November 29, 2015

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First Mediaworks

Doing It All: Russ Withers Combines Industry Involvement With Local Commitment (6/18/07)
By Editor-In-Chief Joe Howard

As a college student, Russ Withers landed his first radio job at KGMO in Cape Gerardo, MO. Today, he owns that station. Many in the industry can justifiably lay claim to deep roots in radio; few have made the journey from employee to owner of the same station. But for Withers, the journey wasnít about returning to where he started with something to prove; it was about serving a community that he cared about, and connecting with people he knows. Itís the same commitment that has guided him during more than 30 years of radio station ownership, and has led him to become one of the industryís most-respected and well-known independent broadcasters. In fact, in 2005 he was named broadcaster of the year by the Illinois Broadcasters Association, and in 2006 was given the same honor from the West Virginia Broadcasters Association.

A key to that success, Withers says, is the freedom and agility that comes with standing firm as an independent owner. "Six people could own one or two radio stations, but as you get more familiar with what is going on, five of them are playing golf and the other guy is doing the work. And theyíre sitting out at the country club complaining about the job he does! I decided it would be better not to have five or six people, so you donít have to waste the time to talk. If you want to do something, you can do it."

When it comes to industry involvement, however, Withers gets right in the thick of it. Heís vice chairman of the NAB Radio Board, and for years heís been the leading fund raiser for the NABís Political Action Committee. Heís been so successful, in fact, that the group retired the award it gave to its leading PAC contributor after Withers won it an astonishing 12 years in a row. "Itís something I believe in, because thatís the motherís milk of what makes this thing work."

What makes things work at Withers Broadcasting is the ownerís commitment to community service, the people at his radio stations, and the radio business as a whole. Elsewhere in this issue youíll fine a roundtable discussion ó titled Radioís Foremost Independents ó with a selected group of independent radio company leaders who share their insights on what makes a successful independent operator. Through his efforts on both the industry-wide and local level, and with the insights he shares here, Russ Withers proves that he is to be counted among radioís foremost independent radio broadcasters.

RADIOINK: What made you want to get into radio?
It was something I wanted to do since I lived in Cape Gerardo, Missouri as a kid. When I was 10 or 11 years old there was one radio station there, and I was intrigued by it. By the time I was a freshmen in college, there was a second station, KGMO; I went out there every day for a year and applied for a job. Finally, when the hours got longer in the summertime, they needed people, and I was a warm body. I went to work there in 1955, and today I own it, and that gives me a feeling of accomplishment. In 1972 my brother was on the air at KGMO and wanted to buy it, but none of the people he talked to could arrange the financing. He got me involved, and I was able to get the financing in place. I donít want to make it sound simple or seem braggadocios, but thatís how I got into the business.

RI: Weigh the challenges you faced when you first became an owner versus what a buyer would confront today.
For one thing, there is a greater understanding today of the value of broadcasting, and certainly a better understanding of what cash flow is. At one time, if you didnít have earnings per share, banks didnít care; you had to have a net income. They didnít understand what EBITDA was, and if they did, they ignored it. Also, there are more stations, good and bad. When I bought KGMO, there were two radio stations in Cape Gerardo; now there are 13. Weíve had the aggregators that put groups together, which they couldnít have done before, and now they can. But great broadcasters that give good service and good localism will be successful, and thatís always been the case.

RI: How many radio stations do you own?
Thirty. My daughter Dana has 10, and I lease a couple of those from her.

RI: What do you make of former Paxson CEO Dean Goodman buying close to 200 of the stations Clear Channel is divesting? All of a sudden, heís a top-five owner in terms of station count. Are people like him shepherding in a new era for the independent broadcaster? Will they become more powerful in the years ahead?
Dean is unique. He has a tremendous radio background ó he got started in radio, and heís a local radio guy. All the stars were perfectly aligned. He was looking for stations ó and thereís capital chasing people who are going to do that ó at the same time that Clear Channel was divesting 400 and some odd stations. But I donít know how many other Dean Goodmans are out there who have access to that kind of capital and can put together that many stations in one fell swoop. A Clear Channel sell-off doesnít happen that often, either. He was in the right spot, with the right tools, and access to the capital he needed to get it done.

