(By Radio Ink Chairman Eric Rhoads) Welcome to 2018, a year that will not be forgotten in radio. Think of the coming year as a giant roller coaster: pretty intimidating when you walk up to it, moments of anticipation and maybe some fear, moments of thrills and screams of joy, and maybe you’re a little wobbly when you step off the ride. But you’re safe, in one piece, and better off for the experience.
My crystal ball is out of service at the moment, and in reality, even the smartest and best in the business don’t really know what this E-ticket ride will be like, but I’ve got a couple of thoughts about what could be.
Bankruptcy and restructure: It’s unfortunate that radio has a cloud hanging over it with the two biggest companies, iHeartMedia and Cumulus, having some giant debt problems. Cumulus of course has already announced bankruptcy, and at the moment I’m writing this, the same could be in the air for iHeart. Though this may send shivers down your spine, especially if you’re employed by one of them, my guess is that 2018 will be the year the companies are restructured, and finally we will see those looming issues resolved. It’s not necessarily a good thing if you’re holding stock, but it will be good for both companies to move on without that raincloud overhead at every moment.
New players (and old players) emerging: There is a strong chance we will see new faces emerge on the scene to run the restructured companies, or at minimum, changes to boards of directors. I’m guessing that Cumulus founder Lew Dickey will emerge either with a new company built from potential breakups or spinoffs — or in the catbird seat with new money, ready to swoop in at Cumulus and offer an alternative to some less popular options. In any case, I suspect we’ll see some top names with great track records emerge in new roles as the company sees new money and/or new management. I’m not seeing new management for iHeart because as an operating company (debt aside), performance has been strong. Of course, if restructuring requires a change in board control, all bets are off.
The Entercom-CBS Factor: Years ago, when everyone else was buying radio stations and betting the farm like drunken gamblers in Vegas, David Field of Entercom sat patiently by, refusing to drink the Kool-aid. Rather than going deeply into debt, his acquisition strategy was measured and conservative. Though he was criticized at the time, I wrote in this column years ago that someday he would be the one holding all the cards when others had debt they could never pay. That day has come.
Entercom, under Field’s direction, is not only the belle of the ball in the industry, Wall Street is confident in its ability to operate. Field now holds the power cards in radio, which may put him in a position to take on some more spinoff properties, take over management of other companies in need of leadership, and create a new kind of radio company — one with reasonable debt and measured, predictable growth. We’re also seeing David take the helm in industry leadership with his massive pro-radio campaign, from which we all reap the rewards. He has used outside media, for the first time in history, to promote radio to the advertising and business communities. This will raise the tide of all ships, of all stations, but strengthen Entercom even more.
Loss of digital confidence: In the wind, and perhaps being considered by many advertisers, is a lack of confidence in much of their digital spending. Bots are clicking on ads and stealing from well-meaning advertisers, many of whom are not seeing the returns they had hoped for. This is causing some, like Procter & Gamble, to return to radio and some other legacy media as an alternative to sell products. Could it be that an almost 100-year-old media will be rediscovered as something useful and relevant (as we’ve known it is all along)? Time will tell.
The crumbling of digital radio: No, I can’t believe I’m saying it, since I too pioneered the space and founded a digital radio company during the Internet bubble. Though listening levels are growing and won’t go backward, these companies are penalized for every listener. The more they scale, the more they have in exorbitant streaming and licensing costs. Pandora, it appears, is crumbling from the inside, and, though it won’t disappear, unless it can develop new revenue streams to take it from an online radio company to a company that monetizes its audience relationships in new ways, it may never escape the curse of its own success.
Discovering the back end: In a recent piece I noted the massive growth of my own enterprise because I realized that my relationship with readers was my most valuable asset and that I could make more money by developing a back end of products to offer that list. That ended up bringing in more revenue than I could ever achieve with advertising alone. I’m working hard on this to bring a new solution to radio, to create a second asset as valuable or more valuable than advertising.
Regarding sexual harassment: We’re already hearing a lot of rumors of actions about to be taken, people about to be fired, and legal action against radio companies, managers, program directors, co-workers, and so on. One source tells us there are dozens, if not hundreds, of people about to go down. This is about the treatment of both men and women, and if the rumors are true, many careers will be ended. There are also massive issues to come concerning what is and is not acceptable behavior, and what can and cannot be said, on air and off. People who have paid off the claims against them with settlements and non-disclosures will be exposed. The radio business — like many others — will be redefined.
The market: Though there is no way of predicting it, some believe stocks will have a massive upside and continue growth. Others believe a giant correction is coming, bringing a big crash. Of course, no one really knows. But you can count on something happening (hopefully stability).
I look to this year with great confidence that radio is in a good place and that there is solid leadership in most of the industry. Though there will be some slippery patches, there will also be some amazing opportunity.
Here’s to a successful 2018!
Eric Rhoads is Chairman of Radio Ink magazine and can be reached at [email protected]