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August 23, 2014

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Walter Sabo On Dark Holes & ‘Vision’ (05/10/04)
By Reed Bunzel, editor-in-chief

Check your local talk radio calendar, and you’ll find that this is the Year of the Election. The airwaves are full of discussions of Iraq, the economy, tax cuts, terrorism, Osama Bin Laden, polarized voters and the as-yet-unfound weapons of mass destruction. Rush Limbaugh is front and center, fending off Palm Beach County prosecutors while claiming a political smear. Air America has launched to the joy of the liberal audience and the critical jabs of the right-wing talk show establishment. Even Howard Stern has gotten in on the act, claiming political bias in attempts to “banish” him from the commercial airwaves. All in all, talk radio is shaping up for a wild, rock-’em, sock-’em ride.

But is talk radio becoming a “one-trick pony?” Is it too focused on the angry white politicized male who has found an ally in Sean Hannity or Michael Savage? More to the point, is talk radio serving the needs of the American woman who — while deeply interested in politics and the election — is not necessarily glued to AM talk day in and day out?

Walter Sabo, president of Sabo Media and consultant to Sirius Satellite Radio, thinks it is not. “It is stunning that there are 1,200 talk stations in America; and 99 percent of them, AM and FM, are programmed for guys,” he observes. “Yet the financial backbone of daytime TV is talk for women. Advertisers are falling all over themselves to find ways to reach young women, and radio has ignored them.”

Of course, Sabo’s focus is not strictly on delivering talk programming to women, although that’s what he’s done — with great results — with New Jersey 101.5 FM for the past 14 years. In fact, he firmly believes that talk radio (in all its many forms) is more suited to delivering solid cash flow than virtually any contemporary music format. “Talk radio is the best business,” he explains. “Nothing sells like talk. If you created a talk station for a 25-34 woman, another for a 35-44 man, and another for teens, you would have the perfect radio stations. You would have a positive environment for an advertiser’s message, and be demographically perfect for what many buyers want for their client.”

President of Sabo Media since 1984, Sabo currently is concentrating on what he considers “the emerging profit machine” of FM Talk. He has been a pioneer in developing this format and claims he was the first to program talk successfully on the FM band for a younger audience.

Prior to starting his own company, Sabo was vice president/general manager of ABC Radio Networks, where he and his team converted the facilities from analog to digital and started numerous profitable, long-form programs. Before that, he was executive VP in charge of the NBC-owned FM stations, with properties in New York City, San Francisco, Chicago and Washington DC. Early in his career, he worked as promotion director of WNBC-AM and WXLO-FM, both in New York, and as director of programming and affiliate relations for the ABC FM Radio Network.

A graduate of Syracuse University, Sabo is a board member emeritus of Command Audio, a member of the advisory board of the Museum of Television & Radio, and a member of the National Arts Club. Radio Ink recently caught up with him in New York, where he is consulting Sirius Satellite Radio’s 100 channels of music and talk programming.

You’ve programmed radio on both the local and network levels, and you can be critical of many program directors and other consultants. What do you know that they don’t?
The way I program is opposite of the way most people program. Most people look for a hole. Why would you do that? Holes are small and dark, and I don’t want to go in one. Why would I define my success by what other people are already doing? It’s not sane. Instead, I look where the largest audience is, and where the most ad dollars are placed, and assume we can do better than whoever is already there. The demographic epicenter of the state of New Jersey is a 38-year-old woman. So we decided to talk to that 38-year-old woman all day, every day. But it had to sound like a music station that she would listen to — it had to have a rhythm and production values and had to sound like something she’s familiar with. We also needed to do it 24 hours a day, because listeners listen to stations, not shows. So we created New Jersey 101.5.

What’s the secret of that station’s ongoing success?
New Jersey 101.5 today is the most-listened-to FM talk station in America. It has more than 900,000 cume, and it will gross over $20 million this year. It made money its first year. It’s #1 in Monmouth Ocean, which is an embedded New York market; and it’s #2 in Middlesex-Union, which is 15 miles south of the Empire State Building. It has a 1 share in New York and in Philadelphia. This is the most important thing we did there: If you look at the hour-by-hour ratings, nothing happens, regardless of changing show hosts, because it has the same relationship with the audience as a music station.

