Pissing Away the Audience

There was a real good piece written by Scott Harris for AOL recently that is so scary it ought to make anyone in the media business think seriously about the repercussions of how they are making decisions.

The article reports that television’s version of cheap content – The Jay Leno Show on NBC – is not only a ratings failure but there have been some unforeseen consequences.

Everyone is talking about Conan O’Brien’s hair when People Magazine spent $7,000 on Kate Goselin’s new hairdo – the better to put her face on the cover.

And how Jay Leno lost 45% of his 10 pm (eastern) audience on his 5-day a week show.

Now, my readers are smart – real smart. So let me ask you, what happens to a performer in today’s entertainment business that loses 45% of his audience?

He gets his old job back -- in Jay Leno’s case the 11:35 pm start of The Tonight Show.

Conan gets the boot – even though he is apparently being forced out. I don’t know about you but I kind of liked the way Conan told NBC to go to hell after pulling the plug on the show they signed him to do many years ago.

I am fascinated by the human condition called media mismanagement.

Why are so many smart people – and they certainly are not dumb – making one lousy decision after the other?

Arbitron CEO Michael Skarzynski lies and his company fires him. Media executives lie all the time and they get big contracts. The real deal is that the Arbitron board had it in for the turnaround artist who they chose to lead the company through the People Meter challenges.

The board wanted him out. Plain and simple.

Jeff Zucker, the NBC “genius” who has turned the number one broadcast network into number 4 can relate.

He hoarded Conan, found a place to keep Leno from leaving for ABC or Fox and now that it didn’t work, he takes absolutely no responsibility for his strategic mistake and causes a bad situation from going from bad to worse.

I didn’t see Zucker apologize to Ed Ansin, owner of Sunbeam's WHDH-TV in Boston when he took on NBC last spring by refusing to carry Leno at 10 although the network later threatened him with disaffiliation if he stuck to his position.

Zucker’s bosses want him in – he is just like them.

And then there is Steve Jobs who answers to no man or woman – does what he wants and gets that power by earning the right. Nothing succeeds like success.

Except failure.

Lost in the debate over Leno and NBC and what Fox will do is that these companies don’t control the future. They are weaker than they were five years ago.

They are all actively or through poor decision making pissing away their audiences.

Cable television seems to be the beneficiary of cheap programming decisions that Zucker made when he stripped Leno across the schedule five days a week to save major production costs.

Now, there is new research that shows NBC’s Jeff Zucker’s poor late night strategy is helping his cable competitors. It’s as if network television viewers just said to themselves, hand me the remote and started exploring niche cable channels.

As some media watchers predicted, 'The Jay Leno Show' has, in fact, turned out to be one of the biggest mistakes in television programming history. Fans of Leno at the 11:30 hour have failed to migrate along with the former Tonight Show host, leading to a shocking 45 percent drop in ratings for NBC at the 10PM time slot over last year in the key 18-49 demographic, according to Media Life Magazine.

Yet, despite this, ABC and CBS have combined to post only a .1 ratings increase during this same time-frame. So if NBC's former viewers aren't watching 'Leno' and they aren't watching CBS or ABC, what exactly are they doing with all that extra free time? Reading a book?

Cable channels are seeing a 1.6 ratings increase over last year in the time period for 18-49 year old viewers. You can check out which cable shows are leading the charge here.

It’s not clear whether NBC or the other networks can someday get these viewers back. They may be lost forever to DVRs and bad programming decisions.

And Zucker will soon be working for a cable company when Comcast takes over NBC Universal. You and I should be so lucky as to have the nine lives this guy has.

Does all this sound a warning for radio? You may never get the audience back that you are voice tracking and cheap-programming to death.

Forgive me for talking programming when the radio industry is all obsessed with cost cutting, avoiding bankruptcy and suing people.

Yes, Lew Dickey is reportedly uttering the “s” word more often these days and His Eminence Fagreed Suleman, fresh from saving his ass from the unemployment line, has filed a lawsuit against Mitch Dolan alleging it was Dolan who drove Sean Hannity from Citadel’s ABC.

Oh, really?

ABC execs say that it was none other than the Ultimate Bean Counter himself who spearheaded the Hannity contract renegotiation's. The ABC execs cringed at the thought. And you saw the results. Hannity bolted to Clear Channel’s Premiere after working out a deal to stay on Citadel’s WABC, New York.

I always say, when you screw up, sue somebody – it’ll make you feel better.

Anyway, the radio industry has a serious case of putting its head where the sun don’t shine because while they fire popular local morning personalities, import network repeater radio shows, cut local news and services and try to trick listeners with vanilla flavored voice tracking, radio listeners are going elsewhere in droves.

I know Nielsen or Radar or somebody will issue a report any minute saying everyone listens to radio – not to worry.

But worry.

You lose these listeners and you’re not going to get them back and erosion has been going on since before consolidation in 1996. Radiio average quarter hour listening as been declining since the early 90's.

I’m going to address this at my Media Solutions Lab in a few weeks. Where are radio listeners turning as they listen less frequently to radio?

We may find them spending more time online – depending on their ages. Or perhaps, listening to music. (I took my car that has no satellite radio in for service and I already miss the 30 gig hard drive that has Jerry Del Colliano’s Philly, Soul and Rock and Roll channel. And no commercials. No liners other than ones I do behind the wheel. Voiced tracked radio has lost me and I love the radio industry).

You may be surprised to find ex-radio listeners (and I mean older ones, too) devoting time to podcasts, webcasts and – are you ready – things that their Apple apps bring them.

Christmas Day the iTunes store sold the most apps ever after the iPod Touch became the big Christmas present of the year (praise be to my Apple stock!).

Apps.

