Radio’s Third Round of Cuts

Sheryl Crow was wrong.

The first cut isn’t the deepest – at least not in the radio industry. What we are about to witness is going to be.

This is not idle speculation.

Wells Fargo’s Marci Ryvicker, one of the few major bank analysts still covering traditional media this week predicted another round of major cost reductions based on the poor results and warnings that have been made anticipating third quarter declines.

Traditional media companies in Q2 were off 15-20%, but the average radio company was down in the 20-25% range. Some analysts think these same radio companies would have a hard time doing much better as the third quarter results are revealed.

Ryvicker is warning that the cost cuts are likely to be substantial but she expects radio CEOs to put on their happy faces as they speak of deleveraging their debt, cutting costs and asserting that some important advertising categories are coming back like auto spending.

She is more optimistic on CBS’ prospects this quarter but that is tempered.

Marci is good, but she’s a bank’s analyst. Good with numbers and relying too heavily on sketchy information fed to her and her compatriots by the very CEOs who are pulling the wool over on everyone else.

Here’s the real deal:

Cumulus, Clear Channel and Citadel – the big three and most powerful radio companies will cut personnel and expenses in the months ahead.

Sooner rather than later and yes, using their customary Merry Christmas holiday timing.

Clear Channel will likely offer the best severance for some (not all) of their victims. Citadel and Cumulus will live down to their reputations of being two of the worst radio companies to work for. See a full list here.

But there’s more.

Did you know that Cumulus has been firing market managers, salespeople and other local station executives the way a serial shooter fires at their victims?

Repeatedly and without let up.

What Cumulus has been doing – hoping to stay out of the headlines – is to move slowly but continuously from market to market and relieve itself of staff. That’s why Cumulus employees like to see John Dickey or Gary Pizzati arrive in their markets as much as they like to see the Grim Reaper. Actually, they’ve got more of a chance with the Grim Reaper.

But once the Cumulus death squads arrive, someone often loses their long battle with employment.

Clear Channel fired so many people in their mass assault on staff a year ago that they couldn’t possibly equal such career destruction again – or could they?

Citadel, in my opinion, has an almost fatalistic approach to cost cutting – that is, sacrifice anyone but CEO Farid “Fagreed” Suleman, the architect of their failed media plan.

You may remember the reverse Morris Trust deal that Disney insisted on when it got Citadel to pay $2.7 billion for the ABC stations and radio networks. Disney walked away with $1.6 billion in cash at closing. Disney put the company into a “shell” corporation for tax purposes one step before Citadel Broadcast Group became Citadel Media.

Some 52% of the ownership went to Disney shareholders but Disney will not get the stations back should Citadel default on their loans. What is likely is that the Disney shareholders will get the same screwing Citadel Broadcast Group investors got – 4 cents a share or less.

You can see why Round Three of radio cuts will be the most devastating for the industry. Let’s not forget that any firing (especially at holiday time) has tremendous personal implications – considerations Wall Street makes short shrift of.

So, what will happen?

1. Cumulus will continue its methodical execution of broadcast careers and work around-the-clock if necessary to get the company to become a simple series of towers and transmitters that can be virtually programmed by Atlanta, marketed through Harvard-style new age cockamamie radio sales logic and run on the cheap by the few, the shamed, the Dickeys.

2. Citadel will cutback not only in personnel but in assets to run the existing radio stations. Keep in mind Citadel owes $150 million in its next debt payment due January, 2010. And as I have said previously, I think Fagreed is working on a deal to trade the company’s debt back to the lenders for equity -- in effect turning over control to the banks. Banks are even better at ending careers. Citadel will not be a pretty place to work in the next six weeks.

3. Bonneville, in my opinion, is not stupid enough to buy Citadel’s ABC stations. They, Emmis and Entercom were among the original interested buyers but Emmis and Entercom came to their senses. I don’t think Bonneville’s Bruce Reese is going to buy even a single ABC station right now. The fix is on to turn Citadel debt to equity and as Cumulus CEO Lew Dickey once said to me about his competitor, it will operate business as usual. And you know what usual is – firings, cutbacks and more repeater radio.

4. If I’m a salesperson right now, I’d take a long vacation and not answer my phone. I think salespeople are a soon-to-be extinct breed in a misguided industry that thinks less is more. Of course, every station should be hiring account execs and training them. My sense is there is a sentiment epitomized by Lew Dickey to create a virtual, new age sales approach to radio. This is tantamount to another recession for companies that think this way, but it’s Dickey’s company and others are following.

5. Clear Channel didn’t cut CFO Randall Mays’ job to save money. Hell, they are paying him for several more years to do virtually nothing. That salary is around a half million dollars – enough to keep more good Clear Channel people working. What I think you’ll see from Clear Channel is no “blood bath” this time – they never lived down the last one in the press. But a blood letting – combining jobs (yes, they can still find ways to do this – how, I don’t know). It will be continuous and will have more of an impact in future quarters than now – which brings me to this conclusion ….

The real reason Clear Channel, Cumulus and Citadel are going for a third round of deep cuts is not to escape their poor performance but to set the table for a rebound when the economy rebounds.

Think about it.

None of these groups can cut anywhere near enough expenses to be even a pimple-sized dent in another quarter of 20-25% losses.

But, as they say on Wall Street, their balance sheets will look awfully nice when the billing returns and their overhead is already cut way to the bone.

See? And you were thinking they wanted to be broadcasters.

Oh, one more thing.

Don’t tell John Hogan (Clear Channel Radio President), Dickey and Suleman that the media world has changed since radio first ran into the recession.

New media is now taking increasing amounts of ad dollars from radio – and even posting increases in quarter by quarter statistics during the recession.

Radio is not in new media – in fact, radio skipped the Internet, mobile and social networking revolutions.

So, now you know the proverbial rest of the story.

More deep cutbacks to sharpen the balance sheet for what they anticipate will be a turnaround.

Escaping by the hair on their chinny chin chins from too much debt by giving up operating control of their companies to bankers that hold their debt.

And no concept of what new media is.

If it’s going to be a bad holiday at your house because three Grinches stole Christmas, wait until Dickey, Suleman and Hogan find out what’s in their stockings.

Nothing.

Absolutely nothing to build a future on as they once again trade immediate gratification for growth by adding to the thousands of people they have been firing for the past few years – the very people who can rebuild their business.

Apple is not firing anyone and you see how they are doing.

My rule of thumb is – companies that hire are on fire.

Companies that fire are dire.

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Record Labels’ Obsession with Music Streaming

Somehow you just get the feeling that record industry executives who haven't been able to shoot straight for the last ten years are getting ready to reload and fire.

Duck.

They are set to go beyond the obvious cockamamie ideas, like Interscope/Geffen/A&M Chairman Jimmy Iovine’s brainstorm to come up with a $2,300 laptop computer basically for playing music.

Now that’s what’s going to save the music industry, don’t you think?

Iovine formed a partnership between HP and Beats Electronic, the audio technology company founded by Dr. Dre.

The laptop is definitely upscale and will allow users to hear music the way it was actually produced. Then again, I am asking the question, how many audiophiles out there really drive the music market?

Iovine dreams on by predicting that this hardware solution includes a plan to start an online distribution platform which is being called “Timberland” to work along side the soon-to-be-launched video website Vevo.

Iovine is quoted as saying this is “a giant step forward” for the music industry.

Say what?

From hardware to soft ideas.

Google is now rumored to be trying to enter the streaming music market by using its dominant search platform.

Insiders say Google is getting ready to announce deals with the four major record labels in an attempt to erode some of iTune’s 70 percent market share. The labels are slobbering all over themselves to get at Apple which has really stolen the key to their brick and mortar record stores and opened up online under their own terms.

Apple’s terms mean – Apple sells the hardware and makes a small percentage of the 99 cent per tune charge, but the labels also get a relatively small percentage of the 99 cents (compared to traditional delivery methods) and the labels don’t get to sell the hardware.

