This past week was another tough one for so many wonderful people who worked at our nation’s largest commercial broadcaster, iHeartMedia. The “monetization purge” that took place was huge. Large markets, medium markets, small markets all were impacted in a big way.
Clear Channel
During my time at then Clear Channel Communications (2004-2009), I enjoyed working within this behemoth of a company that had every resource any radio manager could imagine at their fingertips. It was amazing, until it wasn’t.
Private Equity Radio
In 2008, Clear Channel Communications was acquired by a private equity consortium led by Bain Capital and Thomas H. Lee Partners in a massive $18.7 billion buyout. While the deal was originally agreed upon in 2006, it didn’t close until July 2008.
As a market manager, what I witnessed was control of the radio stations moving from the local management and people who lived in the market to a centralized system of control from the top. Decisions were driven by reviewing Excel spreadsheets prepared by people who never worked a day of radio in their lives or had any real understanding of how radio made money.
Less Is More
In 2009, being a market manager was trying to do more with less; people and resources, that is. I remember going to a management meeting and coming home with a thumb drive of all the people I would need to eliminate. The word of the day was “RIF” or Reduction In Force.
We eliminated the promotions department, traffic department, downsized air shifts, and our sales team of 15 was reduced to five sellers and the three sales managers were eliminated.
This process of reducing staff occurred over the first nine months of 2009 until my regional manager came in and RIF’d me, along with many other market managers in his region. Then senior management RIF’d the regional managers, before the company president RIF’d them. The coup de grâce was when private equity folks RIF’d the president.
Money saved,
but radio – not so much.
RIF’s
Radio would be forever changed after the Telcom Act of 1996. This began the downward spiral through consolidation funded by Wall Street. It was during this period of time that the acronym “RIF” would enter radio’s lexicon.
2009, 2020 & 2026
This year joins 2009 and 2020, when the radio industry also endured massive staff reductions.
RIF veterans from the first round, can often be found saying to one another, “is there really anyone left to RIF?”
Lancaster, PA & Sussex, NJ
I was a market manager for Clear Channel Communications/iHeartMedia in both Lancaster, Pennsylvania and Sussex County, New Jersey. Reading the trades this past week, I believe that all of the air staff in both of the markets have been eliminated.
It breaks my heart for all the people who were RIF’d out of a career that was their life’s passion.
Efficiency Bubble
The “efficiency bubble” means that efficiency is valued over effectiveness. AI (Artificial Intelligence) is exacerbating this change at lightning speed.
In the UK, Rory Sutherland, Vice Chairman of Ogilvy, shared a personal experience that demonstrated what happens when efficiency bubble is pursued.
“The absurdity of the efficiency bubble was brought home to me in a recent meeting with an online travel company. The conversation repeatedly included the mantra ‘the need to maximize online conversion.’ Everyone nodded along. Clearly, it is much more efficient for people to book travel through the website than over the telephone, since it reduces transaction costs. But then someone – not me, I’m ashamed to say – said something revelatory: ‘Ah, but here’s the thing. Online visitors to the site convert at about 0.3%. People who telephone convert at 33%. Maybe the website should have a phone number on every page.”
“Perhaps the most efficient way to sell travel is not the most effective way to sell travel. What, in short, is the opportunity cost of being efficient?”
“Nobody ever asks this question. Opportunity costs are invisible; short-term savings earn you a bonus. That’s the efficiency bubble at work again.”
According to radio research conducted by Fred Jacobs in his annual Techsurveys, radio personalities are more valued by the radio listener than the music played. But in the current environment, I don’t hear anyone talking about “opportunity costs” being sacrificed with all these RIFs.
Radio companies are all chasing the same efficiency metrics, the result is why all radio stations sound the same and their websites look the same. Consolidators have made this once creative medium a commodity.
Today’s world offers infinite choices when it comes to audio programming, and radio continues to eliminate its competitive advantage; its people.
When Your Iceberg Melts
Back in 2008, many people picked up a copy of Ken Blanchard’s book “Who Moved My Cheese?” I know I did. It’s a great read.
But maybe the book everyone in broadcasting should be reading today is “Our Iceberg Is Melting” by John Kotter. Kotter is an award winning author from the Harvard Business School.
Like Blanchard and Johnson’s Cheese book, Kotter writes a simple fable about doing well in an ever-changing world.
The fable is about penguins in Antarctica that discover a potential devastating problem to their home – an iceberg – it’s melting away.
It’s a story that will resonate with anyone, as AI (Artificial Intelligence) is eliminating the need for people in all professions; not just radio broadcasting.
Kotter’s book walks you through the eight steps needed to produce positive change. You will not only enjoy the read, but will be guided with valuable insights to deal with our 21st Century world that is moving faster and faster every day.
Sadly, all industries today face an urgent need to adapt to AI-driven automation, which is reshaping the global workforce.
Emotions
The radio business was never built on Excel spreadsheets and doing what was most efficient, it was built by creative people who touched others emotionally. Be it station imaging, air personalities, promotions, community events, advertising or marketing; radio always went for people’s hearts. And now those talented people have been shown the door.
Where’s The Outrage?
Striking the emotional chord with the listener is what successful radio stations, podcasts and other audio programs will be focused on. The pursuit of efficiency is a rational answer to an emotional problem.
We make choices in products and services emotionally.
We justify those decisions rationally.
-Roy H. Williams
DickTaylorBlog 