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October 31, 2004

Sunday, October 31, 2004.

Sunday, October 31, 2004. Bill Grimes Responds to GM Bully Blog
The lesson is that Time Warner and Time, Inc. have enough audience and capital to exert leverage when a GM seeks "breach of church/state" deals from it. That part of your blog was good. However, criticizing GM for trying to use its muscle to get best deals was questionable--it is exactly what GM management should be trying to do. But first, they should figure out how to make better cars.

Posted by Charles Warner at 4:28 PM | Comments (0) | Print | Mail this entry

October 30, 2004

Saturday, October 30, 2004. The

Saturday, October 30, 2004. The Ills of Media De-Regulation and Concentration. Forty Sinclair television stations aired an anti-Kerry documentary and Harry Pappas, the principle owner of Pappas Telecasting, which owns 25 television stations, bought time on some of his stations and gave it to California Congressional and state legislators running for office. These two incidences of partisan political activity by owners of groups of television stations is another example of the unintended consequences that resulted from FCC de-regulation.

In 1989 the FCC recinded the Fairness Doctrine and personal attack regulations because broadcasters and many liberatarian advocates felt that the Fairness Doctrine limited public debate on important issues because the rule stated that if a broadcast station aired one side of a controversial issue of public importance, it had to air opposing viewpoints. As an ex-broadcaster, I know that the rule was confusing and extremely difficult to implement (but not impossible). Did it mean that all opposing views had to be aired or just one? If a group bought time to pitch for one side of an issue, then a station had to present the other side, even if it meant giving away time to do so. Because of this rule, the vast majority of broadcasters avoided controversial issues, which, crictics argued, limited public debate on important issues. Recind the rule, they argued, and robust debate whould follow.

Broadcasters paid the National Association of Broadcasters to lobby the FCC to recind the rule, which it eventually did. But the result was not robust debate, but partisan activity. When broadcasters were told they didn't have to be fair, many of them decided not to be--Sinclair and Pappas among them.

In 1996 the FCC, at the urging of broadcasters and the NAB, raised substantially the limit on the number of stations any one company could own. The result was an immediate rash of station buying by the already big groups that had the money to buy additional radio and television stations. Sinclair's growth exploded to 62 television stations in 40 markets reaching 24 percent of US televison homes. Pappas grew to 25 stations reaching 15 percent of the US television homes.

The broadasters pushed for this type of media conglomeration and concentration for financial reasons, not because they viewed the media as a public trust. Their interests were mainly to serve their stockholders, not to serve the public. The problems of media concentration are brilliantly put forth by Ken Auletta , who writes about the media for the New Yorker, in an interview by Scott Libin of the Poynter Institute. I strongly recommend you read Auletta's penetrating comments. Click here.

Posted by Charles Warner at 6:44 PM | Comments (0) | Print | Mail this entry

Saturday, October 30, 2004. A

Saturday, October 30, 2004. A Bully Gets Weaker.
No one likes a bully. That's why I enjoyed reading newspaper stories this past Thursday that reported that General Motors "would temporarily lay off more than 10,000 workers for one to four weeks early next year at five plants that mostly produce sport utility vehicles and pickup trucks," according the New York Times.

The layoffs were undoubtedly accelerated by big auto retailers such as AutoNation, demanding that General Motors and Ford "no longer...crowd their lots with slow-selling cars and trucks to help Detroit's auto makers avoid production cuts," according to a Wall Street Journal story this last Thursday. The layoffs will obviously affect profits at General Motors--it will be a smaller and weaker company.

Why should I enjoy GM's weakness? Because GM for years has tried to bully the media into giving it special deals because for several years it was the media's largest advertiser (replaced by P&G in the past two years). Last week, Rick Sirvaitis,
president and chief operating officer of GM's media-buying arm GM Mediaworks and, thus, GM's top media guy made another brash attempt at bullying when he told executives at the American Magazine Conference that he was "itrigued by the prospect of product-placement in magazine editorial. He told the publishers that he found such prospects 'very relevant,'" according to a 10/25 article in Advertising Age. What Sirvaitis is saying, on behalf of General Motors, is that magazine publishers better give GM product placements in editorial content if they wanted GM's business.

