Today At The Radio Show In Atlanta

Happening In Atlanta

The NAB and RAB's RADIO SHOW is now underway at the MARRIOTT MARQUIS in ATLANTA, with a full day of events including the annual Radio Luncheon.

The Financial Outlook

TUESDAY's sessions opened with WELLS FARGO's DAVIS HEBERT taking MARCI RYVICKER's usual place offering the WALL STREET view of the radio industry (RYVICKER was absent due to a schedule conflict); HEBERT said that global financial troubles (especially CHINA's woes) and the possibility of an interest rate hike have created uncertainty among investors, but noted that the U.S. seems to be stable with 2-3% growth and positive signs from the housing and small business markets. Radio, he said, can look forward to a strong political category for the 2016 election; however, ad spending will only grow slightly in 2015 to $188 billion, still under 2008's record high. Radio, HEBERT added, has only slightly underperformed the ad market in recent years, although its share of advertising, now 8%, is expected to decline to 7% through 2019, according to MAGNA GLOBAL, while digital and mobile are growing.

HEBERT also ran through media usage trends, noting that radio's average time-spent-per-day has remained relatively stable at around 2:49 per day, with mobile well behind, and he said that the perception of radio declining and mobile increasing in rapid fashion are not accurate. He looked at the performance of major radio groups, with iHEARTMEDIA well outpacing the market, CUMULUS falling behind, ENTERCOM coming back "very nicely," and CBS "up and down."  TOWNSQUARE, he said, is "performing fairly well" in concentrating on smaller and medium markets and events, and RADIO ONE has fallen behind; Spanish language radio has been "tougher than most."

HEBERT forecasted a slight decline of 1-2% for 2015 but 1-2% growth for 2016. Traditional media in general, he noted, has underperformed the STANDARD AND POOR'S 500; radio has "performed in line with traditional media," he pointed out. But investors, he said, are allocating their dollars to digital and mobile, looking for growth. He warned that credit markets are tough but the secured bank loan market is open to conservatively leveraged radio companies.

Radio investors' concerns, HEBERT said, involve audience fragmentation, radio's place in the connected car, the "challenging economics" of digital, uncertainty over music royalties, and too much leverage ("I can't underscore this enough ... that's regardless of industry right now").  Investors, he added, want to see visibility, consistency in performance, growth (he cited NEXTRADIO, events, and expansion of digital and mobile efforts), conservative balance sheets, more consolidation, "regulatory clarity" from the FCC, and more free cash flow.

The annual panel of corporate radio executives, moderated by PILLSBURY WINTHROP SHAW PITTMAN LLP partner SCOTT FLICK, featured ENTERCOM's DAVID FIELD, CONNOISSEUR's JEFF WARSHAW, and BEASLEY's CAROLINE BEASLEY alongside MOELIS AND CO.'s ANISH ASWANI and U.S. BANK's GARRET KOMJATHY.

WARSHAW cited the large amount of leverage as the main element negatively impacting the industry, and noted the difficulty of attracting investment when the core business revenue is "flattish," leaving the industry to conservative long-term investors; FIELD said that "digital, clearly, has a long runway to go" but he sees synergy between what radio can offer locally and what digital can enable over time. BEASLEY offered that radio "should be diversifying their revenue streams" and added that clients are looking to spend on digital and events and radio should be going after those dollars.

WARSHAW's position that private equity is looking for higher-growth businesses ("nobody's going to lose their job not doing a radio deal") drew a passionate response from FIELD, who interjected that "We're looking at a whole world that's flattish" but radio can make an argument that it will see low- to mid-level growth going forward, compared to "the evisceration of television before our eyes" and ad blocking affecting digital. FIELD stressed that changing perceptions can lead to major growth, but WARSHAW responded that he doesn't see investors' position on radio changing, an opinion echoed by ASWANI. But FIELD's defense of radio as being strong relative to other media and producing free cash flow was supported by KOMJATHY, who called the industry a "free cash flow machine." FIELD also pointed out that radio has not been affected by digital competition, the growth of which he said has come from the recorded music sector.  WARSHAW added that "PANDORA has gotten way too much credit, way too much dollars."

FLICK raised the issue of foreign investment in the wake of the ruling approving PANDORA's ownership structure, but KOMJATHY said that he's "not seeing it."

Lunch With Lara (And George)

The annual RADIO SHOW luncheon featured CBS NEWS' LARA LOGAN giving a keynote and BEASLEY BROADCAST GROUP Chairman, CEO and Founder GEORGE BEASLEY honored with the National Radio Award. 

Youth Wants To Know

The audience for a post-lunch panel hosted by FUTURI MEDIA founder DANIEL ANSTANDIG on young professionals in the industry got to play 'Buzzword Bingo" for $50 prizes while learning about opportunities for new entrants in the radio business.    

THE WEISS AGENCY's HEATHER COHEN noted how many in the business started as interns and advised aspiring talent to "work your butt off," learning every skill -- editing, production, social media -- to make themselves valuable.  Pointing to how singer JOHN MAYER does his own posting on social media, she said that talent should not let interns do their social work.  And she advised talent to answer and correspond with fans on Twitter and Facebook as well as try podcasting.

DISNEY MUSIC GROUP SVP of Promotion SCOT FINCK boosted radio as being "ias critical a component of making a song a hit as it has ever been," offering the exposure radio gave ANDY GRAMMER as the biggest element in his success.  He added that social engagement is also critical to an artist's success, including engagement by air talent with listeners about the music.

EMMIS Classic Rock KLBJ-F/AUSTIN evening host and EMMIS AUSTIN Digital Content Producer CJ MORGAN explained how he got work by growing his social media following.  "I grew up in that age of getting an audience online," MORGAN said, taking a shot at any consultant calling themselves a "social media guru" ("punch them in the nuts").

Deep-Diving Into Programmatic

A three-part session on programmatic tried to explain what the sales process is about and how it will affect the radio industry.  Consultant MATT PROHASKA hosted the session, starting with a primer explaining the automated buying process, its benefits, the subset of real-time bidding, and its likely effect on the business.  He outlined the four top types of programmatic transaction types -- automated guaranteed, unreserved rate, invitation-auction, and open -- and gave other details of the market, including agency players, trade desks, and tips on how buyers and sellers can get started.

A panel of buyers and sellers included MEC's CARL FREMONT, KATZ RADIO GROUP's MARK FREMONT, COX MEDIA GROUP's KATIE REID, and HORIZON MEDIA's TIFFANY KIRK explaining how their companies approach programmatic -- FREMONT said that MEC has a team dedicated to dealing with programmatic and adds layers dealing with engagement and promotions.  On the sales side, GRAY said that he sees programmatic as automating some of his team's duties to allow them to work more on growing the amounts being spent, contrary to the scenario that automating the sales process will lead to jobs being cut; KIRK said that on the agency side, programmatic gives her team time to do things they didn't previously have time to do.

And a segment with ad tech company representatives featured MARKETRON's JEFF HALEY NIELSEN's MATT O'GRADY, JELLI''s MIKE DOUGHERTY, and WIDEORBIT's BRIAN BURDICK.

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