There is long-festering animosity between the labels and Apple CEO Steve Jobs who seems to have their number. Clue: he understands their unbridled egos because he’s got a large one of his own.

Starting soon, then, Google will make it possible for search clients to type in a song and buy it within the Google infrastructure.

Search.

Buy.

Simple.

But is it necessary?

Google is involved with LaLa and iLike (part of MySpace).

Again, as my readers know, the labels are focused on themselves.

In this case getting back at Steve Jobs. Jobs may not be Mother Teresa but he wins by focusing on what the consumer wants. If he can pull one off on the labels while he is at it, well, that’s up to him.

The labels have it in for Jobs because he took the iTunes idea to them – you may remember – as an antidote to piracy that surrounded Napster’s arrival. The labels were in a panic. They called their army of lawyers together and never looked back.

The labels should have bought Napster to take it out of play and maybe even operate it. Instead, they let Jobs sell them his solution to piracy that was iPod/iTunes. The hapless label heads never thought to stop Jobs because he knew what button to push – piracy.

Of course, iTunes is no solution for piracy.

It’s a solution for Apple – a damn good one – for loading up iPods and iPhones with convenient content. Remember Jobs was an early proponent of eliminating DRM (digital rights management) even if he was against giving up iTunes own proprietary version of DRM.

Now, after bumbling through a decade of inaction, legal strategies, failed decisions and partnerships, the record labels are: a) getting into the hardware business; b) betting that music can be sold through search and c) hoping the Android smart phone kicks Apple’s ass when it comes out.

One would be shortsighted to see the future of the music industry like this.

Apple owns the “record store”, controls the pricing, wins when music is either sold or stolen and has such mobile and online dominance of the paid music market that to compete one would have to outsmart the genius who pursued and achieved this strategy.

Lots of luck.

Meanwhile don’t lose the lesson that consumers are the ones with all the power -- not record label CEOs.

Knowing the difference makes the difference.

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The Repercussions of Banker Radio

Yesterday, Randall Mays stepped down, fell down or was brought down from the in-over-his-head position as CFO of Clear Channel.

That’s two Mayes down – one to go.

Lowry is retired.

Randall is now getting the old corporate heave-ho.

And Mark Mays takes on Randall’s job temporarily (that’s scary) while he finds a new Randall (scarier still).

One of my readers put it best:

“Let me see if I have this straight…

The Whiz-Bang corporate Wizard whose financial acumen helped 'steer' a broadcasting leviathan, which once owned 1200 American radio stations, directly into the path of a Force Five hurricane that Ray Charles could've seen heading their way is being given some time off but will stay to provide the corporation with his proven business acumen and he'll continue to receive his obscene salary and benefits "through 2013".

Right.

That's the kind of thinking that's caused Clear Channel and its shareholders to become the 21st Century Titanic desperately looking for a major iceberg.

De-regulation. What a concept!”

The departure of Mays is getting headlines today, but it is a rather meaningless event. Just another step toward the complete takeover of large, financially-troubled radio conglomerates by investment banks.

Lee Capital Partners & Bain Media don’t need Randall Mays.

They are Randall Mays.

Clear Channel is the biggest radio group in the world and if you want to see the future of the industry, just look closely at what is going to happen within the next few months:

1. Lee & Bain, Clear Channel’s owners, will stop playing radio and start playing a very long game of Monopoly. Except they may turn a Park Place company into Broadway in Camden, New Jersey, one of the most blighted cities in the U.S. What a comparison. Camden’s city government was taken over by the state of New Jersey and Clear Channel’s fine stations were taken over by the state of Lee & Bain. Camden is ruled with authoritarian power and Clear Channel is … well, you get it.

2. It will be all about “real estate” for radio companies controlled by investment banks and by “real estate” I mean radio stations and what they could be worth when the economy gets better.

3. The three largest radio companies will be under the control of investment banks in 2010. They are, of course, Clear Channel and soon, Citadel followed eventually by Cumulus.

4. Banker Radio will spare no one from further cuts. The dream of reinvesting in on-air talent and program content isn’t going to happen – at least not at groups that sold their equity to pay debt. Keeping costs low while maintaining the licenses will be the overriding goal.

5. The FCC is going to allow J.P. Morgan to bail out Citadel and all their stations will be run the way investment banks hold all their assets – for resale, hopefully at higher prices.

6. If Clear Channel is playing Monopoly then Cumulus is playing Chutes & Ladders with their personnel being bandied about like board game pieces. Yet there is no real way out for the Dickey family as their debt is also burdensome and much of it will have to be converted to equity for their investors.

7. Dickey, Citadel’s Farid “Fagreed” Suleman and the dynamic duo of Mark Mays and John Hogan at Clear Channel will have one job going forward – save their asses. I believe they all will because it is better to have Mark Mays in charge of writing corporate email memos to the staff than having him run the company. These four have been effectively neutered and they, too, are simply pawns of the banks they sold their souls to.

8. Reduced multiples of four or five times streaming cash flow are critically lower than the inflated 12x plus standard the industry used to get when a station was sold. That’s because no station – even the best – was ever worth 12x cash flow. The banks propped it up and gladly paid those prices in an industry it had invaded. If you’re waiting for these stations to become available, I don’t think the investment banks are ready to sell the good stuff at these lower multiples. That’s my long winded way of saying – I think the bankers are going to be in the radio business a long time. Sorry.

While the industry should be working on a digital footprint and preserving personality radio, it will continue to embrace the concept of turning radio into iPods.

Back when Schafer Automation was introduced, station ownership once again salivated at the thought of a machine running tapes and playing music with few people involved. Never did such stations win audiences that could translate into real revenue.

I inherited a station like that in Philadelphia and couldn’t wait to talk management into ripping out the automation and going live. We did. The station went on to be a real money machine with live personalities.

Just before the automation was hauled away, one of the minimum wage announcers called me in a panic at home and said he couldn’t stop the automation from doing time checks. It was time checks gone wild. The geniuses who invented automation were damn proud that they could have an announcer do "even" and "odd" time checks over the automated music tapes. But this automation clicked and sputtered and the time checks just kept going and going and going.

What I told this poor automation babysitter is – pull the plug.

He did and Humble Harve stopped with the constant time checks (that were all incorrect by then anyway).

Here we are today – voice tracking is the new automation – with the same results.

The wrong weather. Wrong pronunciations. Lower ratings. Less local programming. But cheap to operate.

The only difference is then was the industry came to its senses because the owners – cheap bastards as some of them were – were actually lovable in hindsight because they wanted to get ratings and make money and discovered automated radio wouldn't get them there.

Today, the big three consolidators fired their personalities, went to voice tracking and syndication, then cleaned out their sales staffs during a recession.

They would love to make money – and radio has very few expenses (even fewer without people) so it’s hard not to make money.

Unless your debt is so high even all that “Free Money” has to go down the debt drain.

So – follow me here – with the debt gone and investment banks able to make a profit running low cost repeater facilities all over the country – they can now afford to do what they do best – wait the market out.

Or, as I like to call it, Banker Radio.

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Radio’s Rush to All-Music

It happened again yesterday.

Emmis pulled another fan favorite off the air at KIHT, St. Louis to become more music intensive or, in non-coded language, to pander to Arbitron’s People Meter.

If the radio industry only knew ten years ago that the People Meter would be a front for being able to save salaries while creating the fantasy of better ratings, maybe radio CEOs wouldn’t have given Arbitron such a hard time.

Heck, even paying the increased Arbitron bill makes sense for cost-conscious consolidators under the scenario that is rapidly developing.

In all fairness to Emmis, they are keeping J.C. Corcoran on the KIHT payroll until the end of next year (Don’t try this at Cumulus). The Corcoran decision may also be a strategic programming move. They are allowed.

But KIHT also fired long-time personality Katy Kruze and Carl “The Intern” Middleman as part of their imitation of “Follow what CBS is doing”.

It's okay for owners to responsibly save money, but I don’t think they are allowed to pawn this off as a programming improvement.