GM was probably emboldened in its bullying efforts by the success of its product placement deal on "Oprah" last month when Oprah gave away 15 minutes of her program and 276 Pontiac
G-6 midsize 2005 sports sedans worth $28,400 each to everyone in her audience on that day.

Over the last decade most magazine publishers have been fighting a losing battle to keep advertising and editorial separate, Time, Inc.'s magazines being a notable exception. Time Inc. still has the guts and integrity not to cave in to product placement pressures, but the vast majority of other publishers have caved in as pressure on bottom lines has intensified. I hope publishers will resist GM's pressure to include product placements in editorial because there is too much clutter already in the media and, in the long run, melding editorial with product placements will hurt the credibility of magazines.

Another reason magazines have backed down from the once firm stance on separation of church and state is not only becasue of increased competition and increased profit pressure, but also because of improved technology. Printing and production technology has improved, which, in turn, has substantially decreased closing times for magazine advertising. In the past magazine salespeople, when asked what the editorial content was going to be could say, "I don't know" with credibility. Today, advertisers understand, because of shorter closing deadlines, that salespeople know what the editorial content is, so the salespeople can't use the "I don't know" dodge any more. Therefore, advertisers ask about the content and when they find out, they want ads in or close to relevant content. Salespeople typically cave in to threats such as, "Your competition is giving me content placement, so you'd better give it to me or lose the business," because they are afraid of not getting an order.

I hope magazine publishers will not cave in to GM's or any other advertiser's bullying and take a cue from Time, Inc. and keep editorial and advertising clearly separated. Time, Inc. is a good model because it has the top three magazines (People, Sports Illustrated, and Time) in total revenue and seven of the top 10 magazines in total revenue. There's a lesson here for other publishers.

Posted by Charles Warner at 6:12 PM | Comments (0) | Print | Mail this entry

Saturday, October 30, 2004. CNNfn.On

Saturday, October 30, 2004. CNNfn.
On Friday, October 29, CNN announced it was closing down CNNfn, its financial news network that was established to compete with CNBC. This was a big surprise because no one had ever heard of or watched CNNfn, so the big news was that CNNfn even existed. Who knew?

Posted by Charles Warner at 5:06 PM | Comments (0) | Print | Mail this entry

October 26, 2004

Tuesday, October 26, 2004. Aron

Tuesday, October 26, 2004. Aron Responds.
Your blog about the Yankees being terrified of losing because of the tirade that George Steinbrenner would deliver was indeed a huge stretch. These chumps make 10 million bucks a year not running out fly balls and shooting steroids in order to hit over 700 career home runs. I doubt they ever once thought about Georgie Poo yelling at them. If they don't play for the Yankess making $10 million a year, they can always play for the Dodgers as their career winds down, make $12 million a year for 2 years, get hurt half way through the season, collect the check, and retire.
The fact is: The Red Sox did not quit. But as I started reading your blog, I knew you would tie the Yankee story into a business/management lesson. It's stories like that that kept me showing up for your 7:40am Media Management class at Mizzou.

Posted by Charles Warner at 1:19 PM | Comments (0) | Print | Mail this entry

October 21, 2004

Thursday, October 21, 2004.

Thursday, October 21, 2004. The Yankees.
I 'm a Yankee fan, so I watched every game with the Red Sox--exhilerated and then let down. The Yankees were so close...and yet so far.

When the Yankees went up three games to none, I was pleased and commented to my wife how professionally they went about their business. I wasn't worried when they lost game four or even game five in Boston, because I was confident the Bronx Bombers would come through when they moved back to Yankee stadium--afterall, they had crushed the Sox 19 to 8 in Fenway Park, so I was confident they could hit.

But then it happened. The Yankees realized they were vulverable in the two long, extra inning games when they couldn't put the Red Sox away easily. The Yankee batters became frightened; they put a vision of losing in the heads and they became terrified of losing.

