Audiences Up, Revenues Down

A reoccurring theme that's been happening as I visit radio stations:  someone brings up morale and cites the fact that their company mandated across the board staff pay cuts after the financial collapse of 2007-2008, complaining that those reductions have still not been restored.

As a partner in a small business that has grown in that difficult environment, I always try to explain the economy and help them understand what a huge toll the downturn continues to take on everyone except the very highest earners.

The more specific and detailed I get, I see eyes glaze over.  I suppose that's why Thomas Carlyle called economics the dismal science.

For that reason, I want to congratulate Country Aircheck in their annual June print edition for again tabbing country format ratings and revenues for three pages of charts/trends for the last decade from BIA/Kelsey (click for an invitation to their latest webinar on the subject) even down to specific dollar and audience share data on 274 country radio stations and 17 group owners.

I worry that those pages, which explain it all in undeniable numbers, will be the least read section of the always-fascinating publication.

If you care about your career future and the state of American business, start with this chart but really spend some time with the numbers of stations you know a lot about.

We are not out of the woods yet and if you think it's only your radio station that is affected in this way, make a visit to your local Chamber Of Commerce, a trusted realtor or hometown bank manager.

Headlines I Hope To See in 2013

It was so nice to spot this headline in yesterday’s Wall Street Journal.

.. which got me to thinking of other headlines it would be wonderful to see in the coming year:

THAT's when I woke up! 

Those first four might possibly happen some day in my wildest imagination, but - when I read that final one - I knew I was visualizing the totally absurd.

Bad Timing

The Mays family's decision to sell Clear Channel in 2005 following the family patriarch Lowry's stroke might have been termed "great timing," since it took multiple lawsuits to force the buyers to actually do the deal after the financial collapse of 2007-2008, which put him at #1062 on the year's list of the world's wealthiest billionaires.

Bad timing, of course, for Bain Capitol and its investment bankers, who have been helped at least a bit by the low interest rate environment even as they have been wacked and wacked again by the years-long no-growth economy.

One trade publication last week, as the axe fell again just before yet another year's Holidays, estimated that 10,000 people have lost their jobs since Clear Channel and the other post-deregulation consolidators starting enlarging their holdings in the mid-1990's.

Bad timing for so many people to hit the ranks of radio's unemployed all at the same time, making it even less hopeful that many of will land on their feet until well into the coming year.

Radio Info/Talkers editor Michael Harrison put it bluntly last week in an interview with The San Antonio Business Journal:  “I think Clear Channel is run by extremely intelligent people.  They have tremendous muscle and collective powers, including economies of scale. They are doing the best they can with a difficult situation. The jury is still out. A lot of this has to do with the economy,”

He was even more blunt in his own pages, calling it "iHeartless radio."

It's hard to disagree with him.

Bad timing all around.

As usual, A&O&B is currently looking for experienced people for a number of our client stations, so many other radio companies are expanding and hiring. 

Those folks are going to have a lot more people to choose from than they would have expected at this time of year, but - knowing that there are far fewer opportunities than there are newly-employed - it's hard to call it a good time right now for anybody involved.

Canada Radio Revenues Up 4%; Jobs Up 4.7%

Yesterday, the Canadian Radio-television and Telecommunications Commission (CRTC) released statistical and financial information on the 669 commercial radio stations operating in Canada.  

Revenues, according for the report from Ottawa, for the broadcast year ended August 31, 2011, increased by approximately 4% over the previous year, demonstrating steady growth and continued confidence in an industry whose revenues are now back to pre-recession levels.

While total revenues for AM and FM stations increased from $1.55 billion in 2010 to $1.6 billion in 2011, expenses also rose from $1.21 billion to $1.26 billion during the same period. As a result, profits before interest and taxes (PBIT) climbed from $298.3 million to $311 million, and the PBIT margin went from 19.2% to 19.3%. 

In 2011, commercial radio stations employed 10,576 people and paid a total of $676.3 million in salaries, an increase of 4.7% from last year when they employed 10,104 people and paid $640.7 million in salaries.

I have worked both sides of the 49th parallel for the better part of three decades and can report to A&O's American clients that no one studies what happens in the USA more carefully than Canadians do, whole most of us are oblivious to Canadian economy and politics.

