Radio's Stupid Consolidation Tricks

What do you get when you fire most of your local employees, revert to using voice tracking or cheap outside programming, manage from corporate headquarters, spy on stations and treat engineers like they are not necessary?

No local radio -- or as I like to call it -- Nocal radio.

You could call it Knuckleradio because you'd have to be a knucklehead to do what radio CEOs are doing in the name of economies of scale.

Or Lowcal Radio -- because the costs for running consolidated stations are increasingly low.

Whatever you decide to call it, consolidators are busy at work carrying out their plans to reduce expenses even if it hurts their product and industry.

The three largest groups -- Clear Channel, Cumulus and Citadel -- are leading the way (if you could actually use the term "leading" to describe this self-immolation). Believe me, the other small groups are falling all over themselves to adopt the same destructive and shortsighted policies as you will see.

Here are a few self-destructive examples:

1. Playing offensive videos at "sales meetings".
Turns out one of my Repeater Reporters got wind of an Atlanta GM's attempt at motivating his sales department. The GM reportedly played Alec Baldwin's rant from Glengarry Glen Ross, the 1992 movie about the behind the scenes operation of a real estate office. The clip, as submitted by my reader, is full of insults and obscene language -- some directed at the alternative life style of other employees with children. Give a listen, but you've been warned. Some motivation, eh?

2. Raising ad rates by 20% to cover losses.
Recession? What recession? One consolidator ordered a 20% rate increase effective immediately ostensibly to cover his company's losses. Salespeople on the street are cringing as their prospects are hurting so much many are already skipping radio advertising at existing rates. Talk about being disconnected from your advertisers. Now is the time to cut rates -- not during economic booms. Radio, which had decades to raise its rates, stuck to low ball pricing and now you dance with the one that brought you (low ad rates) -- to quote Shania Twain.

3. Clear Channel's goal: no one in the building on weekends.
I know what you're going to say, there's already no one in their buildings during the week. One CC reader tells me this has been the company's apparent goal for years now and he can prove it. This Repeater Reporter attended a Prophet System training session in Denver a few years back. Here's how he quoted the trainer: "...yes, that's our goal; no one in the building on the weekends." When this concerned radio exec asked what would happen if the station went off the air, he recalls the trainer as saying, "He replied that Prophet had the capability to page the engineer or PD in that situation. He also said that hopefully station personnel would monitor local newscasts for news events that took place and send someone in if any unforeseen events occurred". There's more listeners, TSL and audience interaction on the weekends -- guess Clear Channel doesn't want it.

4. Father's Day Weather -- one day late.
Another disgusted radio exec says that on Father's Day -- well, let's let him tell it, "Clear Channel's high-rated WSRZ-FM, Sarasota, FL, 60s-70s hits, was plugging along, no back announcing, no local content, totally on automatic, when every hour, the recorded weather talked about the expected high tomorrow- FATHER'S DAY !! Seems someone forgot to update the weather. Another fine example of serving the community's needs". No harm done. No one got killed by a tornado this time -- just voice tracking egg on your face.

5. Michael Jackson coverage -- with no overtime.
This has probably happened at a lot of stations in the aftermath of the death of Michael Jackson. As one radio exec put it, "No one else was in the building when the MJ story broke. I put it on all stations (in the cluster) and then pieced together some tribute sets. Got a call reminding me..."No Overtime." (Did get a thanks from the PD who was on the way to the station.). This is not the way to do it.

6. Some Mom and Pop stations want to be Cumulus.
Another eyewitness account from a longtime radio vet who was fired from his consolidated radio job and wound up at a mom and pop operation. His comments remind us why once the genie is out of the bottle, you can't stuff it back in again: "...your article on tracking hit home...even with this local owner...we have a bare bones staff, everything is voicetrax even the morning shows!!...I took (a few) days off last week and had to track my shows while was gone... plus I put in all spots, write, produce etc".

7. "We're live today and you're lucky" on-air attitude.
One veteran broadcaster said, "I heard a personality on the air at a Radio One station on Friday last week who is usually voice tracked. She was on the air playing Michael Jackson songs back-to-back, and said during one of her breaks, 'Call me in the studio today, I’m actually here taking your phone calls and playing DJ today!' Nice sentiment, but she said it as though it was supposed to be a bonus for the audience... Almost as if to say, 'Don’t call me any other day, because I have much more important things to do'.”

8. Less station identification even in non-PPM markets.
An insider from Vegas said, "...in recent weeks, I’ve noticed a disturbing trend. The voice-tracks are totally generic. There’s no mention of the station by the announcers, just a lot of 'that was… this is ' and 'hey, did you know Lonestar was coming out with a new CD?' One can only assume that they’re now having jocks do generic voice-tracks that run on multiple stations, eliminating the need to cut custom tracks for each station. Other than the occasional imaging stuff, the station itself is never mentioned. Plus, there’s no weather, no local happenings, no local comments about artists appearing locally… nothing. That's you're new local radio for you.