Not radio.

Not TV.

This decade will bring great change to the media business and while we may laugh at the corporate CEOs that have ruined our great industry, for those who want a chance to survive, we have to do a better job understanding both technology and sociology.

Consumers have changed and the next decade will be about knowing these consumers better than we have ever known them before.

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How the Music Industry Is About To Change

The bad news is in -- as it has been almost every year since 2000.

Album sales in the U.S. are down year to year 13% and that includes digital revenue according to Nielsen SoundScan.

That’s a decline for eight of the last nine years for record sales.

It’s an ugly scene.

Sales down and that’s with 40% of music purchases coming from online sales – notably iTunes.

It never occurred to the label executives that you can’t make a customer buy what they don’t want to buy. And consumers don’t want to buy what they can get for free.

And they especially don’t want to buy albums – whatever these days.

Downloads sold 1.16 billion songs individually (or cherry-picked, as I like to say) – that’s up 8.3%.

But before you get too excited, that 8.3% increase must be compared with a 27% increase posted last year compared to 2007. So when is a lot not good enough – when analyzing downloaded music sales.

SoundScan does some pretty creative “research” by combining album sales with what it calls "track equivalent albums” -- 10 separate song downloads as the equivalent of a single album purchase. Even with that monkeying around, sales fell by 8.5%.

In my opinion, 2009 was another year without the next Beatles or a new genre the equivalent of rap or hip-hop. No killer music trend is predictable because record labels are into cutting costs and not going out and finding new artists, new music and new genres.

But the lesson is never learned.

It’s not nice to screw with the consumer – especially today, when consumers have so many choices.

Obviously, consumers spend lots of money on albums and downloads and Apple apps and monthly cell phone fees and on and on. But the record industry wants to rebound from its nine-year slide the old fashioned way -- dictating what they think consumers should buy.

The labels are old school but now Apple is the new record industry.

And in a few weeks, there will be another way to push music to consumers on Apple's cool new tablet device (announcement expected January 27). When Steve Jobs conned the labels into thinking he was going to help stamp out illegal downloading of music back in the Napster days, they never dreamed that they were creating a monster.

That “monster” sold lots of what he wanted to sell – iPods, then iPhones and soon tablets. In the record industry today, music is no longer the star. It is the fuel that drives the sale of devices – iPods, iPhones, iTablets, smart phones, etc. And the new gatekeeper is this mysterious genius named Steve Jobs.

You could never have created a music maven like Jobs – only the record labels could in their shortsightedness, their unwillingness to buy Napster and be a player in the digital world or their inability to see what the consumer wants.

They are not alone.

Netflix did a deal with the devil – I mean, Warner Brothers – to allow Netflix to have access to a wider variety of movies online. Currently, if you rent a Netflix DVD you have about 100,000 titles to choose from. Rent a movie online and you have only about 17,000 choices.

Now, with the new deal that presumably the other studios will emulate, Netflix will have a ton of content, but wait …

Because that’s what a renter will have to do -- wait!

They will now have to wait 28 days to access new movies so as to reduce the appeal of Netflix when compared to buying a DVD. That's how Warner Brothers wants it and damn the consumer.

Like holding back their releases to Netflix is going to sell more DVDs.

In other words, Netflix gets a lot of new titles for online distribution --- after all 70% Netflix customers rent older titles and that is a big part of it's deal with Warner Brothers. But to put a time delay for Netflix customers so Warner Brothers can think it will sell more DVDs is compromising Netflix.

And they are driving Netflix customers to competitor Blockbuster to rent the DVD if that's what it takes.

What a lousy deal.

More content at the expense of new titles – at least for 28 days.

Of course consumers are independent and they may decide to watch fewer movies using these outlets. After all, Apple may have something to say about all this in the next few weeks. The Apple tablet could have a nice ten-inch screen very suitable for watching movies direct from the iTunes store. That’s why ignoring the consumer is a loser of an idea.

If Apple makes a tablet that allows a consumer to read books, periodicals, scan the Internet, listen to music and view videos, watch TV shows, movies and/or offer streaming music using monthly subscription plans then both Netflix and Blockbuster are headed out of business.

And that brings me back to where I started – the record industry.

You need look no further than a desperate, outdated industry trying to force its will on consumers to see how it is all going to turn out.

Even these powerful people couldn’t muscle consumers into buying whatever it is they are selling.

And then Apple comes along again and puts everything consumers want into their hands at a reasonable price to enjoy on a very cool portable device.

And that’s how the music industry is going to change as well.

Apple will be the enabler. And artists can go directly to an ever-increasing audience of tablet owners but in the end the magic is no longer in the music (as the Lovin' Spoonful used to tell us).

The magic is the tablet.

The music is what fills the tablet.

Artists, arrangers, writers and producers will soon be able to bypass the labels like never before getting direct access to that mass audience.

And the music will exist to service the electronics industry -- not the other way around.

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Why Failed Radio CEOs Get Contract Renewals

How does a CEO drive a company into bankruptcy and wind up getting rewarded for it?

It happened again late last week.

Let me set the scene.

It becomes public that Regent, the small market radio group, failed to make a loan payment by their December 31st deadline.

But wait – there’s more.

CEO Bill Stakelin blows off the lenders because they have a bigger concern – that they will have to take his money-losing company back. That -- in and of itself -- shows you what money people think of the radio industry.

Keep my investment.

I don’t want to take you to bankruptcy court.

Unless …

Unless ... I get to dictate the terms.

That’s what has happened in the Citadel prepackaged bankruptcy and the impending NextMedia implosions. The clueless lenders and their losing management teams get to negotiate the terms of a prepackaged deal that they can take to a bankruptcy judge and, well – start all over.

