Cumulus Invents Hifiring

From the radio group that brought you sales meetings with spy cameras comes the latest innovation in Harvard educated CEO Lew Dickey's arsenal of weapons.

It is called Hifiring.

That's the art of hiring people at the very same time the company fires an equal or greater number of employees.

And Cumulus has a Chutzpah factor built in. You know shameless audacity.

You see, while Cumulus -- one of the three underperforming "leaders" of the radio industry -- is off firing more people than they are hiring to replace them, they are telling their friends in the happy talk press that "trust me" -- we're back to hiring again.

Hifiring is significant because -- all together now -- what the big three "C"s do, their underachieving imitators also do using the big boys as a screen for their actions. The big boys being Clear Channel, Citadel and Cumulus.

So let's see how it works so even if they get away with it, they won't get away with it in the arena of public opinion.

Remember CEO Lew Tricky Dickey's proclamation a few months back that Cumulus was going to hire 50 new sellers by the end of the year?

I do.

Bet you do, too.

Of course, the end of the year is upon us and I ask, "Lew, where are the 50 new sales jobs?"

He fed this tripe to the trade press -- friends of mine, good people who want the radio industry to do well even when its leaders seem not to want it. They just slobbered all over themselves taking Dickey at face value -- always dangerous.

At the time I complained that the P.T. Barnum of radio was playing a carnival barker by saying, "hurry, hurry, hurry -- now you see them, now you don't. Watch the world's greatest radio company make 250 sales jobs disappear right before your own eyes".

In other words, it was all an illusion.

Now you're probably saying, Jerry, give poor Lew a break, it's Christmas. And just when I was tempted, I see this in All Access -- "Cumulus Has Some Big On Air Openings".

Oh, boy -- here we go again.

Cumulus is Hifiring -- some of its markets barely have one live announcer left working in the cluster and now this hiring hype -- it's all good again.

Keep in mind that Dickey Do isn't the only CEO who does this -- his idol, John Slogan Hogan did a PR blitz to tell the world that Clear Channel was hiring 50 yield managers? You may recall Hogan worked his magic in the happy talk press as well and it came out sounding like Clear Channel was an employer again.

While some so-called "yield managers" were hired, not one of my many friends, sources or readers at Clear Channel can name 50. Hell, they can't name five.

So, where are they Mr. Hogan?

Were you out there Hifiring again -- axing qualified people and hiring only a few former hotel industry workers you said counted as 50 yield managers? Maybe these consolidators get so excited when they actually hire someone that they forget all the folks they put out of work and think a few hirings make up the difference.

Well, it doesn't.

This is the time of year when we don't want to forget our brethren -- the people who actually know how to program, sell and manage radio stations. They are wise enough to know that radio is local and to recognize that "Premium Choice" syndicated radio is really "Ground Round".

These are my friends and yours -- capable, loyal, proven winners who are on the sidelines because of the likes of Hogan and Dickey. I won't even start on Citadel CEO Farid Suleman, the overpaid and underachieving CEO who as of yesterday ran the stock price of his company down to one penny in advance of filing the prepackaged bankruptcy offering that will save his neck.

Who is saving the paychecks of thousands -- and I mean thousands -- of radio people who have been serially removed from the industry they love even as their bosses have run their corporate ships aground?

Hifiring is easy because it's an illusion.

And if the leading radio groups want to continue their two-year blitz to "right size" their stations, then it's up to them. By "right size" they mean capsize -- but I digress.

Even Beasley, a fairly good bunch of operators, that said they would have a PD running each station they own may not have lived up to their word. I don't know for sure, but a number of people are doing a head count and can't seem to square the performance with the promise.

When readers write to me to thank me for speaking up and out on these issues they often mention how depressing this industry has become. Believe me, I remind them that I'm just conveying what I see because if I had anything to do with it, I'd do it a completely different way.

In fact, just before the holiday I'm going to share with you a blueprint of how radio groups -- even consolidated ones -- could have made this business a vigorous one. It's a blueprint for those who want to avoid the mistakes that have taken their toll on radio.

The people who would resort to Hifiring will also be touting Bullspitting in the year ahead -- and what is Bullspitting, you ask?

The fine art of saying that radio will rebound in 2010 because of their frugal management during the recessionary year of 2009.

Under the fine print, you'll note that the comparable statistics they will be using to show "improvement" will be compared with the absolute worst months in the industry's history. You won't find them projecting growth because that would be called Pie-in-the-sky -- and that train left the station a long time ago.

So, if the industry's leaders are content with Hifiring its way into the headlines, so be it.

There are thousands like us out there who know better.

The circus that Fagreed Suleman, John Hogan and Lew Dickey have made out of a great local business and service should be called what it really is.

A high wire balancing act with no safety netting to prevent a fall.

And to all those who have been forced out of radio, are looking to find new work or putting up with moronic management to keep earning a paycheck, don't lose faith.

2010 will be a turning point for traditional media and for you.

I've been working on the curriculum for my January Media Solutions Lab and I know you'll be excited to see the many sales and programming content alternatives to traditional media come of age before your eyes.