Seth Godin, the marketing guru, recently did a blog post on the demise of the sewing machine business and the once mighty Singer Corporation.

I got the feeling Godin was also talking about the radio industry in a way.

But I was convinced he was when he added, "The best marketing strategy is to destroy your industry before your competition does".

I guess radio CEOs are taking him literally.

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What Sold 8 Million Michael Jackson CDs?

So let me get this right.

Michael Jackson dies -- the music industry's Black Elvis -- and Sony Music ships 8 million CDs worldwide. Some 800,000 were sold in the U.S. alone.

That’s 8 million pieces of outdated, non-digital physical product on one artist in just 14 days.

My friend, the brilliant music industry analyst Steve Meyer reminded me of this recently. He publishes the best weekly music industry summary I know of.

Steve recalled that when John Lennon died, Capitol Records sold out every Beatles and Lennon album within 24 hours and the plant went into round the clock production to catch up to feed the demand -- that was vinyl, by the way.

Capitol's entire year was made in the subsequent months following Lennon's death. And even though the Beatles catalog is different from Jackson's it seemed that retail increased across the board at that time.

Huge sellers like this brought with it the increased sale of other artist's product.

The REAL questions to be asked about this huge spike are: a) how long will it last?; b) did it bring with it an increase in overall sales in the industry?

We may never know for sure because you can't count on the record industry to count what they sell correctly. Thought you might appreciate this excellent piece in The Wall Street Journal on the labels' off the wall accounting.

Michael Jackson's death indicates that consumers will still purchase great albums when buying the entire album is worthwhile -- i.e., Thriller, Greater Hits, Number Ones, etc.

Even though downloads were in the millions following Michael Jackson's death, it doesn't compare with CD sales.

I agree with Steve's assessment but there is one more thing.

Without radio, this level of CD blowout doesn't happen.

Period.

Say what you want about awful programming on radio, but after consolidated stations got caught with their pants down in the hours immediately after Jackson's death due to voice tracking, syndication and network programming, they have been banging the hell out of all things Michael Jackson since.

Of course, to hear SoundExchange and the labels argue their position that the egg comes before the chicken, it's the labels that have laid an egg here.

Putting Long Tail aside (Long Tail has proven to be non-existent) and factoring in the death of radio as a hitmaker, something helped sell Michael Jackson music.

Was it TMZ or CNN?

Couldn't have been Larry King, right?

Or wrong?

Was it People Magazine?

MTV? VH1?

The iTunes store?

Free YouTube videos of Thriller downloaded millions of times?

It sure wasn't social networking or was it?

And, because the labels are in a copyright fight with radio stations in an attempt to tax them further for playing their records, radio couldn't have driven all those CD and download sales, correct?

Well the answer is quite simple -- "that, too".

Everything sells music and while radio isn't what it used to be with the next generation, it still has some kick left with Gen X and Baby Boomers. As I said you wouldn't know that the way SoundExchange postures for repeal of radio's performance tax exemption. Why give comfort to the enemy.

If we're learning anything from the demise of a musical icon (and I say learning because new information comes forward every day), it is that:

1. There is no Long Tail -- not that we needed the death of Michael Jackson to prove it. The labels sell a comparatively limited number of popular items to generate their profit. Most recorded music doesn't sell anything or next to nothing.

2. Radio is still big with Gen Xers and Baby Boomers -- and Gen Y will be perfectly happy finding a cheap or free digital copy of any music they want and/or knowing that they have the comfort of seeing Thriller video for free on YouTube whenever their hearts desire.

3. Hard goods like CDs are worth the price when a consumer gets something for it -- like lots of hits. However, a generation that cherry picks the music they want to download will be quite content with continuing to cherry pick thus don't read anything into the huge number of Jackson CDs that have recently been sold when it comes to the next generation.

4. Record labels are preventing -- that's right, preventing -- the further sale of music by charging prohibitive fees to webcasters and podcasters who could have had ready-made followings set to buy music from the labels.

5. Everything sells music -- gossip columns, bloggers -- even newspapers.

Look at the NFL -- not exactly in the same league with record labels. The NFL doesn't miss an opportunity to leverage their product everywhere a football fan could possibly exist. They also have to deal with piracy on the Internet, but the management strategy of constraining exposure for fear of having content stolen is an exclusive trait of the lawyers who run the music industry.

Michael Jackson has proven that he is in fact still alive and that it is the record industry that actually died.

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Saving Radio's Last Generation

Yesterday I wrote about Radio's Lost Generation -- how they are so different sociologically and technologically speaking.

But there also remains the issue of available radio listeners.

You know, the Gen Xers and Baby Boomers who want to listen to radio programming and like it.

They are also being misunderstood and it might be worthwhile to take a look-see as to what can be done to keep them.