Don’t vomit when I print this quote from Emmis Senior VP/GM John Beck that appeared in Inside Radio:

“…playing more music in the morning than any other station in the market is one way we feel we can differentiate ourselves and attract even more listeners.”

So this is my warning to the industry that what CBS started, everyone is now following.

Get the picture – follow the leader even if it isn’t good for you. That’s what radio does too easily and too often these days.

Clear Channel does Repeater Radio and lays off tons of people – Cumulus and Citadel follow.

Cumulus fires tons of sales people, the bottom feeders follow even though sales people are the exact people you should never fire.

Citadel follows Clear Channel. Clear Channel follows Citadel. Cumulus follows just about everybody – as long as it is cover for cutting costs.

But the concept of dumping djs for more music is dangerous in two ways.

One, it works – for now.

Two, it hurts later – as stations will eventually find out.

Firing radio personalities is a bad business.

Radio personalities are really all that distinguish radio from an iPod.

It’s like spreading the remains of a cremated person all over the market – you can never get the ashes back into the urn. Radio operators will find this out – their usual way – the hard way.

Let’s go back to why turning radio into a non-stop jukebox actually does work.

Because PPM is not working as promised.

When we were all hoping for Arbitron to report more listening for radio we never dreamed of the distortion that is taking place. The People Meter is not reporting reliable actual listening. It’s reporting drive-by "hearing".

CBS is smart enough to take advantage of it – that’s why you see all-music AMP-type CHR stations popping up in various markets and benign voice tracking being utilized to basically do no entertaining. It’s the worst kind of iPod on radio – not your music choice, no personality element, commercials jammed into huge stop sets. No music discovery -- the same old, same old that listeners have been complaining about for decades.

And it works.

AMP in LA has two million listeners – I mean, "hearers". Let's count the incidental listening that is getting to be a problem.

The radio industry is now programming to win incidental listeners instead of to create rebid fans that are actually listening to their stations for long periods of time.

Look at how radio is pulling one over on the People Meter -- but it won’t get away with it.

A religious station is number one in teens in Philadelphia if you believe PPM figures there – and I don’t and you probably don’t, either. WVBV-FM was ranked number one in teens for October 1-7, 2009 (Week Three) and the trend is holding.

It will take an act of God to get that meter away from the person influencing these results.

Here’s the coverage map – it would also take Divine Intervention to get this signal to the entire metro area, transmitters and towers alone could not do it.

The results are not just wrong, but absurd.

A small non-commercial New Jersey religious FM is not the number one teen station in Philadelphia and the high cuming, no-personality radio stations that the major groups are rushing to install are not actually gaining real listeners.

Similar problem at WDNA, Miami where anyone can walk in and be on-the-air – that station is suddenly #2 Teens on weekends. I wouldn’t be surprised if one household yielded these results.

And don’t discount this because I have presented two teen examples. There’s nothing preventing other demos from being adversely influenced by the PPM system and hungry radio companies.

Programmers are trying to game the system.

Under the diary, you had a better chance of getting a real listener to lie about the length of listening – I’ll give you that. But with PPM, if a meter wearer is picking up someone else’s preferred radio station, then you’ve got high cume or what I like to call no believability.

This may be great for our egos but advertisers are not going to like it.

You heard what I’m saying – radio companies are trying to game the PPM system. That's why I am going to offer some more effective strategies at my seminar in January.

There are many flaws in any audience measurement system and PPM is no exception. Will immigrants reveal the personal information required by Arbitron to carry a device or is it an INS trick? (I wouldn’t risk it).

Many people – especially women – do not want to carry around meters that look like ugly pagers even with cute stickers on them. PPM should be conducted on mobile devices.

Arbitron under-estimated the costs of proper Houston-style recruiting, and are desperate to hold costs down by restricting sample size and recruiting techniques. The Philly teens case is a good example.

Does anyone think this sample is representative?

Electronic measurement of radio is a good thing but not the way it is being fielded by Arbitron.

However, the real villains may turn out to be the usual suspects – radio consolidators who are happy to confuse hearing someone else’s radio station for listening to an actual radio station.

That’s like Phyllis Diller’s picture being viewed in a computer program that shows how plastic surgery can improve her looks.

Only an illusion.

And in the case of radio, the cure will come from advertisers who are increasingly obsessed with digital spending – a growth area over radio even during the recession.

Unwitting radio advertisers, therefore, may put up with eight minute stop sets, but they won’t tolerate making buys on “hearing” not actual “listening”.

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Learn More About Jerry’s Upcoming Media Solutions Seminar. One-day interactive teaching seminar January 28 in Scottsdale. Focusing on solutions to current media challenges and opportunities. Ways to reinvent radio. Making money from webcasting & podcasting. Unlocking the power of social networking. Music industry opportunities. Skills necessary to operate in the digital space. This is a face to face private event. Will not be made available in a webcast. No audio recording. Space is limited due to the personalized nature of the seminar. Register to reserve your seat here.

Dr. Dickey Tackles Cumulus Health Care

I’ve got bad news for the big radio consolidators.

Once the economy comes back and their money problems ease, many of their best employees will quit.

These loyal workers have been waiting to leave abusive radio groups for a long time now. Once things get better – probably by mid-2010 – the best and the brightest from Clear Channel, Citadel and the worst people-treater of all, Cumulus are going to find themselves in a bad way.

We’re seeing it now.

Many Cumulus employees have quit – even without a new radio job to go to and the ones who have left for brighter pastures can’t get over the pleasure of working for radio operators who treat you well. These may not be the big three but they are out there.

I mention this because one of the Big Three Career Wreckers, Lew Dickey of Cumulus is now tackling health care.

No -- not the public option or killing Grandma approach– he’s out to save money on the backs of the one thing you just can’t take away from employees right now – their health safety net.

He's now using software that allows him to track pharmacy claims on a daily basis. Big Brother is really watching you now at Cumulus.

Dr. Dickey is out to shave $4 million off the health care expenses of his 3,500 Cumulus employees.

The business journal Portfolio.com did a story on health care costs and Dr. Lew is one of the poster boys in what actually turns out to be an unflattering, damning article on how Cumulus operates as an autocratic entity.

Dickey fires his head of Human Resources. Then, he slams her in Portfolio.com!

"Chief executive Lewis Dickey is taking an unusual step toward tackling health care costs: He's taking charge of the matter himself. Fed up with his human resources department's inability to halt runaway costs, he personally took over analyzing health care trends for his 3,500 employees.

Most CEOs delegate such tasks. But technology is allowing top managers such as Dickey to get more involved. He uses a software system from WellNet Healthcare in Bethesda, Maryland, that tracks pharmacy claims on a daily basis, helping him size up and manage health care costs.

Dickey concurs. 'I could immerse myself in office supplies, and in 15 minutes I could have a knowledge about that,' Dickey says. 'It's a simple thing to jump into. But understanding health insurance is different.'"

The full article is here.

There is a lot wrong with this.

First, an effective CEO doesn’t immerse himself in office supply costs. He or she hires competent people who weigh cost/benefit when it comes to expenses.

Secondly, you don’t play "I’ve got great health care coverage and you don’t" with employees during this economy even if you are the supreme owner.

As I said earlier, things will look up next year – radio’s billing will improve although few analysts believe the industry can grow again without a major transition to new media products to attract digitally focused advertisers. Still, things will improve.

As the Portfolio.com article points out, the average family premium for all employer-based health plans is $13,375, up 34 percent from five years ago and up 131 percent from 10 years earlier, according to the Kaiser Foundation.

So Dr. Dickey is doing dangerous surgery at a time when he could be left without his most talented employees. Spying on them with cameras, sending the John Dickey, Gary Pizzati “Death Squads” out to exercise their firing power and dehumanizing the workplace will have a price to pay.

For example, Cumulus remains the Worst Radio Group followed by Clear Channel and Citadel according to our Inside Music Media ongoing poll of business executives (to see the rankings, click here and scroll down the right hand column).

