Greed Kills

by Mr. Mel

"How are things going at the station?"

"Jesus, the stock price is down almost thirty percent over the last three weeks."

"How are the new sweepers sounding?"

"Revenue is up twelve percent this month."

"Do the trends look good?"

"The only thing that matters is forty-five percent in '97."

Radio has exited the entertainment business. It has left behind the concerns of listeners, the creative process, the heritage of seeking excellence.

What we have as 1997 unfolds is a single motivating factor for radio: Greed. Wall Street is King. Long live grossly inflated stock prices, an endless surge in radio revenue, and a zeal for turning profit that would make Bernard Baruch get out of his grave and put on a rally cap.

Before proceeding to a further examination of this woeful situation, it should be pointed out that many radio owners are quite honest about the current state of affairs. They waste no breath on saying that they serve listeners. They don't avoid the charges that consolidation has produced massive animosity with advertisers. They even admit that the profit margins they seek were unheard of in the past.

Notwithstanding the fact that radio operators are candid about their greed, it is a pitiful circumstance when those who work in the radio trenches are praying that the Justice Department will somehow restore sanity to radio. This is akin to Donald Fehr trying to keep baseball owners from throwing "stupid dollars" at players. Once Congress opened the door this far, it can't be practically closed. Why do you think radio's biggest operators went wild, immediately overspending on stations after the Telecom bill was passed?

To understand the depth of radio's fall, let's look at programming. Once upon a time, Radio & Records was almost entirely devoted to changes in the programming side of radio. When Scott Shannon changed stations, it was a very big deal. Now, regardless of who the programmer might be, it's a sidebar or perhaps a mention in Street Talk. The message is clear: Programming is for lower level functionaries. They are expendable, hardly worth our notice. The real movers and shakers are group presidents and CEOs, a few of whom actually know something about programming a radio station.

There is a trickle-down effect. If the programming of a station is hardly worthy of attention, how important can any of the areas controlled by programming be? Specifically, they have written off air talent (with very rare exceptions) as dime-a-dozen, disposable entities. Only the shortage of good Production Directors and the fact that air talent has been devalued have kept the stock of Production Directors relatively high.

Let's return to the original three points of this article. First and foremost, radio at the mega-level is ruled by stock prices. Radio operators are so angry at the Justice Department for trying to rain on their unending parade by enforcing monopoly laws that they can hardly collect their hefty year-end bonuses. Top radio management is eager to point out that (like all self-serving executives) they were put on planet earth for only one reason: To make money for stockholders. Forget the fact that the executives are invariably among the largest stockholders. Forget the fact that radio did very well indeed before group owners were publicly traded companies. Forget the fact that Wall Street has been on such a high that companies managed by monkeys could see their stock split seven times.

The second point of pride for radio's top managers is the unprecedented spiral in advertising revenues. They would like to point out that these revenues are rising ten to twelve percent every month for the last four or more years because they are brilliant strategists who have finally made advertisers see the light. Once again, we can use the monkey theory. All forms of advertising have been shooting up in the 1990s. The costs of other forms of advertising have risen even faster than radio. And in the bargain, radio owners have succeeded in uniting advertisers against them as never before.

The third and most egregious aspect of the New Radio Order is an unreasonable profit margin. For years, radio struggled to return profits of thirty-five to forty percent. Now, several of the biggest radio operators in America have arbitrarily decided that in '97, nothing less than forty-five percent will do. Apparently, at least one company has posted signs to that effect. It's quite a motivation for employees. Revenue rises ten to twelve percent a year, salaries rise three to four percent, workloads rise twenty to thirty percent. Isn't this how Karl Marx and his buddies gained so many followers?

You can make a very good argument that greed has become the national pastime--in business, in sports, in government, etc.. You can maintain, with adequate justification, that greed is essential to fostering competition and making this a more efficient universe.

But no matter how you dress it up, no matter how many cosmetic surgeries you give it, greed is an ugly taskmaster. After forty-five percent profit margins come fifty, sixty and seventy percent. After radio has reduced the average number of personnel at a station to six and raised the average work day to fourteen hours, there may come a cloud in the silver lining of River City. Rising revenue may actually taper off and go down. Listenership may continue its long-standing decline. The price of stocks may fall through the floor.

Then, the only way to satisfy radio's executive greedmongers is to give them the same reward they gave everybody else: fire them. Turn them loose in a world that has no use for them, proving once again that Greed Kills.