Traditional wisdom is that Gen X and Baby Boomers will always be radio listeners.

Then again, radio CEOs thought the same thing about Gen Y -- and they let them get away.

So much for traditional wisdom.

There is still an available audience for radio, but radio CEOs are tempting fate again by making wholesale cutbacks in talent, local programming and a live presence in each market.

The question is how long can these listeners remain loyal to radio as their first line of mobile entertainment and are they vulnerable to new media initiatives that have captivated younger demographics?

The answer to both is yes.

Yes, they can remain loyal to radio and yes, they are perfectly able to jump in on the mobile, social and new media revolution presently underway.

But to keep Gen X and Baby Boomers spending time listening to radio, some changes are going to have to be made. I'm not kidding myself. I know these changes are unlikely. After all, consolidators are fighting for survival. They really aren't in the mood to grow their businesses. At least that's how they are acting.

What I am about to describe will be very familiar to smaller, local station operators who rarely get publicity in the trade press and somehow chug along under the radar doing quite well -- many even making money.

That's right -- making money in a tough economy.

So, let's take a strategic look at how radio can save its last generation of listeners:

1. It is very important not to fall back on the past in terms of programming and marketing. Doing old time radio isn't going to keep the available audience. This is not to say that strategies that have worked in the past will not work today. In fact, many will. But radio must reinvent itself using the principles that make it compelling or else it threatens to become a virtual broadcasting museum.

2. Radio listeners want local programming with personalities. Radio consolidators are moving in the opposite direction -- a fatal mistake. Even young people, in my experience, like personalities and would probably have bonded with radio had the industry not tried to de-emphasize personality radio more than ten years ago. Consolidators apparently cannot and will not reinvest in talent but stations and groups looking to survive will find this an important component.

3. Give the talent a percentage of the show's take. The days are over where radio personalities can afford to be hired for what they are worth. Instead, they grow with you and get a negotiated percentage of the show's billing in return for a long-term contract. I don't think I know of one radio personality who would not go for this arrangement and it lessens the upfront financial burden on the owner/operator.

4. In the spirit of reinventing radio for the available listener, come up with shorter shows. In talk radio, one to three hours could be the max. For music radio, let air talent entertain for shorter periods (no longer than three hours) to get the best product on-the-air. I know longer shows are more cost effective -- oh, there you go again!

5. Make nights and overnights as special as mornings -- and keep in mind what available and older radio listeners do at night. In the past, programmers assumed they were watching TV and their teenagers were listening to the radio. Now, the teenagers are online, texting, talking, listening to music (Homework? Not without all this new media). And their parents are also increasingly online and distracted from television.

6. All-night shows should be magical again -- an offbeat departure from the rest of the day. Your new litmus test: each daypart should sound different and I'm not just talking about a different playlist. I'm certainly not talking about syndicated programming, either.

7. Personalities communicate with listeners by text message, Twitter, Facebook and the like -- their audience. As you know if you've ever written to me, I answer all my mail -- sometimes within 24 hours. This helps me bond with my audience. Radio needs to use new media to bond with theirs.

8. Do something about the abysmal commercial load problem -- fix it. Many of you know I favor the content-commercial-content-commercial approach -- not stacking the ads in two or three stop sets. All of us -- not just the next generation -- have shorter attention spans. Stop and start is your new best friend.

9. And while we're at it, it's time to own up to reinventing commercials. No one listens to them.
That's why they don't work and which is why you're having a hard time selling spots during this recession. Your station has become an add-on -- not a necessity. Make sponsor messages a necessity by reinventing the live-read (I'm doing this now with Dave & Geri in Grand Rapids). Do more out of the station stuff in return for money -- ancillary income. If you tie your income to spot radio you're dead because spot radio is dead. A recent study quoted in Inside Radio said there will be no radio growth until 2015. You can't last that long and there's no guarantee there will all of a sudden be growth again even six years from now.

10. Take a hint from podcasting -- broadcasting has to become more personal. The days of channeling our inner Cousin Brucie or Ryan Seacrest are over. Available radio listeners want intelligent entertainers -- who know about the content (music, news or talk -- depending on the format). You can't do herky jerky radio jive in this era of great change and connect with today's listeners.

So there it is.

I've written about the importance of news, community involvement and other essentials so I'm sure you've noted it previously.

It's not back to the future. No, not at all.

And you can't do new media on radio. Technology prevents it.

It's about talent and how the dynamics of radio works best for Gen X and Baby Boomers who are inclined to like radio if they can get an outstanding, compelling and addictive product.

Don't confuse the cutbacks, "layoffs" and shortcuts like national syndication or network programming for radio and expect available older listeners to continue to tolerate it.

It's not.

Repeater Radio is designed to save money for consolidators and that's it -- not entertain and keep their available listeners.

With no next generation coming up through the ranks to give terrestrial radio a growth component, failure to super serve the listeners who already like and listen to radio is tantamount to actually inviting your audience to leave you.