It is no accident that these three groups – the three largest owners of radio stations – are the biggest career wreckers and also voted the worst operators. And while the bean counters and bankers were performing surgery with their employees' livings, the workforce is going to have the last laugh.

And as Confucius said, “he who laughs last, laughs best”.

People are beginning to migrate from the three consolidators that have set such a dark tone for the industry and moved on to good operators. Because just as sure as the recession ends, Cox will hire once again and so will Bonneville, Lincoln Properties, Journal, Emmis and the other good ones. Their excellent reputations will net already good companies the pick of the market.

Then companies like Cumulus will be forced to hire inexperienced workers from, say, the uniform rental business. Oh, that's right -- they already do.

In the months ahead, keep an eye on the following:

1. Good owners hiring the Worst Radio Groups best employees as they move beyond the bottom of the recession.

2. Clear Channel, Cumulus and Citadel experiencing a brain drain the nature of which they have never seen because these three groups had many outstanding managers, programmers, sales managers, account execs and on-air talent. They stayed because they needed the jobs. Now they will once again polish the old resume.

3. The radio groups that want to be growth companies will have to start spending on new media as I have been saying for years now. And many traditional employees can port on over and new ones will be trained. The three Career Wreckers will not attract this talent any time soon.

4. To get back in the game Cumulus, Citadel and Clear Channel (if they exist in their present footprints) will have to become more people-friendly. More benefits. Better salaries. Insuring a better work environment. A very difficult task without a changing of the guard at the CEO or president level.

5. They will also have to stop forcing employees into arguably illegal restrictive contracts and will have to clean up the sexual harassment I have been hearing about at some of these companies. Zero tolerance is the number for harassment at good companies.

6. The bitterest pill for the most abusive consolidators to swallow is that good people in a good economy will not work without respect and autonomy. No more top down thinking. Read Peter Drucker. The knowledge worker is what you want – not the know-it-all CEO.

So while Dr. Dickey enjoys his $4.1 million health care bonus, keep in mind that it comes at a very high price.

The year ahead is a recovery year and recovering from abusive and misguided managers is also included.

The next recession will be at radio groups that rode roughshod over their employees during hard times.

And their punishment?

They don’t get to keep the best employees some of whom are already starting to leave.

You’ll know the Big Three Career Wreckers are listening to me when you read a story some day soon about consolidators suing employees to stop them from quitting.

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Pre-packaged Bankruptcy for Citadel

If you want to know how Citadel CEO Farid "Fagreed" Suleman is going to avoid filing for Chapter 11 bankruptcy January 15th when he can't pay $150 million in debt, here's the answer.

It appears the fix is on right now to emerge with a pre-packaged bankruptcy for Citadel.

That is, it happens fast.

Everything is predictable because it has been negotiated in advance and it's kind of like having the honeymoon before the wedding.

Without this maneuver, Citadel throws its fate into the hands of a bankruptcy judge who is likely to appoint caretakers to preside over Citadel while a plan is drawn up to emerge from Chapter 11 protection. Translated that means Suleman loses control over the process. Stations could be sold for pennies on the dollar.

Citadel and the lenders don't want that.

That's why he is working feverishly behind the scenes to avoid this scenario.

Citadel share price has been fluctuating upward a little bit -- as much as a four penny stock can increase -- I believe, because insiders know what's going on behind the scenes.

Here's what I think will happen to Citadel:

1. Sometime before the end of the year, Citadel and its major creditors will agree on a way to mitigate the debt that the company cannot currently pay.

2. The creditors will in effect take over control of Citadel leaving the original company with a minority position. I suspect because Citadel executives are playing nice and agreeing to go willingly, they may get a little more of the company than they might have. Still, both sides are going to wrap up an agreement that says since Citadel cannot pay its debt, the creditors will take it as equity and the lenders will own and run the company.

3. A bankruptcy judge will approve this in one day -- quickly -- and as if it had never happened, Citadel is made whole again and becomes a functional business.

4. Current management including the guy who got them this far into such a pickle -- Fagreed Suleman -- may be invited to stay or may be asked to go. I'm betting Suleman comes away with at least a short-term contract as a "reward" for playing nice. That's more than many of his employees got when he fired them in the midst of Citadel's financial crisis but that's why Michael Douglas is making a sequel to "Wall Street" right now in the same city where Citadel is headquartered.

5. If Fagreed stays, his management "team" including Judy Ellis stays in place.

6. No stations get sold from the portfolio unless or until the new owners, Citadel's creditors, decide it is accretive to their fat wallets.

7. Investment banks are never going to wind up in the radio museum. They are not pioneers. They are not legends. They are financial predators looking for fees. From the moment this deal goes down it's really all about real estate not radio -- if you get my drift.

8. Investors who were looking to buy the distressed Citadel stations out of bankruptcy will now have to wait until the price is right for the new investor owners.

Remarkably, this pre-packaged bankruptcy makes Citadel a viable business again even without a pickup in the economy. Citadel and the former ABC Radio Networks does between $600-800 million a year and would be doing just fine even now if Citadel didn't have such a burdensome debt load.

All this is a giant indictment of how investors artificially drove the prices up for radio properties during consolidation and irresponsibly burdened shareholders with debt that was untenable except under boom economy conditions -- certainly not realistic.

Once the pre-packaged Citadel bankruptcy is complete, the enterprise will rise or fall on whether it will run under current management. If it doesn't, Fagreed will be out. If it does, get the company jet refueled again.

Citadel will emerge in the image of Lee & Bain, two investment companies that bought Clear Channel at too high a price and now must hold it until they can sell all or part of it for fees and intended profits.

Someone ought to take this outrage to New York Attorney General Andrew Cuomo and have him investigate the fleecing of shareholders who in the end saw their investments diminished to penny stocks because Suleman and the Citadel's founders are about to get a "Get Out of Jail" card for free.

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Hybrid Radio

Prius, the part electric, part gas powered automobile, has been a successful model for Toyota in a changing world of high gasoline prices and concerns about the environment.

Other companies have responded to Toyota’s success by trying to deliver to consumers cleaner emissions and better mileage.

Not all of them have done it with an electric component – Mercedes Benz, for example, is pushing clean diesel engines as their “hybrid” solution.

Significantly, Detroit was caught selling gas guzzlers and polluting alternatives at the time of the recession. That’s why General Motors and Chrysler took gas – so to speak – and Ford escaped (pun intended) on the strength of their cash reserves.

Suffice it to say that no American automaker was prepared for the recession or perhaps more importantly for the green future.

This reminds me of radio.

A business that had done so well as a “gasoline powered” industry finds itself in need of a new direction – perhaps a hybrid between traditional and new media.

The problem in radio is the same as the one in the Motor City – when your business is spiraling downward, you don’t necessarily want to go off in a radical new direction. You want to stop the bleeding.

Toyota has its own problems in Japan these days with the economy but the Prius was on the drawing board – in fact, in the marketplace well before the world recession hit – to their credit.

The radio industry doesn’t even have a drawing board. A boardroom, maybe – filled mostly with older white men wearing suits. Certainly not a hot bed for new initiatives and new ideas from a diverse group of people.

Now there is little choice.

All during this recession some companies have defied the economy by making a profit.

The new media segment of the advertising market, for example, is one of the few that has shown growth in spite of the downturn. And while some forecasts say expansion is over for new media (that is, only a four percent growth rate), I don’t believe it – not that radio wouldn’t love to have a four percent growth rate again.

It’s not like anyone is saying stop broadcasting and start doing webcasts – that’s not even possible based on other hurdles such as unfavorable royalty rates. The idea is not to abandon all that free cash flow that stations still pump out, but how to find alternative sources of revenue that cooperate with changing technology and sociology at the same time.

So, how to do it.

How to change radio from a Hummer of an industry into a hybrid Prius

1. Immediately appropriate 15% minimum operating budgets in radio to new media initiatives for the year 2010 and 25% for 2011. More in subsequent years. Do you think Toyota developed the Prius without investing money?

