JacoBlog - Jacobs Media's Blog

Cramer vs. Cramer

Jim Cramer's done it again.  This time around, it's a frantic, wild-eyed rave against radio companies and radio stocks.  In a borderline hysterical rant, Cramer pillories broadcast radio as being the worst of investments.

And the numbers don't lie.  As he points out, radio's Wall Street performance has been horrendous.  But that's also because the stock pickers just don't understand radio's value in a digital world.  Yes, radio's financial effectiveness is being challenged, along with the medium's ability to compete against new technology.  But radio is still a great advertising vehicle that puts butts in seats and bodies in stores.  That's why radio continues to perform well in medium and smaller markets, where such arcane "metrics" like store traffic and bricks & mortar purchasing means so much.

>Cramer Rants on Radio Stocks<

But the real underlying reason for Cramer's tirade is his defense of the satellite radio merger.  And in that regard, he speaks with a forked tongue.  In the last three years, XM's stock price has lost about 60% of its value, compared to a nearly 50% dump by Sirius.  And when you look at the way these companies have flushed millions of dollars into lavish talent contracts and content, along with questionable advertising and marketing campaigns, it's no secret why they need a government approved merger to survive.  Cramer, however, doesn't address these “minor” fiscal issues and extravagances.

And this same guy, who lambastes every aspect of the radio business, goes on "Today" and nearly bursts into tears during a discussion of Eliot Spitzer's inane actions.  It's one helluva roller coaster performance.  This guy needs to chill.

>Cramer on the "Today Show" discussing Eliot Spitzer<

The Vision Guy

Paul Jacobs chimes in on the importance of leadership with vision:

Several years ago, in a last-ditch attempt to save the company, the board of Apple Computers turned to the one person who truly understood the company's core values - Steve Jobs.  The rest is history.  By restoring the "mojo" of the company and focusing it on leading-edge technology and user-friendly, attractive designs, Apple today is a powerhouse.  The halo effect of the iPod has even turned around the fortunes of their long-dormant personal computer business, and now Macs are flying off the shelves.

Over a month ago, a similar event happened at Starbucks.  To stop its stock slide and to fend off new competitors like McDonald's, the company is bringing back their original visionary as CEO, current Chairman Howard Schultz.  In announcing his "transformation agenda" in a letter to employees, Schultz laid out four goals.  Here are two that caught our attention:

• Re-igniting emotional attachment with customers.
• Building for the long term.

Pretty simple, isn't it?  These two "bullet points" are the essence of any great brand.  And they are "action steps" that the leaders in the radio industry should carefully consider.  When you strip away the rhetoric and quiet the pundits, this is the recipe to turn radio around.

One of the most disappointing trends over the past decade has been the exodus of the "celebrity program director" - the visionary who truly understood the station's brand, core values, and its emotional relationship with its listeners.  They were the people who defended and protected the brand inside and outside the station.  While there are still a handful around, the loss of these outstanding product managers has led to the decline of great radio stations as local media institutions.

And when you lose the visionary, you lose the brand essence that created stations like WMMS, KVIL, and so many others that have deteriorated into ordinary, pedestrian radio stations.

We're often asked why, in the face of declining overall listening to radio, Public Radio continues to thrive?  It's simple - everything about Public Radio programming is long-term.  And they cherish their audience relationships.  They're patient, they nurture their programs, they research their listeners' needs.

Their conventions and meetings are more frequent, better attended, and more considerate of the values and qualities that contribute to product development, brand building, and audience relationships.  While admittedly they don't suffer under the pressures of Wall Street or profit goals, they are in fact businesses that need to pay bills (with a lot less government support than people think).  The bottom line is that Public Radio succeeds because they think long-term.

And while Public Radio doesn't have "celebrity" program directors you've heard of, most have been in their local communities for a long time and understand how to connect with the locals.  Additionally, Public Radio's core values are brilliant, concise, and imbedded in the minds of every person responsible for the creation of programming.  They are the guiding force behind their emotional attachment with their listeners.

So, the next time you are asked to create a strategic plan, stop writing reports.  Learn from great visionaries like Jobs and Schultz, as well as successful broadcasters, perhaps like the Public Radio station in your town.

