Mary Quass: High NRG [5/26/03]
By Reed Bunzel
As president and chief executive officer of newly formed NewRadio Group, Mary Quass is no stranger to the Radio industry. In fact, sheís a veteran broadcaster, who bought her first Radio station in 1988 and experienced the wild ride of consolidation in the late 1990s.
A native of Fairfield, IA, Quass landed her first job in Radio in 1977 as an account executive at KHAK Cedar Rapids. She became sales manager of the station for two years, 1979-82, then served as GSM at KSO Des Moines until she returned to Cedar Rapids to purchase KHAK. Ten years later, Quass Broadcasting merged with Capstar Broadcasting Partners to form Central Star Communications, and Quass, as president/CEO, oversaw all aspects of the Radio stations in her region. In July 1999, when the company merged with Chancellor Media to become AMFM Inc., Central Star Communications consisted of 66 stations in 14 Midwest markets.
"I stayed with AMFM until the end of Q1 2000," Quass recalls. "At that point, about six months before the merger with Clear Channel, the decision was made to close an office. We sort of said, ĎClose us,í so Central Star shut down at the end of 2000, and I was all set to retire."
Not so fast. Just as Quass was easing herself out of the Radio business, the Internet was riding high, offering seemingly boundless promises of revolutionizing the communications landscape. "Internet Radio was really starting to have some legs, and it was a fascinating concept to me," she says. "A young man who had started a streaming Internet station, policast.com, came to see me. It was a great idea, and what fun and excitement and energy! But its time just hadnít come. There wasnít enough tonnage that people could get their arms around; and because it was tethered, it was limited."
Quass toyed with the idea of developing some streaming-only, local Radio stations without the benefit ó or constraints ó of an FCC license. "We got very positive response to the concept," she says. "People wanted it and felt a need for it, and they liked that whole niche kind of thing. We were all enamored with the e-mail possibilities, the build-your-own-database and the viral marketing ó and then the bottom fell out of the Internet."
More time passed. Eventually, Quass and Lindsay Wood Davis, who had worked with her as regional vice president for sales at Central Star, began discussing Radio and consolidation and new ventures. "We began talking about the fun it would be to get the band back together," she explains. "I said I never would do small market ó I had done mid-size and large market with Capstar ó but since consolidation had hit the larger markets, I started looking at some of these smaller markets that traditionally had some pretty rotten Radio.
"What I learned when I got into this business was how to do great local Radio," she continues. "So we said, ĎIf we can do this in standalone market areas that have their own retail base and arenít in the shadow of a bigger community, and if we can apply some of the things we learned under consolidation, we could make them better.í We both got really fired about this, and we said, ĎLetís just do it.í"
Meanwhile, presented with an opportunity to purchase the Radio properties of Marathon Media, Quass began discussions with Marathon President/CEO Chris Devine. At the same time, she began talking financing with Alta Communications, which she had known prior to her association with Steve Hicks at Capstar. "I really liked them, because they understand the Radio business, so we started a dialogue again," she says. "My interest was to try to build a group in the Midwest, and they had an interest in that, too."
It all came together last fall when Quass announced the formation of NRG and the acquisition of 22 Marathon stations plus the Goetz Network, which includes some farm programming, agricultural reports and other localized news features.
Joining this new venture were Tami Gillmore, who is chief financial officer, and Davis, who is chief operating officer. "Lindsay is a great sales trainer, and heís really juiced about getting into the stations and trying to bring them the things they didnít have before," Quass tells Radio Ink. "Tami started her career as a business manager, and she can bring a level of financial sophistication that works from the banking end, yet she can relate to the business managers at a Radio station."
INK: Considering the current economic and business climate, was this a good time to get back into Radio station ownership?
How do you view the availability of good properties? What kind of stations are coming on the market, and what specifically are you looking for?
There arenít many good properties available. Our goal was to build a group in the Midwest pretty quickly. We all got a little spoiled as a result of what we did in the first round of consolidation, when Capstar had tons of acquisitions going on. Opportunities are still there today. Unfortunately, some people think that the multiples of the late í90s are still there, and they believe their properties should still be worth that. Generally, those properties arenít worth it anymore.
Do supply and demand keep those prices up, despite questionable station values?
That is some of it. On the other hand, for one reason or another, some extremely well-run properties didnít go the way of consolidation in the last wave, and now the owners want to get out. They want a nice price for their properties, and they certainly should get the value. But the buyer also must have an upside. These owners must be realistic and understand that we need to see some headroom in order to make the equation work. Fortunately, because weíre in mid- and smaller-size markets, we have a few more properties to choose from, because consolidation hasnít reached down this farÖyet.
>How do the economics of small-town Main Street compare with the overall national picture?
The economy in a small town isnít any different from Main Street anywhere. Still, it is not without its individual challenges. For example, we can be at war, and we can have a good economy or we can have a bad economy, but we have stations in northern Wisconsin that rely heavily on snow for snowmobiling. This is the second consecutive winter when the snow came in late February and March, when it doesnít do anybody any good. That has a huge impact on the market. Another thing: I see a sort of evolution in the Radio business. I have been an entrepreneur with small Radio stations where we were everything in the community, and it was a good place to be and a lot of fun. But over the last few years, it has had to evolve into a more sophisticated business.
