Knowing Your Limits

Amidst all the news about cutbacks and layoffs, it is refreshing to see an operator do an unexpected, generous thing. I’ve always admired Emmis Broadcasting: some good friends have worked there, and they report that the company is employee-oriented and fair-minded.

I feel the same way about Cox, and perhaps the gold standard among big outfits in terms of treating people as true assets is Gannett, which, sadly, is no longer in the radio business.

In all cases, these companies have never chosen to go on a massive power-grab shopping spree, rolling up radio stations the way some of us collect twine. (Disclaimer: I am not now, nor have I ever been, a twine collector, but some of my best friends are.) Rather, these companies have clear ideas of who and what they are. They acquire stations in the same market size category—market sizes that they are familiar and comfortable with, and in which they can operate effectively and profitably.

It seems to be the case that there are two types of radio operations that don’t work very well. The first type is a company—you know who you are—that indiscriminately acquires stations in widely divergent market sizes. These are the people who, 10 years ago, were telling everybody, “Radio is radio,” but they should’ve asked me. I would’ve told them that there are actually about half a dozen different slots into which you can put radio stations, each of which constitutes essentially a separate industry. Trying to manage this hodgepodge group with a one-size-fits-all approach would never work—and it’s not.

The other group that doesn’t do very well is companies that have bought a bunch of small-market radio stations and expect to be able to manage them effectively from a distance. The hapless group managers who are responsible for the performance of a bunch of such stations is in a perpetual plate-spending mode, running from station to station, trying to prop it up, trying to keep it going.

For these companies, the problem is ineluctable economics: when you lop off the money required to service your debt, you don’t have enough left over to attract good management talent to make your job easier. And because you have to worry about myriad stations in multiple markets, you never really have time to groom the groomable.

The Telecommunications Act is a two-edged sword, to be sure. It permitted companies do things that they really shouldn’t have done, but it also permitted good operators to operate bunch of stations in the markets where they were operating anyway.

(In fairness, it should be noted that on a macro level the mega-companies legitimized our industry in the financial community, which is not entirely a bad thing.)

By the way, this very newsletter serves three distinct radio markets, but those markets do have something in common. We serve radio stations in small rated and unrated markets, lower-tier radio stations in larger markets, and any radio station that targets local business. These stations have more in common than they have differences—namely, they serve their communities from the ground level. . .are eminently responsive to listeners, advertisers and the community. . .and generally have a darn good time doing it.