INK TANK

Lessons From WTOP

One would think the top-billing radio station would be the top-rated station in the biggest market. Why, then, is Washington, DC, market number 9,  home to the top-billing radio station in America? BIA/Kelsey reports that all-News WTOP billed $57.2 million in 2010.

It starts with attitude. CEO Bruce Reese is quoted as telling the staff, "If you are the biggest and best radio station in town, you are only the tallest pygmy in the room. You have to compete with the big boys, NOT just other radio stations." (Reese is headed to Hubbard Radio as president and CEO from the same post at Bonneville International following Hubbard's January purchase of 17 Bonneville stations, including WTOP. That deal is expected to close in Q2.)

Second, WTOP realizes that it's not just a radio station, it's a media news brand with multiple distribution outlets. SVP/Market Manager Joel Oxley had focus groups done with all station employees and some outside experts and redefined WTOP as not just a radio station, but a digital news organization, informing and engaging as many people as possible as often as possible, across all media: FM, HD Radio, streaming audio, Facebook, Twitter, e-mail and text alerts, and the free WTOP iPhone app.

Third, DOS Matt Mills is incredibly focused and respects the format. Mills has been known to turn down business that he feels is inappropriate for an all-News station. The station also pays its highest commissions for new business from companies not currently using radio.

Fourth, WTOP is committed to the format and has designed it to succeed, hiring a newsroom filled with highly competitive people who want to win. WTOP has won nine national Edward R. Murrow Awards in the past two years, more than any other radio or TV station in the nation. And it gets sky-high ratings, both 12+ and 25-54.

WTOP has overcome the odds and won a title that should be held by a bigger-market station. Its success starts with determination to do great radio with inspired employees. It's about achieving success not through cost-cutting, but by doing radio right.

This is a great example for all of radio and an inspiration to all of us.

A Solution For Community Public Radio?

I've been on both sides of the fence about this NPR issue. My initial thoughts were somewhat balanced, but I became more enraged following the NPR sting, with other thoughts.

In both cases I received many passionate e-mails about the downside of seeing NPR defunded –- the threat to the survival of hundreds of local community voices.

In the summertime my local NPR affiliate is one of two U.S. radio signals I can receive, and it is the lifeline of that region, with multiple translators serving the community. My only gripe about that station, frankly, is that I always wished it had more local programming. It was live in the mornings up to about 9 a.m., but other than local inserts in the midst of  programming from NPR and Public Radio International, it's all national content.

Though I suspect that the best shows offered by NPR, like Car Talk, would end up syndicated by someone like PRI, which offers alternative content to many NPR stations, I also suspect the need to fill time will increase local costs. It's been stated that up to 80 percent of some local stations' funding comes from NPR and that these stations cannot support themselves.

Many of these small NPR affiliates (probably most) have no local ability to come up with enough funding to continue operations. Only the standalone stations in bigger markets can do so. What's to be done?

I don't want small-town public radio to disappear. It's clear, however that these stations are being painted with the NPR brush and won't be able to continue without that funding. But asking a Congress in budget-slashing mode to continue funding public broadcasting may not work.

Here's a radical idea. Lets let commercial radio help fund small-market noncommercial radio, with the help of the larger noncommercial markets.

I would like to see a national funding operation created whose sole purpose is to raise money for smaller community radio stations from individuals out of market. This could be operated by the National Federation of Community Radio Stations.

The concept would be simple. It would be a Red Cross for community radio, reaching out online, on mobile, and on broadcast stations. Stations would not only run spots in their local communities appealing for local support, but stations in larger markets would run ads asking listeners to help the smaller broadcasters with donations. They could tug on the heartstrings of America with spots highlighting stations on Indian reservations and other small-town scenarios and highlight these stations' value to America.

Though I am not suggesting commercial radio financially pledge support, since many stations can barely support themselves, I think it would be powerful for commercial radio stations to run ads to help noncommercial radio.

Though the comments section will probably be loaded with people who slam the idea because these people need to learn to stand on their own, many simply cannot, yet in some cases they are the ONLY radio voice in a community that has very little local economy to carry the expenses. Meanwhile, we're running public service announcements anyway, why not run some to raise money to help our brothers and sisters on the noncommercial side?

Radio plays a critical role in our communities. For those of you who live in large metro areas, it may be difficult to relate to a town so small it cannot support a local noncommercial radio station, yet if public radio is defunded, America has hundreds of them who will die unless someone offers a solution.

If the National Federation of Community Stations is willing to come up with a national funding campaign and website for donations, I'll distribute the spots via Radio Ink, and those of you wishing to help can play a role in helping small-town community radio. It seems like the right thing to do.

What Lew Should Do With Citadel

Lew Dickey is tenacious. Whether or not you like him, his company, or the decisions he makes, you have to admire the fact that he managed to get the deal done to acquire Citadel Broadcasting.

Why did it happen? First, because Lew is a masterful chess player in the financial world. He meticulously lined up his capital a year ago, patiently worked to determine his prey, then pursued it at high speed, never letting up. When most others would have given up, Lew proved his worth to his board by finding new openings when every door seemed to be shut. This deal involved some of the most masterful maneuvering ever seen in radio financial circles.

