Home
August 30, 2014

Publishers' Notes

Subscribe

Subscribe To Daily  Headlines

Streamline Press

Industry Q&A

Radio Revenue

Market Profile

Calendar of Events

Reader Feedback

Columnists

About Us

Contact Us

Advertise
STREAMLINE PRESS

 

 

First Mediaworks


Peter Smyth: Radio Executive Of The Year (01/08/07)
By Editor-In-Chief Joe Howard

Peter Smythís enthusiasm for the radio business is infectious. Talk with him about the state of the industry, and listen to the pace and volume of his speech increase as he outlines with zeal the factors that he believes make radio as vital and powerful a medium as any in media today. He truly believes in radioís ability to serve both listeners and advertisers, and has been increasingly taking that argument to the streets since becoming president/CEO of Greater Media in 2002.

For example, his company is a charter member of the HD Digital Radio Alliance, and he sits on the groupís advisory board. And with his recent appointment as chairman of the Radio Advertising Bureau, Smyth now has the opportunity to extend this enthusiasm ó and his ideas for improving radioís standing in the advertising community ó across the entire industry.

ďThis is a very exciting time,Ē he says. ďThe message to everybody in radio today is: Donít expect just one company to step up. A thousand different people in the radio industry must stand up and say: Iím going to take my share of this medium, Iím going to introduce this type of interactive marketing, this type of creative program; whatever it may be.Ē
As for his own company, Smyth carries on the tradition of employee empowerment thatís been with Greater Media since its inception in 1956. ďI want the men and women who work in my radio stations to go home at night and say: ĎIím glad Iím part of that team, Iím proud to be a part of that company.í The greatest investment is making sure they feel better about themselves.Ē

A forward-thinking leader, Smyth is steering Greater Media toward electronic audience measurement for radio. Starting this month, Arbitronís Portable People Meter becomes commercially available in Philadelphia, one of Greater Mediaís key markets. And Greater Media is on board. Smyth is also a believer in expanding into online initiatives such as podcasting and interactive features on station websites.

Itís that careful balance of eagerly pursuing growth while also looking out for the people making it happen that sets Smyth apart as an accomplished leader. And itís his bold vision for the future of radio, and his efforts to make a positive impact on the business, that make Peter Smyth Radio Inkís Executive of the Year.


RADIO INK: What is your broad outlook for 2007?
PETER SMYTH:
I think í07 will be a good year, but not the best of years. It will be a transition year. It will be the year we cross the digital divide, the year we start to find the intersect between the interactive world and the broadcast world, and how these two benefit our customer base. Radio has been the premier provider of a community setting since its inception; we have to find the economic benefit between those two worlds and monetize them.

The biggest challenge we face is to take back radio and make it a primary medium in the marketplace. We have to come to the realization that weíre no longer just in the radio business, weíre in the audio entertainment business. The more we grasp onto that, the better off weíll be. Radio must take off the blinders. We no longer can have a short-term view of where this industry is going; we have to look at it long term. Collectively, we must be the unabashed advocates of the power and the strength of American radio. Itís got to start at every individual station across the country, from the mid-markets all the way up to Madison Ave. Itís a time of innovation, vision, and boldness. These are some of the most exciting times weíre going to experience.

This is the year of the operator. You must have smart operators who really know what theyíre doing. You must be willing to embrace the vision of the men and women who work here, and take the lid off creativeness and let the creative juices start to flow. There is a fine line between art and science. We can rely only so much on the science, then we have to let the art take over. HD2 channels offer a fabulous opportunity to do that.

RI: You mention taking a long-term approach, how do you quantify "long-term"? And how is taking a long-term approach different for a private company, which doesnít have to answer to Wall Street every 90 days?
PS:
You canít change anything in 90 days. We deal in a business of attitudes, and you canít change a perception or any fundamentals in 90 days. Looking at a business in those terms is just not fair, and itís not objective. Being a private company, you have to be able to look at the business in terms of 12 to 18 months. The next 12 to 18 months will be crucial for us. Weíve got to reinvest in infrastructure, marketing, research, and talent. We have to put money back into the marketplace to make sure that weíve reaped the benefits.

In Philadelphia, WMMR has had an incredibly successful run, and so has WRIF in Detroit. But the reason that those radio stations do so well is because we have great management there, and weíve invested in talent, research, and marketing. Weíve actually built brands ó and when the men and women who built those brands go on to do whatever they do next, those radio stations should continue to survive. Thatís what has to happen in American radio. Radio stations have to be built with strong foundations, understand what section of population they own, and move with that generation. You cannot cut your way to profitability; you build your way to profitability. If we donít invest in our HD channels, our technological facilities, and the men and women who actually run, program, and sell these radio stations, then we are at peril.

