Peter Smyth: The 20/20 CEO [10/7/02]
“I’m very fortunate to be able to be the CEO of one of the last crown jewels in the radio business,” says Peter Smyth, who was named President/CEO of Greater Media this past March. “Peter Bordes founded a great radio company in the 1950s, and his widow and his brother have carried on that tradition. I’ve been given the responsibility to take that vision forward.” That vision currently includes managing 19 Radio stations in four markets, as well as the company’s publishing, printing, and communications businesses.
“We have some of the finest radio stations in the country and some of the best talent. We have a very strong balance sheet, we have nil when it comes to debt, and we have a forward-thinking company,” Smyth continues. “I’m fortunate to have great people around me, and the other part of my time is spent trying to grow this company. We’re not under the same restraints as a public company, where we have to grow a percentage year over year in order to be competitive, but we still run Greater Media like a public company. We measure ourselves with the same standards as public companies, we look at the same internal rates of return, we look at the same capital growth, and we look at the same allocation of our resources. I see this company being one of the top privately held radio companies in the business today.”
After graduating from Holy Cross College, Smyth began his career in broadcasting in 1977 as an account executive with WROR-FM in Boston, where he swiftly attained the position of local sales manager. The following year he was promoted to general sales manager, a responsibility he held for five years until RKO General, parent company of WROR, recruited him to direct sales operations for its New York stations. At WOR in New York, Smyth served as general sales manager until he joined Greater Media in 1986 as general manager of WMJX/FM. Continuing a steady climb through the Greater Media rank and file, he was promoted to senior vice president/regional general manager, group vice president/Radio and, in February 1999, chief operating officer. The following year he also acquired the position of president.
Radio stations under Mr. Smyth’s direction include WMJX, WKLB, WTKK, WROR and WBOS in Boston; WCSX, WRIF and WMGC in Detroit; WPEN, WMGK, WMMR and WMWX in Philadelphia; and WCTC, WMGQ WDHA, WMTR, WWTR, WRAT and WJRZ in New Jersey. Smyth currently serves on the Board of directors for the Radio Advertising Bureau and the National Association of Broadcasters, and is a member of the Country Music Association.
INK: What is your goal for Greater Media under your leadership?
PS: I want to be top five in every market we operate in. I want us to be top five in revenue. My goal is not to be a volume-driven company; I want this to be a quality-driven company. I’m going to run low inventory loads, I’m going to place emphasis on the communities we operate in, and I’m going to make sure those communities are super-served. We’re going to invest in marketing and research, and I want to make sure that the people we hire are here for a long time.
You’ve built a reputation in the Radio industry for caring about the people who work for you. How critical is this to running a successful company?
The philosophy at Greater Media is that the people are bigger than the company. Without the great men and women who work for us, we’d be nowhere. That’s the vision I hold. I want them to be able to come to work in the morning, go home at night, and enjoy their lives, because there’s more to life than radio.
What benefits do you have knowing that you don’t have to answer to stockholders every day?
I do have stockholders, but there is a difference. I don’t have the same scrutiny that my peers do, and I empathize with them. I look at radio as a long-term investment, because radio is a long-term business. You can’t change formats in 90 days. I like not having to worry about somebody calling me up and saying, “We’re going to invest $12 million to build a building, and that investment needs to pan itself out in the next 160 days.” I don’t have to deal with that world. I want to run a company that takes what the founder’s vision was, but it needs to survive its architects. I want to build great radio stations so that ten years from now my replacement can talk about the great things we did to build them. Sure, I don’t have to worry about reporting my earnings every quarter, or my stock price, or those outside pressures. I do have pressures, but they’re self-imposed. We’re very fortunate that we don’t have to be in the public arena, but in order to stay a private company you have to really compete, and that puts even more pressure on us in a different setting.
What about financial pressures? How has Greater Media fared during this sluggish economic recovery?
Our company is doing really well. Our radio stations are having a heck of a year. At the turn our company was up in the double digits growth and our EBITDA was up, and our fourth quarter looks very strong. As you know we have a big holding in Boston, which was one of the top five wired markets in the U.S. In the first 90 days of 2000 we did $5.7 million in dot-com business, while during the same period in 2001 we did $200,000. That was a challenging year. But Boston is doing exceedingly well; the stations are run by Matt Mills and we’re having great success up there. Our company will probably end up top-line about 12-14 percent, which is pretty good. For 2003 we’re going to see growth from 5-7 percent. So I see healthy things coming. I hope that we can add some more stations to the roster in the new year and we’re going to work diligently to achieve those goals.
How do you strike a balance between the numbers you need to see and the numbers your people are capable of delivering?