Now here’s where it gets sticky.

Stakelin and Regent CFO Tony Vasconcellos suddenly get the board to extend their contracts and give them a raise -- and I do mean suddenly.

That’s Bill Stakelin, the guy who made all the operating decisions that didn’t work and Tony Vasconcellos, the guy who made all the money decisions that, -- well, you get the idea.

Look at the timing – only a snake in the grass could appreciate the art of this deal.

December 31 – Regent doesn’t make its loan payments. Period.

December 31 – The Regent board finds it fit to rehire their two top guns. Period.

Coincidence?

Nah.

It’s how the game is played.

So while employees are getting let go and taking pay cuts – adding more duties, these two screw ups get a new deal.

Stakelin renews for a base salary of $366,057 a year, with an annual escalator hitched to the Consumer Price Index. A bonus clause: eligible for a Senior Management Plan Bonus of up to 80% of the base salary ($292,846) contingent on hitting financial targets.

And there’s still more.

Stakelin can buy a lot of cigars with the 2010 Special Bonus Plan he is also eligible for.

Plus the usual perks – four weeks of paid vacation (with no forced furloughs, I'll bet), insurance, company car (presumably not a Kia) and one other tiny weeny perk --

The company pays their taxes.

Folks, I’m not making this up.

In effect, Stakelin and Vasconcellos get to have the honeymoon before the wedding – and remember, the wedding is a happy event for them called prepackaged bankruptcy.

Now you may read in the happy talk press that this is just business, but it’s monkey business to me.

So why?

1. Stakelin has no choice but to file for bankruptcy so you’d think he has to roll over and play dead to his lenders. No way. Stakelin can make it miserable for the lenders. He can drag a bankruptcy proceeding out. So by stealing a midnight deal, the lenders get the company the way they want it for a small price – the managers who took the company down.

2. At the heart of it all, the lenders don’t want the equity back. They don’t want to be in the radio business and certainly don’t want to operate the assets. And yes, they plan to sell the pieces when the time is right for whatever they can – presumably a profit. Not bad since they are also writing down the loans that never got repaid. Mel Karmazin had it right. You notice he never sold anything when he ran Infinity because he always told the Street that it was worth much more than it probably was and he didn’t want to be proven wrong. The Regent guys are going to be proven wrong.

3. If you haven’t already noticed, the country is in a big banking crisis. Nothing has been done to fix it. No real oversight. Loose controls. The entire economic foundation of business is in trouble and owning anything is going to be a challenge if I am correct.

One money person told me, “Jerry, the very thing you don’t like about all these radio cutbacks, lenders love”. He said they love it when guys like Lew Dickey come down hard because that’s what they want.

Jason Zweig wrote a fascinating piece in The Wall Street Journal recently about why replacing failed CEOs isn’t always the solution either.

He quoted economist Antoinette Schoar of MIT’s Sloan School of Management who has studied the effects of hundreds of management changes. The question: “If you took the CEOs with the best track records and brought them in to run the businesses with the worst performance, how often would those companies become more profitable?”

Roughly 60% of the time.

Better than not doing anything but not a slam dunk.

Zweig says, “The real force in corporate performance isn’t the boss, but regression to the mean: Periods of good returns followed by poor results and vice versa. High returns attract fierce new competition, driving down future profits; low returns leave the survivors with fewer rivals, leading to better results down the road.”

So, it’s not about what you and I want it to be about – competence, fairness, rewards for a job well done, or excellent work environments.

It’s a game that the bank gets to play -- where failure is rewarded with more money and new contracts as long as the bank eventually comes away with what it wants – which is – the real estate.

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The Leno Lesson

So NBC screwed up.

Programming execs tried to plan for the future five years ago but the future is never predictable. Just try to remember what life was like five years ago and see if you could have predicted the ways things are today.

Ironically, the announcement that Jay Leno’s abysmal 10 pm eastern weeknight version of his old Tonight Show, was broken by the most trusted name in news.

TMZ!

I’m being a little sarcastic here, but not that much.

In a world that sees The National Enquirer and TMZ taking all the risks and usually being right, who could have imagined years ago that CNN, ABC, AP – somebody traditional – would be cutting back so much that they forgot to search for the news?

If these traditional news sources are missing fluff stories such as entertainment news, you can only imagine what they are missing on the health care debate or homeland security.

George Stephanopoulos put his foot in his mouth prior to the weekend when he let Rudy Giuliani get away with factual errors. To his credit Stephanopoulos later apologized and took full responsibility for the botched interview.

Back to the Leno mess.

NBC thought it could see the future from their 30 Rock offices and predicted Leno would be too old to attract desirable demographics by 2009 so they came up with the masterful plan to retire Leno as they knighted his heir apparent Conan O’Brien to takeover The Tonight Show.

Of course, NBC affiliates knew better but hey, who asked them?

The Boston affiliate balked at running Leno at 10 pm and he was whipped back into shape with the threat of having his NBC affiliation yanked.

He turned out to be right.

You see, the media industry has it backwards. Media execs think all entertainment trends start in their offices. They need to get out more often, it seems.

Now Leno is going off at 10 pm as local affiliates are tired of losing the late local news ratings to such a weak lead in. And with Comcast coming in to take over operating control of NBC Universal (and who could have predicted that five years ago), Comcast was attracted to NBC's
content not necessarily the savings NBC U parent GE absolutely needed.

The latest NBC screw up in the making is to put Leno on for only a half hour at 11:30 eastern presumably on the strength of his monologue and one guest. And Conan at 12 midnight to attract younger demos. This is the media version of being half-pregnant.

