Tension At The Convention Edition

Good Morning!

I haven't been to an NAB convention in about 5 years. It was 2000 (I think) and the business was rockin'. I remember the lavish suites & free flowing optimism pulsing from the hotels. As a Senior VP with Infinity, working with good friends & fellow pro's Dan Mason, Don Bouluoks, David Pearlman & John Gehron and reporting to "Mel" we easily "made the numbers."

Life was good. (believe me, making a "Mel" budget was an accomplishment, missing was, uh, not good.)

Overall radio revenue ended 2000 up 12.3% (www.rab.com). I-Pods, Satellite Radio? Not there, , Wide use of broadband was non-existent, More was Much More, HD stood for "Happy Days",Cell phones were for "phone calls", WiFi was an old set of call letters in Philly, and radio was the scrappy medium the dot-coms used to roll out their over leveraged brands. Change was on the horizon, way far ahead, and with a bit of nervous anticipation we entered 2001.

My friend Gary Fries, The Radio Advertising Bureau Chairman remarked in a release dated 12/28/2000, "While 2000 was largely consumed with major consolidation issues, 2001 will be the first full year where the new organization of ownership will truly take effect."

We all know what happened in 2001. Tragic events drove the business down a whopping 7.5%. (actually - with the dot-com bust, it was tanking before 9/11) And tragic events were happening to radio P&L's too!

2002 + 5.7%, 2003 + 1%, 2004 + 2%. According to the accounting firm of Miller, Kaplan, Arase & Co, www.millerkaplan.com ) Radio revenues are up 1% July YTD. But July itself was down 2%. And the trend could continue downward through the Fall. (remember 2004 had a presidential election).

But enough history. you get the point, Radio Revenues are NOT growing. For all the concern from ad agencies about large companies driving rate, it didn't happen. (we added to the spot load)

We streamlined the expenses as a result of falling revenues. We cut too far. Way too far. Now, in the face of competition, just when we should be strong, we are vulnerable. Say you bought a new expensive car in 2000. Paid a lot of money for it. But the car payments were high. You couldn't afford to change the oil, nor do the proper maintenance at the required time. Gas prices keep going up. Your paycheck is flat. The bank still wants the same payment, but you can't afford to drive the car in the way it was designed to operate. The car will not run too well for too much longer. And when you do need to fix it, it's going to cost a lot more. You know it, you're stressed about it, you don't know when it will break down, but you're pushing it. Know the feeling? Last week, that's what it felt like at the NAB in Philly. We had the tension at the convention.

In Radio - The "Check Engine" lite is on! ...... And our mechanics at the 2005 NAB service station are warning us!

You have read in all the trade publications about the "outside speakers" at the convention telling us to "take chances", and "wake up."

They are right! and we have to start somewhere. We have 2 problems. Perception & Reality. Both can be fixed. But as researcher Jon Coleman offered, "we better get cracking." Ok, here we go!

I was told by an industry leader to put a more "positive" spin on these writings.* Ok, Let's try it!

Look, if we are going to address these issues we are all going to have to do better. Not just corporate, everyone. We have the advantage! We pass 100% of the homes & cars. We have 250+ million listeners. We were here first! Are we going to let everyone with a new gadget come along and take our listeners? C'mon! we're better than this!

So here's what we all can do!

In the next 12 months,

Managers - Fight for your station. If every PD, GM, GSM, (all the titles) raises the bar on quality it would really help. Don't take bad copy, lower the spot load, refuse Satellite Radio ads, (we know it's wrong!- stop it! right now!) take chances on music , re-think the same old lame liners, (I hear stuff we wrote 15-20 years ago), don't assume corporate knows best, challenge them, push back, bitch, get more creative, everybody! Not just the PD. Make your building a creative radio factory. Look for fresh talent, Stop defending C grade work, don't play the averages, every station needs to be better, not just the 1 or 2 "big"ones! Submit a realistic budget, then promise to hit it. Fight back when they try to "load you up" with unrealistic revenue goals, but don't "sandbag." Make sales calls, get out of the office and listen to your customers/listeners. Grow your young staff, listen to them, (they are the ones bailing on radio - find out why) Cut the paperwork, it won't make your budget, tell corporate it's too much, fight for marketing/research support, don't accept sloppy anything from anybody in the building. It's time to step up, get mad, and get your listeners and advertisers back! Your stock options are underwater, you're missing your bonus this year anyway, it's NOT working the way it is now. Change it! If 100% of the managers become pissed at the current situation, maybe the people above will listen.

"If you can't make something that's not boring, then quit now," "People have more than enough choices out there today to never choose boring again unless they want to." Seth Godin - NAB 2005

Corporate - Someone has to stand up and realize the current operating plans are NOT working. You must take chances too! HD, PPM, RAEL, Electronic Invoicing, none are absolutely perfect. But get something going! Take a chance!, you can't operate local stations from the corporate office, stop doing it for them!, fund the stations correctly, make them accountable, treat them like a team, stop pushing the blame down, market and research these stations again, they are starving, stream, podcast, get your signal (content) on as many platforms as you can. Lower your expectations, then tell Wall Street what you must do to win! They will understand if you tell them. Stop playing to them, they don't want you to anyway, give innovation time, but expect quality at every level, spend money on format R&D, HD, and talent. Don't be afraid to fail, cut the paper, listen, stop talking, your employees, listeners and advertisers are telling you, pay attention to them!. Reduce the layers between you and the listener/customers. Fight back, stop letting the sat gang reposition us, speak with one voice, it's no longer "business as usual" It's time to step up, get mad, and get your listeners and advertisers back! Your stock options are underwater, you're missing your bonus this year anyway, it's NOT working the way it is now. Change it! If 100% of the company leaders become pissed at the current situation, maybe the people above will listen.

"Bold steps (in radio) will be the only possible solutions to the industry's current problems with "new media". Steve Rivers www.musicbiz.com

Financial Institutions - Please pardon our dust. We are in the middle of re-inventing ourselves as we did in the 50's when TV entered our lives, the 60's when FM came along, the 70's when cable appeared, the 80's when radio became big business, the 90's when consolidation happened, and the last 5 years when the world will again cause us to re-invent ourselves. Our margins may not be as good as they were, our cash flow could take a hit, we may even have a bit of change at the top! We're a little disorganized, scared, confused, uncertain. We have our "game face" on but deep down inside, we're concerned. We've tried a few things, but, it's not enough. Perhaps we've made a few mistakes. We have to try harder. And we will. We are getting it together. You may have to wait a bit. But we are a pretty determined bunch. We just have to face the reality. We're doing that right now!

"Even in a world of iPods, satellite radio, BlackBerries and cell phones. There is simply no substitute for the immediacy of local radio. Localism is our franchise and ours alone" Eddie Fritts - NAB 2005.

The 2005 NAB Radio Convention in Philadelphia will be remembered as the tipping point for radio's new reality. The re-invention of RADIO BROADCASTING is officially underway.

Your response is always welcome!

Fig