Radio pros look at the present situation

As the radio industry gathers in Philadelphia to munch cheesesteaks and seek inspiration from the spirits of Benjamin Franklin and W.C. Fields, we asked a cross-section of radio folks for their insights.

First question: Are you seeing any signs of business improvement? (Please provide some examples.)

Robert Conrad, President, WCLV, Cleveland Orchestra Broadcast Service, and Host, Weekend Radio:
Yes, we are seeing some improvement. August was a very good month. We were about 13%  above goal, beating last August by 9%. This sort of thing is fitful, though. In July we were slightly under goal; June was dismal. September is not looking wonderful.  So far we’re at about 70% of goal. Last year at this time, we were at 93% of goal for September.

Bob Neil, President & CEO, Cox Radio:
I wouldn’t say there has been a lot of improvement, but the fall has leveled off. There was an increase in auto dealer activity with “Cash For Clunkers.” Business continues to place extremely late.  I suspect businesses are looking at their marketing on a month-by-month, or even week-by-week basis.

Frank Kalil, President, Kalil & Co.:
Yes, quarterly market revenue reports are improving. Legends of the industry are returning to ownership and operation.

Natalie Swed Stone, US Director, National Radio Investment, OMD:
We are seeing a staggering amount of just in time buying—clients still not ready to commit to anything long term—flexibility is critical—last minute on-air. For national clients this is a change and was evidenced in National TV upfront as well.

Mark Heller, President and General Manager, WGBW Radio, Two Rivers, WI:
We’ve modified our plan, to concentrate on local business only, as we can’t depend on regional agencies for prompt payment.

We’re a rare duck, as we do not trade-out, at all. The two competing broadcasters in our market who do are now sitting on worthless trade-out inventory that isn’t being sold. The buyers aren’t buying as 50% of retail. Cash is king, and the sins of “barter in excess” have finally been proven out. Your trade-out mentality is as much to blame as the big consolidators are for radio’s woes today, in my opinion.

We’ve been disappointed by not only banks, but credit unions. Car dealers of all types are back on “life support” and I am expecting about 20% of used car dealers in our market to be gone in six months. We have seen some positive activity ion restaurants, bars and nightclubs, who apparently have a stable base of customers. Needing more. Insurance companies for auto, home and live locally are rewriting expired (lapsed) policies instead of prospecting for new business.

I don’t think we’ll see “real” improvement for a couple of years, but there are certain folks that are gaining market share, specifically grocery stores, cell phone carriers and fast-foot restaurants.

Larry Patrick, President, Patrick Communications:
I am seeing some improvement in business across the country, particularly with respect to some digital initiatives — texting, portals, etc. Overall, smaller markets seem to be done a bit better and are ahead of the national trends. A few new business categories also give us some glimmer of hope for the future.

One example of some interesting text business is with one of the Texas stations that I am supervising in a Trust. They did some discounted drink coupons sent via text during a local concert that were good at the concession stands. Quick, innovative and generated a few thousand dollars for the station. In some of the smaller Missouri and Iowa stations where we are minority partners, the growth of local portals displaying news, advertising and streaming video or commercial ads are doing very well.  In a few cases, we are seeing six-digit revenue streams in some very small markets.  In one Iowa town, the newspaper has folded so we are the local news and advertising source on the air and on the web.

Health care also seems to be a big area of development.  In one of our stations, again in a small market of less than 35,000 people, a new dentist in town decided to build the practice quickly and has spent $18,000 a month.  That’s a new category for us and we are aggressively looking at other health care-related businesses such as visiting nurses, elder care, mobile MRI, wellness consulting, vision testing, diabetes clinics, etc.

Rolland Johnson, Chairman and CEO, Three Eagles Companies:
We are seeing “glimmers” of light at the end of the tunnel.  Car dealers got a shot from the clunker program and moved a lot of cars.  Ag looks to be strong.  People are feeling a bit more confident.

Robert L. Heymann Jr., Director, Media Services Group — Chicago:
I believe the recent purchases by Jeff Wilks in Denver and Larry Wilson in Portland are examples of excellent broadcasters who see great value in purchasing stations at this time.

Mary Quass, President & CEO, NRG Media LLC:
As much as I wish they were there, no real concrete signs…just a lot of wishful thinking!