Let consolidators continue to carry off the sham of Hifiring while you get busy rewiring your skills for era of new media that starts in earnest within the next 12 months.

And mark my words -- while some smaller well run radio groups and even small local stations will start to learn about what it will take -- the Hifirers will be high-fiving themselves for failing.

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The Vanishing Car Radio

Broadcasters should be concerned about the changes ahead next year in what used to be called the car radio.

Today, it’s the entertainment system – the one in the center console that formerly was a monopoly for radio broadcasters that is now shared with increasingly popular hard drives for downloading personal music libraries, satellite radio, the usual CD or tape port and soon WiFi-enabled vehicles that will allow the occupants to access an almost infinite number of Internet stations.

This is either a false alarm or a wake-up call. I’m saying it’s too late to stop the changes that are already in motion or prevent additional competition in that center console.

For example, imagine what will happen if Pandora succeeds at finding an automaker who will hard fix its popular custom music service into the car. Pandora is negotiating with Toyota as we speak. Pandora is what a new generation calls great radio and if Tim Westergren manages to get Pandora into the vehicle, terrestrial radio stations are going to take a big hit. (An announcement is expected soon, for more click here).

Back to the programmable hard drives in cars.

You may remember I was fascinated when some of my students told me they wanted to buy a Ford. I’m not a snob but I just couldn’t understand why a Ford – until they admitted it was for the Ford Sync – a hard drive that allows them to dump their MP3s or CDs in the console, shuffle it, and play their own music.

No need to wait for WiFi capability.

No need for music radio.

Recently I bought an Italian car that barely came with a radio let alone a sophisticated entertainment system. What it didn’t have was satellite radio and I was supporting Mel one month at a time until I took delivery. I could add an after market satellite radio but it spoiled the aesthetics of the car and frankly, didn’t fit into the cockpit.

But it has a hard drive my students would have loved – 30 gig and ready for my iTunes library. It shuffles. Files the music in several categories. Oh, and it allows me to text message right there on the console (look out!). Of course, I don’t text and drive but lots of folks do – another distraction from radio and safety.

(When you get a chance read this amazing report that texting is worse than drinking and driving -- here).

Today an automobile is not just a radio with four wheels -- it is an entire entertainment system.

I sure like my own “station” better than what I’ve been hearing. I can even talk up the vocals myself – okay, too much information.

The point: terrestrial radio needs all this competition for its sacred listening grounds – the auto – like it needs a hole in the head. And keep in mind iPod docks are becoming more prevalent plus some folks just stick their ear buds in while they drive.

At the same time I’ve been warning that Apple is going to come out with a tablet device smaller than a notebook size computer and larger than an iPod Touch. It is expected in 2010 and it will have the capability to buy and read books, newspapers, periodicals. Listen to streaming. Watch videos and TV. Download and access over 100,000 apps. Store your iTunes library – perhaps even allow you to read PDFs for work.

An entertainment wonder that will be the next generation iPod.

If you take into account the sociology of the technology, you’ll note attention spans are very short. Listeners want what they want when they want it. The consumer has become the program director, in effect.

Radio was once an $18 billion industry in the early part of this decade – imagine that Lee and Bain paid about that to go into debt to own the largest radio group -- Clear Channel. Nevertheless, BIA is projecting radio as an $8 billion by 2016.

That alone frames the debate.

Before another decade goes by the radio industry is projected by financial analysts to generate half of the revenue it recently produced – when it had a monopoly in the car and listeners were available online or at home to access terrestrial programming.

Radio should be a content producer.

There is less need every year to broadcast anything 24/7 – not the least of which is voice tracked music or national syndicated shows. The world has changed.

The consumer has changed.

Advertisers are in the process of changing.

My advice is to do the best local radio terrestrial stations can do – not the worst as many are now doing to save money. This is not the time for this.

And hedge the bet against the digital future which is already showing that radio has an uphill battle competing as a broadcast medium with on-demand content that consumers are beginning to embrace.

Save station brands and expand them into new media. Be part of the Apple tablet when it comes out. Be ready to make the free cash flow transition from traditional to new media by 2016.

Right now radio companies spend nothing or next to nothing on the digital future even as more competitors chip away at their businesses.

At that rate the vanishing car radio will be driving listeners in a new direction and now is the time to understand the technology, sociology and urgency of taking action.

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Art and Craft

How important is craft to the art of jazz improvisation? In a music that developed out of many different approaches and solutions to technical, theoretical and aesthetic problems, can any one benchmark of craft be placed front and centre of the music as an identifier as to whether a performer is sufficiently proficient to be taken seriously in the music? How important is craft to the art? Is craft in itself something worthy of respect?

These thoughts were prompted by two things – something I read recently and something I watched. What I read was a post from the Groove Notes blog (thanks to the always interesting NPR 'A Blog Supreme' for this), ‘A jazz reminiscence by Dick Stein’, in which he told a story about how a less than proficient clarinettist was publicly humiliated by Jaki Byard
at a club in New York. The second thing that prompted the post was watching a Youtube clip of Hamiet Bluiett playing ‘Peggy’s Blue Skylight’ with the Charles Mingus group in 1972 (Posted below).