That's what happens when you work for a screaming, autocratic, self-absorbed, mean-spirited boss. You could see fear in the Yankee batters' eyes in the last two games. Many of them looked like a frightened deer in the headlights. The Yankee batters weren't afraid of Curt Schilling or Pedro Martinez, they were afraid of their boss, George Steinbrenner. And when you are afraid of losing and play not to lose, inevitably you lose.

Many managers, especially in the media, think fear motivates people and that it's OK to scream at them. But managing by using fear destroys loyalty, dedication, and pride. People hate nasty boss and can't wait to go somewhere else. If they continue to work for a tyrant, resentment builds up and finally seethes through as sullenness. In the last three games of the recent seven-game series, the Yankees looked sullen and scared. They had no joy, no pride, and they played like solem, bored mercanaries.

The Yankee players might even have had a death wish, a subconscious desire to get back at the horrible monster that held them captive with chains of huge salaries and rigid rules like no facial hair.

Think about it, the scruffy, hairy Red Sox were full of joy and pride. They were not afraid of losing, even after being down be three games. Do you think you'd ever see a Yankee break out in a big smile like David Ortiz did when he hit that walk-off home run? Of course, not.--the Yankees have to joy, only fear of losing, fear of the wrath of their check-writing ogre.

Let this be a lesson to managers who think fear motivates people, who have rigid, formal rules like not letting people be scriffy if they want to express their individuality, who think professionalism means being joyless, and who punish people for making mistakes and for failure. Nasty George's total obsession with winning, regardless of the human cost, may well be the reason the Yankees lost.




Posted by Charles Warner at 7:11 PM | Comments (0) | Print | Mail this entry

October 18, 2004

Monday, October 18, 2004. FCC

Monday, October 18, 2004. FCC a Dinosaur?
I have criticized and applauded (and Bill Grimes has applauded) several recent FCC decisions. But in doing so we both made the assumption that the FCC's appropriate charter is to regulate the broadcast spectrum and oversee telecommunication policy (telephones, e.g.), especially as it relates to the electromagnetic spectrum. But has current technology made the FCC's charter obsolete?

Dan Gillmor, in his breakthrough book, We the Media, suggests that the FCC's fundamental mission may be obsolete. Gillmor writes, "What if the scarcity of the airwaves turns out to be an artifax of history and outmoded technology? If scarcity can be overcome, the implications are both exciting and disruptive--we will see a cornucopia of communications that foreshadows woes and opportunities for some of our biggest telecommunications companies. He quotes David Reed, a noted and highly respected Internet researcher as saying, "Simply put, we have to start looking at spectrum as an almost limitiless commodity, not a scarce one."

Reed, who as a Ph.D. from MIT, argues in a 2001 paper that the FCC regulates the airwaves as if the capacity was a fixed amount, but, Reed suggests that new technology can pick up competing signals on the same airwave, so there is no need to worry about spectrum space. The limiting factor in the past has been old-fashioned receiver technology--the problem has been with receivers not with the spectrum. What is happening now, according to Reed, is sophisticated software that can distinguish among a host of signals. This software will free up the spectrum for almost limitless communication possibilites. Everyone could be a brodcaster in this new, spectrum-rich world, just as the Internet has allowed everyone who wants to to become a publisher--thus, this blog.

The FCC's recent decision to allow Internet access over electrical lines will make broadband access more competitive and, therefore, less expensive, and might cause lower stock prices of cable companies and broadcasters, as Bill Grimes suggests. If compression technology and new software could open up the spectrum substantially, then the value of a broadcast license could deteriorate, causing stocks to fall for companies who own radio and television stations, too.

The lead story in Advertising Age this week is titled "THE IPOD ECONOMY" and shows how iPod mania is sweeping the country and that manufacturers are attaching a variety of devices--radios, televisions, stereos, and computers--to iPods. Newsweek magazine this week features the Alpine iPod adater for Alpine car radios. Because a large percentage of radio listening is in cars, iPod adapters could have a further deleterious effect on radio listening levels. And Ford announced this week (a week after the Howard Stern announcement) that it will include Sirius satellite radio receivers in many of its cars as an option. GM has had a partnership with XM Radio and has featured XM receivers as an option. So, now the battle of satellite radio providers is on for control of your car's radio, which will further dilute radio's audience in the long run.