Sooner than 2015.

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Radio's Lost Generation

Do you set an alarm clock to wake up in the morning?

Maybe have the radio come on to wake you up?

The next generation doesn't.

They tend to use their cell phones as alarm clocks. After all, many sleep with their phones right by their beds.

Now some of my radio friends would see this as an opportunity to get Gen Y to wake up with their smart phones and instantly hear a terrestrial radio station.

That works in fantasy but not reality.

The first thing this generation does is check their text messages, mail and what's happening.

If you need music, there is always your iPod.

A longtime industry friend and I had this conversation several weeks ago. One of the reasons so many radio CEOs are making bad decisions is because they don't know enough about the changing generations.

Gen Y was abandoned while consolidators were out running up the debt acquiring their stations. Too many stations purchased at too high a price -- refinanced over and over again until -- well, you don't have to look far to see what has happened.

Steve Jobs knows the next generation and that's why if you want a vacation from the recession, just go spend some time at your local Apple store. If you didn't have an iPhone app to tell you the stock market is in the toilet, the mortgage market has gone to hell and unemployment is rising, you wouldn't believe it there.

My thesis is simple.

If you can sell ice to the Eskimos -- I mean, if you can sell discretionary electronic devices such as iPods, iPhones and computers to people in the worst economy since the Great Depression, think you might like to take a closer look at why?

Michael Jackson dies and radio is slow to report his death or initiate non-voice tracked tributes but it doesn't matter.

It doesn't matter because the next generation can watch Thriller for free on YouTube and, you know what -- that may be good enough for them. You and I might want to own, but YouTube is always there if you need it.

Did I mention free?

Radio folks think greater variety is voice tracking and playing a few more tunes. But if you were raised in a time when you had unlimited access to everything out there -- for free -- would you be listening to what we're passing off as radio today?

Now, you're putting yourselves in the shoes of the next generation.

You love the Beatles or Eagles or The Dead for ever and ever.

They love their artists for shorter durations because they are fickle.

In fact, if you must know, they are damn proud of being fickle. They don't want to be figured out. Don't want you to start bombarding them the way the media did to their parents. They want freedom from mass media.

When you believe that a friend's opinion is worth more than any radio disc jockey when it comes to music -- you begin to understand why radio is left without a future. And meanwhile the knuckleheads running radio groups are firing personalities left and right and making playlists more repetitive just at the wrong time in generational history.

You may have had no alternative but to listen to a Walkman to be entertained.

Not this generation.

They are the djs, program directors, music directors, etc.

There is an excellent study by Jacobs Media for Arbitron called "The Bedroom Study" in which they followed young people into their rooms and observed their media habits.

My experience teaching the next generation at the college level confirms most of what this excellent report reveals.

Here's why radio lost the next generation:

1. Radio misunderstood the importance of technology to the next generation. In the past a Walkman was new technology. In fact, anything that included a radio was new technology to us. But to them -- radio sucked and when consolidators took for granted that there would always be a next generation of radio listeners, radio's future audience got away -- forever.

2. Radio CEOs underestimated at best and disregarded at worst the next generation's passion for technology -- new devices, new ways to communicate -- in fact, socializing without being in the same place. This was unimaginable to button down radio guys all full of themselves. They finally built radio stations into a handful of small empires. But it was a costly mistake as we are seeing now because these "empires" are on the verge of bankruptcy and the desire of the next generation for all things digital goes unabated.

3. The cell phone became the replacement for the radio. The Jacobs Media study put it best when it concluded "For most Bedroomers, the mobile phone is the Swiss Army knife of devices, serving simultaneously as a lifeline, fashion statement, photo album, and status symbol, that allows them to express their own unique personalities". In fact, truth to be told, many consumers in Gen X and Baby Boomer range have succumbed to the cell phone. Some older folks may still like to force an iPhone into being a radio but they are enamored of their phones. When I repeatedly asked classes of college students what's the one device they would not give up, it was the cell phone and when I made them do it for two days I thought they'd need counseling to deal with the grief -- the grief of being disconnected from their digital world.

4. Text messaging is the killer app. Those hapless cell phone companies really fell into this one -- a business that costs them nothing. The content is the conversation. Show me a young person that doesn't text. And while some know that texting is also killing off other parts of their lives, they are addicted to it. Here's a very pertinent article on informational overload. Radio decision makers don't get that radio competes with texting. Everything competes with texting. And asking listeners to text in and win is like asking a hungry diner to eat a crumb.

5. Television is on the decline. Why hang a big HD TV on the wall when your nice new and sleek Apple laptop brings you Hulu or plays HD, YouTube, music videos or whatever right there in front of you. You can check email if you like -- and many do when the pre-roll commercials are playing -- but email is so, well -- yesterday. Gen Y is already getting over it while radio executives use email like snail mail only faster and cheaper. The reality is that Radio's Lost Generation resides on social networking sites such as Facebook. Inside Music Media readers send me personal messages through Facebook at a growing rate.

