In 1992, I was listening to Paul Harvey. He started talking about this tooth whitening toothpaste. It was called Rembrandt. He was three-quarters of the way through the commercial before I ever realized it was a commercial. I still don’t know if my teeth are any whiter, but I’ve been a loyal customer for 30 years.
Live endorsements are the gold standard of talk radio—a one-on-one personal endorsement from the credible host to the listener. So why do we continue to abuse our single greatest asset?
Not working for a corporate radio company for a number of years, I’ve not been micro-managed in a while, but looking around the business, we are doing everything we can to kill the best tool we have against all other forms of advertising.
Some hosts go into a studio and “record” their live commercials before every show? That makes no sense. Why pay extra for a “recorded” commercial? Why ruin the spontaneity of the moment to air a sterile commercial recorded hours earlier?
As Bill O’Reilly says, “do it LIVE!!!” Some hosts use the first person in their copy. What? You don’t work for the flooring company. You are not going to originate my mortgage, and you are certainly not going to come and fix my air conditioner. You sound like a fool.
Don’t say, “I will give you the best price”, say, “they will give you the best price.”
Some hosts read the same copy, day after day after day. Never changing, nothing original, and never incorporating the copy into the show. I’ve heard one host use the vernacular of another host’s live read from another station. The buy was canceled shortly after that doozie.
We laugh at the influencers on the internet, Selena Gomez, Cooking with Mima, and Kylie Jenner. Truth be told, they have 1/10 the talent it takes to host a 3-hour radio show, but we could learn from them. The way they sell their products, the way they use the products, the way they talk about the products.
Just like us, their likes, their followers, their clicks depend on their sponsors. Why do we treat our live sponsors with such a lack of respect? We are the original influencers, so why do we care if our: 60-second live read is 1:05 seconds?
Trust is such a big factor in the news media today. If we do our jobs correctly, we have the authenticity, and the credibility with our listeners to carry their message for years. We should respect the audience/sponsors, tell them the truth, choose only products we believe in and use, go off script, have fun, and give live commercials the same energy as the rest of the show.
Who knows, if you listen to my show, and I do it right, 30 years from now, you might order an R and R portable toilet (15-year sponsor and counting) and think of me.
McGraw Milhaven is a columnist for BNM and the morning host and program director for The Big 550, KTRS in St. Louis. He has been honored by the Missouri Senate for his dedication to improving the lives of Missouri’s citizens, and has appeared multiple times as a guest on CNN, MSNBC, and FOX News. He is originally from Long Island, New York and a graduate of the University of Nebraska-Lincoln. He can be found on Twitter @McGrawMilhaven.
After Decades of Reporting, Jim Avila is Enjoying Giving His Opinion
Throughout his amazingly diverse and essentially unparalleled career, Avila covered the White House during Obama’s second administration beginning in 2012.
Jim Avila is a man who thinks before he speaks. He measures his answers before responding.
Throughout his amazingly diverse and essentially unparalleled career, Avila covered the White House during Obama’s second administration beginning in 2012. Before that, he covered agencies in Washington D.C. for the ABC bureau, mostly assigned to international issues.
Working for WBBM television in Chicago, Avila got to know Barack Obama when he was a community organizer on the South Side.
“I did an investigative story about asbestos in a housing project for WBBM television,” Avila said. “Obama was part of the community organization that was going to change things. He had an ongoing professional relationship with Martha Allen, a reporter for the Chicago Reporter. I got to know him through her.”
That investigation stemmed from Allen and Obama peeling up a tile from a kitchen floor and sending it to a lab, which found it contained between 30 and 50 percent chrysotile asbestos. Allen’s muckraking exposé was picked up by the Tribune and Channel 2’s Walter Jacobson, creating a PR ruckus that eventually forced the Chicago Housing Authority to remove asbestos from five projects.
Avila won an Edward R. Murrow award for that investigation. In Chicago, he also covered the mayoral administrations of Harold Washington, Jane Byrne, and Richard Daley.
During his coverage of Obama, he grew to know David Axelrod, and they played basketball together. Axelrod had a long relationship with Obama, going back to his organizing days and was an advisor on his presidential campaigns.
“I knew David well,” Avila said. “He was very influential in Obama’s career and had been with him since Obama was a state senator. Ax was an advisor to some of the biggest political names in Chicago. Over the years I kept in touch with him. I was out of day-to-day news when Obama ran for president. But I kept in touch.”
After Avila returned to day-to-day news, he reconnected with Axelrod, oftentimes at White House press conferences. When asked if he thought the Obama he knew as an organizer and state senator in Illinois could be President of the United States, Avila wasn’t quite sure.
“I always knew Obama was charismatic,” Avila said. “I think the first time I really knew he was going somewhere was when he gave the keynote speech at the Democratic National Convention in 2004. I was 35, Obama was about 28 years old. You never know for sure, but I always knew he had the charisma.”
Avila said he wasn’t surprised when President Obama became the first Black elected president, he said he is still surprised a woman hasn’t been elected.
There was a huge hatred for Hilary Clinton by so many people. Avila said she would have made a solid president, but was lacking in the charisma department that both her husband and Obama possessed.
“The Republicans made Hilary a huge target, just like Nancy Pelosi,” Avila explained. “These were powerful and marked people who were targeted over and over. When people do it for a long time that enters the psyche of the American public.”
He said there is always a danger to a democracy when 30 percent of the country has gone off the deep end. “They’ll respond to that kind of rhetoric, legitimizing a hatred that was already out there,” Avila said.
Covering the White House was on Avila’s bucket list. After his family, for Avila, covering the White House during the Obama administration was the highlight of his career. The icing on the proverbial career cake. He said he still vividly remembers walking up the driveway to the White House.