Do we need to re-think the FCC's mission and what it should be regulating and assessing fines for?

Posted by Charles Warner at 4:52 PM | Comments (0) | Print | Mail this entry

October 16, 2004

Saturday, October 16, 2004. Bill

Saturday, October 16, 2004. Bill Grimes Responds.
Your blog, Regulation Politcs, was very-well written and argued, but I have two important points of difference:
1. The argument that the Fairness Doctrine should still be a regulation for broadcasters is because of the public airwaves concept and the reality of the consolidation in the broadcast and media industry. These are sound points. However, the second argument raises a tricky issue: should other media be required to publish the opposing view of a controversial issue or story of public importance? For example, in every market in this country there are far fewer newspapers than there are televison stations and, therefore, shouldn't the newspapers be required to adhere to some kind of "fairness" standard? They are not required to do so. Does the First Amendment that is available to newspapers be denied to broadcasters? Even the NY TImes conceded this argument, which for Sinclair would prevail.
Further, liberal commentators such as yourself should remember that the consolidation of the media industry was propelled by the Commuications Act of 1996 which significantly extended radio and television station ownership caps. This deregulation of the communications industry was initiated by President Clinton's appointed FCC Chairman (Reed Hunt) and was passed into law by Congress.
Your point on ABC's First Amendment rights misses the mark. ABC did broadcast the program on its network, but a network cannot require a station to broadcast any program. That is the decision of the licensee, not the program supplier, in this case, ABC.
2. Your point on the FCC decision on enabling the RBOC's refuse competitors access to their fiber networks is more complicated than you opine.
First, the RBOC's have been required since the Communications Act of 1996 to open their local switching network facillities to all competitors. This rule has enabled the cable companies to compete with the RBOCs in circuit-switched local telephony, which means a customer in San Diego, for example, where Cox Cable now provides 35% of households in that market with local and long distance telephone service. This service has been possible only because Pacific Bell was required to open their circuit-switching network to the cable operator at a "fair" price determined by state regulators who in every state govern the pricing by the RBOCs ( a carryover from the days when they had no competition and were part of ATT and America's only monopoly back then).
Now, a new telephone technology has been developed and is being offered in a few markets. It is called Voice-Over-Internet-Protocal (VOIP). This works by conerting one's voice on a phone call into digital 1s ans 0s and, most importantly, these calls does not travel across any wires or phone lines owned by the RBOCs. It travels over the Internet and is routed into home--mostly offices now--that have "telephones" produced by Cisco which converts the digitized speech back into analog voice. As a result--but more because of cell phones--the RBOCs have lost 5 million phone-line customers in the last 3-4 years and with VOIP the forcast is for further loss of subscribers to a cheaper service with equal quality.

Here's the point: The FCC decision to enable RBOCs exclusive use of their facilites is based on two important requirements. First that RBIOCs replace their twisted-pair copper phone lines with fiber (some cost estimates are $100 billion to do this throughout the US) and that this new fiber must come to within 500 feet of every home and business that the RBOCs pass, not every customer but every customer and non-customer in their territory. (As a comparison, few cable systems have more than 25% of their customers with fiber 500 feet from their premises.) The public policy element of the FCC's "last mile" criteria, in this case the last 500 feet, is that every one in America will have, when and if the RBOCs build this new fiber network to the home, the availabilty of virtually unlimited video, faster Internet access than either cable modems or DSL, and even better telephony.
It is because of this huge investment that the "big company" RBOCs are making in these fiber, digital networks that the FCC is giving them a chance to earn a return on this investment, unfettered by legacy regulations requiring they provide their facilities to their competitors. To make the phone companies open their expensive new networks to competitors in the days of new technologies that are now being offered to their customes and which their customers are rapidly adapting to would be like: "Hey, I want to be in the radio station business and I have a frequency but I don't want to buy and operate a transmitter." "That's OK, dude, you can use the WCBS-AM transmitter and its operators for nothing."