6. The new radio is podcasting. Even respondents of the Bedroom Study indicated a soft spot for personalities and the local connection they used to get from radio. (Way to go consolidators -- you're headed the wrong way!). I don't agree that Gen Y will respond to radio in any way but I think radio companies (and/or personalities) can deliver local content directly to cell phones not as radio stations but as podcasts. And that these podcasts can be monetized as my clients are doing in ancillary ways.

One of the fastest growing banks in Japan is Jibun.

Would you do banking like this?

No physical branches.

A website that is spartan.

Customers open their accounts on their cell phones and all banking is conducted on the phone.

The cell phone is the ATM because you tap your phone and get money (if it is in your account, that is). This bank is bad for bank robbers but probably a challenge for cybercrooks.

If this excites you -- welcome to the world of media opportunity ahead.

The revelations are endless about radio's lost generation.

And sad -- very sad.

This is a time in media history when technology is outdoing itself, where young consumers are making it possible to reach them in the palm of their hands and directly into their ear buds.

No need to wait until they get into a car.

Gen Y's media is with them all the time and it's always on.

Radio executives took their eye off of all of this -- both sociological and technological aspects.

But the joke was on this handful of radio pirates who stole the industry from America.

They were in fact buying outdated analog media even while the transition was under way to the digital frontier.

Wall Street and consolidation did radio in.

Now, as it turns out, where is Wall Street when you need it?

And where is radio in a world that has moved on to the digital beyond?

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The Dickey Ding Dong School of Management

I've come to believe that Cumulus is a mean-spirited manager of employees.

Sorry to say, because I always liked Lew Dickey. He's smarter than he is acting and tougher than he looks.

That's my opinion and nothing more than that, but in light of some of desperate things Cumulus is now doing to squeeze blood from their employees, it's serves as a poignant example of how not to motivate good people.

Where Cumulus once had a cluster full of FM stations with live morning shows and live airshifts right through to midnight, they now have as few as three salaried jocks for all those stations.

We already know that consolidators double up by forcing program directors to be production and music directors. You know, to save money.

I get that companies like Cumulus are in serious financial trouble.

What I don't get is their increasing penchant for management by fear -- the "I Spy" mentality of this particular company.

What lit my fire last week was to see the way management is talking down to its employees -- it borders on abusive, in my opinion.

Look, I'm not espousing pie in the sky, touch-feely management. I know these consolidators are not capable of human relations beyond -- do it or your fired.

I'd sure like to have back some of the memos I've written in my career and the mistakes I've made. So it's not about being perfect. All of us are fallible. You see me owning up to them again -- here.

Not so with radio consolidators.

They are arrogant.

It's their way or the unemployment line.

I've worked for some tough customers in my career. Paul Drew was one of my favorite bosses, but I shook when I read his laser-like memos that could cut through you to your core. Dale Carnegie he was not. But I always got the feeling Paul cared about my career and how I could be air talent.

Consolidators care about saving themselves from their undeniable fate --bankruptcy.

Now they've taken their gloves off -- as witnessed by this latest example of mean management.

Let me set the stage.

There was a memo circulated recently purportedly written by Mark Sullivan, Senior VP for the mothership Cumulus.

The Cumulus Spy Meetings happen all day long at various stations -- typically lasting a half hour -- and are run through a Skype setup and video cameras allowing local Cumulus stations to beam the meeting up to "Scotty" so to speak.

From several accounts, the already low Cumulus morale has not improved since "I Spy" began its engagement in local markets. Employees are walking on eggshells trying to keep their jobs, support their families, maintain health care, send their children to college.

Raises are out -- but you already know that.

Some consolidators are asking employees to take pay cuts -- even talent that is responsible for 50 or more percent of their entire stations revenue.

One Repeater Reporter at Cumulus told me, "When Lew (Dickey) writes them (memos) they're several pages long. Recently in a conference call he told everyone that in this economy he could sell their lenders on Cumulus and get them to amend their deal then why can't we sell our local stations. I'm paraphrasing, I don't know the exact wording he used, but the gist of it was that we suck and he's a genius".

But here's a sample of the Sullivan memo in preparation for his series of "I Spy" phone conferences and my opinions -- Dale Carnegie is turning over in his grave:

Have you reviewed the salaries of your top AE’s from 2007, 2008 and year to date 2009? Are your top AE’s seeing their incomes decreasing at the same rate as our billing in your market? In other words, are they feeling the same level of pain that the company is feeling?

Since when is "pain" a motivator for employees? Imagine trying to get more billing out of a station by arguing that top salespeople should have decreasing incomes to match the stations -- and by extension -- the Dickey's loss of wealth.

