PM Drive On KABC

[michael hagerty]

I really don't know what is so shocking about that. Most of these shows sound like talk shows and they have virtually taken over the airwaves on most stations over the weekend and I guess no one complains so this may be the trend as stations find themselves financially strapped.

I don't think Levin will take the hit, but more likely it will be taken out of John Phillips time, which no one listens to anyways. So KABC gets paid for an hour that previously registered no listeners so not a bad business move.

If literally "no one listens to Phillips" between 6 and 7, it would be a wash...but that's an exaggeration, and infomercials will get fewer listeners.

If Phillips is a problem, he can either be improved or replaced with a host that does better. Infomercials will never get a meaningful number. So KABC is voluntarily flushing one-quarter of its afternoon drive numbers, driving down its overall average, and adversely impacting the next day's morning drive, as cars that were parked the afternoon before tuned to KABC now won't be.

A very bad business move, one that sets a very bad precedent.

[michael hagerty]

But never mind...Bob Moore says Don Barrett got it wrong. This from AllAccess:

KABC GM Nixes Report Of PM Drive 'Infomercial'
 PM Infomercial?
CITADEL Talk KABC-A/LOS ANGELES is denying a report by LARADIO.COM that the station will be "turning over a portion of afternoon drive to an infomercial."
President and GM BOB MOORE tells ALL ACCESS, "We have a show on-air hosted by MOE ANSARI on SATURDAYs and have been in discussions with him about doing something on a local level from 6-6:30p each evening. It's not a market update, but more about how are things going with your money. And, it's not a paid program. This is a daily half hour feature about what happens on a macro level, and how it affects our listeners on a micro level."

[RBB05]

no matter what programming changes happen now, they are all temporary prior to bankruptcy/new owners.

[westfield60]

Michael Hagerty the point of infomercials is not to get numbers or necessarily listeners. The station gets paid for an hour that otherwise they would be paying for. That is why it is a good business move. People keep forgetting that radio is a business first and everything else is secondary. Do you really think all the weekend infomercials draw any sort of numbers? Are you kidding? The only thing is that KABC's cash registers are chiming on the weekends.

It's the same reason they broadcast the Dodgers and now the NFL games. The general demographic of KABC has been the senior crowd and do you think that they want to have their favorite conservative mantra interrupted by sports. KABC gets tons of money thru these sports broadcasts and that is why they do it. Listerners or no listeners they get PAID.

Also I imagined it would be Mo Ansari since his "infocommercial" is less salesy. He only publicizes his services and company a few times rather than the other peddlers who are pushing their products or services incessantly. Mo does comes across as a legit talk show.

[michael hagerty]

Michael Hagerty the point of infomercials is not to get numbers or necessarily listeners. The station gets paid for an hour that otherwise they would be paying for. That is why it is a good business move. People keep forgetting that radio is a business first and everything else is secondary.

Westfield: I understand the point of infomercials. I've also seen first-hand the damaging effect they have, especially in core time periods.

Each time you take the "easy money" of an infomercial over actually programming and selling your station on a spot basis, several things happen:

*You reduce the number of people listening to that timeslot.

*You damage the station's overall numbers.

*You give your previously loyal listeners an excuse to sample other stations.

*You give potential new listeners who sample during your infomercial time no reason to come back.

*You depress other dayparts dependent upon the habitual listening you've now undone.

And then comes the kicker.

Once the new, lower ratings for the timeslot and the station overall come in, the infomercial clients don't want to renew at the rate they paid the first time around. The station's not doing as well, so why should they? They argue that you're delivering a lower potential audience to their half-hour...they claim that the direct response isn't what it was...and point out that you'd only do worse now selling on a spot basis.

And it goes on and on.

The really short-sighted managers compensate by shifting more hours to infomercials...hoping to make up the shortfall in reduced costs and more paid inventory in the new hours.

And the same thing happens there.

And it happens again with each successive renewal.

Eventually, there's nothing left...the infomercial folks have ground you down to a rate that, back on the day before you went there, you could have easily beaten with your own programming and spot sales...but it's too late now. There's insufficient revenue with which to rebuild. 