This FCC decison to allow Inernet access over electic lines is a superb one that will send cable and satellite company stock prices down and will go a long way toward providing less expensive voice, data, and telephony for more Americans.


Posted by Charles Warner at 4:23 PM | Comments (0) | Print | Mail this entry

Saturday, October 17, 2004. Regualtion

Saturday, October 17, 2004. Regualtion Politics.
The Federal Communications Commission (FCC) made or didn't make several decisions in the past week that defied logic or a logical consistent philosphy. The only conclusion I can come up with is that the FCC is playing politicis, or more precisely, is playing to the Republicans core base--large corporate interests, especially big corporate media, and the religious right.

Let's look first at the worst non-decision--not doing anything about Sinclair Broadcasting's reprehensible decision to run an anti-Kerry "documentary" on its 62 television stations. The program, titled "Stolen Honor," which is being paid for by a group called Pennsylvania Vietnam Veterans. As a NY Times editorial titled "Dangerous Territory" pointed out, the FCC had no choice but to ignore complaints by Democrats and the Kerry campaign because the FCC repealed its Fairness Doctrine.

In 1987 the FCC asserted that the doctrine was no longer having its intended effect and might actually have a "chilling effect" on exposing different views. Also, the Supreme Court in the 1987 case Meredith Corp. v. FCC ruled that the Fariness Doctrine was not manadated by Congress and that the FCC didn't have to continue to enforce it. "The FCC dissolved the doctrine in August of that year," according to an article on the Museum of TV's Web site.

Mark Fowler was the FCC Chairman in 1987 and was carrying out the Reagan administration's deregulation policies, which were heavily influenced by broadcasters and their powerful lobby, the NAB. Broadcasters pushed the notion that the Fairness Doctrine had a chilling effect on public discourse that featured both sides of issues of public importance because they had to avoid controversial issues because they couldn't give time to all the dissenting sides. The real reason behind broadcasters dislike of the Fairness Doctrine is that it cost them money in both free air time and administrative costs.

The main rationale (which was really a rationalization) behind the repeal from the Fairness Doctrine was the it would put issue-oriented programming (editorials, etc.) out in the marketplace of ideas and the public would decide which ideas were fair and which were not. This was a naive assumption. What the repeal of the fairness doctrine in 1987 accomplished instead was conservative talk radio, as epitomized by Rush Limbaugh. The repeal was a classic example of unintended consequences--bad for fair, balanced public discourse, but good for broadcasters' bottom lines and, tangentially, the Republican party.

In 1996 when deregulation continued with the easing of station ownership limits, the age of big media conglomeration was born, lobbied for furiously by the NAB and large media corporations who wanted to become larger and, thus, more profitable and, apparently not considered at the time, more powerful. This deregulation allowed previously small radio station group, Clear Channel, to amass a group of 1,200 radio stations and Sinclair Broadcasting to buy 62 television stations reaching about a quarter of the country's population.

Part of the FCC's rationale (influenced, no doubt by Sinclair Broadcasting's claim) for doing nothing about Sinclair running the program that smear's Kerry's Vietnam war record is that telling Sinclair not to run it would have infringed on the television station owner's First Amendment rights, which the NY Times in its editorial said was "painful" to defend, but defend it it did. I agree that on First Amendment gounds the right-wing Sinclair stations should be able to run its Kerry smear, even though the same group failed to run Ted Koppel's "Nightline" program in which he read the names of soldiers killed in Iraq. Where were ABC's and Koppel's First Amendment rights? So, on the surface, the FCC ruled (or, more accurately, didn't rule) in favor of the First Amendment, thus aiding the politcal agenda of the right-wing and the Bush campaign.

