Pressure On Radio to Rehire Live/Local Talent

So now we learn that Ryan Seacrest may be leaving Clear Channel.

Industry reports say Seacrest earns $15 million a year from his radio show and syndication but he’ll be just fine, thank you, if all he has left is his Comcast work, American Idol, endorsements and perhaps replacing Larry King on CNN.

This may be a Seacrest negotiating ploy -- or not.

Ryan Seacrest is a smart guy who studied under the master, Dick Clark.

Clark, a Philadelphia TV booth announcer, got his break when the local show American Bandstand lost its host, Bob Horn, to a sex controversy involving a teenage girl. The rest was a meteoric career for Clark who was in the right place at the right time.

He was also the right man.

Clark, like his student Seacrest, went on to build an empire with television game shows, New Year’s Eve countdowns, awards shows, radio syndication and on and on.

These two talents are national in scope and driven by their television work.

Let's not forget that Clear Channel, on the other hand, used Seacrest’s LA-based show to fire tons of radio personalities in the name of saving money. I mentioned at the time that this tactic would not work – the part about audience ratings. It sure as hell worked for Cheap Channel as they fired people left and right and cut costs.

The excellent radio operator Lincoln Financial had an unusual lap in judgment when it turned to Seacrest syndication to fill an air slot in Atlanta. Seacrest did alright but now Lincoln Financial is returning to all live talent by adding – Chase Daniels and Heather Branch -- (all right!).

Now Lincoln Financial is all live and all local – see why they are so good?

Clear Channel will have no problem replacing something – anything – from outer space to fill all those local station lineup holes that would be created should Seacrest leave. I am assuming rehiring live, local talent is still not an option for Clear Channel.

Then, look to Radio One-and-Done in Washington.

Just last week they decimated their airstaff at WMMJ “Majic 102.3” after the station’s local, live air staff turned in one of the best rating performances in a long time.

Thanks PPM.

No, thanks live and local airstaff.

I wrote a piece on this abortive Radio One move recently -- Stupid (and Smart) Radio Tricks and don’t you know that presto-chango, Radio-One miraculously posted an employment listing on its website for – you guessed it – a live jock for DC.

What happened to their “all music all the time” strategy announced only days earlier?

Better yet, why isn’t Radio One rehiring the talent that got them the ratings that went to their heads?

In my piece, I warned that PPM success does not mean stations are attracting true listeners – just drive-by audience that may inadvertently pick up an encoded signal on their meters. And making programming decisions made on this faulty data is even more dangerous.

The Radio One employment ad is hilarious and lists these qualifications:

“Associate's degree (A. A.) or equivalent from two-year college or technical school. Must have at least 2 years on-air experience for all other on-air positions. An equivalent combination of education and experience is desirable”.

What!

If your heart is strong, read the rest of the description (corrected from the previous edition to reflect three openings at WMMJ).

They can't be serious, right?

My sense is that you’ll see a number of radio groups begin to start filling time slots with local and live programming.

This does not mean that they will hire the best talent.

Maybe only the cheapest at first.

Even as I write this, radio groups are continuing to rid their stations of talented employees – sad to say. But there is some hope.

You might be interested to know that there is one other wrinkle in the best laid plans of mice and radio CEOs.

More people are voluntarily quitting their jobs than ever before.

A recent Wall Street Journal article said:

“In February, the number of employees voluntarily quitting surpassed the number being fired or discharged for the first time since October 2008, according to the Bureau of Labor Statistics. Before February, the BLS had recorded more layoffs than resignations for 15 straight months, the first such streak since the bureau started tracking the data a decade ago. Since the BLS began tracking the data, the average number of people voluntarily leaving their jobs per month has been about 2.7 million. But since October 2008, the average number dropped to as low as 1.72 million. In March, it was about 1.87 million”.

So there you have it.

Those sluggish radio groups are beginning to wake up and realize that if they want to preserve their franchises they will likely need real live and real local personalities to do it – as in the past.

They will first continue to unload expensive talent and look to hire on the cheap.

Eventually, they will see that their employees are now quitting – voluntarily – in the midst of the worst recession of our lives.

I have heard that Cumulus has even offered big cash bonuses to more than one air talent to stay at the notoriously employee-unfriendly company. And that’s Cumulus, one of the cheapest operators in radio.

What to make of it all?

It boils down to this.

Radio without personalities is just an iPod with the radio station’s playlist on it.

If radio is to regain its edge, it will need to let an iPod be an iPod and radio be live and local.

Don't worry. Radio CEOs will eventually learn.

The hard way.

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The Google Plan to Annihilate iTunes

Steve Jobs is brilliant but I wouldn’t want to get on the wrong side of him.

The Apple CEO has a long memory and he punishes those who get in his way.

You saw what happened with Adobe.

When Jobs and Adobe got into a dust up, it was the end for Adobe on Apple’s cool and very popular new products – iPhone and iPad. Even Humpty Dumpty couldn’t put that relationship back together again.

Google CEO Eric Schmidt was an Apple board member but as soon as Schmidt made google eyes at some of Apple’s new products, Schmidt was off the board and the two were at each other's throats.

Google then proceeded to go after Apple’s iPhone with its Android operating system which resides now on Apple’s competitors.

Google is looking for a pound of flesh out of Apple and its latest plan which utilizes the search world it monopolizes is interesting to study.

Google is prepping a music download service that is tied to its search engine. Consumers can buy tracks just like – dare I say it – Apple’s iTunes store.

All this could come about before the end of this year.

At some point in 2011, an online subscription service will follow.

Nevermind that the record labels may not be on board with Google right now. If someone brought them an idea to use vinyl in the early 20th century, they’d probably reject it. Then sue them.

It gets worse – or better.

Google is working on a plan to tie this new music access system to phones utilizing its Android operating system along with web access.

Google started rubbing it into Jobs’ face as early as last year when it started linking to partner websites like iLike and Pandora from its search engine. This made it possible for people to access music at a click from the Google search page.

I haven’t seen a groundswell of positive reaction from this feature yet, but …

Back to the record labels.

They can’t see straight on a good day and Jobs has pissed them off (and vice versa). So the labels will probably help enable Google to stick it to Apple in the hope that Apple’s 28% market share for iTunes music can be eroded.

Imagine that.

You hate Jobs so much you’ll risk hurting yourself to diminish Apple’s position.

But Jobs plays by the same rules. It’s just that he’s a lot smarter.

Follow me here.

Jobs is stealing the digital book franchise away from Kindle and Amazon through its iPad (3 million sold in 80 days).

Google wants into that market, too.

Think sometime this year for a starting date.

We already know everyone wants at Apple’s iTunes store with 100 million consumer credit cards at the ready just waiting to buy things.

And if you haven’t picked up on the “I’ll have what he’s having” mentality, Google is likely to get into the cloud-based subscription business that will be compatible with Android phones.

You know Apple bought LaLa, promptly folded the failing subscription music service solely to gain ownership of its cloud technology.

All this is good clean (well maybe not clean) fun. At least it is competition and even this Apple shareholder will tell you competition spawns innovation not consolidation.

It’s good for consumers and shareholders.

But there is something equally important to observe.

Google will not beat Apple.

Google's plan for an oneline/mobile music store store is hopelessly lost because it is too late. Apple is that far ahead.

Another reason: Apple makes cool devices, aggregates the content that works on them and takes a piece of the action.

That piece of the action – believe it or not – is mere chump change to Apple.

Apple is in the business of selling electronic devices. It needs content to fill those devices and make them as desirable to use as they are to hold in your hand.

That’s why Rhapsody is dying on the vine right now. It has lost hundreds of thousands of subscribers. Even if Rhapsody could attract several more million it would not be much of a business compared to Apple.

Not to worry – Google is not giving up its day job – search.

Apple is not letting anyone catch up to them in electronic devices.

Music – that thing we all love and can’t live without, that thing that is the second word in the title of this blog – has been relegated to filling content on cool electronic devices.

