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SKILLS AND STRATEGY
How vital is the smart speaker to the continued importance of AM and FM radio to the American consumer? We investigate by chatting with Pat Higbie of Xapp Media and Steve Goldstein of Amplifi Media.
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THE MELTING ICEBERG
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THE IMPORTANCE OF ELDERS
Brokers and D.C. attorneys chime in on the volume of radio transactions we can expect in 2019.
The 1970s are beloved by many, including those who came of age in the Nixon years and the era of Grease and gas shortages. But are marketers forgetting about the power of the 55+ audience? Not in Buffalo.
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A BIGGER PLAYING FIELD
14 A SALES BOOST THAT’S SONICALLY SOUND
Getting more out of an advertisement is more important than ever for clients and stations alike. Guess what? There’s an app for that. We talk to the founder of SONAD, a smartphone tool that can deliver bonus materials to listeners with the push of a button and a data connection. Radio + Television Business Report STREAMLINE PUBLISHING Chairman: Eric Rhoads Publisher: Deborah Parenti Editor-in-Chief: Adam R Jacobson Director of Administration: April McLynn 331 SE Mizner Blvd. Boca Raton, FL, 33432 Phone: 561-655-8778 www.rbr.com Twitter: @rbrtvbr
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On Friday, Nov. 17, 2017, a transformational combination of some of the nation’s greatest AM and FM stations was completed. CBS Radio was no longer a languishing, underappreciated unit of a company rife with issues, including sexual harassment charges against its CEO and a fight against its controlling shareholder to prevent a reunification of CBS Corporation and Viacom. It was now a part of Entercom, and the broadcast media industry cheered. A charismatic leader replete with Wall Street experience, David Field was now, to some, crowned as the man needed to jump-start a sleeping giant. But is David Field the man the industry so desperately needs? Perhaps that’s not the proper question to ask. Rather, is the industry asking too much of Field? Is Wall Street seeking something immediately positive for a stock that as of late August sat below $8, and bears a year-end target estimate of $11.33? Are know-it-all consultants with plenty of opinions to share being hypercritical over a lack of an immediate turnaround for some former CBS Radio stations? It was with this mindset that RBR+TVBR Editor-in-Chief Adam R Jacobson spoke one-on-one with Field. The conversation came after the dust settled following a disappointing Q1 2018 report, which led investors to sell off the company’s shares. By mid-June, market observers were calling Entercom stock a great value. At the time of Field’s conversation with Jacobson, Entercom had just responded to a $5 million lawsuit including such salacious charges as fraudulent inducement, breach of fiduciary responsibility and misappropriation of trade secrets, filed by US Traffic Network (USTN). On August 24, USTN began winding down its radio operations.
No. 1 reach medium in the U.S., and we know that we are the best at activating ROI. But the medium has lagged, and as advertisers reallocate their spending and look at challenged media all around us, radio has emerged as the strongest value proposition of media today.” The phrase “challenged media” is poignant. Just what is Field talking about? Digital media, and questions regarding metrics, advertiser verification and ROI in an era of “fake news.” While Facebook is in no danger of seeing a substantial loss in advertising dollars in the coming months, Field believes the negative sentiment toward digital media gives radio a big opportunity to bring in new advertisers and increase current budgets. “We, with the scale we now have, are in a position to do a number of things to attempt to capitalize on that, and promote radio,” Field says. As such, the radio industry should strive to work with some of the nation’s largest advertisers directly, in an effort to drive activity. Field points to Procter & Gamble Co. and its commitment to radio. “It’s starting to happen,” he notes. “It’s a situation where they didn’t spend anything on radio two years ago and are now a major advertiser. Others are following. The value proposition of radio is growing.” It’s not just “radio” that has Field excited. Audio is booming, and there is excitement about all forms of non-visual content. The emergence of smart speakers has fueled this. “It is one of the most important new devices,” Field believes.
THE CHOICE CHALLENGE From Dayton to Daytona Beach and from Manhattan to Mexico City, we live in a world where more choices than ever exist for audio entertainment. As such, radio companies are more challenged than ever to make their stations a preferred choice for the consumer. How does Entercom plan to rise above all of those options? Presenting to the consumer in each of its markets content that will outweigh everything else is perhaps an overgeneralization concerning what Field and his team seek to accomplish. “We are having great success with our broadcast radio stations and have seen significant growth in our ratings in the last six months,” Field says. “We are also making a big push behind Radio.com by taking advantage of our position as the No. 1 creator of local audio content.” Meanwhile, Entercom is excited to be “the No. 2 podcaster” through its investment in Cadence13 — placing just behind NPR. That’s nice, but it is still radio that is driving Field, and Entercom, into 2019 and beyond. “We are very bullish on audio, and on broadcast radio. What makes us distinctive is that we
“We are very bullish on audio, and on broadcast radio. What makes us distinctive is that we believe we are driving the best premium local content.” Where is Entercom truly headed? A new peak is certainly in the company’s future. It’s fitting for Field, who is an accomplished mountain hiker, as he’s let the world know by way of his featured Twitter photo. With Field’s passion, enthusiasm and determination driving Entercom, what can be said about the connection between his hiking excursions and his path to making Entercom the solid No. 2 operator in radio, ahead of a reenergized Cumulus Media? Further, what can be said about the Entercom “philosophy” on the power of radio, and what Wall Street investors should truly understand about where the company stands in September 2018? “There are two levels to the question,” Field says. “Radio is the most undervalued and underappreciated medium in the U.S. It is the
believe we are driving the best premium local content.” It is at this point in the conversation that Field notes Entercom’s “unrivaled position in sports, and news, and amazing iconic music brands, and new brands we are launching.” Within hours of Entercom’s closing of its CBS Radio acquisition, format changes in three top markets were seen. Following the flips of WJMK-FM in Chicago to Classic Hip-Hop and both KVIL-FM in Dallas and WBMP-FM in Dallas to Alternative, Entercom announced that it will implement three new business policies “which better reflect radio’s strong value proposition as America’s No. 1 reach medium and Entercom’s position as the leading provider of live, original, local audio content.” These policies, Entercom said, will also enable it “to provide greater value for FA L L 2 0 1 8 · R B R . C O M · 3
“The great AM stations in the U.S., for the most part, are doing very, very well, because it comes down to content.” advertisers while improving the listener experience.” The plans include reducing commercial ad inventory by 5%. This, Entercom says, will “improve the listener experience and increase the entertainment-to-ad ratio for Entercom’s advertising partners.” Additionally, Entercom will prohibit cash infusion advertising deals that the company views “as a poor business practice and inconsistent with its strategic goals.” Furthermore, Entercom is committed to eliminating future sales of advertising with spot resellers, “which like cash infusion deals, the company views as a poor business practice and inconsistent with its strategic goals.” With Field in full cheerleader mode, an observation was presented to him for response: In the opinion of RBR+TVBR, radio as a whole has done a poor job of promoting itself. Outdoor advertising for radio stations is rare, aside from an iHeartMedia station using a Clear Channel Outdoor-owned billboard. A TV commercial for a radio station is something not seen in ages. Should that change? “I know that we are promoting our stations across the country,” Field says, disagreeing with the premise that radio is not promoting itself properly. “When 93% of the listening public listens to the radio each week, that speaks for itself,” he says. The problem is that radio has never promoted itself to the business community over the years. “We have made that a priority in our company,” says Field, “and have and will continue to place major national advertising directly at the advertising community and its clients, so that they understand the power of radio in 2018.” Indeed, Entercom has stood alone in using some of the 4 · R B R . C O M · FA L L 2 0 1 8
nation’s biggest B2B and B2C business media to reach decisionmakers at the nation’s top companies.