2. Don’t design radio’s digital future from the boardroom. Engineers and concept designers built the new green hybrids that are popular in the world today. Management enables. Then stands out of the way and watches the skunk works innovate. The way radio is configured Lew Dickey would use some college course or a book that he read to dictate innovation in any Cumulus initiative. Even Steve Jobs, the Apple CEO and resident control freak knows he can challenge innovation but that he cannot bring it – his experts can. A major difference.

3. Make terrestrial stations more “fuel efficient” (right sized and rightly programmed) while this new innovation is taking place. If radio CEOs had been in charge of running Toyota while developing the Prius, they conceivably could have ordered all back seats taken out of gasoline driven Toyota's and Lexus models to help save money to post a profit and develop the Prius. Radio took local programming off the air which certainly does not make a better product.

4. Remember the 80/20 rule applies to Hybrid radio – 80 percent of your audience, advertising and revenue will come from terrestrial radio stations and 20 percent from digital media. In radio right now it’s more like 95/5 – not good enough.

5. Sit down for this one – because radio CEOs are already moving in the wrong direction on this. One sales staff of well-trained media experts is needed to sell terrestrial and digital content. Same advertisers. Same salespeople. Several ad solutions that sometime cross over and sometimes do not. Radio is neutering account execs currently and making them into robots. What they need to do to create a hybrid production line is train account execs to sell both platforms intelligently. The rule of thumb: offer both, help the client use the ones that work best for their goals.

6. Empower the radio workforce. You don’t put the IT person in the back room – if you have an IT person (or for that matter if you still have a back room). Digital and terrestrial are not separate – they are one. It is a mistake to segregate them because radio CEOs are not comfortable with change.

7. Hire back the talented people who were let go while radio was “bonehead sizing” – that is kicking out the people who could help them the most. If a surgeon could help you return to health, would you walk into her office, abuse her, insult her, take away her x-ray machines and nurses and then say “return me to good health”? But that’s exactly what radio CEOs have done to the very people who could have saved them.

At my upcoming Media Solutions Seminar, we are going to work together to isolate the skills that are necessary to outperform the market – like Apple does and Caterpillar. These skills are critical to reinventing radio and creating a hybrid. They are also critical to anyone who wants to succeed in generational media.

In the 60’s radio was all-powerful and sounded great coming out of the speakers of a candy apple red Mustang.

But today, the radio industry has turned itself into the same potential dinosaur that the American auto industry has become because it has failed to respond to the needs and wants of the consumer.

In the case of Detroit, fuel efficient, clean and green – affordable cars.

For radio, professional content for iPods, smart phones and the Internet.

And instead of choosing one or the other, how about both on a phased in basis?

Terrestrial radio while the market still exists and new media as digital continues to grow.

That’s Hybrid Radio.

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The Comcast-NBC Deal

The radio industry knows a lot about dealmaking.

Don’t do them.

The management guru Peter Drucker told one of my past media conferences in Scottsdale that the acquirer is more likely to get the worst end of any deal than the selling entity.

That was certainly true of the radio industry where every consolidator that acquired stations got stuck with massive debt, a declining ad revenue picture or was less able to compete with new media than the lucky folks who sold their stations (or groups) at record prices.

Now, we hear General Electric is talking to Comcast about selling NBC Universal (barring any obstacles thrown into the situation by partner Vivendi).

The Comcast plan appears to be buy NBC and build a sports giant with existing NBC sports rights and talent and merge them with Comcast’s sports entities. In other words, take a chunk out of the mighty ESPN empire.

This is a failed approach to say the least. That’s not just my opinion but the considered advice of Jeff Bewkes, the CEO of Time Warner. Yes, that time Warner -- the one that got gobbled up by AOL in the last century and has never realized the promised potential.

Bewkes is quoted as saying that the AOL merger “made no sense at the time” and that the idea that the deal would cause synergy (are you listening, Comcast?) is nonsense. This is the same kind of talk that surrounds speculation of an eventual NBC-Comcast merger.

Of course the real motivation for radio mergers, cable-network TV deals and just about any other communications purchase these days is what authors Jonathan Knee, Bruce Greenwald and Ava Seave describe in their new book “The Curse of the Mogul: What’s Wrong With the World’s Leading Media Companies”.

“Their curse, the authors say, can show up in the form of qualities like hubris, overarching ambition and self-delusion”, the authors argue. Or as they put it more bluntly, “There are moguls running amok in Hollywood, and like financial Godzilla's, they prey on gullible investors on Wall Street and Main Street to feed their egotistical hunger for fame and fortune”.

Companies like Rupert Murdoch’s News Corp, Sumner Redstone’s Viacom, Brian Roberts’ Comcast, former Disney CEO Michael Eisner and Vivendi’s Jean-Marie Messier are among 15 media companies the authors studied.

But you don’t need a book – as good as this one is – to know the radio and record industry leads the way in hubris and self-delusion. But the similarities don’t stop there.

In the past nine years, large media companies like these have written down $200 billion assets basically constituting the diminution in value by overpaying for the assets -- “These write-downs represent the real destruction of value from relentlessly overpaying for acquisitions, ‘strategic’ investments and contracts for content and talent”, the authors assert.

Clear Channel, Cumulus, Citadel are three of the numerous radio industry consolidators that could easily plead guilty to the authors’ charges. Remember how consolidation was sold to Congress, the FCC, Wall Street, shareholders, the public and not that they cared – their own employees (forget listeners) and the end results are the very destruction of great assets?

I have chided their leaders in this space for being the puppeteers that they seem to be as Wall Street has pulled their strings. Now, with bankruptcy a real possibility trading debt for equity to their lenders caps the cycle and creates a curse of its own.

“Synergy” is how Eisner’s Disney sold the $19 billion Capital Cities/ABC acquisition in 1996 – a merger of a movie studio and broadcasting network among other things. Who could have known that studios would decline and broadcasting would join them? Not these arrogant dealmakers.

Comcast bought AT&T’s cable business in 2001 but not before Comcast got caught bidding and rebidding for the company that caused it to pay over $20 billion more than the deal was considered to be worth.

Had the radio industry consolidated in a way that would concentrate on “mutual benefits” these companies may have avoided the destruction that has already happened and is likely to continue into 2010.

So, with eyes wide-open we can all see (if we want to) that being number two to ESPN is meaningless.

Sounds good in principle.

Not so good based on reality.

History repeats itself, as the old adage goes, precisely because we fail to learn from it.

In radio, look no further than Greater Media, a well-respected company according to the voting of my readers (click here and scroll down the right hand column). They seem to like shooting for number two.

In Philadelphia, Greater Media attacked the biggest, baddest powerhouse of all, Jerry Lee’s B-101 and as many of you and I thought, they’d lose. We knew it. Somehow they didn’t.

Was it all that loose change they thought would drop their way by attacking B-101 or was it hubris?

Now, failing to heed history, Greater Media is attacking CBS sports leader WIP in the very same market and, I am predicting the very same results – their AM/FM sports combo “The Fanatic” will fail to hurt CBS and their stations will eventually have to do something else (like find a hole in the market or come up with a new format).

Strategically, this is a recent example of the kind of fouled up thinking that seeps down from the dealmakers and power brokers – yes, even to the market managers.

As “The Curse of the Mogul: What’s Wrong With the World’s Leading Media Companies” points out the “single most consistent reason for underperformance by media companies is bad acquisitions”.

Look what it does to company value.

To shareholders.

To listeners.

Hubris, indeed.

Makes you kind of wish for the old days when on-air talent was accused of having big egos but the owners were smart enough to rein in their own egos and concentrate on the mutual benefits of keeping them employed and on-the-air.

Isn’t it disgraceful that the sorry state of the record labels and the radio industry today has more to do with “hubris, overarching ambition and self-delusion” rather than focusing on the consumer?

If they had, they might own a company like Apple that has glided through the same recession to build great products as well as shareholder value.