In the alternative, music is also no longer a big business (at least not as big as when record labels found talent, nurtured careers and sold vinyl or CDs). It seems that increasingly music exists for Apple – and maybe to a lesser extent its clones.

But music has never been stronger.

More variety.

More artists.

More access to music online and on the go.

Different tastemakers – not just djs and record promoters.

That leads me to conclude that the music industry is dead, but music is very much alive.

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Stupid (and Smart) Radio Tricks

Would you believe that Radio One fired its entire airstaff at urban adult contemporary WMMJ “Magic 102” in Washington last week?

With the exception of the syndicated Tom Joyner show in the mornings, their latest brainstorm is to turn the station into a 24-hour a day iPod with no jocks and “all music all the time”.

The only problem is that WMMJ’s virtual "iPod" features the music it likes and not what you necessarily like. Instead of jocks like Olivia Foxx, Suge, Mike Chase, Alvin John Waples and music director and morning show producer Chris Harris on the air live, Radio One thinks listeners will love no jocks and they will love no salaries.

Oh, the weekend staff which must have cost Radio One next to nothing to employ is also wiped out.

Radio One and Done, as I call them, has slithered through consolidation and then the recession as an unremarkable entity and lousy stock investment.

If you’re wondering why Radio One could make such a radical move, they apparently slobbered over their recent PPMs in which they ranked second in the DC market. They saw a ratings increase when they told their jocks to shut up.

Another stupid radio trick is to assume that the People Meter really reports radio listening.

Of course, it does not.

It reports drive-by impulses picked up by devices worn by a flawed group of respondents who picked up an encoded signal.

To radio, that’s listening but it would be a big mistake to think eliminating all live and local jocks will gain listening.

Smart PPM strategists know that the majority of their good fortune in such a flawed system is due to their P-1s who provide the bulk of the station’s ratings. A relatively small group doing most of the listening.

Radio is hell bent on turning itself into an iPod. Without live and local, radio is an iPod of its own making. Most listeners would rather hear their own playlists if foolish owners like Radio One confuse increased ratings with no live and local personalities.

Here's another stupid radio trick from last week.

As you know Mark Mays recently announced he was stepping down as CEO of Clear Channel by years end. But in documents filed last week with the SEC uncovered by Clear Channel-owned Inside Radio (way to go guys!), Mays will remain employed at Clear Channel through 2013.

Now let’s stop and think about this.

Clear Channel, the company that decimated its staff with firings on Inauguration Day 2009 (not to mentioned before and after) in the name of economy will require that Mays will be able to work only 20% of his present hours and still earn $1 million a year.

The wealthy and shameless Mays gets to do virtually nothing for a cool mil.

Something is seriously wrong with an industry that fires people like the Italian government replaces Prime Ministers and then continues to pay them a million dollars for working less than part-time.

This backs up what I have been saying for years that the cutbacks were a fraud.

The nationalization of local radio is unnecessary if financial concerns were the issue.

The greed and only greed is responsible for the heap of trouble big radio operators have brought upon the industry.

I know what you're thinking if you are a Clear Channel employee right now. You want what Mark Mays is getting. More money for only 20% of your present workload. Seems fair.

Oh, one more thing.

Mays will have the right to purchase the company jet – you know, a little plane called the Gulfstream IV. Of course, if the company gets a better offer, Mays gets the right to match it.

The Inside Radio article said, “While often seen as a perk, since 9/11, corporate security experts have recommended executives use a private jet if they’re able to”.

Security an issue with Mark Mays?

Only if he shows up at a convention of all the people his regime has fired.

Not 9/11 security for sure. How stupid do they think we are?

Radio One's decimation of its Washington station and Clear Channel’s shameless payoff to Mark Mays are really stupid, but here is a trick that is really smart.

Very smart.

Saga stuck it to rival Cumulus recently in an effort to attract more great and qualified Cumulus people caught in the Dickey mean machine regime.

Saga cited the Cumulus policy of spying on their employees and pointing cameras at their salespeople in required and dreaded weekly meetings in which headquarters issues marching orders.

Here’s an ad Saga ran – a stroke of brilliance, and a smart competitive move. Note the last line (don’t cheat).

Director of Sales - Columbus, Ohio

We have a panoply of properties starting with AC WSNY, with decades of dominance and proven advertiser results. The proper candidate should be well marinated in creative sales practices and procedures, dipped in organizational skills, dusted with humor, commitment and drive, and finally baked with broadcast sales passion and goals.

Send letter and resume to sagahr@sagacom.com.
Complete confidentiality assured.

Saga Communications – A camera free company

I have said this before and I'll say it again.

Look to the smaller operators and local owners to turn the radio industry around and save it from stupid radio tricks that needlessly continue to damage a great industry.

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The Next Generation – Unplugged

What happens when you take mobile devices and cell phones away from the next generation?

A new study has become public that confirms what I discovered when, as a professor of music industry, I asked students at the University of Southern California to go iPod and cell phone free for two days.

The new study was conducted by the International Center for Media & Public Agenda and students at the Merrill College of Journalism in Maryland.

In the Maryland research, 200 students were asked to give up all media for 24 hours. Students then had to report their experiences.

The USC project involved 44 students who were required to give up their iPods and cell phones for two days or opt to write me a 27-page paper. Obviously, no one chose the paper.

They were also allowed to use traditional media to replace iPods and cell phones but few chose to.

In both studies, the conclusion was the same – abstinence meant anxiety.

They missed texting, calling and staying connected to friends. Many did a workaround by asking friends to text people for them – clever. Their professor (me) never thought of that one.

Some of my students discovered pay phones and didn’t like them.

Most could easily live without their iPods for two days. Few could stand being without cell phone connectivity even though some admitted to enjoying being free from constant contact.

In the Maryland experiment, students reported missing information.

The Pew Research Center’s Internet & American Life Project reported that text messaging has become the number one way teens reach their friends with as many as half of them sending 50 or more text messages a day – 1,500 per month. And one in three send more than 100 texts a day or more than 3,000 per month,

The Maryland study includes college students who send even more text messages – 5,000 or more a month. One participant admitted to sending over 9,000 texts a month.

You wonder why radio operators get their backs up when I remind them that text messaging is their biggest competitor -- not another station, not Internet streaming, not iPods.

A Pew study in 2008 indicated that the Internet had overtaken newspapers as the main source of campaign news in the United States for the first time. Now the Maryland undergrads rarely mention television and newspapers when talking about their news habits.

There are conclusions that are noteworthy in both the Maryland and USC research:

1. Students and presumably young people of the next generation crave the latest technology to keep them in touch and connected to the people they choose.

2. Students do not care about traditional journalism in spite of what traditional journalists think. In the Maryland study it became apparent they did not care about newspapers, TV or even blogs (ouch!).

3. What mattered most was gathering information through numerous ways, devices, networks, sites and applications. In other words, the next generation is their own editor.

If all this is true, and I believe it to be, perhaps you can see why I think our focus should be understanding both technology and sociology going forward.

The radio industry offers 24/7 programs in an era that defies the findings of these two studies.

Radio believes that listeners exist to follow their lead, hear their content and let them chose the ways in which they will be entertained. This is a major misjudgment of the emerging new audience.

It’s obvious as to why radio operators feel this way after all, they own towers and transmitters that are designed to broadcast programming in real-time all the time.

But the world no longer lives in real time.

Consumers have gathered numerous ways to get access to what they need to know and what to hear when they want it on demand. And if this is true, and I believe it to be, can you see why radio stations need to go back to the drawing board to create a new kind of content for the next generation.

Radio as we know it today will not exist one day too soon.

Record labels will become irrelevant (if they aren’t already) even sooner.

But radio companies that invest now to hedge their bets will find a new growth industry in a world that has technologically and sociologically changed from the days when this video was produced. It was made in 1951 about the independent station WMCA in New York City then owned by the Strauss family. It is dated and will give you a laugh here and there but if you’re like me you’ll see two things.