“Not just the first time I did it. I felt chills every single time I went there,” Avila said. “You walk up to the secret service shack, show them what is called a hard pass. They put your stuff through the magnetometer. After that you walk up the driveway toward the press room. It was the White House, with the Marine standing outside the door. There is no experience like it. I was always aware that I was one of the lucky few. I was the first Latino correspondent to sit in the front row of the White House press room, and it has brought me to tears several times. It was one of the most gratifying and patriotic feelings I’ve ever had.”
While covering President Obama, Avila said he didn’t take it easy on him, even though he’d known him years before.
“He knew our job was to ask him the tough questions,” Avila said. “I never experienced any pushback personally. I did a one-on-one interview with him when I first became a White House correspondent. When I asked the first question, he’d say, ‘There’s Jim Avila, someone I’ve known for a long time.’
Avila said that doesn’t mean it was always a feel-good interaction. “One time I referred to him as the Deporter in Chief, and he wasn’t happy with that. He didn’t attack me. He didn’t call my bosses or anything like that.”
In 2012 while the President was in Malaysia, he warned if Syria used chemical weapons against their own people, that would be a ‘red line’ and the United States would require a U.S. military response. Syria did cross the ‘red line’ and used chemical weapons on their own people.
“We didn’t do anything about it,” Avila said. “I was the first reporter to ask the President a question on this topic. I reminded him that he said he would respond and he didn’t. I asked him how he could explain that.”
Immediately afterward, Avila said three other reporters from different networks asked the President the exact same question. President Obama was clearly frustrated, he didn’t get angry. He didn’t call them enemies of the state.
While President Obama didn’t call the press corps out on that repetitive question, someone else did.
“One of the White House traditions, when you’re overseas, is you have dinner with the White House staff,” Avila explained. “Susan Rice, who was Obama’s foreign policy advisor, was not so understanding. She told us we overdid it that day with that particular question. She said we dragged the issue to the ground, and the president had answered it. Why was it asked five times? I had no problem asking tough questions. I had no problems asking press secretary Jay Carney tough questions. Same thing with John Earnest.’
Now years later, Avila said he does think the question was asked too many times.
“Here’s the dynamic in that,” he explained. “Especially when the president is in the room the reporters want to be seen asking a tough question for their broadcast. Even if it was the same as the previous question. Susan Rice had the right to say what she did.”
Since he ended his coverage of the White House, things have changed. When the Trump administration suspended CNN reporter Jim Acosta’s press credentials, Avila said if he’d still been there, he would have stood up for Acosta’s questions.
“Jim Acosta is a friend of mine,” Avila said. “He would have had an ally. I would have held Trump’s feet to the fire. I would have objected to every lie, and corrected him after every lie he told.”
Now retired, Avila can be an average citizen, taking a position on anything he chooses and voicing it. He’s personal friends with Mark Thompson, a longtime host on KGO in San Francisco, and now the host of his YouTub show.
“He’s got lots of energy. He’s a smart guy,” Avila said of Thompson. “I mostly go on his show because I get to say what I want to. As a reporter, I never had the luxury of revealing my own thoughts. Now I have the freedom to do that.’
The life of a network correspondent is demanding, at times it can push you to a breaking point. It certainly has costs and demands you make tough choices.
“There was so much traveling and everything else, it was tough on the family,” Avila said. The pressures and the demands of the job took its toll on his marriage. He and his wife divorced.
“We continue to raise the kids together,” he said. “We go on vacation together once a year with the kids. We did our best to keep it together, but the life of a correspondent is difficult for a family. I think I’m forgiven for that. It certainly was difficult for them to not have their dad around all the time. I did most of the traveling when they were kids, one was very young. I made sure after the divorce I only lived a block away from the family house in Oak Park, Illinois.”
Avila keeps up with former colleagues and their work. This past weekend he watched Chuck Todd’s interview with former Vice President Mike Pence.
“While I’m not a big fan of Chuck Todd, and am usually critical, I felt sorry for him during the Pence interview,” Avila said. “Pence lied, made overstatements and exaggerations. I felt bad for Chuck. How often could he be expected to continue to interrupt Pence to correct him. It’s a no-win situation for an interviewer.”
Avila believes Pence could be equally as dangerous to the country as Trump.
“He made one good call by helping save our country, and he deserves some respect for that,” Avila explained. It may have pissed off Trump’s base, but he said Pence did the right thing.
“If Pence decides to run for president, I don’t think he’ll win,” Avila said. “He was complicit in so many things. His stance on abortion will end his run with 70 percent of the population who are pro-choice.”
Regarding the midterms, Avila said the youth in America, many voting for the first time, were critical in the outcome.
“The kids showed up for the midterms,” Avila said. “I talked to Mark Thompson about this on his show a couple of weeks prior to the election. He’s a pessimist and I tend to be more of an optimist. Mark said there would be the predicted ‘red wave’ in the elections. I was convinced the American people would make the right choices. I told him I thought the ‘red wave’ talk was B.S. Women were registering to vote in record numbers. I don’t know about you, but I know the women in my life don’t easily forget things. If you do something to hurt them, they’re not going to forgive that in a few months. I also think Biden made a shrewd move in forgiving some of the student debt. That brought a lot of younger voters to the Democratic side.”
Avila thinks Republicans were out of touch when it came to abortion.
“They kidded themselves and figured things would break even,” Avila said. “Especially with women, it was a big mistake. I think that and the disregard for democracy cost them the midterms.”
In regards to gun control, Avila thinks as a country we’ll come to terms with some regulations, but not immediately.
“The biggest problem is money in politics,” he said. “The money given to politicians from groups like the NRA is staggering. I’m a little more pessimistic about gun issues. As long as the Republicans control the house we won’t see much change. I do think in a couple of years we may see background checks.
