Monday, January 14, 2008

Can Radio Be A Growth Industry Again?

I was blog surfing and came across a very interesting blog, AVC, (this guy is in the venture capital biz and seems to be very involved with media and tech) which had a post that included this EBITDA chart from Goldman Sachs:

No surprise to anyone who has ever followed this stuff-slower growth leads to lesser valuation. So costs are cut in order to preserve profits. Slowdowns are inevitable in every industry, but the hope is that within a period of time conditions will improve and expansion will return. Will that be the case with radio? I'd like to think things will turn around, but will it be enough to arrest the trend of cuts and stagnation we have been witnessing for last few years? I have my hunches.

Many a company or industry has been left for dead only to surprise everyone with a monumental return to prominence. One obvious example is Apple which had declining sales and products appealing to a narrow segment of consumers. We know what happened next: refreshed leadership, innovation, and a little bit good luck.

Getting lucky is nice, but should not be counted on. Refreshed leadership coupled with innovation; now were talkin'!

What will be next? That's the 15x multiple question. I can tell you this, we can continue to do things as we have been doing them for decades and hang on for dear life as things move past us at warp speed or we can learn some things from those meteors passing us by.

This is hard. Our natural inclination is to do what we know to be right. But the definition of right has and will continue to change. There are still people who believe that talk radio belongs only on AM because FM is for music. You see what I mean.

What if talk and music radio were to come together? What if you couldn't research such a hybrid? And most likely you can't. There's no bigger supporter of audience research than me, however, traditional research is not likely to be sending a station down this path anytime soon. In the past (and present) we test our hypothesis and formulate a plan based on the results of the survey. But, what if?

Who has the courage to call or write me for more information on this harebrained (read: innovative) idea?

Bottom line: we can play "all the hits" and be "the classic rock station" for many years to come. The tried and true will still do OK and we as an industry do a pretty good job of programming traditional radio formats. But we would like to be a growth industry again and that is going to require some innovation.


Dan Kelley said...

Perhaps it was ahead of its time - but WLUP AM & FM/Chicago demonstrated back in the 80s that talk and music can work together.

The station combined high-profile personalities with AOR. Talk. Music.

I don't think you can view it as a format as much as a lifestyle.

HARVE ALAN said...

There have been a few over the years. You're right, it's all about lifestyle, and the format per se is incidental. Of course, structure is needed, but what I have in mind is a total departure from anything that is being done (as far as I know) today.

Anonymous said...

Article written on radio breaking free from its issues on another site just last week-

Ken Hawk said...

Radio can learn from its mistakes the same way retail learned from their own which allowed Wal-Mart to become what it turned out to be. You can only fight your competitor by competing in a smart manner. Multiconglomerates don't have to put radio out of business, but radio does have to evolve and continue changing in order to remain strong. Radio can evolve, and it will evolve. Strong community involvment needs to return to the airwaves, as well. A station must give back to the community that invests its advertising dollars on their air, and do more than the hour-long talk show on Sunday mornings.