There's no doubt our industry has been hit hard from many sides. The days of owners seeing a sales price of 15 to 20 times cash flow has been reduced to 5 to 8 times cash flow. Still, even at those multiples, we are way ahead of typical industry sales with calculations at 1 to 2 times. To me that says radio is STILL extremely viable, useful and needed! We just have to do what needs to be done!
Let me tell you how I got there...
A few years ago I was invited by a group of investment bankers to be their guest speaker at The Metropolitan Club in New York City. If you're not familiar with the Metropolitan Club, it's an upscale, private social club, founded in 1891 by JP Morgan.
Originally for men only, The Metropolitan Club has a very strict set of house rules, including a stringent dress code that all members are required to abide by. Each room is decorated as if you were inside a King's castle, complete with opulent staircases, majestic chandeliers and 20-foot high ceilings.
As if this setting wasn't intimidating enough, I still had to speak in front of 75 bankers dressed in their thousand dollar suits and staring me down on their home turf. I had to figure out a way to de-stress the situation, relax the uptight bankers, and calm my nerves.
For starters, I created a video that played during the first portion of their lunch. It was shown on a huge screen that took up most of the front wall, with the opening scene simply showing me sleeping on the couch in my "Green Room". They had no idea as to who I was.
While the luncheon went on, and the bankers ate, I remained "asleep" on the screen, tossing and turning every now and then so it looked live. It was almost as if the bankers had some secret camera installed in my dressing room. After about 30 minutes went by, a knock is heard on my "dressing room" door, with a man from the other side yelling, "Mr. Sanders, you're on!"
Finally, I'm up! All of the banker's eyes immediately focused on the big screen. They watch me jump off the couch, turn on a radio and crank up "Money Money," a parody of Tommy James' Mony Mony, that I had custom made specifically for my investor's lunch, and was being blasted through the speakers where they were eating.
The video continued. I was moving in super, fast motion trying on different outfits, until finally, I found the perfect one! After getting dressed, I'm seen leaving my room, walking down the hall of the Metropolitan club, and finally entering the room where the luncheon is being held. Wallah! ... I'm there live!
As I entered the room to a group of cheering investors, it was clear to me that these bankers had never experienced an introduction to their guest speaker of this creative magnitude before. They were used to stuffy presenters like Forensic Auditors or Financial Theorists. Not this time! This time, they were injected with Vitamin E...for "Entertainment!" After all, isn't that what's expected of someone in the entertainment business?
Fifteen seconds into my arrival, the bankers were all still on their feet, smiling and clapping to the beat of the music being pumped out of the high-end speakers. But, before they all sat down and my presentation began, there was still one more "de-stress" item that I needed to do. I asked them to remove their ties!
Now, I know that having a banker actually remove their tie is as probable as the pope agreeing to remove his Zucchetto. However, to my surprise, after asking, most did ... Some didn't. That was OK ... My job of bringing levity and a more relaxed atmosphere had been accomplished. After all, they were relying on me to tell them about the state of the radio industry, and to squelch any concerns they had about their investments.
For bankers who didn't know much about the broadcast industry, their concerns were valid. They wanted to know how their radio investments had been impacted by threats from Satellite Radio, Pandora, Internet Radio, and others. They wanted to know if listeners were still engaged, and if radio was still a viable product. They didn't want a sales pitch. They wanted the truth about what was happening in the industry.
Unquestionably, radio has had a tremendous amount of competition over the years ... Cassette players, Walkmans, CD Players, Ipods, Iphones, Satellite radio, Internet Radio, and more. But with all of this competition, FM radio has survived and even thrived!
Listeners continue to tune in to terrestrial radio more than other competitive options for a multitude of reasons, including free and local. But let's see Satellite radio or Pandora talk about a big storm in your town, traffic congestion on your local highways, a concert that just got announced at your local venue, a local election, or raise money for a child from your city with Cancer. It just can't happen! These are some of the many reasons that, according to Edison Research, even the nearly 30 million subscribers that pay for satellite radio spend almost 40% of their in-car time with a local radio station. And then there's in-office and in-home listening!
As long as radio remains relevant, it will continue to survive and grow. With Generation Y (Millennials) and now, Generation Z growing up in the rise of the information age, the Internet and the Dot Com's, programmers must strive to educate themselves and target the hotspots for this audience.
Being stagnant or complacent will open the door for our competition to move to the foreground and for terrestrial radio to become an afterthought. Steve Jobs used Wayne Gretzky's now famous hockey quote, "I skate to where the puck is going to be, not to where it has been," as his mantra to keep Apple as a forward thinking company, a company that "owns" these new generations.
Radio should do the same, otherwise we'll find ourselves being hurt by those listeners who have found "Digital Disruption!" Think about it! Uber hurt taxi service, AirBNB's are impacting hotels, Skype has cost phone companies millions, Netflix put Blockbuster out of business and digital cameras closed Kodak's doors.
Even Jimmy Fallon has figured out a way to disrupt late night talk shows and bring excitement back to a dying breed. Who says you can't do a lip-sync contest with Tom Cruise, an "Ew" skit with Michelle Obama, or sit next to Meghan Trainor singing "All About That Bass" using classroom instruments. Radio must pay attention to the way Jimmy is shaking things up on TV and completely changing the rules for entertainment.
There's no doubt our industry has been hit hard from many sides, and the days of owners seeing a sales price of 15 to 20 times cash flow has been reduced to 5 to 8 times. Still, even at those multiples, we are way ahead of other industries that sell at 1 to 2 times cash flow. This to me says radio is STILL extremely viable, useful and needed! WE JUST HAVE TO DO WHAT NEEDS TO BE DONE!
Comments or thoughts? Contact Jeff Sanders by calling Station Domination consulting services at 704-234-8564, or by E-Mail at Sanders@StationDomination.com.
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