Larry Wilson

On the surface, in a strictly financial sense, Larry Wilson may be one of the savviest operators in the history of the radio business. After founding and building up Citadel Broadcasting to a 205-station group in 42 markets, he sold them all for $2 billion in 2001. At the time, he left to care for his ailing wife. After she tragically passed away, Wilson decided to get back into the game in 2008 -- but the stakes had changed dramatically due to the economic meltdown. He was able to buy two Portland stations from Microsoft co-founder Paul Allen for $11 million - years after Allen paid $42 million for them. He then bought four Portland stations from CBS Radio to solidify his imprint in the Rose City.

Yet it would be a disservice to attribute Wilson's actions as simply smart business strategy. The real reason for hiss re-entry into the business is that he loves broadcasting, and he's back not to build another conglomerate, but to reach out to his listeners and clients on a local level. Here, in his own words, is Larry Wilson's true vision of success in radio.

Why did you decide to sell Citadel?

I just got an excellent offer. It was a big premium to what we were trading on the stock market. It was the right thing to do; we weren't looking to sell at the time, but as it turns out; it was very fortunate timing. It's not that I expected the business to bottom out in the near future. I figured that since the economy had been robust for quite a while, we'd go through a cyclical downtown, but I never anticipated the extent of the meltdown in the financial markets.

What do you feel is the main cause for radio's predicament - refusing to be prepared for the inevitable downturn, or the debt-loading that occurred during consolidation?

The latter. The big problem was that public companies got caught in a very bad trap. They paid high prices for radio stations; I was doing the same thing until I sold out, but they kept going until they came to this cliff. Having all this public debt makes it very difficult to run your business properly. The way they've responded to it has been to cut costs, which is a natural thing to do, but the extent of which it has been done has been devastating to the content we give our listeners. The thing is, I don't know how they could've responded to their situation in any other way.

But at the time, they just kept paying high prices and didn't think the party would ever be over. You look at our economy over the long term, and it's been a very up-and-down situation. We get a recession every five to eight years, yet everybody failed to anticipate the next recession; they thought we'd be in "La La Land" forever. To make matters worse, hardly anyone anticipated the meltdown we had during the Bush Administration and the crisis that has continued since Obama's been in office.

Did you learn anything new, looking at radio's operations from the outside, that you may not have realized when you were operating your own stations?

To be honest with you, I didn't pay much attention to radio after I got out. My wife had a horrible battle with cancer; I concentrated on trying to find a solution to her problems, but I didn't and she passed away in 2008. I stayed in touch with lot of friends in the business and I read the trades, but I wasn't too engaged until sometime in 2008.

That's when I decided to start looking again, and I saw all these companies in trouble with choking debt. Clear Channel is $21 billion in debt, Citadel is $2.1 billion in debt, Cumulus is several hundred million in debt. Because of that, I felt it was a good time to go back in, because the prices for stations had come down.

I still feel this is a great business; I've been here in Portland long enough to know it's still producing terrific results to its advertisers. It's got to be capitalized properly; we have great partner in Endeavour, and we decided to use very little debt in the process of acquiring stations, which enables us to be ready to be very competitive right off the bat.

Did Endeavour have any second thoughts about reinvesting in this business, considering the state it's currently in?

Endeavour was my partner at Citadel; they know me well and made a lot of money with me -- and vice versa. They've always been a terrific partner, so when I started looking, obviously all of us had to get over the threshold that something dramatic had happened to the business. But when we really looked into it together, we concluded that nothing is really different. We have terrestrial radio signals that distribute our brands, a very effective distribution system, and a giant megaphone to drive people to our various platforms -- websites, etc.

What do you see to be the keys in turning this business around?

I'm not so concerned about radio overall; I'm very concerned about Alpha doing well. We're going to do all the basics ... and do them right by emphasizing our local appeal. The one thing that has happened to radio over the years is that there's less local programming and more voicetracking/syndication -- and no matter how much you disguise it, that's just not local. We have to reach out and touch our communities, and one way to do that is to give them really compelling content.

Where we've gotten weak in our industry is in the development of compelling content - again, that came from cutting costs. The most expensive aspect of our business is the talent on the air, and we've let a lot of quality talent go by the wayside when big companies cut costs and settled for something mediocre that doesn't really actively entertain the audience.

A common refrain heard at NAB conventions over the years, especially at the group heads panel, was that the value of radio stock has been slighted by Wall Street. Do you agree?

No, I don't agree with that. Back in the day, we got a pretty high premium ... up to15 times cash flow. Only since we ran up all this debt has Wall Street given up on us. Citadel is virtually selling for pennies; it has been devastated by "spreadsheet management." Why would Wall Street pay attention to Citadel stock when there's $2.1 billion debt on a company worth $800 million?

When you decided to get back in, did you look at a variety of stations in different markets, or did you immediately focus on Portland?

I looked at a lot of things, but I initially couldn't get anybody to sell at a decent price.

I couldn't have been happier when I was able to get a viable deal in Portland. I loved the market; I loved the city and the people here. It's just the absolute perfect place to establish my headquarters. We have some great radio stations with tremendous upside in the cluster.

Have the technological and digital developments since 2001 changed the way you'll run these stations?

The business has changed a bit as technology changes everything in the world. The proliferation of the digital side was a big factor in the purchase of our stations. We're able to integrate the brands we have with digital platforms. I believe this creates tremendous opportunities for radio. Radio is not going away because of digital.