But in the same week the FCC, imposed $1.18 million in fines on 169 Fox television stations for violating indecency rules when the stations aired an episode of "Married in America" last spring. The show in question apparently depicted scenes in a nude bar with lap dancing and digitally masked breasts (as opposed to Janet Jackson's bared breast). The marketplace made a decision about the program--it was cancelled after a relatively short run for lack of ratings. However, the FCC claimed it responded to over 150 complaints about the cancelled program (from guess whom--the Bush core base on the religious right). It appears that the FCC had been searching for something else beside the Howard Stern program to fine for indecency (it has already fined Infinity stations over $1 million for some of Stern's indecent remarks). Isn't it interesting that the FCC found a television program to fine less than three weeks before the election-- a program that had been criticized by Bush's core. What a coincidence.

So, the FCC is being illogical and politically selective in its appplication of First Amendment principles.

Another decision the FCC made last week seems like a good one on the surface. The NY Times ran a story by Stephen Labaton titled "F.C.C. Approves Internet Access On Power Lines" that details the FCC ruling that clears the way for "homes and businesses to receive high-speed Internet services through their electrical outlets. The Federal Communications Commission adopted rules on Thursday that would enable the utility companies to offer an alternative to the broadband communications services now provided by cable and phone companies." The FCC giveth, but then it taketh away. The next prargraph in the story reads, "As a further spur to the rollout of broadband Internet services, the F.C.C. also ruled that the regional Bell companies do not have to give competitors access to fiber optic lines that reach into consumer homes--a decision that prompted two of the Bells, SBC Communications and Bell South, to announce that they would move quickly to buidl new fiber optic networks in residential neighborhoods. The ruling was criticized by consumer groups, which called it anticompetitive and said it would appeal to higher prices."

In other words, the FCC was sending a signal to big business and that it and the Bush administration is on its side less than three weeks before the election. The FCC has already signalled that it is on the side of big, consolidated media this year by attempting to further relax television station ownership rules, which subsequently were delayed by congress.

The FCC seems to be logically inconsistent but politically consistent--carry out the Bush administration's strategy of appealing to it corporate and religious right core.

Posted by Charles Warner at 6:49 AM | Comments (0) | Print | Mail this entry

October 10, 2004

Sunday, October 10, 2004. More

Sunday, October 10, 2004. More On Stern.
Howard Stern's announced move to Sirius Satellite Radio in 2006 caused a tsuami of publicity, which is just what Sirius hoped for when they signed Stern to a five-year $500-million deal. Obviously, Stern's switch will have a huge impact on Sirius's subscriber base and on Infinity Radio's bottom line and, to some degree, on Viacom's.

Let's look at the numbers for Sirius. The $100 million a year includes building a new studio for Stern, all production costs, plus Stern's compensation. Sirius claims it hopes to add one million new subscribers to its current 600,000 base with Stern's move. Sirius charges $12.95 a month. (XM Satellite Radio has 2.5 million subscribers and charges $9.95 a month plus a $1.99 a month premium for Opie and Anthony.) Thus, $12.95 a month times 12 months equals $155.40 per year. In addition, Sirius will probably charge a premium for Stern, as XM does for Opie and Anthony. I wouldn't be surprised if Sirius charged more (Stern's hyper-inlfated ego would demand it), so let's say Sirius charges $2.99 a month for Stern. That would mean Stern subscribers would pay $15.94 a month or $191.28 a year. Multiply $191.28 by a million new subscribers and you get $191.28 million a year. Now add $2.99 by the number of the 600,000 current subscribers who would want Stern---let's say it would be 100,000 to be on the conservative side. That would be $299,000 a month or $3.588 million a year. Therefore, it is reasonable to project that the Stern move could gross Sirius about $195 million a year if it gets a million new subscribers and 100,000 current subscribers sign up for the Stern premium.

Thus, Sirius could potentially almost double the money it will be paying Stern 15 months from now. Sirius doesn't have to shell out the $100 million for over a year and in the meantime it will get new subscribers immediately because of the publicity, and those new subscribers will be paying $12.95 a month now, giving Sirius cash now.

Furthermore, Sirius is carried free on at least one direct satellite TV provider, which means some fans might switch to satellite TV to get Stern, which would be a boost to satellite TV.