There are few decisions in A&O's business history as good as having decided to work in Canada.

Like Earl Pitts has always said:  "Wake Up America." 

It's time for U.S. radio companies to look carefully at what Canadian radio has been doing.

"Reinvent" This!

It wouldn't be a radio business convention or meeting if someone didn't call once again for reinvention of one aspect of what we do or another.

There's nothing wrong with rethinking, of course, but Arbitron's Ron Rodrigues (Marketing Manager for the Programming Services Team) has a better idea in my view:

The next time your sales staff is driving you crazy with value-added, got-to-have-this-or-the-client-will-cancel demands, educate them even further about the power of radio.

Go to the next sales meeting and give them the five-question pop quiz below. Bring a pair of concert tickets or a $5 gift card for the person who scores the best. Be sure to count how many times you hear “Hmm—didn’t know that.”

Before you walk back to your office feeling like the smartest person in the building, remind the sales team that all of this information can be found in Arbitron’s “Radio Today by the Numbers.” This tool will arm them with the information they need to show clients how well radio works for advertisers.

Radio Listenership Quiz

Q1: What percentage of Americans aged six and up does radio reach on a weekly basis?

1. 73%
2. 83%
3. 93%
4. 103%
5. Are you counting all eight days of the week?

Q2: How many hours a month do consumers spend listening to the radio?

1. 14.5 million
2. 1.45 billion
3. 14.5 billion
4. A gazillion

Q3: If there are 10 people in a room, how many are likely to have listened to the radio in the past day?

1. 5
2. 6
3. 7
4. 8
5. It depends on the room.

Q4: What percentage of consumers does radio reach during prime time (6AM–7PM) each day?

1. 60%
2. 70%
3. 80%
4. 90%
5. More than newspaper

Q5: Rank these devices from highest to lowest by the percentage of radio listeners who own one:

1. Digital Camera
2. Computer
3. HDTV
4. Cell Phone
5. Predator Drone

Answer Key:

Q1: C—Radio reaches 93% of all Americans on a weekly basis.

Q2: C—Consumers listen to 14.5 billion hours of radio each month.

Q3: C—Slightly more than 7 out of 10 consumers listen to radio each day.

Q4: D—90% of consumers tune in between 6AM and 7PM.

Q5: From highest percentage of ownership to lowest—Cell Phone (90%), Computer (84%), HDTV (69%), Digital Camera (67%), Predator Drone (unknown %).

I'd suggest that our agency friends who seem to be hooked on nothing but the age-old negotiating ploy called "cost per point" that actually drives the percentage they make on radio buys down, since an agency commission on a small number is less than buying radio intelligently, using qualitative, all our multimedia platforms and involving us in your creative design, testing and execution.

They might increase the rate the agency pays a bit, but wouldn't that increase the dollars buyers make from radio and also act as an incentive for the radio side of the bargain to maximize results, not just lower our prices?

Make radio a full partner in working for the client instead of just a low cost vendor you can beat up in long-used ways.

Let's talk together about reinventing THAT.

Be An Operator, Not A Trader In 2012

As both savvy Inside Radio scribes Paul Heine and Frank Saxe reported yesterday that the "deal market (is) still struggling to find its legs" and "... the radio industry is entering its fifth year since the task of either buying or selling a station became much more difficult following a reset in pricing and the exit of many media lenders," they also made the statement that "the buying and selling of stations is seen by many as a barometer of the radio industry’s health."

Really? Is that all there is?

Let's get back to business basics and rethink that

Entertaining, informing, interacting with and engaging listeners as a means to aggregating a large, loyal audience, creating memorable events across multiple analog and digital platforms, leading to the buying and selling time with those folks is an even better barometer of the radio industry's sustenance and health.

Advertising helps the whole economy.

Radio, done right, is still a terrific business.

Rather than trading in our hard assets and stick values, lets sell the thing we have a fresh new supply of every day: time.

That way, we'll still be around, creating jobs and building profits, in 2013.

Unbelievable!