A SMART MOVE, BUT IS YOUTH ON BOARD? As noted across the RBR+TVBR Fall 2018 Report, the smart speaker is being heralded as a great way for radio to recapture the home. But shouldn’t broadcasters be asking themselves why they lost the home in the first place — and if the consumer is ready to welcome the station back via a smart speaker? Field was asked for his thoughts, and whether he thinks putting a station’s stream on a smart home device is just one part of a much bigger plan. “I can only speak to our company, but it is probably true of most — we have a great lineup of podcasts, and our brands, of course, do so much more,” Field says. “We absolutely are continuing to innovate and continue to engage.” Field again brings up the often-repeated statistic that 93% of the listening public is exposed to radio each week. But this statistic raises questions. If an individual listens to one local radio station for 30 minutes on a Sunday at 11am, that’s radio listening the industry can cheer about? A personal story was then shared with Field by Jacobson. “My friends under 40 think I am nuts because I cover the ‘radio business,’” Jacobson reveals. “They don’t listen to the radio. Ever. Are they forever lost? What about my high school-aged nephew and niece, who use Spotify and YouTube and don’t consume radio? What can Entercom, or other radio companies, do to bring them to the party?” How did Field respond? “Maybe you need to make some new friends.”
Field, for a third time, went back to Nielsen data to support his point. digital media and TV business. But he did point to the acquisition “The data tell us that over 90% of millennials listen to radio of WBEB-FM in Philadelphia from Jerry Lee Radio. every single week,” he says. “Go to any Alternative, Urban or CHR RADIO’S ONLINE HOME station’s concerts — tens of thousands of millennials passionate about the artists and about these radio stations are in attendance. One significant part of Entercom’s future riches is its Radio.com We absolutely need to make sure that we are targeting younger audio streaming portal, acquired with the CBS Radio stations. Field’s audiences with our brands, and I think the launch of Alt 92-3 and desire is to make Radio.com as widely known as iHeartRadio, or per‘Alt’ stations in Dallas-Fort Worth and in Orlando — and in Miami haps TuneIn — a popular app Entercom has ceased doing business not too long ago — are indications that we are focused on deliverwith. Instead, it wants consumers to use a reborn portal and app ing content to younger audiences.” that is light years ahead of when CBS had it just one year ago. It’s no secret that Field loves much of the music played on “We are fully compatible as a preferred provider with Amazon the “Alt” stations that have been on the air for some 10 months. Alexa — you can listen to any Entercom station on that platform,” Orlando is a laggard; Miami is seeing more success in recent Field notes. What about other relationships? “We will be making months. It is a certainty that some level of research went into the sure that Radio.com is fairly ubiquitous.” “Alt” format changes in the Florida markets and in both Dallas and What’s his vision for Radio.com? “We start with the premise New York, and that the calls for change weren’t based on his perthat nobody in the country has better original content,” he says. sonal liking of these formats. Yet having a format champion at the Then there’s the name “radio” for what broadcasters such as top is certainly a plus for all involved with Alternative radio. Entercom do. With some arguing that broadcasters are now in the There’s also Entercom’s passion for sports. With Mike Dee as “audio” business if they own radio stations, does the Radio.com President of “Entercom Sports” after stints at the San Diego brand only reinforce “old media”? Padres and Miami Dolphins, the company has — largely thanks “Frankly, I don’t get caught up in that,” Field responds. “They to CBS Radio stations it now owns — a stable of Sports Talkers are both great.”
“The data tell us that over 90% of millennials listen to radio every single week. Go to any Alternative, Urban or CHR station’s concerts — tens of thousands of millennials passionate about the artists and about these radio stations are in attendance. We absolutely need to make sure that we are targeting younger audiences with our brands.” ranging from WFAN-AM in New York to the recently launched Field was also asked about the future of AM radio. At some KWFN-FM “The Fan” in San Diego. point, won’t the AM band become irrelevant, thanks to technolAs of August 2018, Entercom stations are home to 45 pro teams, ogy and the marching forward of time? “The great AM stations in with dozens of colleges linked to the company’s Sports outlets. the U.S., for the most part, are doing very, very well, because it Again, having a leader who loves a format helps. But Field is comes down to content. You can thrive. We augment the distribuclear that Entercom’s team of local and national format leaders tion of these stations over other platforms, and that’s great, but and in-market management are the ones who are carrying out people will seek out great content.” the growth plans he’s signed off on and seeks to achieve. Now that Entercom has a huge platform of stations in some “We have built an outstanding leadership team all across the cool markets, does one market stand out from another as a country,” Field says. “It is a big team of really passionate, really “favorite”? As RBR+TVBR is based in South Florida, recommendatalented people who love radio, and audio and entertainment. tions on some great places to eat and to stay in Miami were preWe are so blessed of being in this business, and you think of the sented to Field. excitement of being in this business in 2018 … it is exciting.” “Miami is awesome, and we are blessed to be in lots of awesome With that, Field expects Entercom to see “significant secondplaces,” Field says. A new, consolidated facility for Entercom/ half acceleration.” Miami was announced in January 2017. It boasts 15,000 feet of Philadelphia, Detroit and Charlotte were Entercom’s strongestspace and is located in an up-and-coming area of Miami’s northperforming markets in Q1 2018. Yet Entercom now owns stations ern neighborhoods. in Los Angeles, Chicago and New York. When will these top marWith Field’s time with RBR+TVBR ending, we had to ask about kets begin to outperform the smaller markets such as Charlotte? that Twitter pic, the one of him wearing cool shades on top of a “We feel very good about our progress across the country,” mountain. Where was this taken? Field says. “There really is no difference between how we are “I think it was La Plata Peak — a Colorado fourteener,” Field doing in smaller markets compared to larger markets.” says after giving it some thought. The progress includes making additions to the station roster The mountain in the Rockies has an elevation of 14,360 feet. when the opportunity arises and makes fiscal sense for the comThat’s nothing compared to the heights Field and his team and pany. Field declined to comment on why Entercom did not end up Entercom are striving for. With time, patience and passion, with The E.W. Scripps Co.’s WKTI-FM and WTMJ-AM in Milwaukee, perhaps Field is the leader everyone involved in the U.S. radio or any other Scripps divestment as that company refocuses on its broadcasting industry is counting on. FA L L 2 0 1 8 · R B R . C O M · 5
SKILLS AND STRATEGY The smart speaker is being heralded as the latest wonder device to enter the American home — and not just by techies and busy men and women who can have a multitude of tasks accomplished by an AI-powered digital home assistant named Alexa, or a Google Home device. Owners of radio stations are giddy with delight at the opportunity to recapture the home thanks to instant access to their stations’ audio streams via the smart speaker. Of course, getting users to tell their smart speakers to play your radio station requires two things — skills and strategy. Two companies have dedicated themselves to those respective requirements for what they believe is smart speaker mastery.