One big change in radio since you left has been the spread of Arbitron's PPM. What's your take on that?

We're just starting PPM here. I think it generates a very flawed sample. There's something wrong with the picture when Arbitron was charging all this money for the diary ... which, for years, everyone thought was flawed... and is now charging even more for a new system that gives us the "right results," but they're totally different results than what we got from the diaries.

It's not that the device is flawed, but the sample isn't big enough. I don't claim to be an expert on statistical sampling, but I'd venture a big-time guess that any person who looks at the number of people carrying the PPM would die laughing. We're going to have under 900 meters in Portland - for a metro of over two million. That's crazy, but it's the only game in town ... it is what it is and we have to live with it. Someday I think Arbitron will pay the price for not making its PPM sample much bigger from the start.

What I look for in radio is that we're not just about ratings and selling spots. We're about getting results for customers as we build relationships with them. They don't need to know what 900 people are listening to; that will always be very misleading.

What some find confusing is that while the diary's Achilles heel has been people simply writing down their favorite station even when they weren't actually listening to it all day, the PPM counts listening by people who are forced to hear - but not actively enjoy - a station they didn't choose, but was being played in a retail environment. It's almost as if you're trading one weakness for another.

I couldn't agree with you more. It's a silly thing that we bought into, but the advertisers required it. We talked about it with the agency people, who are the most sophisticated on this, yet their answers were that "It's the best that we have." If someone really got into measuring, did a start-up that had a really valid sample and took on Arbitron once their current contracts expire, they'd do pretty well. Yet if I had my druthers, in a heartbeat, I'd say let's go on without [ratings] and just go mano a mano on who can give the best results for our clients. Over a period of time, the best will survive.

Nowadays, do you still view other stations in the market as your main competition, or are your most daunting challengers other media or entertainment diversions?

I think it's both. Radio is still getting 7% of the pie -- and we should be getting more because this is a phenomenal medium. I've evaluated TV, but with the click-throughs and cable's audience fragmentation, it has lost a lot of its value as an advertising medium. It's a wasteland, but it's getting a lot of advertising money - and I don't understand that. Newspapers are falling on hard times with a flawed distribution system and an environmentally unpleasant product with its use of paper. Outdoor is still an efficient medium. Some of the stations we bought have digital platforms that are doing real well in terms of revenue. For now, though, the bottom line is that we compete against our direct radio competitors for the buys that are designated to radio. We want our fair share.

Some radio group owners are already starting to cool on the idea that digital revenues can be radio's new pot of gold. Due to the global access and digital competition, they believe it's difficult, if not impossible to corner an audience.

I don't agree with that. I don't think we've figured out how to do it yet. I see a day when Alpha in Portland will be making over a million a month in digital revenue. I don't know how long it'll take to do that, but we've got a station right now consistently doing $60,000 a month in digital. We have to get the rest of our stations to that level and more. We've got to bulk up in our people skills in digital and make it a top priority.

Our FM Sports station, 95.5 The Game, is a phenomenal megaphone that drives people to its website and heavily uses Twitter and Facebook. It's unbelievable the opportunity this technology is presenting us. The comedian David Chappelle was in town last spring, working on something, and he Twittered as he was coming out of his hotel that he would give a free show in Pioneer Square in one hour. I was near there in a lawyer's office at the time ... and he brought out 15,000-18,000 people in one hour. It was unbelievable. This technology gives us more power to draw a crowd - and that's what we're all about. We don't sell products as much as bring our people to our advertisers' stores.

Alpha's Portland stations seem to be in a state of flux, with new personnel and formats. How deeply are you involved in those changes, or have you delegated those programming decisions to your subordinates?

I'm directly involved and on the ground, working with those stations every day. My Chief Operating Officer is Bob Proffitt, who worked with me at Citadel for 16 years. He's taken the lead on this. But we also have programming people like Scott Mahalick as Dir./Programming for our music stations and Brian Jennings as Dir./Programming for our spoken-word stations. I trust them to evaluate what needs to be done.

We also do research on our own stations, which seems to be something this industry has forgotten about. Nobody is researching their own product anymore. So we take all those things together before we decide on how to proceed.

Without getting into specifics, how fast do you see Alpha Broadcasting growing? Is it your ultimate goal to become a major player like you were with Citadel?

We're going to keep our options open, but it's too early to tell how big we'll get, Right now, we're going to dig deep and drill down on what we have in Portland. Having just taken over a cluster of stations here, getting them in optimum working order is our highest priority.

The key to where we go from here will come from our people; we've got to attract and have the best people. At Citadel, we had a mission statement and the first line of it read: "People are our most important asset." That wasn't just talk; we walked the walk. When we sold out and Farid Suleman came in ... and I heard this from several different people ... he ordered all the mission statements that we put up in our offices taken down. He doesn't get it and he never will. The quality of our people will drive our business.

I don't expect to look at anything in other markets in 2010; I've got plenty to do in Portland. My long-term goal is to have a presence in four to five markets in the West ...and that's about it. They'll have to be nice markets like Portland.

Exactly where I look to grow will depend on what happens to the big guys. Some of them are going to go through bankruptcy proceedings. Will they come out of that intact or will they be broken up? I don't know. All I do know is that Alpha is going to be very moderate on debt load, and we'll have no burning desire to add stations just for the sake of adding stations. We're going to be very cautious and careful in how we expand.