Do you have an “activity standards” in place for all aspects of CSOS? Phone (Jam) Session requirements (dials, contacts, appts), Weekly Planner requirements (number of Stage 3 and Stage 4 calls per week), etc…?

Hell, Stage 4 sounds like cancer and to me that's what this form of mean management really is -- except the patient is Cumulus and it's dying.

Do you have a New Business Activity Requirement (standard) in place for each rep? I would recommend that each rep be required to generate 4 new pieces of business per month (place a minimum order size for a qualifying new account).

Does this guy know about the recession? I'm just asking because you'd think by his tone that his salespeople don't want to sell ads and make money. That's just not the case.

Do you have CONSEQUENCES in place for your New Business Activity Requirement? I would recommend that you pull a billing account each and every month a rep does not achieve their New Business Activity Requirement. It goes without saying that a rep should not be invited to stay in our organization if they fail to achieve their New Business Activity Requirements for more than 3-4 months consecutively.

Management by threat -- pull an account if you don't make your goal. Are these guys nuts? Could Joe Torre tell his players, strike out and I'll give you fewer at-bats or I'll cut your income? It defies imagination that you could motivate good and talented people by brow beating them and threatening their livelihood. This approach is tantamount to whipping a race horse mercilessly when the jockey knows it can't win.

In your weekly sales training (category and basic sales skill training) are you role-playing with sellers?

Mr. Sullivan, this is on you. If your salespeople need to be rehearsing role-playing, you failed your job in adequately training them.

Do you have Regular, focused recruitment efforts in place in your market (On-air ads, job fairs, referral system, etc…)? Managing proper activity by nature means you will have turn-over. You should always be recruiting.

To quote President Reagan (in his 1980 debate with Jimmy Carter), "there you go again".

Fear. Fear. Fear.

Recruitment.

Turnover.

Do you have a rate growth plan in place for your top 30-40 accounts? We have all suffered from rate decreases. This needs to stop ASAP. If you have not put together a plan to stair step up rates on each of your top accounts (30-40) then you need to do this immediately. Jon and I can help you with this. The work of our Rate Task Force is going to be very productive but will take time. We need to attack our rate problem today.

That's the ticket -- raise your ad rates on your best advertisers. I know Lew is a Harvard grad but they never taught us this one at Temple.

My God, I feel awful for those Cumulus employees who are forced to suffer fools and who have to sit through this verbal abuse.

What a long 30 minutes the "I Spy" meetings must be.

Here's the bottom line.

Radio is in the dumpster not because its people all of a sudden forgot how to do their jobs.

Consolidators are failing because they haven't done their jobs well -- managing money, their debt, making good strategic decisions, seeing the future clearly.

And, as witnessed by this latest abortion, apparently are not up to the challenge of leading people to succeed.

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Citadel Closer to Bankruptcy

There are times when I can't tell which radio consolidator will go bankrupt first.

Clear Channel or Citadel.

Just recently Clear Channel's lenders were talking tough about letting the company go into Chapter 11. If that happened, the creditors would be making only pennies on the dollar.

Unfortunately, that may be their best deal. Pennies are better than nothing.

Now Citadel, the Fagreed Suleman radio group has dropped one shoe on the ground -- and you know what they say about the other one.

Now Citadel is covering its butt just in case they have bankruptcy on their mind.

After all, Citadel retained Lazard Freres to help it through a likely bankruptcy filing.

Hiring a firm like Lazard Freres under these circumstances is like calling hospice when there is nothing else you can do for the dying patient.

Or, calling the undertaker three days before you know what.

Or vultures hovering over a dead body.

Oh well, you get my point.

Citadel just warned its employees that effective July 6th, they will not be permitted to purchase Citadel stock in their 401(k) Plans.

Are these guys nuts?

If they wanted to do their employees a favor, they should have told them to sell when the company's stock was worth ten dollars not now when it is worth only a few cents.

But that's not what this is all about.

It's another indicator that Citadel is on its way to Chapter 11.

As a broadcast industry analyst told me:

"This is a formal notice directed to Citadel employees with 401k retirement plans. The retirement plan administrators have chosen to cut off Citadel employees from putting their 401k money into Citadel common stock. Any funds currently being contributed to purchase Citadel stock will be automatically re-directed to a less risky alternative investment".

Of course, Citadel employees are not as dumb as their employers apparently think they are.

They're certainly not rushing out to buy low and, well -- you know, sell high (like at eight cents!).

Who in their right mind is still purchasing Citadel common stock, given its precipitous decline and the state of the company’s balance sheet?

What it really means is that Lazard Freres (which will get their fees no matter what you can be damn sure) has probably calculated that Citadel's common stock will be wiped out completely in an upcoming restructuring.

That is, it’s all going to go to the creditors. And this ban on purchasing the company's four cent stock is an admission that it's all a lost cause.