The tragedy is that, for radio in general now and AM in particular, there are dayparts (especially nights and weekends) where programming sold on a spot basis can't be profitable. But expanding infomercials into key timeslots won't result in success or profits long-term...it will just make those timeslots (and eventually the entire day) unsustainable.

You say radio is a business first and everything else is secondary.

Yes. And the business is supposed to be radio. If it's only about money and the station thinks it can only make money by airing something with no listener appeal, it should probably save the power bill for the transmitter and use its website to sell iPods.

[westfield60]

Michael you make good points, but I disagree with some of the points. Let me give you my example

I've always liked Bob Brinker on KABC and have listened to him sporadically but listened religiously particularly during last year's financial meltdown. His show was different than the other so-called financial shows since he wasn't peddling his company every 10 minutes. Neverthless when KABC replaced him in favor of the Dodger or then later infomercials does not mean that I won't come back and listen to him should he return to that 1pm weekend time slot. The moment they put him back at that time slot is the time I will be back listening to them. So I don't think listener loyalty is that weak.

Secondly the point of sampling other stations. Yes I have sampled other stations but can you tell me what else is listenable in this town. This generally is a sad statement on the overall choices we have in this town but honestly I can't find anything else that I would listen to during that time slot and instead chose not to listen to anything. Once and if Bob returns at 1pm I will return.

As for your point on "Short sighted managers" Amen to that. The reason KABC is in the tank is directly the result of short sighted idiotic decisions by the string of managers that KABC has had for the last decade. They were resistant to change because of their self inflated egos and programmed the station into the ground. But this has been a wide spread problem with managers all across this country in all industries. Banking and Financial industries are prime examples.

I do applaud Bob Moore for trying something new and bringing FHF to that station.

[oaktree]

Don't bet on a bankruptcy filing for Citadel. Or even a pre-packaged one. They're trying to sell debt for equity back to the banks -- who would ultimately "own but not run the stations -- keeping Farid in charge.

They have to come up with $150-million by January 15th.  The stations are billing as a whole just fine. It's the stock that's in the crapper. There's plenty of equity to play with still - and the banks don't want to write down a three-billion dollar loss. There is still time for things to happen before the inevitable.  It will buy Citadel time -- and maybe the economy will turn better. Radio stocks are already on the rise.

Citadel's not got much at $.11 a share, but it's sure a lot better than at $.03 a share.  It has doubled (at last) in a week.  Even going from a nickel to a dime or more a share -- some people got richer. 

They aren't dead, yet. Life support - yes. The banks will buy into the struggle to keep it afloat. If an infomercial at 6 p.m. helps the cause -- they need to do what it takes and someone is willing to pay for billing they'd not get otherwise.

[RBB05]

Don't bet on a bankruptcy filing for Citadel. Or even a pre-packaged one. They're trying to sell debt for equity back to the banks -- who would ultimately "own but not run the stations -- keeping Farid in charge.

They have to come up with $150-million by January 15th.  The stations are billing as a whole just fine. It's the stock that's in the crapper. There's plenty of equity to play with still - and the banks don't want to write down a three-billion dollar loss. There is still time for things to happen before the inevitable.  It will buy Citadel time -- and maybe the economy will turn better. Radio stocks are already on the rise.

Citadel's not got much at $.11 a share, but it's sure a lot better than at $.03 a share.  It has doubled (at last) in a week.  Even going from a nickel to a dime or more a share -- some people got richer. 

They aren't dead, yet. Life support - yes. The banks will buy into the struggle to keep it afloat. If an infomercial at 6 p.m. helps the cause -- they need to do what it takes and someone is willing to pay for billing they'd not get otherwise.

I factually know of two groups putting together their $$$ to buy Citadel....and they are going to wait until Citadel can get squeezed....the value of the company has plummetted and it will be at least 12 months before it could potentially be healthy again. By then, the note holders are going to look favorably on virtually any offer. Both buyout candidates would likely gut the corporate and station managements that have driven the company into the gorund. So anything that happens at Citadel now, is only temporary.