Dickey also won because the Citadel investors and board saw him as the lesser of two evils. In spite of industry grumbling about Cumulus' operating style, its approach doesn't discourage the financial community. It encourages them. Tougher operators with tighter controls mean more profits.

And we must not forget the perspective of those sitting on the Citadel board. They had other offers to choose from, but Dickey convinced them his offer was the best and he would provide the most promising future.

Of course, Farid Suleman is also a master financial politician. But one big difference is that Lew Dickey is a likable chief executive and Farid, to be frank, is not. Remember the old saying that it's easier to attract bees with honey? I know from communications with Citadel board members that they had tired of Suleman's approach to motivating employees and thought his ability to take the company further could be limited by his personal style. Dickey has plenty of personality. He's likable, articulate, and has a plan.

It's tempting to send a message to Lew Dickey asking him to take advantage of this opportunity and return the new company to radio's days of wine and roses, but that's a dream that cannot come true. We're not living in the 1980s anymore. Though we know deep in our souls that radio had more personality, more localism, more personal involvement in those days, the reality is that these giant operations can't be run that way and get the margins necessary to service their debt and make a profit for investors.

Though it would be nice to see radio's biggest operators run with the sensitivities of companies like Emmis or Bonneville/Hubbard -- groups that understand the theory of honey, entertainment value, investing in people and innovation -- operations like Clear Channel and Cumulus must squeeze out higher margins.

So I'm not naive enough to believe that Lew Dickey is going to return his company to the halcyon days of radio. It's not financially possible. But there is a huge opportunity to overcome the "Farid factor."

This is what I would consider doing if I were taking over Citadel.

1. Build a new senior team. Though Farid's top people may have taken on his personality traits to survive, it's probably best to create a new senior team that gives Citadel employees hope that the reported leadership-by-intimidation will stop. Start by looking within Citadel for untapped brilliant leadership. There is value in corporate history.

2. Do a quick fly-in with all Citadel GMs and SMs the moment you can legally do so, and listen to them for three days. Don't preach. They have valuable insights about their company, markets, and employees, from which you can learn. If nothing else, they will be grateful for a chance to be heard.

3. Rehire the greats. Yes, they were more expensive, but there were a lot of great people who built and operated great radio stations for Citadel. The giant former ABC Radio properties had superstar money-machines like Mitch Dolan, Mickey Luckoff, and others who have proved their worth.

4. Give Citadel employees time to trust again. If you pick up an abused dog in the pound, he will be skittish for a long time until he knows his new owner won't kick him.

5. Rebuild their self-esteem. Citadel has valuable people who can make valuable contributions, with good minds and experience. Give them the framework they need to operate within, then allow them the autonomy to perform. They have been praying for a white knight to rescue them.

6. Don't micro-manage. It's not possible. Give great people a chance to thrive.

7. Create the Cumulus X-prize. Big reward for great accomplishments. Radio can be better. We need to find cost-effective ways to return to great localism, a great sense of community, great personality, new revenues, and new digital alternatives. Citadel's people will invent it in an affordable way if you give them the incentive.

8. Focus on being bottom-up instead of top-down. Though every company needs directives and has to make operational decisions, Peter Drucker always told us that the best ideas come from the field. Ask what will create superior performance.

9. Don't take a "not invented at Cumulus" attitude. You may have systems internally that you're in love with, but there are great things within Citadel, and they might be better than what you have. Keep an open mind. Just because Suleman is an unpopular leader doesn't mean that there aren't many brilliant initiatives and systems within that company. For instance, some of the Citadel Media digital initiatives are among the best in the industry. Combine the best of both worlds.

10. Return the network to greatness. Invest in finding the greatest talent and offering radio great leadership. The network business is a lot like the movie business: Most of the success comes from the talent. Everything else is just bookkeeping.

11. Don't put all your eggs in one basket. I told John Hogan when he started at Clear Channel that placing all the stations under one programming team, one research company, one sales director was risky because they might be wrong. Why not run Cumulus and Citadel like two companies, with two teams, to spread your risk?

Though some suggest that Lew Dickey's takeover of Citadel is just another wolf in sheep's clothing (though the previous wolf didn't pretend to be a sheep), I am excited about the transition.

Though I do not personally know Farid Suleman aside from a casual hello at industry events, everything I've heard makes me think he's not the kind of leader I want to see controlling the lives of radio employees and creating radio content. My personal impression is that he puts his own needs before the needs of the company.

Wishing for someone "better" than Dickey is simply a waste of time. No matter what is said or believed about his operating practices, I've talked to many of his managers and employees, and I do know him personally. And I think this is a giant improvement for Citadel. What he does over the course of the next two years will tell the real story. We can only hope it's good for radio.

 

Why NPR's Implosion Means Opportunity For Commercial Radio

When can you last remember the biggest story in the consumer press being a radio story? Though the story is about NPR imploding, the bigger story should be that commercial radio is having a giant opportunity placed in its lap at a time when it's more needed than ever.