How does your local talent stack up in this evolving sophistication?
One of the things that I have been absolutely amazed at ó and overjoyed about ó as we went into newly acquired Radio stations, is the quality of talent at some of them. On the other hand, many of these people have not been exposed to technological advances afforded to Radio. So weíve had a hoot, going in to say, "Weíre going to build great local Radio. And thatís what you have to do. You are great local Radio. But what we want you to do is look at it in a little different way."
Do you need to help them purge a "small-market Radio" mindset?
The thing is, a lot of these people get so caught up in all the same things theyíve done for 25 years, and we come in and tell them they wonít be doing some of it anymore. If we have a great production guy up in the north woods, we can have him do production for a station in Illinois and have these people focus on growing whatís between their ears. So instead of working eight hours a day ó four of them doing stuff that anyone can do ó we can free them up to do the things that only they can do.
Just how important is that local aspect of Radio today ó and does this vary from market to market?
Localism isnít just about hot lunch or somebodyís lost dog, and it canít come from a corporate office. It comes from your heart and soul. So when you come to work, itís important for you to believe that you make a difference in your community. Itís not just hot-lunch programs. Itís being aware, itís being involved, and itís being a part of the community. A guy who was interested in selling his station said this to me: "If I sell the Radio stations to you, I still have to live in the community." To me, that says it all.
Is NRG oriented toward acquisitions or same-station growth? How do you achieve either or both during todayís sluggish economy?
Itís a two-pronged approach. Part of our model is to scale it, to get to a point where we have the ability to share resources across the platform. You canít do that just by having a few Radio stations and doing the same year-to-year growth, so our model definitely includes an acquisition strategy. But weíre also trying to overlay some group-wide systems that have never been there and that will afford people the opportunity to focus on the things they can control to grow the year-over-year increases. When we structured this company, we made the management pretty top-heavy, because we knew we had to act quickly to get things done faster. We believe that the sum of those two strategies will get us more quickly to where we need to be.
Is Radio in small or medium markets inherently easier or tougher than in large or major markets?
I donít think itís more difficult, although the dollars certainly are different. In a large market, the dollars are easier to get, and $1,200 spot rates are more attractive than $12 spot rates, but itís all relative. The volatility of a competitorís coming into the market, or of having a bad book, is probably a lot greater than it is in some of the smaller markets weíre in. Things donít go up as fast, but they donít come down as fast, either. You have the same people issues ó egos are about the same. We try to balance it all, and I try to push decisions down to the level of the people who actually are on the front lines. I want my managers to lie awake at night and worry about what goes on in Wassau, so I can worry about other things. And you know what? These people will worry about it, because they love Radio just as much as the ones in Chicago do ó sometimes more.
Is it difficult to find good managers, programmers and on-air talent?
Lindsay is sort of the Rolodex of the Radio business. He has the contacts and has built a good cadre of acquaintances and people. But another aspect is that weíre all Radio rats who got into this business because it was fun. Back then, there was a real track: You had to start in the small markets and move up to bigger markets. If you didnít, by God, you were blackballed and relegated to a small market, and that was where you were going to stay. But that was then and this is now. People are interested in their quality of life, having fun and not being under some of the incredible pressures and lack of ability to control things. As a result, people who previously worked with us have said, "Iíd love the opportunity to work with you again."
Has consolidation affected the quality of people youíre able to hire?
Because of consolidation, weíre able to attract executives we may have been unable to afford if we were doing one station in the north woods. Also, this business still attracts talented people. If we can provide an environment where they can see that they can grow and do better, itís amazing what you can get out of people. Thatís part of the systems weíre trying to put in place.
What qualities do you look for in new hires?
We look for people who have a lust for life. We want people who are engaged in living, as opposed to just being passive players in the world. Fundamentally, we want people who look forward to getting up every day, who arenít looking for a predictable job in a business that never changes. If you canít attack a day, it will be pretty difficult to feel good and survive in this business.
What challenges have you faced going into these stations and letting them know that life as they knew it before NRG has changed?
One thing I learned a long time ago was that the culture of an organization is as important as its system. At Capstar, when we went into new stations, the employees would look at us with their arms crossed and say, "What are you going to do to impress me?" So when we put together NewRadio Group, we asked ourselves what we would do differently. We decided we wanted to start out with a culture ó how weíre structured, whatís important to us, what weíre all about ó and then we wanted everybody in the company to understand that culture. We began with the idea that we want to do great local Radio, plus some truisms, such as "all of us are smarter than any of us," "weíre all interdependent," and "job clarity equals job satisfaction." These things require training across the board ó not necessarily sales training or management training, but a philosophy that filters throughout the company.
So in effect you developed a corporate culture tied to your operating systems.