THE MONETIZATION STATION Pat Higbie, CEO and co-founder of Washington, D.C.-based Xapp Media, started the smart speaker-focused technology company nearly six years ago. He was certainly fueled by the cool new ways radio programming could be consumed in the home. But the key impetus for putting Xapp on the map was all about money. “From the beginning we saw an opportunity in audio media, specifically to improve monetization,” Higbie says. “The initial invention was voice-interactive media and voice-activated audio advertising, primarily in the mobile space.” This proved to Higbie, and to others, the efficacy of voice-activated media on mobile. “It was a much higher response rate than seen when someone is asked to touch a screen,” he says. That got Xapp on the road to where the company is today, and close to radio. Then, the smart home assistant came along. With the arrival in the marketplace of the Amazon Alexa and Google Home AI-powered voice assistants, Higbie and his team gathered to explore the answer to the following question: How does the proliferation of the smart speaker benefit radio and the advertiser? With that came a spark: why not develop independent radio skills for the smart speaker? Xapp moved forward, and used Federated Media-owned WBYT-FM “B100” in Elkhart, Ind., as its model station. In March 2017, B100 was the first Xapp client to go with an independent skill. “Since that time, we’ve helped major radio broadcasters create Alexa skills and Google Assistant apps for their podcasts,” Higbie says. How does this benefit radio? Higbie is reminded by his interviewer of a conversa-
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tion with an individual who was unaware that their smart speaker could access radio stations. Further, Higbie was asked if radio stations could truly benefit from the smart speaker as consumers largely tuned out of AM and FM stations in the home because of lack of interest, rather than a lack of an available tuner. He said, “What you have to focus on is how voice-activated home assistants are changing user behaviors, and these smart speakers are absolutely causing people to use more audio in the home. That’s a fact.” But audio isn’t radio. So, what can a radio station owner do to get the Pandora and Spotify streamer’s attention outside the car and throughout their domicile? Higbie suggests that radio industry executives ask themselves the following questions: • Does your radio station have its own voice app? • Are you promoting it on the air? “This is where listening is going,” Higbie says of the smart speaker. “Voice becomes the easiest way to access content, and information and radio content is in that group. If you’re not there with your own separate Alexa skill or Google Assistant action and you’re not promoting it, you have to think of smart speakers as a frequency change or a new dial position. You have to tell them it is there, and you have to tell them over and over.” While the smart speaker’s presence in the home is getting all the attention, Higbie is already setting his sights on the final frontier where radio has a distinct advantage over all other forms of media — the car. With the “connected car” soon becoming a workaday reality for the new-car and -truck driver and passenger, and the smartphone poised to get even smarter via voice-triggered skills, there is “an existential threat to radio” all must be cognizant of, Higbie says. Among those who share Higbie’s vision, and concern, about the future of radio broadcasting are Cumulus Media and Westwood One. “They are our single biggest customer,” Higbie says. “There are more than 350 voice apps that are live for them.” Other major broadcast companies running on the Xapp platform include Bonneville International Corp. and Urban One; The E.W. Scripps Co.’s stations are also using the Xapp platform, although at press time the company’s Oklahoma, Idaho, Arizona and Wisconsin stations had been sold. For smaller radio station groups, a self-serve platform may be used to get
Pat Higbie
the proper voice activation skill set up — perhaps something like, “Hey Alexa, play ‘Blink 102-9’ in Springfield.” This could be essential for the future health of radio. Higbie notes, “We have more than 100 broadcasters running on our platform. There are 15,000 radio stations in the U.S., and of the top 400 radio groups, I would say only 25% of them have their stations live today. There are thousands and thousands of stations that don’t understand how important it is to them, and they need to act.” Ensuring a station can be accessed via a smart speaker is also essential for the client, he adds. “This is extremely important for advertisers, but they are coming at it from a somewhat different angle,” Higbie says. “Today, the live stream is what is primarily being run on the smart speaker, in addition to podcasts. These live streams already have on-air advertisers in them. What we do is provide multiple opportunities – including a custom intro. When you launch the Alexa skill, there is an on-air talent that can introduce you to the skill, expanding this brand. This custom intro can be used as a sponsorship opportunity.” Introducing the “voice landing page,” an enhancement advertisers can add to their broadcast campaigns, using smart speakers as fulfillment vehicles.
INSTANT ENGAGEMENT With the right smart speaker skills, something valuable arises for radio and for TV. “A user can engage instantly,” Higbie notes. But how does a radio station invite to the party those that don’t consume their radio station, because they simply don’t listen to the radio? Go where they go, Higbie says. As such, a social media/digital media promotional campaign is what would best serve — and not just an on-air awareness effort. If not, murky waters could grow as fast as the algae plaguing the Florida Gulf Coast’s shoreline. “It is the broadcast company’s responsibility because it is their livelihood,” Higbie says. “Clearly, on mobile, aggregators had a big advantage because you only had to download one app.”
He’s referring to the Radio.com, iHeartRadio, RadioPup or TuneIn apps. “That all changes with voice,” he adds. “It makes a direct connect to whatever content they want instantaneously.” Thus, there’s no TuneIn with a directory to be had with a smart speaker. It’s as simple as saying “Play B100” — assuming your smart speaker knows which B100 you want to listen to. Getting ahead of the disruption requires radio companies to plan now for the months and years of desired consumer connectivity that lie ahead. “It takes time and early adopters, but it is going to happen,” Higbie says. “If you’re going to survive in the audio business, you’ve got to get people, and it starts with the listener. One must get them to understand how to get there, and how to get the content.” For Federated, this included the creation of skills for podcasts, and for specific programs. Brand-building went beyond B100. “By having separate skills for these things, they can cross-promote the station and what it offers,” Higbie says. “I also put Westwood One and Cumulus in that camp, as they have all of these top programs available as separate Alexa skills as well. The Mark Levin Show, The Zack Sang Show, Opie Radio — all are available as their own separate skills and completely time-shift. “Technology is changing the world at
MANAGING THE MIGRATION
“Radio needs to rethink how the content is to be distributed in order to keep it relevant.” — Steve Goldstein an accelerating pace, and it is critical to understand what technologies make life more convenient for users,” Higbie concludes. “Twenty-five years ago it was the web. Ten years ago, it was mobile. Today, it is voice, and that is the technology that is going to disrupt the industry.”