One, why radio was so important when it did things like WMCA and local stations of its day did and two, how this very ancient example kind of gives perspective as to how radio has changed to repeater formats and national focus with emphasis on cheap entertainment.

You can view this WMCA video here (thanks to Neal Mirsky)

You may conclude, as I do, that the natural evolution of radio from the WMCA days to today must be one of redeploying the use of talent and marketing and community service using today’s preferred mobile Internet devices.

To do less will land you in the Museum of Radio and TV.

To do more will guarantee you a prominent position in the lifestyle of consumers who have changed from sixty years ago and will continue to change as new devices and preferences present themselves to the next generation.

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Mays Departure from Clear Channel Meaningless

Mark Mays, the outgoing Clear Channel CEO, didn’t build the company.

His father did.

Or should I say Randy Michaels did because Randy’s skillful knowledge of programming and engineering led to the best decisions about which stations to buy and where to buy them.

Mark Mays never really ran Clear Channel.

He had no operating experience. After all, he’s the one who elevated John Hogan to the position of president over the more qualified Michaels and frankly, I can’t see any other radio company picking an unremarkable market manager like Hogan as their radio president.

Mark Mays didn’t seize the mobile and Internet future when he had the best resources and product platform to do so.

The reason?

Mark Mays didn’t have the experience.

In fact, Mays was so naïve that when he kicked Randy Michaels out for John Hogan, he sent Michaels to Clear Channel’s version of Siberia – the non-existent Internet division.

Remember that?

What’s worse, he probably would have stumbled into success if he let Michaels and his crew have a crack at new media. But the “promotion” was really a punishment. I think -- and this is my personal opinion -- that Mays felt threatened by Michaels who had the experience he did not.

Mark Mays seemed to make all the wrong decisions.

Therefore, his departure by year’s end will be unremarkable. The damage is already done.

The Mays family used Wall Street investors to line their pockets. They never really knew how to run a larger radio platform but someone in the family knew how to play the investment bankers game.

Again, that would not be Mark Mays.

The reason Mays is giving his resignation is that it is time to let a new media person run Clear Channel.

Why does that scare me?

It seems that Clear Channel will do its obligatory executive search for the next few months. It’s hard for me to believe that Lee and Bain, the investment bankers that overpaid for Clear Channel in the first place, don’t already know who their new CEO is.

Betcha he’s not a formidable Internet executive with an enviable record.

Betcha he’s not a she – that is, very slim chance of a woman running the biggest boys club in radio.

Betcha he’s not a man of color --- oh damn, you get my point.

So the departure of Mark Mays also puts in doubt the future of John “Slogan” Hogan, the man without a plan. Hogan knows how to say, “yes, sir” better than anyone in radio and that may be the most important advantage in keeping his job at Clear Channel.

But I’ve got bad news for you.

Even if Hogan stays, he’s not the boss.

Hasn’t been the boss.

Never will be the boss.

The big story on Action News tonight is Lee Capital Partners and Bain Media are in charge the way Alexander Haig thought he was in charge at the White House when President Reagan was shot.

Who is really running Clear Channel?

The debt holders.

Keep in mind that Clear Channel runs up against its almost $20 billion debt covenant in the next few years. They either have to pay it off or refinance it at God knows what high rates. This is not good.

Or, Lee and Bain can pull a Citadel and file for a nice pre-structured bankruptcy. It’s too early for that talk, but pre-packaged bankruptcies are the rage these days. Trade that debt by giving up equity.

Think they won’t do it?

The game we radio people can’t seem to stomach about investment banks is that it is all about making fees. Succeed or fail, every investment bank makes money. And there are always assets left to sell off and earn – you guessed it, even more fees.

So what Lee and Bain really need is a workout specialist to get the debt under control. Clear Channel doesn’t make anywhere near enough money to repay its costly debt so you can see where this is all headed.

And that’s the other thing.

Investment banks, unlike responsible individuals who pay their bills, operate only when they can leverage debt. Use other people’s money to expand their vast holdings – and forgive me – so they can generate more fees.

So while some look at the departure of Mark Mays as a new day, it is more likely to be business as usual.

And that business is leverage and buy.

Refi-and sell.

Earning fee after fee all the way.

That’s bad news for the fine people at Clear Channel who are hoping that the new CEO will be an Internet and mobile media maven. That’s like asking Sony to become Apple after they missed the portable device revolution and don’t have the people to do it now.

This is good news for radio competitors who are showing signs of being operators.

I had to laugh the other day when I saw PwCs projections for radio based on the optimism that radio operators will embrace new media. In other words, PwC joins the other analysts who insist that radio cannot grow without mastering new media.

Isn’t that what we’ve been saying for years?

Advantage: the small radio group that can get a leg up on the big boys while they are playing monopoly.

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The Effect of Multitasking on Listening

Just when the radio industry is pushing its hardest to get radios on popular mobile devices like iPhones, iPods (other than Nano) and iPads, there is some academic debate bubbling under that indicates multitasking is bad for people.

I heard a fascinating NPR discussion a few weeks back on the deleterious effects of doing more than one thing at a time and my ears perked up.

Why not?

Isn’t the main reason for existing in the media business today becoming part of this vast conspiracy of multitasking?

When I taught at USC, I asked my music industry students if they would like to learn a way to prioritize the many things that they have to do every day instead of trying to do them all at once.

They weren’t interested.

I am always talking about the importance of understanding the sociology of technology and thought you would be as interested, as I am, in this topic. After all, Apple CEO Steve Jobs is actually feeding the multi-tasking frenzy and if you listen to experts this may not be a good thing.

Some thoughts:

1. Our brains are not well adapted for multiple streams of information at the same time. Nonetheless, an entire generation has been raised on these often conflicting streams. Even older people, Blackberry users, for example, are subject to the inefficiencies of multitasking.

2. Multitasking has a negative impact on performance in spite of what we may think. In fact, studies on people who multitask the most frequently show that they think they are the best at multitasking when in fact they are the worst.

3. Technology is evolving faster than our brains and media companies can barely stay up on let alone the impact of the message on the brain.

4. Multitasking does not allow you to engage in high quality thinking. When one of the professors on this NPR program tried to offer money to multitaskers to quit for a week, they said no (I offered my students two days without their cellphones and iPods or a 17-page paper. They picked giving up their mobile devices instead of writing the paper – begrudgingly, of course).

5. More companies are playing into the multitasking danger area by asking their employees to respond to emails within a certain time period, stay engaged in social networking and otherwise keep certain screens open while they work.

I heard of a young man who was anticipating the start of a new job in a few weeks from now say, “then I’ll start my fantasy baseball team at work”.

Obviously, there are social ramifications from having our heads too far up our – well, ear buds.

Yet, the world – young and old --- becomes more fascinated with technology and staying connected.

The more laptops, iPhones and iPads I have – the more information I have available at my finger tips especially later in the day – the worse I sleep.

And I don’t want to get better.

I am addicted.

This begs the question of how we should entertain and inform in this new mobile Internet world when listeners are changing and their abilities are sometimes being compromised.

As a professor I soon learned to bag the PowerPoint presentations and tried to be compelling – in presence as well as substance. I engaged students by asking them not to turn their cellphones off (you should see their faces when a professor says that).

Invite laptops as study aids – assign people to find information while lecturing and then report to the class in real time.

But it is all worrisome.

Young people often do not listen to their tunes on mobile devices all the way to the end. Ask them. They’ll tell you. When radio plays music it starts and ends at the direction of the station. The only alternative choices was to hear it all the way through, change the station or turn the radio off. Now, iPodders can change the tune at any point along the way.

I do not believe multitasking is by nature bad (again, I am an addict), but I do know how to focus. I am an excellent prioritizer.