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Citadel’s Bankruptcy Endgame

If Citadel is so close to bankruptcy, then why is CEO Farid Suleman continuing to fire employees?

Can Farid fire enough people to save the $150 million that is due to lenders in January – or even $5 million, for that matter, in the latest round of cuts?

This time, the master accounting student is putting a sharp pencil to Citadel Media – or as I call it, ABC Radio.

Late last week, Suleman’s new network guru, John Rosso, the Internet guy, learned quickly how to get the hang of things as he marched VP/Affiliate Relations Dave Van Dyke and VP/Digital Media Kevin Miller into his office and told them they no longer have to come to work.

Prior to Rosso’s ascent to power as Jim Robinson’s replacement, some 25 other people were fired from ABC – I mean Citadel Media – with more firings expected. (Notice the new way consolidators are firing these days – slow and steady – maybe no one will notice, right?) No one knows for sure why Dallas-based Robinson got it – he’s good – but perhaps it was because he wouldn’t move to New York to hold court with Suleman.

Before we grapple with the strategy of continuing to fire people if you’re headed into bankruptcy anyway, a little context …

In fairness, ABC had a real bad year – the recession, you ask?

That, too.

Paul Harvey died – he was the best and irreplaceable.

Sean Hannity eventually bolted and between Harvey's death and Hannity's departure Citadel Media lost $30 million in revenue. To paraphrase Steve McCroskey (Lloyd Bridges) in Airplane, “Looks like I picked the wrong week to quit sniffing glue”. This was the wrong year for ABC to lose Hannity and Harvey.

That said, the network is down only 15% -- look how I say only. But still, under the circumstances, a negative 15% is not bad.

Of course, Citadel couldn’t do anything about Paul Harvey’s death at 90, but there are people inside Citadel who think they did not have to lose Sean Hannity who operated out of ABC’s WABC, New York. Farid reportedly got involved and some feel he was the one who screwed up the negotiations.

Nothing apparently sticks to Suleman who earned the nickname “Fagreed” for his $10 million plus compensation years before bad times reined him in.

But now, it may be greed once again that is Suleman’s motive in continuing to end talented people’s careers just ahead of bankruptcy.

Farid will not even be able to make a pimple-sized dent into the $150 million Citadel is having trouble coming up with for its January showdown with lenders.

One option is to do what is called a pre-packaged bankruptcy in which Fagreed gets to save his own bad hide. He’s no dummy and he’s slicker than olive oil on the floor of an Italian restaurant. Can he convince the debt holding banks that he’s the lesser of the evils they want in charge?

I think he can and there is precedent for that.

Would you pick John Slogan Hogan out of a lineup anywhere to run the largest radio group in the world?

Seriously?

Nothing against John as a market manager. You get my point.

But Hogan can say the word “yes” faster than anyone else at Clear Channel so the top job goes to him. You may think I’m kidding, but I’m only half-kidding. Lee and Bain, the investment banks that own Clear Channel now, are dictating the orders. They don’t know how to run radio and don’t want to learn. It’s easier if Hogan learns how to say "yes" to whatever they want to do.

This has got to motivate Suleman who is no less incompetent than Hogan.

By continuing to prune costs – even at the expense of lifelong careers, and yes, even in the worst recession of our lives – Farid Suleman shows the potential banks that will take over his company in return for unpaid debt that he has earned the job.

This sounds like lunacy but that’s how Wall Street works. Is there anything crazier than investment banks thriving when everyone else is hurting because they earn fees like “crazy”? That is, even if the entity they purchased goes under, they can sell off the parts and never look back because the money they made running the company into the ground made them fees on all sorts of things.

It is possible that Citadel could wind up in bankruptcy court and a no nonsense judge could order someone to oversee the company while options are examined. While this usually hurts employees (and their benefits package), it can also result in the company being broken up.

And Suleman being out of work.

With the best multiples available at no higher than four times cash flow right now (for the few deals that are getting done), some or all Citadel properties could wind up on the market in a fire sale of sorts that could allow a lot of radio people to buy back in.

True, they would be buying at the bottom with no guarantee of significant growth ahead, but they could afford the debt – something Citadel, Cumulus, Clear Channel and just about all of the major consolidators could not.

To put it bluntly – Citadel still generates somewhere between $600-800 million in revenue a year.

That’s a lot of free cash flow.

And it all goes toward paying the debt their founders saddled them with yet they are still coming up so short that bankruptcy or trading debt for equity may be the only way out.

The endgame for Citadel – let the lenders take majority ownership of the company and they can keep right on going.

The end game for Fagreed – show the lenders he can carry their water so he can keep right on going just like the Energizer bunny.

For a guy who sat at the side of Mel Karmazin all these years, you’ve got to wonder if he learned anything at all from his master.

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Judgment Day for Radio CEOs

We tend to judge radio CEO’s today by whether they are not as bad as the others instead of whether they are better than most.

Too many have gotten away with less than stellar results and they somehow still have their jobs and apparently think they should be given a free pass for their dull performance due to the recession.

What if these happy talkers were held accountable for the predictions that they are trying to sell Wall Street, advertisers and their own employees?

I thought it might be nice to put it up here on the Internet for all to see – that way if they turn out to be correct we can all give them their just dues. On the other hand, if they are flat out wrong when all is said and done, then they should be held accountable.

My comments are attached so I’ll play by those rules. Will they?

Jeff Smulyan/Emmis

Radio functionality on iPods and iPhones will revive the radio industry with those who embrace new media.

I can see how Smulyan thinks that being able to easily get radio broadcasts on a cellphone would create the next Walkman revolution. And if he turns out to be right, he was able to ignore how the next generation – 80 million strong and coming of age – are using media in an entirely different way.

Smulyan totally ignores the fact that attention spans are declining and with that generation it may be entirely obsolete to listen to 24/7 broadcasting. It’s an on-demand generation -- raised on their own playlists and their own devices like chat, texting and social networking. All these things are radio competitors – at least for listeners time.

I’ll go as far to say that making an iPhone a radio won’t even impress older listeners who are also taken with new media and other attention depriving alternatives.

The iPod Nano became an FM radio recently. Will pausing and tagging be the killer app? Let’s see if Jeff was right a year from today. Was it a boon for radio or a bust?

But it’s also another year lost.

Peter Smyth/Greater Media

In his "Corner Office" monthly blog, Smyth declares the recession over and says “we’ve survived”.

Keep in mind this space is for his employees even though the trade press reports Smyth’s comments as news almost every month.

Peter makes an impressive argument: business is slowly returning; tough times have made radio folks better business people; much-missed automotive advertising is coming back; the real estate market is stabilizing; credit is becoming available as bankers and lenders are thinking that the worst is over.

And I think he’s right about the bottom.

But no analyst who studies radio for a living is predicting or revising previous predictions that it will be a long time – if ever – before radio revenues will post a plus year. Some analysts say beyond 2010 if it happens.

Smyth is giving us a pep talk – and that’s not bad. What is worrisome to me is that here is a radio CEO who didn’t mention advertising spending on new media, the Internet, mobile space, social networking, generational media – not a word.

And that’s how radio got into the mess it's in. Not because of bad people – quite the opposite. Radio possesses exactly the kind of people who can do both traditional and new media. But Greater Media and just about everyone else has been firing talented managers, salespeople and on-air personalities.

So, I hope a year from today Peter Smyth can get our accolades for marking the return of prosperity to radio. Everyone knows 25% revenue declines will improve. But I’m doubting any radio company that has no presence – spends virtually no money – in the new media space will ever be a growth industry.

Lew Dickey/Cumulus

Debt-ridden groups will turn their debt over to lenders in the form of equity and “it will be business as usual”.

That’s what Dickey told me when we bumped into each other at the NAB Convention in Philly. In other words, Citadel will get their debt purchased and be none the worse for it. Bankruptcy will be avoided.

Maybe it’s all wishful thinking as Cumulus also has trouble staying up with its debt covenants.