If NBC is trying to push O’Brien out, that was unforeseen as well since they signed him to a long, lucrative contract to be the next Jay Leno. Conan could wind up on Fox or, less likely, on ABC. What a mess.

One thing is certain – Leno will be on for at least a half hour and maybe the entire Tonight Show again if O'Brien bolts. Conan O'Brien's fate will become known after he negotiates with NBC and its competitors.

Lessons anyone?

1. You don’t separate talent from their audience when they are still getting ratings and generating revenue and The Tonight Show was number one in both. Attention radio consolidators: this means you, too.

2. No one can see the future – just future possibilities. That’s why five-year business plans are out and contingency plans should be in. What NBC should have looked for is options. Options if Jay lost his ratings. If his audience got too old and it affected sales. If Conan got restless and threatened to leave. Attention radio consolidators: Warren Buffett buys the management of the businesses he likes and keeps it in place. Good management is always studying contingencies.

3. When you fail to let consumers have their way, your reward is to go down by having it your way. It happens all the time in the media business. NBC has a bigger mess than it would ever have had if it programmed to the audiences’ liking. Radio CEOs have severed the ties between local radio, and its news and personalities in the name of Wall Street and look where it has gotten them? Bankruptcy.

4. Even the mighty Apple CEO Steve Jobs isn’t foolish enough to deliver products to the marketplace the way he necessarily wants them delivered. Becoming consumer driven is a forgotten skill of media companies. They used to know how to please audiences, but have been distracted by trying to assuage their own egos and pay homage to the lenders that prop them up.

The Leno lesson is quite clear to those who will listen.

Or to put it in the lingo of the fabulous Texas journalist, the late Molly Ivins, “You’ve got to dance with them that brung you”.

NBC needed to dance with their affiliates.

NBC programming "genius" Jeff Zucker needed to respect the power of a Tonight Show that was number one in ratings and revenue. He could have readied contingency plans but not act on assumptions.

Radio consolidators paid inflated prices that Wall Street banks were all too happy to fund, but they needed to go with the management, programming, sales and marketing people and policies that made radio a business that attracted large investors.

One more thing.

While the newspaper business was trying to figure out how to deal with its nemesis, the Internet, a brash LA attorney, Harvey Levin, started his own publication – TMZ.

While the Times and the Journal negotiated cost savings by cutting their newsrooms, Arianna Huffington launched her own cost-effective online Huffington Post – now an online news alternative for millions of readers.

Five years ago, who knew?

Proving once again that the future occurs in the present and is not predictable in any way, shape or form.

The only thing that is predictable is that any fool who sees the future and takes his or her eyes off the consumer will lose.

Can you say radio?

The record business?

Newspapers?

And now TV?

Thank you, NBC for giving the Harvard Business School another case study for how not to run a media business.

The question is -- is the lesson written off to pop culture or are we going to study it?

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Best Radio Groups for 2010

For months now, I’ve been running a poll on my website for “The Best & Worst” Radio Groups. On December 31, the voting ended and the winners and losers have been clearly established. Click here to see the final results.

What’s more important as we enter a new year – not soon enough for all of us – is why the best are the best and why the worst couldn’t make the grade.

Even over the holiday weekend, several of the “worst” were firing people – Happy New Year!

What is critical for those of us who want to transcend the rubble of consolidated broadcasting is to understand what qualities make media companies excellent.

Over the weekend, I was reminded once again of the gold standard for great management, Peter Drucker. In an article in the LA Times, Drucker was quoted on the anniversary of 100 years after his birth and a few short years following his death as being right on the money -- again.

Let’s learn from the master of management:

In 1974 Drucker wrote,"The business enterprise is a creature of a society and an economy, and society or economy can put any business out of existence overnight …The enterprise exists on sufferance and exists only as long as the society and the economy believe that it does a necessary, useful, and productive job."



But that’s not what radio is doing.

In small markets, radio stations tend to stay connected with their communities doing a useful and productive job. But you can’t say that about most of the radio groups that follow their leaders – Clear Channel, Cumulus and Citadel.

Voice tracking, fewer local personalities, networked repeater radio, virtually no news and out of town weather watchers, a lack of commitment to the public interest – this adds up to a formula for failure if you listen to Drucker.

Note what Drucker is saying – the economy or society can put any business out of existence overnight. No matter how smug Fagreed Suleman is that he has bankrupted Citadel and become dictator for life, Drucker is likely to be right.

As the excellent LA Times piece points out, Drucker showed that there is no "inherent contradiction between profit and a company's need to make a social contribution," but that the former is indispensable to achieve the latter. He also warned that an enterprise that fails to "think through its impacts and its responsibilities" exposes itself to justified attack from social forces.

We know social contribution is a joke in the radio industry today. But it wasn’t always that way.

In pre-consolidation days, radio was new technology. It’s how parents and students heard school closings, how news was delivered, how people bonded with their local communities. It’s how local businesses got the word out at a price they could afford. Radio was entertainment and information but even more importantly it was the original social network even before Facebook, MySpace and Twitter.

It's still that way in smaller markets where some owners continue to do radio right.

Consolidators seem to forget this. As the LA Times article emphasized:



"Peter was talking about this in the 1950s," or long before corporate social responsibility became a formalized management principle, says Rick Wartzman, a former Times colleague who is executive director of the Drucker Institute at Claremont Graduate University. 

His views placed him in conflict with classical economists of the Milton Friedman stripe, who considered profit maximization the be-all and end-all of corporate behavior. 



Profit may be the motivating force of the businessman, Drucker wrote, but it fails as "an explanation of his behavior or his guide to right action." Worse, this narrow view of the corporation's role inspires the hostility toward profit that is "among the most dangerous diseases of an industrial society."