RI: With Clear Channelís privatization deal and the Cumulus/Susquehanna deal, private equity investors have acquired a considerable stake in radio business. How will this trend affect the industry?
PS:
The only way that private equity money will benefit the radio industry is if these investors hires great operators who understand the value of the media and what is necessary to make these radio stations successful. If they donít have that appetite, then theyíre in the wrong business; itís not going to work.

RI: Do you think they do?
PS:
The equity firms coming into our industry ó and thereís more and more of them ówant to get a good rate of return for their investors. They are looking for anywhere from the high teens to 20 percent rates of return. The only way you can get those rates of return is by putting money into the things we just talked about, and giving these brands chances to grow. The private equity firms have to look at these products for the long term. If they do that now, they have a greater chance of achieving the rates of return theyíre looking for than if they try to starve these radio stations with no investment whatsoever. They have to look at radio stationsí need to breathe, and must make smart investments. That includes investing in talent. This is a great opportunity for stations that lost Stern to develop great morning shows.

This is also a great time to invest in different types of advertising. Television has traditionally been the medium of choice for most radio stations; maybe thereís a more cost-efficient way. Research the market, understand the radio landscape, understand how your radio station fits into that niche it services, and how you are going to super serve that audience.

What will help lift radio in general is having stronger radio stations in some of our top markets. People must view radio as a primary medium ó not a medium that is constantly being sold, or flipping formats, or that isnít embracing growth and investing in new products and technology.

RI: Does investing in electronic measurement fall under that category?
PS:
There has to be some type of electronic measurement. Our clients are telling us that they want to see some accountability on the rating structure. We have to move to one form or another of electronic measurement. We live in a digital age. We live in an age when a UPC code can tell us how many cases of Tasterís Choice moved last night. Networks can look at television programming the night before and see if The Office is working or not. They can look at all these different metrics and see what is working and what is not.

When you read a ratings diary, you are looking at history; youíre looking at what happened, not whatís happening. Digital technology will lead us to more information sharing Ė weíll have the ability to send maps to individual GPS systems, and to monetize music downloads. Once we stop that technology growth, weíre stifling the industryís growth, the whole sectorís growth.

My company chose Arbitron, because I feel today that it is the best product I can find for our company and for what our clients are telling us. For my peers in the industry, thatís an individual decision. Emmis, Bonneville, and CBS all felt it was good for radio to move now with Arbitron. I respect what Clear Channel is doing in their RFP. If they can bring that to closure, it would be terrific to have some competition in the marketplace.

For the past six months weíve been educating the men and women in Philadelphia about the programming and sales aspects, and how we are going to deal with that. I donít think managers should react when it happens ó itís the reaction to those actions that I worry about. We made this commitment ó the harder part is how we as a company are going to adjust our selling, our training, our market presence on the street. How are we going to program our radio stations to win in this new environment? What are the tools that these men and women need to win? When I talk about investment, thatís what I mean.

RI: This month, one of your key markets ó Philadelphia ó will become the first to commercially launch the PPM. Are you worried about the short-term effect that the PPM may have on your business?
PS:
Sure, Iím a little anxious. But if there is a dislocation in the first or second quarter, Iím prepared to see that through because I have to think about the long-term impact of PPM on my business. Will it show that the cumes in Philadelphia are twice the size they are today? Will it show that the way we sell radio ó or the commerce of radio ó might change? Maybe all of the dynamics have to shift. But that dialogue should have been taking place parallel to all this talk about PPM. My biggest questions to Arbitron President/Sales and Marketing Pierre Bouvard and CEO Steve Morris were: What will happen in the marketplace? Whoís training the salespeople of tomorrow to market this? Whoís teaching the agencies and the clients and the decision makers how to interpret this data? Thatís what we have to get our hands around. We must recognize that there might be a paradigm shift in the way radio is viewed in the marketplace.

Weíre taking a $20 billion business and turning it upside down. Are we taking the time to educate our staff ó and our clients ó how to use this data?

RI: How are your sellers reacting?
PS:
Theyíre very excited. There is some trepidation, but they are very encouraged because they are being informed about whatís going to happen, to the best of our knowledge. We are living in a brave new world. Iíve always said, donít be afraid of technology, embrace technology, just push through it. We might fail, but donít be afraid to fail, because if you donít fail, you will never succeed. It sounds bold, but itís got to be bold, because these are bold times.

