Almost 30 years ago, Radio station ownership limits were lifted, and Wall Street saw an opportunity. But the hedge funds didn’t understand the business and created mayhem in a still vital industry.
I worked in New York City for over 6 years. I had the opportunity to spend time around the brain trust of Wall Street. These Masters of the Universe saw the weakness of the radio industry and thought that they had all the answers.
Well, they didn’t.
I will give you some history from my perspective. My first 16 years were spent working for family run operations. Both of these companies were managed by third generation operators who put people and community first. These were highly successful operations with large staffs.
I am not looking back with rose colored glasses. No organization is perfect or without unique challenges. But people were first in these broadcast companies. Both of my first employers had top consultants to give strong outside the organization feedback. Both companies had General Managers that catered to both the programming and sales departments.
The Telecommunications Act of 1996 was the biggest overhaul of telecommunications law in 62 years. It was widely thought that this would bring radio into modern times. Consolidation has been a landmark of American Business, so, Wall Street’s Hedge Funds saw an opening. Radio station owners sold for insane profits. Longtime owners were able to sell stations for multiples of up to 30 times meaning that if an owner had a station earning 1 million dollars, they could sell it for 30 million dollars. Quite a return (Most stations didn’t go that high but multiples of 18-25 were very common during this period).
Wall Street looked at radio like the pickle industry. Except there was an issue. Radio did not have hundreds of workers in each location. You couldn’t move all operations to a central hub and save HUGE money, that would justify strong ROI. So, radio ended up with several large owners (by the way, I am not criticizing iHeart, Audacy, Cumulus and the other large owners).
When larger companies developed, they went public selling stock to individual shareholders and institutional investors. The market states that companies show a certain amount of revenue growth per year. Let’s say that number is 10%. Radio is interesting, we are regulated by the Federal Communications Commission. You cannot just build new radio stations. So, companies were forced to merge or expand to meet revenue goals. Wall Street encouraged and even demanded it.
Here was the problem – radio companies acquired an unsupportable amount of debt that could never be paid back. The Hedge Funds just moved cash around and demanded companies cut staff and consolidate management. It was a blood bath. Any of us who entered this business in the 90’s saw this. Great broadcasters, salespeople, managers were forced out because of unsustainable debt and micromanaging Hedge Funds.
On the local level, new clusters were forced to protect the biggest biller in the group. This was not set to grow revenue; it was to protect the revenue and keep the spreadsheets looking right. I know of stations that were more successful brands in ratings in a cluster than the cash cow but if you were the Program Director who was consistently beating the cash cow, your job was in jeopardy. This was a reverse hunger games caused by debt, fear and shortsightedness.
So, here we are.
The good news is that most radio station clusters are still very profitable.
The bad news, the debt makes many clusters unprofitable.
Even though a couple of the bigger companies have gone bankrupt, they’re not bankruptcy situations where assets were liquidated creating a market-based value of these properties. It was essentially a negotiation to lower the debt, and did not move these companies to become cash positive operations again.
Why do the Hedge Funds not cut their losses and move on? Now that is a great question. Hedge funds handle billions of dollars. They bundle bad deals with great deals and so their investors don’t seem to have a problem if they see enough of a profit at the end of the month, quarter or year. People remember the subprime mortgage crisis of 2008. Hedge Funds were bundling bad mortgages with good ones. Soon the bad overcame the market. Thus, a crash. The homes never went away. The value of real estate fell dramatically in many places.
Are people still listening to us? 80% of Americans do. Not the 93% of a decade or so ago (Pew Research). This is much better than local TV where only 63% of Americans watch local TV News.
But what is the future?
It is entirely up to Hedge Fund involvement. Will Hedge Funds cut their losses and move on? If that occurs, will local broadcasters rise again?
What can YOU do?
It is all about the billing. If you are billing a lot more than you cost, the company will need you, and indispensability is what corporate leaders will see. Make yourself available for Sales. If you are the morning talent, be dressed well enough for a sales call. Make yourself available a few times each week to meet clients. Let salespeople know about the products and services that you use. Radio personalities are influencers. They have huge audiences that listen every day. Don’t forget your advantage. We cannot control the Hedge Funds, corporate debt or a fast-changing marketplace.
This was not an exhaustive history, but it illustrates our challenges. Radio programming departments are filled with creative people who just want to entertain. Be aware of our weaknesses and strengths. The Market Manager and sales manager are under huge pressure. Be that person who understands their concerns.
