Tag Archives: Warren Buffett

Today’s Media Consumption Headlines

I can’t help but be struck by the headlines I read each morning when I log onto my computer or pickup my smartphone to read the latest news.

Here’s just a few recent ones:

  • More audio is now consumed in the U.S. through mobile devices than through traditional radio receivers. -Edison Research
  • 83% of U.S. Homes have enabled smart TVs or streaming media players. -Hub Research
  • 49% of registered voters don’t have traditional TV, 80% stream. -Samba TV & HarrisX
  • The steady climb of podcasting’s reach in the U.S. -Edison Research
  • Why mobile first is radio’s road back. -Jacob’s Media
  • Survey finds older adults are slowly warming to streaming audio. -Broadbeam Media

This last headline flies in the face of traditional wisdom that people over the age of 55, who grew up with AM/FM radio, won’t abandon the medium. However, the COVID pandemic has caused rapid shifts in media habits, even among older Americans.

Not surprising, it has been the shift to streaming video that’s taught people how easy it is to stream audio content as well.

Traditional Radio vs. Digital Audio

For twenty years, we’ve seen this day coming. With each passing survey, research study or anecdotal observation it’s clear that listening to audio content is moving from the world I grew up in, AM/FM radio, to digitally streamed audio.

The trend line is clear, everything is moving in one direction and there’s no signs of it reversing. Today 53% of audio time spent listening is to digitally streamed audio.

I started off this year of blogging with an article about how ALL of my radio listening is digitally steamed, whether I’m at home or in one of our cars. You can read that article HERE

Hallmark Christmas Movies

My wife Sue and I love watching Hallmark Christmas Movies. One of the things I’ve noticed about today’s movies, is how ubiquitous the smartphone has become in storylines. Everyone is constantly texting or video chatting with others in these movies.

But what really struck a nerve with me, was a scene in a recent Christmas film where a character in the movie tries to explain to another character what radio is:

Actor 1: It’s like TV without pictures.

Actor 2: You mean it’s a podcast?

It’s clear that we are living in the future that was predicted decades ago.

Life Is Change

It doesn’t have to be all doom and gloom. Both public radio and Christian radio have found audiences that will listen and support them whether they are received by traditional radio broadcasting or via a digital stream on a smartphone or smart speaker.

Many of our country’s smallest radio markets are also some of the most successful radio operations. Why? Because they know their listeners, and engage with them on a very personal level.

It’s only when the tide goes out that you learn who has been swimming naked.

-Warren Buffett

In other words, everyone looks like they know what they’re doing when business is good, it’s only when things become challenging, that we know who is prepared to not just survive, but thrive.

How many years must a mountain exist
Before it is washed to the sea?

-Bob Dylan

Radio broadcasting, like the mountain in Bob Dylan’s song “Blowin’ In The Wind,” is dealing with its own type of climate change, a change in people’s habits for how they receive and consume their media.

Let’s hope the answer to radio’s future isn’t “Blowin’ In The Wind.”

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What’s NOT Going to Change About Radio?

It’s human nature to wonder about how our world will change and most times, what we think will change or maybe what we worry might change, doesn’t.

So, why do we do this?

Most likely because we all want to know what the future will bring and this is why fortune tellers are still in business or why we watch The Weather Channel. It’s definitely not because they always get it right.

What’s Going to Change in 10 Years?

I just finished listening to Bob Pittman, CEO of iHeart, on the Borrell Local Marketing Trends podcast on how radio will change in the years ahead. Gordon Borrell and Corey Elliot wanted to know “how radio will remain unique over the next 10 years, whether its dependence on advertising revenue might need to change, and whether we should be calling it ‘radio’ at all.”

What was his answer? Well you can listen to the podcast HERE, if you really want to know. But I can save 23-minutes and 15-seconds of your time by telling you it doesn’t matter what he said, because he’s probably wrong, and that’s OK, because no one will remember what he said a month from now.

What’s NOT Going to Change in 10 Years?

I remember reading that Jeff Bezos said people constantly asked him the “change in 10 years question,” and he said the question they should be asked is “what won’t change in 10 years.” Both Bezos and the brilliant investor, Warren Buffett, believe this is a very important question you should be asking yourself about your business or industry.

“When you have something you know is true, even over the long term, you can afford to put a lot of energy into it,” says Bezos.

Radio Personalities

Over the Labor Day holiday weekend, Rewound Radio presented the sound of classic Chicago Top 40 radio with air checks of WCFL (Super CFL) and WLS (The Big 89 – The Rock of Chicago).