A Clear (Channel) And Present Danger

Earlier this week, Mark Ramsey blogged about Clear Channel's "murky future," and in the process, expressed sadness for company’s employees, listeners in their markets, and for the company itself.  Mark is a passionate radio broadcaster, and one of our best industry observers, and so his comments made me pause and think about the implications of Clear Channel's problems.

As a Detroiter, I know what it's like to be held hostage by a mega-corporation like General Motors.  On the one hand, you can resent their short-sightedness about where the automotive industry was headed.  And you have to acknowledge their arrogance throughout the '60s and 70s, too.  Remember the saying, "When GM gets a cold, Detroit gets pneumonia?" As much as many people here in Motown hate to admit, you reluctantly rooted for GM to do well.  Your livelihood depended on it.

And so it goes with Clear Channel and its dominance of broadcast radio.  Most definitely, the Wall Streetization of our business has taken its toll.  Clear Channel's history as the biggest company in radio has been very checkered, and without a doubt, they have been tarred by a brush often of their own making.  While the famous "Minot Incident" was probably blown out of proportion, becoming an industry urban legend, the fact is that Clear Channel became known for its voicetracking, the canard called "Less Is More," collective contesting, and other "innovations" that have not enhanced our business.

I will never forget reading an interview with Lowry Mays in Fortune magazine back in 2003 when he was quoted as saying, "We're not in the business of providing news and information.  We're not in the business of providing well-researched music.  We're simply in the business of selling our customers’ products."

I remember thinking at the time that it would not have been that difficult for Mays to reverse that quote - and still make the financial gods happy.  Had he simply noted that Clear Channel stations are a great advertising tool for its clients, but the company was dedicated to providing great radio and serving its communities, much of the PR backlash might never have materialized.  Instead, the media seized on the "Evil Empire" moniker, and the bad ink continues to this day, all the way to Washington, D.C.

So, back to Mark's questions.  Do I feel sorry for the company?  Do I feel sorry for its employees? Do I feel sorry for what all of this means for the radio industry?

No.  Somewhat.  Yes.

A Word From Fig

Last week's blog entry, "The Graveyard Shift," struck a responsive chord with many of you.  Bill Figenshu chimed in with some comments of his own, well worth taking a few moments of your time to read (below).  We appreciate his views as someone who has spent much of his career in leadership roles in radio, but who has the added perspective of being able to step outside the foul lines and see the media world through a different prism these days.

We also heard from many of you, eager to tell your own stories of starting in radio in obscure markets, and in overnight or weekend shifts.  We invite everyone who reads this blog to send along your own tales of how you broke into the business, especially if it involved the entry level route that has virtually dried up in recent years, due to voicetracking and cost-cutting.  How would many of you gotten your starts, had it not been for these part-time, on-the-job training opportunities?  In this case, I believe we can learn a lot about where we're headed as an industry, by gaining a better understanding of our past.

And now, a few words from Fig...

Hi Fred,

I noted your overnight blog regarding the “dearth” of a talent gateway into the radio business. (BTW, that’s $80.00 a week before taxes for me at WMID! Yikes!) You are so correct. And true, by eliminating the overnight shift for financial reasons we have closed the pipeline to new talent. But wait! There’s more!

I believe we in management have failed the process. Today, managers and program directors are spending MUCH more time on administration, and much LESS on the creative process.  Who was your mentor? For most of us, someone took our passion under their wing and taught us the basics of the business. (For me it was Norm Feuer.) Today, managers are so busy; they have no time for the content or the people that create it.

Whether on air or behind a desk, hours were spent training, discussing, teaching, and mentoring us. How is it that most of the talented radio people of our generation were successful in their early 30’s? Many “product people” were either running radio broadcasting companies or support companies such as yours by the time we were 36. We were the first generation of “FM” radio management. We could not get jobs at KHJ, WABC, WFIL, or CKLW. We had to develop those FM stations to be successful. We built stations and companies around the new technology. Nurtured by our managers, supported by the companies, we were allowed to experiment with formats and ideas. “Give the kid that FM station, how bad can he screw it up, it has no listeners anyway!”  “As long as my friends at the country club don’t hear that awful “progressive rock” crap we will be OK.” We were taught the basics of radio, applied them to the new band, and the rest is history.

