Tag Archives: radio stations

What Do Radio Broadcasters & Almond Farmers Have In Common?

Last week, an article in The Atlantic titled “The Well Fixer’s Warning: The lesson that California never learns,” was a terrifying read about the water supply used to irrigate the almond orchards on the farms of Madera County. So many of the farm’s wells were coming up dry and the farmers were puzzled as to why water flowing out of their wells had been reduced to a trickle and were mostly producing sand.

Matt Angell is not only an almond farmer himself, but owns Madera Pumps, a company that drills wells and repairs well pumps. He knows that droughts, like the California sunshine go hand-in-hand, and as John Steinbeck wrote: “no one (forgets) the last drought faster than the farmer.”

Since the middle 1970s, almond farmers have persevered through at least five droughts and their solution to the problem was always the same – BUILD MORE DAMS.

BUILD MORE DAMS

Those three words stopped me cold. Who else thinks like this? Radio people, that’s who.

Today in America, there are now 26,076 radio stations on the air, 2,500 of these stations are broadcasting in HD which adds another 2,100 multicast radio channels to the mix. That’s about a 93% increase in the number of radio signals from when I started in high school.

The radio industry and almond farmers, have both felt that the way to grow is by adding more and more and more. Almond farmers added more acreage of almond trees and radio owners added more signals.

Aquifers

The dam reality was the San Joaquin River already had a half-a-dozen dams diverting its water, so the next solution to obtaining more water for almond irrigation was to drill down to the aquifers beneath the farmlands. Unfortunately, it didn’t take long for the farmers of Madera County to pump out the easily available ground water and see their wells coming up dry. As they were drilling deeper and deeper into the earth, a hidden lake beneath the farmlands was discovered in 2014. It was shocking to see it pumped dry in only seven years.

Angell noted that the snow on the mountain had melted two months earlier than “normal,” and the water level of the San Joaquin river was so low, it was now nothing more than a series of unconnected ponds as well as the wells – residential, business and farming – all over the community were running dry.

The reality is, the Madera County underground water table is one of the most over-tapped aquifers in the West, and all those wells had depleted the underground water source, causing the aquifer to collapse.

The Advertising Pie

It was before the COVID19 pandemic gripped our world, Gordon Borrell hosted a webinar back in early 2019 and told of how the media pie (the radio industry’s aquifer, if you will) is over-tapped.

To put things in perspective, Gordon shared how an over-populated media landscape is impacting local advertisers.

  • 1,300 daily newspapers, 6,500 weeklies
  • 4,700 printed directory books
  • 4,665 AM radio stations, 6,757 commercial FM radio stations
  • 1,760 Class A TV stations
  • More than 1,000 cable systems with local sales staffs
  • 660,000 podcasts were actively produced in 2018
  • 495 NEW TV shows were introduced last year in addition to what’s already on
  • PLUS, local ad sales are taking place on Facebook, Google and Amazon

Same Old Answer

Despite the fact that the water from the aquifer and river was being depleted by droughts, climate change and being over-tapped, the almond farmers’ answer was always the same, said Mark Angell, “Plant more almonds and pistachios. Plant more housing tracts on farmland. But the river isn’t the same. The aquifer isn’t the same.”

Listen to radio owners, and they will tell you they too need more and more radio signals in order to stay viable, despite the fact that the advertising pie is finite and media supported by advertising continues to expand exponentially.

“I used to use the word unprecedented to describe what we’re doing to the land,” said Angell, but “now I use the word biblical.” Is it any different for radio broadcasters?

The Solution

For the nut farmers of Madera County, the solution is a hard pill to swallow, it’s “to figure out a way to retire one million acres of the six million farmed, “otherwise, we’re looking at a race to the bottom,” said Angell.

For radio broadcasters, Gordon Borrell said the solution to the future of media expenditures would be a process of “thinning the herd.”

The way advertising buyers are responding to a world of media abundance, Borrell says, is by:

  • Decreasing the number of companies from which they buy advertising from 5 to 3.5, and
  • 90% of their media buys are being made with companies who can bundle traditional and digital advertising.

Killing the Golden Goose

Do you remember the Aesop fable of the goose that laid the golden 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 and almond farmers. Both possessed a wonderful “goose” that laid daily “golden eggs.”

Unfortunately for almond farmers, in wanting more, they are killing their water supply, and for broadcasters not wishing to wait for each day’s golden egg, cut open their goose beginning with the Telcom Act of 1996, that allowed them to own as many radio stations as they basically wished.

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.

Almond farmers saw the moral of the fable as planting more trees, install more powerful pumps to withdraw more water and watch your R.O.I. grow.

But ironically, it is 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/almond trees).

Everything in excess

is opposed to nature.

