With the COVID-19 vaccine slowly making its way around the country, and states, even with high case numbers, beginning to open up, what does this mean for ad spending? And, where does radio sit at the revenue table. Every morning, starting today, we’ll speak to a radio executive to find out if this COVID nightmare is over. Up First, Galaxy CEO Ed Levine.
Radio Ink: The Vaccine is here, what sense are you getting from the community, the people you talk to about it, even though the roll-out is slow?
Ed Levine: In general there is frustration with the slow rollout of the vaccine but optimism that it is indeed becoming available. Our County Executive, Ryan McMahon, has been extremely transparent during the entire pandemic and holds daily press briefings in which he goes through all the data. Our area has been doing quite well with relatively low infection rates. The unhappiness tends to be more with NYS and what many believe have been inconsistent policies that have greatly harmed local businesses particularly the restaurant industry. In fact Galaxy, through our Taste Of Syracuse has already raised $30,000 with a goal of $50,000 that we’re giving directly to local restaurants that request it. I personally wrote the first $5,000 check to launch the project. You can’t tout being “local” and not put your own skin in the game.
Radio Ink: What is the business community feel?
Ed Levine: The local business community runs a wide gamut from industries that can’t keep up with the business (anything to do with the home) to truly struggling mom and pops hoping to survive. In general there is certainly a sense of more optimism than 60-90 days ago.
Radio Ink: How is Galaxy doing and how are you pacing compared to the middle of 2020?
Ed Levine: We finished 2020 with true momentum as our EBITDA in Q4 was equal to Q4 2019 which was a very strong quarter for us. This is largely due to an amazing 1-2 punch from our Events division which created a new hugely successful drive through Halloween event, drawing 12,000 cars which was prefect for COVID ,and our annual holiday event Lights On the Lake which shattered every conceivable attendance record. We partner with Onondaga County on that event so not only was it great for Galaxy it added significant additional revenue to the County’s coffers at a time when the County is facing tremendous shortfalls. We are very proud of that fact. So considering we couldn’t stage Events for 7 months we did 90% of the 2019 events EBITDA which is amazing.
Additionally our digital department was UP in revenue in 2020 growing by 4.5%! Sports marketing was way off which is to be expected considering the truncated and interrupted seasons so overall from the depths of April by Q4 the momentum was unmistakable and has continued in Q1 2021.
From forward pacings, it looks like February will be the last month that will be down from prior year as it all hit the fan last year in mid March. We anticipate significant growth in both radio and digital in 2021 over 2020 but that’s not the goal .
The goal is to get back to 2019 and we are gaining on that each week. We have lowered our expense base without any full time layoffs and that may be what we are proudest of . In 2020 we really learned the difference between “nice to have” and “must have.” By making those tweaks we believe we are coming out of this stronger than before with a stronger balance sheet than ever. We were fortunate to retire significant debt and buy out the private equity firm in 2018. That has enabled us to invest in things like our Halloween event which was a $100,000 risk up front..we wanted to cover costs and hopefully make some dollars. $200,000 of EBITDA later we accomplished our goal. But if we still had PE money clicking away and huge bank debt we could not have done that.
So in the end, it does come down to right sizing your balance sheet, and getting debt levels down. Without that, you are just a gerbil in the wheel.
We do not take our current good fortune for granted at Galaxy. I spent many an afternoon in April walking along the Erie Canal working through “worse case” scenarios in my mind. Fortunately, they did not materialize. That is largely due to an incredibly talented staff that was all in it together. We all made sacrifices for the greater good as most of Galaxy views their role as more than just “a job.”
We are not naive and do not think 2021 revenues will just spring back to 2019. In fact ,in many cases there has been a permanent dislodging, to many business models that will take time to sort out.
Realistically we believe that we can achieve 2019 cash flows in 2022 with 2021 being a strong comeback year. But you need to be doing more than waiting for avails to pop up. Our solution has been to go where they can’t -hyper local in all aspects of what we do. We stay in our lane and do not get distracted by shiny new objects. Identify your strengths and stick with the plan. Sounds simple but executing it is really tough. But immensely satisfying!
Radio Ink: Is Radio out of the woods with this pandemic?
Ed Levine: I certainly wouldn’t say radio is “out of the woods” as COVID has caused 5 years of dislocation to happen in 9 months. There’s a reason that iHeartMedia and others almost never use the word “radio” anymore and instead use the much more generic “audio” term. Like it or not -Radio is perceived to be a medium on the downhill slide by many ad agencies. That’s completely untrue with the consumer but absolutely true with agencies and many business owners. Many of the buying decisions at a national/regional level are made in major metro areas where mass transit is a way of life versus driving to work. So they’re not listening to radio driving to work. It’s not completely divorced from the political divide in our country where half the country can’t believe the other side got so many votes.
When I ask the “93%” question (how many people listen to a LOCAL radio station in X town” (invariably get shock and disbelief when I tell them it’s 92 or 93%) – THAT’S the problem as perception becomes reality as to where money is spent.
Radio absolutely still works- but to ignore the reality of the perception problem is to have your heads in the sand.
On deck for Thursday morning, Ben Downs from Bryan Broadcasting.