It's tantamount to a legal notice to employees to insulate the company from the lawsuits that are likely to be generated. This way 401k participants can’t say they weren’t reminded that they have the option to bail on their current shares while they can still get something for them.

That's right – even if it is just pennies on the dollar.

Here's the disclaimer:

"If you already hold shares of Citadel Broadcasting common stock within your 401(k)
account, you will not be required to sell these shares at this time. However, you will
continue to have the right, as you always have, to sell any or all of your Citadel
Broadcasting common stock shares within your 401(k) account at any time of your
choosing (subject to market trading hours)".

So there you have it.

Citadel's bankruptcy specialists are issuing the necessary warnings for what is about to happen
next.

Citadel, along with the other groups never had a "what if" plan should the economy ever tank.

They never considered that radio might someday be passe and that 80 million new listeners would be necessary to constitute a growth industry.

They and other radio groups have financed, refinanced and refinanced again their debt until the point of no return -- and that is now.

I have said many times that should Clear Channel go down for the count first, you can bet that the entire industry is done. And Clear Channel is teetering on the brink of bankruptcy.

Each month the sales figures get iffier.

There's almost no one else left to fire to realize more cost-cutting.

The industry has been pillaged by consolidators who are facing the consequences for building companies they have proven they cannot operate and on which they certainly cannot pay the debt service.

Economists do not see the bottom of the recession.

Consolidators do not see the ascent of the Internet, podcasting, smart phones, streaming and the implications of social networking vis-a-vis generational media.

There is a reason you don't call the plumber to do a funeral.

Plumbers fix things.

You call funeral directors (so to speak) like Lazard Freres to prepare for the likely event that you must protect yourself from your creditors.

That time is getting closer.

Radio stations will be returned to their proper owners very soon.

But consolidators will be doing them no favors even if these good hearted purchasers will be able to buy them cheaply from a bankruptcy court.

A bigger tragedy than the demise of Clear Channel, Cumulus, Citadel and a few bottom feeders is that good money will be thrown after bad in a time of great change in the broadcasting business.

The real tragedy is that operating radio stations -- even if they are purchased at reasonable multiples -- will be like operating a steam engine railroad in the space age.

One tragedy -- the unnecessary demise of the radio industry -- has already happened.

The next tragedy -- the repurchase of these outlets from failing radio groups -- will be one more way arrogant consolidators will spit in the face of talented people who want one more bite at the apple.

I am not against investors buying radio stations from bankrupt consolidators for pennies on the dollar as long as they know that what they are buying is not in and of itself a growth business.

Without a digital media blueprint and 40% of their operating budget spent to grow it, radio in its final iteration will wind up spending down or bankrupting the retirement nest eggs of the outstanding radio executives who so badly want to save this industry.

Meanwhile, Fagreed Suleman will be working somewhere else.

Citadel principal Teddy Forstmann will be doing a financial play with something else.

Lenders will be making their considerable fees for funding their next fantasy.

The other day I heard GE CEO Jeff Immelt on Charlie Rose and he said we're going to have to start building things in this country again. Can't outsource everything for cheap labor. Can't make it as a financial economy or "service" economy alone.

Isn't that also true of the traditional and new media business?

It's time to build things.

Not just finance schemes that earn lenders their fees and risk shareholder investments as part of the fool's game.

Unfortunately, building radio from the rubble of bankruptcy is a slippery slope and may be the unintended legacy of radio consolidation in the end.

On the upside, consolidators have fired a lot of talent.

Now, it's time to redeploy and reemploy these folks in the new media economy that is sure to rise up and be the growth industry that will fuel the next generation and perhaps generations to come.

Knowing the difference is everything.

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Radio Unprepared for Another 9/11

Radio is unprepared for a news story of the magnitude of the 9/11 terrorist attacks on the U.S.

The increasingly non-local industry could barely report the death of pop icon Michael Jackson two weeks ago almost as if it was caught off guard and buried in automated programming.

Frustrated program directors were stuck in voice tracking or syndication hell – unable to grab the controls and get their local stations back on track.

Look what happened.

After the first few hours of paralysis, some stations – I emphasize some – tried to do some Michael Jackson special programming. Later in the day of Jackson’s death, other stations reacted – much to their credit.

Many, however, from the accounts I got from readers, did little. Some did nothing. That might be understandable for a format that doesn't feature Michael Jackson's music, but not for stations that do.

Radio couldn't wait to get back to voice tracking in its own little world where bad news is good news and local news doesn’t get covered.

I say bad news is good news because only radio could take a research report that shows fewer than 20% of teens listening to radio for music discovery and turn it around to mean “teens still listen to radio”.

I say local news doesn’t get covered because hardly a week goes by that some locality in the U.S. gets a tornado warning while a voice tracked radio station airs fair weather forecasts.

How is an industry that can’t stop the voice tracking and can’t even do the weather going to cover another emergency the level of 9/11 or worse?

The short answer is – it can’t.