When I was growing up both of these radio stations greatly influenced me and were responsible for creating the desire to make radio my lifelong career.

Listeners to this special Labor Day Weekend presentation on Rewound Radio said they loved hearing their favorite radio personalities once again.

The program was not broadcast over any AM or FM radio signal, but was only streamed on the internet to a worldwide audience.

In fact, this past July 2022, more people watched their favorite programs by streaming them versus a cable TV subscription. Streaming, says Nielsen, is now “the most popular way to consume content.”

The one thing that Bob Pittman did share in his Borrell interview worth noting, was that in focus groups people didn’t call our medium, “radio.” They called what they listened to by the station’s brand, as much as we don’t refer to our mode of transportation as a “car”, but as a Ford, Chevy, Honda etc.

So, having a unique brand for your radio station is very important. The one unique brand every radio station in America has are its FCC call letters, like WCFL or WLS.

Dan Mason

Dan Mason was recently inducted into the Broadcasting & Cable Hall of Fame 2022. Dan said he grew up in Louisville, Kentucky listening to Cawood Ledford, the voice of the University of Kentucky sports for decades. It was Cawood that created the desire in Mason to be on the radio and he never pictured himself in the executive suite. But Dan Mason would rise to the president and CEO of CBS Radio, which he retired from at the age of 64.

Upon retiring that position, Mason quickly return to his first love, that of being on the radio and broadcasting sports play-by-play.

Dan Mason believes that great radio depends on two things: 1) community & companionship for the listener, and 2) having integrity.

For the listener, both of these are created, and earned, by the radio station’s air personalities.

And that’s something that’s never going to change.

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First Things, First

covid-19If someone had asked you, “Where do you see yourself in 5-years?” I seriously doubt anyone could have imagined they would be smack dab in the middle of a global pandemic. But that’s where we find ourselves at this moment in time.

No matter what you may think will return us to the life we had before COVID-19, nothing even begins to change until we have two things: therapeutics to cope with this novel coronavirus and a better understanding of how this dastardly disease can be squashed like a bug. In the meantime, everything else we try is merely a Band-Aid on the problem.

TRUST

A good radio friend posted on LinkedIn a graphic from the Radio Advertising Bureau (source: Kantar 2017)  “Trust in News” purporting radio to be the medium, Americans turn to for trust.

Radio & Trust

Well, we are now half-way through 2020, and I wonder what relevance that this research conducted in 2016 and published in 2017 has in a COVID-19 world. Probably, slim and none.

In fact, the NRRC (Network Radio Research Council) is recommending that all network/national buying and selling be based on the Fall 2019 Nationwide survey, and not those surveys conducted since the start of COVID-19, saying “the impact of the COVID-19 pandemic has caused unprecedented divergence of traditional patterns of media consumption, including AM/FM listening and the streaming of audio.”

If we can take to the bank anything from the world we are living in now, it’s that anything pre-COVID-19 is now FUBAR*.

How COVID-19 Has Changed Our Media Consumption

Since the onset of this global pandemic, the home broadband bundle has significantly been changed. Most consumers are adopting a stand-alone broadband service and not bundling it with Pay-TV or home phone or even their mobile phone. Why is this happening? Researchers say with another recession looming, people are watching all of their pennies.

With people working from home (WFH) and driving less, Out-Of-Home (OOH) media has been clobbered. Revenue projections for the Billboard industry show it will be down over 19% in 2020, compared to radio (down 13.7%) and local television (down 12.4%), according to MAGNA. Before COVID-19 hit, OOH was one of the fastest-growing and most stable linear media channels. Zenith thinks that OOH revenue will be down even more, predicting it to be down 25% in 2020.

Nieman Lab writes “Radio listening has plummeted. NPR is reaching a bigger audience than ever. What gives?” And the answer is, 2020 is the year that NPR will make more money from underwriting on its podcasts than it will from its radio programs.

Follow the Money

Local radio is very dependent on Main Street, but Main Street is in the cross-hairs for defaults, bankruptcies and evictions due to COVID-19.

Much like NPR is experiencing with its online products, retailing is becoming an online activity with American consumers. Economists knew that many cities had a retail footprint that was too big for the local consumer economy to support. COVID-19 merely accelerated things.

In fact, COVID-19 has created a quantum leap for e-commerce in 2020. What was projected to take place over years, has been compressed into a few months.

The United States Census Bureau reports that in the second quarter of 2020, e-commerces retail sales in America rose 31.8% from the first quarter and were 44.5% above the same period in 2019. The Census Bureau says that compared to the share of total retail sales, e-commerce sales grew as much in three months as it had over the past five years.