For those of us serious about harnessing the great mobile Internet revolution that is morphing traditional media into new media, all of this is a calling to – well, focus.

Think hard.

To me – even when I write this blog – I concentrate on how to make it unique, compelling and hopefully addictive.

Later I will answer readers mail, listen to Pandora, have a Word document open and cue up Leo Laporte's video show all at the same time.

My point: to create content without understanding the changing abilities of listeners and viewers to focus is the ultimate crapshoot.

Steve Jobs knows what he is doing when his devices feed the multitasking mania.

Do we know what we are doing before we create the content for a new generation.

I highly recommend “Does Multitasking Lead To A More Productive Brain?”. Listen here and let me know your thoughts (but not at the same time you are listenimg).

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The Key to Local Radio Is News

I confess.

As a program director I did all that I could do to move my stations’ news commitments to the overnight hours so we could play more music during the day.

It was stupid then and stupid now.

As my friend Dick Carr, the legendary Metromedia executive puts it, “When radio turned its back on local news coverage the handwriting was on the wall. That's when the localism light began to fade”.

Before radio consolidation, stations programmed news out of instinct.

Today, misguided CEOs more than programmers, eliminate local news out of cheapness.

Under Carr’s watch, news was a ratings getter.

Scheduled every half hour.

I know. I know.

WIP in Philly and WNEW in New York were adult full service music stations with personalities, contests and community presence. But, you know, one of the biggest top 40 stations of all time – WABC in New York – carried news on the hour (and often the half hour) and it was youth-oriented.

Some of the elements of these news-oriented adult and youth stations included:

• A real live local news staff (not a regional headquarters where outsiders try to write local news as Clear Channel does currently). Often staffed overnights, too – not network, local.

• A newstip hotline (H-O-T-L-I-N-E) that locals could use to call in tips and win a cash prize every week. All the calls were recorded with a beeper so that there was always great audio.

• Two newscasts an hour, longer ones in morning drive.

• Sports reports with a real live local sportscaster (or two) hired to do morning and afternoon sportscasts.

• Reporters who actually left the building to cover news and send sound and reports back to the station. Today, few stations have such a luxury.

• Bulletins – not breaking news, not false alarms but bulletins that listeners ought to know about pronto. Local listeners could depend on radio to watch out for them.

• Telephone interviews and actualities integrated into live feeds dominating local news coverage.

• As the very able WIP News Director Paul Rust used to say,"Did you try to get 'sound' on that story?"

Television could not compete with radio for up-to-the-minute local news coverage (and I worked in both radio and TV).

Newspapers – forget it.

Then, came the demise.

Not just at the time of consolidation but when the first thing stations owners did as they took over a new station was cut the news. Little did they know that they were cutting a key local component – one that has gotten them into trouble today as new media exposes their flank.

As Bill McCloskey, a WIP alum and eventual news director of Metromedia’s WASH-FM, Washington (yes, a music FM station) said: “We made hourly 'rounds' calls to police and fire headquarters”.

Today, you can’t find local artists on most radio stations.

Or local personalities.

And certainly not local news.

But with iPods, iPhones, digital competition, the mobile Internet – the radio industry shot itself in the foot.

You want to make radio different from an iPod, add local news.

And you don’t have to make it all sound like stentorian news announcers reading formal documents. Let a real program director or news director (if you can find one) develop style.

Today's news doesn’t all have to be about Kim Kardashian or Miley Cyrus. It can be about a fire two miles from your house or a scandal at the county seat.

And, it can get even better.

If you’re with me on adding video to audio with a text option and calling it radio, then imagine the possibilities of listener photos, Skype reports by passersby, social networking built to communicate news and even talk about it. Resources available in depth.

When Bobby Kennedy and Martin Luther King were assassinated, some great news coverage took place around this country – and I’m not just talking about the network feed. Once the story was told, local broadcasters went on-the-air and engaged their audiences in the various format genres in which they operated.

I’m told there was some of this in Nashville after the flood. This is radio at its best.

I’m saying – you want to make an iPod seem like yesterday? Make a radio sound like tomorrow.

Pictures.

Live coverage.

Local focus.

Scheduled local news.

News personalities – local of course.

On-air and on the mobile Internet.

And don’t look to your consolidated "Wall Street 2" radio CEOs to understand its importance.

The only news they care about is extending their employment contracts and making fees.

I know this is advice that is costly to stations and therefore they will likely not take it, but it is more costly to ignore it.

Radio plus local news plus simultaneous video on the mobile Internet plus social networking and text availability for in-depth digging is just too compelling to fail.

You want a future for radio? There you have it.

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The Music Radio Solution

DJs are history.

Streaming services can’t attract enough subscribers.

Apple worries everyone with what they are planning to do with their anticipated “cloud” service.

Music royalties have killed Internet radio and are a constant threat to the survival of the most popular Internet radio service of all – Pandora.

Apple doesn’t believe in putting FM chips in their most popular mobile devices. And even when they do (like in iPod Nano), it doesn’t make a difference to the radio industry.

So what is really going on?

Music is the one thing that consumers can’t live without – maybe next to Starbucks – and yet the future of music delivery has never been so uncertain.

Or is it?

I am seeing a scenario that should start to unfold in the near future that, if correct, will totally redefine the radio industry, music business and other media relying on music as a core attraction.

May I take you through it?

Big bad Apple is definitely up to something with the purchase of LaLa, the streaming service that it promptly shut down. You see, Apple was after LaLa for its "cloud" technology. I don’t believe Apple wants to get into the radio business as we know it. I don’t think Apple even likes radio as a business.

What it does like is its own concept of the iTunes store with 100 million credit cards on file ready to buy music for Apple devices.

So I wouldn’t be surprised to see a Steve Jobs announcement in coming days where a new Apple streaming service will make consumers’ iTunes libraries available on the “cloud” anywhere, anytime, on any device.

It’s hard to say how Apple will price it, but Apple is good about pushing price points without breaking the consumers’ wallet (with the exception of the first iPhone when Apple promptly cut the price and rebated the overcharge).

Apple will use the "cloud" to make your iTunes library available everywhere in an instant.

And maybe – just maybe – to allow you to preview music you may want to own. The “cloud” will enable this.

But I’m not counting out an Apple music subscription service, either. With Steve Jobs predicting Apple for fun and profit is a fool’s game.

Labels love subscription plans. They would support it. Years ago Warner Music told me they wanted ISPs to charge consumers a monthly fee for all the music you could eat, but that plan was dead on arrival. Try to get ISPs to agree on anything.

The streaming service Rhapsody has gone from 800,000 subscribers to 650,000 – a 19% drop in the past year.

Spotify hasn’t gotten off the ground in the U.S. yet and while consumers seem to like it in Europe the jury is out as to whether the financial model will work in a world of free filesharing.

So, it seems inevitable that consumers will keep their music on their mobile devices and add “cloud” accessibility thus reducing the role of terrestrial and satellite radio in acting as a jukebox.

But …

If radio could reverse the self-destructive trend of eliminating personalities and “music authorities”, it could and probably would present an attractive package to even young consumers who hadn’t previously turned to radio for music discovery.

You also hear me mention the term music discovery a lot because young people tell me that music discovery is exactly what they want.

More ways to connect with more and different kinds of music and artists. Radio used to serve that purpose with the dj as the music authority. Voice tracking and syndicated voices are not the same. Ask any young music consumer.

Radio, therefore, can get a leg up on what is inevitably going to happen by hiring (or re-hiring) personalities who know music and/or employing music "authorities" in their genre as well as putting specialty programs on-air that are about discovery.

Just driving terrestrial listeners to the Internet or mobile Internet, I am sensing, will not work.

I’d also like to see the radio industry announce at the NAB Radio Show this September in Washington a new agreement where the industry would agree to pay a small performance fee in return for very favorable Internet streaming and podcasting rates.

While I don’t think it is fair for radio, the longtime drive behind music sales, should pay this fee, reality says the time might be right for a compromise and our new NAB President seems to be that kind of a guy.

