December 2, 2015

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First Mediaworks

07/04/05 New Power: Bring It On

Since the inception of Radio Ink's 40 Most Powerful People in Radio list in 1996, we have seen a younger generation move into positions of prominence. Of the top 10 on our initial list, none remain on the list today. About 30 percent of those on the current list are under age 50; interestingly, in the top 10, seven are under 50, while three are 50 or older. That shift has caused a corresponding shift in attitudes about radio, and those revolutionaries are no longer willing to accept the status quo. It's refreshing to see the new ideas and bold actions in an industry with younger leaders to whom the baton is passing. As in all generations, change occurs when the good-old-boy club is replaced by new blood.

A profound truth is also being revealed: If you wait long enough, the pendulum always swings back the other way. With consolidation, we had cultural change, expense-driven budgeting and lower-cost operations through technology. Now, boardrooms are realizing that cost cutting can no longer stimulate radio's growth. There is little else to cut. Necessity will prompt discussions and actions about growth through innovation. Although we are at the early stages of an innovation curve, companies are being forced to reinvent because of the necessity of growth.

No doubt a little more consolidating will come. Yet, soon to follow the force of the pendulum will be break-ups, reductions in station count, stock buy-backs and privatization. Companies realize little benefit from being under the microscope of the public market. Some will find Pareto's 80/20 principle to be true - that 20 percent of their stations make up for 80 percent of their revenues (look at Infinity, with 180 stations and $2.3 billion in revenues in 2004 vs. Clear Channel with 1,194 stations and $3.6 billion in revenue in 2004). All companies may benefit from reducing the size of their portfolios and creating higher returns with fewer stations. The ego of owning many stations will be overcome by the practicality of owning fewer stations that can be managed effectively to return a handsome profit. Opportunity will again exist for the next generation of young entrepreneurs who want to own radio companies as they sell off properties they consider counter-productive.

Tomorrow's power brokers will get their power from power-ratios and profit-per-station, not from weight of ownership alone. The new source of power in radio will also come from a return to the things that have always elevated radio when challenged: the power of content, the power of entertainment, the power of great people and limitless boundaries, the power of community and the power of innovation.

Although Wall Street may temporarily lose interest in radio, we can return as a growth industry if our leaders employ practicality in the future and do not ignore the forces that threaten radio. We cannot adopt the old-school cheerleader attitude that “Radio has been threatened before and these threats won't hurt us now.” Instead, we must understand that technology has changed the way consumers get information and entertainment, and we must not pretend they can't hurt us. Threats like satellite radio, podcasting, WiMAX radio, cell-phone radio, streaming and other yet-to-be-invented technologies will become viable competitors for listening time, yet they will force us to reinvent and innovate. If new competition is what it takes to make us stronger, bring it on. Radio's new power is made up of open-minded youth and vitality; such innovative and tireless warriors can lead radio into a new age of relevance.

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