November 29, 2015

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10/30/00 Dot-Com May Be Dead, But RADIO Isn't
Dot-com is dead [June 12, 2000, I Hate To Say ‘I Told You So,’ But…]. In the January 10 issue [Net Economy 101],
I warned those who were forecasting big increases that they should not expect the dot-com ad craze to continue and that they should look at that income only as gravy to "beat their numbers." Well, the music has stopped, and there aren't many chairs in the room. We are not likely to see a continuing surge of dot-com Radio ads (or other-media ads). Unfortunately, many public companies in Radio were counting on the revenue and are not "meeting the quarter."
At the NAB, a major group head, whose stock had just plummeted, told me: "Yesterday I was a prince; today I am a dog." I bit my tongue out of respect.
An analyst told me last week that "Radio's big ride was over," and he was recommending that Radio stocks be removed from his firm’s portfolio. So, what is in store for Radio if we are falling from Wall Street favor? It depends on your perspective.
In fact, this could be Radio's great, shining moment. I certainly hope this one analyst is wrong and that the world will continue to support Radio stocks, but I don't think Radio is having any more problems than most industries on the market. Nevertheless, those in trouble (as perceived by Wall Street) will do what it takes to increase performance. That probably means more consolidation and more operational cuts. What it also means is that we may see acquisition of some bigger players not affiliated with big media companies. I fully expect AOL-Time Warner to make a big Radio play. I can also see a company like NBC acquiring a major Radio player. That’s good news, because the smart major-media players don't grow their companies by cost-cutting initiatives. They understand that quality product drives
consumer adoption, and that drives revenues. This could be awesome for Radio, because we could see a return to the things that make Radio great: fantastic, entertaining talent; eye-turning, ear-grabbing promotions; and all-around great Radio. Radio could become more fun than ever, especially with a former Radio guy like Bob Pittman at the helm. I for one would like to see this happen.
Radio is an incredible business that never got the respect it deserves, and I believe our shining moment is yet to come. A lot of people have been working a lot of years to promote our business and break through the "under 10 percent" barrier. As we have 90 percent of Americans listening 20 hours a month, and 75 percent tuning in every day, we have a powerful story to tell. Wall Street is all about cycles and hot and cold categories, but it often has nothing to do with reality. Great performing companies and industries still get bad stock rides.
While some see Radio stocks’ downtrend as a bad thing, I think it forces change — we look at what we’re doing and seek a better way. Difficult times always result in great innovation. Radio's shining moment is ahead!

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