Accessibility via the smart speaker is just one part of what it takes for the radio broadcasting company to ensure its stations’ audio streaming will be a top choice with consumers. For Steve Goldstein, CEO of Amplifi Media, the goal is to provide a full level of understanding to the top media companies and podcasters on content development, strategy and that all-important monetization. Yes, podcasting is a major part of the equation. But so are original branded programs. That’s where AM and FM radio stations enter the discussion. Goldstein says his DNA is “all broadcast.” When he launched Amplifi three years ago, it was done as he witnessed the shift from linear to digital broadcast. This observation came at the conclusion of a 28-year run at Saga Communications, which he departed as EVP/Group PD in March 2015. Before that, he was PD of Metromedia’s WOMC-FM in Detroit, and he knows a thing or two about Mike Joseph’s “Hot Hits” format — Goldstein was PD of WHYT-FM in Detroit under Capital Cities and PD of WTIC-FM in Hartford under Chase at times those stations were running the tight-listed Top 40 presentation. He’s also a pioneer in seeking younger audio listeners, as Goldstein served as Director of Affiliate Relations for The Source, NBC Radio’s automated Top 40 format heard on such stations as Walter C. Maxwell’s origi-
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nal WBPM-FM in Kingston, N.Y. With this rich background in radio, an observation in summer 2015 sparked Amplifi’s ramp-up as a smart speaker content consultancy, if you will. It had nothing to do with radio, but was all about TV. “You don’t need to be a brain surgeon to see that migration is going to occur — or is occurring — on the audio side,” Goldstein says. That’s because, just as eyes shifted from the television to the tablet and smartphone, ears are shifting away from radios to these same devices. Enter the smart speaker, and a different dynamic exists — one that could empower radio while broadcast and cable TV continue to struggle to maintain consumer attention against digital choices. Having three children in their 20s also shaped Goldstein’s views on how Amplifi could coach radio companies on how to best connect with a group of people who may not need radios because they have smartphones, but may want to enjoy the content radio can provide them. “Radio needs to rethink how the content is to be distributed in order to keep it relevant with that generation,” says Goldstein. “Broadcast is not podcast. Broadcast is not ‘smart speaker.’ They are different, just as YouTube is different from TV.” Goldstein elaborates on this philosophy by rewinding the clock to summer 2015. He speaks of his latter time at Saga and recalls, “Being over all of these different radio stations and different formats and different geographies, it was clear that there needed to be on-demand strategies. That was not going to happen there, and I was one of the original partners in the company. I had the wherewithal and capacity to go out there and do this myself.” That’s what literally transpired: Goldstein declined outside funding, and took it upon himself to figure out how to take on the digital audio space. He invested in SpokenLayer.com, a provider of spoken media content to the Amazon Alexa, Google Home and other audio-enabled task platforms that takes print content and turns it into an audio report. Customers include the San Francisco Chronicle and USA TODAY. Goldstein did the same with DriveTimeMetrics.com, a tech firm that collects and analyzes anonymous audio listening data from vehicles.
“You have to think of smart speakers as a frequency change or a new dial position. You have to tell them it is there, and you have to tell them over and over.” — Pat Higbie
This could be “perfect” for sports talk shows, or traditional talk programs. “Big morning shows” could also benefit. All commercial radio needs to do is look to, um, NPR. “They have a 10-year head start in developing content for the smart speaker. Why? Because they went beyond the stream, with original on-demand options. It breaks the business model at a time when the business model is under a lot of stress.” This is where Goldstein does a little fingerpointing at an industry that is collectively pushing for loosened ownership caps as a way to combat digital media’s encroachment. “Many of the companies are not investing the research and development dollars in building a future beyond that,” he laments. “That ‘93% of Americans use AM/FM radio each week’ number that everyone cites … the underlying problem is that [Persons Using Radio] is down and [Time Spent Listening] is off significantly in many markets.”
LURING THE ADVERTISER
Once the broadcaster can figure out the pathway to smart stream success, which is different for each and every operator, monetization can come in new and unique ways. having a radio in the home anymore. “They Take, for instance, the Amplifi-produced didn’t use the content,” he concludes. As podcast series for specialty grocer Trader such, “Putting the speaker back in the house Joe’s. A longtime radio advertiser, Trader doesn’t solve the problem.” Joe’s was looking for a different conversaGoldstein continues, “Not only does the tion with its shoppers. The result: www. smart speaker have 100,000 radio stations, switcher.com/podcast/the-nosh-show/ but it has 550,000 podcasts and has all of lets-talk-tjs — a podcast all about the these large streaming services. It is a vari- Trader Joe’s shopping experience, includable supermarket of audio services with a ing such topics as why bananas are sold plethora of choice.” at 19 cents each and not in a bunch. “It is Then there is the pending arrival of the the biggest branded podcast we are aware “connected car.” As the smartphone has of,” Goldstein says. “This is another use of become the entertainment hub in the house audio in monetization, but in a very differand the home, the “smart dash” could ent model of getting a modest CPM.” swiftly do the same in the automobile. Given the success of the TJ’s podcast, a Radio has an opportunity. It requires station with a big morning show could call future thought, and a bit of imagination on on one or all of the hosts to helm a podcast the deconstruction of radio, and on reinthat’s all about sponsored content, but on venting it in an era where digital technoltopics of interest that the consumer can ogy came first. engage in. For example, the live remote at Goldstein asks, “Why is the only thing a car dealer could be reinvented as a “Free a radio station can do is put themselves Ride Feature,” with a host chatting with the on these other platforms, in these native head of the dealership about one or two top forms? Why not put their best content on lures for a vehicle lagging in sales for the these platforms and make it accessible to month. Such a scenario could be translated the listener whenever they want?” to a plethora of local and regional busiHe recalls the vision of former NBC nesses, including restaurants and coffee Chairman/CEO Bob Wright, who retired in shops, recreational businesses, and even 2007. Some 20 years ago, Wright warned private schools and specialty academies. COMPLETE REIMAGINATION that broadcast TV was going to die. With such progressive thinking, ushering With his hands in tech firms that could “Everyone laughed, at a time when they radio back into the home in the digital age easily benefit the traditional AM and FM were killing it,” Goldstein says of an era in just might reinvent what some have called radio station owner in the digital realm, NBC’s history that saw Seinfeld conclude in the world’s first social media in ways that Goldstein began asking himself perhaps the May 1998 while Friends became one of the will prolong its life well into the latter half No. 1 question as to why broadcast media network’s many dominant offerings. of the 21st century. executives from coast to coast were so The threat then to broadcast TV was All it takes is getting on the rollercoaster, giddy about consumers’ rapid embrace of cable. The result: NBC, under Wright, creand being prepared for the ride. the smart speaker: “Why were the radios ated CNBC and MSNBC and purchased The “There is a collective fear of innovation,” gone from the home?” Weather Channel. “That is the opportunity Goldstein concludes. “I’m not going to say The answer, however painful it may be for that radio has in front of it,” Goldstein rea- that radio stations are going to perish. But the radio executive, was clear to Goldstein. sons. “So why not create other programpeople are looking for something different In short, the consumer didn’t care about ming that can live underneath the brand?” for the smart speaker.”
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THE MELTING ICEBERG With cooler weather finally set to arrive across much of the U.S., the climate for radio and TV deals seems to be in a serious thaw. The E.W. Scripps Co. no longer owns radio stations. Saga Communications is a radio industry pure-play. Townsquare Media is refocusing its efforts on AMs and FMs and local digital media, moving away from live events. Beasley and Entercom look to be battling back from share dips seen over the summer on Wall Street. Cumulus Media and iHeartMedia are poised to start anew, and recapture their respective roles as the radio industry’s No. 2 and No. 1 players. On the TV side of the business, the marriage of Gray Television and Raycom Media is the deal that will perhaps serve as the catalyst for further consolidation, after Sinclair Broadcast Group’s proposed merger with Tribune Media went down in flames in August. Who will be Tribune’s new suitor? Is FOX the perfect partner? What’s next for Nexstar is also a top topic. The mood among media brokers and key Washington, D.C. communications attorneys is little changed from a year ago: TV deals will likely drive total transaction activity in the second half of 2018 and in 2019. But there will be certainly be activity ahead for buyers and sellers of radio stations across the U.S.