I hate to sound like the old guy who tells kids to get off his lawn, but I’m not optimistic about the future of either television or radio. I only see people watching local television for news and sports. They have too many options. They can get everything streamed to them.”
Jim Cryns writes features for Barrett News Media. He has spent time in radio as a reporter for WTMJ, and has also served as an author and former writer for the Milwaukee Brewers. To touch base or pick up a copy of his book: On Story Parkway: Remembering Milwaukee County Stadium, available on Amazon, email email@example.com.
The Jeff Smulyan Interview with Special Guest Rick Cummings – Part Two
Last week we ran the first half of a two-hour interview I did with Emmis CEO Jeff Smulyan and Rick Cummings, Emmis President of Programming.
Last week we ran the first half of a two-hour interview I did with Emmis CEO Jeff Smulyan and Rick Cummings, Emmis President of Programming.
It’s remarkable to have a CEO agree to a 30-minute interview. Two hours is unheard of, but this was a unique circumstance. Jeff has permitted me to say he was isolated over a holiday weekend last Summer. I’m sure most people he knows were spending quality time with their families because each time I offered to wrap up the discussion, Jeff insisted he was having fun and said to keep going. That is what Rick Cumming probably had planned, but he is a good sport and hung in the entire two hours. Rick’s presence is a bonus you usually don’t get in an interview with Smulyan.
A transcript of a two-hour interview with such an accomplished CEO as Jeff Smulyan and a programmer as Rick Cummings is unheard of, perhaps unprecedented.
It’s only been edited for clarity. It’s lengthy but covers so many topics that it’s worth the time investment. A long holiday weekend maybe just the time to catch up on some reading
Since I’ve mentioned the holiday weekend, it is Thanksgiving, and I want to thank each of you who have been reading the columns that I’ve written for Barrett Media since the start of the Summer. I appreciate your time investment and your comments – regardless of whether you agree or disagree with me. I always enjoy hearing your thoughts
Twitter @AndyBloomCom or email firstname.lastname@example.org
I find Jeff: smart, funny, insightful, and, like the name of his company, honest. If you do, too, consider getting Jeff’s book: “Never Ride a Rollercoaster Upside Down: The Ups, Downs, and Reinvention of an Entrepreneur,” which will be released on December 6th.
Part one covers Smulyan’s discovery of radio while growing up in Indianapolis. His passion for baseball, apparent at a young age, college and why he went to law school but doesn’t practice. Stories about the beginning of his radio career, including David Letterman and how his relationship with Cummings begins, which you don’t want to skip, and how he won another station’s major contest. It includes his experience owning a Major League Baseball team, how NextRadio began Emmis’ exit from radio, and the reasons why.
If you didn’t read part one, it’s available here:
Here is part two of the Jeff Smulyan interview with special guest Rick Cummings:
Andy: Your experiences help clarify why you exited the business.
Jeff: Andy, writing the book gave me a chance to look year-by-year at the business. When you look at the growth of radio, the decline started in 2001. The Wall Street love affair with radio began in 96. Before then, the industry grew 4 to 7% a year. From 96 to 2001 it probably grew 7 to 9% a year. Then came the dot com bubble. From 2001 to 2009, it limped along at maybe 2 or 3%. Then it declined by 25 or 30% from 09 to 11 with the recession. The industry peaked at, I think, $21 billion a year. And then I think it dropped from $21 billion to $17 billion in 2009. Then from 2011 until COVID, it stayed at 16 to 17 billion, but the character changed, and there was a lot more NTR and digital. The over-the-air spot stuff, which was always the high-profit stuff, is only about 13 billion. Then COVID hit, and the whole thing dropped from 17 to 14 billion. It’s coming back now, probably to 16, but the nature of it, the profitability, the margins, it’s all changed. You look at the industry map and can see why it is where it is. I’m doing this off the top of my head, but I’m close.
Jeff: Andy, writing the book gave me a chance to look year by year at the business. When you look at the growth of radio, the decline started in 2001. We had the dot com bubble and the Wall Street love affair with radio that began in 96. For five years, the industry grew. This industry before that grew 4 to 7% a year. From 96 to 2001 it probably grew 7 to 9% a year. Then it stopped. If you look at this business from 2001 to today, 20 years later. It limped along, maybe two or three percent from 2001 to 2009. Then it declined by 25 or 30% from 09 to 11 with the recession. Then it lost – the industry peaked at, I think, $21 billion a year. And then I think it dropped from $21 billion to $17 billion in 2009. I’m doing this off the top of my head, but I’m close. Then from 2011 until COVID, it stayed at 16 to 17 billion, but the character changed, and there was a lot more NTR and digital. The over-the-air spot stuff, which was always the high-profit stuff, is only about 13 billion. Then COVID hit, and the whole thing dropped from 17 to 14 billion. It’s coming back now, probably to 16, but the nature of it, the profitability, the margins, it’s all changed. You look at the industry map and can see why it is where it is.
Rick: All of this happened in the context of Facebook now doing 60 billion a year.
Jeff: Yeah, all the local revenue went elsewhere. Facebook and Google and you’re competing with other ecosystems. You could just see the steady decline.
Rick: I would add another thing that occurred in the last ten years. One of the things that was so fun about the business was that we were the gatekeepers of music distribution and discovery. Probably, starting ten years ago, I began to notice with my kids and then everybody else’s that they weren’t listening to the radio. In the last five years, the TikToks of the world have become the music discovery vehicles. When Jacobs’ TechSurvey shows, basically, these are all radio people (listeners) they survey, and it shows that they can’t find anybody under the age of 35, that’s pretty deflating. That was one of the things that made this so much fun: breaking hit records and having the younger end of the demographics really engage with your products, and those days are gone.