So, Fagreed’s bean counting, Dickey’s reinventing the wheel and Clear Channel’s operation of the world’s largest radio group in the image of any other buy out that parent company Lee & Bain runs is in trouble if you believe Drucker and not the three blind mice.

Drucker’s concept was that a business exists to serve the customer by providing an outstanding service in both personal and social arenas.

Yet, consolidated radio companies focus on cost cutting and squeezing out profit and show by their actions and their operating budgets that they can ignore the Internet, mobile content, social networking, local radio and on and on.

And this is important because when the big “C” groups screw up, as incredible as it may seem, smaller groups follow by accepting and installing their misguided concepts. Look no further than voice tracking or repeater radio for evidence.

No radio group has even a 3% budget for Internet and/or digital – that’s amazing seeing as they sat out the Internet revolution and are now signaling that they will sit out the mobile Internet revolution that will be the growth business of the next ten years.

And what makes a good CEO?

Again, Drucker is compelling:



"Every CEO, it seems, has to be made to look like a dashing Confederate cavalry general or a boardroom Elvis Presley," he wrote in 1988. But real leadership "has little to do with 'leadership qualities'; and even less to do with 'charisma.' It is mundane, unromantic, and boring. Its essence is performance." 



Fagreed’s insufferable arrogance?

Lew Dickey’s need to wear his Harvard breeding on his sleeve?

John Hogan’s surprise that he actually got the job running the world's biggest radio group?

Drucker has taught that real leaders show respect for people and their work.

Oops.

Not in most radio companies and our poll of who you think are The Best & Worst Radio Groups seems to bear this out.

Peter Drucker also warned that excessive and abusive executive compensation is one of the main things that destroy this trust and we all know that Dickey and Suleman are making millions while they are cutting back employees in a bad economy.

Drucker said 20 to 25 times what their average workers earn is appropriate compensation for a CEO. Drucker said that then – years ago – but today the likes of Dickey and Suleman make hundreds of times what their workers make.

Hundreds of times what their workers make -- even as they fire and fire again!

On executive compensation in 2004, Drucker said:

"It can only lead to political measures that, while doing no one any good, can seriously harm society, economy, and the manager as well … there is no excuse for it. No justification. This is morally and socially unforgivable, and we will pay a heavy price for it."



Drucker preferred the humble CEO – one that was selected from within the company presumably not one born into it or imported as an outside hired hand.

The good news is that radio has three groups that have excelled in many areas of excellence and I would like to commend their CEOs.

Bonneville, Cox and CBS.

Bonneville's Bruce Reese is an outstanding executive with people skills, humility and commitment to radio and radio people (both of these are important because a commitment to radio without radio’s finest talent is an empty commitment in my view).

Cox's Bob Neil gets your vote and mine as an excellent operator. He trains, nurtures and respects his employees. He leads them in difficult times by using his brains and compassion.

CBS' Dan Mason has a tough job running a radio division that is part of a company that also owns television. But he had made many smart format decisions and when he has had to fire (and he has) it has been handled better that most big companies. Mason has more of a leg up on new media -- perhaps the only major broadcaster to understand that there is no future for radio companies without the next generation.

Even these three "best" radio companies are still woefully insufficient in the digital future. They do not commit adequate budgets to webcasting, podcasting, mobile content and social networking as warranted by today’s business and sociological climate. Here's hoping that changes.

Apple is about ready to unleash its tablet entertainment system and radio can’t seem to find the will to commit great sums to developing brands and pioneering content and marketing in the digital future.

Of course, radio companies that will want to grow beyond terrestrial radio and avoid the coming decline of a former growth industry will have to step up.

But there is no taking away from Reese, Neil and Mason that they are exemplary radio operators worthy of emulation.

I love the Men’s Health feature that says, “Eat This Not That” that goes on to tell you the healthy choices between two popular foods each month.

For radio, “Do This Not That” seems appropriate.

Be Bruce, Bob and Dan.

Not Suleman, Dickey and Hogan.

And if you mean it, then do more to reject voice tracking, do local shows, rehire morning personalities, add local news done from local stations back into the format, have local sales staffs, train your people, respect and nurture everyone who works for you, compensate yourself 20-25 times more than your worker bees, serve the public interest convenience and necessity, stop complaining about the economy it’s going to be a challenge for years to come and for God’s sake …

Even the best in radio can do better is these areas.

And for goodness sakes, get into the digital future even if you are ten years too late.

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20 Days Until My Media Solutions Lab ...

My God, does anyone really get what's going on in media today?

NBC recants and puts Jay Leno back on the Tonight Show after his failed 10 pm experiment that was designed to -- well, to save money.

It didn't work.

But Comcast came along and agreed to buy NBC Universal -- Comcast was interested in -- content. So you'll see NBC in the programming business again after some ugly mopping up around the annointed "next one" Conan O'Brien.

Why is it that all too often we don't understand the consumer?

And that's why I am doing my Media Solutions Lab.

For the first time in the history of the media business, anyone can enter and win. The big companies may have access to investment funds, but they are bankrupt when it comes to understanding their audience and on innovative ideas.

So we'll talk about this groundswell that I know you can feel -- with Apple leading the way. Apple will enter the mobile TV business, steaming music for monthly subscription fees and will offer a platform anyone can access with all the infrastructure available to create a growth business.

Here are some of the benefits of attending my Media Solutions Lab:

Webcasting -- How webcasting is about to take the proverbial fork in the road -- you'll know which direction and why the present 24/7 "radio" model will fail.

Podcasting -- how to get listeners to download you and how to make money without even running a radio-type commercial or charging fees. You're going to like this -- and you can do it -- within one to three months.

Radio -- How to extend the life of your radio format and brand while finding new life in the digital age. We'll get specific.