I want to treat the managers and other people of Greater Media the way I want to be treated. I have certain guidelines I’d like to see, and certain things I’d like to see happen. We’re in very challenging times, and I don’t want to lose good people because world conditions or economic conditions make their jobs impossible. So I sit with the general managers and talk about where the economy is. I look at the Beige Book so I can getter a better understanding of what’s happening in our marketplaces, what sectors of the economy are growing and what sectors are contracting. I take a great look at the mix of business so I can understand it and set realistic goals, because I want our people to win. I don’t want them to be good; I want them to be great—and I don’t want to give them unrealistic goals.
Would your managers say you’re “hands-on” or “hands-off”?
My managers would say “he’s the type of guy who will challenge you to get the best out of you, but give you the opportunity to run your own business and get out of the way.”
How has consolidation—and the change that accompanies it—made running a Radio group more challenging?
With any type of change in an organization, it’s not the first action you take but the second action you take that’s critical. My job is to anticipate what those changes are going to be and understand the reaction to them. This way I can make sure when we buy certain stations in certain markets, or change formats, or when the economics or commerce of radio changes radically, that we’re on top of those changes and we see what’s coming out three or four years ahead. Wayne Gretsky had a great line: when he was asked why he was such a great hockey player he said it was because he always skated to where the puck was going to be. That’s what we have to do when running these companies: we’ve got to know what the commerce of radio is going to look like three or four years out. We have to understand how a consolidated cluster works. We have to understand how cross-platform marketing works. We also have to understand that the men and women selling radio today really need an education in the commerce of economics.
How have you structured your sales departments to best serve your clusters—and your clients?
In each of our markets we have a director of sales that oversees the cluster, and each individual radio station has its own general sales manager, local sales manager, and sales team. It’s very important that no station be left behind. These stations are worth an incredible amount of money, and it’s our job as operators to enhance the value of the asset, and better serve our communities. We are not going to spend $100 million to loss lead a radio station—it’ll never happen on my watch. I will make sure that these stations compete to be number one. I want them to take care of their local business and their national business.
How difficult is it to find good, innovative account executives who are committed to helping their clients instead of just selling spots?
Historically, radio has done a bad job recruiting salespeople. We spend a vast amount of money on the programming side, and very little on the sales side investing in our men and women. In all our stations we have formalized training programs—that’s a necessity. I believe that these men and women are going to work for 4, 5, or 6 different companies in their lifetimes, and my job is to give them a great education that will teach them more than just how to sell spots. I want to teach them the commerce of radio—the economics of how business is transacted in their market. If you can give people an education and make them better than when you met them, and financially reward them, and recognize their family needs, their human needs, and their personal needs, then you have a home run.
What sort of background does a person need today to be a successful station or market manager?
People should have a classical education. They should be exposed to the arts, to literature, to Keynesian economics. You have to be well-educated and well-read. You should be able to write. Writing skills today are terrible, but communication is crucial. You also have to have an incredible passion to succeed, and a passion to improve yourself personally. So the type of person I look for is someone who is educated, is well-read, has the aptitude to learn, has an open mind, has good writing skills, verbal skills, presence, the ability to stand in front of a crow. There are two types of people in life: those who watch it happen, and those who make it happen. I’m looking for the ones who can make it happen—those who want to grow within this company, who want to have opportunity to do great radio and build a great career, and at the same time have a life outside radio. If you can find that balance in your life you’re going to knock it out of the ballpark.
How would you define leadership?
Leadership is somebody who walks the talk, someone who sets a high ethical and moral standard within the company. With all the scrutiny of CEOs today, from compensation to accounting irregularities, you have to let people know that you’re an ethical, balanced person, that you’re honest, and that your word has value and currency. People are looking for someone who will get in an airplane and fly to each city and work with their stations, and meet with their clients and talk to their programmers. They look for someone who will be there to resolve issues, who will deal with the solution rather than dwell on the problem. A leader is going to admit when people make mistakes, and accept responsibility for them. A leader is someone who stands by people who, rightly or wrongly, might get in an uncomfortable space, and make a fair and equitable decision—and then live with it. A leader is someone who doesn’t compromise principles, because once you do you open the floodgates to abuse.
You’re on the RAB ad hoc committee studying the Personal People Meter. What’s your take on PPM?
I never want to be an obstructionist in the face of technology—I will not do that. We own stations in Philadelphia, and when Arbitron contacted us and said they wanted us to participate, we were right there. We are a participant, and we continue to be a participant. My issue with the Personal People Meter is that I want to make sure we’ve thought through what the new commerce is going to be. Is this going to be a business based on circulation cumes or based on quarter hour listenership? How are we going to transact business from Main Street to Madison Avenue? I also want to learn more about how people use the People Meter. We all need to get involved with this, and the radio companies and Arbitron should form a partnership. Steve Morris has tried to do that with us—he met with us in New York in the beginning of the summer, and he was very up-front with us. I want to work with Arbitron to build that system out. Anyone who tries to hinder technology is going to end up having it bite them in the back.