Jeff: When I went to school, KHJ debuted in L.A. You couldn’t be in your car at an intersection without hearing it. When we put Power on the air In 1986, you couldn’t go down the street without hearing Power on the air. Today people still listen to the radio in their cars, but the impact on people’s lives is just gone.
Andy: You mentioned portability. The first clue I had, to use your phrase, that radio was about to receive the death knell was the loss of the nightstand. When the industry lost the nightstand, when clock radios disappeared, and iPhones took their place, I thought radio was in real trouble. That happened and should have been a wake-up call. The last frontier for this industry is the car. The dashboard is in the process of changing. You are now in a position where you can say anything you want. You don’t have to show up at those NAB or RAB meetings.
Jeff: Right. You know, those are the people that have been my friends for 50 years. You know that?
Andy: I do know that. But maybe you can speak more freely, or perhaps you’d say the same thing regardless of your position. But the dashboard is certainly the last frontier. Right? What advice to the industry do you have to protect the dashboard?
Jeff: It is the advice that I had with NextRadio. The minute we launched it, Ford came to us and said, this is your future. What you built for smartphones, we want to put in dashboards. Now, the problem was there were some pretty interesting reactions against that by some of our peers who shall remain nameless. You can figure out who really didn’t want an industry effort there for their own purposes. It’s very clear that, and again I’m going to save this for the book because when you read the whole story, it’s hilarious. It was very clear that we had to have interactive radio in the dashboard. To an extent, I think that’s what they’re doing. I think iBiquity is doing it, and they’ve taken on a lot of the stuff we did. Obviously, you had to have that. It was clear, Andy, This is one of the reasons we vacated the space because there’s probably going to be a steady erosion because it’s tougher. You get in a car today, and it has Apple CarPlay. It takes you three switches to hit the terrestrial signal.
Rick: Radio is going to have to evolve much more to spoken word and personalities, which is a tremendous hurdle when you consider what most of the big groups have done over the last 15 years, which is to voice track things and pipe things in from out of the market. The only thing radio can offer these days that is unique is personality because music delivery as a linear system is really fading fast. I think that’s going to be a very challenging hurdle. But I think the industry will survive. The industry will have to evolve much more into spoken word and personalities in local communities if it is going to remain relevant.
Jeff: That’s why the Bud Waters of the world will tell you that they have remained local and live and are more relatable to their communities. Frankly, they like competing with the big three groups that are sending (content) down the pipe and don’t even have a market manager in those places.
Andy: Let’s talk about the book, being released on December 6. Your daughter suggested you needed to write a book. Let’s start with the process. How does Jeff Smulyan write a book?
Jeff: At heart, I’ve always been a writer. I spent three summers at the Indianapolis Star. When I was bored doing religious radio, I wrote a book called The Emmis Region; that’s how the company got its name. When I got out of baseball, I wrote 800 pages about my experiences in Seattle. I have always liked writing. When Covid started, and things were slow, I just sat at my desk, and 45 days later, I had 300 pages. I sent it to a couple of friends. My nephew, my niece’s husband, is an agent and now has a production company. I said, do me a favor; read it. He said, look, you really have something. Jill Greenthal, a friend and a former Emmis investment banker, said, send it to me. She read it, and she said, you’ve got something here. She said, my husband, teaches at Harvard. He just published a book. His editor is one of the great people of all time.
You need somebody independent to look at it, tighten it up, and make suggestions. She said, here’s the template; you and the editor will come up with a presentation. You’ll do two sample chapters that you’ve cleaned up. You put an outline together with an overview of the book, and you send it off to some agents. Hopefully, you’ll get an agent, and hopefully, the agent will find a publisher. That’s what happened. My agent found a boutique publisher, Matt Holt, that distributes through Random House. I love the guy. We signed with him last fall. It took me about a year to go through the process.
Do I really want to do this? Do I not? It took me six months to sign up the editor after I’d written it. Writing, the book was cathartic. Then working with the editor, Phyllis Strong, who is just terrific. She would say, “Okay, you’ve written this; now elaborate on that, or hey, this is extraneous; it doesn’t move the story along.” The next thing I knew, we had a publisher, and they did their edits. Now the book is finally done. They said we can rush everything and get it out for the spring, but we think you ought to take your time. We’ll get it out for the fall. That’s the best bookselling season. I have no idea if anybody will like it. I got my first review, which was very positive, from Kirkus Reviews. I know that I’ve had more fun with it than anything I’ve ever done.
Andy: It wasn’t difficult?
Jeff: Every step of the process was fun; let me put it that way. The actual writing was easy because I just wrote what I thought. The editing was fun because I had a dispassionate editor who could say, “I like this, but add to this or cut this.” We’d go back and forth and tighten things up. She’s a great partner. The gratifying thing is people say, yeah, you write well, and you write funny. Who knows if that’s true or not? But that was gratifying. There have been some gratifying moments. I’m sure I’m going to have ungratifying moments.
The publisher had a copy editor, who I kid is the wizard of colons and semicolons. Everything’s got to be the right style, and he was great. He got done, and he sent me a note, saying, I love this book. I called him and said, oh, you must say that to all the girls. He said, I’ve been doing this for 40 years, and I’m telling you, I don’t like much, but I love this book. I said, here’s my question. If somebody reads this book, are they likely to tell a friend to pick it up? And he said, yeah. Because I’ve always heard that’s how books sell. So, it’s been very enjoyable. I don’t have any illusions that I’m going to sell a billion copies. The publisher asked, what’s your goal? I said I’d like to sell more than the Bible, but just the Old Testament. I have no idea if it sells three books or 200,000. But it’s been fun.
Andy: What’s in the book that’s going to surprise people?
