09/15/08 Playing The What If Game To Save Your Business

Those who don’t know history are destined to repeat it. 
— Edmund Burke 


Did you know that whale oil was once a giant industry in America? It was owned and dominated by two young entrepreneurs named Rockefeller. Fortunately for them, they played the what if game. What if whale oil is no longer needed to light homes? While their competitors clung to their fortunes, the Rockefeller brothers began investing in crude oil. Their what if game made them the richest men in America. Their competitors all folded. 

Have you played the what if game lately? Let’s play. 

- What if XM and Sirius try to merge? “It will never happen,” I heard from most of you. “The FCC and DOJ will prevent it.” Of course it came true. Could playing the what if game have prevented it? (And now that it has happened, how can we take advantage of it?) 

- What if the recording industry convinces Congress that radio should pay a performance tax on songs played on the air? Five years ago you probably would have said it will never happen, yet it’s gaining ground today. What impact will that have on your business? How many stations will refuse to pay the tax, and convert from music to talk? 

- What if advertisers decide that “push” commercials are no longer effective, and shift their entire budget to online advertising? If you think it can’t happen, read Veronis Suhler Stevenson’s predictions. What would you do to generate revenue? 

- What if the FCC takes broadcast spectrum away from radio stations? Can’t happen? Anything can happen when the government is involved. What if Congress decides they could generate more revenue from selling the spectrum for other use? What if they require a percentage of our revenues in return for use of the airwaves? What if they make us pay upfront? You can defend this with arguments about radio’s use of the airwaves for public service, etc., but broadband and satellite radio can accomplish the same thing. 
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- What if every car manufactured has a high-speed broadband Internet connection and access to tens of thousands of online radio stations? What if those stations provide localism, but are not owned by traditional broadcasters? What if the online component of your radio station became more important than your transmitted signal? 

- What if the government reinstates the Fairness Doctrine so that every comment uttered on talk radio has to be matched by a voice sharing the other side? How will that impact ratings and revenues? Remember: Talk radio was nothing until the Fairness Doctrine was repealed and Rush Limbaugh was spawned. 

- What if the government decides that radio should do more public service and localism? Oh, that’s right — they’re trying to do that now. What if they decide what formats are on the air, and how many of those formats can be in each market? They did just that until about 1980, and they could do it again. What if they force you to do news for an hour in the middle of each day? Or a daily show for the less privileged? Or 10 minutes of local news every half hour — but online radio does not have to? Seems silly, but it could happen. 

- What if we looked at ourselves as media companies instead of radio companies? How would we change the way we do business? Wake up, we are in the media business, not the radio business alone. 

- What if an ad tax is legislated for radio? (It’s being raised now in many states.) How will radio survive if additional taxes are levied? 

Every assumption we live under must be challenged. Though many will say, “Eric, don’t borrow trouble,” I believe the what if game can save your business from extinction. How are you investing for the future of your station or company?