If Lew is right and the big “C”s (Clear Channel, Cumulus and Citadel) escape unscathed from bankruptcy, I wouldn’t exactly show up in public bragging about his prediction.

Thousands of careers have been terminated. Radio has become less local for one main reason – to save money. Sales forces have been terrorized (with Cumulus leading the way) at a time when the industry seems to be chasing sales categories like health care and services more than this growth industry has been returning the love.

In a year from today, if Dickey is correct and Cumulus, Clear Channel and Citadel are still left standing – especially after all the damage their CEOs have done to radio – it would be a tragedy. Dickey will have to celebrate in private.

I think Dickey's competitor, Citadel, will go into bankruptcy when it can’t meet its $150 million debt obligation in January and then anything can happen.

It is ironic, radio – even in a recession – is pumping out lots of money that would be profit if not for the unmanageable debt radio CEOs allowed themselves to take on.

A company like Saga that has hardly any debt comparably speaking winds up paying the same price as the overspenders -- in other words, even a responsible approach to debt doesn’t pay dividends for Saga in this screwed up world of banker-run radio.

Station values are between three and four times cash flow.

No group invests even 5% of its operating budget in new media as if radio is sitting out the biggest Internet phenomenon since the industrial revolution.

Local programming has become compromised.

Sales staffs have been decimated when what they need is to be expanded.

The People Meter is being used to unfairly represent drive-by hearing instead of actual listening – a strategy I predict advertisers will not appreciate once they figure it out.

Until a CEO speaks intelligently and candidly on these and other generational issues that will stick in the craw of radio, I’m going to consider every pep talk a diversion from the real problem.

Radio has been cursed with the wrong leaders at the wrong time.

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Jerry is planning a one-day Media Solutions Seminar.

• Scottsdale, AZ January 28, 2010
• Jerry will teach an interactive program that includes a new and traditional media forecast for the year ahead, reinventing terrestrial radio, podcasting, webcasting, social networking, mobile content and how to effectively predict generational media.
• The day is fast-moving, fun and substantial (breakfast, lunch and all breaks are included). It's academic and non-commercial. Jerry Del Colliano's Media Solutions Seminar is all about solutions.
• To reserve a seat, click here.

When drums stop - big trouble!

Most jazz musicians probably know this joke -- the one about the guy on Safari, who when travelling through the jungle hears some incredible drumming coming from a distance. The following conversation ensues with his local guide:

Guy: Wow! That's amazing -- let's see if we find it!
Guide: No! We must go now -- when drums stop, big trouble!
Guy: But the drumming sounds amazing, I really want to check it out
Guide: No -- we must go, when drums stop, big trouble!
Guy: But this is the kind of thing I came here to experience! I really want to hear it!
Guide: No! We must go before drums stop!
Guy: But why? What happens when the drums stop?
Guide: Bass solo!!

Like all good jokes, there's an element of truth to it -- there are indeed people who fear and dread bass solos! This post is prompted by a little throwaway remark by the excellent Patrick Jarenwattananon from NPR, who in reviewing a concert by the bassist Linda Oh said: "Oh did a rare thing: play a non-boring bass solo". He later clarified this in response to a comment I left on his blog, explaining that it was meant in a light-hearted way. Even so, I find that to be an interesting remark because as a bassist, I of course have had to think about the whole soloing issue, and there's also no doubt that bass solos elicit a wide range of responses from listeners (and musicians), ranging from groans to (sometimes undeservedly) huge accolades.

The bass' primary function is of course that of accompaniment, and we spend more than 90% of our time in that role. If you don't enjoy the accompaniment role above all else, then you definitely shouldn't be a bassist. Having said that, there is a long and proud history of bassists who have expanded the role of the instrument and taken it into the realms of the soloist - starting with Jimmy Blanton and then onwards into the bebop era -- Ray Brown (left), Oscar Pettiford, Mingus etc -- and then into the 1950s with people like Paul Chambers and George Duvivier. And then around 1960 comes the quantum leap forward in technique and speed pioneered by Scott LaFaro with Evans. This represented a seismic shift in how the bass was treated both technically and functionally. But it is also the point in which jazz bass playing takes two different directions -- one which continued the tradition of bassists such as Blanton and Ray Brown, and another which followed the pioneering work of LaFaro (pictured below).


These are very different ways of playing the instrument -- one, (the LaFaro stream), uses quite a low action and features the player using the complete range of the instrument from very low to very high. The other uses quite high action and the player tends to concentrate his playing in the more traditional lower register of the bass. The low action of the LaFaro-ites allowed for a greater rapidity of movement, but it did affect the sound too - a softer less prominent sound than that of the high-action bassists who in pre-amplifier days were used to driving large bands and forceful soloists forward, and for whom sound projection was very important.

So by the mid-60s there were two distinct strains of bass playing extant in jazz, both of which featured very strong soloists. Since electric bass was still relatively unknown in jazz, most of the bassists at this time were playing acoustic bass. The advent of an amplification in the early 70s made the physical challenge of playing the instrument more manageable, and many bassists gratefully accepted the help of electronics in making their life physically easier. But some of the sounds of those early amplified basses were pretty awful. A case in point would be Ron Carter's classic playing on Joe Henderson's "Tetragon". His walking bass line on "Invitation", is one of the greatest in recorded history in my opinion, but also features a pretty horrible bass sound. Thanks to the pickup, Carter went from having one of the most rich and full bass sounds in jazz to having one of the most metallic. But this loss of natural sound didn't deter the bassists of that time, they took to the pickups in droves.

Fast forward to the 1980s and something interesting happens -- a new jazz orthodoxy appears from the south and decrees bass amplification to be an abomination. An insistence on a return to pre-amplification days becomes de rigueur with the Marsalis clan in particular, and bassists working in their orbit were required to raise their action again and just use a microphone stuck in front of the bass for amplification. Reintroducing such physical difficulties in playing the instrument immediately caused problems for soloists whose speed and fluency took a step backwards. In the new orthodoxy LaFaro's tradition became anathema and devotees of the style were denounced and ridiculed. Stanley Crouch even went as far as to say that LaFaro played the bass in the way it would be played if jazz had been created in Europe! On top of this the Marsalis clan also put the following notice on the cover of their albums 'This recording was made without usage of the dreaded bass direct'.

The sheer arrogance of this stance is breathtaking - a saxophonist, a trombone player, a trumpet player and a failed drummer-turned journalist telling bassists how THEY should play their instruments! I wonder how Wynton, Delfeayo or Branford would feel if a bassist told them how they should play their horns? Also incorporated into this philosophy of how a bass should sound was a philosophy of what a bass should do - little soloing, or ideally not solo at all. The result of this intervention into the natural evolution of the bass was a production line of bassists who were like dray horses - chugging away, Suppliers of Quarter Notes by Royal Appointment to the self-styled horn playing aristocracy of jazz - or as a bassist friend of mine puts it - 'beboppers labourers'. All the earlier work and research and invention of all those bassists over the years dismissed at the stroke of a revisionist pen, so to speak. The whole neo-classical movement of the 80s set the cause of bass soloing back by about 10 years. Of all the Wynton bass acolytes, Bob Hurst (above left) was the only one who really found a way to combine the demands of the Marsalis crew for the bass to be a one-trick pony yet also develop as a really strong soloist. Unfortunately he ran away to join the Tonight Show circus before he could really make an impact.

But eventually the wholesale dismissal of great bassists because they didn't conform to a narrow ideal of what bassists should do receded, and a new generation of players appeared in the 90s who took freely from both traditions of bass playing and took the instrument into new realms of possibility as far as soloing was concerned.

But despite this, there is still a divided view on bass solos - one being that they are boring and dull, the other that they are always worthy of applause. Both views are equally unwarranted - bass solos can be wonderful interesting creative constructs, and they can be dull and boring - like any instrument, it depends on the soloist as to which qualities of dullness or invention they exhibit. The branding of bass solos as being automatically boring is grossly unfair to the many great soloists who have appeared on the instrument since the music's inception, and grossly unfair to the many great soloists who are performing now.