Publishing --- Why you'll want to get in -- now that the Apple iTunes tablet platform is available. Get in if you're a station, company, individual -- there's money to be made and I'm going to get you excited about it.

Management Skills -- You know you'll have to adapt to be part of the digital future but why guess? Learn what's in the master's DNA -- see how Steve Jobs reads his audience, motivates his people, stays ahead of competitors. I'll go down a list of new skills you'll need and show you how to start acquiring the ones you don't presently have.

Mobile Media -- Look around, the entertainment system is replacing the radio in the car. Have you seen the entertainment system Audi is putting in their cars? Touch pads, Wiki directions, voice commands and screens that show maps, movies. My attendees are going to get a view of the future and not be left out.

Do-It-Yourself Advertiser Content -- Advertisers are beginning to bypass traditional media and go directly to consumers with content, sales and marketing. Their budgets may be tied up in apps that drive consumers to special marketing in stores and elsewhere. They need ideas. What an opportunity.

Brainstorming Skills -- You'll need them whether you work alone or with other people. I am going to demonstrate the system I taught to students at USC and show you how to do it yourself if you'd like.

Media Startups -- I'll have three for you. We may come up with more as a group. If you're looking for ideas, the Lab is the place.

Paid Content -- It's coming. I've predicted a lot of things over the years (thank God most have come true) and I'm saying it as bluntly as I can -- the free Internet, although still very much free, is on its way to a paid model. Consumers will have to pay for what they want by the end of the next decade and they'll pay taxes on things they are now getting tax free. If you're running a business, you need to track this -- at the very least.

Social Networking -- What is next after Facebook and Twitter? Is it more ways to communicate fewer words or will social networking be a prerequisite to all marketing and communication? Radio owners cringe when I say the talk radio of the future is -- texting. A generation obsessed with what they think not what a talk show host thinks. Are you ready for this discussion?

An Action Plan -- All this means nothing if you don't come away with a personal Action Plan. If you're running a media entity, how to keep it on track. If you want to start one, how to increase the odds of succeeding. Panels and paid speakers will not do in this digital age. Heck, anything other than a media solutions lab would be, well -- another convention. We'll have none of that.

So if you want to come go break your bosses' door down.

If you are the boss, what are you waiting for?

There are some "$200-off seats" left until they're gone. Lock one in here.

On-site Westin Hotel rates are now reduced 50% so enjoy the 70 degrees and sun in Scottsdale while you're working. Call (800) 354-5892 and request the "social catering rate" for Jerry Del Colliano's Media Solutions Lab. Or call Debra at 480-624-1348.

Want cheaper digs -- here's a current site with hotels (and comparative prices) very close to the Westin meeting location -- click here.

Let's work face-to-face in an atmosphere of approval and acceptance -- together, learning from each other.

Invest in you -- the future is here now.

Register for my Media Solutions Lab here.

Pandora and Pioneer Together

Tuesday I was at the Mayo Clinic Scottsdale having a very minor procedure performed when the doctor asked me, "what kind of music do you want to hear?"

I was not interested in hearing the usual Mayo strings or that sort of fare, but she added, "We have Pandora -- what kind of music do you like?"

I said R&B.

Then a nurse rattled off a number of R&B genres and I interrupted by saying, "type in Jerry Butler, the ice man".

I know the power of Pandora!

Within seconds, I heard "Mr. Dream Merchant" followed by other great songs in the genre. She was finished in a few minutes -- too few if you can believe that -- but I wanted to stay and listen to more Pandora.

They raved about it and I've got to say that this doesn't surprise me. With 40 million fans, my USC students were absolutely clairvoyant a few years ago when they saw this phenomenon coming. It's not nice to ignore the next generation's media whims.

And that's really the issue.

Tim Westergren, Pandora's founder, has spent over ten years innovating while terrestrial radio and music executives have been spending that same time obsessing over building a cheaper mouse trap.

Westergren was forced to humiliate himself to go begging for continued financing when his seed money dried up. Then he had a close call with the record industry's lunatic fringe that wanted to charge high royalties to the money webcasting business. That could have permanently put Pandora out of business.

Pandora survived and is now poised to become the "new" radio thanks to the rise of the mobile Internet.

You've noticed, perhaps, that radio is far from a growth business as consolidators are going down to bankruptcy at a pretty fast pace.

Then, yesterday -- this news from one of the best media writers in the industry, The Wall Street Journal's Sarah McBride.

Pandora and Pioneer, the components manufacturer, announced at the annual Consumer Electronics Show that they had a deal that would make it easier for in-car listening to Pandora through a new entertainment system that will be manufactured by Pioneer.

Sarah points out that no money changed hands because both Westergren and his counterparts at Pioneer knew a good thing when they saw it.

It's a win-really win proposition.

The radio industry has had over a decade to prepare for the advent of mobile Internet radio and they did nothing. Spent nothing. Learn nothing. Three radio companies are bankrupt and experts say that is the end of it.

In March, Pioneer will sell their new system that --- well, let Sarah McBride tell you ...

"...that allows Pandora users who stream the service on their Apple Inc. iPhones to easily access Pandora in their cars. The $1,200 navigation system, announced today at the Consumer Electronics show in Las Vegas, will detect iPhones and iPod touches that have Pandora installed, and put the consumer's Pandora settings on the navigation screen. That will allow drivers to hear their favorite Pandora radio channels".

Do yourself a favor when you have a moment and read the rest of her report -- here.

Satellite radio -- over.

Forget 18.5 million listeners paying $12.95 a month (less for second and third listening devices).

Satellite had a chance to innovate but all it did was eliminate commercials and do cheap programming. Howard Stern and sports rights cost them a fortune but 90% of their channels were and are unremarkable.

