Ripped from the Radio Headlines

August 29, 2006

Couple of bits caught my eye today.

From Inside Radio

Bonneville’s going to charge $4.99 a month for access to its Washington, D.C. classical service.
This isn’t just any classical service — it’s the “VivaLaVoce.com” choral/vocal stream. It’s very popular and Bonneville says that’s the problem — “the increase in royalty and streaming expenses has outpaced our ability to support the station commercially.” Starting Friday it goes commercial-free – and subscription-only.

Who the hell wants to pay for radio . . . I mean geeze.  ,-)

I hope we’ll find out what happens to the service – does it thrive under the subscription model – or die on the vine?

I also wonder at what point along the axis does an internet stream become so successful it can no longer be supported with ads that would make it a viable AM/FM format.  Is there a hole between them – is that where Satcasters are living?   Is there a PAY RADIO space where terrestrial radio companies can/should be playing in?

Should we be investigating this BEFORE we go shooting off our mouths about how “no one should have to pay for radio”.

And this

Christina Aguilera picked to host new Clear Channel online video show 

What do you mean online video show?   Aren’t we in radio?  ,-)

Back in July I posted

New Technology levels playing fields and removes barriers .

It means Newspapers don’t need FM transmitters or FCC licences to create audio entertainment that competes with radio. Neither does TV.

It means TV networks don’t need a printing press and a distribution channel to deliver written content that competes with Newspapers. Neither does Radio.

It means Radio doesn’t need space on a cable network to get the scoop on a world premier of a music video. Neither does Newspapers.

This the future of media – and it’s open to everyone that chooses to participate.

Clear Channel gets that.  But here’s the thing.  It’s not JUST other RADIO operators that we’re competing with – it’s ANYONE with a good idea.

As Hugh McLeod said in one of his cartoons –

The World is Changing  – and the parts that aren’t no longer interest me.

Word.

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Broadcasting?

August 16, 2006

In Douglas Rushkoff’s book -“Get Back in The Box” he argues that once a company goes public it’s really not in the “widget making” business anymore- it enters into the shareholder appeasement business. It turns it’s focus AWAY from it’s core competency – and towards a completely OTHER kind of activity.

From Inside Radio today –

Emmis shareholder Noonday Asset Management is back for more – it wants a second Dutch auction.
The Farallon Capital subsidiary holds nearly 10% of Emmis’ stock and thought it might cash out from Jeff Smulyan’s sweetened buyout offer – but that never came. Now Noonday says in a 13D filing that it wants the board to consider mounting a second Dutch Auction – essentially letting the market dictate the terms of a share buyback (but still remaining public).
Here are the numbers for a possible Dutch
auction for Emmis.

Emmis did one of those last Summer and set the price at $19.25 a share after sellers indicated their preferred price and amount. But things have changed and last month Jeff Smulyan withdrew his go-private offer of $15.25 – and then watched the price of “EMMS” dribble down close to $11. Now Noonday goes to the board to force the issue. Actually – Merrill Lynch analyst Laraine Mancini says Smulyan might be open to another sweeping buyback. She says “a Dutch tender at today’s stock price is likely a good opportunity for management to buy shares at a depressed level.” She’s keeping a “buy” rating on Emmis – which was up in today’s trading.

Does this sound like “broadcasting”? Does it sound like Jeff Smulyan is focused on the product Emmis is IN BUSINESS to create?

No. He’s busy with shareholder appeasement.

Actually – it’s worse.

SHAREHOLDER implies a share HOLDER – an investor with a long term HOLDING. In the Emmis case above it’s about a big institutional investor looking for an exit OUT of the stock.

This is the huge point made by Mark Cuban that I referenced in my “Stock Buyback” post.

I know this activity isn’t limited to radio companies – but radio is the industry I’m employed in and the “everyone does it” rationale shouldn’t excuse it.


Stock Buy Backs

August 10, 2006

When Cumulus bought Susquehanna last May – my interest in public corporations naturally increased.

One fairly common issue that gets reported in radio trades – but never explained is the practice of stock buy backs. Clear Channel has been doing it all year. And Cumulus just did it in June.

In searching for info about what this means – I found a common answer – it’s supposed to be great news for shareholders.
If a company has 100,000 outstanding shares – buys back 10,000 – each of the remaining 90,000 shares now represent a larger portion than before.

Instant gratification. Kinda.

I ran into a post about the issue by Blog Maverick Mark Cuban.

In reference to Microsoft’s recent buy back, Mark lets it be known that he thinks stock buy backs is a horrible idea –

There is no better example of trying to manipulate earnings and stock prices than through the stock buyback, and there is no worse message to send to long term sharedholders than through the stock buyback.

To stock traders, the buyback makes perfect sense.

If you buy stock in the open market, you help maintain the stock price. If you buy back shares of stock, you reduce the number of shares outstanding, which in turn increases the earnings per share.

