Entercom's David Field: Radio Executive Of The Year (01/09/06)
By Reed Bunzel, Editor-in-Chief
As CEO of Entercom, the third-largest U.S. radio group in terms of revenues (behind Clear Channel and Infinity), David Field could focus singularly on the financial performance of his company's stations, working to make each a competitive market leader in the midst of an increasingly difficult media environment. He could be preoccupied with Wall Street's obsession with net revenue growth, free cash flow, EBITDA, and share price. And he could be motivated simply by growing the size and power of the company his father, Joseph Field, founded in 1968, without regard to the overriding issues facing the broader radio industry.
Rest assured, as a consummate businessman Field most certainly is consumed with each of these facets of corporate success, and more. But in an industry under siege from new media, where technological evolution and marketing hype threaten to diminish radio's value as a major communications medium, Field has demonstrated a dedication uncommon in today's fast-paced, time-crunched corporate environment.
Example: In addition to his corporate role at Entercom, Field is chairman of the National Association of Broadcasters' radio board of directors, and a board member of the Radio Advertising Bureau. In these capacities he has played a key role in creating numerous industry-wide initiatives to promote and market the benefits of radio to advertisers, agencies, and consumers. Just last month, Field signed on as a charter member of the HD Digital Radio Alliance, calling for a rapid and thorough roll out of digital radio in the U.S. With these endeavors and numerous other initiatives, Field consistently has exhibited leadership qualities that inspire others to action.
“The radio industry's future is quite bright,” says Field. “Twenty years ago, radio reached 96 percent of Americans; today, radio still reaches 96 percent of Americans. Despite an explosion of new technologies and new gadgets like cell phones, CD players, video games, the Internet, and satellite radio, Americans still spend 20 hours per week with free, local radio. The recent Arbitron/Edison study reveals that new audio distribution technologies do not materially reduce listening to free and local radio; rather, they increase the size of the pie by creating additional listening time.
“In a world of exploding consumer gadgets, we will likely see moderate erosion to TSL in future years,” Field continues. “But we will remain an enormously powerful medium that still reaches the vast majority of Americans with extraordinarily long TSL. The fact is, we principally compete with media such as newspapers, television, Yellow Pages, and a handful of other media that accounts for the vast majority of ad dollars in the U.S. Are these media immune to the changes in our world today? Of course not. In fact, they have experienced vastly more erosion than radio and have significant issues going forward. The bottom line is that radio is the single best value proposition for advertisers today. Now is the time to capitalize on the very positive Radio Ad Effectiveness Lab studies and the other industry improvements of the past two years to shift more dollars from other media to radio.”
A former investment banker at Goldman, Sachs in New York, Field holds a BA from Amherst College and an MBA from the Wharton School of the University of Pennsylvania. He joined Entercom in 1987 and has served in numerous executive positions with the company, including chief operating officer since 1996 and president since 1998. He was named chief executive officer of the company in 2003.
It is because of David Field's leadership both within his company and the greater radio industry that Radio Ink this year recognizes him as Radio Executive Of The Year.
INK: After several years in a confusing radio economy, how optimistic are you that we will begin to see some solid revenue growth for the industry in 2006?
DF: I'm cautiously optimistic about our outlook. Radio remains an extremely compelling value proposition for advertisers and marketers. The Radio Ad Effectiveness Lab studies have powerfully demonstrated radio's outstanding effectiveness and ROI. What we've lost is a little bit of our sex appeal as newer, shinier advertising vehicles have come along. But we have not lost our effectiveness, nor have we lost our efficiency. Ultimately, dollars chase efficiency and effectiveness, and radio is extremely well positioned to prosper going forward.
Still, the advertising landscape is changing as ad dollars chase new and old media alike. Can radio continue to count on revenue growth as the pie continues to fragment?
Absolutely, but it may take some time to work our way through this ad shift that is occurring as customers move portions of budgets into new media platforms. However, as we look at radio's value proposition and contrast it to media with significantly greater challenges, such as newspaper, television, direct mail, and Yellow Pages, we are well positioned to gain share.
That said, what are you predicting for overall industry revenue growth next year?