News: One of Cleveland’s best-known radio voices has been silenced. Chuck Collier, afternoon host and music director at 99.5 WGAR, as well as midday host on Majic 105.7, died Thursday from a massive heart attack. Chuck was 64 years old. Chuck had been a fixture on WGAR for 40 years, starting when the station was still on the AM dial, and playing adult contemporary music.

Comment: Ask any of us to knew and worked with Chuck over the last four decades and you'll hear endless stories of hard work, a positive approach to life, a wonderful family and a dedicated professional who loved Ohio and Cleveland. That smile on his face was always there and it's incomprehensible that we won't see it again except in photos. Please remember his family when the memorial service is announced.

News: Cumulus' Thursday Conference Call For 500 Programming Executives in their newly enlarged conglomerated empire. Among many other rumored imperial dictates: no outside programming consultants, flip-flops, piercings, exposed tattoos or bluejeans.

Comment: It's a source of pride to find myself, by implication on THAT list. A&O worked with Citadel and had some great relationships there - which we'll sincerely miss - but if tattoos, bluejeans, piercings and flip flops aren't welcomed in the new configuration, I wouldn't want us to be there either. Bon Voyage, Cumulus. It's going to be fun to compete with you. I'm tempted to have that tattooed in an exposed place on my body today.

News And Comment (An Ongoing Series)

News: "In 2009, the majority of radio newsrooms (56%) relied on social media for story leads from "citizen journalists," and 34 percent of radio newsrooms said social media not only provided leads but can also provided possible sources of information for news stories. Today, only 31 percent use citizen journalists, down 25 percent from 2009. So while use of social media among stations has exploded over the past two years, the use within the newsroom in terms of leads has actually declined."

Comment: Hopefully, this study serves as a wake up call to radio newsrooms and reverses this troublesome trend. Get with it, news people.

News: John Klesewetter: “Heritage rocker 102/7 WEBN Cincinnati is looking for its next morning show for the next decade and beyond. We’re looking for a team or ensemble that can connect with men 25-54 in the confines of a music intensive morning show in a PPM market. Prior ratings success in a major or medium size market a must. Please no voice-trackers, wacky morning zoo types, syndicated morning shows, or shows that need a prep service for material. We want real, honest and fun. We haven’t had a morning opening in over 25 years."

Comment: Hellllloooo, wannabe radio personalities! This job description is for you in the year 2011. You'd think that by now everyone who aspires to do well in ratings in either PPM or diary market surveys would have gotten this memo by now.

News: Bobby Rich continues to prove that doing good in your neighborhood works as well as ever at Tucson's 94.9 MIX FM.

Comment: Let's all help out and bid that house WAY up for him!

News And Comment

News: John Gehron, in the Chicago Tribune, saying Rock "is not the dominant sound that it was in the '60s and '70s, when rock really was the sound of a generation." Today, in RBR, Lee Abrams asks "Is the Rock format dead? Well, maybe. But who cares?

Comment: Shhh. I have a secret for you. Guitar based rock of the 70's, 80's and 90's is very much alive and well, growing a huge audience. We call it today's new country music.

News: Skip Mahaffey back on the air in Tampa. He has to purchase his airtime now

Comment: You GO, Skip. Hopefully, this age-old entrepreneurial model still works, up there at 1340 AM. Many personalities around the country are watching closely and will follow suit if it does.

News: Radio revenue should increase from $14.6 billion this year to $17.2 billion by 2015. BIA/Kelsey also breaks out the “online” part of that revenue stream, and finds it growing from about $494 million this year to $783 million in 2015.

Comment: I have clients who feel that BIA's estimates understate their actual revenues, but even if that is true, the percentage of total radio revenues coming from new media (3.8% growing to 4.6% in four years) is disappointing. Surely, we can do better than that.

News: New York Post's Claire Atkinson asks CBS' Les Moonves about buying Pandora.

Comment: Please don't do it, Les. Instead of calculating what percentage of total revenues comes from digital, lets all start trending what percentage of PROFITS come from it.