Important because the mobile Internet and the Internet stream will be vital to radio’s ability to make up for inevitable lost terrestrial listening in new media. What an opportunity.

The sky isn’t falling unless we take our eyes off the consumer.

Consumers are dictating what devices they prefer, how they want to listen (in shorter segments), where (on their mobile devices) and with whom (their social networks).

This is all good for us – we’re radio, the original social network and mobile device that may have lost its way during consolidation but can find the future by looking to the early adapters of new media.

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Lew Dickey Runs Cumulus Like BP

While CBS Radio President Dan Mason is celebrating the ascent of WCBS-FM in New York to number one status in the latest PPM ratings, Cumulus CEO Lew Dickey is telling a Kagan Conference that he has $1 billion in capital to spend on acquiring “pretty attractive stuff”.

Mason is a real radio guy and a friend of mine so if you think that clouds my judgment, read no further.

Of course, I’ve known Dickey for years and he has always been nice to me. We have had a cordial relationship.

But I no longer respect him.

Dickey is mean to his employees – many of whom detest him and his management team and he talks out of both sides of his mouth – like in his recent comments at Kagan.

This guy is playing with us.

He is quoted in Radio-Info as saying, “His challenge – to ‘de-commoditize our business’ and start lifting rates.”

WHAT?

Dickey is the guy who made a commodity out of radio – importing cheap syndicated and shared programming to save money, cutting local sales forces to the bone and authorizing a phone-bank in Atlanta to sell local radio in Cumulus markets.

That is what he has factually done.

And yet Dickey is getting a pass in the trades as if he actually knows what he is doing.

Then look at Dan Mason.

Same industry.

Same economy.

Plus add corporate pressure of being an arm of Viacom.

Yet Mason builds radio stations that for the most part are very likable and listenable. More importantly, they are local. He may use voice tracking more than I like and I never cared for CBS firing a lot of its morning talent to save money – I suspect he didn’t like to do it, either.

Still, to revive WCBS-FM was his brainchild.

A beloved station that New York listeners missed so much they wouldn’t give the “Jack FM” format as much as a slim chance on the 101 frequency. One of the first things Mason did when he was hired by Les Moonves was revive the oldies station and morph it into a somewhat younger sound. Mason didn’t run from oldies (or classic hits, if you must) because baby boomers were getting older.

He saw how the People Meter could actually help the genre.

So what is the difference between Dickey and Mason?

Mason is a programmer – a product guy, who worked for decades at radio stations.

Dickey is a pretender, sorry to say it – who brags about buying other companies the way adolescent boys brag about you know what in the locker room.

Now, Dickey spits in the face of the industry and the very people whose careers he has ruined or is in the process of ruining and he gets a free pass.

In an Inside Radio story titled “What Will Lew Dickey Buy? You Might be Surprised” his pseudo $1 billion Crestview acquisition account is never questioned. You may remember, Dickey announced the partnership with great public fanfare but neither Crestview nor Dickey pledged any money to the account.

Show me the money?

Who invested in it?

Some people – I’m one of them – say, “I call you” in his poker match. Is the acquisition account fully funded?

I doubt it.

Is it partially funded?

I doubt it.

Is there any money in it at all?

How about a full public accounting.

Then Dickey goes on and brags about the “pretty attractive stuff” he is supposedly looking at.

Yeah?

Well, looking isn’t buying.

Are you buying CBS?

Previously, Dickey has bragged about buying Citadel and Regent.

You know what happened there.

Now Dickey is saying it could be another three or four months before a deal gets done – maybe even longer.

As my mother used to say, “don’t leave me hanging”.

Dickey has the chutzpah to say, “If we have to wait until 2012, it’s not that big of deal. We have plenty to keep us busy”.

Like learning how to run a radio station as they lose valuable managers, programmers, on-air talent, sales execs and engineers.

So you can see the contrast.

Maybe a few years ago the Dickey dog and pony show might attract a crowd but today you get the feeling he’s selling snake oil to a gathering of snake oil salesmen.

Mason is trying to do local radio under the constraints of a tough economy.

Dickey is firing everyone and consolidating their jobs in Atlanta.

CBS is delving deeper into the digital future – for without it, radio can never be a growth business again as witnessed by the PwC prediction that radio will fully recover from its recession by 2014 but only if it adds all forms of audio including Internet and satellite.

Dickey’s foray into digital media is a Blackberry.

Look, radio is on the cusp of either making it or breaking it as terrestrial listening is replaced by digital entertainment.

Dan Mason is one of a handful of sincere radio executives who understands this and is doing something about it. Good programming on-air and new content for the mobile Internet.

Dickey reminds me of a BP exec telling us the personnel spill was not that bad …

That Cumulus is not polluting the airwaves with cheap, unremarkable syndicated programming and voice tracking ...

That cleaning up the shores of declining sales is as simple as raising ad rates 30% to pre-recession prices while offering less in-demand local programming.

Dickey is as insensitive and clueless as BP oil executives and both come off seemingly as slippery as the very oil BP was drilling for in the Gulf.

So my suggestion to Dickey is to mimic BP one more time and set up a fund with, say, $100 million as compensation for payment to radio people whose careers Cumulus has ruined and then call Dan Mason and ask him how to run a radio group.

There is a window of opportunity here for great local radio and great local mobile Internet content by radio companies.

Every time someone like Lew Dickey tries to revert back to “Wall Street 2”, call him out for the sake of all radio people who want to be part of the future, not bad business as usual.

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“Pre-Order of 600,000 Radios Suspended”

Could you imagine a headline like that?

But Tuesday, the most unpopular cellular carrier in the world and the most popular electronic device manufacturer in the world got so many pre-orders for the new iPhone 4 that it was forced to suspend sales.

That’s right – they were selling pre-orders and had to stop writing business.

True, they ticked off a lot of potential customers who tried to pre-order the phone with resulting computer crashes and site malfunctions but nonetheless, AT&T and Apple emerged with even more customers.

And those customers – the ones who couldn’t be the first on the block to get the new iPhone -- were promised a delivery date of after June 24th – sometime, anytime after – before they could receive their coveted iPhone.

Consumers are moved by innovation and good marketing. They will even put up with bad service and a faulty cell carrier.

How is this possible?

Back to my mythical headline “Pre-Order of 600,000 Radios Suspended”.

In the history of radio or television, were 600,000 sets ever sold in one day? I understand televisions cost much more than an iPhone but radios do not.

Even the recent history of HD radio – did they sell 600,000 HD radios in all?

Or satellite radio – without the car radio install – how many satellite radios would capture the imagination and wallets of entertainment consumers?

That’s how big the portable Internet is becoming because I’m sure you’ll agree these phones are not flying off the shelves because they only make phone calls on the AT&T network.

There is no reason for radio, television or the record industry to be discouraged – this is a time of great opportunity for them – and for publishers.

But the company that owns the delivery system will get to charge a toll.

It is no different than the Jersey Turnpike. Want to go from Mt. Laurel (exit 4) north to the George Washington Bridge (exit 18) – you’re going to pay the state to use the road.

Increasingly, Apple is the state.

You’re going to pay them to carry your content. That’s not necessarily a bad thing (this is an Apple shareholder speaking, by the way). It depends on the price of the toll.

True, Department of Justice investigations are being rumored for Apple’s alleged monopolistic practices but America seems to like monopolies. The less competition the better.

That’s how you got radio consolidation.

I see it all differently.

A new day ahead for traditional media – a new day built around someone elses delivery systems. No longer can radio expect automakers to provide the radio while they provide the terrestrial signal. Those days are gone as well.

If I’m a radio owner, I’m falling all over myself to hire talent and young people (the kind Apple is hiring) to build me content.

I’m going to build on whatever valuable terrestrial radio brands I now own.

Try to get into digital print with an eye toward the iPad.