In the Byard story, he (Byard) not only heckles the clarinet player who is playing during the intermission in a duo with a drummer, but decides to prove that the clarinet player is a faker by going to the bandstand and challenging the guy to a trial by blues – accompanying him on the piano and punctuating the resultant performance with a profane ongoing critique, as a result of which a) the crowd are made to realise that the clarinet guy can’t play, b) they turn ugly, and c) clarinet guy turns tail and runs out into the night. At least that’s how the story is told – with no little relish – by Dick Stein.

This kind of story divides jazz readers into two camps — one camp would enjoy the story very much and see it as being a classic example of an interloper getting his comeuppance, someone who hasn’t done the necessary groundwork trying to put one over on the jazz public, and being found out, unmasked, and driven out by a crusader for the real jazz. This is definitely the view that would be taken by traditionalist defenders of the faith. On the other hand, there are doubtless readers of this story who would be outraged by it, and would see it as a typical piece of jazz fascism in which a very narrow view of what constitutes “correct” musicianship is foisted on all-comers, irrespective of their artistic leanings. I think this is definitely the view that would be taken by the post- free guys, who both argue for a broader definition of what constitutes jazz, and also question whether proficiency in playing over form, and over changes, constitutes any kind of litmus test of ability.

So which view is the correct one? Of course it’s impossible to tell from that story whether the clarinettist was as bad as was claimed or not. But should he have been given the opportunity to play his music unfettered by the views of Jaki Byard as to his abilities? In short, was Byard’s definition of craft — and insistence on the lack of it being shown here — too narrow, or did he have a point?

Again, it’s impossible to tell at this distance and at this remove from the incident itself whether the guy could play or not, but as far as my opinion is concerned, if the guy was as bad as suggested, then I have to have a certain sympathy with Byard’s views. I do think a certain element of craft is necessary in anybody who pertains to be a professional musician of any stripe, and in particular a professional jazz musician. I think anyone who demands money from the public to listen to their music, has a certain responsibility to that public to be a valid practitioner of a certain level — a musician that is of a high enough level to charge for his or her services. But what is the yardstick by which one can tell whether said musician is of a professional level?

Sound? This is a VERY subjective call, especially in jazz where you can hear such a huge divergence in sound – listen to Coleman Hawkins and John Coltrane for an example of two acknowledged giants who could almost be playing different instruments, so great is the difference in their respective sounds. Classical music has a much narrower definition of what constitutes a ‘good’ sound – in jazz it’s a moveable feast, depending on era, style, approach and many other factors.

Intonation? Again, this is a grey area in jazz – less grey than it used to be, but grey nevertheless. While it’s true to say that there is more uniformity of opinion of what it means to be ‘in tune’ these days, there have been many examples of great jazz players whose approach to intonation would have raised many an eyebrow in other music, and often did even in jazz itself. And again the response to these different intonation approaches can be very subjective. In my own case I love the acerbic sound that Jackie McLean achieved largely by dint of his wayward intonation, yet I can barely listen to Eric Dolphy’s flute playing for the same reason. Go figure, as they say.

Speed? Technique is often defined by velocity, unfortunately. The speed somebody can play at is often taken as a measure of how good they are – i.e the faster you are, the better you are. Which is of course a very shallow way to listen to music and to judge music – but it appeals to certain types, especially young male jazz musicians! But leaving aside what the speed is used for, for the moment, there is no doubt that the ability to play fast and in time, (and this is a crucial distinction between those who are simply moving their fingers quickly and those who are relating what they’re playing to the underlying pulse), is definitely evidence of craft. The ability to play fast and in time is something that can only be achieved through years of dedicated practice and hard work. If somebody can do that well, they are definitely exhibiting a high level of craft. Whether they apply that craft in the service of art is a whole other question........

Ability to play on changes? Definitely a high craft factor here too – playing well over changes is HARD! Again it’s something that can only be done if you’ve spent long hours in the practice room, and it’s something that involves the ear, instrumental technique and rhythmic strength. There’s no doubt in my mind that anyone who can play well over changes, and negotiate them with good voice leading, and good time and feel is demonstrating a high level of craftsmanship.

But of course it's too easy to get into a narrow definition of what defines craft, and this is often done in jazz. There's a story about Thelonious Monk that describes how much he loved Bud Powell's playing and how in private he (Monk) would demonstrate his love for Bud by playing exactly like him. I've heard this story several times and have always hated it, since its agenda is really clear. This story sets out out to apologise for Monk's playing and 'validate' him by showing that he could play the way the piano should really be played if he chose to. I'm pretty sure that a) Monk couldn't play in the Powell style, (any more than Powell could have played in Monk's), and b) wouldn't have wanted to either. Because, like Powell, Monk's technique was of the highest level in that it was perfectly fashioned to express what it was he wanted to express.