Yes. It was critical to put systems in place and then educate our people on how those systems fit together ó such things as why sales pacing reports are important, and what the value is in sharing them. We knew that, if we utilize the skills that our people have, we could reallocate our resources. Itís a constant process, not just "once a quarter you go to Radio University." Thereís a lot of good training out there for Radio people, but that training has to be reinforced when youíre back home. Whether itís with the GMs or the sales managers, thereís always a focus on what we as a group can do to be better, and what we need to do to learn more.
Have there been any surprises for your people with assimilation into the company?
We got used to working at a pretty quick speed when we were consolidating into AMFM, and thatís the kind of track weíre on. Now, many of these guys in the smaller markets have not been accustomed to working at that pace, so itís been a real shock to some of them. But itís just a matter of training. Good training with reinforcement and a culture that matches will be the difference between just going to a seminar, learning one thing and forgetting it in 32 hours, or making it work ó and be worthwhile. We donít want to give lip service to training; we want to make a commitment to it, putting tools in place to help these people do their jobs better.
What is your role within the NewRadio Group structure?
This time Iíve taken a different role than I have in the past. I love the visioning part of this. I love to be able to look down the road and say, "This is where I want us to be." I can see it as well as I can see the computer screen in front of me. For me, the real rush is figuring out how to get there. I say to people, "This is what Iíll do. You worry about your Radio stations, and Iíll try to communicate with you and ask questions and try to get you there."
How would you define leadership, and how is a strong leader different from a strong manager?
Everybody has their own idea of what leadership is. To me, it is the ability to see whatís on the horizon, and have the conviction and confidence to know that weíll get there, regardless. A good leader will create an environment in which people can achieve their own goals, giving people the confidence that they can excel in their area of comfort.
I consider myself one of the least important people in this organization, because I determine the success or failure of it on a much smaller scale than every other employee does on a day-to-day basis. But I do have something I can provide, and that is thet sort of vision and dogged determination that will get us where we want to be.
What do you see as the greatest competition in small-market Radio?
The competition varies. In some of our markets, there are some really good, smaller broadcast groups that are our direct competitors. Local newspapers also are still a factor. Honestly, the biggest area of growth that I see is not taking money from the competitors as much as it is educating people on what our product is. We all have to believe in our product ó or at least have an understanding of our product ó before we can sell it or make it better.
At the beginning of consolidation, many people were high on the potential to raise Radioís rates to a level of local television or newspaper. Has that happened?
Sometimes we in Radio are our own worst enemies. Weíre terribly undersold in our industry. We can blame it on everybody and their dog, and say that we get only other mediasí leftovers, but a lot of it has to do with our mentality ó and our willingness and strength to be able to change it. We had the opportunity with consolidation. The agencies were worried that we would cause rates to go up. We should have. We had it in the palms of our hands, and we didnít do it. If you look at Radioís rates, theyíre probably lower now than they were in the late 1990s.
Is Radio well positioned as a strong source of news and entertainment, or is there an inherent risk from emerging media, such as wireless Internet?
In a lot of ways, Radio is best positioned to lead the charge and be on that frontier, because we understand how to move people. But we canít just stick our heads in the sand and think that the Internet wonít have an impact on Radio. This is the first technology to mean that anybody can have a Radio station as good as, if not better than, whatís out there today ó and it has nothing to do with a license. I want to be in and out of the business by then. When I was growing up, I could tell you my favorite Radio station, and I was adamant about it. Well, a 12-year-old today can tell you the artists, but they may or may not have a Radio station where they know the DJs. Iím very concerned about this, because we havenít remained relevant to these people. When I go to the gym to work out, you know what I do? I listen to MP3 on my Rio. If I grew up with Radio and Iím listening to MP3, why should we expect young people to listen to Radio when their lives are so packed with other things? Thatís why, when the Internet becomes wireless, I want to be there.
Has Radio lost sight of the product?
Radio has taken for granted that we will always have 96 percent of the adult population listening to this medium in a week. But we know that response rates and that kind of stuff are declining ó not so much because Arbitronís methodology necessarily is flawed or archaic, as much as it is that people want what they want when they want it. Itís all about the product. If you have a great product and itís in demand, people will use that product.
As an industry, we got away from that and have lost sight of the fact that we must give people product that they canít get everywhere else. If we donít differentiate our product when the Internet becomes wireless, it will be a whole new ball game for all of us. We had better be ready, or the frustration we feel will only grow.
What are your personal long-range plans? Are you in NRG for the long haul, or do you plan to hand over the reins at some point?
Lindsay, Tami, and I have a real love of the business. This is an opportunity for them to have ownership and equity in a business that they love and want to spend time in. I tried to retire once before, and Iíll probably want to do it again. My goal is to build a company with some great people, put some systems in place, build something weíre all proud of, and get me the opportunity to do something I love. But I also know that the chances of my wanting to do the same thing for the next 20 years is probably not there.
When you last were on the cover of Radio Ink, you were dealing with some health issues. Iím sure our readers would like to know how youíre doing.
So far so good. This July 1, I will have been cancer-free for five years. I never want to go through it again, but I will tell you it was a very profound experience, and I can say now that I have learned some wonderful things. It has given me a perspective and the ability to share, to look at people and learn things that I never would have. But I donít want to go down that road again.
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