RI: Is Clear Channelís privatization effort a sign that the day of public radio companies is waning?
No, I donít think so. Clear Channel, in effect, had two broadcasting companies under one umbrella ó the major markets and the smaller markets ó and theyíre not the same. Theyíre not run the same, they canít be done the same. There are some similarities, but there is an awful lot thatís dissimilar. Theyíve gotten rid of a lot of the smaller markets that they acquired when they bought Jacor, and I donít think they acquired many smaller markets after [former Clear Channel Radio CEO] Randy Michaels left the company. They didnít sell any large or major markets off, so they basically brought themselves back into a major-market broadcasting company. Theyíre back to where they were. I understood what they were doing, and I thought it made good sense.

RI What are the challenges as an independent competing against companies that have the benefits of scale?
The challenges are there when you compete against anybody. I compete against Regent, against Citadel, against Clear Channel. Do you want the highest powered station in the market? Of course you do. But if youíre doing a good programming job and the listener can pick you up well, they donít care if youíre 6,000 watts, 25,000, 50,000, 100,000. They just want to be entertained and informed.

RI: What can large companies offer employees that smaller companies cannot? RW: They may have more opportunities for advancement. If you have so many regional managers and so many regional sales managers, you can continue to move and grow if youíre with a large company. Of course, itís an unfair analogy because Iím working for myself. The people come first with me, and I think all the companies feel that way. Having met with a lot of the major group operators, I know they really care about their employees, so itís just a case of how well you care about the market youíre in and how fast you can move. Some of them canít move that fast because they have layers of decision makers who have to say yes ó weíre going to do this in market A; and no, weíre not going to do this in market B. If you donít have all those layers ó the local to the regional to the national and then back down again ó you can make a decision in 10 minutes and implement it. It makes for a more strategic, faster-moving battlefield, thatís all.

It is fairly analogous to the major banks and the community banks; even though theyíre a large company and they do well and they mean to take care of their customers, they canít do the job that the community banks do. The broadcasting business and the banking business are analogous; thatís where we are with community radio stations. Look at the job that Jerry Lee does every day in Philadelphia. He just astounds everybody by continuing to be the number 1 or number 2 radio station in Philadelphia, and heís a singleton. But, he and his people have that fervor, that excitement. Itís a vocation and an avocation; they want to make it work.

RI: What methods do you use to retain your best employees?
If youíve got people who have fire in their belly, who want to get out and do it, who are excited about their job and love to come to work every day, thatís the kind of relationship we try to put together. People are like eagles: You find them one at a time, they donít fly in flocks. Iíve got some who are just eagle pluses, some who are just out of the nest, and weíll see if they fly fast and far enough.

For example, Alan Sledge ó whoís a Clear Channel senior vice president for programming ó got his first job working for me. Iím proud of him. I see his mom at the post office, and she always says, ďYouíre responsible for his success.Ē I say, ďNo, Mrs. Sledge, heís responsible for his success. All I did was give him a job.Ē He had to earn it, prove it, and work at it. Not for one minute do I think Iím responsible for it.

Recently a young man came in ó he was 16 years old ó and wanted a job. He was still in high school, and he worked midnight to 6. I called the superintendent, and we got him on a work-school program.

Iím always thrilled when I go into one of my daughterís stations. The people there love her, and thatís exciting to me as a father, but when you blow the whistle, they go over the wall ó and sometimes you donít have to blow the whistle, because they know that wall is there to climb.

RI: It sounds like your daughter is another strong independent owner.
She is, and sheís been going with me to stations since she was six years old. Once we were up in Minnesota where I had purchased some stations ó stations Iíve since sold ó and she was sitting over in a corner coloring. On the way back to the airport she said, ďYouíre gonna change a few things arenít you, like the traffic system?Ē I didnít know she knew what a traffic system was! Then she said there are two girls in there who really want to do a good job; they really want to please you, they want to learn the new systems, and they want to be good employees. She said the other two spend all their time talking to their boyfriends and doing their nails. From then on, anywhere I went I always looked around to see if there was a little girl coloring in the corner! I was really amazed and pleased, because I didnít tell her to do that; she wasnít set up as a stoolie, she just was watching out for her dadís best interest. She is like a sponge. Right now she is the chairman of the Illinois Broadcasters Association. She was elected by her peers on the board ó I didnít have a vote, Iím not a board member ó and I cannot tell you the parental pride I got over that.

RI: Are you a hands-on leader? Can someone from one of your stations pick up the phone and call you?
Yes they can. Anybody at any time can call. One gal who was cleaning the stations at night called me at home at 10 oíclock at night to tell me the vacuum cleaner didnít work; she said she thought Iíd like to know it. She hoped I wasnít offended. I said no, I wasnít, and said tomorrow youíll have a new vacuum cleaner.