Looking beyond Twitter and Facebook for real social networking that begins and ends with me at my radio-based content.

I’m adding video and text capability because I realize that in 2010 no one would develop just an aural medium. Yes, radio was desirable in the early 1920’s because TV had not arrived, the Internet was a gleam in Al Gore’s eyes and social networking hadn’t been born with Mark Zuckerberg.

No problem.

If radio could only get over its delivery baggage, it would be hard to stop.

If the radio industry wants to ever meet or exceed its industry output before the current recession, it is going to have to do so with new media content that it owns and controls.

Someday there will be another Apple.

Once there was a Sony and they made Walkman devices.

To adapt to the future, radio, print, television and record industry companies are going to have to live in the present not the past.

Picture this – as I often do.

A big room – a control center, if you will.

No walls.

Everyone interacts.

At the head of the room is the Chief Inspirer because the days of hiring geniuses to make content decisions is also over.

This Chief Inspirer looks to her left and sees someone managing the terrestrial signal.

To the right, someone else handles social networking.

Down the center a podcasting, then video center.

Way in the back of the room, digital publishing.

Somewhere in between, mobile content.

Marketing people work arm and arm with content types.

If this Chief Inspirer is working at 1010 WINS, she gets word that a plane has crashed at LaGuardia (God forbid).

The terrestrial manager then stands up and says, “we’re breaking in and going live”.

The social networking chief says, we’re live with two-way talk and eyewitness accounts.

A chief anchor initiates a podcast that is updated every half hour.

Video podcast is added within the first hour including footage from WCBS-TV and eyewitnesses.

The Chief Inspirer looks to the back of the room and shouts to the digital publishing people to file reports on all aspects of the tragedy including links and video.

And the marketing people?

They are selling sponsorships of all types using pre-determined rates as well as on-demand for the duration of the event.

All in one command center.

And that’s just one example of a story.

And one example of a radio format that could grow legs into the future. It also applies to music, talk, and specialty formats.

There are many more.

To get these results, you can’t let the audience change and the technology change without the content providers changing their skill sets as well.

On a day when we see 600,000 iPhone 4 units sold until they can’t sell another one – when demand is so great for the digital future – will someone in radio please stand up and acknowledge what the digital future will be without – content?

That’s radio’s business and the sooner we commit budgets, talent and new thinking to it, it will pay off for us the way it is paying off for the bumbling AT&T which by happenstance is in the cellular provider for all things Apple.

Well, radio can be the content provider for all things Apple.

Think Different.

Soon.

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Life After Cumulus (At Saga)

Lew Dickey may be amping up the pain machine at Cumulus for his employees, but Ed Christian’s Saga Communications is hiring his market managers and engineers.

What’s more, Saga loves ex-Cumulus managers because they are good and their enthusiasm for proving that Dickey discarded them prematurely is a great motivator.

And, believe it or not – Saga would probably like to hire more of the troops that the Dickey boys don’t want. But, Saga does not recruit. They apparently accept and appreciate inquiries into their management positions.

Dickey has turned to outside-the-industry, non-experienced managers from companies like Cintas Uniform Company. God knows why Dickey is obsessed with Cintas.

This is an uplifting story in an industry that could use a few uplifting stories right now.

Saga hired Michael O’Shea, an old friend, who worked for Cumulus in Eugene, OR and now works in Bellingham running KGMI, KISM, KAFE and KBAI.

Bob Bollack a great performer from Cumulus Ann Arbor (former Clear Channel hand) went to work for Saga as market manager of Ashevlle, NC at WISE, WOXL and WTMT. My opinion: Bollack was a hard guy to hire and Super Lew made it possible for Saga to get him. In other words, Cumulus didn’t value the talent and he got away.

Jim Principee worked in not one but two Cumulus markets – they transferred him – but Saga got him for Charlottesville, VA now running WINA, WWWV, WQMZ and WCNR.

Diane Hubbel was PD of KABC and KDKA and then GM in Santa Rosa for Maverick. Cumulus recruited Diane for its Savannah cluster. In spite of the pros and cons that were bandied about in the industry regarding making a career move with Cumulus, she took the job. Presto, Saga got her for WNOR and WAFX in Norfolk.

All four managers are exceeding expectations from what I hear.

They could have been working for Cumulus right now doing the same good job, but they left for Saga.

Saga also picked up a few chief engineers from Cumulus' shortsightedness in the technical area. It’s hard to find good engineers today. They’ve been fired and relegated to other industries.

Cumulus worked their engineers hard and even some present Cumulus employees think engineering is another weak spot for the company.

Lew Dickey is Harvard and Stanford trained.

His view of radio is all about theory. I once told him face-to-face that a little Dale Carnegie would go a long way with his people. In a multi-month online survey I did on my website last year, Cumulus was voted the worst radio group. (Bonneville was chosen the best).

Dickey’s experience is light. In my view, he’s all business theory, very little practical management.

In this day and age you cannot lead a company to great financial success when your talented people want to leave the company.

Cumulus is run like Central Command.

Sales meetings by Skype from Atlanta – Big Brother-type atmosphere.

Sales strategy comes from Atlanta.

Programming comes from Atlanta.

All thinking comes from Atlanta.

Some managers – in my opinion – are hostages at their own Cumulus stations forced to do everything in lock step with CentCom.

That’s why I have been saying that 2010 will be the year that under appeciated radio managers and talent will get their revenge. Not in the sense that they will try to sue Cumulus – although there are several legal initiatives under way.

But in the sense that Cumulus will start hurting from the brain drain that it did not need to initiate.

There is reason why Cumulus could not have kept its team together during the awful financial year of 2009.

I know that Cox has hired some Cumulus people including Kristin Okesson in Connecticut. Cumulus thinks that it is a better use of their money to try to make Okesson pay for leaving them (and their reportedly ambiguous contract) than trying to keep an excellent manager happy.

This is not limited to Cumulus, of course. All the major consolidators have been firing talented people because to them financial savings matter more than a strong operation.

I’ve mentioned this before but I know of talent (they can’t reveal who they are contractually) being paid huge six figure sums not to work for major consolidators. That is, they get their paychecks to not do their number one radio shows. If this makes sense to you, it sure doesn’t to me.

A needed tax write-down – maybe.

Insanity – definitely.

So wherever you are a manager, if you want a job with Saga, I’ll send your resume along in confidence. No guarantees. Saga (and for that matter Cox) are not poachers. But I know good managerial talent is still appreciated.

If you are happy where you are, I am very happy for you – and I mean that.

But we are entering an age where the mistakes of radio consolidators have now come due.

Finally, there are good radio companies that want you again.

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The Music Business Turns To Newspapers

One of my readers sent me an email over the weekend to say that on page E-17 of The Sunday Los Angeles Times there was an ad for Tom Petty & the Heartbreakers new album “Mojo”.

According to my reader, a free download of “Mojo” was included with each concert ticket purchased when the album debuts today.

This isn’t the first time artists have turned to print to fill seats.

Remember when Prince had one of his CDs stuffed into the pages of The Mail on Sunday in a massive giveaway designed to – well, sell out his concerts?

It worked.

What it didn’t do was to get newspaper readers to buy the CD because they didn’t have to. And Prince apparently didn’t care if they did or not – he just wanted them to come see him perform live.

There have been a lot of cockamamie schemes lately to fix what ails the music industry but little notice has been given to the concert touring business which is also on the skids.

How bad are things?

Live Nation, for example, wiped out its service fee for June to find a way to make concerts more affordable to screwed-over consumers. That damn “service fee” and other associated charges is what sticks in the craw of young music fans, but you can’t get Live Nation to eliminate them for good.

That’s their business – excessive fees.

What does it say about a music industry that can’t sell CDs, doesn’t want to allow consumers to cherry pick tunes even if they pay for them and refuses to fuel the viral growth of music by allowing file sharing?

How about – dead business.