MULTIPLATFORM MOMENTUM Kathleen Kirby, a partner and chair of the Media Practice at Wiley Rein, sees many radio groups continuing to focus on multiplatform solutions to drive revenue growth. “They are investing in the digital side, and they are rolling out smart speaker skills and podcasts,” she says. “They are developing next-gen mobile apps.” What does this have to do with dealmaking? Everything. “It strikes me that the smart radio companies are moving toward an ‘all things audio’ or a ‘go-to marketing company’ approach, rather than simply focusing on creating a large terrestrial radio footprint nationally — although that, or in-market consolidation, may be one element of the strategy,” Kirby notes. “Moreover, they are exploring ways to utilize data to quantify the effectiveness of campaigns for advertisers.” That has value, and could make a group of radio stations more attractive to a buyer or even a private investment firm. With Entercom, Cumulus and iHeartMedia fueling forthcoming radio growth, Kirby points to the spins of certain stations by companies making a concerted deleveraging effort. Others are selectively adding stations. The companies Kirby believes are looking to expand their portfolios include Beasley and Saga, in addition to Bonneville International Corp. and Hubbard Radio.
Bob Heymann
Elliot Evers
Scott Flick
“If the FCC adopts the NAB recommendations on ownership rules, I expect we will have a period of buying and selling stations much like the period of 1997 to 2002 ... perhaps not as long but certainly very intense.” — Bob Heymann While Bonneville acquired Entercom divestments and Hubbard in late August emerged as a possible dealmaker with Alpha Media, overall activity remains tepid. “The radio trading market may remain slow and steady, rather than characterized by the blockbuster deals we saw in some years,” Kirby says. “Given different long-term strategies, whoever the sellers are, it probably will remain more difficult to sell a large group of radio stations as a whole rather than piecemeal to maximize the value of the assets.” In the eyes of Scott Flick, a partner at Pillsbury Winthrop Shaw Pittman LLP, radio is continuing its search for “the Next Big Thing.” While Kirby already sees an evolution of sorts at some radio companies, Flick is awaiting the one idea that will attract more than just incremental revenue and investment in radio stations. Enter the podcast, and the company that can combine success with AMs and FMs with the appeal of on-demand offerings to consumers and advertisers. “The Broadcast Finance panel at the 2016 Radio Show [in Nashville] noted the sudden growth in podcast listening hours,” Flick recalls. “Interestingly, this growth was not at the expense of radio listening hours. This year appears to be the one where radio companies are really starting to embrace podcasting as a way of reaching new audiences and better connecting with their existing audiences.”
While the 2018 Podcast Movement in Philadelphia, held during the summer, proved that podcasts are no fad, there remains one key concern for Flick as it pertains to the radio broadcasting company that seeks to use on-demand audio as a revenue driver. “Until someone figures out better ways to monetize them, podcasts seem to fall into the category of an interesting opportunity for radio, as opposed to the Next Big Thing.”
CAPITAL QUESTION Deregulation — or as the FCC under Chairman Ajit Pai calls it, rule “modernization” — will most certainly generate more deal activity in 2019. But how far will radio ownership deregulation go? An NAB plan under consideration at the FCC as RBR+TVBR’s Fall Edition went to press would allow one company to own as many AM radio stations in a given market as it wanted. In markets under No. 75, a company could own all of the FM radio stations, too. While such a scenario is unlikely due to the current market players, the possibilities have led to much debate and discussion. In all but four of the markets in which it operates, Townsquare Media could be the lone commercial broadcasting company. For FCC Commissioner Jessica Rosenworcel, stories of a 2002 train derailment disaster in Minot, S.D., and the lack of a live and local staffer to get the news out across local stations controlled by iHeart predecessor Clear Channel FA L L 2 0 1 8 · R B R . C O M · 9
Radio, still stir bad memories — and bring tart words from anti-consolidation advocates. Regardless of rule changes, possible players will be dealing. The companies involved? It’s all about money. “The question is entirely one of getting the access to capital to do new deals,” Flick says. “Many radio groups would like to expand and diversify their reach, but with many still burdened by debt and few new investors showing up to infuse cash into these companies, the desire to grow and the ability to actually accomplish that objective may be two very different things.” So will the FCC be doing anything that can spur deals? “Any change to the FCC’s ownership rules tends to spur deals in the short term, even when those changes are not particularly deregulatory, as operators adjust to their new regulatory environment,” Flick says. “However, none of the probable changes are likely to launch a vast wave of new deals. Instead, I would anticipate seeing station swaps and smaller acquisitions as stations adjust their holdings to take advantage of deregulatory changes on a market-bymarket basis. The real winners if deregulatory changes are made will be the owners of
orphan stations — those who are too small to compete against station clusters in their markets but who can’t currently sell to those larger operators because those operators have already maxed out their radio holdings in that market.”
NEW PLAYERS WANTED As the media broker sees it, business continues to lack a strong growth pace. That’s the overall assessment for radio industry deals from Kozacko Media Services head Dick Kozacko. What could serve as a welcome catalyst for growth? Greeting unfamiliar faces and getting them excited about radio would hearten Kozacko. “I would welcome some new players into the radio ownership field, and that would make a difference,” he says. “But the present broadcast atmosphere doesn’t really lend itself to becoming a growth industry. If one looks at the various Market Overview pages provided by BIA Advisory Services for different markets, one will often find that the radio revenue for the market shown for five years ago is identical to the figure projected for five years from now. That reads like a ‘No Growth’
“Given different long-term strategies, whoever the sellers are, it probably will remain more difficult to sell a large group of radio stations as a whole rather than piecemeal to maximize the value of the assets.” —Kathleen Kirby
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industry. That makes it hard to get investors excited about this kind of market.” Would deregulation help spur deal growth? Kozacko shrugs. “I don’t think the FCC can do much,” he says. “Sure, making some adjustments in the ownership policies will be of some help. But the radio industry has to make itself more attractive for investment purposes. We need more banks to return to the marketplace as sources of financing. I can recall past NAB conventions where banks and lending institutions were active participants. They have gone and don’t seem to be returning. Since the rate of return is so much better in other industries, I don’t see banks running to join us at the yearly Radio Show or the NAB Show in Las Vegas. The obvious answer is for broadcasters to not fight among themselves, to make more money, and to show that broadcast ownership can provide a good rate of return for its investors and its owners.” Bob Heymann, director for the Chicago office of Media Services Group, views the flow of media transactions as normal. “It has been business as usual, according to the data I have seen through May 2018.” Deal volume as measured in dollars is up slightly from 2016 and 2015. But he admits the 2017 numbers are skewed by Entercom’s Reverse Morris Trust-fueled acquisition of CBS Radio. How will 2018 conclude? Heymann is presently engaged by a medium-sized radio company to purchase, on its behalf, attractive stations if and when they become available. “It’s certainly possible that a large number of stations could come to market in the not-toodistant future.” Following Heymann’s conversation with RBR+TVBR, SummitMedia of Birmingham, Ala., led by Carl Parmer, emerged as the buyer of 19 Scripps stations. This followed the purchase of Scripps’ stations in Tucson and in Boise, Idaho, by Lotus Communications. A regional media company in Oklahoma took Scripps’ Tulsa stations.
Richard Foreman
Greg Guy
Could there be another player in the mix? Time will tell. Will such a deal be the direct result of FCC rule changes? “That is the question!” Heymann replies. “If the FCC adopts the NAB recommendations on ownership rules, I expect we will have a period of buying and selling stations much like the period of 1997 to 2002 ... perhaps not as long but certainly very intense.” And the closer we get to an outcome on new FCC ownership rules as proposed by the NAB, the less likely there will be an “orphan” transaction, Heymann believes. “If it appears that the ‘orphaned’ stations will have the opportunity to be bought by existing cluster owners, then there will be no reason to enter into a complicated multi-party transaction like the one that occurred in Philadelphia [with Jerry Lee, Entercom and Beasley].”
