I have just returned from the eleventh annual BIA Conference in Sarasota. As always, it was very insightful and informative. The conference was very well attended by several significant industry leaders; remarkable in light of the fact that the Bayliss Roast was the same weekend.
One of the presenters, Marci Ryvicker, of Wachovia Capital Markets, gave a terrific presentation on the public radio sector. In summary, radio stocks are in the doldrums. Because radio revenue is not growing, the stocks are not growth stocks. And the discrepancy between private and public multiples isn't great enough to qualify them as value stocks. Wall Street has lost interest in the industry and only a handful of banks follow the sector. The fact is Wall Street has decreed the radio industry to be "persona non grata." Satellite radio, iPods, podcasting, etc. are all sexier, at least for now.
What if the public companies miss quarterly projections? Wall Street is telling us they really don't care. They certainly are not going to reward those that beat the estimates.
This is great news! It's an opportunity for radio to become radio again. This is the time for the "suits" to give their stations back to the General Managers so they can get back to being entrepreneurial. The corporate culture is simply not healthy for this industry. Here is an opportunity to tell our clients and Wall Street that we are going to create rate integrity. It may hurt our earnings in the short term, but now we can invest in our future. Spend some capital and create our brands and loyalty so that stations become creative again and make radio fun. Instead of importing voice-tracking, stations can become local. Where did our best news people go? According to a recent New York Times story, they're at National Public Radio because Joan Kroc recently endowed NPR with USD230 million. NPR sounds fresh again by beating other journalists, including television, to major stories. They have done this by investing in their best product, people.
We have let satellite radio have their day in the sun. Let them believe their own nonsensical definition of a subscriber; by looking at their stocks Wall Street seems to be catching on. We all know that satellite is a non-event. How long will their major shareholders, the automobile industry, be willing to fund an industry that loses 230,000 per hour, 24/7 - - 365? My guess is that the auto industry has other issues on their plate.
Our industry needs to be more proactive. We have been too passive by letting satellite hog the stage for too long. It's time for the RAB to bring in a top notch public relations firm to put our industry in a positive light. Did anyone other than the radio trades tell the world how vital and important radio was during the hurricanes?
We cannot be afraid of change and the future. We have to embrace it. If Rupert Murdoch can be comfortable with purchasing MySpace.com and Robert Wright with iVillage.com, why can't we incorporate the future as our partners as well?
One of the panelists at the Conference suggested that the RAB invite Google to join in presenting to clients. They just made a several hundred million investment in our industry. Google wants to be our partner; we should want to be theirs as well.
We cannot afford to miss this opportunity to throw off our corporate shackles to bring rate integrity and creativity back to radio. That's why private, entrepreneurial enterprises run circles around the public companies. The public companies are standing in the way of progress.
Thomas L. Bookey
Chairman & CEO
Heartland Communications Group, LLC.
Chicago
Good Morning - Gain a personal edge on today's business day. Are you reading this from a forwarded email?
