Thursday, September 22, 2005

More consolidation coming ...

Philadelphia - At the same time that advances in technology put the radio business in flux, heavy-hitters from the industry are warning that more consolidation will be coming.
At the first "Super Session" of the 2005 National Association of Broadcaster Radio Show Convention, entitled "Broadcast Financing 2005: Radio on the Rebound," panelists from a number of major banks and large radio companies predicted about $5 billion in station sales and transactions over the next few years and many did not believe the challenges facing the industry - podcasting, news from the Web, FCC problems or satellite radio - would affect this trend or profits in the future.
However, one panelist, Peter Smyth of Greater Media, Inc., which owns four stations in the Boston including political talk WTKK, said his company was not going to expand just for the sake of expanding. Greater Media, he said, was going to embrace technology issues and he saw them as an opportunity and not a hindrance. Smyth also noted that the future of radio was to "get back to basics" by connecting with listener communities and create "localisms."
"Radio needs to regroup," he said.

Sidebar: It should be noted that while many of the Greater Media Boston stations have local disc jockeys on their music stations, they also have some syndication, which puts local folks out of work. On its talker, WTKK, the company has syndicated hosts Bill O'Reilly, Laura Ingraham, Sean Hannity, and Don Imus, as well as formerly syndicated - soon to be future - Jay Severin. All of these hosts are considered conservative in their politics in what some people say could potentially be a profitable liberal listening area. There are a couple of local hosts who have one hour programs - including liberal Jim Braude who shares a show with more moderate Boston Herald columnist Margery Eagan. Plagiarist Mike Barnicle also has a one hour show. I don't know what other talk stations are like at Greater Media, but his comments about localism in the Boston area rings a tad hollow.

Gary Lawrence of First Broadcasting Investment Partners, LLC, said that banks were eager to invest in radio consolidation, noting that there was no shortage of money available. He called the market "very resilient," adding, that no one he has known has been unable to to get money.
Elliot Evers, of Media Venture Partners, LLC, said there was great expectation for growth because "the weighted cost of capital is historically low."
"There is a good environment on pricing of debt," he said. "As long as you can buy money cheaply, there will be more multiples."
Another panelist called the lending environment "robust" because of expected growth potential and the industry's high value.
There was also a lot of banking talk at the seminar - since this was sponsored by Dickstein Shapiro Morin & Oshinsky LLP, a New York law firm.
Outside of this particular event, there was a lot of talk about the fact that many radio stations are over-valued and the asking prices are way too high. I overheard a conversation between a middle-aged man from the Bay Area looking to buy a station and some other folks. The man looking to buy complained about costs or the fact that whatever he could afford was junk. I retorted, "One man's junk is another man's treasure," and added that new buyers had to start small and build up. The potential buyer agreed to a point. Then again, he could have been just blowing steam out of his backside. Who knows if he was really a potential buyer or not.
I had a pretty good lunch in the Reading Terminal, an area similar to Fanuiel Hall in Boston, with markets and sandwich places, but no, I didn't have a Philly cheese steak.

Station 'culture' and newspapers of the future
Later on in the day on Wednesday, I attended two interesting conversations about radio: The culture of your company office and whether a station Web site will become the newspaper of the future. What was interesting these talks was the fact that both dealt with the long-term health of a radio station or media company. If you don't have a pleasant and healthy work environment [hence culture], there is a good chance you would be able to keep good employees happy; if your station [or company] can't modernize, you won't be able to stay alive in an every-changing and competitive atmosphere of the current technological wave.
The panelists for Awesome Station Culture ... No Matter Who You Work For - like many of the talks here - were representatives of a slew of corporate behemoths: Clear Channel, Cox, and Entercom. They were supposed to have a local person on the panel but they didn't show up. Not that there is anything wrong with that. But sometimes, the folksy approach, is better than technocratic approach. The point: It would have been nice to hear from a small market owner or operator about improving station culture, that's all.
What attracted me to this seminar was the first section of the description: "They say you can tell whether a station's successful by the vibe you feel in the lobby ..." Isn't that the truth?
I thought the talk was pretty good but a lot of it was management [again, technocratic] gobblygook. Some of it was positive - complement your employees at least once a week, end conflicts before they simmer or explode, and have meetings which result and tangible instruction/discussion and delegation of new things to be done, etc. But if much of the information was implemented, no one could fit it into an ordinary day. If you did everything that was proposed, you wouldn't get any work done! Hence the term, management. Hah!

The other seminar, Your Radio Website: The Newspaper of the Future?, was more interesting but also dealt more with marketing and sales revenues, and less about content.
The guy promoting this talk, Roger Utnehmer, an owner of three stations in Sturgeon Bay, Wisconsin, addressed a number of key issues including the importance of local content. In a town of 8,000, he has three full-time reporters who cover news, videotape events, and Webstream everything. They cover the big stuff and the small stuff. They Webstream five football games every Friday night. Their site - - also looks like a newspaper, which is pretty cool. How does he finance the expenses such as a T-1 line, reporters, etc.? He concentrates on the local, auctions off his barters and other items to listeners in a Saturday morning shopping/auction show, and goes after potential clients with a vengence. Utnehmer described himself as "a politically progressive capitalist pig" ... an interesting comment, to say the least.
But throughout the presentation, I just couldn't believe what I was hearing - how could such a small outfit like his be making $25k to $40k per month? How could they be getting $3,500 from car dealers to put mini three minute TV ads on the Web? Impossible. I just can't believe it. I didn't say anything negative to him in person. In fact, I commended him for his commitment to local journalism and sports. But, he is either the best snake oil salesmen ever or a brilliant genius. Maybe, he is some form of the two!
What helped make me feel this way was the presentation by Dave Casper of RAB, who showed everyone how to set up your own auction system, through his company, of course, as a way of making more money. While there wasn't any pressure at all to sign up, there was a blur between the two, which was a bit odd.
Again, like I said, there wasn't much about how the content of the Web site could become the newspaper of the future or compete for people attempting to get news; just how a station could potential bust the gut of a local newspaper by going after their advertisers.

Later, I attended a Super Session roundtable about programming which wasn't too bad either. The Super Sessions are held in the large ballroom and have video cameras and large screens.
There was a lot of talk about reinventing formats and being unpredictable, like a late night talk show, and trying to be local and relevant. There was also some digital radio talk and also anticipation about Arbitron's new PPM or "portable people meter" system which is supposedly going to replace the handbook they send out to gather ratings.
The group also spoke about some of the best promotions they had seen of late. There was the gas promo - set up months before prices boomed; there was one thing that a DJ did to help a teenager with learning disabilities go on his first date; there was also a silly fugitive game, where the DJ described the person who people should seek out in the city and the first person to figure out who it was would win a prize; there was also a promotion tying in the Hummer H3 SUV and a trip to Hawaii, aimed at 18-plus men called "Win a Hummer in Hawaii ..."

I had probably one of the best dinners ever at Morton's Steak House. Every place around the convention center was booked solid and this was the only place that fit us in. Also, I was able to hang out with my former colleague, Kristina Arvanitis, the former reporter for The Star, for a quick beer at the Monk's Cafe. I was so proud to hear that she is doing so well in law school and even made the law review. That is so awesome!

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