And this seems to me to be the definition of craft serving art - a situation where the player has worked hard to reach a level of instrumental (or vocal) skill where he or she is perfectly equipped to express the musical ideas they have. Which is why the Monk/Powell story outlined above is so screwed up, since it implies that Monk’s craft or technique was less than Powell’s. This feeds into the idea that craft can be defined by very narrow parameters such as speed and dexterity. Speed and dexterity, assuming they’re aligned with a strong rhythmic sense, ARE signs of high levels of craft, but they’re not the only ones by any means.

When I was younger I must admit to being as bad as anybody in confusing speed with technique, or defining an ability to play by how well someone displayed a conventional technique on an instrument. For example in my early days as a player I just didn’t get Charlie Haden – I saw him as a primitive in comparison to say Paul Chambers or Scott LaFaro. It took several years for the penny to drop and for me to see the extraordinary levels of craft involved in what Haden did and to recognise that there’s more than one way to skin a cat, technique-wise.

But I have to say that I also believe there are measurable levels of craft on display when listening to a musician perform – i.e not everybody is of the same level of technique and craft in music. For me it comes down to being able to adequately deal with the technical challenges of the music you choose to play. There’s a very cruel, though funny, aphorism attributed to the great guitarist and pedagogue Mick Goodrick in which he will say to somebody struggling through something - ‘Yeah man, I hear what you’re trying to say......’ Which kind of sums it up for me – is the player technically equipped to deal with the musical challenges of a given piece of music? If so, this is a real demonstration of craft. But if a musician is struggling through something and clearly trying to play something that is beyond them technically, then there's definitely a craft problem.

Which brings me back to the Hamiet Bluiett video mentioned earlier. Bluiett is well known, and highly regarded as a member of the World Saxophone Quartet, and is a player from the freer end of the spectrum of jazz. But here he’s playing ‘Peggy’s Blue Skylight’ with Charles Mingus, a piece with both form and changes, and when it comes to the playing over the changes, his level of craft in this area is just not high enough to make his playing sound convincing. He opens his solo with a sonic barrage, which is very impressive, and you can clearly see that this is an area in which he’s very comfortable, and there’s no doubting the raw excitement it generates, with both audience and drummer Roy Books responding to it. But throughout the solo he alternates these frenzied passages with playing lines over the changes, and whenever he does the latter the rhythm is poor, the voice leading is poor - in short the craft is poor. And he’s clearly trying to play conventional lines in these sections, but he just hasn’t put in the man-hours on this particular facet of improvising to be convincing in it. This to me is a demonstrable lack of craft, and prevents me from enjoying the solo since there are so many flaws in the technique that it gets in then way of the music. The craft doesn’t support the art.

Opinion in the jazz world seems to be divided on the issue of craft. On the one hand you have the people who revere a very narrow definition of instrumental technique and equate that with musical greatness. This is clearly a very myopic and shallow way to think about music – craft does not automatically equal art, nor is there only one kind of craft.

On the opposing side you have the people who dismiss musicians who do have high levels of technical craft in their armoury, for just that reason – implying that the playing of changes with ease, (for example), automatically makes the musician a hollow vessel, incapable of real feeling, emotion and creativity. This attitude not only disrespects the work that’s been undertaken by the musician to achieve a high level of craft, it also denies craft in itself as being something worthy of respect.

Both of these attitudes are seriously flawed – a plague on both their houses just about sums it up. As someone who has spent the majority of his life, playing, thinking and talking about jazz, I do believe there’s far too much high craft put to poor use these days – far too much technical skill used for far too little result. But as a musician, I will always respect the craft of good musicians. Someone who can play at a high technical level has spent years getting to that level, which means they must be serious about what they do. Whether we like the result or not, the effort, skill and sheer hard work that’s gone into the music should be respected. Sometimes the art and the craft are in perfect harmony, sometimes they’re not, but though great art may be the ultimate goal for all creative musicians, great craft should equally be something that’s respected and recognised.

Art and Craft - like so many things in jazz, and in life, it's not simply an either/or issue.....................

Radio’s Believe It or Not

It’s time for another edition of Radio’s Believe It or Not, inspired by Ripley’s Believe It or Not – which deals in bizarre events and items so strange and unusual that readers might question the claims.

There is no shortage of strange and unusual things going on in consolidated radio these days, so let's begin:

A Clear Channel On-Air Job Promotion for One

This actually happened in Nashville, TN according to one of my readers:

“So, I'm driving around Nashville earlier today and punching up different stations and it brought to mind the CC bit designed to help out of work listeners (not out of work air folks) to record a quick resume for on-air use.

But at least one CC station here, news/talk WLAC, apparently isn't listening to its own programming because the pleas of a handful of resume responders keep airing. "Hi, this is Chip...and I'm looking for"...and blah, blah, blah. Every time I punch to this station, up comes Chip. And, he's been on for several weeks now. Is no one else calling in to record their own resume? Does anyone else want to do it? Does anyone at the station care about such a CC-directed bit?”

Syndicated Heaven

Live and local from Rockford, IL:

“ (A) newstalk station is going to dump an hour of local programming (10 am to 11am) for another syndicated program...one day was the local Catholic Forum which brought in $20,000 a year income. Plus we are pushing the fact that our highest rated show is Rush and that we are breaking the streaming hits with Rush...Good bye local talk radio...hello syndicated heavan (sic)...”