ASSERTIVE AND ACQUISITIVE On February 21, 2018, Dick Foreman was suddenly thrust into the national spotlight. Of all the media brokers in the U.S., his Richard A. Foreman Associates Inc. (a.k.a. RAFAMEDIA) had been selected to serve as the trustee for the Sinclair Divestiture Trust. The trust was designed to handle all necessary spins associated with Sinclair Broadcast Group’s merger with Tribune Media. Today, the merger is a bust, and Tribune is suing Sinclair in Delaware Chancery Court for breach of contract. What of the Sinclair Trust? “I’ve reached out to Sinclair for official guidance,” Foreman says. “You may also want to do so.” RBR+TVBR’s queries to Sinclair were not answered. Some 21 TV stations were originally designated for sale. This included KPLR-11 in St. Louis — a property Meredith Corp. on April 23 agreed to purchase for $65 million. But the deal was scuttled one month later due
Kathleen Kirby
to Department of Justice concerns about the creation of a duopoly. With the Sinclair Trust’s fate uncertain at press time, Foreman was willing to share his thoughts on the trends for 2019. “Deal volume continues to be sluggish, barring the sale of a few outliers,” he notes, pointing to the Scripps sales, Entercom’s purchase of WBEB-FM 101.1 in Philadelphia from Jerry Lee, and the sale by Connoisseur Media to Townsquare Media of stations located in the Trenton, N.J., area. What of Saga and Beasley and talk of either company expanding in the coming months? “Both are highly qualified and resourceful buyers,” Foreman notes. “At the end of the day, I would expect that of the two, Beasley would be the most assertive and acquisitive.” Meanwhile, deal-making could be hampered by a lack of unanimity among radio broadcasting companies on the NAB’s proposal to loosen local ownership restrictions. The nation’s No. 1 owner of radio stations, iHeartMedia, is against any “modernization.” Foreman says, “An acceleration in volume in 2019 is highly dependent on deregulation. Loosening ownership restrictions will help.”
A CALL FOR DEREGULATION Another high-profile broker who has been in the headlines throughout the last 12 months is Elliot Evers, Managing Director of MVP Capital LLC. The San Francisco-based brokerage was given the task of handling Entercom’s needed divestments in order to complete its merger with CBS Radio. How does Evers, who successfully landed Bonneville International Corp. as a buyer in the Golden State, view the first three quarters of 2018?
“My hope is that some adjustments are made in the ownership caps, allowing for further strategic consolidation. Even in larger markets, small clusters and standalone operators face an uphill battle.” —Greg Guy
“They are emblematic of the state of the radio industry: a lack of growth, limited equity capital and a few notable companies carrying too much debt for an industry that has not shown meaningful revenue increases in a long time,” he laments. “In our view, this means it is highly unlikely we will see new entrants or new sources of capital showing up to acquire stations, at least until the [FCC] implements broad and long-overdue deregulation.” Evers believes that, unless deregulation is seen, radio station deals will be few and far between. Selective acquisitions from companies including Entercom, Saga and Townsquare Media will dominate the headlines. Regional media companies looking to add radio to fill out their local advertiser opportunities — as in the case of Griffin’s purchase of the Scripps stations in Tulsa — will also appear from time to time. “Unfortunately, until the industry begins generating some level of consistent growth, we believe that M&A activity and capital inflows to the sector will be limited,” Evers says. A brighter picture could emerge once the industry resolves its “balance sheet issues,” Evers concludes, pointing to Cumulus Media. “With balance sheets more in line with the industry’s current status, we will see operators in the radio sector increasing their investment in the business, managing for the longer term and displaying more rate integrity with an eye toward narrowing the gap between radio’s audience share and its share of media advertising revenue.”
A THIN BUYER POOL Slow but steady deal growth, particularly in the smaller and unrated markets, is how Patrick Communications Managing Partner Greg Guy sums up the M&A activity for radio in the last few years. Top clusters are saleable and generate interest. But the buyer pool remains fairly thin. Second-tier and third-tier clusters in unrated markets face limited options beyond an in-market buyer. Deals are getting done. But it often requires that elusive “perfect fit” scenario. Without regulatory relief, Guy expects these trends to continue into 2019 and beyond. “While radio remains a strong business with good fundamentals, it faces several challenges in a fragmenting audio landscape,” he says. “My hope is that some adjustments are made in the ownership caps, allowing for further strategic consolidation. Even in larger markets, small clusters and standalone operators face an uphill battle. Traditional commercial buyers want clusters that can win, limiting the market for incomplete clusters and standalone stations. Removing or adjusting the subcaps would be the biggest thing the FCC could do to spur activity.” While there is momentum toward deregulation, with the midterm elections looming, anything is possible. For the radio industr¥y, the possibilities all point toward growth — hopefully with a spark provided by the FCC. FA L L 2 0 1 8 · R B R . C O M · 11
THE IMPORTANCE OF ELDERS Ask any twentysomething woman what bands she truly loves, and Fleetwood Mac is bound to be mentioned. The 1970s are beloved by many, including those who came of age in the Nixon years and the era of Grease and gas shortages. But are marketers forgetting about the power of the 55+ audience? There is growing evidence that the biggest users of radio, a generation that was born and raised without the internet, DVDs, or a cassette deck, is a very viable generation for advertisers and station owners.
As Forbes reports, baby boomers are also big spenders. “When it comes to housing, transportation, entertainment, food and alcohol, older people already have their checkbooks out,” the publication said in a February 2018 Next Avenue article. “Americans 60+ are expected to account for at least 40% of consumption growth in those areas between 2015 and 2030.” Better diet, increased physical activity and improved health care point to longer lives. But here’s the wakeup call: If you’re preparing for your high school’s 40-year reunion this fall, you’ll be turning 70 years old in just 12 years. Today, marketers won’t care about you.
MISSED OPPORTUNITY On August 9, media ecologist Jack Myers’ TomorrowToday offered commentary that put an exclamation point on what veteran Buffalo radio industry figure Buddy Shula has long known — brands are losing out by missing a lucrative demo target, the active, AARP card-carrying adult aged 55 or older. “Money is being lost to the industry by invalidating the 55+ audience, which captures a disproportionate share of the network TV audience for many networks, as well as a key consumer audience,” Myers notes. The same could be said of radio, given the typical audience breakout for Talk radio stations across the country. Myers, who is a disciple of the late famed New York University professor Neil Postman, is no spring chicken. He obtained his M.A. in Media Ecology in 1976 and graduated from Syracuse University’s Newhouse School of Public Communications right before Neil Armstrong set foot on the moon. He’s a key member of the generation he so passionately writes about, and defends. “We have heard the old yarn that the best way to cement future purchasing patterns is to capture consumers while they are young,” Myers writes. “But that philosophy does not take into account the transitory and evolving nature of our society and the actual behaviors of all consumers in today’s economy. Advertisers who want impact for their ad spend must change their mindset from youth-obsessed to ROI-focused. Who is doing the viewing? Who has the discretionary income? Who is on the bleeding edge of today’s trends? Boomers, boomers and boomers.”
