The way the CBS announcement — to explore ways to get out of the radio business — is being reported, you would think CBS CEO Les Moonves came up with the idea the night before the CBS shareholder meeting. Everyone with a pulse inside the industry was aware this was a possibility (see CBS/Beasley Swap), and probably being discussed even before the Moonves comments.
CBS has always been a television company first. Radio is lucky to get a passing mention during earnings calls and barely a line in quarterly earnings releases. Eventually everyone gets out, if the price is right, and others move in and operate. And from time-to-time better operators come along. It’s not as if Moonves is turning off the transmitters and shutting out the lights. These CBS powerhouse stations are not dilapidated sticks that need to be turned around. As we reported yesterday, they are radio’s beachfront property, prime real estate, iconic calls. CBS consistently makes up half of the top 10 highest-billing stations in radio. But make no mistake about it, newspapers all around the country are trying to use the CBS announcement to dance on your grave.
Radio managers may want to take note that mainstream media print publications are trying to push the argument that radio is dead and Pandora and Spotify are pushing CBS out of radio. Seriously? If that was the case, why doesn’t CBS just shut down Radio.com and Play.it. And, did Pandora become a profitable business and we all missed it somehow?
Check out how the New York Times played the story on Wednesday: “Moonves’ comments reflect the challenges in the traditional radio business as it tries to compete with online services like Pandora and Spotify. The question really is, ‘Who would buy traditional radio assets today?'” The obvious answer to that silly question is there are many in our industry that would love those assets.
Here’s one of the most incredible statements about the CBS announcement. It comes from The Los Angeles Times: “The decision marks the end of an era and highlights the waning influence of commercial radio, which is no longer considered a growth industry. Young adults spend more time listening to digital music files, podcasts and subscription Internet radio services such as Spotify and Pandora. The shift has prompted major advertisers, including car dealerships, wireless phone companies and financial services firms, to steer more of their marketing dollars to digital platforms. For advertisers, radio is just not sexy any more,” said Adam Jacobson, a radio industry consultant and analyst. Hey Adam, read this story HERE!
Here’s how Reuters twists the story…”The urge to deal is understandable. Industry revenue has declined as advertisers embrace other media to reach customers. Last year, radio ad sales dropped 2 percent, while revenue in the struggling newspaper business actually rose 7 percent, according to Standard Media Index.” Radio revenue has certainly not been growing like it once did, but what Reuters fails to detail is how far newspaper has fallen over the past 15 years. A lot.
The Wall Street Journal followed the same script. “Once a steady contributor to the company’s bottom line, growing competition from satellite radio and streaming services have raised questions about the medium’s long-term viability.”
We’re not trying to paint a completely rosy picture of the industry. Q4 2015 earnings were a mixed bag at best and Q1 2016 pacings are nothing to write home about. However, radio, for as old as it is, has held up quite well, especially compared to newspaper, in a time of incredible competition. Nielsen continues to report that radio listenership is high (91% of Americans listen weekly), studies continue to show radio’s R.O.I. is very high, and the Infinite Dial study just completed by Edison Research and Triton Digital, showed that while there are many more online listeners in 2016 compared to 2015 (136 million compared to 119 million) Time Spent Listening has declined the past two years; consumers still turn to radio to learn about new music and radio still dominates listening in the car.
The industry may just want to be careful that these print publications aren’t allowed to control the narrative and make its advertisers believe CBS just pulled the plug on the Titanic.