Tuesday, September 29, 2015

A radio group that could screw up a three-car funeral

by Don Keith

If you hold stock in Cumulus Media, you have my deepest sympathy.  Cumulus is the second largest owner of over-the-air radio stations in the USA.  They own some truly legendary stations with call signs like KABC, WABC, WLS and WSM.  But last time I checked, their stock, which had been in the $4 range not that long ago, is now less than 75 cents a share.  You'd have to sell five shares to afford a latte at Starbucks!

If you dig deeper--and really, before you bought stock in that mess, you should have--you will see that they have taken those great radio stations, and the other 600 or so they own, and run them into the ground.  Ratings are down more than 50% on some former market-leading stations.  When stock analysts gave them grief a few years ago, they tried to blame their problems on Rush Limbaugh, resulting in them dropping his show at many of their stations.  I won't go into the details here but, regardless of how you feel about El Rushbo, he does deliver ratings.  And he had no more to do with the problems of the Cloud People than I did.  You simply can't continue to grow revenue every quarter by going out and buying another radio group with borrowed money.

No, the company is the textbook example of the "cut your way to prosperity" school of business profitability.  They have succeeded in chasing away most of their popular and creative on-air talent and programmers because they did not want to pay them.  Instead they have that usual MBA-mentality aversion to "risk" that comes along with having actual, living, breathing humans making local decisions at their radio stations.  "Jesus, what if he gets good ratings and leaves us and takes his listeners to the competition?  The stock analysts would kill us if that happened!  Let's just run music off the computer.  It won't leave us when its contract is up."

And their sales philosophy in the face of plunging ratings?  Work even harder, make more cold calls, don't waste time putting together a real marketing plan for clients when you could better be in a sales meeting--learning how to make cold calls--or working your way through the Yellow Pages and setting up appointments at every potential advertiser with a phone number.  (Don't believe me?  I have seen their "weekly sales calendar."  Nobody has time to sell or work up an effective ad campaign or follow up with those who do buy a schedule on their air.)  And if, despite all this BS, someone actually becomes a star salesperson, he or she has commission cut because the rep is making too much money.  And those good accounts developed through hard work and smarts get re-assigned to the constant influx of new salespeople, hired to replace those who go on to sell cars or cemetery plots, so they will at least stay with the station long enough to justify printing their business cards.  (I'll avoid my "Glengarry Glen Ross" references here, but they would be totally appropriate.)

I could also go into detail about what the company saw as its savior, a massive branding effort for its country music-formatted stations called NASH-FM.  Actually, they had some truly creative and exciting ideas, developed some interesting partnerships, and might have been onto something.  But they forgot the most basic thing of all: they did not put compelling content on their radio stations to attract enough listeners to even be aware of what NASH-FM was all about.  No, they piped in deejays from New York for morning drivetime, the key daypart on any radio station, and ran most of the rest of the day streaming the same 100 songs over and over.  And bragging about how cool and hip NASH-FM was with well-produced drop-ins voiced by smooth announcer-types.

I've said it before and I'll say it again: over-the-air radio will NEVER win the music-streaming battle.  That ship has sailed.  And they certainly won't unless they offer more between the songs to attract listeners willing to put up with those long, long, long commercial breaks they insist on running so they can tout "Fifty minutes commercial free of the biggest hits of the 80s, 90s and today!"  All this is especially true of country music, which is so much a life-style format.  You have to have some warmth, humanity, and companionship on the air beyond the songs or people.  Your whole station, and especially the personalities who pop up between the music, have to be something with which the country-music lifestyle group will identify.  Otherwise, they will simply go to Pandora and listen to the songs there...one after the other.  I don't have any evidence of it, but I'd still bet that nobody responsible for the songs played or the personalities that waft in on the satellite to be on the radio in local markets know what the country life-style group is all about in each and every market.  Where do those listeners work?  What do they drink?  Where do they go for live music?  What sports teams do they follow?  What vehicles do they drive?  Which TV shows do they watch?  Sorry, it is not the same in Nashville as it is in Birmingham as it is in Dallas as it is in Atlanta as it is in the middle of dadgum New York City!

Well, now there is a new development with Cumulus that caused me to launch this latest rant.  Today they announced a shake-up in their top management.  The company has been run--and, let's give them credit by admitting they built a huge group of stations by borrowing money like sailors on shore leave and hypnotizing stock analysts with their business-school-speak--by the Dickey brothers, sons of the founder of the company.

That is no longer the case.  Desperate times call for desperate measures.  They needed someone who can buck the trend, do what it takes, change the culture.

Today, they announced a new CEO, someone who will lead Cumulus back to prosperity.  Someone who understands what it will take to save not only the company but commercial radio from the effects of rapid technological change and all that new competition for the ears of America.

Yes, Cumulus went out and hired themselves--well, they didn't exactly "go out" and hire someone because she was already on their board of directors--a new CEO from the world of...you ready for this?...MAGAZINES!  Which medium was the first to succumb to technological change, even before newspapers?  Magazines.

