Back in May – Susquehanna, the company that owned the radio stations I work at (KFOG/KSAN) was sold to Cumulus Media for about 1.2 Billion.
To raise that kind of cash Cumulus had to bring in several private equity investors and let them own 75% of the company.
For 1.2 Billion, Cumulus got to control 36 radio stations in major markets like San Francisco, Dallas, Houston, Atlanta and other medium markets and about $300 million in annual income. Pretty big deal.
In part of the sale process, CEO Lew Dickey came by and gave us his best CNBC styled CEO address about the wonderfulness of radio and the radio business and – in one comment – he laughed off the internet “bust” as a challenge to radio. I’ve been bothered by that ever since. I thought it lacked a full appreciation of reality. I remember thinking that Google was no company to laugh off.
Now, just a few minutes ago, 1 website – Google, just bought another website – YouTube – for the equivalent of 1.65 Billion in stock. What they really bought was an audience – over 100 million video views per day.
In 2005 – Google made over $6 Billion in income – and over 3.5 of it was gross profit. More than any radio company.
The internet is clearly the next place to use, consume and create audio and visual entertainment. There’s a lot of money to be made – and Google is extremely well positioned to begin selling AFFORDABLE, TRACKABLE advertising into radio, AND online video.
Am I the only one for whom the idea of only buying radio transmitters is beginning to seem . . . . quaint?