November 27, 2015

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First Mediaworks

Ron Davenport Jr. and Susan Austin: At Sheridan Broadcasting, It's A Family Affair (03/07/05)
By Reed Bunzel, Editor-in-Chief

Thirty-three years ago, Judith and Ronald Davenport Sr. founded what has grown into one of the largest African American-owned broadcasting companies in the United States. In 1972, while dean of the Duquesne University School of Law, Davenport Sr. and his wife formed a group to buy four radio stations; a few years later, the company purchased the Mutual Black Network, and moved its operations to Pittsburgh. Throughout the next several decades, the company expanded and flourished, while the Davenports became leaders in the Pittsburgh African American community.

During those years, Judith and Ron Sr. instilled in their children a sense of leadership, entrepreneurship and business acumen that now is being exhibited by Ron Davenport Jr. and Susan Davenport Austin. As a director and general counsel of Sheridan Broadcasting Corp., president of the Sheridan radio division and manager of affiliate relations for American Urban Radio Networks, Davenport Jr. oversees the entire operation of each station, including sales, marketing and programming. Susan Austin, who spent the past 10 years on Wall Street, serves as vice president of strategic planning as well as a director and treasurer of Sheridan Broadcasting Corp., and president of the Sheridan Gospel Network.

“We feel very fortunate,” Davenport Jr. says of growing up not only within the Davenport family, but also within the Sheridan Broadcasting environment. “Our parents worked very hard to create Sheridan Broadcasting Corp., and they gave us a solid foundation and tremendous educational opportunities.”

Those opportunities allowed Davenport Jr. to attend Yale University for his undergraduate work and Harvard Law School, while Austin earned her undergraduate degree from Harvard and an MBA from Stanford Business School. Another sister, who works in television, graduated from Princeton. “We hit the trifecta,” Davenport Jr. boasts. “But it's more than just the educational achievement; it's the desire for excellence and the opportunity to build on a foundation that we feel very humble to have had. We're standing on some great people's shoulders - people who were far smarter and far more capable than we ever will be, who never had the opportunities that we had. To be an African American family in business in the U.S., doing the things we've been able to do, we feel very fortunate,” he continues.

“Not only are we fortunate that our parents got into this business and are in the position that we're in, but we're in radio,” Austin adds. “By owning stations and networks, we have a tremendous opportunity to ensure that the voices of African Americans get heard. It's exciting, it's a tremendous responsibility and growing up around it has been a lot of fun. When you realize the power of radio and the opportunity you have as someone in the position of ownership - we're very lucky. Knowing that we can serve our community in this way is a great honor and responsibility.”

Sheridan Broadcasting today owns six radio stations, including WAMO-AM, WAMO-FM, WPGR-AM and WJJJ-FM in the company's home town of Pittsburgh; WUFO-AM in Buffalo; and WATV-AM in Birmingham. Sheridan also owns Sheridan Broadcasting Networks, Sheridan Gospel Network and Sheridan Production Services. Additionally, Sheridan Broadcasting Networks is the majority partner of American Urban Radio Networks, which is the largest and oldest African American-owned radio network in the U.S., with more than 300 radio station affiliates across the country.

Prior to joining Sheridan, Davenport Jr. was an attorney in the general counsel's office of the Board of Governors of the Federal Reserve System. In addition to his corporate responsibilities, he serves on the boards of several civic organizations, including the Pittsburgh Cultural Trust, Pennsylvania Economy League-Western Division, Pittsburgh's National Aviary, Urban League of Pittsburgh, EcoLogic Development Fund and St. Edmund's Academy. He is married to the former Lynn Williams, with whom he has three children.

Austin spent 10 years in investment banking, specializing in telecommunications and media finance, before joining Sheridan. Most recently, she was a vice president in the Communications, Media and Entertainment group at Goldman, Sachs & Co. Previously, she worked for Bear, Stearns & Co. and Salomon Brothers Inc. Austin was honored by Girls Incorporated in 1998 and received the inaugural John W. Gardner Volunteer Service Award from The Stanford Graduate School of Business in 2002. She has been profiled in Womensbiz, Ebony and XII magazines, and serves on the boards of the National Association of Broadcasters, where she is vice chair of the Audit Committee; the Stanford Business School Alumni Association; and the Lower Eastside Girls Club. She is married to Kenneth W. Austin.
To mark this annual issue highlighting the 35 Most Influential African Americans in Radio, we recently spoke with Ron Jr. and Susan about Urban radio, minority opportunities and continuing their family's legacy within the broadcasting industry.

Wall Street analysts understand that niche markets such as Urban and Hispanic have been outperforming the rest of the radio marketplace. What do these formats offer that others don't?
Ron Davenport Jr.:
I can't express an opinion on one format or another, or why one is better than another. We are Urban, and we believe we can put on a more compelling product than anyone else in our respective marketplaces. We believe we can do that better than anyone else here in Pittsburgh; we want to expand that into Buffalo, where we've had a heritage station for a long time, and Birmingham, where we recently acquired a heritage station. We're not saying that one format is better than the other; we just say what we're capable of doing and what we're prepared to do. When we're on our game, no one can beat us on our turf.