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Meanwhile, adults aged 18-34 are crippled with student loan debt and credit card balances that may have double-digit interest payments. They are also more likely to consume less radio, instead turning to Spotify, YouTube, Pandora, SiriusXM or their iTunes to enjoy music while considering a podcast or two to stay informed on news and information. Radha Subramanyam, Chief Research and Analytics Officer at CBS, is cognizant of the “delayed ‘adulting’ of millennials — the key marketer target yet not necessarily the biggest spenders. She notes, “Audiences that have been left out of media plans are often the most affluent and the most likely to drive spending across a range of categories, including auto, fine dining and travel.”
BUILT FOR BABY BOOMERS While there’s growing evidence that targeting adults aged 60-75 can bring rich dividends to a broadcast media property — in particular, radio — few if any operators have responded in any way. That’s what makes Buffalo’s Buddy Shula a pioneer of sorts. In November 2016, an entity named Radio One Buffalo — not to be confused with Urban
One’s radio division — agreed to acquire 1kw Class C WECK-AM 1230 in Cheektowaga, a 15-minute drive northeast of hip communities such as Allentown and Elmwood Village. Radio One paid $655,000 for the station and FM translator W275BB at 102.9 MHz to Culver Broadcasting, which obtained WECK in November 2007 from Regent Broadcasting for $1.3 million. In January, Radio One added a second translator — W263DC at 100.5 MHz in Tonawanda — to extend its coverage in the northern suburbs, excluding Niagara Falls. An improved signal on 1230 kHz brings WECK into both cities of Niagara Falls, and to St. Catharine’s, Ontario. To the east, WECK extends to Batavia, N.Y. Under previous management, WECK was a “Timeless” Adult Standards station. Now, it’s offering “good times and great oldies,” and is one of the few remaining big-market stations offering songs from the Beatles, Lesley Gore and even Frank Sinatra in the midday mix. How did this opportunity for Shula come about? “After 20 years doing a combination of sales and on-air work at Entercom in Buffalo, I left to own and operate WECK, which was owned by CBS Radio at one time. I have always wanted to buy WECK. The reason I wanted to buy WECK is because I knew of the potential it had.” Given its tower locations and coverage areas, WECK — in Shula’s view — was a “sleeping giant.” The owner of Culver Communications knew Shula was interested in owning WECK; Shula approached him many times. “After many conversations regarding a purchase price, we settled on a number, and the process began,” Shula says. “I was sad to leave Entercom, because they treated me great for 20 years, but when this opportunity came, I had to go for it. I knew I could make a difference in the station, for the community, and for the advertising community in Buffalo.” A two-hour listen to WECK on a Friday midday yields no national spots. That said, there were plenty of commercial breaks, all featuring local advertisers including grocer The Market in the Square in West Seneca, N.Y.; the Made In America Store, which has its own branded show on Saturday and Sunday mornings; Window World of Buffalo; Western New York Dermatology; and Jamestown Mattress, which featured Shula voicing the commercial. On one recent weekday, WECK offered well-known classic hits such as Van Morrison’s “Moondance” alongside more obscure Top 40 selections of the past, such as the Tarriers’ late-1956 version of “The
Banana Boat Song.” There’s a reason for the wide range of songs once staples of legendary stations of Buffalo’s past, including WKBW-AM 1520 and WYSL-AM 1400. “Our target audience is 50+ … more like 55+,” Shula says. “It is for the people who still love radio and have not abandoned it for other technologies. I feel that the only people who truly ‘get’ what radio is are adults 55 and over. They have wonderful memories of radio, and it is, and always will be, a trusted, consistent medium for them.” As such, WECK has a music library of more than 2,000 songs; KRTH “K-Earth 101” in its Oldies heyday had perhaps 400 songs in rotation, at most. What WECK does have in common with the K-Earth of the 1990s is the presence of legendary market air personalities. From noon-3pm weekdays is Harv Moore, still remembered as “The Boy Next Door” for his tenure in morning drive at WPGC-AM 1580 in Washington, D.C., during the 1960s and ’70s. He’s been connected to Buffalo since 1975. Tom Donahue of mid-’70s WGR-AM 550 fame is a morning co-host, alongside Gail Ann Huber, who started her career at nowdefunct WSPQ-AM in Springville, N.Y. In afternoon drive is Dan Neaverth, well-known for his long run at WKBW/WWKB and at former Oldies WHTT-FM. What does this say about the future of radio, given the AARP-friendly age of the on-air staff? “We are a station that appreciates our great, rich broadcast history,” Shula says. “The heritage personalities I employ either decide to hang it up by choice or not by choice. There are many requests I get on a daily basis from big-time Buffalo broadcasters who are not working now. They want to be on the air, even if it means not a lot of pay. I simply do not have the openings. But, if I could, they would be here now too. They want to do it for the love of the business. I do not think I will ever run out of choices of great Buffalo DJs to employ.”
HISTORY LESSONS FOR FUTURE GROWTH The path Shula is paving in Western New York most certainly speaks to a region that still cherishes its place in American folklore, from the Anchor Bar that gave birth to the chicken wing to the “Beef on WECK,” which could explain the station’s call letters. Could WECK work in other markets? It may take a special owner, and a group of determined and well-remembered market veterans, to do the job. It may also take an audience that’s lived in the market for decades. One thing that’s not needed is the audience the majority of large broadcasting companies continues to chase. “I don’t care what Nielsen says,” Shula says. “I don’t care what the big radio companies are saying. People under 40, and especially under 30, are not listening to terrestrial radio by choice.” At every drive-through window he approaches, Shula asks the attendant what
radio station the person listens to. “These are all young people, and none of them say the listen to or like radio,” Shula observes. “They almost give me the perception that radio is ‘uncool.’ They mention Pandora, Spotify, satellite radio and such.” That said, Shula gives Entercom/Buffalo credit for bringing listeners of all ages to WBEN-AM and WGR-AM, the News/Talk and Sports Talk stations, respectively. On a summer’s day in July 2017, RBR+TVBR enjoyed a ride with a 43-year-old mother of two grade-school children who exclusively listened to WGR … and used SiriusXM for her music cravings. “For music stations for people under 40, I think the ship has begun to sail,” Shula laments. “It is the exact reason why HD Radio made hardly any impact. No one cares about the quality of the sound. They care about the content, and music radio for people under 40 gives nothing that a listener cannot find anywhere else.” This only reinforces the advertiser opportunities Shula believes will make WECK a financial success. “If the 55+ audience are the only ones who really love radio, why wouldn’t radio want to talk to them, instead of trying to pretend that younger people like them?” he says. “I don’t care if one person under 50 listens to my station. They’re not my target.” For those who ask what happens to WECK when the audience dies off, Shula responds, “That will be a few decades from now, so I will be where they are anyway.” So could WECK work in a market as big as Chicago? What about Dayton, or Denver, or Dubuque, Iowa? “Buffalo is a non-transient market,” Shula says. “People are born here, and stay here for life. If there are other markets like that, then I think they should copy the WECK radio model. If there is a rich history in broadcasting in that area, with many names that still live in that market, yes, I
do think it would work great. The profits I am making go back into the company, with new equipment, hiring great people, giving incentives to my current great employees and providing exceptional service for advertisers, including client creative strategies.” There’s also an argument that “AM revitalization,” which has come through the use of FM translators for many operators, can truly be had by refocusing on the content heard on the AM signal — and targeting an audience that has long been familiar with the band, and is perhaps a bit more tolerant of a bit of static and a crackle during a thunderstorm. “In Buffalo, AM radio is not extinct — it thrives,” Shula says, pointing to WBEN-AM, WGR-AM and WWSW-AM 1400, offering “Solid Gold Soul” to the African-American community in Buffalo. “The two FM metro translators are icing on the cake.” A celebratory cake for Shula and his team may be on the way. In the Spring 2018 Nielsen Audio ratings for Buffalo, WECK-AM ranks with a 2.3 share, up from a 1.4 share of listeners 12+ in fall 2017. It’s just another positive renaissance in a city full of them. “This city 30 years ago almost seemed embarrassed of itself,” Shula says. “It was one of those Rust Belt cities that was going nowhere. Buffalo has made a total transition. We have taken advantage of an incredible proximity to Lake Erie, and to Canada. Education and health care facilities are second to none. Buffalo has steadily declined in market rank over the years, but I feel that will change. Buffalo is a city of great hearts. It’s an underdog city; it is not fake. Does it snow? Yes. Other cities have their problems.” For years the city’s motto has been “Buffalo is Talkin’ Proud.” Now, that’s exactly what Shula is doing about a station that’s proud to serve Buffalo, and its most loyal residents.