Who Needs Engineers

This one will make you laugh or make you cry. In one market, an owner laid off people there and, well – let me let him tell it …

“one was the ENGINEER (um they only have one) eh hem, after they laid him off they asked him if he would...............CHANGE THE CODE ON THE DOOR! Uh yes they laid off the one guy in the building that could do that. Yeah can we have your key card please you don't work here anymore, Oh and we forgot could you change the code?

YES, I swear to you that is the truth. That story right there tells me there is NO logic, NO respect ... in this corporate radio world. Not even any humanity, it's all gone. That rings through my head at any given time almost every day since the lay offs, " uh oh yeah could you please change the code"

The Late News – Literally

You remember the little boy adrift in hot air balloon story, don’t you?

Well, I guess Clear Channel’s regional “local” news center blew it by providing this misinformation on a story that headlined all the cable channels and was correctly reported online and on my iPhone:

“…Tonight the 6PM sixty-second newscast on Lite 99.9 in Dayton had the up-to-date story that a “little boy was adrift in a runaway balloon and that authorities were currently chasing it”. Only problem is that the balloon landed two hours earlier, and by 6PM the boy was even found hiding in the attic at home. This is another great example of how Clear Channel is keeping its promise to stay up-to-date with it’s regional news centers.

The fact is that the newscast in question was recorded at about 3:30PM from the local TV station. What I’m further surprised at is that no one at the station even bothered to notice how out-of-date it was. Is it because no one was even there at 6PM? Furthermore, what gives me any confidence that they (CC Dayton) will notice if something happens that threatens the safety of the citizens in its broadcast area?"

Cumulus Managers Should All End Up Millionaires

Oops.

Here’s what a former Cumulus manager related about a meeting he will never forget:

“I think back to when Lew told a small group of mostly original (Cumulus) managers that ‘there's no reason why each of you shouldn't end up millionaires out of this deal’. Of course none of those people are still with (Cumulus). I think the last to go was Bernie Barker in Montgomery. And of course, the only millionaire that came from that meeting is Lew Dickey. Only a man w/o a conscience could sleep at night doing what he's done to people! God. . . what a bad deal! What a greedy bastard!"

Syndication Deals with the Devil

Here’s how Cumulus recently positioned itself to be a producer of national programming it pawns off as local while cutting salaries of on-air talent and saving money:

“Did you see where VP/Programming was in Nashville Monday to launch the new Tony & Kris morning show? (Tony & Kris were morning show staples at both KSON & KUSS/San Diego). It’s a partnership between Tony & Kris and Cumulus, you see. It launched on 6-Cumulus stations Monday…with 4 more in the wings. In the case of each morning show, each was assigned to either PM Drive or the vacant Mid-Days that they fired during one of their previous bloodbaths. In some cases, the morning teams were split between PM Drive and Mid-Days. So, how long do you suppose these displaced Morning Shows will be employed by Cumulus? Anybody giving odds?"

Clear Channel 30-Day “Action Plans” That Precede Getting Fired

A number of people have written to me to warn of Clear Channel’s “30-Day Action Plan” strategy aimed at salespeople it is apparently targeting for removal.

Here’s one reader’s take:

“What's happening now seems a weeding out process, an example is a friend that is one of the best radio sales person I have ever encountered. He was the National Sales Manager coaxed to stay and not take the infamous 9 mo severance package during the "Ingurgitation (sic) Day Massacre"', with the promise of no harm to his pay. In less that (sic) 1 month his commission was less that (sic) half of what he was making for the passed 20 years and the promised client list never appeared. According to the upper Management its out of there hands and coming for (sic) the top...........He is not the only one that this has happened to..............

Now after 20+ years of hard ass-whip service he is filling out this crazy paperwork (like in elementary school) along with several other radio people of the same sales caliber and are now under a 30 day "Action Plan".....Rumor is a 30 day notice.

Live and Local When Possible

Believe it or not, this just in from an reader:

"Don't use my name, but I'm told there's a Cumulus station not far from here - think upper Midwest - that is actually using this as a liner: "live and local - when possible"... I'm serious."

An End of the Year Fire Sale -- All Year!

A former Clear Channel executive nominates this very thoughtful but scary description of what Yield Managers are doing to hurt radio rates:

"...I thought you may want to know that they are doing what they do every year at this time…. Doing their traditional one day sale. In past years, it was to put the first few weeks of first quarter to get a jump start on business and take money off the table from the competitors. It’s been a good plan in the past since demand is usually soft in those weeks.

However, this year it is the revenue yield managers who have selected weeks throughout the entire year (usually it’s the last week of the month) where they anticipate lower demand. The pricing is determined by the RYMs, with little input from the sales managers. Either way, the clients have come to expect the one day sale.

Lots of radio’s problems these days are either misguided policies and/or poor handling of personnel by heartless and clueless managers.

Many of you know I taught for the Dale Carnegie organization for over a decade. It offers some of the best advice to managers who want to actually increase their productivity through their employees.

Bonneville and a few other radio groups do this. Guess which ones do not. You just read about their believe it or not management tactics.