Susan Austin: Urban is becoming mainstream throughout America. It's a growing trend in the way people live, especially young people. What used to be considered just Urban is now a big part of popular music in America. Gospel and inspirational music are similar cases: They've existed for a while in the Urban community, like contemporary Christian in the mainstream community. I think post-9/11 people have focused inward on spirituality, and the net effect is that gospel and inspirational Christian have really begun to take off. People are starting to recognize how strong these formats are.

RD: I remember reading an article in The Wall Street Journal about some kids in West Virginia. They'd souped up their cars, and they were racing them on the streets; apparently there wasn't a whole lot to do. The interviewer asked these kids what kind of music they listened to, and they answered Country and Rap.

As Urban music becomes more mainstream, do you think American attitudes toward race and ethnicity have become more accepting?
We're not social scientists, but it is interesting that The Wall Street Journal is writing about the “dissing” of somebody. You don't expect to read that there. Language has broadened to include words that heretofore might have been called urban or slang, words that are popular within the urban community.
SA: The face of America is changing; there's a mixing of ethnicity and races. We're a very different country than we have been in the past.

Are the business and advertising communities finally waking up to the power of Urban radio and the African American listener?
Yes. You started to see it at the Grammys recently, the number of songs by African American artists and the question of who's buying all this music. The music has broad appeal, and there's recognition in the marketplace that the Urban format is very competitive.
SA: Years ago, when markets would get soft, niche marketing dollars usually went away. In the past few years, however, when advertising has been softer, advertisers are still targeting the urban audience. That is a change from 15 years ago. There's recognition of the buying power of the African American community, and the breadth of the format's audience, which crosses ethnic lines. There's also recognition that this is a younger, trend-setting audience that advertisers must reach.

Do you still see “no-Urban” dictates in some advertisers' buying strategies?
From time to time, yes. There are clients who believe they don't need to advertise on Urban stations - that Urban stations are a throw-in, or that they'll get their audience via other media. We vehemently disagree. The research I've seen shows that if you target the Urban audience, you can obtain them, and they become very brand-loyal. Unfortunately, we've seen many situations where stereotypes are used to prevent a buy, or to justify not buying.
SA: It's true locally and nationally. It's unfortunate, and we continue to try to educate people.

Are minority ownership and leadership opportunities growing or dwindling in today's economic and consolidated-media environment?
The number of owners has dwindled with consolidation, but some people have made money, which is a good thing. Consolidation has some positive elements, but in this business, scale becomes much more important. It has become a challenge as a small operator to go up against the big guys. At the same time, as the laws change, there are opportunities. People are buying stations, minority owners are buying stations - but it's a different market environment than it was pre-consolidation.
RD: Our parents put Sheridan Broadcasting together pre-tax certificate days, so obviously they took advantage of the few opportunities at the time. We were raised with the mantra: “You can do whatever you set your mind to” - so the limits of our imagination are the limits of our creativity.

Would you like to see the tax certificate reinstituted?
Anything that can be done to increase the number of minorities in the industry is positive.

Are investors interested in working with minority owners, or has the money (and the opportunities) in that area dried up?
Investors are out there; it's a question of the cost. I've spoken with many bankers about a variety of deals; the difficulty is devising something that makes economic sense within a workable time frame. This is particularly true in a start-up or turnaround situation. With the larger consolidators in almost every market, you can't do a small deal the same way you could before. The banks are looking for larger deals that will grow even larger, which will provide them with great exit opportunities. I don't think it's a question of, “I don't know if I want to invest in an African American company,” as much as the flavor of the deal and the size and structure you want.
RD: Keep in mind that Susan spent 10 years on Wall Street; from her network contacts throughout “the street,” we have access to capital. She knows what buttons to push.

How far should the FCC and Congress go in regulating and legislating rules on indecent programming?
We try to be good stewards of the airwaves and keep off the FCC's radar screen. We're not trying to have any wardrobe malfunctions or explore words that can or cannot be said on the air. We have a pretty moderate view of the FCC and the role the chairman has played. Essentially, he has done what he has needed to do.

FCC Chairman Michael Powell will be departing the commission soon. If you had an hour with the new chairman, what would you discuss?
I'd ask about the effects of consolidation, and the role of radio and small owners. We recognize this is a business, but we don't want to get squeezed out. We want to make sure there is a role for the small, independent broadcaster. Certainly, indecency would be on the list. We want to be sure we're not doing anything untoward as we try to super-serve our listeners. I'd also talk about the future of Internet broadcasting, the streaming of signals.

Has the network/syndication environment changed much in the past 10-20 years? Are stations looking for more or less syndicated programming?
In the past, it was easier to get certain programs cleared. We have heard groups say, “We're not taking programming that we don't originate.” That changes the game, and it's been the biggest hurdle. We fundamentally believe that compelling product will win in the end. If you give general managers an opportunity to realize that we offer something better than they can produce within their market, and show them how they can sell it, we should do just fine. We compete daily with many entities, and some of them have more money to spend than we do, but we believe that with compelling product, we can triumph.