RI: As the new RAB chairman, will you take steps to promote the PPM, either to radio groups or advertisers?
PS:
I donít think it is the RABís position to endorse any technology or supplier. Thatís not their job. The RABís job is to make sure that the key account management and the top eight key advertisers in America today know the value proposition of whatís going on in our medium. If you went to the heads of some of these companies and big agencies, they wouldnít have a clue. I am going to make sure that we talk to these people about how strong an industry we have and stop apologizing for being in the radio business.

RI: How about RAB-sponsored training programs for sellers in the PPM world?
PS:
I think thatís Arbitronís responsibility in the beginning, but when itís adapted the RAB should offer training. The RAB does have a very good sales and training program, but it has to be modernized. We have to get better in how we teach people what the interactive world is all about. I think we can do a better job. RAB President/CEO Jeff Haley is a brilliant young guy with a lot of great skills. He does not come from a radio background, which is intriguing in itself. He understands how to market a product, what the task in front of him is. He also understands why private equity firms are diving into this business ó because they know there is a lot of value here.


RI: Whatís wrong with local business? Why is it weak?
PS:
I donít think we sell the value of radio. Weíre concerned that it is too expensive. Radioís been perceived as a ďcost-efficientĒ media. Cost-efficient means cheap, and I donít want to be cheap. I want to get paid for the value that I deliver. If the PPM does anything, I hope it shows people how this medium should really be valued. Somebody told me that a morning drive spot in New York goes for 200 bucks. I find that hard to believe. But if it is true, and there are 10 million people in New York, would you pay 200 bucks to reach 10 million people? Thatís the deal of the century. Weíve got to get a better understanding of the value proposition and sell radio for what itís worth. There is nothing wrong with getting paid for what you deliver ó 280 million people a week. If youíre selling product for people, they will pay for it. If youíre coming in with creative solutions to marketing problems for companies in your local marketplace, they will pay you for it, because you are making their cash register ring. Itís no longer about just selling spots; you have to understand the marketplace and economics, and you have to understand that we are in the business of selling product. Weíve got to bring more people into the radio pie, and bring different sources of business in here.

RI: What are some of the initiatives youíd like to launch at the RAB to help improve the image of radio?
PS:
The first thing we have to do is speak from one voice to the right people. The RAB has done a good job to this point, but now we have to make sure we run it like we run our businesses, and adapt the same key account management structures that we have in our own organizations today. We must touch base with the chief marketing officers of some of the major companies in America today óWal-Mart, Target, McDonaldís, soft drink companies, automotive companies ó about why radio is the solution provider. We canít just say hey, weíre in the radio business, weíre cool, weíve got the tallest towers and we reach all these people. We must understand their business, ask for a homework assignment, take a problem they are having and resolve it using radio as the primary medium. We have to take a marketing approach, and become partners with these major corporations instead of expecting that they should buy us because weíre ó because weíre what? Itís not the quantity of stations you own, itís the quality of station that you have and its ability to move product. I want to make sure that we are driving more funds into radio. The litmus test of success should be: Did we grow the radio pie? We have to develop a clear vision of where weíre going and a clear strategic plan to achieve those objectives. I want people to say weíve got to do radio, before TV or anything else.

I also want to make sure that training is still important for a lot of stations. Iím going to serve as RAB chairman the same way that I run my business.


RI: How important is the Internet in radioís marketing mix?
PS:
Most advertisers today are looking at the Internet and saying to themselves: How does this work? I know I have to be here, I donít know why, but I know I have to be here. It is our job to say explain why they should use it when it is applicable and why they shouldnít when itís not. But I donít believe anybody who tells me that they have the silver bullet to how the intersect between the interactive world and broadcast is going to work. Streaming was supposed to make millions. Well, stations were making about $69 a year and spending fortunes. Streaming is very important, but it is only part of the mix. Podcasting and blogs are also important. Those are the things that have to be built out, where the solution for the client is best settled in both those worlds.

Having a two-way relationship with the audience is important, community is important. Our rock stations are all doing fine because they have great street presence. They have great interactive websites where people can participate in the whole rock experience. For us to grow this industry, weíve got to understand how people use our products.

RI: Is making money through the station website a priority?
PS:
It is important, but the website has to have an interactive role. It has to have a digital music store, video, podcasts that I can download from a great morning show bit. I want to go there to find out more about different types of music or artists. The website just canít sit there; it has to participate in the listenerís life. It has to bring a benefit to a listener. The more engaging it becomes, the more lucrative it becomes. I think WMMR gets 4.2 million hits a month. That is a big number.

