Do you remember Aesop’s fable of the goose that laid the gold eggs? Let me refresh your memory of this tale. It’s about a farmer that was poor. One day he makes a startling discovery when he finds a golden egg in the nest of his pet goose. Skeptical at first, he has the egg tested and finds that it is indeed made of pure gold. Even more amazing, each day this farmer awakes to find that his goose has laid another golden egg. In very short order, this poor farmer becomes fabulously wealthy. But then his wealth brings greed and impatience. No longer satisfied with just one golden egg per day, the farmer cuts open his goose to harvest all of its golden eggs at once only to find the goose is empty inside. With a now dead goose, there will be no more golden eggs laid.
In remembering this fable, it sounded so familiar to the world of radio broadcasting. A radio station was like a wonderful “goose” that laid daily “golden eggs” for many an owner. It was an industry joke that having an FCC broadcast license was like having a license to print money. It was “golden.”
But broadcasters not wishing to wait for each day’s golden egg, cut open their goose with the Telcom Act of 1996. Twenty years ago, this act deregulated radio and now owners, like the farmer cutting open his goose to get all the eggs at once, now could own as many radio stations as they basically wished.
And how did that work out? Not much better than what the farmer discovered.
The moral of Aesop’s fable is if you focus only on the golden eggs and neglect the goose that lays them, you will soon be without the very asset that produces the golden eggs.
The radio industry’s quest for short-term returns, or results, took their free FCC licenses and ruined them by not maintaining the balance between the production of desired results and the production capacity of the asset.
Aesop’s fable is the very principle of effectiveness. It’s a natural law. Like gravity, you don’t have to believe in it or understand its principles, but you can never escape its effects.
Radio broadcasters probably saw the moral of the fable being the more geese you own, the more spots you add to the hour, the more effective your R.O.I. (Return On Investment) will be. But ironically, it was the principle of “Less Is More” that in the end rules the day.
To be truly effective, you need to maintain the balance of what is produced (golden eggs/revenue) and the producing asset (your goose/radio station).
Stephen Covey wrote extensively about all of this in his book “The Seven Habits of Highly Effective People.”
“When people fail to respect the P/PC Balance in their use of physical assets in organizations, they decrease organizational effectiveness and often leave others with dying geese.”
One could certainly make that case for two of America’s largest radio broadcasters today. They are reaping the results of those who’ve gone before them who’ve in essence liquidated the asset, before they took over and now the accounting system appears to show that they are not performing at the level of their predecessors. But is that really the case? Did they in reality inherit a very sick goose when they took over? The debt problem say many who are more schooled in this area of high finance than I, will probably be addressed with a re-set. And once that happens, it will come back to the people of radio.
Covey says to “always treat your employees exactly the way you want them to treat your best customers.” Herb Kelleher at Southwest Airlines built his company on this very Covey principle.
Covey puts it this way: “You can buy a person’s hand, but you can’t buy his heart. His heart is where his enthusiasm, his loyalty is. You can buy his back, but you can buy his brain. That’s where his creativity is, his ingenuity, his resourcefulness.”
The bottom line is the future of radio will be determined by the vision of the people leading the radio industry. It will also be determined by the hiring decisions they make going forward.
“If you hire people just because they can do a job,
they’ll work for your money.
But if you hire people who believe what you believe,
they’ll work for you with blood and sweat and tears.”
13 responses to “Are We Killing the Golden Goose?”
Half of the radio stations in this country before 1996 were losing money. Owners were getting out and were offered huge sums of money. What wasn’t known? A bad economy on the horizon, digital media, and other factors that would impact our industry. Now we have companies with an astronomical debt, and nowhere to turn (unless they diversify), even selling off properties is not going to solve the problem. This is turn gives our industry a very negative image…the perception that it is failing.
Losing money? Are you sure? Maybe claiming to lose money by making a million less in profit than the 5 million a few years earlier, perhaps? Never saw a station owner in the 1970s through 1990s trade in their Caddy for a VW.
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CBS 48 Hours made the same claim in 1992, that half the stations in the US were losing money.
Dick we were told that consolidation would help lead to the bad stations becoming more like the good ones. I’m afraid the opposite happened. geo
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Dick I was one of the students of World Changers 2007, at Wizard Academy. On our graduation day we had the past CEO/President of Clear Channel speak to us. Back then, he was saying the new model of the network was the long tail of future growth and revenues. I think all media drank the cool aid of we’ll thrive on being all things to all people. The results we see is a flawed business model. Radio listeners continue to listen to radio because of selective quality programming (niche or tribal groups) and entertainment value. Talk radio is mostly political entertainment noise and music is all over the place because there are so many avenues of getting what you want to listen to. As I’ve said before, radio will always exist but its glory days are over and unless it leapfrongs the existing model with some innovation that is monopolistic,
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It will continue to flatline or decrease in quality, programming mix, and availablity. Sorry, my previous post was posted unfinished by mistake,not by desgin.
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So you’re a fellow Wizard Academy grad. You’re “family.” Congratulations Victor. My class was from September 2001, right after 9/11, and not many who were supposed to be in my class showed up. We were dubbed “the Fearless Flyers” class by Roy.
I am working on some additional thought about all of this and expect to make that next week’s post.
Stay tuned & thank you for offering your perspective.
Prior to Telecom ’96, truly great stations placed equal emphasis on super serving target listeners and advertisers, community involvement and the bottom line. Focusing on one element at the expense of the others resulted in inferior product, service and, subsequently, P/L. Post Telecom ’96, the bottom line became everything – due primarily to huge debt loads. And the industry has suffered. Will there ever again be a great radio station?
Thank Don for joining in the conversation.
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I think there’s some truth to the idea that a lot of radio stations were unprofitable before 1996 (I don’t know about “half”, though). But I’d counter that a lot…if not most…of them were Docket 80-90 dropins that, in retrospect, never should’ve been allowed. Those signals were small, hobbled by adjacent channel interference, and mostly in communities ill-suited to support a full-service local radio station.
And as we’ve seen, the 1996 Telecom Act didn’t actually make any of these underperforming signals any better. All it did was allow cluster owners to paper over the problems and let the zombie signal shamble onward aimlessly.
I think it’s without question that the single greatest thing the FCC could do to “revitalize” (word picked very deliberately there) the business is to re-introduce the ownership caps and force owners to sell off their underperforming properties. Let someone else take a chance on them…they’ll probably fail but who knows? Maybe someone will innovate something new!
I’d also combine that idea with changing the rules to allow owners to “destroy” an allocation and “turn in” a license in the commercial FM band. If a signal cannot be made viable, the option should exist for the marketplace to remove it and “clean up the band” so other signals can function better.
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