I have holiday parties at each of the locations, and weíve had picnics in the summertime where everybody gets together; they donít have to come if they donít want to, but itís just a case of letís do something thatís not all business. And it gives me a chance to know the people, and them a chance to know me, and I donít think thatís all bad.

RI: As vice chairman of the NAB Radio Board, can you talk about the benefits that the NAB offers independent broadcasters?
Theyíre advocates for all broadcasters, but more particularly they offer a good value for the smaller broadcasters. Theyíve got a great legal department. The NAB has taken a lead position to see what we can do about the Internet streaming resolution the copyright royalty board came up with. And youíve seen the letters [NAB President & CEO] David Rehr sent Congress on this performance tax, as he calls it, that labels want to impose on broadcasters. I couldnít do it, and no other small-market broadcaster could lead this charge and make it work, because they couldnít afford it. If the NAB werenít there, not only would you have to invent it, youíd have to do it in a hurry. Not only are there a tremendous number of challenges today, it just seems like theyíve all rounded up at once.

RI: How do you feel about the performance rights, or ďperformance tax,Ē issue?
Weíve had a great relationship with music labels in this country for years. I laugh at the fact that if they didnít want the music to be played, there wouldnít be any payola scandal ever, because they paid to get it played! Iím not saying that was a proper thing ó I would fire anybody who was involved in it ó but theyíve done that to get their records played, to have increased record sales, and to increase the number of people who are in attendance at concerts. So, I felt that we performed. It was a quid pro quo; you provided us the music, and we helped your business and provided you the outlet to sell more records and increase your concert attendance. I think theyíre being compensated. Weíve never billed them or asked for a percentage of the record sales or asked for a percentage of the concert proceeds. And yet, we made it possible for them ó through airplay, which cost them nothing. Nobody feels badly about that, and thatís been the tradeoff that has occurred forever. It is not the broadcastersí fault that the business model for music has changed.

RI: What are your plans for HD on your stations?
I will have the first two HD stations on the air this year, and will sign up to convert the rest of them under the plan that we worked very hard with iBiquity to do; if you can do it this year, you can freeze the cost.

Peter Ferrara did a great job with the Alliance, and itís great to see everybody coming together behind it. HD will be one of the big thrusts of the NAB Radio Board this next year. It will be interesting and exciting to see it roll forward. People whoíve heard it do like it, and what they like most of all is that itís free.

I can see more and more formats that will evolve. I have a radio station in West Virginia that I will convert to HD; there is no full-time Bluegrass station there, but I think youíll find one on our HD channel. When thereís a Bluegrass concert, people turn out for it. Not enough turn out that youíd program a station doing it 24/7, but enough that it would work. If thereís something they want to hear, that will be the impetus to get a better radio. Two or three of the automobile nameplates now are putting HD radios in their cars either as standard equipment or as options, and thatís OK. If itís available, it will be there, and that is only going to get better. And theyíre doing the full court press on that.

RI: Is that an area where the NAB can help out?
The NAB Radio Board is working with the Alliance to do that. Weíve got a new technology committee that is working on that; weíve committed a substantial amount of money over the next five years ó through a unanimous vote of the NAB radio board ó to support the HD rollout. Some of the funds are for promotion, and some are for technology that will make it more economical for every station to convert. Thatís all I can say about that at this time, but this radio executive committee has worked very hard with the support of the full board to make it a better world for radio broadcasters in this country.

RI: The NAB selected you to testify before Congress regarding the proposed merger between Sirius Satellite Radio and XM Satellite Radio, where you faced off against Sirius CEO Mel Karmazin. Talk about that appearance.
I was chairman of Melís affiliate board when he first took over Westwood One, so Iíve known him for quite some time. Heís a great salesman, but I didnít think it was fair for the NAB to look like the bad guy every time. When he said how broadcasters have been fined for indecency, I almost said that most of the CBS fines occurred while you were president! And they did. Mel was cute about that. At the end [Senate Commerce Committee Vice Chairman] Ted Stevens was confused because he thought if they merged there would be room for a new entrant. I cleared things up because Mel wouldnít give them an answer. He kept dancing around it. He made Fred Astaire look like a double amputee!

RI: What are you thoughts on why the two satellite companies want to merge?
What amazed me is that they both fought and did not develop the interoperable receiver. Had they done that, where anybody who wanted to could be a Sirius or an XM or both, there would be no need for a merger, and the public could pick and choose as they wanted. But they didnít do it. There is a market for satellite radio, but not the market broadcasters have.

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