Can you name the next generation of company presidents, or successful consulting firms such as Jacobs Media?  Where will they come from? Who will give them a chance to make mistakes? Most general managers and program directors are so busy managing the business of the business that there is no time for mentoring. Running 2, 3, 4 radio stations or more in one market, in addition to web sites* leaves no time to mentor. Many of the management decisions come from “corporate” not the local station. Pride of authorship is locally lost when formats are dictated from above. Local managers can’t mentor someone in corporate. Corporate has no time on the schedule to mentor local managers. The pressure for success is now measured in weeks, not months or years. Ask any manager in Houston or Philly who now lives with PPM. Results are delivered weekly. (BTW, having lived with diary ratings, I support PPM. As with the diary, Arbitron will make it work over time.)

As you suggest, there is a clear pipeline available to us if we would only use it. Rather than have a “coalition” select the HD formats for major markets, broadcast companies could allow local stations to develop HD and create the “vibe” necessary for new audio products. Taking advantage of “MySpace/Facebook” and blogs, the viral effect will create the “underground” formats necessary to launch the people and formats we so desperately need in 2008 radio. Given the right environment for experimentation, some kid somewhere will slip the HD radio “under the pillow” at night and dream of running one successfully someday. As was the case with us, the passion for radio could be re-kindled if given the chance. The next “Jacobs Media” or successful talent lies in the dreams of new ideas applied to new technology. “Give the kid that HD station, how bad can he/she screw it up?” “It has no listeners anyway!”

Thanks for letting me vent Fred.

Regards,
Bill "Fig" Figenshu

The Graveyard Shift

"My first job was playing the religious tapes on Sunday mornings.  Every now and then one of the tapes would break and I'd be on the air live."
   -- John Tesh, TeshMedia CEO

"My first paying job was as a part-time disc jockey in 1976 at WLYV/Fort Wayne.  I got fired three months later because my voice was still changing."
  -- Tony Richards, Federated Media CEO

"WMID/Atlantic City.  It was summer, and I thought it would be a good idea to get a job 'down the shore' while my friends were flipping hamburgers on the boardwalk.  I was playing tunes for $80 a week, from midnight to 6am, except on Sunday, when it was midnight to 8am."
   -- Bill Figenshu, former Viacom President, and now President/Broadcast Operations for Peak Broadcasting

"I had my first full-time job before I graduated (Emerson College).  In my junior year, I started working for Greater Media.  I was producing the Wolfman Jack show overnight.  I learned a great deal about being a personality from that show.  Wolfman Jack had an influence on how I was on the air, and I never even knew the man."
   -- Ken Johnson, Format Director/Urban, Cumulus Broadcasting

"I went on to Utah State, and working in radio helped put me through college.  I did overnights on Q92 FM, KBLQ in Logan, Utah."
   -- John Dimick, Lincoln Financial VP of programming & operations

"My sophomore year (Swarthmore College) I sent a tape to WMMR in Philadelphia and started doing part-time at the dominant station of free-form progressive radio.  I graduated college and started doing afternoons at MMR.  I was very lucky."
   -- David Dye, host of WXPN's "World Cafe"

These are great stories, and they're just the tip of the radio iceberg.  (I "borrowed" them from Erica Farber's always entertaining "Publisher's Profile" column in R&R.)

These reminisces are from a handful of radio's celebrities and movers & shakers who first got their start in the business doing overnights, part-time, and/or weekends.  Those were the "gateway shifts" where aspiring radio professionals got their start, learned their craft, and fell in love with the business.  Radio was so intoxicating that most aspiring broadcasters felt considerable pressure to get that first job in the business, the stepping stone to bigger markets.  There was always a great deal of competition for radio jobs, even in smaller markets.

Today, radio finds itself at the opposite end of the spectrum.  A recent report from the U.S. Labor Department notes that radio will be among the slowest-growing industries in the next decade.  Among the "negatives" for radio work, reports Inside Radio, are shift work and low pay."

If you talk to station managers and PDs in Norfolk, New York, or Nome, the story is the same.  We cannot find talented, motivated, energized young people like the Bill Figenshu's and Ken Johnson's of decades ago.  That's because many of them aren't captivated by radio as an entertainment medium.  We saw this in vivid color during our "Bedroom Project" interviews.  If you're not a core radio listener, why would you want to make it a career?