What effect will Clear Channel's Less-Is-More strategy have on the placement of, and time available to, network commercials?
You're presuming that these stations are sold out, which we're not prepared to presume. We don't presume it on the local side, and we don't presume it on the network side. There's still a role for networks, even within the “Less-Is-More” environment. Again, it's all about providing quality product and maximizing the value of each spot for the stations.

How much competition do you see coming from satellite radio? Does it concern you, or do you have a game plan to deal with XM and Sirius?
As much buzz as there is about satellite radio, I agree with Jeff Smulyan, who said iPods are a bigger threat. People listen to radio not only for the music, but also for the personalities and local information. You know you like the music on your CD or iPod, because you put it there. Will satellite radio continue? Absolutely. Will it fill a need? Absolutely, for people who are doing those long, cross-country drives. Otherwise, I don't really see it as a significant threat.
RD: Yes, satellite radio is here, and it will be here for the foreseeable future. But they have a window; once Internet radio starts to hit and more stations start streaming, that window may close. If you can hear your favorite station in your car and your house anywhere you are, and you've already paid your monthly fee for Internet access, what do you accomplish by paying an additional fee for a music service?

For several years, Internet has been considered a dirty word. Is there a business opportunity for radio stations to connect to listeners via the Internet?
Streaming is very successful - and it is available around the world. With our gospel network, we have people streaming us consistently in various countries. People are coming into the office and listening to us all day.

Radio Ink annually recognizes the Most Influential Women and the Most Influential African Americans in Radio. Some people believe we shouldn't single out members of minority groups for recognition, while others welcome it. How do you feel?
I've heard those comments. Much to my dismay, and that of many others, there aren't as many women and minorities on Radio Ink's 40 Most Powerful People in Radio list as we'd like. The lists for the most influential women and most influential African Americans in radio identify those individuals who might not make the 40 Most Powerful list, but have achieved a level of recognition within the industry. You started the MIW list about the time I joined this company, then they started their mentoring program and I was fortunate to become a “mentee.” Through the mentoring program, I met some fabulous women in the industry. When I was new to the industry, it was a great opportunity to see who was working at a senior level, people I could learn from and aspire to emulate. So, while I understand when people raise this question, I think Radio Ink's MIW issues are a tremendous service for people in radio. This is particularly true of those people looking to grow in their careers; when they see more people who look like them getting recognized for their efforts, they see an opportunity and potential for growth.
RD: I haven't as heard much of the turmoil as Susan, so I'm speaking at a slight disadvantage. I applaud your efforts to raise the profile of women and African Americans within the industry.

What key qualities are needed to be a leader in this business?
Identifying clear goals, then executing them. That vision, goal and execution defines leadership. The success or failure is the measure.
SA: People have daily options about how they spend their time. If you can align people's choices with the direction you're trying to go in, that's real leadership. Set a vision that people understand, then give them the opportunity to execute those goals.

Have we seen this type of leadership within the radio industry?
We have begun to move in the right direction. We do need to raise the profile of radio. The RAEL studies to show radio's effectiveness are good. The advertising leadership that David Field and others have spearheaded is good. Radio is a very effective medium, but we're undervalued.
RD: The bottom line is moving product off the shelves. When you look at radio's ability to move product, compared with the cost and effectiveness of other media, radio has a tremendous story to tell. Yes, advertisers have been able to buy radio relatively inexpensively- too inexpensively.

If radio is so successful at moving product, why does it still get a bum rap among advertisers who spend such a disproportionate amount of their dollars on television and other media?
There's a sexiness in seeing things on TV, and the budgets tend to be bigger. When it comes time for the buying community to get their cut, putting together a television buy becomes far more compelling than a radio buy. That's not to say TV isn't effective: Folks are going to use TV, and we expect that - but not at the expense of radio. Radio has a role in any kind of marketing plan in terms of overall effectiveness for the bottom-line client. When it comes to moving the product off the shelves, radio reaches people in ways that other media cannot. As we begin to tell radio's story, people will see that radio has been taken for granted and undervalued. I applaud the efforts of the RAB, the Radio Ad Effectiveness Lab and the NAB, in particular, to get this message across. With all of these efforts, I believe we will start to see the value of radio become clearer and stronger.
SA: Radio is local; trying to bring national attention to something so local in orientation is a challenge.

What is radio's greatest challenge in the coming years?
The greatest challenge for radio is to sell itself nationally. As Susan said, radio is local, and it's still a challenge to get advertisers on the national level to realize that radio works. We can show results and do all kinds of research, but the biggest challenge is to get over the perception that radio doesn't count. People spend a lot of time listening to radio.
SA: People feel more connected with radio than with other media.
RD: Advertising on the radio is a great way to reach people.

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