Looking to Get Out?

Selling a radio station used to be the equivalent of falling off a log.  Just let a couple of brokers know and you’d have five offers before the log was cut down…

woman in denim jeans and jacket sitting beside a bullet train

Photo by Anderson Miranda on Pexels.com

Today – frankly, everything is for sale.  Putting the large groups aside for a moment, many of today’s operators are at the end of their careers.  The promise of selling to a family member or a hot shot GM just doesn’t work.  I talk to operators daily who truly don’t know what to do with their stations.  They made a good living, but the future  of the business, the decline of local retail and the onslaught of digital media has dried up the pool of potential buyers.  And of course, the sellers all want to sell at 8-10 times cash flow…but the market is at 4.5 – 6 times with healthy stations and non-existent elsewhere.

So when Sunnylands Broadcasting, with three stations in Palm Springs, CA  tried to sell their stations they found the market dead.  For several years we tried numerous strategies…selling to another under the cap group, offering financing to local employees, selling to a religious broadcaster, etc.  Nothing.

We had for some time noticed that non-com stations continued to be successful and could represent an additional 15-20% of the revenue in a market.   Working with Greg Smith and David Hartman, partners in Sunnylands, InTown Media began exploring moving the stations to a non-profit 501 c 3 organization.

Why would that make sense…and what are you thinking??

There has long been a big, fat line between commercial and non-commercial stations in the business.  Neither of us acknowledged or understood the other.  Non-Coms weren’t really radio.  They did those dumb fund raising Beg-a-Thons for money and offering clients ‘underwriting’ that were a series of words with no call to action.   And those of us on the commercial side were just greedy money changers in their eyes – playing the same 30 records and cramming lousy commercials down our listeners throats.  (Probably truth on both sides!)

But while commercial radio struggled with flat or no growth the past entire decade, stations like WNYC in New York grossed $82.3 million in 2016.  Hyper targeting  the local hip music scene in Seattle, KEXP developed a unique AAA format.  While always registering less than a 2 share in the ratings the station just completed a $12 million dollar studio renovation with a restaurant, coffee kiosk, community meeting space and a concert venue. They have some $21 million in the bank and grossed over $10.3 million last year.  It’s my back of the napkin that non-commercial radio stations take about $25 million out of the market with listener donations, grants and underwriting PLUS whatever the religious stations gross.

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KEXP performance stage – Photo by Amber Knecht.

What could we learn from these stations that would give us an exit strategy in Palm Springs?? Indeed what kind of thinking would be necessary to get listeners to pay for the audio they want to listen to…?

First of all we had to rethink audiences, ratings and how we traditionally do business. Successful local radio is about local – we’ve all heard that for decades.  But now we need to rethink local.  What audience is there that has a common passion?   A common interest?  A common community?  Just saying hello to Evanston doesn’t make a Chicago station relevant to a listener in Evanston, does it?

In Palm Springs the obvious answer was the LGBTQ community.  By some estimations the city is 50% LGBTQ.  The entire city council is gay and the community has literally hundreds of thousands of tourists every year, many from the gay community in LA.

So we developed a format around the music and lifestyle of the LGBTQ community without alienating the straight members of the audience.

We then worked with local advocates to create a 501 c 3 organization, install a board of directors and set up the organization to run the stations for the benefit of the non-profit.  Called Qchella Media, they entered an LMA with Sunnylands.  Qchella Media also has an option and first-right-of-refusal to purchase the station.

Launched the day after Christmas, KGAY 106.5 has been warmly received and sales/underwriting is accelerating quickly.  Interestingly, the talent coming out of the woodwork to sell, produce and do on-air work is like it was 1970.  They are knocking on our door…!

We see this model – moving support from strictly advertising to listener/donor support as a next generation model for radio stations.  Not all of them – but for owners looking for something that makes sense and gives them an exit or a solution for an underperforming station, this kind of broadcast asset management may make sense.

Listen to KGAY 106.5 at http://www.kgay1065.qchella.com.