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A SALES BOOST THAT’S SONICALLY SOUND Digital media has been able to capture a growing percentage of local advertising dollars for several reasons. One of them is the ability to deliver more than what is heard in a :30 and :60 and then perhaps forgotten. Radio stations now have a possible tool that can help them compete head-on with digital media by delivering more than what’s said and heard. It doesn’t take a rocket scientist to figure out how to bring added value to a radio station’s audio stream, does it? In this case, that’s actually who’s behind a company that seeks to connect radio station clients with audio consumers through the one device they’re most likely to have with them at all times — the smartphone. In 1979 Lev Neymotin left the Soviet Union and took a job at Brookhaven National Lab, located off Exit 68 of the Long Island Expressway in New York State. Nuclear and high-energy physics was the focus at first. Today, it is a science laboratory heavy on research and development. “I was interested in different technologies and have always been interested in sound,” says Neymotin. Three years ago, it occurred to him that humans are largely underutilizing sound, as there is much
more to sound than what the human ear can hear. “I believe there is a way to expand its usefulness in communication,” Neymotin says. He got involved with tech start-ups, including SONAD — a mobile iPhone/ Android app that uses proprietary audio barcode technology for advertising on mobile phones. As Neymotin started to explore the possibilities for what SONAD could offer, taking his ideas to others, all agreed there was a business opportunity to be had. The possibilities all gravitated toward radio and television advertising. SONAD technology allows advertisers and broadcasters to embed inaudible data in audio and audio/visual streams and use the regular soundtrack of TV, radio or any sound-based programming or public announcements to deliver digital advertising content directly to smartphones. What does this mean to the listener? They won’t have to remember that telephone number said six times during a :60, or an e-mail address, a website or any other pertinent information tied to an exclusive offer as they watch or listen to anything with an audio track.
While Neymotin has the tech smarts that helped build SONAD, it’s relatively unknown among radio industry executives. He admits that marketing SONAD has been a challenge, and is working on ways to get people to get excited about the app and run with it. Much of the challenge rests with introducing a new technology to individuals in an industry that may not be receptive to “the new.” He says, “The problem with new technologies conceptually is it is extremely painful to convince someone with 20 to 30 years in an industry that it is ready for a change.” With the 2018 Radio Show in Orlando an opportunity for SONAD to gain exposure with the industry’s key decision makers, Neymotin believes he is ready to go to market. The SONAD App is in the Google Play and iTunes stores. And he added a game — Zippr — as a bonus opportunity to sell to radio stations that may wish to have a fun diversion on their own apps, which can be sold separately.
TAP THE APP, MORE TO EARN
Key to how SONAD works is getting consumers to download the app. Then, the user must have the app active
“People don’t write down stuff. You’ll need to remind them 10 times before they get to remember it.” — Lev Neymotin 14 · R B R . C O M · FA L L 2 0 1 8
in order to learn more about the audio ads they may be hearing. Instead of those “tap on the banner” spots designed for the now-passé days of desktop/laptop audio streaming, a tap of a logo corresponding
to the advertising brand is selected. While SONAD may be nearing maturity Once tapped, a window opens in the app and exiting the start-up stage, Neymotin containing all the information the advertiser believes there is long-term importance for wishes to provide to the audio consumer. the technology fueling the app. “Today, we It’s a tough proposition. Who’s responsilive in a world of inefficient spots,” he says. ble for getting people to download another “People don’t write down stuff. You’ll need app, and an app they’ve never heard of to remind them 10 times before they get to before? Will the consumer keep the app remember it.” active at all times, burning through data Importantly, Neymotin doesn’t wish to on a smartphone? be a “disruptor.” In fact, SONAD was built For some, the calling card is simple — with that mentality in mind: Advertising is they get more information about a good or uninterrupted. The result, for a participatservice of key interest to them, and it’s an ing station, is a direct benefit. opt-in opportunity free of intrusion. Should SONAD become a hit with radio Neymotin explains, “An advertiser who broadcasters, Heather Cohen of The Weiss uses radio can say they want SONAD. The Agency, which represents on-air talent, proaudio code is overlaid into the commergram producers and management, may be cial and blended with the soundtrack of just a little bit responsible for its success. the advertisement. Whether it is audio or Cohen was good friends with Neymotin’s video, it just needs sound.” younger daughter while growing up. Then, the code is connected with a pack- The two went their separate ways until age of information — text, links, offers or LinkedIn reconnected them, leading Cohen even QR codes. to learn about SONAD and its potential for SONAD can’t operate in the background, the radio industry. however, “for privacy and security purposes.” With VSS doing music testing for radio Therefore, it is incumbent on the parvia a smart speaker and the integration ticipating radio station to explain to the of Triton Digital’s programmatic audio listener what SONAD is, and what its benad marketplace with a top content-target efits are. video ad network, the timing could be right “It has to be useful,” Neymotin stresses. for SONAD. “How do we push this? Bonuses. And they It will ultimately be up to the industry to need to be significant. We need to know decide whether it’s a hit. how to motivate a person to turn on an app on their phone.”
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RADIO’S MOST PRESTIGIOUS LEADERSHIP CONFERENCE Forecast gathers the smartest minds in broadcast and advertising to forecast trends, expectations, and revenues for the coming year.
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Marci Ryvicker, Media Equity Analyst Caroline Beasley, CEO, Beasley Media Group
NOVEMBER 14, 2018 • HARVARD CLUB, NYC SPECIAL GUEST Major Garrett
Chief White House Correspondent CBS News
SPECIAL GUEST Colin Kinsella
SPECIAL GUEST Ben Arnold
Senior Director/ Innovation & Trends Consumer Technology Association
CEO Havas Media NA
Join Caroline Beasley and Marci Ryvicker, along with other radio leaders, investors, visionaries and prognosticators, for a day full of information, ideas and provocative discussions about the future of the industry. Solid daylong “think tank” capped by the annual Top 40 Reception, honoring the 40 Most Powerful People in Radio. SPONSORS Platinum
Gold
Bronze
Corporate
Participating
Top 40 Plaques
Media Partner
If you run a major radio group or a small independent, if you have a financial stake in the radio industry, plan now to attend Forecast 2019. Register now for substantial savings with early-bird registration pricing.
Go to radioinkforecast.com for details TODAY!