The Next Ten Years: Radio’s Biggest Challenge

by Tom Webster, Edison VP


Radio continues to take it on the chin with advertisers and Wall Street, but finding the root cause of Radio’s doldrums is like peeling an onion. Some point to Radio’s tremendous installed user base and reach and contend that the problem is simply a PR issue. Others observe that Radio is losing the technology battle, and is being eclipsed by new media platforms such as satellite and Internet radio. Or is it consolidation? Content? Global Warming?
Certainly, all of these things represent competitive forces, applying pressure to one or more facets of the radio industry. In business, these forces are all part of life–in fact, let’s roll them up into one term: “change.” The forces of change are constantly surging, shifting and subsiding in any industry. When change happens, winners predict, survivors adapt, and losers react. Only one thing determines which camp a company–or an industry–inhabits: people.

Radio needs to find a more attractive entry point than “music intern.”

The Human Resources issue is, in my opinion, the most serious obstacle radio faces in the next ten years–not satellite, iPods or internet radio. These competing technologies alone will not damage radio–it’s the talent that those competing companies are luring away that will plague radio for years to come. There just isn’t enough innovation in the industry to keep up with competitive media channels AND a loss of talent. Content and technology are not the problems, they are symptoms of an HR disease. Broadcasting is simply not as compelling a career choice today as it once was, and broadcast companies are failing to attract new talent. Want proof? Here is Fortune’s 2006 list of the 100 Best Companies to Work for. See any broadcasters there?
When I got my college degree back in Boston years ago, I had a choice–I could go to graduate school, join some of my friends at the (then) Big 7′s of the world (Arthur Andersen, Price Waterhouse, etc.) or…I could get Matty in the Morning’s coffee for two years in the hopes of landing an overnight spot on Kiss 108. I chose grad school, though (oddly enough) I would find myself working with Matty and Kiss at Pyramid later in life. Radio needs to find a more compelling on-ramp, a more attractive entry point into the business than “music intern.” The type of person who is attracted to that position may or may not become the next Tom Poleman or John Fullam, but until Radio finds a way to recruit great young talent out of college and business schools as well as the clubs, we will continue to field a less than fully competitive team. The Radio industry has no training ground, no management recruiting strategy, and no solid HR strategy to enable it to compete not just against other media channels, but other sectors of American business as well. There is only so much talent to go around, after all.
Radio needs to do better at college campuses, and it needs a new HR strategy for the coming decade that will provide a compelling career path for smart people. With consolidation and automation, many of the spots the industry used to have open for its “farm team” (overnights, for example) are now gone, giving stations a smaller talent pool in which to fish, and the talent pool was thin to begin with. HD Radio solves the wrong problem. Fix the HR problem, and radio will survive and even thrive in the coming years. If station A out promotes Station B, blame Station B’s PD or marketing director. But if TSL declines in the whole market, we need to look a lot higher north on the organizational chart.
Some of this has to do with how radio consolidated itself over the past 10 years. In most industries, when one company seeks to acquire or merge with another, there is a careful exploration of differences in culture, people, benefits and strategy–and HR has a prominent seat at that table. The post-Telecom Act feeding frenzy of the late 90′s, however, afforded no such introspection and analysis. I was a part of five mergers during that period myself, and with each successive iteration I felt the culture changing around me–and rarely for the better. I felt nervous about my future, and no longer saw a clear career path where I was. I was not the only one–and I was also not the only one to move on to seek more solid ground.
I would love to see a whole raft of broadcasters make Fortune’s list next year–to me, there would be no greater sign of health for the industry. The good news is that the answers are not difficult to find–there are tons of successful models out there that radio could adopt to attract and retain great people. Here are a few to ponder:
1. Glaxo Smith Kline rotates its promising young managers through all aspects of its business. Imagine a radio station where top talent rotates through sales AND programming, so that tomorrow’s star PD was yesterday’s LSM–and the sales managers of the future are required to sit in music meetings today. There are some examples of this, but imagine how strong our talent pool would be if one of radio’s worst practices, the separation of “church and state” between programming and sales, became a fertile training ground for only the best talent.
2. The J.M. Smucker company (yup–the jam) offers 100% tuition reimbursement for higher education. With no limit. If we can’t lure MBA’s away from other industries, maybe we should start cooking up our own.
3. SAS Institute has made this list for a decade. The secret? Well, the pay at SAS certainly isn’t at the top of the industry, but when it comes to caring for their employees, they put their money where their mouth is–100% paid health care, an onsite medical clinic, unlimited sick leave and $300 per month onsite child care. A lot of folks would gladly give up some salary for benefits like these, and they do–and SAS not only attracts the best and the brightest, they also proactively keep them healthy and happy. Health care makes a lot of us nervous.
4. Stock options aren’t going to cut it when they are so far underwater your employees will never exercise them. Make it stock, not options. I know a lot of people, by the way, that work for privately-held radio companies and are a good deal happier than their compadres at publicly held companies. This can only be boiled down to a misalignment on some level of shareholder and stakeholder interests. Radio can either invest in realigning these interests, or just do what Richard Branson did when he stopped having fun–buy they company back and go private. How else can you explain Virgin Cola?
5. Invest more in training–Steve Rivers long ago told me about his vision for a “PD University,” like McDonalds’ “Hamburger U.” We fire a lot of people in this business (and deter many more would-be applicants due to the turnover and insecurity of the profession). In many situations, losing your job in radio means moving–pulling your kids out of school, uprooting your spouse. Radio needs to find more ways to retrain, reeducate and reduce turnover.
I guess the thing that makes me most incredulous about radio’s HR problems is the fact that we are so good at finding the little things that move the needle with our listeners. We pay their tolls at the bridge for a day, or buy them a tank of gas. We remember their birthdays. Pay someone’s mortgage for a month. Drop by their offices unannounced and buy them lunch. Little things–little things that build relationships and create love. Can’t we do the same for our employees? Wegman’s (the grocer) made Fortune’s list at number 2 (and number one with big companies) with an impressive 8% voluntary turnover rate. People love working for Wegman’s because they have genuinely created a family atmosphere. If a grocery store can do it, so can you.
What do you think? What are your ideas for Radio’s HR crisis–or do you disagree that it is one? Please leave your comments below or send me an email. I’ll cull some of your thoughts along with my own and present them here in a future column.
Thanks for reading,
-Tom