Peter Wilkinson Thiele is a weekly columnist for Barrett News Media. He currently serves as the program director, and morning host of Newstalk KZRG in Joplin, MO. Additionally, Peter has held programming roles in New York City, San Francisco, Little Rock, Greenville and Hunstville. He has also worked as a host, account executive and producer in Minneapolis, and San Antonio. You can reach him on Twitter at @PeterThiele.
With Nielsen, Is There Life After 54?
If the industry truly believes that Nielsen should offer more demos, it’s time to ask the relevant questions and get the answers.
There’s been some discussion of late about whether it’s time to change the standard demos that Nielsen uses for reporting radio audiences.
Dan Mason began the debate a couple of months back with an argument for three demos: 12-19, 20-40, and 41-64. Steve Allan at Research Director has added his thoughts with the suggestion that Nielsen drop persons 6-11 and 80+. Beyond the lack of buyer interest in these demos, he sees it as a backdoor way to increase the PPM sample. Perhaps because more discussion is a good thing, I’ll offer my two cents.
There is likely no way that Nielsen will ever remove the 6-11 and 80+ PPM panelists even though the data are essentially meaningless for radio. PPM is now used for both audio and video. In the latter, PPM measures out-of-home audiences for local TV in the metro areas of DMAs. Remember that TV measures down to the age of two and while Arbitron never dropped that low (can you imagine a three-year-old with a PPM?), the design was that PPM would measure both radio and television. Because video likes a big number, the 80+ issue is probably off the table as well.
Let’s move on to Dan Mason’s suggestions. Radio has been battling with the “you’re dead at 55” issue for decades. In the late ‘70s and early ‘80s, I was the operations manager of WSPA-FM in Spartanburg, South Carolina which ran the beautiful music/easy listening format. I clearly remember Ted Dorf at WGAY in Washington (same format) starting a 35-64 committee, the goal of which was to show the value of the older audience and bring dollars into that demo. That was more than 40 years ago and nothing much has changed.
Even with the lack of dollars for older demos despite the incredible spending power of the boomer generation, why can’t Nielsen offer more “standard” demos? In the “old days”, there were limitations based on processing software and even the size of the printed ratings report (remember the horizontal Arbitron books?). Today, the E-book is barely used and processing power is essentially unlimited.
The limitation may reside in the systems used by Nielsen to process the local markets. The old Arbitron processing systems were somewhat limited and rebuilding the system was usually behind other priorities. I do not know if Nielsen has updated the processing system, but if they have, it shouldn’t be hard to offer more “standard” demos, whether Dan Mason’s suggestions or others. If Nielsen has not updated the systems in the decade since the Arbitron acquisition, then we’re back to my recent column asking the paraphrased Ronald Reagan question of whether you’re better off now than you were ten years ago.
What about the third-party processors: other companies that use the Nielsen data, for example, agency buying systems? Nielsen can require certain data to be made available as part of the future licensing agreements for data access. Still, the companies would also have to make software changes that will take time.
Let’s make the generous assumption that these changes will take place. Who wins? It seems that most radio formats would do well if at least one buying demo went up to age 64. And yes, I know 35-64 has been available for decades, but let’s consider Dan’s 41-64 for the moment. News/talk will be helped along with classic rock (how many classic rock songs were recorded after the mid-80s?).
Those of us who are older don’t act like our parents (full disclosure: I do not fall in any of Dan Mason’s new demos) so I can see Adult Contemporary, Country, Urban AC, and other formats doing well. Public radio has also been aging so it may be easier to sell underwriting and their outside offerings that can carry spots. The various commercial Christian formats should look good, too.
Where does this leave us? If the industry truly believes that Nielsen should offer more demos, it’s time to ask the relevant questions and get the answers. Assuming Nielsen can make the software changes in a reasonable period of time, it’s up to the industry to convince agencies and advertisers of the value of these new demos over the ones they’ve used literally for generations. That will be no easy task, but making the data easily and readily available will help.
Let’s meet again next week.
