Tag Archives: consolidation

The Question Radio Itself Has Yet to Answer

86That was the subject of an email I received from a reader of my blog recently. The writer went on to eloquently state why he felt the way he did, even citing articles on the topic. He had my interest and I asked him if we could speak on the phone.

The BIG Question

This reader’s (who asked to be kept anonymous) big question was “What can radio do that other media can’t?”

And it’s a very good question.

In 2017 when many are using the internet for things that only radio could provide in the past, is radio’s future being the poor man’s smartphone, tablet or iPod when it could be more?

“NPR and SiriusXM, in addition to the new exploding podcast marketplace, have had no trouble creating personalities and programs,” but my reader writes “why does FM commercial radio continue to stick with playing the hits, past and present, at the expense of personalities, thinking it will make them money when the biggest radio companies have trouble paying off debts on the stations they seem to have paid too much for?”

Well it was a well-known fact all of my radio life that you make money in radio at the time you buy a radio station. Buying it right makes all the difference. And those big radio companies went on a buying spree using other people’s money (Wall Street) and it’s much like student loan debt, no one worries how much debt they’ve accumulated until they are asked to replay it.

Is Local Radio Local Anymore?

My reader quotes Westwood One’s Chief Insights Officer Pierre Bouvard from an AdExchanger interview as saying “A local radio station gives you traffic, sports, weather, great music, funny DJs and talks about your town,” he said. “Spotify has these robotic music playlists, which are awesome, but there’s no one telling you what happened at the Giants game last night.”

My reader says Pierre (who was my first Arbitron representative back in the 80s) makes a good point, but wonders if Pierre ever took the time to hear what passes for much of local radio these days. My reader feels that much of today’s FM radio stations do a combination of great music and robotic, Spotify-ish playlists, and relatively little in the way of “traffic, sports, weather…funny DJs and talk about your town” stuff.

Sadly, I’ve heard similar things said at radio meetings where the person starts off by saying “now don’t quote me on this, but…”

TELCOM Act of 1996

It was President Bill Clinton who signed the Telcom Act of 1996. That act was supposed to bring competition to the phone and cable television industries thereby lowering costs of each to the consumer. While that didn’t happen quickly (some might wonder if it ever did) it did cause the quick consolidation of the radio and TV industries. We went from a country where the largest radio operator could own 12AM-12FM-12TV stations to virtually whatever their pocketbook could afford. And with Wall Street Bankers waiting in the wings, what a company could afford was a lot.

Low Power FM & Translators

For the non-radio folks who read this blog, Low Power FM signals and Translator signals are virtually the same thing, with the exception being that Low Power FM stations originate programming and translators don’t. Both are received over the air on the FM radio dial. Both have increased the number of FM signals on-the-air in America today.

The latest FCC (Federal Communications Commission) report as of the end of December 2016 shows that there were 4,669 AM radio stations on the air in America. Over on the FM dial, 16,783 signals now beat the airwaves (FM, FM educational, translators and low power FM).

To put things in perspective, at a time in America’s radio history when the number of FM signals equaled the number of AM signals on the air, 75% of all radio listening was to FM. So you can only imagine what it’s like today.

93% of Americans 12+ are reached weekly by AM/FM radio says Nielsen.

So while the Telcom Act of 96 caused radio to consolidate under fewer owners who own more stations, adding to the signal overload was the advent of low power FM and translator signals. So much to program and no one home to do the work.

Enter computers, voice tracking, and syndication. This is same computer technology that is employed by Pandora, Spotify, Radio Tunes, SoundCloud and many others.

When TV Challenged Radio

In 1952 TV was born again. It was birthed just before World War II but the war years put broadcast radio/TV development on hold. After the war ended, things began to ramp up quickly for TV.

In 1953, Elmo Ellis was hired to fix 750AM – WSB in Atlanta. Ellis would write about “Removing the Rust from Radio Programming” for Broadcasting/Telecasting (now called Broadcasting and Cable magazine).

One of the points Mr. Ellis made was that a stack of records and a turntable do not a radio station make, though many broadcasters persisted in that very belief.