What do you think of In-Band, On-Channel digital broadcasting?
I love it. Milford Smith is the head of engineering for Greater Media—he’s probably the finest engineer in America—and he chaired the IBOC committee for the National Association of Broadcasters. Greater Media is in full support of iBiquity, and we’re already working with them in Detroit because we feel it’s important for the automotive people to listen to that. I’d very much like to see this roll out for the Electronics Show in 2003. Radio One has announced they’re going to work with them, and I had a meeting with them the other day and I’m looking forward to trying to put a deal together. I hope to put some GM stations online—more than what I currently have—in the 4th quarter. High definition radio is just a whole new vista for all of us and we should embrace this technology.
Is Greater Media looking at acquisition opportunities, or are you content to wait awhile longer to see how the market shakes out?
I’m looking to expand. Greater Media is in the business of buying radio stations. We did a deal last year in New Jersey for north of $80 million, and we just closed on WJRZ down there, which we bought for $8-9 million, at the end of the summer. We have a very strong balance sheet, with practically zero indebtedness. The thing that dominates our thinking is that in each marketplace there basically are eight formats, and after you move out of those formats, what’s left? So in order to have a strong position in a marketplace you really only need four or five stations. More than that and you start tripping over yourself, and then you cannibalize that station at the expense of the other four. I don’t want to do that.
Do you have specific criteria for the markets in which you’re willing to buy?
Two years ago we said we wouldn’t go below the top 50 markets. In New Jersey that Middlesex-Somerset market is 33, and we own WDHF in Morristown, which is out of the top 50. But it’s a great radio station in a great corridor. We go from the Delaware to the Hudson River. So we have a very strong presence in that entire region. Would I look at opportunities like that? Sure. It would be great for us to do something in Providence, or Saginaw. Today you have to open up your parameters. If public currency stays the way it is, cash is king. And a company like ours, which is in a very strong cash position, is in a very advantageous position to grow. It’s not a problem of closing, or financing a lot of these deals. I’m looking for situations that make strategic sense for the company, stations that will give us a good position in markets that have strong potential growth.
As CEO of a company that has both Radio stations and newspapers, what’s your opinion on the existing cross-ownership rules?
I don’t really understand why the cross-ownership rule was there to begin with, but I don’t want to judge the FCC. I think cross-ownership will happen, but the only thing I would question as we move forward is that when we talk about cross-platform selling we’re not really talking about discounting. Any time you talk to anyone about “quantity” and “commitment,” “discounting” becomes the third word. Those three things scare me, and people have to think that through.
Looking at the greater picture, has consolidation been beneficial or detrimental to the Radio industry?
Peter Bordes and [title to come] Tom Miliewski [sp?] were very much against that bill, along with some other people, because they felt that the entrepreneur no longer would be able to get into the radio business. Peter Bordes started in the 1950s with $50,000 in Sturbridge, MA—and look where we are today. And the fact is, to some extent the smaller entrepreneurs are not able to do that today. I do believe that consolidation is important—with the Internet and 100 channels of cable and other media, we do need to be able to own more stations. But on the other hand, when a radio company gets past five or six radio stations in a market I don’t believe the value of those stations is really taken to the maximum.
Is Radio prepared to compete successfully in a world of satellite, Internet, CDs, PDAs, MP3s, and wireless broadband?
How does radio cut through all this chatter? How does it deal with the Internet or satellite? How does it compete with people burning CDs? I believe that local content is king. When a morning show can drown itself in local issues, that’s crucial. People want to be engaged with things that are important to them, and satellite radio will never engage them. We are still going to be the premiere entertainment vehicle in the car. As long as we keep our local base and understand the value of localism to serve our communities, entertain our communities, meet the needs of our communities, and be invested in our communities, radio has a fabulous future. When we abandon those principles that made us great, shame on us—we deserve to lose.
What’s your primary concern with the Radio industry as we enter the final quarter of 2002?
My concerns have nothing to do with the radio industry itself, and I’m not worried about the technology on the horizon. I embrace it and I feel challenged by it. My concerns are with what’s going to happen in the Middle East. I’m concerned about what the price of oil is going to be. I’m concerned about consumer spending. I think the American economy is very strong, and the fundamentals are great. Interest rates have never been better. I am concerned about the effect of terrorism on this country, and what’s going to happen in Iraq. But the American people are strong and our markets are good, and radio—unlike some of our brethren in the communication field—is well-poised to work with these challenges because we super-serve our communities.
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