Jeff: There will be some stories about NextRadio that will make people laugh and shock them. I think a lot of people will say, Holy shit! I sort of suspected that, but now I know it. Hopefully, the thing that will surprise people is there are a lot of funny stories about the stuff we’ve done.
Rick: I think that’s the theme that will emerge. I don’t know if it will surprise people, but I think it will delight people. Through the successes and failures, some great stories are told. That’s the key to anything, right? Whether it’s a book or a podcast, or a morning show. If you tell good stories, people will consume them.
Jeff: The other thing that will surprise people, I hope, is I think it provides an easily distillable analysis of the economics of sports, radio, TV, streaming, and podcasting that somebody could say, I never knew that. My editor said that when I went through the economics of streaming and podcasting and how sports evolved, she was blown away.
Andy: Let’s talk about the things that Emmis is doing now. And I’m not sure I know all that Emmis is doing now or which ones are active.
Jeff: Emmis has harvested cash, so Emmis is sitting on some cash. It’s no secret we have an FM that we leased to Disney/ESPN that will come back in a couple of years, and it’s pretty clear we’ll sell that. We have one more AM in New York, we have some more land here (Indianapolis). We have money in the bank, and we have three active businesses. We have Rick’s podcast business, Sounds That Brands. We have a dynamic pricing business, Digonex, which we’re quite encouraged about. And then we have a sound masking business, Lencore. Those are the three businesses. We’re looking for other things. We’re also involved like every other American in a SPAC. We may be in the final stages of something, but who knows? Those are the four active things we’re doing right now, Andy.
Andy: Do you want to elaborate on any of them?
Jeff: We like those businesses because we think there are good growth characteristics. Our job is to make them grow. We like what we see. It’s too early to tell whether any of them will be just smashing successes, but we certainly see some interesting trends there that are encouraging.
Andy: I want to come back and follow up on podcasting. You mentioned that nobody has made money, or at least broadcasters have not made money off of podcasting or streaming.
Jeff: I used to joke every time I spoke about NextRadio and streaming. My best example was what I used to say about Power 106. Our distribution cost was $60,000 a year. That was the cost of electricity to power the transmitter in L.A. For $60,000 a year, I could reach one person or 15 million people in Southern California. But if I took my transmitter down and I had to reach my audience, which is about 3 million people a week, it would cost me, and now this is outdated; it would cost me about one million dollars a year in data charges plus music licensing. And my listeners would also have to pay about $1M aggregate in data. The net result was probably $2M of total aggregate costs to reach the same people. The exact same people, with the exact same content. It’s why Pat Walsh used to say every time I take a listener from over the air to streaming, I take a 35% margin customer and make him a minus ten customer, or I lose ten percent for the exact same content to the exact same listener. Data charges are bundled now. But make no mistake, there are data costs and music licensing. It’s why, frankly, if you look at Spotify – one of our statements at Emmis is we ought to take $20 million and short Spotify. We said with our luck, the minute we shorted Spotify, Alibaba or Tencent would buy it for $100 billion, and we’d be wiped out. The reality is if you are iHeart or you are Spotify, and you rely on the economics of streaming, the math is impossible. And Apple being Apple has made it more impossible because they basically went to the music business and said, we’ll pay you $0.73 on the dollar. So Spotify at $0.65 on the dollar isn’t going to get much lower rates. The problem with that is you show me a business where 73% goes to music licensing besides all the other costs, and you make no money. Am I making any sense?
Andy: Are any of these big companies making money off of streaming?
Jeff: I don’t think so. Spotify will say one quarter, they’ll make a little, but I don’t believe that anybody has consistently made any money. By the way, that’s why Spotify went into podcasting. They said we can’t make any money paying $0.65 on the dollar for music licensing, so we’ve got to go buy podcasts.
Rick: There was a headline story, I think it was in Bloomberg, recently. The headline was something to the effect that Spotify’s $1 billion bet on podcasting has yet to show results, and investors are getting impatient. It’s logical that they moved in that direction because they needed something other than their high streaming costs. They needed content they could actually own. It made sense for them to do it. This article basically said the bet hasn’t paid off yet. Maybe it will.
Jeff: If you can get enough subscribers. The same thing is true with video. Netflix had a $250 billion valuation based on the idea that this thing will be wildly profitable. But when Netflix has a $21 billion gross and $19 billion in content costs, it is very, very tough. Even Disney, with its massive library, was projecting $5 billion of losses before they ever got to profitability on Disney Plus. It’s just really tough math, Andy. All this has transferred billions of dollars in value from distributors to consumers.
Andy: Please explain that, Jeff.
Jeff: Well, when Spotify can charge you $9.95, or I think for the version with commercials is free, and there are two or three units an hour, that is a bargain. It’s a great bargain for the consumer. But nobody’s proven that the distributor can make any money on that business.
Andy: Something has to give. Doesn’t it?
Jeff: Yeah, it does. You saw it give with Netflix losing 40% of its value. What happens is the bubble bursts. Wall Street loves what Wall Street loves, and all these things are based on “This is the Future.” This is the wave; streaming is the wave; podcasting is the wave. Then people start to look and say, you know, they’ve been doing this for ten years, and nobody’s making any money.
Rick: I think subscriptions are an elegant solution. But there’s a story every week or two about how consumers are oversubscribed and starting to lose their patience and cut back on things.
Jeff: A year ago, we talked about the brave new world of video streaming, and you had Paramount Plus, Disney Plus, Netflix, Hulu, Discovery Plus, and Peacock. The problem is all of them are saddled with massive content costs. We are seeing the same thing in sports, Andy. The first experiment is people cutting the bundles. I haven’t gotten into sports, but one anecdote sums up the entire sports business. You’ve got an 85-year-old grandmother in Pasadena who is a cable subscriber. She’s got a $100-a-month cable bill. She’s paying $10 a month for ESPN, $6 a month for the Dodgers, $4 a month for the Lakers and the Angels, $3 a month for the Kings and the Ducks and $1 for the PAC 12 Network. She’s got basically over $30 in subscriptions to sports that she’s paying as part of her cable bundle. She doesn’t know the Dodgers left Brooklyn.