On the merits, if 2006 is a reasonable year for the general economy, radio should grow at mid-single digit rates; top-line, something in the 5-6 percent range.
Do Wall Street and the rest of the financial community have as good an understanding of the radio industry as they should?
At the end of the day, Wall Street is agnostic. They invest in growth and they get frustrated when there isn't growth. Once radio re-emerges as a consistent growth vehicle, Wall Street will reward us.
Group-wide, what are you expecting for the first quarter of 2006, as well as the full year?
We have held ourselves accountable to grow top line and bottom line faster than our peer group. We are very committed to investing in development initiatives that will enable us to sustain superior performance going forward.
One year into Clear Channel's Less Is More initiative, how has it affected national radio revenues - and Entercom's bottom line?
In most cases, 60-second ads are simply too long. There is no reason we need to take 60 seconds to communicate what could be accomplished in 15, 20, or 30 seconds. Research proves that shorter ads can be just as effective. To be competitive in the new media landscape, the industry needs to make this transition. In the future, I believe radio stations will be limited to approximately 6 minutes of commercials per hour, comprised almost entirely of 10- to 30-second spots. If you listen to radio stations that run that level of inventory, you know they are dramatically more compelling to listeners.
Should the entire radio industry reconsider how airtime is bought and sold? Is this an industry-wide concern, or just important to the groups that have seen their spot loads creep up over the years?
The critical question is pricing. We can transition to a 6-minute inventory level if we recognize that a 30-second commercial is worth just as much as a 60-second commercial, and a :15 is worth pretty damn close. If we're foolish enough to price these commercials at ridiculous discounts, then we will have accomplished nothing other than shifting from 12 minutes of :60s to 12 minutes of :30s, which will not be compelling to listeners of the future and will cause significant erosion in usage.
Essentially, if a :30 moves as much product as a :60, you're saying it shouldn't be priced any less?
Will the advertising and agency communities accept this new pricing structure?
Absolutely. Again, what is the relative value of media choices today? Radio on its merits scores extremely high on both efficiency and effectiveness, and deserves a much larger share of the advertising pie. The RAB marketing team has made a significant contribution toward advertiser perceptions of radio. Still, we have a lot of work to do, and I believe we need to be investing far more in marketing our medium to listeners and to advertisers, and perhaps less in marketing individual radio stations. To that end, I applaud what Joel Hollander has done in breaking entirely new ground with his unprecedented ad blitz in Ad Age.
Who takes the lead in this marketing effort?
The largest companies, led by Clear Channel and Infinity; and the RAB. And we need to be far more strategic as an industry in competing more effectively with our true competitors.
How important is it to have a state-of-the-art audience measurement methodology, and is the Portable People Meter it?
It's important to have a state-of-the-art measurement tool that has advertiser acceptance. However, I am gravely concerned that a substantial amount of listening will be lost because there won't be anywhere close to 100 percent compliance among people meter users. Meter wearers will inevitably forget to bring the device with them on certain days, or will not record listening in the bedroom or bathroom, and so forth. While the diary may not be shiny and new, it has been scientifically validated over many years. We need to make sure that we have the right new mousetrap before we take the plunge.
Should the radio industry just be content with the diary until an acceptable electronic measurement system finally is put into place?
I'm very interested in the Clear Channel RFP process. John Hogan did this industry a huge favor when he drew a line in the sand and said, “We're going to look at alternatives.”
Radio's greatest strength is thought to be its local flair, but how plausible is it for 10,000 commercial radio stations all to meet the needs of this “localness” and still be relevant to the listener?
Well, that's a loaded question, isn't it? The fact is, we need to deliver compelling content to listeners to make radio an important part of their entertainment diet. That will mean a strong commitment to localism and the unique content that only local stations can provide on a 24/7 basis. But it will also mean continuing investments in compelling new music and spoken-word product, as well.
Can we make these investments when we're so conscious of what Wall Street thinks?
We over-rate the impact of Wall Street. Every group broadcaster I speak with is very focused on this issue. We all are looking for opportunities to enhance the content of our radio stations. In just the past year, Entercom has launched several new Mike, Charley, or Simon formats; in addition, we have launched several new progressive talk stations, we put on a new 24/7 local sports station in Milwaukee, and we have added a variety of strong new personalities at stations around the country. We also continue to look for ways to make our existing brands better for our listeners.