….it rewards the exact thing that should not be rewarded. It rewards people getting out of their investment, while not rewarding keeping the investment.

In other words – stock buy backs are “exit strategy” for institutional investors and insiders that want a quick return – not shareHOLDERS.  Holders largley get shafted – which is Mark’s gripe.

share buybacks are horrid for several reasons

  1. It allows companies to manipulate earnings per share. Buy back enough stock, and you will hit your Wall Street expectations.
  2. Companies will undertake risky cash management strategies to pay for the share buybacks.
  3. Companies will undertake buybacks with CEO and management incentives and bonuses in mind. Hit those numbers, earn lots of stock and options.
  4. Companies will buyback stock so that they can re-issue it to themselves and employees.In essence – they use the market as their personal and corporate piggybanks. They Buyback stock to push up earnings in hopes the stock goes up.Then they issue the stock to themselves.Then if the stock goes up, they sell the stock they awarded themselves to unsuspecting shareholders who have no idea the money they are paying for shares is going to insiders.

Stock buybacks are a very bad idea for investors and a very profitable idea for insiders and traders.

I guess this is my welcome to the world of publicly traded companies.

So everyone involved in this GAME thinks it’s a great idea.

Mark does not.  Who do you listen to?

For me . . . it’s Mark.

Why?  Simple.  Mark has “fuck you” quantities of cash.

He’s not dependent on stock buy back schemes to make his “number”.

He’s not running a company engaged in this activity – (he prefers dividend fyi) so he doesn’t have a vested interest in defending the activity the way say . . . oh I don’t know . . . a CEO doing buybacks might.

There’s lots of reasons why companies buy back stock and Mark doesn’t address them all. But that doesn’t negate his very solid points.
My only interest in this is the extent to which Radio is engaged in these activities.  And I have to admit to being disappointed.


Old to New may not have a Tipping Point

July 25, 2006

So says Robert Paterson (consultant who is responsible for helping NPR re-create it’s entire organization that I blogged about here)

In his latest entry Robert says:

Until very recently, I thought that the rules of the adoption curve or the Tipping Point would apply and that eventually everyone would “get it.”

I no longer believe this to be true.

I see no signs of any airline other than AMR going the Southwest Culture route. I see no signs of the US or Israeli military matching their asynchronous opponents. I see no signs of the Commercial media other than Murdoch making a shift to true participation.

In fact I see all the signs of the establishment of Inquisitions and the choice to fail rather than to change.

This is really the way I feel when I read or hear people almost blindly defending our old methods – or using any out of context “research” or “study” to telegraph to the general radio community “everything’s ok the way it is – go back to scheduling your 10 song sets“.
Robert continues:

I think that the context that fits best for me is that of the religious wars of the 17th century. Is not Fundementalism a response to the modern commercial world? What compromise do we see there?

So this is why I see the choice so starkly. If you stay with the old, you will inevitably be destroyed by those that use these new rules.

These new rules have emerged and are now clear. So you get it or you don’t. For those that get it, you can now compete on the basis of culture and not money. You have the clear advantage.”

Damn.

I’m not one to see things so starkly – truth is often vantage point specific.

I also think those that don’t currently “get it” – while at a disadvantage, when faced with extinction will change their tune and find enlightenment.

Sometimes we just need to get our asses kicked before we start self-defense training.  Yes I’m aware that’s often too late.  And that is human nature.
And while not without Fundamentalist proclivities – Business is all about the cash.  As long as there’s money in a system to be extracted – business will extract it until it’s empty and then move on to “discover” the next thing.

Yes I’m aware that’s also very often – too late.  Again, human nature.

The current system is at an . . . uh . . . what’s the word . . . . PRECIPICE. ,-)

The OLD ways are still throwing off WAAAY too much cash for most people responsible for collecting all the money to even THINK about changing a thing.

But – as Robert points out – new ways are emerging that are changing the old systems – and in many cased killing them off.  Like it or not there’s no stopping it.

I admit I’d feel more comfortable if I thought the radio industry as a whole will suddenly “get it”.  I know there’s lots of ground troops in radio that “get it” – so the question is really put to the commanders.


MySpace Generation will create radical change

July 20, 2006

Great, DEEP piece about MySpace from Wired

Mr. Media Elite himself – Rupert Murdoch :

“To find something comparable, you have to go back 500 years to the printing press, the birth of mass media – which, incidentally, is what really destroyed the old world of kings and aristocracies. Technology is shifting power away from the editors, the publishers, the establishment, the media elite. Now it’s the people who are taking control.”

After talking about various ways MySpace COULD make money there’s this little ditty . . .

. . . . as lucrative as those ideas may be, they’re based on an old media conception of audiences as consumers.

But MySpace members are something different: They’re participants.

The site’s greatest value isn’t connecting people to products, people to information, or eyeballs to advertisers. It’s connecting people to people.