What’s the greatest misperception about talk radio, and how would you correct it?
The greatest misperceptions are that it’s expensive to run and that it reaches only people who are predominantly over 55. There are a number of dramatic examples of these fallacies. In 1979, when we put Dr. Ruth on a contemporary radio station in New York, she was a professor at City College. We put her on Sunday nights to talk about sex — her first media job, for $20 a show. A year later, she was represented by William Morris, she was getting $60,000 for the same show, and she was saying, “Valter, I vant a Seville.” She got her Seville. To this day, I don’t think anybody has pulled the shares of 18- to 34-year-olds that she did. She was doing 30 shares of 18-34 adults on Sunday nights.

And you didn’t crawl into a hole to do it.
No. The fact is, by using everything you know about successful music programming and applying it to talk, you can reach any target demo you choose. The first talk stations in America — WGN, WOR, WIOD — followed a certain pattern. They have a very specific format — news at the top of the hour, traffic, “the largest newsroom in the city” — and they attract a very specific audience. The audience that finds this presentation attractive is primarily over 55. But there’s no law that says that’s how you have to do talk.

Are radio programmers and managers afraid to risk something new?
People in every industry in every walk of life are gun-shy about trying new things. It is how the species survived. Profitable companies understand that most people are risk-averse so they give them the tools to be brave. Smart CEOs give managers the resources to invest capital on new ideas, in the future of the company. Procter & Gamble, 3M, Apple, NBC, ABC and CBS Television have laboratories where new ideas are developed. New ideas are researched, and new ideas are expected. The ability to test a new idea gives executives the ability to be brave — but radio has no lab, no development budget, no system to test big, new ideas.

Is radio fixated on “who-else-is-doing-it”?
Sure. Copying and repeating the past can maintain a profit, but the dollars are chump change compared with the profit power of a new format, a new star host or a daring, untried promotion and marketing campaign. In show business, maintaining the status quo in order to “make the numbers” is by far the greatest risk a manager can take. Still, even the bravest would have more courage and more success if their companies gave them budgets for testing. A development budget formalizes the acceptance and expectation of new ideas.

What’s your perception of today’s radio programming?
I actually think radio programming is a miracle, and the people who program radio stations are geniuses. The more time I spend with television executives and executives in other media, the more sure I am of that. Radio programming is always progressively better, and that is proven by the fact that every month, every year, somebody announces something that will kill radio. Sound movies, television, 8-track tapes, records, cassettes, CDs, Walkmen, Internet radio — all of it was going to kill radio. No one at any time was forced to listen to AM and FM radio. Therefore, something extraordinarily appealing must be coming from the speaker for people to be buying radios for the shower, for their heads when they exercise, for the back seat of their car. No other medium has enjoyed the proliferation of radio.

So why do we still receive only 8 percent of the advertising pie?
Our failure as a medium is that we are grossly under-priced. There is nothing wrong with radio salespeople — they’re some of the hardest-working people in the world, because they’re pulling the most dollars with the fewest tools. Just try to ask for a new sales kit or an animated presentation, a tool to go up against a big newspaper or magazine on a buy. They work for very hard for all the money they bring in, but the fact is that the medium is grossly under-priced.

How should radio be priced?
In 1970, there were about 3,000 radio stations in the U.S. Multiply that by 18 minutes an hour — you can do the math. Today, there are 10,000 radio stations, averaging 15 minutes of commercials an hour. Our inventory — just the number of spots in the marketplace — has increased dramatically every year; and the law of supply and demand says that when supply goes up, price goes down. Then to make sure, we add more spots.
Remember: in radio, the seller doesn’t determine the price — it’s the buyer. Actually, the buyer determines the price in any transaction. And as long as there’s no pressure on the inventory, the value and price will remain suppressed. The result is that, in 1970, about 8 percent of all media dollars went to radio. In 1980, it was 8 percent; in 1990, it was 8 percent; and today, it’s 8 percent.