It was the very same philosophy I employed when I launched a “Music of YOUR Life” radio station. I felt that to be successful, you needed more than just Al Ham’s music list, you needed the personalities that complimented the music.

Both my reader and I are in complete agreement in that a radio station is more than just a song list.

Less Is More

The problem today is that with the “land rush” by broadcasters to own as many signals as they can, we have seen our country’s biggest broadcasters put themselves into a debt situation they cannot get out of and smaller broadcasters have signals and streams to manage but not the revenues to properly execute them.

If we go back to the beginning of broadcasting in America, we see that the FRC (Federal Radio Commission) that predated the current FCC felt that quality over quantity of radio stations should be the rule of measure. By limiting the number of stations, the FRC was attempting to insure the content of those stations on the air would be of the highest quality and also by limiting the number of stations; the advertising revenue that is the life blood of free over-the-air radio could be sustained.

What Can Radio Do That Other Media Can’t?

This brings me back to the question my reader originally posed and asked me to answer.

But before I do, I’m going throw that question out to my other readers – to date over 80,000 from all over the world – to weigh in with their thoughts.

What do you feel radio can do that other media can’t?

Is any radio station you know of doing it right now?

Is this a sustainable future for over-the-air radio?

I’m looking forward to reading your thoughts.

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What We Have Here, Is a Failure to Embrace Complexity

42The world we live in today is a complex place. The KISS operational style seems like it would be a good idea. (KISS = Keep It Simple Stupid) But maybe not.

Turns out in a complex world, being agile is more importance than being efficient. Being efficient kills innovation. Innovation today is the primary driver of building value and creating value is one of the basic reasons for any organization to exist.

Managing Complexity is a 21st Century Skill

People who can manage complexity will be the leaders of the future. Managing a radio station was complex due to the fact that radio has two customers, which want totally opposite things. One customer is the radio listener. This customer wants information and entertainment. This customer usually isn’t fond of commercials. The other customer is the radio advertiser. Anytime their ad isn’t dominating the airwaves and driving consumers into their store is a moment the radio station isn’t doing its job. To add to this complexity are the talented people needed to service both of these customers. Air personalities that attract listeners and sales folks that service advertisers.

Consolidation & Complexity

As the radio industry began consolidating after the Telcom Act of 1996, the traditional thinking of protecting margins was amplified. This resulted in reducing labor costs. RIFs became commonplace (RIF = Reduction In Force). For those that were left wages became stagnant, little money was invested in training and the number of people left in the workforce was reduced to a bare minimum.

The problem is, when you have low paid, poorly trained and overworked people, your operation lacks new and innovative ideas that can improve the business. When the only ideas that are introduced come from the tippy top, they rarely connect with the challenges seen at the front line.

Zeynep Ton writes in her book The Good Jobs Strategy about a discount retailer that took a different approach to their operation than most companies when the great recession of 2008 struck the world. Rather than cut wages or reduce staff, Ton says they asked their employees to contribute ideas. The result was that this company managed to reduce prices to their customers by ten percent while increasing their market share from 15% to 20% from 2008 to 2012.

Herb Kelleher writes in his book NUTS! about how Southwest Airlines created a culture where employees are treated as the company’s number one asset. Southwest does a number of things to benefit its employees, including such programs as profit-sharing and empowering employees to make decisions. This empowerment during the period when oil prices hit a high of $145 per barrel in 2008 saw the Southwest pilots taking the initiative to plot more efficient flying altitudes and work with ground crews to get in and out of the gates quicker to control the Southwest ticket prices and not lay off any people while maintaining a positive profit margin. These actions did not come from the corporate home office but from employees in the field.

What to Do When You Have Maximized Efficiency

Let’s face it; the ability for any radio operator today to squeeze out any more profit through efficiency is over. Radio consultant George Johns puts it this way: “Radio today is in the no business, it has no money, no time and no people.”

So what’s the answer? Collaboration.

The radio companies of the 21st Century will need to develop the ability to make collaboration a competitive advantage. The game has changed from what you own and control to what you can access. Access happens via platforms. Radio needs to create platforms that bring consumers and producers together, much like the Apple App store does globally, but locally for their service area.