Now – and sit down for this – Tom Petty and Live Nation are turning to Tribune, the publishing and TV station owner currently in bankruptcy to help them sell concert tickets.

You see, giving away free downloads is an extra when the end game is actually selling out the venue.

What does that say about the value of music?

I’ve long said that the financial value of music is easy to compute. Just take 99 cents for a legal download as the high and zero as in free file sharing for the low and you’ll find the price at about a nickel – taking into account the fact that most people steal music rather than buy it.

So imagine this.

Petty turns to a newspaper company and says build me a “first-of-its-kind web hub designed to give their fans access to unique content, music, concert tickets and merchandise in select markets across the country. Visitors to the site can also play an exclusive "Tom Petty and The Heartbreakers" trivia game with a chance to win two front-row seats to the band's Oct. 1 show at the Hollywood Bowl, including airfare and hotel accommodations in Los Angeles”.

I’m quoting from the official Tribune news release.

And don’t get me wrong – I don’t have a problem with trying new things. The only problem is that newspapers and websites are not new things.

Giving free downloads away in exchange for buying concert tickets is lowering the price of music below zero.

It is saying that the record is the loss leader and the concert event is the business – even if it is becoming a sluggish business.

Recently I took a meeting with the manager of an aspiring country artist and the manager wanted my help on planning a social networking strategy. You might be interested in my advice.

I said, if you are prepping your artist to be a singer with a planned singing career then both of you will be broke.

In today’s world music appears to be an entrée to something else – touring for those acts big enough, acting, a reality show – something else.

It reminds me of the old Italians who used to say to their aspiring children, “get a degree and become a teacher just to be safe”.

We see all this bad news about the music industry – the foolishness of the big four record labels.

Then we read about the genius of the Live Nation merger which in reality looks to me to be a bum deal five to ten years down the line when some of their artist contracts expire.

What is fast becoming apparent is that the concert business – even as a monopoly – is not a business at all if there isn’t a vibrant record business.

Now, you’re probably expecting me to say – let’s revive the record business and rebuild live entertainment.

Nope. I’m not going to say it.

The consumer is telling you what they want.

Instant access to music – free music to sample and decide. They want music on their mobile handheld devices. It is apparent to me that they want to see live performances but don’t want to have their wallets lifted to do so.

They are going to embrace the iPad, expect to see and hear their favorites and are relying much less on voice tracked radio to help them decide what they like.

In fact, they are telling us they want music discovery.

And they want it on their favorite Internet mobile devices, in the car and in person for the right price.

The labels and last remaining live concert companies are going in the opposite direction – in reverse of the inevitable.

With all due respect to Tribune, when Tom Petty has to turn to a newspaper company to sell tickets …

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The Rewards of Radio Bankruptcy

Now that the first phase of radio bankruptcy is coming to an end (don't worry there will be more), the spoils of failure are being outed in grand style.

Take Citadel’s overpaid CEO Farid “Fagreed” Suleman as he lives up to his nickname.

The company under his guidance tanks.

Gives Citadel shareholders a major haircut.

Hundreds of valued employees are fired. The survivors are kept on by burdening them with additional duties for the same or lower pay.

Citadel winds up in court with a pre-arranged bankruptcy. Fends off litigants with enough money to fight for some kind of out of court settlement. Too bad for the rest.

The judge grants the bankruptcy and what happens next?

Fagreed gets a new contract.

Five-year deal with a base salary of $1.25 million.

Plus – an annual performance-based bonus and stock options -- where the real money can be made because the inmates get to set the performance guidelines.

Oh, and while Citadel employees are often forced to sign non-competes, Fagreed gets his new contract not burdened or restricted by a non-compete.

Fagreed may not be able to run a radio group profitably but he sure can negotiate a hell of an employment contract – for himself!

And his radio “wife”, Judy Ellis gets a new three-year deal for all the wonderful work she has done managing talent, firing people and helping the company underachieve.

Ellis, who somehow got to be COO, gets $500,000 a year plus bonuses. Oh boy, there is that "b" word again.

But it doesn’t stop there.

CFO Randy Taylor – you guessed it – a new contract, $400,000.

Senior VP/Finance and Administration Patricia Stratford gets to keep her job and bag $200,000 annually.

They also get stock options and bonuses.

The old board exits stage left.

Teddy Forstmann is out but gets to keep his girlfriend, Padma Lakshmi. (Hey, I’ll take that deal!).

Because Citadel couldn’t pay its debt, it had no other option but to trade debt for equity – that is, the lenders got 90% of the company and they could have kicked the under performing Suleman and his team out on their butts, but instead – they locked them in for more of the same.

Now I know what you’re thinking.

Jerry, you ask, how can this be?

And my response is, that you think consolidated broadcasting companies should be judged by their performance but Wall Street’s money game does it differently.

The new Citadel investors – the unpaid lenders, as it were – get to make plenty of money going forward even if the management team takes apart the entire operation. And don’t tempt them, either.

You want hubris?

How about the public offering that is coming for suckers – I mean, stockholders, who want to invest in radio’s version of the Titanic. Like a Timex, Citadel will always take a licking and keep on ticking. Would you buy a new Citadel stock if you weren't drunk at the time?

And, just so you don’t go away with the thought that after a brush with bankruptcy these clowns have now learned their lesson, don’t forget the new $762.5 million credit agreement that still remains on the books.

Only – and I say only -- $1.9 million in interest is due by the end of September when Citadel execs get back from parading around the NAB Radio Show like they never met a loan payment they didn’t want to repay.

And if this isn’t enough to make you scratch your heads in amazement, Citadel is rumored to be looking to acquire.

Ah, the many rewards of screwing up.

Real radio people now know that this was the game all along. The PR and spin that accompanied downsizing had nothing to do with staying alive. It had to do with greed and who better to lead the next generation of Citadel bungling than a man named “Fagreed”.

But it’s not just Citadel playing this game.

Bill Stakelin and his Regent team finagled new contracts on the eve of filing for bankruptcy and when the courts eventually approved their pre-packaged bankruptcy, Stakelin and the boys left with their money without having to do the work.

You think Clear Channel is afraid of bankruptcy?

Incredible as it may seem, Clear Channel owes about $20 billion and it comes due in a few years. Aw hell, they can always refinance it for higher interest rates, right?

And the Amazing Lew Dickey machine acts like an acquirer when Cumulus will run into its loan covenants in the next year or so.

All together now -- Who You Gonna Call?

Look … these consolidators are a joke.

If you want something positive to chew on, take a look at a few companies that are about to try to turn this thing around. They are not perfect but they’re not in this game to play Wall Street 2.

Bonneville -- Watch their new media and interactive efforts and profits.

CBS – They will sell some stations but the larger markets that remain are well run and CBS has been a leader in interactive.

Cox – Always ran a solid group. Never really stooped to consolidator shenanigans.

Saga – Number one in remaining virtually debt-free. No one else can say that in radio.

There are a handful of other companies out there that seemingly can’t decide whether to go after the pot of gold in the digital content business.

To date, greedy consolidators have laughed all the way to the bank(ruptcy) courts.

But there is an emerging group of radio companies that could have the last laugh by actually taking a cue from digitally-minded consumers instead of bankers.

Keep a watchful eye on them.

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Cumulus Mandates Pre-Recession Ad Rates

The recession is over at Cumulus – forget about the rest of the world.

CEO Lew Dickey and his "other" brother John are focusing on raising their average unit rate (known as AUR) in spite of the loss of talent to competitors, lower ratings and tough local economic conditions.

As one Cumulus manager put it:

“If we had high ratings and on-air talent, we could definitely go to our broke business owner clients and maybe pull a few more bucks for our quality advertising media products. But guess what, we don't deserve to ask for more when our market share of listeners is 30% less than a year ago because we had to slash the quality of our product”.

The first part of the year started optimistically for radio but the broader economy and sluggish recovery have taken a toll on the sector.