RI: Almost 40 percent of Clear Channelís radio stations are on the market. What does this say about the radio business? How will this change the industry?
PS:
Iíve never believed that the number of stations you own is that important a metric. I respect what they are doing. Theyíre in New York, Chicago, Los Angeles ó thatís about $2.5 billion worth of revenue right there. If you do a stellar job in the top 20 markets, youíre going to have a great company. There is nothing wrong with the other markets, but you want to make sure that your management is positioned so that it can bring the most attention and the most resources to the radio stations where you can get the best rate of return for your size operation. My company may have 20 radio stations, but it generates over $230-$240 million. What Clear Channel is doing makes sense to me. If I had a company that size, I probably would have done something similar. It is not the quantity you own, itís the quality.

RI: Do you think they just had too many radio stations?
PS:
I canít judge them. I donít know the inner workings of the company. It takes just as much time to run a station in Peoria as it does in Detroit.

RI: Will Greater Media buy any of those stations?
PS:
I donít know. Weíd like to look into the southeast, southwest, Washington, DC. If an opportunity presented itself, we would. Our capital structure is strong, and our balance sheet is clean. Most of our stations are all paid for, so weíre probably one of the companies that could participate in this without any problem. If the right opportunity presents itself and Clear Channel wants to do something with us, Iíd welcome a conversation with Clear Channel CEO Mark Mays. I would never take this company any bigger than 30 stations, tops. But they would have to be strategically placed.

RI: Do you expect more private equity investors to move in?
PS:
Diversity is important to our industry. It brings back more creative people, different types of formats, innovative ideas. It will be an interesting year.

RI: What are the odds that some of the existing groups will buy up a chunk of the Clear Channel stations? Do you think that some company out there is going to grow by 50-75 stations?
PS:
I would tell them to go back and look at the stable of stations they already own. People are always readjusting their portfolio of stations to make sure they are properly suited to the skill sets they have. Make sure you think it through. Donít just think about being able to say in a magazine that you own 2,000 radio stations. Can you run them effectively? Do you have the infrastructure that will bring you and the people who work there a profitable experience? Those are the things that youíve got to think through. Can you do all of that and still run a successful company? Capitalize on your strengths, manage to your weaknesses.

RI: You mention that markets can only sustain a certain number of stations, but with HD, the industry will have many more stations. How will that play out?
PS:
I donít know where the endgame will be with HD. HD provides a tremendous opportunity to bring in diverse voices, and I see HD stations augmenting the community and filling niches. But what role will they play four or five years from now? We as broadcasters must figure out the best application for them. They will be incredible in terms of pushing out data and receiving data back. The music today is just the first generation of HD. The 2nd and 3rd generation will make radio even more important in the community.

RI: So, will HD thrive more with data distribution than with music?
PS:
First weíve got to get the distribution. We had a great sale in Detroit with Radio Shack, and we are starting to see the sales pick up. The automotive companies are getting more receptive. In the beginning it will be music, but all of a sudden youíll start to see channels used for reading, where authors will come in and read from books for community groups. And then they will be used for interactive applications, exchanges of data back and forth.

RI: And where will the money be made?
PS:
I donít think the HD2 channels will ever be marketed the same way traditional radio is. You wonít hear units per hour. Youíll hear, ďThis show is brought to you byÖ.Ē like the PBS model. The experience today is totally different. When people first experienced FM in the í70s, it was this underground funky thing that didnít run any commercials, it just played Jimi Hendrix. These channels are coming on without any commercials, and the HD Alliance is going to keep them commercial-free for the time being. That is very important. The way they will be monetized will be a lot different. The economics will change demonstratively.

RI: It has been over a year since the HD Digital Radio Alliance was formed. Back then, the plan was to keep HD2 stations commercial free for an unspecified time. Can you give us an update?
PS:
The original plan was to go commercial-free for 18 months, and I think weíre going to extend it for another year. CEO Peter Ferrara is doing a fabulous job. CBS Radio CEO Joel Hollander, Mark Mays, and I serve on the executive board, and weíve been working hard with Peter, traveling around the country, and talking about the value of this technological advancement. It has been fun. We work well together. Peter Ferrara really deserves a tip of the hat.

RI: What are you hearing from the receiver manufacturers and the automakers?
PS:
Iím hearing very positive things. Weíve got great response from the manufacturing base. On Black Friday we were selling them for $99. The Polk stuff is great. The Boston Acoustics stuff is great. The auto companies are starting to recognize that this thing is for real. Theyíve got to see that you can build a very significant distribution platform, which Peter and his crew have done. The radio industry as a whole came together and put up over $200 million in marketing muscle, and weíve spent a lot of inventory on this. It is not like some other incarnations where the radio industry would come together for 22 seconds and then they would all go shoot each other. We all realize the importance of this, and we all realize the applications down the road are far, far greater than what we are talking about today. We have to be in this space. We are a digital medium, and the sound quality is just incredible.