15 replies
  1. Jack Armstrong
    Jack Armstrong says:

    I think you make the basic mistake a lot of analyst make. You assume that radio is interested in hiring and developing talent. That is simply not true. Radio today is “concept” oriented and NOT interested in personalities. The two main questions they want answered by perspective employees are 1)can you do the job and 2) how little can I pay you. The whole purpose of consolidation is to buy a “format” for a given market and never have to compete. There are NO promotional budgets and the air talent has never been paid less. The public has noticed the poor presentations and are leaving to try something else. This is why AM died and this will be the death of FM. As for HR, how do you attract new talent when there is NO “glory” in working at the station. They can’t even find people to fill the weekend shifts. Control is a VERY poor substitute for entertainment.
    Jack Armstrong

    Reply
  2. Tom Schuh
    Tom Schuh says:

    This is a must-read article for anyone in the business, and maybe more so for listeners who cannot for the life of them understand why they don’t love radio as much as they used to. As a famous Buffalonian, Marv Levy, likes to say, the formula for winning is simple, but it’s not easy. Treat the people who work for you better, and results will follow: for them, for listeners, for advertisers, and for shareholders.
    For years, motivated people were happy to “work” in radio for less money than they could make elsewhere, because it was more fun, more glamorous, more show business! I think they still would, but they won’t settle for the pay if the other rewards aren’t there. Bring back the show biz, and people will come.
    You mentioned Pyramid – that company was based on Richie Balsbaugh’s philosophy: “we’ll make a little money, and have a little fun.” He said it out loud, he meant it, and the company lived it, all the way down to their little Oldies station in WNY. A little bit of that attitude would go a long way in today’s uptight, over-compliant, living-for-this-month’s-revenue-number world.

    Reply
  3. Tom Webster
    Tom Webster says:

    Tom–thank you. You make an excellent point about the “showbiz” appeal as a draw for talent, and as a fellow ex-Pyramid employee I agree that Richie knew that as well as anyone!
    Jack–I know a lot of broadcasters who think otherwise, and I tend to think things are a bit more cyclical than that. Also, I am not really talking about “talent” as in air talent, though that is a part of it. I’m talking as much about leaders in product strategy, finance, marketing and sales. Radio needs to court both talent from the clubs AND talent from business schools to create value and build a sustainable edge. But you make a valid point in agreement with Tom about the “glory” of working at a station.
    Thanks so much for reading.
    T

    Reply
  4. Greg Gillispie
    Greg Gillispie says:

    You might want to think about making the future projection for the next couple of years…who know what type of technology may arrive tomorrow.
    Otherwise you make a good point…Long ago radio gave up on its unique aspect and replaced it with “shut up and read the liner card.”

