June 23, 2015
Emmis Communications may never be one of the "Big 3" of radio groups, but it's just as much a trailblazer as any company in the industry. From day one, Emmis has pushed hard for the activation of the FM chip in smartphones via NextRadio, attracting Sprint as the first carrier to do so - and the results so far have been promising. Elsewhere, Emmis flagship Top 40/Rhythmic KPWR (Power 106)/Los Angeles now faces a stiff direct-format rival, headed up by its former morning show star. How's Emmis handling today's hectic business climate? Here, Pres./Programming-Radio Rick Cummings shares his frank and clear-eyed perspective.
How would you describe the current business environment for Emmis and radio overall?
I describe it as being "in progress." The more negative view is that business is stagnant; the more positive view is that we're increasingly figuring out how to be more competitive in a much more fragmented world, where we once had universal appeal as the main if not only gatekeepers, but now we no longer enjoy that circumstance. We're finding our way in terms of digital offerings, sales efforts, and things we're still trying to figure out. We're having more discussions within our company and with people in other companies and I feel, in general, we're starting to get it.
So are you bullish on the rest of the year?
Yes, but in fairness I've heard all kinds of theories why the first few months were not very good. I don't know which ones to believe. Some culprits were terrible weather in the Northeast and even falling oil prices, which may be great for those who are filling their gas tanks, but not so great for those with jobs in those industries. Those things seem to be, at least, abating, which certainly helps. All my career, I've heard that radio is considered to be a bell weather for the general economic conditions of the country, and the latest quarter GDP sure confirmed that. It has been better and positive in June, so things look brighter than they did in the early part of the year.
Emmis has long been behind NextRadio. What will it take to convince more carriers to come on board? Would Sprint's success with NextRadio inevitably get others on board as well?
I hope you're right; that's our theory. I have to say that I've never seen anyone go so relentlessly at a concept on behalf of an industry as I've seen Jeff do. I've never seen anyone run through walls for so long and hard as Jeff has with NextRadio.
The key, whether it's convincing other carriers, other broadcasters or consumers, is that we have to be able to answer one simple question from all of them: "What's in it for me?" If we can give them an answer that's positive, be it easier accessibility for consumers or economic benefits for the others, that's when you'll see a universal embrace of NextRadio.
There are some signs out there that are very encouraging -- not only in the increasing number of NextRadio app downloads, but greater TSL for stations on NextRadio. People seem to love certain features, such as the "What's Playing Now" feature in the market grid. We have encouraging interactivity with the app, but the best one, for me, is when we show this to a consumer under the age of 25 - and let's face it, that's where we lost a lot of our consumption -- well, we show them this thing, and they tell us it's cool. Radio hasn't been considered "cool" for at least a generation; that excites me. We won't be all the way back until our embrace of digital in all of its forms will prompt more people to think of our medium as cool again.
I also love the comment from someone at SiriusXM, who said that they used to really worry about streaming channels, the pureplays, but not so much anymore. He believes, as we do, that people will ultimately want more than playlists generated by an algorithm. They'll want curated music from trusted tastemakers; they'll want personalities they know and love, and they'll want current news and information. And they'll want all those things from the audio source of their choosing.
But will Sprint show data on how successful NextRadio has been to other carriers?
You'd have to ask Jeff or Paul Brenner; I'm not sure what the answer is. I know that Sprint is very pleased with results at this point. I know Jeff and Paul are happy with the results; I know that we're free to release, and do with regularity, download and listening metrics.
What about getting NextRadio on iPhones?
It'll certainly be an important milestone. Paul said publicly many times that Apple will be the last domino to fall ... after everyone else is in.
Because more radio listening is happening via smartphones, is it important to tailor radio content for mobile?
That's a good question. We saw how mobile consumption overtook desktop on our streams in the third and fourth quarters of last year, and we saw all the growth in mobile. Certainly we need to have increasing discussions about having a strong and attractive presence for those who use mobile devices, so we want to provide quality audio content for mobile. Those conversations are happening all the time, I don't know if we've learned anything that says mobile content should be different, but they do want content that's elegant, simple and easy to consume.
What's your view of the encoding issues with PPM and the viability of Voltair?
