November 26, 2015

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04/07/08 Bullish On Radio

A few weeks ago I was wined and dined by a group of bankers who are planning to put up a fund to buy radio stations. They wanted to know if I am bullish on radio. Hereís what I told them:

Question: Should we invest in radio?
Answer: Not if youíre going to overpay, then build profits through cost-cutting. Weíve been there, and there are no more cuts to make. The industry is hopefully at the end of this vicious cycle, which has damaged the self-esteem of our people and eroded the time spent listening by 25 percent in the last 10 years (though cume is only off a few points).

Question: Why is radio revenue so far off?
Answer: It appears that the negative trend for radio spending primarily has been at stations owned by companies that are cutting costs. Other stations, mostly independents, claim that business has been fairly strong (at least prior to the recent economic news). Why? The cost-cutters have de-motivated their personnel, cut sales commissions, and stopped promoting themselves to their audiences. Even though they ask others to advertise with them, they are not advertising themselves. They have cut out localism and, in too many cases, eliminated personalities ó or anyone live. Stations with happy people, happy sellers, relevant personalities, strong localism, and consistent marketing are thriving.

Question: If you were on our board, what recommendations would you make?
Answer One: Fire your CEO and let someone else try it for a while. If you acquire a lot of radio stations, spread the risk. Do you really want all decisions impacted by one person, one research company, one corporate programmer, one sales director, and one trainer? Set up teams, and donít force them to follow company

dictates. Even the best people are not right 100 percent of the time. I like the concept of regional presidents with their own teams.

Answer Two: Invest in your radio stations. The cuts arenít working. I know itís easier said than done, but at least experiment with one region. Hire some quality salespeople and donít shoot them after 90 days. Give them a salary and donít make them survive on straight commission. Get deeply entrenched in your local communities. Invest in marketing and hire local, live, relevant personalities. Stop trying to control programming from a national level. Hire programmers and let them do their job. They probably know more about your market than anyone else.

Answer Three: Listen to your managers. You may think theyíre stupid because their stations are not performing, but perhaps youíre the problem. Act on their ideas, give them a budget that they buy into, and tell them to figure out how to succeed. Donít saddle them with rules, reports, and paperwork. Remove the negative pressure, and give them positive feedback.

Question: What about the Internet?
Answer: Invest heavily in your interactive department. Hire some 20-somethings and let them invent ways for your station to offer online, mobile, and video content. Your advertisers are increasing the demand for interactive, measurable offerings. Find new homes for your content. Youíre not in the radio business, youíre in the information, communication, and entertainment business. How you deliver it is no longer relevant.

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