Here is pure gold that Citadel, Clear Channel and Cumulus missed:

• Build rapport with your employees so that you have a good relationship from the start

• Begin with praise and honest appreciation

• Call attention to people's mistakes indirectly

• Reassure employees and give the other person a fine reputation to live up to

Radio doesn't just have a financial problem, it has a management problem. Until you treat employees with respect and value their contributions you will be bankrupt in more ways than one.

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Farid Suleman's Immaculate Deception

Late yesterday afternoon The Wall Street Journal reported what you and I already knew which was Citadel CEO Farid "Fagreed" Suleman is preparing to file for bankruptcy by the end of the year.

Merry Christmas and Happy Holidays -- now that The Journal reported it, it must be true.

Even as you read this Citadel is seeking lender approval of a prearranged Chapter 11 bankruptcy.

If Citadel succeeds, the lenders who swap their debt for equity in the reorganized company and 90 -- count them -- 90 lenders would win control of the house that Farid wrecked.

Current shareholders would see their stakes totally wiped out.

Sorry about that.

Farid made his final Hail Mary pass and it was caught by 90 receivers -- that's one for the books now isn't it?

So let's answer a couple of questions straight forward.

First, what really happened ...

1. This screwing of shareholders is blessed by Citadel, Forstmann Little -- the investors who conceived of this radio group -- and its creditors. They want this to proceed efficiently in as short a period of time as possible. Time is money -- their money. The parties want this cozy little deal so badly it is being filed well in advance of January 15th when their loans are overdue. That speaks volumes.

2. Soon the creditors will win control of the company and they will call all the shots. These are not radio people and don't expect them to act like broadcasters. They are the real Michael Douglas -- the real Gordon Gekkos -- they care about one thing and it isn't local radio.

3. Farid Suleman's place in the "Radio Hall of Shame" along side the likes of Clear Channel founder Lowry Mays is now secured. The destruction of shareholder value that occurred under Suleman's watch is jaw-dropping. The company’s market capitalization has plummeted, from more than $2 billion in 2004, to just $12 million today. Even though Suleman is apparently staying at the helm, nothing will ever change the fact that the company declared bankruptcy on his watch as a result of his business decisions as CEO.

4. The thing that sunk the ship was Suleman's egotistically inspired purchase of one of the greatest groups in radio -- ABC. He was suckered by Disney who unloaded it at the absolute right moment in time and made their shareholders wealthier while Farid weighed down his fledgling company with debt that never had a chance of being repaid. If I knew it and you knew it, why didn't he?

What happens next ...

1. Very little is likely to change near-term for operations. Only Citadel capital structure has changed. The company is actually producing revenue with respectable cash flow. Its equity is wiped out and the new entity will soon be run by debt holders.

2. If radio revenues improve, these debt holders will benefit from the increased cash flow. This could continue for a rather long time as creditors will seek to make themselves whole again on any good fortune the economy or the company might have. First and foremost, it is about the debt holders.

3. Fagreed's continued employment by these thieves who have stolen the equity from a company that could never repay their loans in the first place signals that the new operators are more comfortable with the guy who ran the company into the ground so creditors can benefit from an advertising upturn should it happen. Oh, and one more thing -- if you think Suleman doesn't know how to run a radio group, these Wall Street opportunists know even less.

4. More personnel cutbacks are possible. But it is also possible the worst of the firings are behind the company especially if ad revenues stabilize. Unfortunately, however, Citadel and Clear Channel are driving down per unit ad rates by pushing so called short spots seen as a hidden way of cutting ad rates. By driving down rates the chances of the entire radio industry recovering looks even less promising. This guy is dangerous to all of radio not just Citadel shareholders and he will continue in power under his new bosses.

5. Stay away from sharp objects for this one --with no more shareholders to please, creditors can act in their own self-interest without regard to regulations, filings, shareholder meetings, etc., the costs associated with being a public company will be gone, so this will be another cost savings. This could result in the pressure coming off operations in the near to intermediate term. It eliminates the uncertainty, but will likely mean the end of local radio as we know it.

What does it mean going forward ...

1. Many scenarios are possible. One likely scenario is that creditors run the show with Suleman at the helm to benefit from the company’s cash flows. Eventually, once the economy recovers and ad revenues stabilize, the creditors may seek to sell off the stations, either all at once or piecemeal.

2. Who will buy them and what kind of multiple they get for them is anyone’s guess. Multiples for these stations will likely be around 2 to 3 times cash flow. Meanwhile, CBS CEO Les Moonves told analysts a few days ago that he wants to sell more CBS radio stations. Lew Dickey would like to unload Cumulus stations and there is a long list of sellers and not a very long list of buyers. Of course, if the Citadel stations can throw off respectable cash flows, the creditors may just hang onto the stations and ride it out….another possible scenario.

3. Bankruptcy can be strangely liberating. The old restrictions are gone. The company will have greater flexibility to restructure, cut costs, conduct operations, etc. without the cost and scrutiny associated with being a public company.

So Fagreed Suleman has finally achieved successful failure.

And he's the market leader in that category.

