If you love and listen to radio anytime (almost anywhere) over the last 20+ years, I can almost promise that you’ve been exposed to the creative genius of Fred and Paul Jacobs. These gentlemen have been thought leaders and top level consultants to the industry since I was a little baby DJ at Central Michigan University.
Fred Jacobs founded Jacobs Media in 1983. He was inducted into the Radio Hall of Fame in 2018 and is widely credited with creating the “Classic Rock” format. Brother Paul Jacobs joined the firm in 1991; is an expert in all “rock formats” and is indeed a “sales savant”, helping radio stations “ring the cash register” for decades.
If you are or have been employed in the entertainment business, it might be you. Tens of thousands of industry employees, particularly those who work for media companies who have exposure radio properties with stock as part of the compensation plan have watched these accounts implode in recent years.
Six years ago, Audacy Inc. Chief Executive Officer David Field proclaimed the radio business was “massively undervalued”. This wildly incorrect presumption literally cost the Field family their fortune. Sadly, they are not alone. Shares of iHeart Media, the nations largest radio chain, have fallen from a peak of $27 and change to below $5, now sitting at about $2.79. The drop for the nation’s second largest radio operator Cumulus Media have not been as dramatic, but share prices here are also below the $5 threshold.
So what went wrong? Market analysts will tell us that despite projected audience growth, revenues are down since the pandemic. Technology has disrupted the business, fragmented the audience and the revenue streams and like the proverbial ‘buggy whip makers’, old school radio broadcasts and the traditional ways of consuming audio are simply less relevant in people’s lives.
Radio will always be special to me. I grew listening to the truly great ones like Paul Harvey, Don Imus, & JP McCarthy. My career began in on-air, doing sales and then moving with the technology explosion, into research. Radio lost it’s luster for me when technology became the easy replacement for talent. It was clear then and it is more obvious today, that removing talent from the mix does not improve the product. You can’t fight technology using antiquated business strategies and out dated tools. Scaling up the business to a bloated, unmanageable size simply means gaining an increasing share of a shrinking market. We don’t need ‘Larry the Liquidator’ to tell us that is a proven formula for failure.
I don’t spend much time with commercial, terrestrial radio these days unless I’m on the freeway at rush hour and need a traffic report [Thank you WWJ-AM!]. Honestly, I used to get traffic from SiriusXM, but they recently decided to drop this content. [Who do I talk to about that?] I digitized my personal music collection years ago. When I get tired of the ‘chatter’ on SxM, I punch up my own playlist, or an audio book, or a podcast and enjoy the ride. My music collection hasn’t grown much these last years but when I want new music, SxM has me covered there too- commercial free. I am not alone.
Can radio ever recover?
I’m not going to give out stock picks here but I dumped my company provided VIACOM stock years ago. If you’re looking for places in entertainment stocks to hold your nest egg, APPLE would have been a much better bet than any company heavily exposed to broadcasting. These days, you need growth companies. Innovators. Places that seek, hire and employ TALENT.
Radio will recover only when it’s leadership begins to think and function like an innovator. This key pivot requires an ability to develop a culture that rewards creativity over conformity. Old rules do not apply and must intentionally be broken. The ‘global village’ is now omni-present.
Broadcast 101: “the medium is the message”
– Marshall McLuhan
If this theory is still true, it must be re-examined in context because the tools of the trade (delivering audio content) have changed at a fundamental level. What is the true value of a broadcast license? What does a tower and a transmitter do well that can’t be done with wifi, 5G Cellular or whatever platform comes next?
Radio needs to better understand the competition and their audience. When Rich Meyer founded Mediabase/MMR, he wasn’t trying to disrupt the industry. Instead, we were dedicated to disrupting the dreaded practice of ‘paper adds’. Our mission was all about problem solving, not simply to be the last one standing. Technology innovators today don’t concern themselves with media theory. They focus on ‘making meaning’ and fabricating a new paradigm with the game solidly tilted to favor their platforms, their licensing rules and their way of thinking. ‘Scorched Earth’ isn’t just a strategy- it’s an objective.
Finally, someone in the C Suites (or someone capable of earning that corner office) needs to start asking much better questions. Tech companies are notorious for asking the impossible or unsolvable interview questions. They don’t care about the answer as much as they seek to deconstruct a candidate’s way of thinking.
How you define a problem significantly improves your ability to solve it. Content “Code Cruncher” Harry Kovsky built a lasting legacy on the principle that once you ‘separate reality from perception’, the path forward becomes clear. Radio will not survive in it’s present form. Are you bold enough to try and break the mold?
Passing Thought…
The big reason radio stations can’t just ‘bolt-on’ a podcasting division, is the misperception about what the audience wants from pre-recorded audio. Yes, they appreciate professional grade production values, but they also want to be stimulated in new ways. New stories and new story telling styles offer a glimpse into the mind of millennials and Gen Z. And they don’t conform to the conventional wisdom or navigate the traditional doors of perception.