Dick Kozacko, Kozacko Media Services:
Most stations in small and medium markets have been running behind 2008 revenue.  But, I am seeing some individual cases of where stations in 2009 have started to turn the corner and are now running ahead.  However, it's important to recognize that one has to compare apples with apples and 2008 did have some interesting factors to consider.
 
I know of one Pennsylvania owner who had very strong February, March and April of 2008 because of the heavy political advertising he received.  As one may recall, there were primary contests in both the Democrat and Republican party for President at that time and Pennsylvania was a state that was considered pivotal in the primary election and then even in the general election in November.  So, it was difficult in 2009 to beat these same months in 2008 because of the impact of non-recurring political advertising.  Now that the political advertising has gone, we're seeing months, as example, June, where 2009 revenue is higher than what occurred in June, 2008.
 
We have also seen some local banks get involved in broadcast station financing.  Many of the larger financial sources have simply gone out of the broadcasting business, so money is extremely difficult to come by. But, if a buyer can designate a local bank that is active in the community, there's very good odds that the bank may also be a major advertiser on the station and the employees, listeners. This can be especially true if the station has been locally owned or if the new owners will be active as local owners in the community, as opposed to absentee principals.  Banks still do not  know radio, so a major task is "educating" the bank about the broadcasting field.  But, if the station has a good record of local community service and decent financials, some local banks will consider it as the type of business activity for potential financing.  Of course, expect that the buyer is going to have to be able to make a decent financial commitment, as well.

Kay Olin, Local Focus Radio:
The recent jump in planning activity and the increased point levels being planned over 2008 are very encouraging.  They indicate improving confidence and returning ad budgets. Also the arrival of  issue spending and anticipated political budgets will help build recovery .  Political and issue will typically give us double digit growth based on increased billing and the pressure that they put on the spot inventory.  Increased opportunity to monetize all station assets beyond spot will play big in what still appears to be a long recovery.  

John B. Tupper, Kepper, Tupper and Company:
The decline appears to be lessening.

Eileen Decker, President/Sales, Dial Global:
We are seeing increased demand especially with retail.  This is a bifurcated market – there is demand against the money demos – AD18-54 and WM 25-54 along with demand on  top-ranked RADAR inventory and heavy top market delivering networks and DG performs well in these categories, not all Network companies can make this same claim.  Endorsement radio with high-profile program hosts are also in demand, as are opportunities for product integration inside programs.

John Pierce, President, John Pierce & Co.:
I am seeing signs of business improvement, however small as it is. This is based on our call flow and finally even a few small deals in AM & FM stations that we are handling are getting financed. That is to say, I also have been in touch with some of the larger company sales mangers that say their business is holding and may even have, in some markets, a little more than a humble but a small increase.

Bob Struble, President & CEO, iBiquity:
For iBiquity and HD Radio technology, it has really been a tale of two cities. On the consumer side, we are seeing fantastic momentum: we’ve more than doubled receiver sales thus far in 2009 over 2008. That has been driven by some great progress in automotive -13 automakers have launched or announced plans to launch HD Radio technology on more than 70 vehicle lines. And it’s been helped by the launch of new portable devices, especially the Best Buy Insignia branded portable radio and Microsoft’s Zune HD.

On the broadcast side, we have not seen any real uptick in the metric we watch most closely, the number of stations upgrading to HD Radio broadcasting. Stations are still upgrading, just at a slower pace since about mid-2008, which is tied to the pullback in radio station’s capital budgets driven by the industry’s revenue difficulties. We are however, very encouraged by the wide range of programming and unique partnership that are emerging in the industry.  As example, the Dallas Cowboys partnered with CBS Radio to create a dedicated 24x7 Cowboys channel on 105.3 HD3 in Dallas. This is a trend that we see continuing that should open up new revenue streams for broadcasters through sponsorship and traditional spot sales.

Daniel Graves, Managing Director, CobbCorp LLC:
It is a mixed bag for our clients.  In general we are seeing/saw total revenues for 1Q09 off mid 30s, 2Q09 mid 20s, 3Q09 20ish, but 4th quarter is way off (over 50% in some cases at this point).

I wouldn’t say the improvement during the year was all business improvement, probably just as much that there are better comps from 2008.

At the same time, saying 4thQ is way off may be more a function of late booking and late ad budget commitment than such a drastic fall off.

We work in other businesses as well, such as college sports marketing, which run July to June, and these areas are showing some strength for the Late Fall Football bookings and the Winter B-Ball sales season.

So, it depends.

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