The big gamble Sirius is making is that it will get a million new subscribers, but as the above numbers show, it can be successful if it gets only about 600,000, or doubles its current base. That's a good gamble.

The financial impact on Infinity and on the radio industry could be huge. Stern 's program, which is syndicated by Infinity and appears on Infinity stations is New York and Los Angeles, is extremely profitable for Infinity, as the syndicator and for its stations. Stern appears on a total of 46 radio stations and has a national audience of about 11 million. When Stern goes to Sirius, perhaps a million (about 10%) of those listeners will go to Sirius and no one knows how many will stay with whatever programming replaces Stern, but I think it's reasonable to expect that the current Stern stations would lose 33% to 50% of their current morning drive time audience to other stations or to iPods. Stern's primary demo, men 18-34 are deserting radio for iPods, MP3 players, and games on the Internet, and Stern's move might speed up this diaspora.

On his program last week, Stern apparently said that Viacom ought to buy Sirus. Cute idea, but it won't happen because buying Sirius would cost too much for a poor return until Stern's increases kick in and, thus, hurt Viacom's bottom line when it is already hurting because of Infinity's poor performance. That poor performance is not necessarily because Infinity is doing a poor job managing the stations but because radio revenue in general is in a slow decline due to the migration of 18-34 men to other forms of entertainment. Also, Sirius would be silly to sell when it has a potential winner. If Sirius were going to sell, it would wait until after Stern is on board and the stock price would be much higher.

Some economic prognosticators are predicting that radio revenues will decline by two percent in 2005, and that was before the Stern announcement. When Stern moves in 2006, that move alone could reduce total radio revenue by another two percent. Not only will the Stern advertising dollars go away, the Stern move will reduce audience levels for the radio industry, and since revenue follows audiences, the move could cause an additional one percent revenue decline. So the radio industry could be looking at a decline of five percent in 2006. Scary for broadcast radio, good news for satellite radio.

Posted by Charles Warner at 12:33 PM | Comments (0) | Print | Mail this entry

October 7, 2004

Thursday, October 6, 2004. Stern

Thursday, October 6, 2004. Stern News for Infinity.
When Howard Stern announced on the air that he would be moving to Sirius satellite radio in 2006, when his current contract with Infinity radio is up in 15 months, you could almost hear the groans at Infinity, Viacom, and the entire radio industry.

According to the Wall Street Journal, the obnoxious Stern signed a five-year $500 million deal with Sirius, which hopes that the signing of Stern will add a million subscribers to its current subscriber base of 600,000. Subscribers apy $12.95 a month for a variety of commercial-free music, talk , sports, and entertainment channels. When Sirius signed a deal to carry NFL games earlier this year, that move was not touted in the press nearly as much as the Stern signing was. Sirius's signing of Howard Stern made the front pages of the New York Times, the Wall Street Journal, and USA Today, which was much more prominent play than Sirius's NFL deal got.

Both Wall Street Journal and the USA Today articles were better than the Times's article because both had more financial details. The USA Today piece asked the best question about the deal: "Did Sirius pay too much for Stern?" Investors didn't think so as stock in Sirius closed up almost 16% on the Nasdaq. Some analysts speculated that Sirius did pay too much and would never recoup its $100 million a year for Stern. I think the analysts are right, Sirius won't get its money back in subscriber revenue, even if they charge a premium for Stern, which they probably will (Opie and Anthony on XM Satellite Radio is $1.99 a month extra, but XM charges only $9.95 a month versus Sirius's $12.95 a month). But the Stern deal might be worth it to Sirius for the publicity. I mean how often can you get front-page stories on the three largest circulation newspapers in country? To say nothing about the publicity the move received on radio and television and the magazine covers that are sure to come.

In my next blog, I'll write more in depth about the financial, audience level, and social implications of Stern's move to Sirius. But in the meantime the move, as much as I hate to admit it, does make Stern the "King of All Media" as he has so often and so modestly proclaimed for years, to Don Imus's disgust.