We are living a period of rapid technological change. Columbia Business School economist Laura Veldkamp says, “We are changing the way business is getting done, we’re changing the way we’re shopping and the way we’re eating – we’re changing the way we’re having meetings.” She points out that:

“the pandemic, like the Depression and World Wars I and II, is fundamentally altering people’s tastes. Some businesses will be left behind, as consumers get accustomed to videoconferencing instead of commuting, and buying groceries and other goods online instead of braving stores, malls and restaurants.”

Unemployment Tsunami Ahead

Economists are worried what’s ahead when it comes to unemployment in America. They see exponential growth in claims for the Pandemic Emergency Unemployment Compensation (PEUC) program and a weakening U.S. labor market. The PEUC has grown from 27,000 people on April 11, 2020 to 1.3 million as of August 1, 2020. Worse, the number of PEUC recipients has stayed at over 1 million people for four straight weeks and has actually been increasing each week.

“The real tsunami is coming,” says Mark Zandi, chief economist at Moody’s Analytics. “My guess is at this point hiring in the industries that have been hit hard is going to abate.” Plus we know that United Airlines plans to furlough 3,900 pilots, Delta 2,000 pilots and American Airlines are alerting their employees to furloughs of 19,000 companywide.

The Conference Board Consumer Confidence Index declined in August for the second consecutive month hitting a new pandemic low. Consumer optimism, along with their financial prospects also declined. Both are continuing on a downward path.

The Long Road Back

Economists see a long road back for the United States economy. A National Association for Business Economies (NABE) survey of 235 members July 30-August 10, 2020 showed that 60% predict that it will not be until the second quarter of 2022 (or later) that our economy may finally rebound to where it was in 2019, pre-COVID-19.

Economy Rebound

The Party’s Over

When you’re having a good time, it’s hard to call it a night and leave a party. Sometimes it’s due to FOMO (Fear Of Missing Out) and other times, it’s because no one likes to see good times come to an end.

The Oracle of Omaha – Warren Buffett, puts it this way:

‘They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.’

Commercial broadcasters, by and large, have enjoyed the radio broadcasting party of the 60s a little too long. So many of the programming models haven’t really changed since the days when I was still a disc jockey, yet the world has changed, and changed exponentially.

Radio broadcasters, like NPR, that have embraced a vision of where media consumption is headed, are seeing their investments paying off.

Those that haven’t changed, are finding today’s environment extremely challenging.

Local radio’s fortunes have always been tied to Main Street, not Wall Street.

COVID-19 has disrupted Main Street’s business model.

The old rules don’t apply any longer, but, we don’t really know yet if this is another giant bubble or the future of our world.

Realizing that the time horizon for answers could be two years out, one wonders, will you be able to survive till we have the answers?

 

*A military term defined as F’d Up Beyond All Recognizability

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Radio & the Consumer Driven American Economy

99This week produced some conflicting economic data. The stock market was setting new records and the unemployment rate dropped to 4.3% but the number of people filing for unemployment benefits beat analysis estimates. WTF?

The Surprising Threat to Radio

It’s estimated that two thirds of the American economy is driven by consumer spending. Don’t get hung up on the percentage, but know that a lot of our economy is driven by the buying and selling of stuff that is consumed.

Some things, like a Whopper are consumed quickly and other things, like the car you drive, are consumed over a longer period of time. Much of our spending is discretionary.

Radio is a strong driver of putting thoughts into people’s heads about things they should be deciding to consume. Radio is the word of mouth medium with the big mouth.

So what threatens radio today? Consumers are not spending.

Radio’s Role in Consumerism

Broadcasters can’t change the attitude of an apathetic consumer for the most part. Other factors in the world create consumer attitudes, uncertainty being one of the biggest.

Uncertainty causes consumers to hunker down and make do with what they already have. And today’s world is filled with lots of uncertainty that is being stoked 24/7 by the cable news networks, talk radio and social media.

Radio is excellent at directing consumers to different businesses, products and services when they are feeling confident and want to part with some of that discretionary cash.

Barron’s reports that year-over-year growth in U.S. retails sales peaked in mid-2011 at 8.3% and has since rolled back to 4.5%. The four biggest performing stocks are Amazon, McDonalds, Comcast and Home Depot.

A World of Debt

Radio people are very aware of the huge debt problems impacting iHeartMedia and Cumulus. But they may not be aware that American household debt in the last quarter reached a record $12.73 trillion and Barron’s says that just surpassed the debt American’s owed at the height of the housing bubble.

Student loan debt is now over $1.4 trillion, which is about $620 million more than U.S. credit card debt. Student loan debt rose six percent in the past year.