News: WTOP's Jim Farley in RBR: "My boss and I knew right away we should have a website, but the company that owned us back then (pre-Bonneville) would not let us spend a dime. But we did have something of value: our own content. We did a deal with AOL. They built us a website and we provided local news content to them. By the time that deal ended, Bonneville boss Bruce Reese was an early and eager proponent of investing in online. Initially we had one full-timer working on wtop.com. But Joel Oxley, who runs the Hubbard stations in Washington, decreed early on that the Sales Department could NOT give away space on wtop.com. No value-added. Clients had to pay for space online. As he started to see revenue coming in for online (mainly banner ads at the time) Joel reinvested it."

Comment: That's how enduring business is built, on a solid foundation, one brick at a time!

Radio Keys To Success

1. Signal
2. Potential market or format growth
3. Potential station growth
4. Price and/or terms paid for the facility
5. Promote: increase visibility and sampling, then build loyalty and time spent listening.
6. Concentrate on retail business. Emphasize local, direct sales.
7. Be flexible. Avoid bureaucracy.
8. Research consistently. Make sure the audience thinks you have the best personalities and the best music.
9. Attitude. Become positive and aggressive. Make your staff that way, and "take it to the streets."
10. Take risks.

You simply MUST have #1. Then, the more of the others you have, the higher your potential for success.

Hits? Or, Mechanicals?

Tom Roland's Country Update "takeaway" this morning from last week's second annual Billboard Country Music Summit - that the business is simply upside down as CD sales slipped another seven percent - in spite of CMA market research director Greg Fuson's report that "the majority of North America's 95 million country fans are an attractive and growing target which defies traditional stereotypes" - contains more than a small clue as to why both things might be the way they are.

Roland quotes CMT senior VP of music strategy Jay Frank equating a celebration of the CD to cheering for the rotary phone.

"The CD still has life in the marketplace," Frank said, "but instead of thinking of it as the primary source of business for Music Row, it should be considered just one of numerous revenue streams, including digital sales, online streaming of music and videos and—thanks to 360 deals—partnerships in other segments of the business. Ten years ago," Frank said, "a major label might have six forms of product on an artist. Now, that same artist might be the source of 300-500 product formats. Each of those products is likely to bring in a fraction of what the label previously received, but the small bits and pieces added together have the potential to make up ground."

Nashville Songwriters Assn. International executive director Barton Herbison responded to that optimistic future view, complaining that with fewer CDs selling, non-hit album cut mechanical royalties are a smaller part of the equation.

Somehow, he equated that factor to a need for radio to pay performance royalties — the payments that songwriters and publishers receive for the public use of their material, primarily from radio, which elicited this quote: “You could have a song on [a] CD and make a living with a song that never went to radio,” songwriter Rhett Akins said, reflecting on the ’90s, when such artists as Shania Twain and Garth Brooks routinely went multiplatinum. “Now it’s hard to get a songwriting deal if you’re not getting songs on the radio, because the amount of sales doesn’t add up to enough for your publisher to keep you around.”

So, let me get this straight.

Radio needs to pay for the people who write songs we don't play?

Listeners not wanting to buy albums anymore because of all the songs they don't want to pay for because they don't add sufficient value to the CD means that radio must pay performance royalties so that songwriters who don't write hits should continue to make a living?

Upside down is right. Upside down thinking.

Selling?

• Recently, I went on a sales call with a programmer at a client station and listened as a station rep told a buyer who asked for additional value-added - after reporting that a competing station was offering more free mentions as incentive than "we" were - told the agency, "you know they will promise anything but their track record is that they talk big but don't deliver."
  
  
• Not too long ago a music director reported that a major label promotion rep suggested that he drop a competing label's highest-charting song to make room for something on the promoter's imprint.

So, what else is new?

Of course, these things happen every day, in one way or another.

We're in a very competitive business in difficult economic times, both in our advertising contacts and our music business relationships, so you can't blame folks who aren't incented on necessarily doing things the right way, but on the short-term results they get.

However, doesn't any good business need to be based on solid product attributes which deliver results and relationships built on trust?

How does trashing your competition achieve that?

All Products Are Experiments

ARB's Gary Marince's sensible advice on yesterday's monthly Arbitron PPM call: “When you’re explaining, you’re losing...” no doubt stood some programmers' hair on end.