The reality is all of sports in America are built on that bundle. But the idea is that sports get 100% of the consumers to pay for what 30% care about. As that bundle breaks apart with cable-nevers or cord-cutters, then that market for sports starts to decline. The best example is ESPN. At its peak, ESPN had 105 million homes paying $10 monthly for ESPN. Today, it’s 75 million homes. Well, if you want to look at ESPN’s challenges, you lose 30 million a month at ten bucks a month, and you’ve got challenges. Now the regional sports networks are saying if I used to have a million subs for Detroit Tigers baseball at $5 a month. Now I’m down to 750,000 subscribers. How do I make it up? They’re trying to go direct with streaming services. But the problem is to make the math work out, they have to charge people $20 a month. The Red Sox were the first ones. They’re charging people $30 a month. Even if you’re the world’s biggest Red Sox fan, you ain’t dying to pay 30 bucks a month.
Rick: The problem is this unbundling and cord-cutting is growing. At the same time, competition and fragmentation are increasing.
Jeff: The churn rate on all this stuff is staggering. The joke was when HBO got done with one of its series, it lost 30% of its customers. So you’ve got to hook them with something else.
Andy: That happens every time HBO loses a hit going way back. They keep having to crank out a hit before they end a hit or they’re in trouble.
Jeff: The problem is it’s very expensive, and it’s very tough to know what will be a hit.
Rick: I’m sure there have been a lot of conversations at Netflix over the past year. Oh, my God, where’s our next “Squid Games” coming from?
Andy: You’re right. They don’t know what will be a hit because I don’t think anybody there really thought “Squid Games” would become a cultural phenomenon.
Rick: Right. Absolutely. That’s right.
Jeff: The problem is they are just throwing enough stuff against the wall to try to create something that works.
Andy: For sure. Let’s come back to radio with the benefit of hindsight. Let’s create two columns. What did the industry get wrong or should have done differently? And what would you have done differently with Emmis?
Rick: I’m not sure the industry did anything wrong other than consolidation caused people to overpay from the traditional ten to 20 plus times (cash flow). To fund that, they increased spot loads from a traditional eight minutes an hour to 12, 15,16, and up.
Andy: Who’s still running only 12?
Rick: Exactly. I remember the intense debate we had inside Emmis when we decided that KSHE could go from eight minutes an hour to nine. It was a knockdown, drag-out discussion. A year later, we were all running 12. I think we hastened the fate of the industry with these oppressive spot loads. Personally, the more I’ve gotten away from radio. I put K-Earth (KRTH-FM/L.A.) on in the car the other day, not to pick on anybody. That is a magnificently programmed radio station. But the spot load is so oppressive it’s almost unlistenable. It is hard to listen to, and you see that more clearly when you’re not down in it every day. I think most consumers have seen that. I think that’s why people under the age of 40, people who have tethered cars, and people who no longer have clock radios have all moved on, and they’re increasingly moving on. You see it in the PUMM levels. Year after year, it drops another seven or eight percent. Those are people who have a choice. Every time we have another wave of new cars and more people have a choice, listening levels go down. I don’t know that there is a way to fix that. I really don’t. That’s why I increasingly think radio’s hope is a move towards spoken word and personalities that are unique and cannot be delivered by Spotify. The music delivery system is rapidly going away.
Jeff: I would add that companies grew and grew and grew. It was sort of a shell game. At the end of the day, the survivors had so much debt. iHeart had $20 billion of debt when the music stopped, and they never paid off any of it for ten years. Then they went bankrupt. They have so much debt. The only thing you do when you have massive debt levels in an industry that’s not growing is say, how do I cut my costs? Well, by cutting out all my disc jockeys or cutting out sales commissions or cutting production or centralizing everything, or cutting my real estate footprint. The problem is the more they cut; the less compelling they make the product to the consumer. You get back to what Rick said. There’s nothing local. There’s nothing compelling. The personalities are pretty much watered down or eliminated. Consolidation clearly led to excesses that the industry has never been able to escape.
Rick: By the way, if none of that had happened, I think radio would still be challenged because technology has come along and offered a better mousetrap. Let’s be blunt here: When you talk to a 20-year-old kid, and she says, I find my music on TikTok, and I have my own playlist. What do I need you guys for? Consolidation or not, that’s a really tough hurdle.
Andy: Is there anything you can say now that you couldn’t say in the past?
Jeff: Not really. We voted with our feet over the last five years. We loved it, but we felt that it wasn’t growing, and it wasn’t fun. I don’t think it was a surprise to anybody that we sold Indianapolis. Maybe it was to some people. It’s hard to be gone, but it was harder to stay.
Rick: That’s a good summation. Yeah, really hard, really hard to be gone, but even harder to stay.
Andy: Now I’m going to do stuff I save for the end. Instead of asking open-ended questions, I’m going to state opinions and then ask you to respond. I think radio, the industry royally screwed up because all the things about technology that you talk about. I think that radio should have done. We had the distribution. We had the knowledge. We had the audience. We had the brands. And we gave it all away because when we did things digital, in most cases, we had the person driving the van also in charge of the Internet. We folded jobs into other jobs instead. Instead of saying this is something new, we need somebody who understands it, and they need to be dedicated to it, and all the things that allowed us to innovate were the first things we cut. I think the industry made every possible mistake it could have made, allowing little piddly companies with no people or people working out of their basements and garages to build the companies that radio should have made. And I think that’s why. We’re struggling to earn $0.30 on a dollar on digital instead of owning it.