One of the radio industry’s most respected researchers, Dr. Ed Cohen writes a weekly column for Barrett News Media. His career experiences include serving as VP of Ratings and Research at Cumulus Media, occupying the role of VP of Measurement Innovation at Nielsen Audio, and its predecessor Arbitron. While with Arbitron, Cohen spent five years as the company’s President of Research Policy and Communication, and eight years as VP of Domestic Radio Research. He has also held the title of Vice President of Research for iHeartMedia/Clear Channel, and held research positions for the National Association of Broadcasters and Birch/Scarborough Research. Dr. Ed always enjoys hearing your thoughts so please feel free to reach him at [email protected].
The Latest Example of How to Not Produce a Debate
If there is a blueprint on how not to put on a debate, it was Wednesday evening.
As if it couldn’t get any worse, it did. For the first time since it’s been my job to watch a Presidential debate for a living, I turned one off. After 82 minutes (9:22 p.m. CST, not that I was watching the clock or anything), I had enough. I couldn’t subject myself to the torture that became the second GOP Presidential debate on Wednesday night from the Reagan Library.
If there is a blueprint on how not to put on a debate, it was Wednesday evening, and there are multiple reasons why, beyond the usual bemoaning of “the candidates won’t stop talking over each other.”
The debate was overproduced. In the opening there were videos of Reagan (nice and well done, don’t get me wrong), each anchor had various lines they were reading between each other, which felt forced and unnatural, and as a result, it took over three minutes from the opening of a debate to a candidate finally speaking.
I understand TV isn’t radio, but in a PPM world, imagine taking three minutes to get to your content, when people are tuned in at that moment to consume the content you’ve been hyping up and promising for weeks. Time is a zero-sum game. Every minute a candidate is not speaking, because a moderator is, or a pre-produced piece is playing, can’t be gotten back.
Give people what they came for. A 15-second welcome, a 60-second introduction of the candidates, if that, and dive into the questions is a 90-second process. Keep these things moving and give the viewers what they came for. And that’s the candidates.
The debate lacked direction and clarity. Anchors spent far too much time asking long-winded questions with ridiculous and unnecessary details. As a viewer, it came across like the anchors were trying to impress us, rather than asking a question, getting out of the way, and letting the candidates — you know, the people running for President — try to impress us. They’re the ones who I want to be impressed by because they’re the ones we’re being asked to vote for.
Also, the topic direction had little flow and was disjointed. On certain topics, only one to three candidates would get to answer questions on the issue. I’ve laid out the case for keeping the flow of a debate and moving it along, but only giving half the stage the chance to answer questions on the most pressing issues in the country is a disservice to the voter who is there to here what everyone had to say.
At one point in the debate, Chris Christie was asked about a looming government shutdown, which was followed by a childcare cost question to Tim Scott and then it was an immigration/dreamers question back to Chris Christie. And that was in a five to seven minute span. Huh?
Rather than finding the six to seven big topics and diving into them with each candidate, while letting the candidates then organically and respectfully spar, it was like watching an ADD-riddled teen try and bounce between topics with no clarity or purpose.
And Yes, the Candidates
Of course, there were plenty of these moments that typically derail debates, notably primary debates, where multiple people are talking over each other and no one is willing to give in to be the first one to shut up. Then, the debate begins to inevitably sound like Charlie Brown’s teacher and suddenly the obnoxious noise even makes your dog look at you and wonder what in the hell you’re watching.
There were too many candidates on stage and then the moderators also ended up losing control, like what happened last go around.
But as I wrote last month, this debate format is a broken system. But for some reason, we keep doing the same thing and expecting a different result.
Ronald Reagan was rolling over in his grave watching that debacle last night. It’s too bad he’s not still here to try and help fix it.
Pete Mundo is the morning show host and program director for KCMO in Kansas City. Previously, he was a fill-in host nationally on FOX News Radio and CBS Sports Radio, while anchoring for WFAN, WCBS News Radio 880, and Bloomberg Radio. Pete was also the sports and news director for Omni Media Group at K-1O1/Z-92 in Woodward, Oklahoma. He’s also the owner of the Big 12-focused digital media outlet Heartland College Sports. To interact, find him on Twitter @PeteMundo.
3 Ideas to Turn CNN Max Into a Streaming News Juggernaut
The last thing CNN needs to do is to have CNN Max hiding in plain sight.
It is so easy to find a gamut of stories and opinion pieces within the past year or two criticizing many different aspects of CNN and the way it operates. Many of those evaluations have been absolutely fair.
Now though, it is time to give CNN credit where it is due.