Among the many difficult challenges facing radio in this new millennium, perhaps the most glaring is the need to reintegrate youth into the business.  As we have noted in this blog before, HD2 stations should be doing just that.  But the problem runs deeper because the training grounds, known as overnights and weekends are too often walled off by the economics of voicetracking.  We are so intent on saving money during this quarter that we are in the process of mortgaging the future of radio's employee base.  One of the key reasons why there aren't many great new morning shows, sales reps, research companies, and consultants is that we've virtually eliminated radio's equivalent of baseball's minor leagues.

I was impressed by the spirit of Edison Research's recent "30 Under 30" campaign, designed to shine the spotlight on talented youth in radio.  But the fact is, our numbers are down, there isn't a line of young, energetic, intelligent people ringing around our stations, and we need to take action to reverse this trend.

As the NAB continues to move forward with its recently announced "Radio 2020" initiative, let's hope that a youth component is part of the plan.  Because long after the PR campaigns have run their course, attracting the youth of America back to radio ought to be on the front burner of radio's new strategic plan.

A CVC Lesson

Jacobs Media's Ralph Cipolla talks about the potential writers strike & CVC:

A work stoppage looms, one that will impact nearly everyone in the mainstream of contemporary American society.  No, it's not the UAW - they've struck a deal with GM, and are now well into finalizing discussions with Chrysler.  I'm referring to the Screenwriters Guild; the brethren of New York and Hollywood-based men and women who pen the scripts for TV and film.

These are the people behind the one-liners used by Jon Stewart and Jay Leno, the scripts for every prime-time sitcom and drama series, and all those big-screen productions in the pipeline (note: Reality shows like Survivor, Big Brother, and Dancing With The Stars are not bound by the existing screenwriters contract - I guess all those bachelorettes really are that witty).  That epic Paramount Studios re-make of Star Trek slated for 2009 release?  It looks like the Enterprise will sit in dry-dock if this dispute doesn't get settled soon.

So, what are the issues?  There is really just one, and it's another conspicuous case of an old business model trying to catch up with new media reality.  The writers want their share of digital residual royalty revenue generated from the sales of DVDs, their cut of on-line downloads, payment for free on-line streaming of TV shows from network websites, and even compensation for product placement in films (I guess someone gets paid to write - "Camera angle changes, music swells as we see James Bond call M on his Nokia N81 cell phone.")

If you write the script for a TV show, for example, Grey's Anatomy, you get paid when that episode airs, and paid again when it is shown as a repeat.  You then receive another check when that show becomes part of a full-season DVD boxed-set, and paid yet again when every writer's new-media-age-dream comes true - the show becomes available for download on iTunes.

Writing for TV or film is the gift that keeps on giving, but apparently not enough.  The last work-stoppage came in 1988 and lasted 5 months.  This was a time when no one had email, the internet was known only to upper academia and the military (and Al Gore), the consumer DVD player was still on the drawing board, and the idea of downloading video to a handheld device was the kind of fantasy pipe-dream found in, well... Star Trek.  A writer saw residual payments when his TV show went into re-runs, or her movie was released for VHS rental.  It's a bit more complex this time around.  The producers now contend that things are changing so fast, they don't even know how money is going to be made and what kind of numbers we'll be talking about.  So, Patric Verrone, president of Writers Guild West calls their bluff - "Our basic mantra is this - if they get paid, we get paid."

That was 19 years ago, and this issue has galvanized the writers' union.  The Guild contends that the old deal doesn't begin to account for the until recently unimaginable cash-generating schemes common to this on-demand, multi-platform, video iPod age.  Even the word "age" is outdated in this context, for all this will change, even before the "ink" is dry on a new deal between the writers and producers.

There's no new lesson here, just reinforcement of the conclusion central to the Jacobs Media / Arbitron "Bedroom Project" - it's all about C-V-C.  Consumers want, and the market will be driven by, Content - Variety - Choice.  These components are essential to any entertainment medium and delivery environment.  The writers may not have anticipated this in 1988, but they now want a new deal that maximizes the value of their content, as the variety of entertainment options competing for TV time and theater dollars widens, and consumers have an ever-growing degree of usage choice.  Just as these writers realize that it's no longer a small-screen/big-screen market, radio is coming to grips with the fact that it's no longer just an AM or FM or Walkman world.

Perhaps you need to negotiate a new deal with yourself, and make C-V-C a non-negotiable item.