-Hippocrates

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The Largest Financial Decision in Your Lifetime

122I was just reading an article about car buying and it said that buying a car is one of the largest financial decisions most consumers will make in their lifetime.  Really? I thought that was buying a house.

After being a university professor for seven years, I left with a feeling that getting a college education might be the largest financial decision. Today, student loan debt tops $1.3 trillion. The number of Americans with student loan debt is a record 44.2 million.

A record 107 million Americans now have auto loan debt. Worse, 6 million of them are behind on their auto loan payments.

Homeowners are doing little better with only one in four having more equity in their home than debt. Unfortunately, 5.4 million homeowners are seriously upside down – meaning they owe more on their mortgage than they can sell their home for. The rest of the homeowners are somewhere in the middle.

Then again, maybe it’s the cost of health insurance or putting away money for retirement.

Finding a Purpose in Life

Have you found yours yet?

I was lucky, I learned at a very young age what I wanted to do with my life.

It was to be a disc jockey on the radio.

Until one day, after being a DJ for ten years, I changed my mind. Now I wanted to be the radio station general manager.

That lasted over three decades until I changed my mind again. Now I wanted to be a university professor. I did that for seven years before deciding there was something more to life than just focusing on a career.

Business writer and editor Theodore Kinni says that “you can still build a rewarding career, even if you don’t heed the purpose ‘siren call.’ Start with what you’re good at and go from there – quit early and often until you’ve found work that works for you.”

 

“A sense of purpose is like an appendix. If you’ve got one, good for you.

 If you don’t, you’re not missing anything important.”

-Theodore Kinni

Luck & Success

I’m not discounting the need for hard work to be a success in life, but I know a lot of people who worked very hard and still had a hard time getting ahead while others seemed to have a much easier time.

Recently, a report in Inside Radio spoke to the fact that some radio markets were enjoying phenomenal growth while other markets were very challenged.

If you’ve ever worked in a large radio group, I’m sure your property was often compared to others who were making their numbers while yours struggled. No one seemed to care or found it important to understand the local market dynamics and how another’s “Best Practices” were not in your best interests to employ.

Radio Stations & Colleges

Turns out colleges have similar geographic problems as radio stations. Colleges are married to their location in much the same way that radio station licenses anchor broadcast properties.

Have you ever heard of the DCI?

DCI is the Distressed Communities Index and it shows that the U.S. economy is very diverse and fragmented when it comes to economic well-being. The 2017 DCI shows 52.3 million Americans today live in communities characterized as “economically distressed.”

For colleges that operate in these areas, their prospects for recruiting students to fill the seats is very challenging. Not all that different from radio stations trying to produce cash register rings.

Another area that both radio and colleges are being challenged, is the internet and the mobile economy. Whether it’s listening, shopping or getting an education, more and more people are doing it online.

When listening, shopping or education moves online, it no longer competes with the entities, but the best merchants, radio stations and the best colleges in the world.

Internet Dollars or Dimes

For too long, I heard traditional broadcast media complain that going online was trading OTA advertising dollars for internet dimes. And that was certainly true. It’s because we tried to apply the same business model to the internet that we applied to our broadcast business model. Colleges did it too. It was wrong. Internet economics is an entirely different business model.

Look at the top 50 internet websites and you will see they don’t make money the way that traditional media companies or colleges made money. The top 5 didn’t exist before there was an internet.

I’m sure if you dig deeper you will find that the digital dimes are being made by the traditional media companies and colleges, while the digital dollars are being made by those digital startups. In fact, INCOME did just that and compiled a list of the top 20 companies making the most money on the internet.

The real eye-opener is when you scan this list of companies and see how much money they vacuum in every second (Amazon $1084 per second is #1).

Very quickly you realize that internet commerce is made up of a few haves and a zillion have nots.

Once upon a time America had strong antitrust laws. Antitrust laws are really anti-competition laws that were put in place by the U.S. Government to protect you and me from predatory business practices by ensuring that fair competition existed and we live in an open-market economy.

Fast vs. Slow

The beauty of our government is that nothing happens fast. It takes time and a lot of political capital to bring about change.

Fortunately, that slow pace of government wasn’t that much slower than the rate of commerce over the last 225 years. It all worked. Until it didn’t.

Welcome to the 21st Century

Computers are fast. Computers connected to the internet are even faster. Collaboration adds even more to the speed of innovation.

Government hasn’t been able to adjust to this new high-speed world the internet created.

Colleges and radio stations are also trying to play catch-up.

Life is a balancing act.

Things are moving very fast.

No one can ever tell you what’s right for you. And no one knows where all this is going.

And so, I’ll leave you with some great career advice from Dr. Seuss:

“You have brains in your head. You have feet in your shoes.
You can steer yourself any direction you choose.
You’re on your own. And you know what you know.
And YOU are the guy who’ll decide where to go.”

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Filed under Education, Mentor, Radio, Sales