Crappy Manager

Recently – one of my employees said that he’d never heard a word of criticism about me.  And I said, “Really??”“Well…actually I guess to be honest, I’ve heard some complaining and bitching from time to time…but not often!” he emphasized.

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Could this guy screw up something…?

I would hope as a manager, that people would complain.  Hopefully to me…but I know how people can grouse around the proverbial water cooler.  And for all my assumed competence, it’s been more than once I’ve been a “dummy, idiot, tool and screw up”.  And I guess I’m encouraging everyone in management to know it’s OK.

There is a rule in banking.  Unofficial, but well known, that if you don’t have some defaults you’re not working hard enough to bring in new business.  Same in the insurance business.  If there aren’t some losses then the underwriting is too stringent and the company is losing business.  I’d argue that management without making mistakes and learning from them is not good management.

Fear is a terrible motivator…but if you operate out of fear, then you’ll be so afraid of making a mistake you’ll largely be treading water and your organization will suffer.  So go ahead – break a few eggs (mixed metaphor, sorry) and have courage that the worst that can happen is you’ll screw something up.  Good managers do it all the time.

 

Genius

My skills do not really include much of a feel for marketing.  Oh…I can evaluate it – but so can my vacuum cleaner – so I tend to avoid marketing topics.  Too easy to be the dummy in the room.

BOffice Conflict Picut I couldn’t pass commenting on this truck board I  walked by last week.  The combination of Office Depot and Office Max (you’re forgiven if you missed the merger) is apparently moving business to being ‘personal’ rather than just business (I guess).  This strikes me as a really low bar campaign.

 

  1.  In what way does this new combination (presumably Office Depot if the URL is correct) make buying pencils and paper reams personal, warm, fuzzy and intimate like a warm fire on a cold winter night?
  2. The ‘cooler-than-cooler’ business dude seems to be disregarding his computer in search of what?  Maybe a personal relationship with an HP printer?  Wouldn’t you too rather be wandering the Office Depot aisles than actually working…?
  3. Does anyone care what the branding of the new organization is?  We all drop by the most convenient outlet with little awareness of any difference in the stores – certainly not enough to create any real passionate consumers.
  4. We can’t all be about relationships in marketing – as much as the genius’ in marketing would want us to.  Office Depot needs to add some other value for consumers – but a personal relationship with my office vendor?  I don’t think so.

So much marketing blows through us.  Left to right. In one ear…out the other.   Nothing sticks.  A campaign that was based on ‘who gives a shit we just merged’ at least would be both true and memorable.  But as I said, I don’t often comment on marketing campaigns.

Redemption or good deal…?

So our business has a curmodgeon commentator Jerry Del Colliano …

Jerry feels that he has it on good – even very good authority – that Lew Dickey is about to take his baby back – that he’s set to make a bid on Cumulus out of their inevitable bankruptcy.  Jerry is right more often than not…so let’s see what that might look like.

Frankly, this is a move that may be more about redemption than a realistic financial path.  Assuming this actually happens…let’s see what could come with this scenario.

1)  Dickey coming back is every employee’s worst nightmare.  Lew is a very SMART guy but his people skills border on sociopathic.  He  doesn’t get people very well…
2)  The ensuing chaos of a bankruptcy is bad enough…knowing the guy that drove you into that financial state is returning leaves NO room for light at the end of the tunnel…
3)  Are the banks really that dumb?  Yeh…probably…
4)  The debt knows that a workout is less disruptive than a straight chapter 11….it’s a known haircut.  Dickey’s plan is unknown with a lot of potential potholes.  The current CEO Mary Brenner has been to this rodeo before with Readers Digest.  Good chance she knows how to navigate the shoals….
5)  The people he’s said he’d fire make it look like a Venezuelan coup.  You get the feeling he’d put people like Mike McVay in jail if he could…:).
6)  He truly might get a great price for Cumulus, but it would be a company in complete chaos and collapse as everyone of any caliber scrambles to gets out…
7)  And as far as who was to blame for the bad morale…he WAS CEO.!  Does the guy take no responsibility?  In another interview he threw people under the bus saying “…he’d trusted the wrong folks…”.  He apparently was blameless for all that happened.
8)  On the other hand he’s a very smart guy – I have always been impressed with his strategies.  But his ability to build trust, confidence and inspire people is at the bottom of his strength’s chart.  Few people would follow him to the bar, much less the depths of radio hell…
OK…sorry. Sounds like I just vented…! And I guess I did.   Jerry brought it up…sure is interesting.