P.S. How close are the two sides as the deadline looms?  Hint: the producers claim that this era of digital choice has cut into their bottom line, so get ready for more Desperate Housewives repeats, more amateur singing, more dancing with Jerry Springer, and bigger weight-loss contests in prime-time... or maybe you can just download that movie you missed at the theatre.  Or listen to the radio more.

No Average Joe

The drama surrounding the Joe Torre situation last week finally came to a head.  The Yankees - proving once again that legendary achievements don't necessarily translate into class - gave Torre a substandard offer (a reduction in pay, no less), and the manager did the right thing, and walked.  This ends an incredible era in Yankees history - and that's saying a lot given the team's accomplishments.  You can look up the Torre record of World Series appearances and victories, not to mention that he had the Yankees in the playoffs each of the twelve years he ran the team.

But perhaps his greatest accomplishment was his ability to manage - both up and down.  In George Steinbrenner, Torre had to deal with the most volatile of owners.  It rarely took much for George to cajole, intimidate, and shout at Torre, his players, and his coaches.

And throughout a 162 game season (plus exhibition and playoff games), managing all of those high-priced stars was an ongoing challenge.  From keeping A-Rod motivated and sane, to making sure Jeter knew he was still top dog, to dealing with Giambi's steroid controversy, to making all the other stars - from Posada to Matsui to Rivera - feel like they were just as important to the team's success - Torre demonstrated the ability to manage both up AND down.  And he did it under the glare of the predatory New York media, day in and day out.

Most radio programmers probably feel like Joe Torre much of the time (except for the multi-million dollar salary, of course).  On the one hand, it's the airstaff - frequently a high-powered morning show, and other needy staffers.  On the other, it's local management, and an increasingly demanding corporate team, headed up by a CEO who's under immense pressure.

Being able to relate to talent, make them feel good, and insulate them from the guys in the boardroom is a challenge.  And yet, having the ability to play the corporate game, deal with budgets, high-risk promotions, and still put an entertaining product on the air continues to be a tough putt in 2007.

The truly great ones are able to handle both management tasks deftly, serving as an advocate for both the bosses and talent, and doing it seamlessly and with class.  Last year at Summit 11, author Jeff Angus (Management by Baseball) put it together for us, providing examples of how inspirational field managers can tell us a great deal about how to do our jobs.

This week, the Yankees lost a great programmer... that is, manager.  And like the elite coaches in any field, Torre will indeed be back on another bench in a different town.

Mark Cuban: The Brand

Everyone knows Mark Cuban, right?  He's the media maven who sold Broadcast.com to Yahoo! and forever became a media/entertainment icon.  Cuban is also the outspoken owner of the Dallas Mavericks, and is the most recent phenomenon on ABC-TV's hit show, "Dancing With The Stars."

But those are just items on his resume, because Mark Cuban is much more than just a list of accomplishments.  He is a well-marketed strategic brand.  Cuban "gets" branding, perhaps more than anyone else, and continually fine-tunes, builds, and hones his image.

As the owner of the Mavs, Cuban has become the best known mogul in the NBA.  He has brought Hi-Tech to the NBA, and actively returns fan emails.  Cuban has marketed his name as being especially responsive to his legions of Mavs loyalists.  Win or lose, this is a massively successful franchise that isn't afraid to try anything new.  And its owner is more famous than its best player.

Cuban, the brand, isn't afraid to take risks and shake it up with a little controversy.  His tirades against the refs resonate with NBA fans, and while Commish David Stern may find Cuban a pain to work with, the latter has elevated the buzz in the league.  When you're up against the NFL and Major League Baseball, you need all the headlines you can get.

Now, Cuban is taking his branding efforts to television.  It is noteworthy that Cuban isn't afraid to fail.  His "The Benefactor" series may have stiffed in '04, but he's right back on the horse with "Dancing."  And his spin this time is brilliant, melding the wild success and exposure of this ABC-TV hit show with his personal rehabilitation from hip-replacement surgery.  Not only is he competing hard on "Dancing," but he is becoming a mascot for surgery rehabbers everywhere.

And as always, Cuban is playing it brilliantly, casting himself as the underdog up against all the star athletes, movie idols, and "pretty boys."  Don't count him out to win the whole thing, but whether he pulls that off or not, he has already elevated his brand equity.