    Reply
  5. Andy McNabb
    Andy McNabb says:

    Bang on – and thank-you for the inspiration that comes from someone telling it like it is – and needs to be. Finding someone in our industry who shares similar concerns is an anomaly, and I am very grateful for your article.
    One of the reasons that the status quo is such in radio, is that our industry attracts a more egocentric individual in sales or programming. Egocentricity is directly at odds with the selfless practice of servant-leadership that makes men and corporations great; in which servant-leadership bears the good fruit in the examples you cited in your article.
    Why is radio dominated more by egocentricity than by servant-leadership, and what can be done about it?
    1. Radio is the most easily accessed form of “show business”, and gives the egocentric and prospective announcer a very accessible on-ramp to the working world. Same for the egocentric ad seller. As much as radio advertising has the potential to be perceived to be one of the more “sexy” career choices, many radio sales efforts are characterized by aggrandized bluster and contention, based on what the seller wants to tell, and not what will most effectively grow the buyer’s bottom line. This type of seller is not attracted to print – its selling culture is too conservative. These type of sellers are not those who will be hired by television, as television can pick and choose its people. That leaves radio as the default mass medium of choice.
    2. Strong passions are aroused that prevail over common sense. Consider that a P1 listener of any one station spends more time listening to that station than with any other company’s television station, website, newspaper or magazine. We meet people almost daily, that love our station, and gushingly tell us so. Whether we be sellers or programmers, basking in the warm glow from our listeners takes precedence over examining our own shortcomings, and we neglect to do better.
    3. How do we change the status quo and attract more and better people? Lead by example. Share the testimonies of those leaders in radio and those leaders from radio’s customer base who do what you prescribe. Foster direct debate between “old school” folk and the new breed of leaders bearing good fruit, making public long-term financial results, shares of market, and employee satisfaction and turnover scores to serve as the final arbiter. Nothing speaks like results.
    Andy McNabb
    McNabb Broadcasting/Y2Marketing/Andy McNabb & Company

    Reply
  6. Ed Shane
    Ed Shane says:

    So, what’s the complaint? I can get you several jobs at almost $16K a year, six days a week, and you’ll make a ton of money on remotes — on the seventh and eighth days! In other words, you’re right on target. I’m glad you made such a point of it!

    Reply
  7. Norman Wain
    Norman Wain says:

    I agree with you 100%…point after point was right on…HOWEVER there is even a bigger problem then HR for radio…it’s talent. How do you “develop and train” the next Howard Stern? The answer is you simply don’t. People like Stern just happen. And radio’s overall problem now is that we need creativity now more then ever…we need creative performers and formats. “40 in a row” doesn’t cut it in the age of i-pods. BUT you may have a big part of the answer in HR. Put some well paid passionate people who love their companies and their jobs in a room and tell them to be creative and you just may come up with something that listeners want to listen to.

    Reply
  8. David Martin
    David Martin says:

    Good points but not able to agree with everything you say. Your suggestion of practices employed by firms like GSK are simply unfair. To put it into perspective, GSK has an ongoing dispute with the IRS that may end up costing them over $11b or about half of what all commercial radio is said to produce annually and that is but one “case” now in their reserve. Scale is an issue here. Radio remains a regulated small business and as such is not a candidate for the attention of the Fortune 100 Best or other business press. btw, radio has not yet had a case at the Harvard Business School – it’s too small, a slice of the larger media sector. Agree with your take on the critical importance of HR but this has always been the case. Never has there been a time when more talent was available, good operators understand the importance of hiring smart and do just that. The youth have a keen interest in getting into the trade. The smart kids paid their way to attend the RTNDA/NAB last week, among these were the bright cum laude gang hungry for their first broadcast job.
    Norman is wrong in his thinking that people like Howard just happen. Absent support, and the proper environment (provided by management) nothing creative just happens. Without Mel the Howard we have come to know would not have just happened.

    Reply
  9. Tom Webster
    Tom Webster says:

    David–appreciate your input, but the facts don’t support your version of radio as a “small business.” Clear Channel, for example, has (according to Hoovers) 31,800 employees, more than 90 of the 100 Best Companies to work for. In fact, compare CCU’s nearly 32,000 employees with Microsoft (37,746), PricewaterhouseCoopers (26,392) Nike (12,502) or business school case study favorite Four Seasons (10,625) and you will be forced to rethink your vision of radio’s size and reach. Even companies like Citadel and Cumulus have more employees than many of the companies on the list (including Smuckers). CBS Radio’s yearly sales are comparable with companies on the list like Edward Jones and AG Edwards, whose combinations of small local branches and large centralized HR systems are not dissimilar to how most sizable radio companies operate.
    Radio, by the way, has generated lots of business school cases (I had at least one), including a Harvard Business School case on Radio One (and even one on WFNX in Boston). Size is irrelevant to being an interesting business problem.
    Please don’t take this as harsh–my goal here is to clearly show that radio CAN and MUST compete on the larger stage in order to attract the kind of talent needed to compete in the next ten years. There is no reason why ALL broadcast companies should not shoot to be included on the Fortune 100 list.
    Thanks for reading.

    Reply
  10. Frank Kingston Smith
    Frank Kingston Smith says:

    I spent a load of time in radio, and decided in 1993 (after 29 years) that the industry eventually would be three or four big companies. (remember how long ago this was.) I figured that one company would own three or four stations in one market, tying up three or four formats, managing to keep payroll down by hiring card readers and eliminating any real competition. That’s when I decided on retirement.