We Used to Own this Town…

Comedians…in Cars Getting Coffee…is a hit internet-only show on Crackle (it has since moved to Netflix).   Hosted by Jerry Seinfeld it’s a remarkable reminder of the power of stories.  And when Jerry picks up his favorite comedians (Jay Leno, Barack Obama among them) he takes them for a ride in a memorable classic car.  As they drive to the coffee shop they are sharing stories the entire time.  Very entertaining.

ShandlingIn one episode, Jerry picks up Gary Shandling, just before he unexpectedly  dies.  It’s maybe the most funny and poignant of the series.  They decide to visit the old Seinfeld set at the backlot at Universal Studios.  Walking through the lot they are passed by young producers, set people and script assistants who do not recognize either one of them.  I can understand missing Gary…he was sick and looked it by this time.  But to miss Jerry Seinfeld?

As they walk out of the lot into the LA sunshine, Jerry puts his arm around Gary and ruefully says, “We used to own this town…” And indeed they did…

It dawned on me in that moment that that was the magic of radio and TV that drew me to it…  and for a while, we did own ‘this town’. We were big shots.  Top 40 jocks and TV personalities were a big deal in every town.  The stream of cars that drove by our Salt Lake City studios at KCPX (KAY-PIX) on Social Hall Avenue in the 70s required the cops to control traffic.

The impact of stories on the late TV newscasts was remarkable.  Many newscasts had a 12-20 rating.  That’s a rating, not a share!   20% of the market watching one newscast EVERY night! Late news is lucky to get a 2 rating these day.

Being recognized everywhere you went.

And the power of local editorials on TV was a social power unto itself .  We – the local radio jocks, TV personalities and anchors “...owned this town“…all over the country.

It’s clear Jerry misses that time…and so do I.

Cross Ownership – just a little late!

 

Ajit Pai

This week the FCC indicated it would relax the cross ownership rules between radio/TV/Newspapers in a single market.

Futile.  Absolutely futile.  Like sending Harvey Weinstein to a sexual manners class.  Too little too late..

It could be argued that there are some synergies between news departments of the media.  Some stations around the country already do something like that – either formally or because they had grandfathered ownership under the same roof.  But how does a cluster of CHR, Country, AC radio stations synergize with a newspaper or TV station?

It was a stupid rule when it was imposed. And became an even more stupid rule with the rapid spread of internet dissemination.

Most bureaucracies operate one-generation behind the technology – the FCC is no different.   Broadcasters are just going to have to build new business models to survive.

 

Facebook will Fry You…

Oh…I’m sure you didn’t miss it.  Facebook last week disclosed they are working on publishing two feeds.  One called loosely Friends & Family.  The other Business/Publishing.

Freak out.

Businesses have been built around the implicit understanding that Facebook will distribute their content free of charge.  In one of our markets, Thurston Talk (www.thrustontalk.com) has developed a nice business creating content and adding circulation through Facebook.  Now it’s clear.  Facebook will be happy to post your content – for a price.  It’s putting millions of businesses in a vice.

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It’s unclear how the two feeds will co-mingle and whether a business can purchase distribution through the Friends & Family channel.  But you can be certain it will be for a price.

 

Frankly – good for Facebook.  We’ve all got clients who count of Facebook and think it’s just great because it’s FREE.  Well it was never really free and now it’s about to get more expensive.  And the truth is it’s been less and less effective every day.

Facebook says there are no plans to roll this out beyond the test markets.  Right.  Same thing they said about the auto-play videos earlier this year.

Lesson?  Don’t count on someone’s free platform to build your business.  It will bite you as soon as you start making money on their backs.  Not a pleasant vice to be in!