American credit card debt rose by $3 billion in February 2017, its highest level since 2008 according to The Motley Fool.

Market Watch says that U.S. households now have surpassed the amount of debt they had in 2008. Plus Americans are struggling with their auto loan debt with these sub-prime loans hitting their highest delinquency levels in December 2016. A pattern that Market Watch says was seen prior to the 2007-2009 great recession.

An Inconvenient Truth

During the 1960s and 1970s, the American economy expanded over 11%. In the 90s it couldn’t get above 9% and in the most current expansion it hit 5.9% and recently was only 3.6% according to Barron’s.

Many Americans no longer see consumption as being the “American Dream” but now are saving as much as they possibly can despite interest rates on savings sitting at anemic levels.

Income inequality is also playing a huge role in the current state of American consumerism. 76% of the wealth in America is now held by the top 10%. Only 1% is in the hands of the bottom 50% of American families in today’s America. CNN Money reported in December 2016 the wealth inequality in America is getting worse. “The rich are money making machines,” said CNN.

A 2016 study by Gallop senior economist Jonathan Rothwell found that the bulk of our national spending is eaten up by just three items – healthcare, housing and education.

What’s the impact on ad supported media in a world of enormous debt and haves vs. have-nots? I wrote about this after reading Thomas Piketty’s book “Capital in the 21st Century.” That article was called “The Future of Ad Supported Media” and you can read it by clicking on the link here .

Survival of the Fittest

What all of this is telling us, Spending is OUT and Frugality is IN.

A broadcaster friend of mine was sharing that in his PPM market TV ad time is now selling at “radio rates.” When the pie isn’t growing, media companies are forced to begin taking more from someone else.

Radio is the best value for the money when the economy goes soft.

I started my radio sales career at the beginning of the early 80s recession. I was very successful and it saw me enjoying a four plus decade long radio career before becoming a broadcast professor to pay-it-forward to a new generation of broadcasters.

As Warren Buffett says, “It’s when the tide goes out, that you know who’s wearing a bathing suit.” In other words, when the business changes from taking orders to really selling, we will learn which companies have trained their sales people to not just survive but thrive.

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Radio Would Be a Great Business… If It Weren’t For the Employees

21I’m sure the title of this week’s post caught your attention. If you’ve ever been a manager, quite possibly this thought has crossed your mind on more than one occasion. Unfortunately, technology has provided many a radio company the opportunity to give this concept a whirl.

The reality is radio is a people business. Take away the people and do you really have radio anymore?

My best sales people were a pain in the derriere. My best air talents were likewise. And I mean that in the nicest possible way. The fact of the matter is, great talents are always a handful to manage, but they are the engine that creates great radio.

Managing great talent is the art of keeping them from killing one another. Managing great talent is respecting that they are outstanding at what they do and at the same time looking them in the eye and under no uncertain terms letting them know that their talent doesn’t transcend to every other aspect of their life.

Very talented people often think that because they are outstanding in one area, they are in all areas and this is often what leads to their downfall.

Managing great talent is like keeping a nuclear reactor under control. You need to know when to push the control rods in to calm things down and when to pull them out to create a powerful, positive reaction.

Managing great talent will exhaust you. Managing great talent will frustrate you. Managing great talent will challenge you. Managing great talent will be the greatest experience of your life.

I’ve had the honor of running some great radio stations over my radio career and I’ve been fortunate to have worked with some incredibly talented people in every area of radio station operations. I credit my success to them and doing my best to clear the field of obstacles that might prevent them from performing at their highest personal best.

Since I started teaching, I’m finding a similar scenario with students. Great students will get every piece of knowledge they can out of you. They are self-motivated to excel. And yes, they too, can be a handful. But the greatest reward a teacher can experience is having students who want to learn and then apply what they’ve learned to grow and excel at whatever they put their mind too.

Warren Buffett’s “3 Qualities to Look for in Hiring:”

Integrity, Intelligence & Energy.

If you don’t have the first one, the other two will kill you.

To sum it all up, the most important thing any business or school can do is pay attention to how it recruits the people it will work with. You can’t teach attitude. You hire attitude. Everything else can be taught.

Radio is a great business if you will do these three things: 1) focus on hiring great employees, 2) make sure everyone is focused on the same goal and 3) let your people know you really care about them.

Just remember, like a high performance automobile will command a lot of attention, the finest race horses will command a lot of attention, so will high performance talent. Anything that performs at the highest levels of its field will command a lot of attention.

If you like winning, then everything it takes to get there will be worth it.

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