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RBR publisher Jim Carnegie looked at the state of the business yesterday. Here's another take from a respected industry leader.


RE: Radio not dead, but needs to change - 06-29-2006 RBR #127

The radio industry owes a huge debt of gratitude to Vic Miller and Ralph Guild for hosting the 2006 Bear Stearns/Interep Radio Symposium. The clear intent was to provide a platform for industry leaders to present investors with a solid case for their continued involvement. Vic Miller's theme-defining question for the Symposium: "Does Wall Street See a Future in Radio?".

An invitee in the audience myself, my sense is that "at the end of the day" few minds were changed. In fact, the audience began to dwindle fairly early on.

Never mind the empirical evidence confirming slow or very modest year-to-year revenue gains for basically the last 5 years, the medium's mantra for the day blamed the positive press "buzz' for the iPod and Satellite Radio as the basis for radio being "out of favor" currently with Wall Street investors. The theory that radio is merely the victim of a rash of "bad p.r." betrays an underlying sense of uncertainty as to an effective means of competing against these emerging technologies.

Perhaps more troubling, it was impossible to ignore the fact that radio's biggest player was noticeably nowhere in sight. Of course ARB was also a co-sponsor, so one had to wonder if the squabble over PPM might have been behind Clear Channel's decision.

The acrimony between top industry players over PPM and Media Audit/IPSOS Cell Phone based system represents the most recent example of the long-held notion that the radio industry is its own worst enemy. Credit must go to CBS Radio President Joel Hollander for issuing a call for unity on the critical issue of expediting the conversion to some form of electronic audience measurement methodology.

And where others only offered excuses, CBS Radio CFO Walter Berger was resolute in outlining a sound four-point, long-term strategy for accelerating annual revenue increases at CBS:

1) Further portfolio "rationalization"

2) Operating Expense Rationalization (not necessarily reduction)

3) Recognizing the value of "content" production

4) Monetize that value by "re-purposing" content for additional alternate distribution platforms

Bonneville Radio President Bruce Reese and "the most successful single station operator in the country" WBEB's Jerry Lee also scored points by underscoring how important it is for radio to differentiate itself by offering both listeners and advertisers a unique experience that simply cannot be duplicated by competing media. Of course, neither face the wrath of Wall Street Analysts for "shaving a couple points off the (operating) margins" to make the requisite additional investments in their businesses. Their publicly traded colleagues could only nod in agreement.

On the positive side, Carat Americas CEO David Verklin predicted that as much as 10% of TV's total annual revenues would be "in play" over the next few years. Verklin views radio as best positioned of all of the so-called "traditional" media to benefit from this potential windfall.

Some of us are obviously better prepared than others. I bought CBS today. Carpe Diem!

Paul W. Robinson

Emerald City Radio Partners

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