Radio needs to find a way to attract listeners by causing them to be fearful of missing something if they’re not listening while directing them to local places via platforms they control that can fulfill their wants and needs on demand.

In other words, radio needs to “think different.”

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Real Possibilities

AARPBefore I get into the meat of this week’s post, I first need to walk you through a bit of a preamble. Also, this week’s post is a continuance of last week’s post about Millennials vs. Baby Boomers, so if you missed it, you might want to read that first here before you read this week’s. Now please bear with me while I set-up the story for this week’s post.

I’ve been a card carrying member of AARP since I turned 50. When you hit this milestone birthday, don’t worry the folks at AARP will find you and solicit you to become a member.

When I became a member, AARP stood for the American Association of Retired Persons. But at age 50, I was a long way from actually retiring.

AARP was founded in 1958, so this organization could be classified a “Baby Boomer” just like me. And just like me, AARP has changed over the years. It officially changed its name from the American Association of Retired Persons to just AARP. AARP no longer requires members be retired but they must be at least 50 years of age.

In 2013, AARP launched its “Life Reimagined” program that sub-labeled the “RP” part of AARP to mean “Real Possibilities.” You see, AARP realizes that today people aren’t thinking about retiring when they hit 50 as much as they are thinking about tackling a second, or maybe a third career or endeavor.

At my university we started a wellness program in 2013. I was a charter member. Our university self-insures employees for healthcare and one of the ways to control costs is to incentivize employees to be as healthy as possible.

My university office is on the third floor of the Mass Media & Technology Hall building. We have three elevators in our building. I never use them. I prefer the stairs for two reasons: 1) they are much quicker than the elevator and 2) I use the stairs as a part of my wellness fitness program.

When a student says they’d like to meet with me for a moment in my office after class, I often find them a third of the way up the stairs when I reach the top floor (I take stairs two-steps at a time). They are also huffing and puffing. I just wait for them to catch up.

Now here’s the point of this week’s post…

Millennials Don’t Know What Age “Old” Is

Millennials are today’s media buyers. Millennials are today’s creative’s. Millennials are today’s planners. Heck, Millennials are probably the people running the place too. So if they have a warped concept of age, it is going to affect their advertising placement decisions.

Millennials now populate today’s media properties. They are the programmers, air talent, sales management, sales people and possibly the senior management.

I just met the director of Cox Digital Media in Las Vegas this past April and he is 28 years old.

Millennials Describe What Old Age Means to Them

Well AARP did some research into this question of what Millennials think “old” is. Then they asked them to show them what they thought “old” looks like. Then they introduced these same Millennials to some real “old” folks. Best of all, AARP recorded everything on video.

Watch the four-minute long video and then continue reading.

https://www.youtube.com/watch?v=lYdNjrUs4NM

See the problem now?

If you are wondering why more radio stations aren’t programming to Baby Boomers, or if you are wondering why more media buyers aren’t buying the BIG MONEY demos, now you have a better understanding of the problem. They think you and I have one foot in grave, instead of one foot away from the summit of Mount Everest.

Corvette Buyers

I live a short distance away from the only place Chevrolet makes the Corvette in the world. The average age of a Corvette buyer is 59. Boomers and people even older are the people who are buying Corvettes. They are NOT the Geritol-set.

We Are Part of the Problem

We call them Millennials, Generation X’ers and Baby Boomers etc, but another way to look at these generations is as tribes. Seth Godin has written extensively about this concept.

Seth says that sooner or later tribes begin to exclude newcomers. So each of these groups operates in their own little silo because it is easier than to keep breaking in newbies and because it could threaten the existing power structure.

Consolidation

The consolidation of media hasn’t helped either. RIFs (Reduction In Force) mainly dismissed the highest priced employees (Boomers) and left an organization of low cost employees (Millennials) all in the pursuit of increasing Shareholder Value.

Recent studies have shown that private companies out-perform public companies. The reason, they operate on the Peter Drucker principle that the only valid purpose of an enterprise is to create a customer. Privately owned radio companies also out-perform their publicly traded radio company counterparts. Same reason.

Turns out delighting customers is simple, clear and measurable, moreover it is the genuine path to successfully operating any business.