But equally unjust is the wild applause that sometimes greets dull pedestrian soloing on the bass - this is especially true of double bass. Again it's a bit like the 'talking dog syndrome'' which I referred to in an earlier post - it's not so much what the dog says that's amazing, it's the fact that the dog can talk at all. Some audiences see a bassist playing this huge instrument and are amazed at the fact that the bassist can coax anything out of it apart from a dull thud, and so they greet anything other than a dull thud with thunderous applause. There's a very funny piece called 'bass players offences and fines' which did the rounds a few years ago and included a fine of $25 for 'excessive sweating' - this is very observant since a sweating bassist thudding out basic arpeggios in lieu of a solo is often enough to elicit huge applause from many audiences.

This simple arpeggiation of the changes to a tune often comes under the heading of a 'bass solo' but really this kind of thing just amounts to a speeded up bass line rather than a solo proper, in my opinion. A very good indicator of whether a bass solo stands up to any kind of critical scrutiny - at least over changes - can be determined by imagining the solo played on another instrument - or being sung. If the solo were sung or played on a saxophone, would it still sound good? If not, then the likelihood is that the solo is probably not very good. A good bass solo should have the same qualities of phrasing, logic and construction as a solo on any other pitched instrument. Of course there are exceptions - particularly in the area of more open playing, where the qualities of the bass are used to their fullest extent, and the solo would just not be as effective on another instrument - Dave Holland's Emerald Tears recording would be a classic case in point. But in general I think the 'how would it sound on another instrument?' question is a good litmus test of the qualities inherent in a given bass solo.

There are so many examples of truly great bassists playing truly great solos - many of them up on Youtube - which act as an illustration of how misguided the idea of all bass solos being boring is. From the fully developed post LaFaro virtuosity of Eddie Gomez with Bill Evans, to the post Paul Chambers virtuosity of Peter Washington with Tommy Flanagan. From the effortless swinging suppleness of George Mraz - again with Flanagan - to the complete command of both open arco playing and lyrical soloing over changes of the great Anders Jormin (pictured above left). From the effortless lyricism of Steve Swallow's electric bass in duo with Carla Bley, to the rhythmic power of Dave Holland and his solo rendition of Coltrane's 'Mr. PC'. And two contemporary American masters - the extraordinarily accomplished all rounder Drew Gress, and Scott Colley, whose ability to shape a phrase is the equal of any horn player.

All of these players make a great case for the tradition of bass soloing, and show that it needn't be dull or boring, that the instrument can speak in as powerfully expressive a way as a solo vehicle as any other, and that when the drums do eventually stop, we have something to look forward to rather than fear..............

Radio's Other Music Tax

So what my Italian mother would have done -- and perhaps yours as well -- is to drag both parties by the ear and make them apologize to each other.

This is getting out of hand now between the record labels and the radio groups.

The labels have SoundExchange to ably lead their fight and radio has the NAB.

It's getting nasty.

This week, the labels had two major victories in their misguided attempt to get a radio station performance tax.

The Senate Judiciary Committee approved its version of a performance royalty bill for terrestrial radio and, like the already approved House measure, it will require radio stations to pay performance fees to artists, musicians and rights holders in return for airplay.

The bill will lose this time around if it ever makes it to the floor for a vote.

The labels are rallying their supporters -- the ones who want to help starving musicians. Of course, cynics would say, the best way to help starving musicians is to warn them not to sign a contract with a record label.

The radio industry through its lobby group, The National Association of Broadcasters, swears it has enough votes in the House and Senate to kill the tax. But it's close and over the next year or two could swing to the labels' side. The NAB has counted 251 nays in the House and 26 in the Senate.

Then in the same week, the House Energy and Commerce Committee passed the Local Community Radio Act of 2009 which basically enables the creation of hundreds of low power FM stations.

The music industry hails this as a way to promote local radio -- boy, do they have a surprise coming if anyone goes for this baloney.

Shrewdly, the Future of Music Coalition has positioned this bill as an antidote for "the lamentable loss of localism due in part to consolidation in the commercial radio marketplace".

These folks are good.

LPFM stations are community-based, non-commercial radio broadcasters that operate at 100 watts or less and reach a radius of three to seven miles. The labels argue that low powered FM provides a platform for underserved musical genres, minority, religious and linguistic groups and offers a forum for debate about important local issues.

Hell, an HD station with three listeners will do more.

But that's not the big story on Action News tonight.

The present ASCAP, BMI agreement with radio stations expires at the end of this year -- the music industry wants more money for its starving "whomevers" and the radio industry wants to pay less.

In one corner, you have the so-called Performance Rights Organizations (ASCAP, BMI).

In the other, the Radio Music Licensing Committee.

Both sides have been negotiating for quite some time but short of an agreement this issue could wind up in litigation over how much broadcasters should pay for using the labels' music.

Stations do not pay royalties -- yet. That's SoundExchange's bailiwick and that's why they are pushing for the performance royalty previously mentioned.

The ASCAP, BMI, SESAC fees are compensation for the composition part of the on-air broadcast.

Webcasters and satellite networks have to pay for both composition as well as the use of the sound recording and while radio owners may not be thinking about their ASCAP and BMI payments right now they may well be scrutinizing their bills in the future because the music industry is in need of cash and they are not going to get it from increased CD sales any time soon.

The radio industry five years ago negotiated ASCAP, BMI deals based on a fixed amount because some experts believed that the radio owners saw their business growing thus a set rate would be a windfall for them. But the opposite has happened as station income declined. The radio industry lost shares to new media, a recession hit, consolidators who own the most stations teetered on the brink of bankruptcy and they now find themselves unable to ante up more money.

The radio industry pays about $230 million a year to ASCAP, BMI and SESAC so these organizations are also dependent on this large amount of money as they see the music industry decline.

It gets messier.

It used to be that the ASCAP and BMI agreements covered terrestrial radio use. Now the Radio Music Licensing Committee wants to be able to cover music they use in new media endeavors (webcasting, mobile, etc). And issues like podcasting could be a concern because is a podcast a broadcast or a reproduction of a collection of songs?

If the whole mess winds up in court, a trial will occur -- that's right, a trial with a judge who will hear both sides and then rule. How scary is that? Can you say CRB (Copyright Royalty Board -- the group that just killed the webcasting industry with draconian taxes)?

It takes time, money and lots of public relations and in the end both sides are rolling the dice. It's similar to a divorce case where both sides, after spending too much money, eventually agree to hold their noses and settle rather than have a judge rule.

So short of an agreement, both the music industry and radio owners have a lot to lose.

It's not really about starving artists -- that's just a great public argument.

Nor is it about increased rates -- if you haven't noticed, radio is not exactly a booming business these days -- radio's argument being it pays composition taxes but lower rates are warranted now, not higher.

And while radio has made the music industry a lot of money giving away free exposure, they are not going to get any public traction for charging the labels for promoting their music even though that is what they have done and still do -- for free. That should be worth some consideration, but it's likely not to be.

These two industries -- radio and records -- need each other.

This fight has got to come to an end with a compromise -- and by compromise I don't mean one side gives in while the other cranks out good PR.

The labels are in an almost ten year revenue decline. Radio analysts say a zero growth year -- that's right, zero -- may be several more years away if ever -- their words not mine.

Radio companies, webcasters and podcasters need music and labels need some form of compensation -- both sides getting far less than what they demand.

I've spelled this out for you because some happy talkers are saying a recovery for radio is right around the corner. Not if stations have to dig deeper for these music taxes to break even.

And the music industry -- out of ideas for a decade now -- expects to milk its only few known hostages -- radio (and in a previous agreement webcasters) for all they can get.

When any one side produces a loser in a dispute, both sides eventually lose.

So, mom had the best idea of all.

Drag both parties by their ears, make them apologize and make up before they ruin a good thing for both.

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