So they hired Mary Berner as their new CEO.  Ms. Berner may well be a fabulous executive and have the skills, smarts, savvy, and creativity to assure that the company comes roaring back.  But if you look at her resume, you will see that she not only worked in this dying industry, she last ran their trade organization, the Association of Magazine Media.  The outfit that was supposed to help fight back against all the new media that has made the print industry a shadow of its former self.

Not only that but she worked for Readers Digest, a magazine made up of articles culled from other magazines!  And TV Guide, which swam against the rip current of technology until it ultimately drowned.  But she did work at one example of the technological revolution, the cutting-edge web site recipesnow.com.

Why am I so cynical and bitter about The Cloud People and what they are doing to my favorite medium?  Three reasons.

First, at a time when radio most needs strong, dynamic and creative leadership, these folks are cutting, slashing, firing, threatening, and conniving to stay afloat, not by doing something on the air to attract listeners and sell product for advertisers but to keep the stock price up and continue to grow revenue by borrowing money and printing more stock certificates so they can buy more stations, not by doing a good job running the ones they own already.  In my opinion, they are killing radio and that makes me mad as hell!  It is a tough enough challenge if everybody was doing things right.  When the second biggest owner of stations does everything wrong, it does not bode well for over-the-air broadcasting.

Second, I know too many good folks who still work for these guys and are being hurt.  There is something magical about working for a great radio station but these dedicated people will never know that feeling again.  They stay because they love radio or because they've been there for most of their careers or because the other radio operators are only slightly better, so where do they ply their trade if they jump ship?

And third, because I don't think it has to be this way.  Back in the '90s, I had the pleasure of visiting Lew Dickey Sr. in his home in West Palm Beach.  He, like many owner-operators before the FCC messed with the ownership rules in 1995, had started a radio group on a shoestring.  He did everything in his stations, on the air, selling commercials, engineering, sweeping the floors and mowing the grass around the towers.  He understood the one-to-one relationship between on-air personality and listener, between sales rep and advertiser.  Though he had just started building his group, and was seeing considerable success, I got the idea he was not totally sold on how things were changing.

We had a good chat about the medium, the business, and where it was going.  I believe that with some of the things he said and much more he only hinted at that Mr. Dickey knew very well that things were not necessarily playing out the way many of us thought they would.  And especially those of us who believed the change in ownership rules that allowed the creation of these mega-group owners was a good thing.  He died several years ago but I really would have enjoyed rekindling that conversation and seeing if he would discuss what has happened in the meantime to the medium he and I love so much.

I doubt he would have gone so far as to comment on the part his sons have played.  He did not seem to be that kind of gentleman.  But he had to know it wasn't right.  Had to know cutting the heart and soul out of broadcast radio was not the path to success or the way to save a threatened medium.

He had to know that when you take the warmth and companionship and one-to-one out of the most one-to-one mass medium we have, you take away all its power.  All its magic.


Wednesday, September 23, 2015

Unexpected answers from folks who should know

by Don Keith N4KC

So a publication called MediaLife Magazine did a survey and asked the question "What do you think is the biggest problem for radio today?"  Understand that MediaLife Magazine is targeted at media buyers and planners, the folks that actually do the work at advertising agencies of deciding on which media they will buy commercials and how much they will pay for them.  And when they say "radio," they are talking about commercial radio broadcasting, not ham radio or shortwave broadcasting or any of the goofy Internet "radio" that is suddenly so commonplace.

With that understood, most of us would assume that these buyers and planners would say, "Radio is too expensive," or "Radio is too hard to buy in order to get the best exposure for my clients,"  or "Radio sales reps are woefully inadequate and poorly trained." No, they don't say that at all.  Well, they do say that in some numbers and all three are absolutely true, but the largest vote-getters are the very ones I have noted in this blog.

 In fact, they sound like most of the rest of us who might express an opinion about the state of radio, from the guys in the carpool to individual advertisers who might use radio far more if it seemed truly interested in helping local merchants succeed.  Over half--51%--say radio's biggest problem is the concentration of ownership in the hands of a very few giant companies.  And they believe that is also the over-arching reason for some of the other problems they think are the major ones facing radio:

#2   Decline of local radio and its community involvement   49%
#3   Ad clutter       45%
#4   Lack of innovation   41%

Of course, they also threw in one not-so-surprising one, too: competition from digital players like Pandora, at 47%.  Lack of compelling content (same old music and talk) also was a strong one at 35%.

See, media buyers and planners are not just interested in making the math work when it comes to buying ads on radio.  Sure they want to reach the most human beings in their target as often and inexpensively as they can.  But they also want whatever campaign they are supporting to be successful, too.  They really need those "numbers" they buy to represent excited, motivated customers for their clients' products or services.

Dull, boring, background content with long, tune-out-encouraging commercial breaks don't make people rush out and buy beer, fast food or cars.  And when folks are not buying what an agency's clients are selling, agencies get fired and companies go broke.

(See the story and complete results of the survey HERE.)