Ed Christian

Ed Christian has spent almost a half-century in radio ... 49 years, to be exact. He's been the head of Saga Communications since its inception about 24 years ago. Currently, Saga has 91 radio stations in 26 markets, five full-power and four network low-power TV stations, the Illinois, Michigan and Minnesota Radio Networks and the Michigan and Minnesota Farm Radio Networks.

Christian represents the old school, grassroots broadcaster, one who still firmly believes in localism, selling spots based on relationships and realism when it comes to its business foundation and future growth. Here's how he addresses the challenges of the New World Order of radio operations in the New Millennium.

On the Saga website, you post a President's letter. When will we be seeing one for 2010 ... and what are you planning to write about?

It'll be up sometime in March or April. The theme will be that we held our noses and somehow got through the past year. That's really what 2009 was all about -- how to market and administrate your broadcast company during unprecedented times.

Why was it unprecedented?

In past recessionary times, radio suffered, but because it's an inexpensive and easy-to-understand product, there was a quick turnaround time, so radio didn't suffer as much as other industries. But we had an almost perfect storm that came together all at once last year.

You start with the auto industry, which normally accounts for 20% of our revenue. That was down 20-25%. Secondly, national advertising dried up. It became a totally transactional business. Normally national accounts for 15% of business, maybe 20% ... The number of spots were priced the same as the '08 rate -- and it was tragically off. So the CPP shrank dramatically.

Do you consider Saga fortunate to withstand this economic calamity, simply because you haven't been carrying a huge debt load?

In a way. We were always stewards of our business. We've always been debt-averse, but what happened to us was that everyone in radio, as an industry, was painted with the same brush. It's pretty much the same in any industry right now; banks are looking at their credit policies, deciding what to lend to radio as an industry - as well as TV and so on. Unfortunately, no matter how good Saga is, we are judged by the same metric as radio groups that compromised themselves with debt.

This also affected the transaction market in 2009; there's been virtually no volume of trading. Banks may say that a radio station is worth x, but it's all a fallacy. They have nothing to base it on because nobody is selling. In the absence of credit facilities, you're seeing a total stagnation on the trading floor.

What are the prospects for Saga and radio in 2010?

I don't think it could get any worse ... and it might even be a little better in '09. We've done significant restructuring. I think we'll see an uptick in radio revenue -- conditioned on the economy not having a seismic aftershock. If so, all bets are off.

What's the key to Saga improving its business -- overall economic improvement? New revenue streams? More tie-ins with other media?

There's a lot more to it than that. One thing we learned is the importance of singularity, of being focused. We are blessed in some respects, in that most of our markets are not dependent on national advertising ... nor are we ratings-focused. We're still able sell radio in a qualitative nature -- a relationship sell -- which is totally absent in the transactional market.

Our philosophy is if we do good creative, talk to advertisers on setting up a proper schedule and frequency ... and get results, they'll be happy and come back again. Sooner or later, all successful businesses have to try and increase share, and there's no better time to do that than during a recession for emerging. Smart businesses take advantage of competitors that aren't spending.

How much emphasis are you placing on Net revenue growth as opposed to traditional spot sales?

I think you'll see 3-5% of radio revenues accruing from the Net. It all depends; part of the issue isn't the streaming; it's that you have a lot of listening that doesn't benefit your core marketing area.

If I'm streaming in Champaign, IL and someone's listening in Virginia, that doesn't benefit the local advertiser. Does it benefit the national advertiser? Not yet, because it's not that large of a national audience. At this point in time, the streaming industry is still growing, which we'll revisit in a number of years. It's not something to prioritize highly yet. When you talk about the law of focus, our mainstay revenues come from radio advertising. The cherries and whip cream comes from the revenue we make from our websites and digital marketing.

