No one was ready to sign on to Entercom CEO David Field’s prediction of double-digit growth in 2010, but participants in Thursday’s Group Executives Super Session Breakfast agreed that the worst of the downturn appears to have passed.
“If David’s group is up 15%, then we’ll be up 16%,” joked Clear Channel Communications CEO Mark Mays. “We’ve definitely hit a bottom over the last couple of months,” he said, but didn’t offer a firm prediction for next year.
“I’d love to feel that next year is no worse than flat,” said ICBC (Inner City) CEO Charles Warfield, who is also Chairman of the NAB Radio Board. If that’s the case, he’s hoping to be able to push EBITDA up a bit.
GAP Broadcasting President George Laughlin is being cautious, saying he is still budgeting for flat to down 5%. With broadcasters now in budgeting for 2010, Laughlin urged people to make any tough decisions now and carry out any further necessary budget cuts in Q4 so 2010 can be nothing but positive for their radio stations and employees.
Moderator David Kennedy, CEO of Flycast, noted that new NAB President Gordon Smith needs to know what issues are of most concern to radio group heads.
“Performance Tax, Performance Tax, Performance Tax,” said Laughlin and Mays in unison. “And I would just add Performance Tax,” said Bill Stakelin, President of Regent Communications.
Mays praised the NAB staff for work already done to build Capitol Hill support for the broadcaster-backed measure which would block any performance royalty. “If we work together, we can do great things,” he said, suggesting that there was no greater surprise for the RIAA than how radio came together to fight the Performance Tax. But the fight is not over. “It is going to be a war,” Mays said.
Warfield urged attendees to meet with their local Members of Congress to explain the impact that the performance royalty payments would have on their business. “There’s a lot of misinformation being spread about our business,” he said. Warfield said the royalties are being presented as having minimal impact, which nothing could be further from the truth.
With most radio stocks in penny stock territory and financing for radio transactions extremely rare and dear, the group heads were asked what will bring capital back to radio.
“The investment community will return. It’s just a question of when they will return,” said Mays, noting that cash flow growth in the coming years will draw money back to radio.
Laughlin added that the investment community will look more favorably on the radio industry when it has its digital strategy in place. He said radio groups should be moving to bring in 10% of their revenues from digital within the next couple of years.
Other panelists agreed with the need to invest in digital, with Mays noting such efforts as the I-Heart-Radio app for Clear Channel streaming. “We have to give great localized content to consumers the way they want to receive it,” he said.
RBR/TVBR observation: We would emphasize two of the points made by the execs. Bill Stakelin was dead on that we need more feet on the street selling the value of radio to as many advertisers as possible. And we would second Charles Warfield’s complaint that radio has not spent enough to develop talent. “Talent brings people to us,” he noted. It seems some people forgot that in recent years.