Jeff: Well, again, and I think you’re right, Andy, but it all gets back to the overall dynamics where the business was challenged. Everybody was looking not to invest but to save money because they had to service the debt. All the investments weren’t made. There were no Skunkworks because they were just trying to keep the wolves away from the door.
Rick: I question whether people skilled at radio have ever understood digital and had the skill set to execute it. We had a very checkered experience trying to sell digital radio. Sellers never really grasped it, with an occasional rare exception. I think there’s a lot of truth on the programming and content side too. Twenty years in, I’m not convinced that the skill set was transferable. That doesn’t mean we didn’t have a few people who got it. But we had a hell of a lot of people who didn’t get it. I continue to wonder whether the people who have historically been in radio would have that skill. As Jeff pointed out, we certainly weren’t equipped to go out and say, we may not have that skill set, but let’s hire a bunch of people who do and let’s be prepared to lose a lot of money for several years until we can build a successful digital business. Maybe some companies are, maybe Hubbard.
Jeff: We spent an awful lot of money on Emmis digital. We made a lot of investments. The verdict is still out on how much value we created.
Andy: That’s an interesting point. I wonder what the consensus will be. Did we miss the boat, or did we really not have the people? I understand your point. At that time, there wasn’t the ability to go out and hire many new people and create a whole new digital company. Emmis did as good a job at digital as any broadcast company – maybe better. In the end, you concluded, Jeff, I think, as you said, you went from a 35% margin to a minus ten margin. Maybe that’s the real answer. Maybe, I’ve been too harsh in my judgment. Maybe it really couldn’t have been done, and it needed people who were pioneers to cross the Mississippi, cross the Grand Canyon, and go to the Wild West. It is a good point. It’s one of my major criticisms of the industry, and I may have it wrong.
Rick: I don’t think we know yet. Both viewpoints have some validity. Which one prevails remains to be seen. But the view the radio industry didn’t go far enough and invest enough to do enough R&D to be a leader in the digital world or for people steeped in radio for years in some cases, decades and decades simply didn’t have that skill set. I think both of those things are possible.
Jeff: If you look at the best success in digital, part of the problem is that the Monopoly rents in digital are swooped up by companies that were the Facebooks, Googles, Amazons, and Apples. The best examples of success in radio are people like Hubbard and Townsquare. To a greater extent, they are the boiler rooms, they became local resellers of that stuff. That was a nice little business, but that was not groundbreaking digital other than boiler room sellers repackaging and adding some things for local advertisers that, in a large sense, were a lot of the dollars that went to the Facebooks anyway.
Andy: One of the other things I’m critical of is that the iHeart and the Radio.com or the Audacy apps are horrible mistakes because they killed off the local brands. I understood it was an effort to chase Facebook and Google for national dollars. But Jeff, you, and Rick will have a far better concept than me. I feel it never allowed radio companies to compete with Google, Facebook, and other national brands for dollars but effectively killed or damaged these local brands that meant so much.
Jeff: Andy, I can say it with a little more fervor than that. I will even be somewhat sympathetic. When Bob Pittman got the job, I’m certain he said to himself, “I have got to create a brand that creates the cachet with the streaming business. Then I can spin it off for $15 billion and solve a $20 billion debt problem.” I will give him credit by thinking that’s what he did initially, but he turned the company upside down to create a national brand. He not only did that, but he set a template for every one of his shiny objects. Whether it was streaming, podcasting, or music festivals, where not only did he throw a lot of money against the wall, but he used inventory on his stations every hour, which made the core product more unlistenable. If you listen to an iHeart station, you know there’s at least one minute on streaming, one minute on podcasting, and one minute on music festivals. Now in some cases, you take 15 minutes an hour and make it 18 minutes an hour. The net result is a further derogation of your core product. It sends the message to the consumer; why do I even listen to this?
There’s a reason you’ve never seen an economic analysis other than, hey, we grossed $40 million in podcasting or $70 million in streaming. Still, you haven’t seen a breakdown of the profitability of those businesses in over a decade. When you look at the net result, you harm the core product. The national brand meant nothing other than it allowed you to rent a yacht at Cannes to entertain advertisers. It did give you the ability to sell massive amounts of advertising to some national advertisers. A one-stop or one size fits all. I think the net result never helped the economic performance at all. That’s why that company has never paid any of its debt down.
Andy: I appreciate that. What do you think it’s done to the value of the local brands in local markets?
Jeff: The problem with this is that we didn’t promote the brands. Forget about Pittman and iHeart. They clearly were playing a different game. None of us promoted the brands. Everybody cut back on marketing, and everybody said, I don’t have the money to spend on research, marketing, or anything else.
Consequently, the consumer fell out of love with the product and stopped discovering it because it wasn’t in front of them. Those are all the sides of a business that declined. When was the last time you turned on the (local) news and saw an ad for a radio station? All of us are to blame for that.
Andy: If you’re king for a day, what would you do as it applies to the business? What are you going to change?
Jeff: If I could, I would change two things. I would change spot loads. The problem is everyone in the industry has a lot of debt. Let’s assume I didn’t have any debt. I would change spot loads, localize the personalities, and try to create compelling local content and market the thing.
Rick: My answer would be the same. That assumes that we have the ability to cut spot loads. Okay, we don’t have any debt. We’ve cut our spot load down by at least a third, if not by half. And we’re investing in developing personalities, which we’re pretty good at doing. We’re doing a ton of research and marketing the hell out of those personalities. We’re moving our radio stations away from just a music delivery vehicle and much more into the unique content that personalities can provide.
Andy: What are the odds that Emmis would return to radio?
Rick: Not good.