Posted by Charles Warner at 9:38 AM | Comments (0) | Print | Mail this entry

October 2, 2004

Saturday, October 2, 2004. Warner

Saturday, October 2, 2004. Warner Wolf on 1050 ESPN Radio.
I listened to Warner Wolf on 1050 ESPN Radio this morning and I thought he was excellent. I'll tell you why and do some compare and contrast analysis, but first I have to give a full disclosure about my association with Warner.

I first met Warner Wolf when he did a sports-talk program in WTOP-AM radio in Washington DC in 1965 or 1966 when I was sales manager of the station. Warner's sport-talk program was one of the first of its kind in the country and it became instantly popular in Washington (and, by the way, easy to sell). What I remember most about Warner was his prodigious memory. He had a feature on his program that involved people calling in and trying to stump him on sports trivia. He rarely lost. Absolute photopgraphic memories are an extremely rare occurrence in human history, but I suspect that Warner comes very close to having one.

Warner went from radio to televison in Washington and then to WABC-TV and WCBS-TV in New York, where he became famous for the line, "Let's go to the video tape." Warner was a very good sports anchor and used his two or three minutes of time in a half-hour newscast well. He was exciting and good natured. But I felt his greatest asset, his encyclopedic memory, was buried under the blanket of television vapidness and highlights, no analysis, no insight, just action--but that's TV.

When 1050 ESPN Radio went on the air last year with its new all-sports format, I began listening regularly, primarily because I couldn't stand the in-your-face, arrogant, nasty sports-talk show hosts on WFAN. At first I thought Michael Kay was terrific--knowledgeable and good with callers. However, I tired of Kay as his on-the-air personality changed. He became self-absorbed, silly, and nasty to callers. He became an angry dispenser of his personal opinions and berated and made vicious remarks to and about his callers. Worse, he often deviated from talking about sports and talked about himself , movies, sex--anything but sports. He also began kidding his producers with cruel , malicious remarks. His anger, narcissisim, and spitefulness began to dominate his performance and I stopped listening.

I never watch local commercial television station's newscasts, so I wasn't aware that Warner was let go from WCBS-TV this past June, two months before his contract ended. I learned of his dismissal when I was talking to an old friend and WCBS-TV ex-general manager who is also a friend of Warner's. To my surprise, my friend put Warner on the phone and we had a nice chat. He told me is was looking around and I said, "You ought to be on ESPN Radio--you were the best at sports-talk radio and ESPN readio needs you desperately."

So when I was listening to Wally & the Keeg (Wally Matthews and Tom Keegan) on 1050 ESPN one afternoon, I heard a promo for Warner Wolf on Saturday mornings. I was glad to hear that Warner was back on the radio, for which I thought he was best suited, and made a note to listen.

Warner was great on the air. He was talking to Bob Gallerstein, the Sports Center update announcer and side-kick. It was pleasant, fact-filled conversation about sports that showed off Warner's unbelievable memory for sport statistics. Warner also has an infectious, real, warm laugh that was sprinkled through the discussion. He came across as a happy sports nut who loved nothing better than talking intelligently about sports and being able to put current sports in historic perspective. Smart, fun, and imminently listenable.

Unfortunately, he was only on until 10:00 a.m. when Mike Crispino came on the air. Cirspino is another rude, nasty, mean-spirited, humorless, angry Mike who arrogantly cut off callers. He sounded as though he belonged on WFAN, not on 1050 ESPN. So I turned him off.

I'll listen to Warner Wolf again next Saturday morning, blog until noon and then turn on Jonathan Schwartz on WNYC-FM (993.9). A nice Saturday on the radio with some up-beat, intelligent radio veterans, not angry, nasty narcissists. Perhaps my affinity for Warner and Jonathan reflects more on my age and personality and the angry, nasty narcissists refelct the age and personality of the younger sports fan 1050 ESPN is try to appeal to. For the first time in several years I'm pleased to be old.


Posted by Charles Warner at 11:57 AM | Comments (0) | Print | Mail this entry