Sirius XM is betting that Internet availability will also make them competitive in the world of mobile Internet listening but they and their terrestrial predecessors just don't get it.

Pandora is new technology.

New genomes for detecting listener likes and dislikes.

The best radio can come up with is this cockamamie concept of listener driven radio where songs can be shut off in the middle of airplay when the station detects some or most of their listeners have heard enough. That's just not going to work with individuals who can have better at Pandora.

The lessons here are so many and you can bet we'll be discussing this at my Media Solutions Lab at the end of this month.

Radio and record execs think they can cram their products and services into digital age devices. Had Tim Westergren thought like that, there would never have been a Pandora ready to ride the wildly expansive growth of mobile Internet radio.

And all fun aside as we kid the clueless radio execs here in this space, this is a serious problem. I'm not even in the mood to joke or poke fun at these guys today.

Hell, there is absolutely no innovation going on in terrestrial radio and the record business -- none.

I've got bad news for them -- mobile Internet will not be a friendly home for rehashed concepts.

To give you a little preview of what I am going to lay on my Solutions Lab attendees regarding this issue ...

... That being in the music playlist business (with or without voice tracking) is a non-starter in the Internet space where customized music mixes will always be more desirable. Playing to PPM is a joke -- playing to fans is the real goal.

... That cost-conscious radio groups firing their talent and turning thousands of stations into virtual iPods (playing their music playlist not each individual's favorites) took radio out of the game.

... That for those of you -- my very bright readers who think there are opportunities ahead in Internet radio beyond terrestrial stations dumping existing formats on the web and mobile content, podcasting, social networking sites -- well, you would be right.

Knowing how to innovate is now the mission -- not lamenting the fools who frittered away the best talent that could have been their entree to mobile Internet radio.

May I be blunt?

24/7 Internet radio stations are not the future.

Special programming, shorter duration, customized programming built around a community is.

I've told this story before so forgive me as I tell it to my new readers:

When Tim Westergren talked to some of my adoring students at USC, they were indignant and sometimes outright rude that he called Pandora -- radio. They hate radio. Think it's tainted. One class beat Tim up for almost two hours until this gentleman turned to them and said, "what would you call it instead"?

No one had a viable answer.

Today we see that Westergren really wanted to redefine radio for another generation -- and in too few years when people think of "radio" they will think of Pandora and streaming sites to come not Donny Osmond on 65 terrestrial radio stations looking to save money.

Pandora has not only changed the meaning of the term radio but changed the meaning of radio.

Smart money gets out of the music playlist business because they are going to lose.

The future, then, is in personality and information driven mobile content -- and right now we're taking applications looking for the next Tim Westergren.

As I said, Internet radio -- not your consolidator's Internet radio -- is big on our agenda at my upcoming Media Solutions Lab. Try to join us. We've got some interesting people attending.

And I want to share the news that staying at the on-site hotel just got almost 50% cheaper.

For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.

Thanks for forwarding my pieces to your friends and linking to your websites and boards.

Westin Reduces Media Solutions Lab Hotel Rates

The Westin Kierland hotel in Scottsdale has now reduced the price of staying on-site for the upcoming Media Solutions Lab to $259 for weekdays. This is a result of registration activity.

If you have already registered at the Westin Kierland at a rate higher than $259 per night, you can call (800) 354-5892 and request the "social catering rate" for Jerry Del Colliano's Media Solutions Lab. Caution: do not cancel your current reservation confirmation until the Westin issues you a new confirmation at the $259 rate.

If you are staying elsewhere for the event and would like to stay on-site at the Westin Kierland Scottsdale, call (800) 354-5892 and request the "social catering rate" for Jerry Del Colliano's Media Solutions Lab. Once you have a Westin confirmation at the $259 rate, you may cancel your offsite reservation.

You always have the option of checking this handy hotel reference site to monitor the best rates and act appropriately -- click here.

Some registrants who have decided to stay longer and enjoy 70 degrees and sunny this cold winter have asked for a special Westin promotion in which you pay the standard going rate for the first night and then the last two digits of the year of your birth for the additional two nights -- so if you were born in, say, 1962 -- the second and third nights would cost $62 per night.

You also have the option of using Starwood points to reduce the rates further.

But look, there are few places you can get the background necessary to be part of the digital future. The Media Solutions Lab is not a convention. You won't see one speaker after the other pontificating. And I can tell you there will be no sponsors to sell you anything, no one with an agenda. The format is so unique and fresh, I think you'll love it. I've done many times before and attendees are moved to action.

The magic is in how we work together. I have done my homework and I bring you into the mix. My motto is "the teacher and the taught together do the teaching". I promise we will cover 14 of the most meaningful, relevant learning modules now at the start of this new year.

You're not going to get this at a traditional convention, confab or seminar.

The Apple tablet is looming over all the changes we see ahead -- I'll tell you all I know about it and the possibilities of you making money from this exciting new platform.

Internet radio is the big story for the next five years and yet terrestrial radio people think Internet radio is radio online.

No.

No.

No.

It is Pandora and the streaming music service I believe Apple will soon offer -- things like that. There is no way around having to be an innovator.

That lets a lot of radio CEOs out, but it provides you with many new opportunities.

But you'll have to be open to them. Sacrifice a bit. Invest in yourself to get to this refresher. Find ways to connect with people who know the future.

I can hardly wait to tell you about a business concept that will be yours and yours alone -- based on the Internet and something you can do with advertisers to unlock it.

There's lots of benefits. I hope you'll take a moment to study the program here.

I've got a few "$200-off seats" as part of the pre-event pricing. If you want one, lock it in here.