[michael hagerty]

Michael you make good points, but I disagree with some of the points. Let me give you my example

I've always liked Bob Brinker on KABC and have listened to him sporadically but listened religiously particularly during last year's financial meltdown. His show was different than the other so-called financial shows since he wasn't peddling his company every 10 minutes. Neverthless when KABC replaced him in favor of the Dodger or then later infomercials does not mean that I won't come back and listen to him should he return to that 1pm weekend time slot. The moment they put him back at that time slot is the time I will be back listening to them. So I don't think listener loyalty is that weak.

Secondly the point of sampling other stations. Yes I have sampled other stations but can you tell me what else is listenable in this town. This generally is a sad statement on the overall choices we have in this town but honestly I can't find anything else that I would listen to during that time slot and instead chose not to listen to anything.

Westfield:
   You're a model listener. I can tell you from experience...it's easy to blow off an audience. Getting them back is a bear. The average listener isn't checking back to see if you've regretted your move and restored your schedule. They figure you've moved on and now they will.
   
   You could (and I'm talking about weekdays, not weekends, here) try to fix it through promotion...but who's spending that kind of money anymore? And what media do you use to reach a former KABC listener?
   
   As for sampling other stations...that's actually the least of the evils...that they'd land on KFI or KRLA or KCRW or discover that they like one of the music stations more than they thought.

   I should have included not listening to the radio at all in my original post. Frankly, that's worse. If your audience samples someone else, they'll eventually (in a 7-minute spot break, maybe) hit "scan" to see what else they can find...and maybe they'll re-discover you at a good moment (it's just as likely that you'll be in your own 7-minute spot break...or 30-minute infomercial).
     
   But when they've left the radio universe...for silence, mp3s, audio books, whatever...they're not hitting "scan" at all, ever.
     
   And the scary thing (or what should be scary for radio management) is that if you can get past the change in habit...not listen to the radio for, say, two weeks, and replace it with something you enjoy more...you don't miss it. And if and when you do decide to see what you're missing, the sad state of radio usually has you back to other options in a heartbeat. The longer you've been away, the quicker you hit the "off" button...and the longer it will be before you give it a curiosity listen again.
     
   It's like leaving a bad relationship. You didn't realize how much your head hurt until you stopped banging it against the wall. And in radio, you're not tempted to go back because the sex was good or you need to be loved, even badly. Sex ended a long time ago. So did love. Radio has been barely acknowledging the listener's presence, let alone serving their needs, for a long, long time.

[oaktree]

I factually know of two groups putting together their $$$ to buy Citadel....and they are going to wait until Citadel can get squeezed....the value of the company has plummetted and it will be at least 12 months before it could potentially be healthy again. By then, the note holders are going to look favorably on virtually any offer. Both buyout candidates would likely gut the corporate and station managements that have driven the company into the gorund. So anything that happens at Citadel now, is only temporary.
[/quote]

Bonneville is kicking tires and is certainly in a position cash wise to do such a deal.  But the Citadel stations themselves are cash flowing and can only go higher and quickly as the economy improves. They may be "squeezed" but the protection will be the debt-for-equity bankers who, even temporarily, keep the assets with Suleman in charge until Bruce Reese or someone else (that in purely speculation from Larry Wilson's Alpha Broadcasting and Randy Michaels and Tribune on down the food chain of potential but leveraged buyers,) decides that it's time to push the button and get into Citadels corner pockets. Would Wilson retake the group he put together before selling to Forstmann? That's a big chunk, but, yes, he could do it.


The assets of the company are, obviously, greater than the corporate shell and the purchase will still be expensive -- even if Bonneville or another buyer, get to divvy up the stations in parts instead of buying the whole deal.  The corporate value, as you've stated, has plummeted, which screwed many of the Disney holders of the odd Morris Trust still holding stock in Citadel. 

No matter who get Citadel, in whole or in part, it's not going to be a fire sale. They are buying equity, not debt. The debt will be the banker's problem and not at the cost of equity.