In a recent blog I shared my thoughts about NPR, which were written before the O'Keefe sting video. NPR exec Ron Schiller was offered $5 million by associates of filmmaker James O'Keefe, pretending to be members of a fictitious group they claimed was associated with the Muslim Brotherhood. In that video, Schiller says NPR doesn't need its government funding. (You can almost hear him finishing the sentence in his mind with "because we only need people like you to fund us, and we'll promote your voice on our 900 stations.")

This brief moment in time revealed the true colors of NPR management and their attitude about middle America. Schiller, who had already given notice of his resignation, departed immediately, and NPR President/CEO Vivian Schiller (no relation to Ron) was forced to resign as well. The story will no doubt result in a lot of offended Americans ending their donations to NPR. And of course it could also result in the complete and immediate defunding of NPR by the federal government.

If you were to look at the audience for NPR's long-form news, you would learn that NPR stations have a significant number of listeners who simply enjoy long-form news and have been willing, until now, to tolerate NPR's bias. But much of this audience will now feel disenfranchised, and will never support NPR again. Though Ron Schiller said NPR could get along without government money, I predict NPR will die faster than a fly next to a can of Raid.

So what's the big story for radio?

Look at the conditions. Months ago, I wrote that the spoken word will become perhaps the most important format in radio. If radio loses the music licensing battle and ends up paying 8 percent of gross revenues to the labels, only one music station per format in each market will be able to survive. The second- and third-tier music stations in each format won't be able to make what could amount to staggering royalties payments. Could it happen? Yes. This issue is still looming and not yet resolved.

Another issue is that radio has aided and abetted its enemy -- by arrogantly ignoring it. "Pandora can never do what radio can do," they say. Though I believe strongly in radio, I also believe Pandora will be the hottest IPO this year aside from Facebook, because people love it, embrace it, and listen to it. It is distributed on every smartphone and is on the way to car radios. I recently saw the BMW in-dash with Pandora, and it works flawlessly. Radio's exclusive in-car audience is being threatened.

The perception is that Pandora is hot, even if its audience numbers compared to radio are still small. But the growth patterns of Pandora and others, like Slacker and TunedIn, are impressive. If someone just wants music, why not pick Pandora, with no commercials and no personalities, and have it customized to their own taste?

In 1999, at our first Convergence conference, I stated onstage, "Radio needs to take advantage of its core strengths of localism and personality. Being a jukebox, segueing music, will only set the table for online music radio, which can do it better. Yet so many of our music stations are no longer offering deep local content, are no longer involved with and reflecting the community, and have little or no personality. That is one of our great strengths. If we don't use it, we will be enabling our new competitors." It appears this is coming true.

Another condition in this perfect storm of opportunity is the state of Talk radio. Talk has become a target of many who wish to squelch its voice. Ask any Talk radio manager about advertiser boycotts and how difficult it is to use a concept sell. This format is not only plagued with the curse of PPM, which is showing its audience to be significantly smaller than previously believed, its revenues are shrinking due to advertiser pressure. It will surely become even more of a target because there are those at the FCC, the White House, and many -- on the left and right -- who find Rush Limbaugh, Sean Hannity, Glenn Beck, Michael Savage, Ed Schultz, and others an irritant that gets in the way of their agenda. The move to silence these voices will likely come at the FCC level, especially if Congress declines to fund the agenda-driven voice of NPR. Can you say "Fairness Doctrine"?

If music audiences are being stolen by Pandora, if Talk can't survive regulation and financial boycotts, and if music stations can't survive high royalty rates, where will radio make its money?

The most profitable stations in America are News stations like WTOP in Washington, which did $51 million in revenues last year. News stations are the top billers in seven of the top 10 markets, even though they don't hold top audience shares. Furthermore, in seven out of the top 10 markets, News stations combine for about $250 million in billing. These stations are typically non-political, so they're not magnets for advertiser boycotts or FCC scrutiny. They are not targets like political Talk radio. In New York, WCBS bills about $43 million, with ratings lower than Talker WABC, which billed about $21 million as the number one Talk station on the East Coast.

With all these potentially deadly conditions, the logical solution to make big money is to stop being the number two or three FM music station in a format or a struggling AM Talker and become a News station. The problem, of course, is that news is horribly expensive to do well -- and 88 percent of all radio stations in America don't have even one news person. News commitment is essentially top-of-the-hour network feeds for many stations. A commitment to big expense in news isn't likely.

This week's NPR stories and the eventual defunding, along with the alienation of many listeners to the 900-plus NPR affiliates,  will result in a giant hole to be filled in America. As it stands, no network other than America's Radio News Network, which yesterday doubled its news segments (talk about perfect timing) offers programming even close to NPR. But the NPR uproar is a huge opportunity for radio, a giant insurance policy for struggling Talk and music stations at a time when non-political spoken word is set to prevail.

I predict that an NPR alternative in your market, offering a format to fill this gaping hole at the most important time in recent radio history, will be the most profitable radio format on the air in every market. A commitment to this direction will be golden for radio, and I see no risk or downside.

While radio continues to shrink programming, while broadcasters instruct News/Talk operations to cut the expensive programming, the time is ripe to fill the void as listeners reject NPR. The first replacement in each market will become the biggest heritage commercial station in town for the next two decades.