Can that slice ever increase to 10 percent or more?
It won’t be 10 percent until one of three things happens: 1) There’s pressure put on the inventory, which means it’s cut back dramatically; 2) the rate is increased dramatically, and we hold it; or 3) we could give people something new to buy. Radio people are always talking about how we need to get new business. Well, guess what: Buyers know the radio medium and its plusses and minuses surprisingly well. They know that certain formats don’t move product off the shelf, no matter how big the audience. So until we give them something new to buy, it’s difficult to get new business.

Do radio people have a “third-world” mentality when it comes to radio’s position against other media in the marketplace?
Yes, and they need to get over it. The fact is, we have always been the gleaming castle on the top of the media kingdom, and it is time that we claim it and cover the roof in gold. Radio is the most successful medium in the history of mankind, and we don’t take enough credit for it. The first page of any presentation in radio should be the same first page that other media use, and we don’t: our penetration. We have 98 percent penetration of the American public. To this day, cable is barely squeaking by at 65 percent after 35 years. We’re an enormous success story, and it’s very important that we claim that success, price it accordingly and profit from it significantly.

So the “critical-mass” benefits promised through consolidation aren’t enough to move the revenue needle?
We have the clout to attract media dollars from other media, and that should be the mission of all consolidated companies. It’s fool’s gold to go after the radio bucks across the street. The real money is at the newspaper and the television station — go after that. That’s what consolidation can do.
That said, all our organizational models came from radio in the 1920s. While it might have been a terrific structure, all we’ve done with consolidation so far is jerry-rig a structure created 80 years ago. One of these companies should take a cluster in an isolated market and turn it into a Saturn plant. When General Motors wanted to build a new car, they started the Saturn plant with different union deals, different distribution deals and different types of dealers. They did it from scratch to meet Japanese competition. Someone should create a lab, where we can find out if there is a better way to sell radio, to program it, research it and manage it under a consolidated cluster.

Has radio taken full advantage of the programming opportunities afforded by consolidation?
Consolidation offers radio an enormous opportunity to develop new talent, but no one is taking advantage of it. Each TV network has a development budget, with which they develop new talent. A radio program director should be able to walk into a comedy club, see a real talent and say, “I bet he’d be great on the radio. I don’t know what I’m going to do with him this minute, but I think one day our morning show could really use that.” That PD should hire that talent, develop him, work with him — not simply put him on at 3:00 in the morning on Thanksgiving weekend and later say, “Gee, it didn’t work.” That’s where radio companies need to invest their money — program research and development. We’re the only mass-marketed product, from toilet paper to lotion to TV, that doesn’t have a lab. We need one.

How many talk stations can a market handle?
A cluster manager once asked my associate Howard Valentine: “Which one of my FM stations should I turn to talk?” His answer was the right one: “All of them.” Talk radio is the best business, because nothing sells like talk. If you created a talk station for a 25-34 woman, another for a 35-44 man, and another for teens, you would have the perfect radio stations. You would have a positive environment for an advertiser’s message, and be demographically perfect for what many buyers want for their client.
If I had a cluster of four FM radio stations, I’d turn them all talk, and I’d target each of them for a different demographic cell. Imagine what a nighttime station would sound like, having just teens on it. The reason those kids call the request lines isn’t to hear the song; it’s to hear themselves. It’s to feel a part of a community. Imagine if you didn’t play the songs — it would be thrilling. Radio was the first chat room; OK, let’s claim it. Women 25-34 love The View, they love Rikki Lake, they love Oprah. Hello!

What can talk programmers learn from music programmers, or vice versa?
All the great talk programmers I know came out of Top 40. They have a Top 40 background and a Top 40 sensibility. The smart ones apply what they know about Top 40 to talk. The basics of modern format radio, when applied to talk, make any talk station more effective, more efficient, and more profitable. Talk programmers should pay attention to modern formatics and apply them.

How critical is the program host or DJ ?
I can’t begin to emphasize the power of personality. There’s no greater clout than a star. I listened to a Tampa station this week — every word those jocks said was written, liner-card drivel. I was thinking, “Does the jock have an opinion? Does he have a life?” Share your life. Share the real stuff. The way someone becomes a star on the radio is by giving opinions. That’s how we get to know them. We can’t see their clothes or hair. The common trait of every star on the radio — Howard Stern, Paul Harvey, Rush Limbaugh, Dr. Laura, Bob and Tom — is that you know how they feel about everything. Program directors should hire DJs who are smart and have a little extra talent, even though they may be a handful to manage. Trust that sometimes the DJ is right. When that DJ shows unique personality, you have the potential for a star — and that’s always the best thing you can have for your business.