How has the bankruptcy problems that beset the radio groups such as Citadel, NextMedia and Regent (from debt load, etc.) impact Saga

The groups that have gone bankrupt have basically continued on with a new set of owners. Again, what happened was the banks used a "one size fits all" metric to the detriment of several groups. Remember, there was more than one suitor for ABC. A few years ago, we lauded the acquisition of ABC by Citadel. Unfortunately, the economic circumstances of the past couple of years proved otherwise.

Do you consider the reconstituted Citadel and NextMedia as having a "fresh start?

I look at them the same way I look at GM. It emerged from bankruptcy to continue on as very viable car company.

How do you balance localism when you're competing against more national personalities and voicetracking?

Localism is an absolute fact. Localism wins; that's what radio is all about ... it's the warm-and-fuzzy nature of radio. If you don't have that, you're no better than Sirius XM -- and you see where that has got them. Yes, we use some syndicated shows, but as a supplement to our strong News/Talk programming. It's very difficult for the News/Talk format to sustain live and local content for 18 hours or whatever a day. When you have strong syndicated opportunities, you take advantage of them, but in no way you run syndicated talk shows in morning drive or even afternoons. You still need the community touch and you have to know what's important in the community to survive.

Also, from what I see in the major markets, when Hannity follows Rush, he basically regurgitates the same talking points back to back. It's causing a ratings deterioration because it's too much of the same thing.

What are your thoughts on the PPM, the diary and Nielsen's sticker diary?

We don't subscribe to Arbitron except in Des Moines. We experiment with other things. We believe the diary system is obsolete and outdated in today's marketplace. You simply can't expect anyone to carry a diary around and accurately record listening all day long for seven days a week. Nielsen suffers from the same problem.

I'm also an adjunct professor at Central Michigan, where I teach a Statistics class. One time I took a sample Arbitron diary, copied it and passed them out to the class and said I'd give them six-pack of Pabst Blue Ribbon if they'd religiously fill out the diary with their radio listening every day. Every time I've done this, they look at me like I'm orbiting Pluto.

The PPM, which takes the monitoring out of the respondents' hands, would seem to be a better option, although some seem to think it favors certain formatted stations over others. What do you think?

I do think PPM benefits certain formatic types ... and it is punitive to News/Talk stations because, as a friend of mine says, it picks up a lot of dry cleaner and Diary Queen listening. Its accuracy is still a very weighty issue that's being studied by the MRC, and far brighter minds than mine -- who are expert statisticians -- are reviewing the efficacy of the PPM. I have my own concerns ...do I think the PPM is better than diary? Yes. Is it a panacea? Absolutely not.

What's your view of the potential impact of a performance royalty?

It's not a performance royalty; it's a record company windfall profit. A lot of performers today sign away their rights when they sign to a label. If you dissect this, you'll see that 50% of money goes to record companies, which are primarily foreign-owned. I have two simple questions: In law, cui bono ... who benefits? Record companies. Who's paying for all those people to testify for it on Capitol Hill? Who's behind the entire campaign? It's not the performers; it's the record companies. What's the raisin d'etre for this? Record companies ... that found themselves at the wrong end of new technology. They have extreme difficulty managing their own business, so they're seeking out any sources of new revenue to continue on.

Radio has historically venerated music -- the composers, authors and publishers. That's our responsibility ... to pay them royalties. They created the intellectual property that's timeless.

Is the era of media consolidation over? Do you See Saga in a station acquisition mindset in the future?

It all has to do with credit availability and the perception of value. Most broadcasters wouldn't sell in a down market; they know the true value of their properties

I doubt that we'll make any acquisitions in 2010. We're going to tend to our own company and focus on that. That doesn't preclude growth in 2011, '12 or '13. We'll deal with that when we get to it. I just want to operate the best possible stations in markets we're currently in. With that said, we never say never.

Any final predictions for Saga in 2010?

We've always operated the company with a focus on realism. We've talked to our GMs, who are feeling good about 2010 -- not ebullient, but good. We're looking at a growth rate in the low to mid-single digits. That's do-able, especially when we'll have more political ads this year, which should spike Q3 and Q4.