There's a great deal that DJs and personalities can learn from Cuban's brand-building endeavors.  A calculated risk, a little controversy, and some sound strategy can go a long way toward strengthening a brand.  And not being afraid to take a chance - and fail - is part of the formula, too.

Cuban realizes that as his own personal stock rises, all of his business "boats" rise, too.  The better known and loved he is as a person, the stronger the fan base grows for the Mavs and his other endeavors.  As icons like Donald Trump, Jeff Bezos, Bill Gates, and Warren Buffett well know, branding and marketing go well beyond P&L sheets.  In this world, the guy behind the company can shape its brand equity all the way to the bank.

Picking Up Waitresses

I remember being at client dinners where the GM would ask the waiter or waitress, "What's your favorite station?"  There's just something about a focus group of one that seems meaningless, and frankly, I was embarrassed by having to sit through this little exercise.

But every once in a while, this "research" technique would yield a sharp, intelligent, vivacious server who just loved the client's station.  Oftentimes, he/she would rattle off all the reasons they loved the station, the morning show, the contests, and even those weekend themes.  On occasion, the GM would even give this person their business card, encouraging them to call and discuss a possible sales job.

My takeaway on this was that radio operators had to be a little desperate to be enticing an Olive Garden waitress to join the sales team.  After all, account rep jobs were in demand, with no shortage of bright and reasonably talented professionals who wanted to break into radio or move up the small-medium-large market chain.

Sadly, that's not the case anymore.  Many radio stations - even in large markets - have to use their own air to advertise sales openings and "job fairs," hoping to find reasonably intelligent candidates to sell radio time.  And more often than not, sales efforts are failing radio in markets, clusters, and stations all over the U.S.

I've come full circle on this.  We are frequently asked to put together and present basic presentations for the sales staff to help them defend Rock or Classic Rock stations.  Yet, in many cases, we're talking about heritage stations with consistently great ratings.  In situations where you'd least expect it, it's Sales 101.  Too often salespeople either don't get it or just don't have that passion for stations that are otherwise highly successful.

So, a couple weeks ago, I was in another restaurant, at another client dinner, and another waitress (from Detroit) happened to overhear our radio discussions.  After chatting with her for a few minutes, it turned out she actually had some experience in event promotion, knew the client's station very well, and was a motivated, smart, and attractive person.

I encouraged the client to give her a business card, and look forward to seeing her in an upcoming sales meeting.

Aren't we at that point where it's time to acknowledge that we need sales reps who love our stations, who are enthusiastic about our morning shows, who appreciate our special programs, who enjoy surfing our websites - and who can work with clients to help them attract customers with a great, local media outlet - our stations?  Aren't we tired of pulling great ratings and hitting our goals, only to continue falling well short of our objectives?

Maybe it's time to rethink where those sales reps are coming from - and how we find and recruit them.  People who are upbeat, "into" radio, young, and pleasant are no longer plentiful in radio station conference rooms.

The Online Race

In Mark Ramsay's Hear 2.0 blog, Mike Agovino has a very important quote:

"If we’re not making more money OFF the air than we are ON the air 10 years from now, we’re in trouble."

Mike's being generous with his timeline.  Juxtapose his prediction with the announcement that Viacom is upping its revenue goals to over $500 million for this year.  Clearly, "old media" feel the pressure to leverage more dollars from their digital activities.

Paul and I did one of those New York City "four-meetings-in-one-day" trips earlier in the year.  We visited everything from a magazine publisher to a cable network, and even an online game producer.  While these are all different businesses, the message was the same - it's critical for traditional media players to look to their online assets for revenue growth.

Of course, in order to accomplish these goals, the digital product has to be in-line with consumers' tastes.  It also has to be worth visiting.  This is the struggle that radio companies are enduring on a daily basis:  where to sink the dollars moving forward.  Given the costs of HD Radio, the digital space, and of course, the core product, there are many needy sources, all crying out for personnel and capital.

While we gear up for Summit 12 - which will tackle PPM, marketing, and technology among other things - consider taking a stroll back to last year's Summit in Dallas via our online video streaming.  I believe the companion panels headed up by Gordon Borrell and Jason Calacanis are still must-see sessions.  Each says a lot about where we are and where we need to be.

Sometimes, you just need a road map.  Or a GPS.