And now you can stay on site at almost 50% less -- scroll down after clicking here.

Many, many more thousands of people read me today than in the old glory days of Inside Radio for which I am very grateful.

That proves to me you are looking ahead -- ready to adapt and gain new skills. It would be my honor to be of help January 28th and beyond.

Register here.

A Look at Bankrupt Radio's Playbook

Regent missed a $1,269,125.73 payment to lenders, it was revealed yesterday.

Regent has been working with their lenders since last spring, but now the cash ran dry and Regent could neither pay any of the interest or principal due.

Regent also missed the payment of so-called professional fees and that has got to really irk their lenders. Don't mess with their fees.

What's interesting is that if Regent has been in default for nine months, it doesn't seem like the lenders want the company.

They may have no choice but to take it back, but if someone's not paying you in a timely fashion for that long and you're letting them get away with it, it illustrates the sorry state consolidators have gotten themselves into. Read Regent's SEC confessional here.

Regent stock is now worth just 19 cents a share. Regent execs are spinning it as an attempt to conserve cash.

Ya think?

Here's another nice mess Regent has gotten themselves into.

I thought it might be helpful to look behind the scenes at radio group bankruptcy plans now that Citadel and NextMedia have filed.

Regent was expected -- the vultures were circling the carcass for some time now.

And Regent won't be the last bankrupt radio group.

So, I thought I'd handicap the latest bankruptcy potential for radio group owners and at the same time try to provide a little context to what they may be thinking and hoping will happen:

1. You've probably noticed radio consolidators talking up a recovery -- even alluding to better performance than last year. They've somehow managed to confuse some of the loyal trade press into thinking the worst is over. The reality is that radio groups will be comparing 2010 with God awful revenue figures for 2009 so the losses will have to look better. But they would be fortunate to have one "plus" quarter even with the easy comparisons with last year.

2. All the CEOs have been nicely tucked into bed in advance of whatever should happen so you don't have to lose any sleep over it. Emmis recently rehired CEO Jeff Smulyan even though Emmis is a potential chapter 11 candidate. Lee & Bain have John Hogan tied up (God, that sounds good, doesn't it?) for the foreseeable future even though Clear Channel is nowhere near out of the woods. Lew Dickey took that huge long-term package a few years ago that was supposed to convince him to sign a new contract. Disingenuous at best. Fagreed Suleman was rewarded for so ably steering Citadel right into bankruptcy with a contract and job security with the lenders who took back the company. So rest well -- the CEOs have their money all tucked away in advance of whatever bankruptcy will bring.

3. Prepackaged bankruptcies are the new growth businesses for lenders. When bankrupt radio groups run out of money, they look to Fagreed Suleman for leadership -- how scary is that? The Citadel prepackaged bankruptcy lets the failed CEO negotiate to save his neck while giving up whatever pennies were going to go to shareholders. Bankruptcy courts just rubber stamp the deals and then within six to nine months allow the new owner/lender to work their way out of chapter 11. It's pure genius. Shareholders get wiped out. The original equity holders lose their stake (i.e., Forstmann Little of Citadel) and the banks get the company.

4. I saw an Inside Radio survey recently that said most radio people who responded feel their jobs are safe. The article said, "Half (51%) of the respondents to the Inside Radio reader survey expect the number of employees at their station or cluster will remain the same in the coming months — a far cry from a year ago when 56% were bracing for layoffs. While a quarter say that’s still possible in 2010, an optimistic 24% say it’s likely their station will actually begin to fill positions that have been vacant. Last year just 11% thought they’d see staff increases". I'm afraid that's more wishful thinking even if it is understandable.

5. There is only one thing ahead -- cutbacks.

6. There is only one thing that can be cut back -- jobs.

7. Most agency people believe advertisers will spend the same amount as last year -- and that was way down. However -- and this is very significant -- they will start to shift that "decreased" spend more to new media which has been growing even through the recession. Thus, the one thing radio groups teetering on the brink badly need -- more cash flow -- will elude them again this year. And, to make it worse, refer to number 6 above -- they are reducing their local sales staffs to save money. The imperfect storm.

8. Bankruptcy may be what we fear but it is a mercy killing for many of the failed CEOs who are out of luck, out of time and, of course, out of money. Bankruptcy is the only answer because it allows most if not all of their debt to be wiped out and with a prearranged bankruptcy, the lenders take control in an orderly way with the very CEO that got them into the mess running the new entity. As the old saying goes, "Better the devil you know than the devil you don't."

9. The end game (I know you've been waiting for this) isn't to stop the bleeding. Bankruptcy does that. A radio station really isn't that expensive to run especially with few people left and no personalities. The end game is to prune down the expenses even more and resell the stations as soon as the economy comes back. Notice how no one is rushing to buy radio stations in this economy even at under 5x cash flow -- way under.

10. Stations will start selling within one to three years and yes, the lenders will only get 3 times cash flow if they are lucky. And, yes buyers will be purchasing a lot of distressed properties with most of their assets (management, sales and talent) squandered. New media will continue to appeal to the younger audience now coming of age. Nevertheless, there will be some good money to be made by lenders when they sell these assets -- and remember, someone has to finance the deals (so guess who can hold the paper?).

My friends, when radio became all business and no show it was the death knell.

Not the economy.

Not the iPod (or even the iTablet when it comes).

Not Pandora.

This ending was guaranteed when suckers with big egos agreed to big interest payments based on unrealistic multiples (10 times or more) that lenders, oddly enough, never questioned.

Why didn't lenders in the early days of consolidation pressure these suckers to negotiate for true multiples of streaming cash flow?

Now we know, don't we?

Just as in Monopoly, the bank is never the one to go bankrupt.

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