    Radio is not a developmental entertainment business. There are no more stations like the WABC I jocked for. The RKO stations were at one time the ones to beat. At one point on WRKO I had a 60 share, and the competition was sending out airchecks to get me hired out of town. Now there is no REASON to develop anything. I can say that I learned more in three years with Mel Phillips and three more with Rick Sklar than I did in most of the rest of my career. Everyone learned how to ENTERTAIN in a format.

    The only people who have fun on the radio are the morning shows *excuse me* the “Morning Gang” who laugh riotously at everything when nothing is really that funny. Childish attempts at humor when the only laughing is coming out of the speaker. A real shame and a waste of airtime.

    It’s too easy to pick up a satellite and not have to have a live, local, INTERESTING, FUN air personality collect a check. Some of the stations where I worked years ago have gone the easy way out with paid religion or “Name your choice of political leanings”. Here in the Phoenix market where I have retired (thrown in the towel) I can’t WAIT to punch up any station which adds “The NEW…” in front of their letters. And it usually turns out to be yet another “Segue Serenade” with a RoboJock (like Joe Kelly) every four pieces telling me, “It’s the music YOU LIKE!”

    If there were a rock ‘n roll station that a Dan Ingram or a Real Don Steele or a Larry Lujak would like to be on today, I’d get in line to get behind a mike. But pretty much all you will hear is, “Seg a POWER, then a HEAVY GOLD, then an UP-AND-COMER, then a RoboJock positioning liner, then a POWER, followed by a promo (no talking), then an OLD GOLD. Backsell the OLD GOLD into a stop. Play six minutes of recored spots, and follow with a ptomo for 45 minutes of “Nothing but Great Music, and seg into another POWER.”

    No laughing over there, Morning Crew….

    Reply
  11. Tom Webster
    Tom Webster says:

    Thanks for chiming in, Frank! By the way, if you are looking to join the Morning Gang, see Ed Shane’s job posting, above. The pay is low, but at least the benefits are awful.
    -T

    Reply
  12. John Parikhal
    John Parikhal says:

    Hi,
    Great article. The core issue with Wall Street Radio is simple – Wall Street rewards ALL companies for eliminating jobs. The proof is obvious – on a balance sheet, people are ‘Costs’ , NOT ‘Assets’.
    The greater issue is that fewer than 5% of radio executives are professional managers (which means “people who grow people”). Instead, they are “operators” (their own term). This means cash flow at all costs.
    So, if you’re a 20 year old and you look at radio, do you see a place where people are valued, where the company plans career paths, where there are happy employees, where there is a future? Where are you going to want to work?
    To be fair to the radio industry, they don’t have to care about all this. In business, you get what you measure and reinforce.
    Since the first round of consolidation, it’s been 90 day cash flow.
    Just because companies are big doesn’t mean they are well managed or forward thinking (GM anybody?). And just because they have biz school case studies doesn’t mean they have it together.
    There are some people in radio who really care about trying to develop people and attract them. However, most have missed Jack Welch’s point when he said HR was the MOST important part of a company.
    In radio, it’s sales and the CFO.

    Reply
  13. Benson Amollo
    Benson Amollo says:

    I do agree with you. Been in radio before and canot today help wondering what the radio industry is headed for; a matter of fact, talent development which has been a coveted tenet in the radio industry today, does not add up to a radio enterpreneur or even veteran producers in the industry.
    However, it is notable that a lot more investors in the radio industry do not care what thay are taking the audience through out of the horrible pool of presenters they have so long as they make their kill from the adverts. It is also funny that the few people on air have got accustomed to the less pay such investors are keen on giving and have also hung up their creative boots…It is therefore a pity that there is very little one can do but watch other technology take over radio.

    Reply
  14. Mary Brace
    Mary Brace says:

    There are a few words missing from this essay: “autonomy”; “loosen control.”
    Before MDs came straight from internships (which came straight from being college radio MDs), MDs came from semi-autonomous jocks competing for ratings. People were afforded the opportunity to learn directly what worked and what didn’t.
    Even college campuses are using automated music programs in conjuntion with stricter formats, now. And they’re not even in the business of competing.
    Only club jocks have the freedom of autonomy in a competitive environment now, and for the better ones, going to radio would mean a cut in pay.

    Reply
  15. Kwama Leonard
    Kwama Leonard says:

    Radio content is still an issue when it comes to the current technological advancements. Many presenters especially in development countries are hired based on very mere qualities that do not present what is really reqired to part of that team like: knowledge of subject areas, current affairs and basically the ability to focus on dissemination fo information. i do appreciate the fact that many people are trying to invest in this industry but still not quite in terms of talent cupture.

    Reply

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