That’s not enough to stop the Dickeys.

Every Cumulus cluster according to insiders must run an average of 4,500 “no charge” spots a month that are being sent down from Atlanta headquarters. That is, the local stations run the spots, don’t get credit for the money in their billing or their bonus plans.

Here’s the straight scoop right from the horses ….

mouth.

Lew Dickey himself in a memo to his “team”.

30% Higher Ad Rates

"Floor rates must be enforced and AUR targets must be achieved. We are a fixed-inventory business, so Peak revenue can only be achieved if rate structures are returned to Pre-recessionary levels. Radio rates have fallen some 30%, yet consumer spending is on pace to return to “peak” either this year or next. Our industry was guilty of predatory pricing which proved to be highly destructive and must be reversed".

Targeting Health Care, Education and Legal

"One of the key reasons why radio’s rate structure collapsed is the over-reliance on a small number of accounts and industries – namely auto, housing and financial services. When they were hit disproportionately hard, so was the radio business. In our march to “Peak” revenues, it’s essential that we expand and diversify the accounts and industry segments we target. It would be foolish and naïve not to learn from storm we’ve just come through. Industries like: Healthcare, Education and Legal Services are all growing and should be integral new revenue streams on our “Path to Peak”. In short, diversification is the responsibility of all responsible managers as you manage your book of business and develop your strategic growth plans".

Pawn Even the Poor Stations in the Cluster Off for a 30% Premium

“Each of our markets consist of multiple radio stations which EACH have 43,680 units to sell in prime on an annual basis. In other words, “Peak” revenue requires Contribution from ALL of the assets in a cluster, not just the primary assets. Every station has its own unique community of listeners and that community (regardless of its size) has intrinsic value to target advertisers. Most sales organizations “default” to selling the highest rated stations and then “package” in the others for little or no incremental value. This is a sub-optimal strategy which will produce below-potential revenue for the cluster. Achieving “Peak” revenue requires a strategic plan for each assets which recognizes its inherent value and contributes incremental revenue for the 43,680 units or chances for our target clients to communicate their marketing message to their potential customers”.

This guy must be out of touch with the real world.

In his “team” memo, Dickey predicts that the radio industry will return to “Peak” revenue by 2015 or $21 billion.

Is he nuts?

There is not a respected or for that matter scorned industry analyst who is predicting that the radio industry will even return to his recession levels -- maybe ever -- let alone grow to $21 billion.

Maybe Dickey is factoring in new media, interactive media, mobile Internet – you know.

Just one problem.

Cumulus doesn’t do new media all that much so in effect Dickey is predicting $21 billion for the radio industry even as new media is siphoning off advertisers monthly.

Now that’s optimism.

Or maybe Dickey's beginning to believe the hype he gives to investment bankers.

Then again Dickey also said he’s adding 100 new salespeople to help with local business. What he avoids is telling them that these salespeople will be working out of Atlanta.

Wonder if the local clusters get credit for the sales? Just asking.

Again in his own words Dickey sums up his plan to raise the rates even if local stations cannot justify them when he rallies the troops:

“In order to achieve our objective of reaching “Peak” revenue 2-3 years ahead of the industry, we obviously need to grow faster than the competitors around us. We will accomplish this goal through more sophisticated pricing practices and development of new business that our competitors will not because they will simply not manage the process required to truly develop these lucrative accounts”.

Hey Lew!

Radio will not be a $21 billion business in 2015.

Your local managers know best how to price their stations in local economies.

To build ad value, add on-air content that is local instead of the national syndication and voice tracking that Cumulus is stuffing down the throats of local listeners and advertisers.

Today, I have finally come to understand why Cumulus has become so mean to its employees, so centralized in their management and so delusional in their goals.

I truly believe this guy believes he is the only one in that vast company who knows what’s best for radio.

Print this out – save it until 2015 and let’s see if “Tricky” Dickey who is trying to reinvent an industry he trashed is as smart as he says or we are as dumb as he thinks.

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Record Industry Collapse

Radiohead frontman Thom Yorke is saying that it is the end of the world as the record industry knows it.

Yorke is predicting the total collapse of the music industry and is warning young musicians to hold off signing record deals as he anticipates some big labels going belly up in the next few months.

Radiohead left their label, the troubled EMI, three years ago and went whole hog into digital distribution. You may remember In Rainbows was offered on the Internet and fans were allowed to set their own price from free to whatever – with mixed results.

This comes as the record industry may have just survived its worst week ever in the last week of May.

Worst for album sales – at least in twenty or thirty years.

Absolutely the worst since Soundscan came around.

According to Digital Music News physical and digital albums totaled just 4,978,000 units for the week ending May 31st. Compare that to 45 million plus for the highest weekly total in music history in late 2000.

The CD continues to melt down.

Touring is in trouble.

Radio has lost its influence as a hitmaker.

Even merch isn’t selling all that well. After a concert event, who needs a CD bundled in? Most concertgoers have all the music they need before security pats them down on the way into the venue.

Meanwhile, the labels are trying to find a way to survive yet none have an original idea.

Suing consumers hasn’t worked.

The labels are two weeks away from shutting down LimeWire convinced that filesharing is their problem.

Twelve years have passed since the CD first hit the skids and an entire generation of young people have been raised on bit torrent sites or, at best, legal downloads from a consumer electronics company – you know, Apple.

Labels, in an effort to trim expenses, have cut back on what they need to do more of – find new acts and new genres.

Not even rebels like Radiohead have found the answer to the music industry’s digital future.

Here are the problems that are not being dealt with that adversely affect today’s major labels:

1. Steve Jobs is the Commissioner of Music – just as Bud Selig is the Commissioner of baseball except Jobs has even more power. He has relegated music as a byproduct for his electronic devices. Previously, music drove everything. Forced radio airplay. Commanded live touring dates. Fueled merch sales. Not so now. Music exists as an add-on to an Apple device. The labels let Jobs get away with it.

2. The radio industry has lost its influence over the 80 million strong next generation. They grew up without djs and stations telling them what was good and young consumers now look to each other bridged by social networks and filesharing to spread the word.

3. Growth by lawsuits has failed miserably. You can understand why the lawyers of the music industry played the only hand they know but filesharing is impossible to stop and what is worse is that time and focus has been diverted from innovating to litigating. As we write this, the labels still pursue punishing pirates instead of embracing them.

4. The labels inability to make deals with Steve Jobs that are accretive to them shows how they have missed the mobile digital revolution. After all, Jobs always gets what he needs, but the labels somehow wind up left at the altar in a marriage of convenience.

5. It is inadvisable to pursue all you can eat strategies such as Rhapsody and Spotify when Apple is about to make music available online to its 100 million credit card holders. Their iTunes store will someday stream music to mobile Apple devices everywhere and the labels need to get with the changes that are driving cloud computing because the cloud is coming. And, the labels will be supplying their music to Apple and getting kissed by their sister again.

6. Labels need to get out of the record business and into content creation using the artists that they own. In the past programming was outsourced to radio. Then Apple conned the labels out of their music but didn’t go to the expense of creating programming. The labels need to be tomorrow’s radio using their artists. Hire creative radio types. Make sure video is included. Add social networking. Why? Because the labels own the best assets and because they fail to see the new business model ahead, leave their music to others from which to profit.

I am not sure the record industry is ready to implode.

I think it already did.

From inaction, reaction to filesharing and lack of traction for the digital future.

There will be a lot of bad weeks ahead for the music industry, unless and until they get out of manufacturing and get into content creation.

There. I’ve said it.

Record labels that act more like Apple and less like widget makers.

Thom Yorke is quoted as saying, "It will be only a matter of time - months rather than years - before the music business establishment completely folds. (It will be) no great loss to the world."

But the music business folded when the labels let Steve Jobs take over pricing, delivery and now promotion.

There is nothing left for a traditional record label to do except find and sign artists – and that is precisely what they are not doing enough of.

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