Week of February 2, 2009

This week we have been discussing rate cutting and what can be done about it. Bottom line? As a manager, I would appreciate support from above to allow me to walk on low ball BS business and establish a firm floor for the value of my station. Until that happens, you will hear GM's and Owners alike lamenting about low rates. But it's like teenage sex..everybody's talking about it, but not everyone's doing it! Certainly NOT MY CHILD! It's the other kids!

"Cutting rates are killing us!" is our discussion this week. (See yesterday and Tuesday) I have suspected all along that the past 6 years of expense cutting is having an effect on the psyche of a radio station staff. When the entire station is voice tracked and the studio that used to be populated by people is now just an empty room, there is a tendency to feel it is less of a facility that is not worth what it once was. Take a walk through many radio facilities today and count the empty cubicles, offices, production rooms, and studios. No marketing, promotions, activity, guests in the lobby, and parked remote vans have taken a toll on the "soul" of the station. Hence, there is a feeling of despair. Looking I at it everyday, perhaps, creates the feeling of less value...because it is worth less. Agree? Tomorrow - what can be done? (PS.it starts at the top.)

"Cutting rates are killing us" we hear the cries from CEO's on panels and in the trades. "We have to stop it!" they say. However, saying it publically and asking GM's to do it is quite another. As we did yesterday, here is another reason it MUST start at the top.

1. Act like a rate leader, even in tough times. When the number one station sells for less than the number two station, there will be a free fall of rates. Would you sell a BMW for less than a Toyota? Never! What the hell are leading stations doing dropping rate to less than the lower ranked stations? That's crazy! Yet it is happening in every market, and GM and CEO's Must stop it! Tomorrow.more rate fun!

"Cutting rates are killing us" we hear the cries from CEO's on panels and in the trades. "We have to stop it!" they say. However, saying it publically and asking GM's to do it is quite another. The quest for MK share and "get whatever money is out there" is overshadowing the nobility of the idea. If a CEO wants to put the rate where their mouth is, perhaps they might consider a few thoughts we will write this week that are at the root of the problem.

1. Consider realistic budgets. I hear from GM's all the time that have "corporate" jamming revenue in a down market. "Don't submit a budget that is down for 2009" they say. The GM thinks, "Ok, my ratings are down, the market is tanking, and they want more revenue than last year!" ...Hmmmm, there are only two ways to get it.lower rates or add spots. Until corporate starts allowing realistic revenue budgets, there will be more of the same. More tomorrow.

Given the tenuous state of the economy, as a manager, it's important to review financials on an almost daily basis. Making expense cuts is never easy or pleasant, but you must stay ahead of it in order to survive. Many managers tell me it's hard to forecast when the revenues keep dropping. No doubt that's true, but it's a good practice to assume the worst and prepare for it. Keep a "doomsday" budget in the top drawer and be prepared to use it. Oh, one more thing. Don't get discouraged; look at the newspaper, TV, and on line advertising. Someone is spending money....as long as there are businesses still advertising; there is a place for your radio station to economically show businesses a way out of this malaise. Take the lead.....but take precautions!