Produce programming for vacation periods? Constantly conduct experiments in real time?

“The metric that’s most important to me, at first glance, is daily occasions" of listening. He says occasions drive TSL, or Time Spent Listening. “PPM is a wonderful laboratory", because of its rich depth of detail and fast turnaround. But he suggests making just one change at a time, instead of two or more things that might cancel each other out.

In the PPM future, knowledge, innovation and swiftness will be requisites. Are you up for it?

As Tom Peters says "Crazy times call for crazy organizations."

Research tends to make companies too slow to act: 'ready, ready, ready, ready, aim, aim, aim, aim...' The only way to find oil is to drill wells.

Now, you can watch listeners as they consume your product.

Merging two dinosaurs doesn't make a gazelle. In today's world of business, you must be fast, smart and creative. Latent needs + deep insights = tomorrow's opportunities.

Satisfied customers aren't enough today. Satisfaction is simply the difference between feeling P-O'd and feeling nothing. Today, you must WOW your customers.

U1/U2 = success. (U1 = understanding. U2 = urgency)

Ad-ology: Advertise Or Die

According to a new Ad-ology Research study, more than 48% of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business must be struggling.

Conversely, a vast majority perceives businesses that continue to advertise as being competitive or committed to doing business.

Ranking low in the key findings, the word "radio," (".. TV, newspaper, direct mail, and Internet top local media from which consumers saw/heard an ad within the last 30 days that led them to take action.."

Is it that these respondents simply don't realize at the conscious level that radio's ads impact them? Or, do they want our ads and offers to be more easily searchable online and on mobile devices? I'd bet it's both of the above.

Meanwhile...

* 40% of consumers use coupons more now than a year ago
* Most consumers are as willing or more willing to pay more for ‘healthy' or ‘organic' products than they were a year ago
* A ‘deeply discounted price' was the number-one factor that would make consumers more likely to purchase a big-ticket item (+$1,000)
* Store Web sites ranked second only to search engines as the way consumers research products and shop online

I didn't like that they seem to have short-changed radio's ability to influence, but do love this conclusion of the study, as C. Lee Smith, president and CEO of Ad-ology Research, says "It is critical to advertise in the current economic climate, to maintain long-term positive consumer perception of your brand... advertising... assures consumers of a business' reliability... "

RBR: Banks Could Use Some Help From Broadcasters

Jim Carnegie reports that federal officials are pressing banks to find and serve unbanked and underbanked people in their communities. But the first-ever national survey by the FDIC finds that most banks aren’t having much success. One reason is that many aren’t trying very hard, but the feds may change that by providing “oversight and guidance” to the banks – a euphemism for the heavy hand of government regulation. But this looks like an opportunity for broadcasters, particularly those serving minority communities, to help the banks help themselves avoid more government mandates.

The FDIC’s survey found that a majority of banks – 63% – offer basic financial education materials, but fewer participate in the types of outreach efforts that are viewed by the industry as most effective to attract and maintain unbanked and underbanked individuals as long-term customers.

Take a copy of the FDIC report along (posted as a pdf on this page) when you present your marketing plan to a local banker.

I Was All Set To Completely Ignore The Grammy Awards, But Then..

I just heard that KSON, San Diego, morning cohost Cliff Dumas has been chosen to voice the 2009 radio pre-Grammy special. Cliff will work to make something radio-friendly, I am confident.

.. Which is much-needed in the wake of Mike Henry, Bill Stakelin, Randy Kabrich and Bob Neil calls to pay no attention to the RIAA-sponsored record sales promotion event. As a former Radio And Music Awards (1999-2005) winner back when that was on air, I still lean their way in spite of the entreaties of Jerry Delcolliano.

Just ignore the upcoming Grammy Awards. Then, let’s check back with the Grammy broadcast in February to see if there is a different message about radio. If there is not, then radio should ignore the Grammy Awards for the following year. Radio should not acknowledge the Grammy Awards ever again, until the Grammy Awards broadcast acknowledges radio as the primary source for the discovery of music, which is universally understood as fact except to the over-eager Grammy copywriter. Here are the facts as they are known today: The plurality of people discover music on radio. Once they’ve discovered that music via radio, many of those same people download the music from the Internet…often without paying for it. - Mike Henry, Paragon Media Research

The R-M-W's were an attempt to get radio airplay the credit we deserve, spear-headed when Von Freeman was marketing director at KIIS, Los Angeles after an experience backstage at the Grammy Awards in 1998 when the #1 CHR station in the USA felt ignored (the KIIS website contains CMA Awards links but no news of any R-M-A plans for '09).