Think for a minute how this shift – from “consumer to participant” conditions the MySpace generation and their expectations from media – particularly as they get older.

How do we think yesterday’s “gather round the radio” mass-media “message shout” playbook will fly for these people?

How about 5 years from now?

And 10?

This is OUR future – yes?  Where do we fit?
More . . .

How? Think of MySpace as an 80 million-screen multiplex where YouTube videos are always showing. Or an infinite radio dial where the DJs spin only the records they want to play.

I’m not bringing this up to suggest radio needs to be like MySpace. It can’t.

I’m bringing this up because the future of media is going to change – radically.  Even if WE don’t change a thing – kids will change it themselves.  If they can’t (if we won’t let them) – they’ll abandon it and move on to something they can control.

I bring this up because I honestly don’t know where radio (as it’s performed today) fits in this universe.

Any thoughts?


Provoking necessary conversations

July 15, 2006

Fortune magazine declares the Jack Welch management playbook dead.

I hear ya – “Ahh come’on Jeff – they’re just trying to sell magazines”.

Uh huh.

But look closer.

Fortune magazine is not outside the circumstances it reports on. It is one of MANY “properties” in a larger company’s “portfolio” of “assets” and yet there it is… speaking against the predominant business philosophy not only of OTHER companies – but of their own company as well!

Fortune’s target audience is largely business executives who by and large are presently, and for nearly 2 decades have subscribed to the very ideas about business management the magazine is now debunking.

“Is an emphasis on market share really the prime directive? Is a company’s near-term stock price – and the quarterly earnings per share that drive it – really the best measure of a CEO’s success? In what ways is managing a company to please Wall Street bad for competitiveness in the long run?”

Which inspires me to ask – How is the Radio Playbook looking?

Written around the same time Welsh took over G.E. it has dominated our thinking ever since. The media universe has undergone no less change and upheaval than the businesses G.E is engaged in.  So . . .  Do all the old radio rules still apply?

Do we engage in the necessary (in my view) questioning of the very foundational beliefs we have about the performance of radio and it’s business? Not just the little risk free private chats we all have – but publicly – out in the open.

I do see some of that happening.

Clear Channel’s foray into finding another ratings solution , and their “less is more” efforts certainly break with old conditioned behaviors and patterns.

Both have met with skepticism – but that’s an essential part of any fundamental change. As Mark Cuban wrote – “Criticism is easy to avoid“. Just do nothing.

Give the article a read – if not for the specifics the article addresses about management philosophy – than for the genuine interest the authors have in igniting conversation and debate about the the bedrock assumptions it’s readers have taken as gospel.

I admire the effort because it attempts to step out ahead of the prevailing views and seeks to guide it’s readers into new territory. A lot like good radio.


Shocked! Shocked I tell ya!

July 14, 2006

By way of Edison Media Research comes a link to this (pdf) Center for Media Research piece regarding the effect of “on demand” media.

Nineteen percent say both the ability to skip
commercials and the ability to time-shift viewing
are equally important.

However, the majority say that fitting their TV viewing into their schedule is most important.

Can we all accept that there is no “stopping” this.

On Demand is increasingly becoming the basic expectation people have about the media they consume.

Our program schedules based on “forced listening” (can we banish this phrase yet?) will no longer control people’s behavior. They’ll only control when the DEVICES show up as a proxy for their owner – to grab content and hold it until master gets around to using it when it’s convenient for THEM.

Adapting to this will require radical thinking – particularly for radio. We love to hate Arbitron – but Arbitron is also trotted out as the number one reason we can’t do _________. (insert anything remotely innovative here)

If the industry took command of the issue of On Demand – and true Portability of our content – Arbitron would be forced to catch up.  We might even find alternate ways to monetize and get credit for this material. Instead – we’re sitting around waiting for one of the slowest organizations on the free-market planet to say it’s OK to move into new worlds.

?

Meanwhile other people are designing the disruptive technologies that will affect radio’s future.  I disagree with the idea that TiVo doesn’t impact radio .  It impacts the cultural expectations people have of ALL media.

I’ve been without my ipod for a few day now. Among the issues I discussed here regarding it’s effect on my media consumption – there’s another impact.

I find myself EXPECTING to be able to fast-forward, pause and rewind live terrestrial and satellite radio. My XM unit allows me some of that – my radio does not.

I EXPECT to look at my audio device and SEE relevant info about what I’m hearing.  

These “expectations” were created by using media that allows this.
This expectation is not a fluke.

It’s not a fad.

It’ll not remain isolated to a few geeks.

It WILL spread.

It will become THE way. What are we doing about it?

BTW – Fred Jacobs has an excellent post this morning about how NPR is doing exactly this – creating the future for themselves rather than letting it HAPPEN to them. Liberating their content from transmission towers and program schedules to remain and become more RELEVANT to their listeners.