Last summer, Entercom and Clear Channel entered into an unprecedented emergency broadcasting arrangement known as the United Radio Broadcasters of New Orleans. In retrospect, what would you like to say publicly about this endeavor?
It has been an extraordinary few months and the achievements of our people in New Orleans have been unbelievable. The personal losses are unfathomable, both in terms of property and community, as is the degree of disruption to peoples' lives. Katrina demonstrated radio at its very best. WWL supported by the combined resources of the URBNO team, was the primary lifeline for the people of New Orleans before, during, and after the storm. I could not be more proud of what our people have accomplished.
Last month, a significant industry-wide push to implement HD Radio was announced. What do we need to do to get it right the first time?
First, we will see a dramatic acceleration going forward. There is an extraordinarily broad and deep commitment among radio broadcasters to drive the adoption of this technology. There will be a huge amount of promotional support for HD Radio, and a rapid roll out of new multi-cast channels that will make HD a must-have for consumers, both in their cars and in their homes. By providing additional station choices, HD Radio will give radio a huge boost. The key is ensuring that the multi-cast formats are truly new and different. If we fall into the trap of merely bastardizing existing formats, we will add no value to consumers' perception of local radio.
You can't just go in and flank your competitors' ACs…
That would be an unmitigated disaster and would mean that HD Radio would never move off the shelf, nor would it be endorsed by the consumer electronics manufacturers or automakers.
Radio has been outmaneuvered by the marketing people at XM and Sirius. What does the industry need to do to reverse this image problem?
Satellite radio definitely has benefited from an extraordinary hype machine, and I give them a ton of credit for their public-relations efforts. They spend more in PR in a week than this industry spends in years. Having said that, 96 percent of Americans listen to free local radio every week, and research shows that only a very small fraction of them has interest in purchasing a satellite radio. So, as long as we deliver a compelling product to the listeners for free, the market for pay radio will be limited. The challenge for us is continuing to make the investments in our products to make them more compelling. That includes great localism, diminished spot content, compelling new formats and personalities, and marketing the virtues of free local radio.
What do you foresee as radio's single greatest challenge in the next few years?
The challenges are in three buckets: content, radio's appeal as an advertising vehicle, and technological change. On the content front, we must continue to make radio more appealing in an increasingly competitive market, which requires us to creatively reduce spot loads without harming the business model, and to enhance our core product. On the sales front, we must continue to invest in research and marketing, to educate advertisers, and to ensure that they recognize the superior efficiency and effectiveness of radio, because we still do not get anywhere near our fair share of advertising when compared to our competition. On the technology side, we need to ensure the rapid, successful adoption of HD radio, and to ensure that digital AM and FM radio is a core part of the wireless entertainment devices of the future.
Both the NAB and RAB are changing leadership within a few months of each other. What would you urge the leaders of both organizations to consider as their number one priority for this industry?
First, it's important to recognize the enormous contributions that Eddie Fritts and Gary Fries have made to our industry. They have been outstanding leaders and terrific spokesmen for radio. As we change the guard, I'm very excited about David Rehr and what he will bring to the NAB, and I have great confidence that we will be welcoming a terrific new leader to the RAB, as well. David and his RAB counterpart will need to be highly visible spokespeople championing radio's cause on a broader platform than has traditionally been the case.
What is the most critical change radio needs to make in order to maintain its position among consumers and advertisers?
It's essential that we enhance the perception of the value of our medium. We have been unfairly slighted by our critics and our competitors, which has had some impact on advertisers' perceptions of radio's worth. It's grossly unfair, and we need to do a better job of articulating what makes radio such a great medium for advertisers.
We also need to remind ourselves of how extraordinary our business is. If tomorrow somebody invented a medium that reached 96 percent of Americans for close to 20 hours a week, was ubiquitous, 24/7, offered dozens of content choices and was on the verge of nearly doubling those choices, and priced its commercials for less than competitive media that reached fewer people, it would be the hottest new advertising vehicle of the millennium. We all need to do a better job or articulating our strengths and recognizing our medium for how terrific it is.
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