Eye on the Future: Radio Economics Becoming like TV Economics and other Things to Consider

| March 18, 2013

By Walter Sabo
Sabo Media
Chairman
NEW YORK — In our strategic advisory work to CEOs we are constantly asked to deep dive into the future of media. This column will always focus on future trends and products that will lead media to goal achievement.

Radio economics becomes TV economics

The radio station of the near future will look like…a TV Station. Until 1970, most TV stations, even in the smallest towns had live on-air studios. Some of them had three full live studios. They produced, in house, local shows for many hours a day: a kid’s show, entertainment shows, cooking, dance shows.  Right now at KPIX-TV in San Francisco there are three beautiful studios, one with studio audience seating and a separate entrance for the audience. Only one, the news studio, is in use.

In the early 70s, all the local TV kids’ shows were cancelled, along with the dance, entertainment and cooking shows because it became clear that animation from Japan and off-network re-runs were cheaper and less troublesome than dealing with local production issues. Local production costs also increased as unions came knocking. TV stations took their remaining resources and poured them into news.

Dark after 10:00 am everywhere

In small and medium markets many radio stations are already “dark” after 8:00 or 10:00 am and this trend will continue.  The position of “program director” at a local TV station was eliminated or mutated into “program and promotion director” or “program and research director” as it is at Fox O&Os.

The reality is that total radio revenues are down $5 BILLION in the past five years. They will be down 1-4% this year versus last year.

Operators who have made aggressive cost cuts based on this reality are not evil. They have done what is necessary to stay on the air. Don’t blame radio’s sales effort. Blame the toad bastards who ran Lehman Brothers who began the collapse of the economy in 2008.

It’s the RETAIL economy

Radio revenue is 100% dependent upon the retail economy. In your city there is block after block of empty storefronts. The retail economy remains in a dust-bowl depression. As long as there is no commercial credit and no retail growth there will be no radio sales growth. STOP wasting your time on daily pacing reports (never useful even in the best of times) and recognize that the profound change in radio management was not deregulation but the economic collapse of 2008. Daily pacing reports are nonsense distractions from where top management energy should go: Designing radio operations that THRIVE in the new reality.  (Besides, there is so much wizardry in how and when a sale is reported to scam who gets the credit and commission you would get more accurate data from Tolkien.)

To THRIVE, resources should be deployed without romance to the past and that is what Cumulus and Clear Channel are doing.

Regardless of format, smart money will flow to a station’s capabilities to cover local news and events in a manner appropriate to the format’s audience.  During hurricane Sandy, for example, Sharon Dastur at CHR-formated Z-100 turned the station into a brilliant mirror of the information needs of New Yorkers. Best news source in the city.

Music selection adopts real time

Social media is more than LIKES. It must now be the driver for music selection. Now, “Cups” by Anna Kendrick was a hit six months ago. Amazingly the label is running ads in the trades supporting “Cups” now. The song is from the movie “Pitch Perfect” which was released six months ago. Anna performed the song on David Letterman six months ago. It was an online video phenomenon six months ago. Why is it being “worked” now?

Social media no long simply introduces and makes a song familiar to your audience. If you wait six months to add an online hit, social media may have BURNED it for you too.

Superior listener info means superior ratings

The predecessors of today’s radio CEOs marginalized the importance of research and the industry has suffered because of it. Good news, those clowns are gone and research can hit the field now. Doug Jones is a top researcher who has created a new research product. The new product allows a station to relate on a granular level with listeners on all platforms. Contact him today at Doug Jones doug@DJResearch.org

  tbugk
Walter Sabo is chairman of New York City-based consulting firm Sabo Media.  On a regular basis you will find trend reports from Sabo Media in TALKERS (
www.talkers.com) and RadioInfo (www.radioinfo.com). Walter Sabo can be reached at Walter@sabomedia.com.  Meet Walter Sabo at Talkers New York 2013 on Thursday, June 6, 2013. 

Tags: , , , , , , , , , , , , , , , , , ,

Category: Analysis