This week marked the launch of CNN Max and it has been as seamless as a fresh glazed donut coming straight out of the oven. The stream’s video quality is crisp. Commercials are inserted properly. Most of the exclusive programming feels exactly like something you would see on linear CNN.
But the most fascinating thing Warner Bros. Discovery has been able to pull off is the ability to stream most of the same programming that airs on domestic CNN via Max. It is a stroke of business genius and puts the company and network ahead of its counterparts when it comes to offering a quality streaming alternative. As has been mentioned in the past, the network has been able to bypass MVPDs and stream their primetime anchors without permission from cable operators because CNN Max is mostly a direct simulcast of CNN International which airs U.S. programming live overnight while Europeans are in bed.
Despite the successful launch, there are still some tweaks that could improve the product exponentially. One major benefit would be to have replays of programs that viewers may have missed from earlier in the day. Each show on serves a specific purpose and although similar coverage of news is told throughout the day, each anchor has a unique way of stringing the narrative together. Viewers deserve to get the chance to see how a story develops throughout different parts of the day and see specific segments in its entirety that may not get clipped for social media.
Viewers also need a chance to fully sample CNN Max’s exclusive programming and at the moment, if you don’t watch it live you’ve missed it forever.
Speaking of clips, it’s important for highlights of the day to be available quickly within the Max ecosystem. On CNN Max’s first day, Kasie Hunt scored an exclusive interview with Sen. Joe Manchin that made headlines.
Unfortunately, the only way a viewer could see it if they missed it live was if they scoured the network’s website for it or waited for a clip that the social media team would eventually put out. Part of being a modern-day news organization requires accessibility to be at its best at any given time of the day.
If viewers have a difficult time finding out the major highlights of what’s been on air, it may be harder to convince them to try a new product.
Viewers also deserve the opportunity to subscribe to alerts. News breaks on a consistent basis and unless you’re scrolling through your social media feed all day 24/7, it is almost impossible to follow everything that’s happening. Max needs to provide an option for specific types of alerts dealing with breaking news or major storylines that have developed live on air on CNN Max with the option to tune in now or to see clips or full episodes that deal with a specific headline. Alerts will increase engagement and maintain a relationship with the consumer they may not be able to get at another major entertainment app that streams similar programming as Max.
Promotion within the app is also important. While Max did an awesome job of showcasing the various shows that are live at any point during the day, it used the same graphics of the same hosts with the same descriptions every day. Viewers who read promos on entertainment apps are used to seeing different plot lines and convincing pictures showcased once a week whenever a new episode of their favorite show is ready for viewing. Max needs to treat news stories in the same fashion.
As stories break throughout the day, Max needs to promote their live programming with information blurbs containing new developments and questions that viewers might get answered by tuning in. Show previews could also promote featured guests. Using the same stale graphic of a host, show name, and generic show description will eventually become stale and annoying for viewers. Viewers will unfortunately train their minds to ignore the static messaging.
Warner Bros. Discovery also needs to take advantage of CNN Max’s predecessor. CNN Plus was able to maintain a decent amount of followers on social media – at least 35,000 on Twitter. Turn that page into a promotion spot for CNN Max that aggregates clips, promos, and previews of what viewers can expect on Max or what they may have missed.
As the brand develops a presence on social media, it will also develop name recognition among future cord-cutters who are deciding between Max and other services. The last thing CNN needs to do is to have CNN Max hiding in plain sight. CNN Max can be additive to cable ratings if people have an understanding of where and how to access it.
CNN Max is creating a direct relationship between the consumer and CNN. It’s a relationship that has always had a middleman. Unfortunately for the cable industry, the middleman is slowly dissipating away.
With this newfound bond, the network should take advantage of the digital real estate it has access to and create real interaction with viewers. Optional polls, factoids, written descriptions of stories on screen, or even biographies of the guests on air at any given time could provide viewers with an extra reason to stay tuned in. It keeps viewers occupied and helps elongate the amount of time viewers spend on the stream and the app as a whole.
Jessie Karangu is a weekly columnist for BNM, and graduate of the University of Maryland with a bachelor’s degree in journalism. He was born and raised in Baltimore, Maryland but comes from Kenyan roots. Jessie has had a passion for news and sports media and the world of television since he was a child. His career has included stints with USA Today, Tegna, Sinclair Broadcast Group and Sightline Media. He also previously wrote a weekly column for our sports media brand, Barrett Sports Media. Jessie can be found on Twitter @JMKTVShow.