In our world of Blackberries, iPhones, social networking and the Internet, the all-news slogan "You Give Us 22 Minutes and We'll Give You The World" is so outdated.

You give the next generation 22 seconds and they'll give you the world. In 22 minutes they'll see or hear or read more takes on the news than traditional sources can deliver.

Yet, radio chooses to deliver -- nothing in most cases.

Consolidation’s version of their very own Three Mile Island nuclear meltdown is happening at Cumulus, Clear Chanel and Citadel – among others – right now.

Let’s just say if an emergency happens in a city that has a CBS all-news station, those citizens will be lucky, indeed. Unfortunately, most cities don’t have “all news all the time” and few even have radio stations with a serious news commitment (translation: news reporters).

While they – and your elected officials – may be content to not worry about a potential national tragedy, I am worried. Perhaps you are as well. I know a lot of program directors – good ones – who wish they could regain control of their budgets and their stations to get ready to serve their communities in an emergency.

Think about this.

Al Qaeda has been identified as trying to work on terrorist attacks that could go beyond crashing airliners into tall buildings.

For example, detonating dirty bombs with nuclear fallout in major population centers or poisoning a city’s water supply.

God, I hope this never happens for oh so many reasons including the fact that local radio stations under the control of Wall Street dummies is not prepared.

No news departments.

Tethered to Repeater Radio.

Clear Channel has a few regional news centers – the brainstorm of their boss John Slogan Hogan – which will do them no good if they need to be on the ground where the news is happening.

Smaller markets are more vulnerable to radio’s negligence.

If a consolidator monopolizes a city like Minot, ND during the infamous toxic tank car spill, then what chance do listeners have of getting their news and vital information from a radio?

Today’s radio is built to repeat national programming so failed consolidators can save money and try to avoid bankruptcy.

They are not committed to serving the public interest, convenience and necessity. They are committed to saving their asses from fiscal irresponsibility.

And no one in power – either in Washington or on Wall Street – seems to think anything is wrong other than an economic downturn that they insist will get better.

You might argue that at least listeners still have NPR.

That may be true but NPR is “National” Public Radio – many affiliates are ill-equipped to handle a major local emergency.

Citadel owns ABC Radio Networks – or whatever Fagreed Suleman has renamed them. But that’s a national news platform. Local newsrooms are harder to find than competent radio CEOs.

If we learned anything from the Michael Jackson death, it’s this:

1. Voice tracking needs to be stopped and local programming inserted when local or national stories break. Of course, most consolidators just kept the hits coming and some hit music stations were slow to even add Michael Jackson music.

2. Program directors and talent are the best line of defense when live and local is needed. PDs and personalities saved consolidators the past few days when they returned to stations, put in overtime for which most were not compensated and did the right thing for their audience. Thank yous were not expected.

3. Syndication and voice tracking is hard to interrupt during a local news crisis when you have no local people in the building to -- well, interrupt. Duh!

4. Switching to national coverage – the plan most likely in a future national emergency – is not acceptable especially when local people are needed on the ground to be the eyes and ears of listeners.

5. Bill Drake is turning over in his grave that the hits just kept on coming. In reality Drake stations played the hits and when local stories became a hit, they put them into "A" rotation.

So the radio industry plods along living in its own world.

Everything is beautiful in its own way.

Until the day comes that local cities need their radio.

That’s when only the lucky cities where smaller, local companies still run live radio stations with news people will be able to rely on their old friend.

There is no defense for what consolidators are doing to radio.

We got a glimpse of it during the Michael Jackson death -- hardly a 9/11 type event, but nonetheless a major news story.

Voice tracking and syndication is out of control or as owners might put it – in control of the tripe that is being passed off for radio these days.

It would be wonderful if we lived in a world where people were nice to each other.

Where there are no wars, no crime, no death.

Where weather was always sunny and mild.

But that is not the real world.

Unless, of course, you are a radio CEO living the fantasy of your mind where national programming and few local employees is called local radio.

There’s trouble ahead.

And today’s radio is terribly behind.

Marty Greenberg, the former ABC Radio executive, sat on the board of North Texas Public Broadcasting when the president of NPR spoke regarding the “perfect storm” for NPR in 9/11 – that commercial radio had given up on news because of consolidation and public radio was increasing its news presence.

Marty and his wife, Elin, were visiting their grandchildren on 9/11 and they had to be back in Dallas so they drove home – listening to public radio all the way. Even though some of the stations went to the major networks, according to Greenberg, there was no comparison.

“To this day, I am amazed at how poorly the commercial radio industry served America that day, and it has gotten worse (less) every day since”, adds Greenberg.

If radio can’t cover Michael Jackson’s death, can you image what is ahead when the next national disaster strikes?

You can’t all of a sudden become a “news” station when you have no local people, no resources, no training, no nose for news.

Therefore, radio’s disaster has already occurred.

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