It is ironic that Canadian Dumas would be named to do the radio pre-Grammy special, since the Radio Music Awards concept continues in Canada to this day.

Can Edmonton Handle Five More New Radio Stations?

Canada's Radio and Television Commission last week approved Harvard's application for an Alternative Rock/Pop station for Edmonton, which also gets a new station from CTVglobemedia who already own/operate The Bounce. Meanwhile, Rawlco's application for a new AC/Hit music station and also John Yerxa's application for variety music format targeted to 12-34 year-olds (a very innovative social network-driven concept, really worth watching I think) were also given a go-ahead.

That will make, as I count it, at least 20 radio stations competing for pieces of the Edmonton radio revenue pie in what's looking like it's going to be a very tough economy.

Canadians, of course, do make a business of studying the U.S. and trying to avoid mistakes made below the 49th parallel, so you can certainly look at markets like Boise and Salt Lake City, probably the most competitive in the world, and conclude that more stations are possible.

Meanwhile, Red Deer also gets two new stations: a new CHR proposed by L.A. Radio Group and a new AC station to be built by Harvard.

Canadian radio has been growing at a clip of 6-7% per year for the last few years, so the pie has been growing - espcially in Alberta, but just because western cities are many miles and kilometers apart - and thus it's possible to drop in more and more signals - doesn't make it a sensible short or medium-term investment.

Long-term, these of course are absolutely very rapid-growth cities, but let's hope these new Alberta owners have deep pockets to help them get from here to there.

Radio Outpaces Ad Market Growth In Canada (Again!)

Stats Canada: Private radio broadcasters' advertising revenue advanced 6.0% to $1.5 billion (current dollars), outpacing advertising market growth as a whole for the third time in five years.

The industry's financial success during the recent past was due largely to economic growth and industry restructuring. Among other things, regulatory changes in 1998 allowed for greater concentration of ownership, which helped radio withstand the competition from other media. The industry also rationalized its operations by transferring AM stations to the generally more popular and more profitable FM band.

FM radio played a predominant role in the industry's results. In 2007, it generated 78.3% of advertising revenues and 94.6% of profits before interest and taxes, which is a little more than in 2006 in both cases.

The size of the market has also been a key factor for radio broadcasters' profitability. In 2007, radio stations operating in the five largest census metropolitan areas generated almost twice as much profit before interest and taxes per dollar of revenue as stations operating in smaller markets. Large markets have had this advantage for several years.

Hey, American radio owners: maybe it's time to look hard at what's different about radio in Canada. Canadians have been watching American business for many years, and it shows, EH?

Is The Future Of Radio Unfolding Now In Indianapolis?

You have to say this about market #40: almost all of the major consolidated groups compete there (including one of my personal fav's, Emmis, which possesses a unique culture, more vision and courage than most) and it seems the local managers are unafraid of experimentation and change, so it often is a test for things which could eventually impact all of us.

Reporter David Lindquist documents the past year of changes there in this morning's paper and it's worth a read.

"Advertisers spent $92.5 million at Indianapolis radio stations in 2007, following $99 million spent in 2006, according to California-based accounting firm Miller, Kaplan, Arase and Co. That's a 7 percent drop, and Emmis executive Tom Severino predicts another drop of 4 percent in 2008. To appeal to advertisers who may believe radio is past its prime, companies create stations that aim to deliver audiences composed of the correct ages (and often the correct gender). Executives say modern radio is more than what's heard in your car or at the office. They tout entertainment and information available at radio station Web sites, as well as concerts they present." (photo) Cumulus Market GM Chris Wheat, who says "patience is key with new formats."

Go Daddy, Bob Parsons!

Thanks to JRN's Danny Wright for turning me onto this guy, his program, podcasts and website.