Jeff: Andy, my favorite saying in life is never say never. It’s hard to say this, but I don’t think that’s in the cards. Number one, you’re dealing with a 75-year-old guy. So actuarially, it’s not likely. But I would never say never. We love it. We always will love it. Loving it from a distance is probably where we are.
Andy: Is there anything I haven’t asked that you want to make sure that you get in?
Jeff: You haven’t asked me about USC joining the Big Ten. You’re the only person that hasn’t asked me that in the last few months.
Andy: Well, I could keep going for hours, but I have taken so much of your time. I also want to make sure that I include that everything they say about Jeff Smulyan being a nice guy is true and then some.
Jeff: And I’ve learned one thing that changed my entire life; that Cummings didn’t have a job at WSMB. That is probably the most shocking fact (laughs).
Andy: Yeah, and you should get your money back.
Rick: I did that for 41 years, and then I fucked up.
Jeff: Literally, this is everything! I would never have gone after an unemployed guy in New Orleans. Thanks for bringing it back. You know what’s funny? All kidding aside, I really did, in my mind, think that you were at WSMB, but maybe I did know that you had left SMB. I know that either way, it was a bad radio station. In spite of that, we’ve stayed together for over 40 years, and we’ve laughed together every day in all of those years. That I know.
Rick: Yes, that is for sure.
Andy: I appreciate your time.
Jeff: This was fun, Andy. I enjoyed it. It was. It was great. Thank you.
Andy Bloom is president of Andy Bloom Communications. He specializes in media training and political communications. He has programmed legendary stations including WIP, WPHT and WYSP/Philadelphia, KLSX, Los Angeles and WCCO Minneapolis. He was Vice President Programming for Emmis International, Greater Media Inc. and Coleman Research. Andy also served as communications director for Rep. Michael R. Turner, R-Ohio. He can be reached by email at email@example.com or you can follow him on Twitter @AndyBloomCom.
Should The News Be Minimized on The Holidays?
“I do wonder who is watching or listening or reading and what the return on efforting news programming on holidays really is.”
This is not by any means a new topic of discussion but I do enjoy bringing it up and batting it around because I think it’s worthy of regular consideration and deliberation. Perhaps it deserves even just a fresh batch of whining and complaining by those of us stuck in a newsroom, in front of a camera or microphone or standing out somewhere in the cold.
There’s no debate that what we do has a level of importance that fluctuates from time to time. There are countless professions that we cannot do without for even a portion of a single day. That said, working the holidays is not unfamiliar or even a question for many people out there.
I, myself have spent most of my adult life in professions where working on Thanksgiving, Christmas, the High Holidays, Independence Day among others was just part of the job. It still amazes me how many people would react in astonishment when I declined an invitation or mentioned in conversation that I was working that day.
Like they couldn’t comprehend the possibility. Must be nice.
Now, let’s be clear about this; covering a parade or a holiday festival or religious services on a particular day is not what I’m focusing on here. Imagine the Macy’s Thanksgiving Day Parade or New Year’s Eve or the 4th of July fireworks without reporters and crew coverage.
More people would actually have to go to these things.
No, I’m talking about regularly scheduled newscasts and field reports on these mornings, afternoons and evenings.
I don’t see it.
More specifically, who is measuring the need for this programming? I cannot identify sitting behind a desk (probably inside an office…what’s that like?) and concluding that there must be 4:00pm-6:30pm newscasts on Thanksgiving Day.
5am news on New Year’s Day is out and out sadism.
“Good morning and Happy New Year…here’s what’s happened in the twenty-three minutes since you went to bed.”
Yes, by all means, let’s open our presents with the soothing tones of morning drive news in the background or lounge in the living room after the two-ton turkey dinner and watch the daily rundown of criminal activity lovingly framed in holiday graphics.
Do people want to drive to Grandma’s house while listening to the latest in Tuesday’s home invasion- assault investigation, this morning’s hit and run fatality or the city council vote on funding a halfway house near the elementary school?
Actually, the inspiration for this semi-rant comes from a conversation I had with a woman I was speaking with about holiday getaway travel. She very innocently asked me why there is news on the holidays. “Who is watching…who is listening on a day like that?” I told her I really couldn’t say. Of course, this was someone who told me she didn’t even pick up a newspaper or peruse social media for a news update on any given holiday.
“On Christmas”, she said, “no news is good news.”
To a significant degree, I’m on board with that. I do wonder who is watching or listening or reading and what the return on efforting news programming on holidays really is.
This is not about those having to work although employee consideration should be part of the equation. There will always be the need to have someone in the newsroom but minimizing that requirement could never be a bad thing.
Many operations do work with reduced staff during the holidays and that’s great. Twenty-years ago the radio station group I worked for dropped most programming during the year-end holidays, simulcasting holiday music across all the stations only cutting in with station IDs, tracked greetings from staff and news updates only if necessary.
I suppose one could argue that people need to know what’s going on all the time so we are providing a necessary service but really, everything we do is on-demand whether we like it or not. Nobody is listening or watching or reading unless they make a conscious effort to do so. They have to turn the TV on and hit the channel, dial the car radio and click on the website. We have no say.
For me, somebody somewhere has to show me that there’s a need and a want for what we do on those special days and at those special times. Convince me.
In the meantime, move the turkey and stuffing closer to my side of the table and keep the cranberry sauce and yams over on your end.
And I’ll be up bright and early talking to the Black Friday shopping crowd.
Don’t get me started.
Bill Zito has devoted most of his work efforts to broadcast news since 1999. He made the career switch after serving a dozen years as a police officer on both coasts. Splitting the time between Radio and TV, he’s worked for ABC News and Fox News, News 12 New York , The Weather Channel and KIRO and KOMO in Seattle. He writes, edits and anchors for Audacy’s WTIC-AM in Hartford and lives in New England. You can find him on Twitter @BillZitoNEWS.
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