Leadership

The first question of a leader always is: “Who do we intend to be?”

NOT “What are we going to do?

BUT “Who do we intend to be?”

In other words, says Max De Pree of Herman Miller “What are we here for?”

Napoleon put it this way “Leaders are dealers in hope.”

Tom Peters says “The leader is the person who inspires us, sends us on quests to places we had never imagined.”

Think Thomas Edison, Nikola Tesla, Steve Jobs, Elon Musk and so many more just like them.

To paraphrase the title of Lee Iacocca’s 2008 book:

“Where have all of the radio leaders gone?”

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Radio is Going to HAL

22You remember HAL? The HAL 9000 is a fictional character from Arthur C. Clarke’s Space Odyssey series. HAL’s name stood for Heuristically programmed Algorithmic computer. HAL was the future of artificial intelligence. HAL always spoke in a soft, calm voice and in a conversational manner. HAL was born in the 90s according to Clarke.

I remember computerizing my radio station’s traffic and billing system around that same time. Computers would quickly invade every part of my radio station operations. It was scary. I remember looking at that computer box and thinking, if that darn thing “dies” there goes the whole enchilada. It wasn’t like losing a phonograph needle or a cart machine or a CD player. Computers changed the game to an all or nothing model. Computers also introduced another concept foreign to radio broadcasters, planned replacement schedules while they were still fully operational. Radio always used to run every piece of equipment until it could run no more. But you couldn’t play that game with computers.

More Dead Air

Programming great, George Johns, recently posted this thought on his blog: “Is it just me or are there a lot more pauses on the radio now than there was when we were using carts.”   And I wrote back to Geo that I noticed the same thing. I figured it was because today, the people charged with running radio stations are not listening to them. Not because they don’t want to, but because they can’t. They are busy – very busy – multi-tasking.

When computers were introduced into radio, I thought it would be great because it would allow air talent to spend more time working on show prep, interacting with the listeners and being focused on their show and not about cuing up records, pulling carts etc. For small market radio stations, it meant that air talent would have an engineer just like the big city radio stations had always had for their air talent. But that’s not what happened.

The radio industry had a different idea in mind. Computers would allow air talent to do more.

After the Telcom Act of 1996, the radio industry began to rapidly consolidate. General Managers became Market Managers. (GMs usually were charged with overseeing an AM/FM broadcast property. MMs would oversee multiple AMs, FMs and in many cases, multiple markets of AMs & FMs.) Computers were quickly seen as a way to do more with less. More work with less people that is.

Multi-tasking Kills Your Brain

Air personalities now could be on multiple radio stations at the same time. They could multi-task. The unfortunate part of this is research now shows that multi-tasking will kill your brain. Turns out our brains were not built to multi-task.

MIT neuroscientist Earl Miller quoted in Inc. magazine says that our brains are “not wired to multi-task well and when people think they are multi-tasking, they are actually just switching from one task to another very rapidly. And every time they do, there’s a cognitive cost.” This constant switching actually produces bad brain habits. Worse, multi-tasking actually lowers your work quality and your efficiency. It actually lowers a person’s IQ like if you were to skip sleeping or use drugs. So if you wonder why today’s air talent isn’t connecting with listeners like they used to, it really isn’t their fault. The deck has been stacked against them by an industry that is using computers and voice tracking to enable their air talent to multi-task. Multi-tasking is not a skill to add to resume. It’s a bad habit to quit doing.

Computers Change College Radio

Erik O’Brien wrote in an article in Radio Survivor about how automation was introduced into his college radio station and how it changed the way college radio was now done and not for the better in his opinion.

KUTE adopted the ENCO DAD radio automation software. What had been a college radio station comprised of student radio enthusiasts, experimenting, having fun – sometimes producing radio greatness and sometimes not – would turn into a more “professional” operation through the use of computerized software. A radio station that had live radio personalities around the clock could now operate without any DJs.