Clear Channel and Cumulus and even little Regent are not far behind.

I disliked consolidation from the moment it was enabled by Congress. You may remember that initially working broadcasters embraced it -- some managers got appointed to run two or three stations and their salaries went up. They had benefits, a certain amount of control and prestige -- what was not to like.

I didn't like it because consolidation by its nature forced good broadcasters to take their eyes off of what made radio so desirable as an acquisition target in the first place -- its visceral connection with local listeners.

The deals done by consolidators to purchase stations were downright fraudulent. No radio station was actually worth, say, $100 million -- not even in New York or Los Angeles. The cash flows were impressive but the multiples were manufactured by the very equity holders who will now be writing down their losses.

And to prove it, debt has been refinanced on Mezzanine capital, patios, balconies or whatever other cute terms investors have for it -- all costing more each time consolidators got uncomfortable with the debt payments.

Farid Suleman is a bean counter and by experience not much of a radio executive.

Now after leaving his shareholders broke and his debt holders in charge, we come to find out that maybe Farid wasn't a very good bean counter, either.

Farid Suleman pulled off the Immaculate Deception.

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TV Is Acting Like Radio

I like Jay Leno.

But Jay Leno stripped at 10 pm is bombing.

Local NBC affiliates are taking the hit with Leno as their late news lead-in and when you lose audience at bedtime, the TV station is not on your channel for the lucrative morning news and fluff shows that permeate television.

Television is acting like radio.

In the past 13 years of consolidation the good and solid programs, formats and personalities that audiences and advertisers loved have given way to Repeater Radio, networked shows to save money and God-awful voice tracking that may sound live but isn’t very local at all.

Network TV cut back on expensive dramas a few seasons back giving more life to reality TV shows most of which are mindless wastes of time.

But they are cheap.

See the radio-TV strategy here – cut expenses and diminish the quality of entertainment and everything will be fine.

Well, it isn’t.

You see the mess the radio industry is in – a new plan every six months to cut costs and further water down local programming and television going with cheapie shows to make their bottom lines look not as bad.

Not as bad is not necessarily good.

Growth companies invest in their products and services. As I have said many times Apple isn’t sailing through this recession for no reason at all. (Apple stock was up almost $8 a share yesterday and yes, I own it).

Apple spends money on staff, hiring, research, development, marketing – can radio and TV say the same?

Of course not.

To make things worse Oprah is planning to leave syndicated TV – another bad omen for dying early local news shows that benefited from her lead-in to their newscasts.

Television doesn’t have another Oprah in the minor leagues waiting for a break unless reality TV's Kate Gosselin or Rachel Ray are the new Oprah's. I doubt it.

Oprah Winfrey gets it.

She is leaving network TV to concentrate on her cable channel. Cable, therefore, has finally become a more potent adversary to broadcast TV than originally thought. The niche programming attracts fans that generalized and watered down network TV is losing. Plus cable channels – some of them anyway – are at least trying to understand the Internet and mobile content as it pertains to their niche.

Is cable big enough for Oprah?

Of course not. Oprah is everywhere her fans want her (re-read this line please).

Magazines. Satellite radio. Mobile content.

And this presents a very interesting teaching point.

While the radio industry is ridding itself of talent and turning its back on local broadcasting (at least the consolidators are), they are looking like the playbook for other losing businesses such as television.

Let’s see ...

Ryan Seacrest on as many Clear Channel stations as possible – a star in LA saving Clear Channel money in 100 different places.

And ...

Jay Leno – a star at 11:30 nightly – as a cheap production version of a 10 o’clock weeknight series.

I’m not sure even Oprah could work out at 10 pm for NBC but I am sure that she is not foolish enough to try.

Oprah is a brand – a very special brand to women. She goes where her fans are. It’s the old Disney success formula.

Marketing. Marketing. Marketing.

Oprah is so powerful she is a cable channel.

She is a magazine all by herself.

She is daily talk show.

So the radio industry and TV business obsessed with cutting costs need more people like Oprah Winfrey making their decisions. You can’t sell what people don’t want. You may like Jay Leno at 11:30 each night but not at 10. NBC would never have put Leno on at 10 had it not been for the financial hot water NBC Universal is now in.

That leads us to the majority interest sale of NBC to Comcast.

Comcast is – a cable company.

It sees the acquisition of NBC as adding content to its cable sports franchises. They are not trying to buy NBC for the Leno show. They want the sports franchises. And in spite of saying all the right things about carrying terrestrial TV on cable, Comcast didn't buy NBC Universal for the network division.

Network TV in the not too distant will be like, well -- radio.

By extension the music industry is making some of the same mistakes.

Long lost in finding ways to save the CD revenue it is losing to piracy and cherry picking 99 cent tunes from previously overpriced albums, the labels have lost their way.

Instead of developing talent and feeding the insatiable appetite of music lovers for discovery, you’ll note that there hasn’t been a new major music trend since the industry began its decline in 2000.

After rap and hip-hop the labels stalled out. Prior to that the new technology of the CD stemmed a windfall of profit to the labels as consumers had to once again buy their favorite vinyl albums so they could enjoy digital sound. (Or is enjoy digital sound even a good way to put it given the better fidelity of vinyl – but I digress).