RI: Greater Media has been actively rolling out its HD2 channels. What have you learned so far?
PS:
Itís expensive. You have to manage an HD station just like you manage a regular station. When you meet with your regional guys, make sure they are committed to it. Make sure they assign people to it and commit economic resources to it. Donít think that once the engineers finish building up the tower you can walk away from it. The challenging part is programming it and assigning warm bodies to it so the user has a positive experience. Do research, have brainstorming sessions. Ask yourself: How can we do it better? What are we doing right? What are we doing wrong? We do labs with the listeners to see what they think. We bring people into our buildings to talk about it. What do you like about it? What do you dislike about it? How is the audio quality?

If you are going to be in the business, then be in it. If you are going to commit, then commit to it. It is a constant investment. Weíre not there to play, weíre there to win. When I first got into it, I thought I can just build these and thatís it. Then, sitting around with some of our general managers one night, I said weíve got to win this thing. Weíre going to have the best-sounding stations in the country. And they said there is nobody listening. I said there is nobody listening today. That gives you time to screw it up, so when they are listening it will be great. And that is what we did. Next year I want to have a Marconi award for the best HD2 channel in the country.

RI: What do you think of the rumors about XM Satellite Radio and Sirius Satellite Radio merging?
PS:
I have read all the rumors, but who knows what is going to happen there? I think that business should be video-on-demand. Thatís the best application. Iíd take those 120 channels and burn them down to 10 video-on-demand channels beamed into the back seats of cars so parents could have their kids watching Bambi in the back seat. Would a young parent with a screaming two-year-old pay $3.95 to shut the kid up? In a heartbeat. I think that is a better application than what they are doing now, because people are tired of paying for things, and this next generation thinks things are free.

RI: Are you concerned about how the recent shift in political power in Congress could affect the radio industry?
PS:
As long as the Republicans control the White House, there is some check and balance on which bills will pass, and which bills wonít pass. A lot of centrist Democrats were elected, so they have to be very careful that the liberal wing of the party doesnít hijack it. Because if it does, and Congress gets bogged down with endless investigations, it will be two years of nothing until the next election.

RI: Do you expect the indecency debate to crop up again?
PS:
I think that will eventually become a First Amendment issue, right or wrong. Here is the problem: Itís very hard to get a clear-cut vision of where it is supposed to be. Iím not trying to be a wise guy, but how do you define indecency? According to their standards, I donít know what it is. But the fine amount ó $325,000 per utterance ó that is pretty definable. But does one complaint letter mean that we get a $325,000 fine?

RI: The FCC is conducting another review of its ownership rules. Do you expect Congress will once again get involved?
PS:
I think the temperature is going to increase dramatically, but I donít think anything will happen. Itís going to be very difficult to get some of these bills passed, because I donít think the centrists want to deal with the liberal wing. There are going to be a lot of competing agendas, so it will be difficult to get a lot of these bills through. Some in Congress think that there is too much concentration, but I think it would be very difficult to roll back the limits because youíd have to unwind a lot of companies, and create a lot of dislocation. I donít see the rules being repealed, and I donít see them being expanded, either. I think itís the status quo.

RI: The local market ownership caps and the Arbitron-based radio market definitions are back on the table. What do you expect will happen?
PS:
With market definition, I think it goes back to laws of nature. I never thought the Arbitron method was the right one. The physics of radio should dictate that. FCC Chairman Kevin Martin is going to bring up a lot of different things and the rules will all get re-introduced, but I think theyíll all end up back in an appeals court. It will be a challenging time on the legislative front, thereís no doubt about it.

RI: It seems that the harder the FCC tries to set clear limits, the more questions that arise.
PS:
As long as you can continue to appeal them and get stays of the rules, you will never get the proper balance. Once you get to four or five stations in a marketplace, the next three or four are used as spoilers. They decrease the price structure of the market, and you cannibalize yourself. There are only eight basic formats, and then there are flankers of that. When you get into eight stations in a market, it gets hard to run them. That is to the detriment of radio, so maybe you have another operator in the marketplace. I donít like the fact that the government can come in and tell you youíve got to do this or that. Greater Media just went through it here. I had to get rid of one station in Boston, and I think it is ridiculous. Kevin Martin will be under a lot of pressure, and people will be pounding on him to do certain things. But I donít foresee major changes.

RI: It was only the numerical limits that the court remanded, so all the FCC has to justify are those limits.
PS:
But I still donít think they will get it done. What have they gotten done? Not a hell of a lot.



Comment on this story

  From the Publisher 

















<P> </P>