Everything that goes on the air goes through DAD (Digital Audio Delivery). If it’s not in the computer, it won’t go on-the-air. This standardization now allowed for KUTE to begin monetizing their programming. KUTE had an AM signal, licensed by the FCC, but when the transmitter broke down and there was no money to repair it, it became an online only station. Now it was not subject to FCC rules that embraced a community-driven model of radio. It also could now support advertising that could be scheduled and aired that its non-commercial FCC license did not allow.

The new computerized system meant the station was now stable and standardized and predictable. Except when the computer loaded programs didn’t air and other operator errors would plague the station’s on-air sound. What used to be a fun college experience now was a stressful chore.

The Bottom Line

What it all comes down to, whether we’re talking about college radio or commercial radio, is what value are we offering to our listeners by the technology we employ? What do we want the listener experience to be? If we use technology to allow our air talent to be more focused on the station’s mission, radio will be great but if we use it in other ways, probably not.

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Is Radio Ready for a Black Swan?

Once upon a time, radio employed a lot of people. Radio stations that operated 24/7 had to have a live person on duty every hour of every day.

Radio studios were different back then too. There were multiple turntables, cart machines, reel-to-reel recorders and multiple microphones/headphones in every studio. In short, there was lots of redundancy. Radio wasn’t very fragile.

But as technology invaded the radio world, computers would replace just about every piece of equipment in the building; saddest of all were the people. They increased efficiency by a lot.

That’s what disruption does. Disrupts. Everything.

Ironically, there’s a relationship between all this efficiency and fragility. As computers increased efficiency it also increased radio’s fragility.

In those early days, lose a phonograph needle or a cart machine, it was no big deal. However, when you lost a computer, you lost the entire radio station. This drive for efficiency eliminated the redundancy. (Most radio stations today have redundant computer networks to deal with crashes; but not all.)

In New York City, many radio and TV stations left the Empire State building when the World Trade Towers were erected. A couple didn’t. On 9/11 those that kept a redundant transmitter plant in place at the Empire State building were able to stay on the air when those iconic towers came down. That kind of redundancy wasn’t efficient, but it was smart and it made those broadcasters less fragile.

The problem is that in business, becoming more efficient means eliminating human redundancies. That’s been part of our high unemployment problem since the beginning of the digital revolution. All businesses are becoming more efficient through digital ecosystems. It’s these very ecosystems that eliminate lots of jobs.

When systems become more optimized, efficient and complex their fragility increases. Fragile systems often break suddenly and with no warning.

Consolidation contributes to this scenario by stacking optimized, efficient and complex systems into an even larger ecosystem that become top down managed through “best practices” strategies. Unfortunately, the reality of “best practices” is they are often more “average” than they are “best.” Often what’s best for one location, doesn’t translate to best for others. Best practices are really a “one size fits all” situation.

Before you argue that local decisions sometimes also fail (and I would not disagree with you), the failure is quarantined to a single location and does not impact the entire enterprise.

Nassim Nicholas Taleb wrote about all of this in his book The Black Swan.

 “The Black Swan asymmetry allows you to be confident about what is wrong, not about what you believe is right.”

History teaches us the outcome of efficiency and fragility. But like the couple getting married who knows that between one third and one half of all marriages end in divorce is convinced they are the exception, companies operate with this same blind eye to the arrival of a black swan to fly into their path. Or as Taleb writes:

“If you survive until tomorrow, it could mean that either a) you are more likely to be immortal or b) that you are closer to death.”

The world we live in today is changing. No doubt about it. It’s a communications revolution. We can’t operate the way we’ve always done it. Taleb shares this example:

“Those who believe in the unconditional benefits of past experience should consider this pearl of wisdom allegedly voiced by a famous ship’s captain:

‘But in all my experience, I have never been in any accident… of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort.’

-E. J. Smith, 1907, Captain, RMS Titanic Captain Smith’s ship sank in 1912 in what became the most talked-about shipwreck in history.”

If there’s an industry that needs to be thinking about “black swans” and balancing efficiency with redundancy, it’s the radio industry.

People don’t have a favorite McDonalds or a favorite #2 pencil brand, but they do have a favorite radio station.

When a “black swan” swoops in, will you be ready?

Your listeners are depending on you.

Don’t disappoint them.

They love your radio station.

They trust you are prepared for black swans.

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