What is the biggest mistake a programmer can make?
The biggest mistake, in any format, is to pick and choose. If you do, you lose the consistency of formatics. In the 1980s, the hottest music show was Casey Kasem’s American Top 40. Logic would suggest that the show belonged on Fridays at 3:00. That was the best-produced Top 40 show in the world. It was a great show, it was on the money, and he was a huge star. Why didn’t anyone put it on Fridays at 3:00? Why did they put on the $25,000-a-year DJ? Because they didn’t want to break the format. We know the tensile strength that a format provides. The format consistency in music radio gives you a business in a consistent, predictive, solid, profitable manner. It’s the same thing with talk. A lot of AM talk stations cherry-pick shows, but they’ll have one or two huge shows and nothing else. If they were all consistently approaching the problem the same way and talking to the same target all day, they would have much better programming. That’s the key strength of Air America — it’s a consistent format, just like a Top 40 or a well-programmed AC or Country.

What’s your take on Air America — do they have the formatics to succeed?
The real story there — and it’s not to discredit them at all — is an important lesson for radio: the power of a good public relations firm. Whoever is doing the PR for that network should win all the awards, because it’s not the first liberal network. Sirius Radio has had one for two years; so has XM. The fact is, modern talk radio became viable because of Barry Grey, Brad Crandall, Lee Leonard, and Barry Farber in New York; Jerry Williams in Boston; Larry King, Neil Rogers, and Sally Jesse Raphael at WIOD Miami; Michael Jackson in L.A., and Ronn Owen in San Francisco. No one listened to them because they were liberals — they listened because those people were great on the radio. No one listens to Rush because he’s a conservative — they listen because he’s great on the radio. If stations can get someone who is great on the radio, then their odds are very good.

You consult 100 channels at Sirius. Do you consider yourself a talk or a music programmer?
I always think of myself as a music programmer. I like all forms of Top 40, including talk. All I’ve ever done is apply what I know that works.

How will satellite radio stack up against terrestrial radio over the next few years?
Satellite radio will be very successful, and so will AM and FM. It goes back to the genius of radio programmers, and it will have as much impact or as little as programmers are responsive to another medium. Every new audio medium — 8-tracks, CDs, cassettes — has been announced as troublesome for radio. Nothing has had any impact, not because of the medium itself, but because of how programmers have effectively and successfully reacted to it. That’s always the key. As long as they react to yet another medium as another opportunity for listeners to be entertained, everybody will make a lot of money.

You’re creating a network that targets a female audience, largely ignored by contemporary talk radio. What do you know that no one else does?
It is stunning that there are 1,200 talk stations in America; and 99 percent, both AM and FM, are programmed for guys. Yet the financial backbone of daytime TV is talk for women. These shows are insanely successful. The new Ellen Degeneres show is going to gross $60 million this year. Advertisers are desperate to put money in a girl-positive environment. That’s why Woman’s Day magazine, which has a circulation of about 1.5 million, grosses $232 million a year; while WINS with a circulation of 2.5 million grosses about $50 million. Advertisers are falling all over themselves to find ways to reach young women, and radio has ignored them.

Radio already draws a huge female audience.
Yes, radio delivers women, but not in the way those advertisers want. They don’t want to be the first spot at the end of 20 in a row. They want to be part of a positive, entertaining show. As a medium, we’ve rendered an entire gender to sidekick status. The opportunity, because there’s so much money there, is to talk to women 24/7 on FM.

Theoretically, you could have a talk station for every segment of the female population.
In every single city in America, the daily newspaper grosses more than all radio combined, and the reason for this is women’s retail. Two-thirds of local ad dollars in newspapers is women’s retail. The other third is primarily automotive and male-oriented. Radio is terrific at offering a male-oriented positive environment — sports, news, traditional AM talk, Hot Talk for guys on FM — but we have failed with women. The only way you’re going to get the money sitting there is to put on a product that appeals to them.


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