Well, if iHeartMedia has never heard of Voltair, I don't know much about it, either... (laughs) It is funny to watch how secretive some companies are about Voltair, but you'd be hard-pressed to find a company out there that's not using them or at least hasn't had experience with them. We tried them and I would say there certainly seemed to be an increase in meter counts -- in some cases -- and generally speaking, an increase in meter count means an increase in ratings. We have anecdotal circumstances where Voltair has gone in and ratings have gone up. The thing is, we can't correlate Voltair with ratings success in 100% of the cases. We've been unable to correlate such because so many things impact ratings - seasonality, marketing, competitors.
I don't think we really know what we have here yet. It will be very interesting to see what Nielsen ultimately says about the processor. We will hear something soon, I think.
Are you familiar with Vadio and if so, are you interested in using it chain-wide at Emmis?
We have always been interested in it. I met Bryce Clemmer at a NAB Tech Summit three or four years ago. We were interested in the concept then and we have been periodically checking it out. We do think there's something there, although the execution can be pretty difficult.
It ties into one thing I do believe: The world of silos we all grew up in -- with separate print, audio and video silos -- is going away. Cisco has predicted that 80% of all Net consumption in a few years will be video. There's a growing expectation, especially for people under 24, that they should be able get what they want -- including video -- anytime they want it, on demand, and it should be free or cost next to nothing. At Emmis, a job opening is more likely to be a video producer/editor these days than it is an announcer. I can imagine that companies like Vadio and probably several others will be in demand.
In Los Angeles, Emmis' heritage Rhythmic Top 40 Power 106 is now facing considerable direct-format competition with your former morning show host across the street as well. Historically, the market leader basically ignores the newcomer and keeps its eyes on protecting and expanding its own turf. Is that true in this case, or has this direct-format rival impacted how Power 106 is programmed?
We certainly can't ignore it, but we are continuing to take the view that we shouldn't take much of the ratings picture very seriously so soon after its launch. Let's take the first serious look after July 4th, well after the competitor launched with a commercial-free month and a legacy morning guy. We know his popularity and heritage; we helped him build it. They launched with probably the biggest marketing campaign I've seen in southern California since the economy downturn in 2008, so they have a lot going for them.
I've always said direct competition initially kills the upper 25% of your ratings, which is the lucrative bottom-line part you lose when people have a choice - and they're certainly a formidable competitor. What has happened so far has been expected. We're starting to stabilize and we've seen them flatten out. I remain confident that what we saw in New York, when they did that 13 years ago and it served them well, allowing Z100 to beat Hot 97, is helping them with KIIS now, and there's really nothing we can do about that. But as long as we do a good job with our audience and advertisers, and make sure they're happy with what we give them, that's our goal ... and a successful strategy, I think.
You now face the challenge of launching a brand new morning show with Cruz. How did that come about and what kind of expectations do you have for him and the show?
Jimmy Steal, the PD of Power, had J Cruz in mind as a successor to Big Boy someday way down the road. We certainly did not know and weren't planning on it happening this way, but he was viewed as an eventual heir apparent.
As you know, building new morning shows take more time that getting the music right, but we're strong believers in Cruz. His show is surprisingly good considering it's not even 120 days old - and it's getting better all the time. He has a great crew, who use a lot of imagination and creativity - and they're all hard workers who want to make something great.
This show is more of an ensemble cast, which ultimately will be great. In the short and medium term, this will be harder for the audience. It takes considerable time to build a fan base for ONE talent, let alone a team. There is a learning curve here for the audience ... for Cruz and his team, and for us. But we're starting to feel really good about what we're hearing.
We'll need to do better in the ratings but even now, we can look at each other and agree that it's already sounding pretty good. We're fairly pleased with the progress so far.
Finally, after establishing a benchmark morning show, only to see it go elsewhere, has that altered your perception of how your relationship should be with that type of talent?
You have to keep great talents feeling like they have challenges left, and feeling that leaving would be a difficult thing for them, be it personally, financially or both. I felt we did that with Big Boy. In the end, he did not agree and the judge said it was his right to make that determination. We did all we could to keep him, so I don't think this changes our view at all. Our job is to put on a great product and be talent-friendly, creating a good home for them so they feel they have opportunities that go well beyond the studio.