The marketplace wants singers, bands, stars – the labels give us lawyers suing the pants off of people to save declining CD revenue.

It’s as clear as mud to the labels and for that matter the networks or radio consolidators.

It’s not good to save money at the expense of the product.

When you cut, it hurts.

When you grow, you gain.

Video never killed the radio star – that concept is all too simple and incorrect.

Video killed video.

Radio killed radio.

The labels killed the music industry.

And they all did it the same way.

By emphasizing the wrong word in the term -- show business.

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When Hiring Local Costs Radio Jobs

CBS Radio President Dan Mason had to spend some money to hire TV personality and former radio dj Carson Daly to do morning drive at KAMP “Amp” in Los Angeles.

Amp – a newer version of Clear Channel’s CHR market leader KIIS “Kiss” will now pit Daly against Kiss’ Ryan Seacrest the first week in January.

It’s good. It’s local.

But wait.

If it stays good and stays local than CBS did a great job reading its local Los Angeles market. After all, Carson Daly is LA and in my opinion not Buffalo or Nashville or Philadelphia.

There are other people for those markets or as I like to say, the days of syndication are over because radio will be unremarkable if it does no more than repeat a local show designed for one market and try to make it fit all.

Over at Clear Channel Ryan Seacrest exists so that Clear Channel can fire personalities in its group to save money and send networked Repeater Radio to places it should never go. And if CBS eventually does the same thing then I take back everything I said that is good about this move.

There is going to be a big explosion next year and in spite of the fact that the three major groups will be grappling to stay afloat, that’s not the explosion I'm referring to.

Apple is expected to reveal its tablet device – larger than the Touch and smaller than the smallest laptop but this thing will be a game changer.

My friend Barry O’Brien told me recently he and his lovely wife Nancy had to live without a DVR for a week and came to realize that even media savvy people may be underestimating how things have changed. He hated watching television in real-time.

We don’t watch television – one third of America’s households record content and then time delay what we want to watch on our schedules.

We don’t read printed newspapers – that’s why they are dying off. Most people get the news all day through "reporters" called friends and Facebook and Twitter buddies who can tell us when something has happened that we might like to know. That was the job of the newspaper reporter, but newspaper reporters will have to change because their audiences have changed.

We don’t turn the radio on in an emergency even if it is free – we look to our cell phones, smart phones, iPhones or Blackberry devices. We have become the news editor. Meanwhile, radio stations have let us take their jobs because they have been firing critical employees who used to help us in a crisis.

We don’t listen to radio for school closings during snow storms – you guessed it, there is a new age workaround and it's on a cell phone.

We don’t listen to radio for music discovery. Young people listen to streaming sites, share files legally and illegally and listen to Pandora. And more ways to sample music are in the works.

And as the year ahead unfolds, the new Apple tablet will likely be a Kindle killer, PDF reader, iTunes player, video screen, movie theater, link to the Internet, a place to play with Apple apps and whatever else Steve Jobs decides to cram into it.

Radio – the original, free and mobile medium of all – is being relegated to also-ran status because radio owners have ceded their greatest advantage to mobile competition.

That advantage – the ability to employ local personalities who play local music lists and feature news, information, promotions and commerce close to home.

Even the World Wide Web isn’t really a world wide network.

Oh sure, it allows you to reach across the globe in real-time but most people find it invaluable in helping us with social networking – connection, commerce, information and entertainment on demand.

So I wonder how the heads of radio’s most powerful groups cannot see the damage they are doing by firing their successful local personalities in the name of economy.

The people who could best do content were working for radio stations and now most of them are unemployed, underemployed or serving from day-to-day at the will of CEOs who have driven their companies into bankruptcy.

CBS picked a local guy to do a local show and if it doesn’t eventually turn out to be some other market’s Ryan Seacrest, then it appears to be a shrewd move.

But let me throw out a few other ideas:

1. Every station should have 100 podcasts distributed daily – and by that I don’t mean podcasts of air content. They should be developing an under culture of personalities somewhat like what happened on FM as it was coming of age.

2. Someone please start a Boise News, Dallas Now, Philly First type mobile content that is local to the zip code. Radio companies need to create news and local content for mobile uses and applications.

3. Clear Channel brags about iHeartRadio as being radio on a phone but while it did the laziest and perhaps least it could do to cooperate with the inevitable future, it should own 10,000 separate applications using content driven by their local stations.

4. Then, monetize the 10,000 with rates higher than $5.

The power of radio is not the tower or transmitter.

It’s not the fact that it is free.

Or that it is available in just about every automobile.

The real power of radio going forward is in its ability to create mobile content separate and apart from simply broadcasting. Yes, it should continue broadcasting but not cheap, compromised national syndication and voice tracking pawned off as local radio.

Hire back the wasted talent that has been fired and put them to work on new media, podcasting, webcasting and social networking businesses that can provide a new stream of free cash flow.

Or, I will train these fine folks at my Media Solutions Lab in January and don’t be surprised if they kick your butt attracting new media advertisers going forward.

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