Charles Warfield

Few people in the radio industry have more at stake in Arbitron's transition to the PPM than ICBC Broadcast Holdings, Inc. Pres./COO Charles Warfield. Inner City Broadcasting's stations in New York and San Francisco have been directly impacted by the shrinking AQH numbers of the PPM era, while PPM's sampling and compliance issues with Blacks -- especially 18-34s and those who are live in cell phone-only households -- remain major bones of contention. Nevertheless, Warfield continues to do what he can to maximize the growth potential of Inner City properties in 2010 and beyond. Here's how he tackles those challenges.

The radio industry, by and large, has had a very tough 2008 and 2009. How did Inner City fare during the past year or two?

To be honest, 2008 was a pretty good year for the company until the end of Q3, when the downturn of the economy had an impact. Added to that was the disproportionate impact of PPM on our ratings in our primary markets of New York and San Francisco. The great first nine months started to come apart when PPM was introduced. It led to a very difficult 2009 for us, as it was for the rest of the industry.

How have the bankruptcies of groups like Citadel, Regent and others impacted Inner City?

The issues of other groups haven't had that much of an impact. In reality, many broadcasters have too much leverage and other issues with their lenders -- and Inner City was no different. Everyone had their own unique circumstances; in our case we had covenant challenges, but our lenders have been very receptive in working with us. Going forward, we're confident our issues will be addressed in a positive manner.

If Arbitron makes the necessary improvements to make their PPM samples truly reflective of the major markets that would help things a bit. To get a lot better, though, a lot of good things would have to break our way - and not just for Inner City and minority broadcasters, but for the industry as a whole.

What are your expectations for 2010?

Our hope is that our industry sees a return to positive performance in 2010. The Supreme Court decision on corporate political spending will drive some money to radio. If the economy begins to show more signs of life, that could be a positive for radio, but I don't see that happening until the second half of the year ... if then. Quite honestly, until some of these larger markets see an improvement in the unemployment figures and consumers feel their jobs are safe, we're going to see a drag on the economy ... and our industry.

The PPM has been a major bone of contention for Urban and Hispanic broadcasters. What are your main issues with it - is it an unrepresentative sample, or is it just that the machine operates as a passive measuring device?

We made this point with Arbitron a number of years before the full-blown PPM rollout: The PPM was under-representing various segments of the population -- not just black and Hispanics, but key demos such as 18-34 and 25-54 suffered from the PPM's very inconsistent performance. They like to look at how well they're doing 6+ and how all the markets, put together, average out, but when you get into the target demos, there are still challenges in terms of panel representation. We asked them years before their aggressive rollout to address these concerns, but they refused and said there were no issues ... but we know there are.

It's also been an issue with Arbitron in the speed they've made improvements. Arbitron talks about its continuous improvement program, but it's always been too slow, too little and too late for the industry overall. Unfortunately, it could cost the survival of entire radio companies, not to mention certain formats.

What formats are endangered by the PPM?

Formats that provide information - that are not strictly music-intensive formats - are being hurt the most. We've already seen Smooth Jazz go away in many major markets primarily because of PPM. You're not going to see much growth in Urban or Hispanic programming around the country -- in spite of the fact that those audiences are growing faster than the population at large.

The PPM has impacted more than a lot of formats. You're seeing high-profile personalities losing their jobs and positions in some markets. Localism could be negatively impacted, too.

Isn't Smooth Jazz a music-intensive format? Why is it doing so poorly?

You may expect it to do well, but apparently due to the PPM's inability to measure all elements of the populace; Smooth Jazz has been one of the formats most impacted by the PPM ... why else has it disappeared across the country?

At the end of the day, even when you talk about music-intensive stations, you're still talking about serving certain populations -- and some of those populations are not being served in the methodology or in the results.

One radio group owner has complained to us that the PPM picks up too much "dry cleaner and Diary Queen" listening. Do you agree ... and if so, should such listening be separated from in-car or at-home listening?

In those cases, the PPM isn't recording listening but exposure. I agree with Arbitron that it has to come out with some sort of measurement of listener engagement, because that would address some of the problems with the current results. I agree that the PPM is not recording actual listening in those cases, but there are other issues as well. We're not here to challenge the concept of electronic measurement; we just want it to be accurate.

Some Urban stations seemed to have figured out how to re-program themselves to generate better PPM ratings. Have you found such a formula yet?

One of the realities of what Arbitron likes to do is confuse the argument and discussion. They talk about share of the Urban stations, and some of those stations have improved in the rankings. However, the average quarter-hour ratings (AQH) currency has not recovered to pre-PPM levels, and our spots are still being sold at a discount. The financial impact is still being felt.

The new argument from PPM supporters is that it's a cume business now.

It is a cume business, but our industry is not a cume industry. It's still an AQH business to our advertisers. Arbitron started saying this before the PPM became currency ... that in PPM, 70 equals100. That was the terminology they used. That translated into a 30% discount for the advertiser, but there's been no modification or adjustment by those buyers for our 30% loss.

Do you believe the advertising community's strong endorsement for the PPM was primarily to use it as a way to lower spot rates?

No, they're just doing their job by taking the data that we provide for them. I don't think that data is accurate as it should be, since it's under-representing certain segments of radio, but that's our problem. If we were in their position, we'd be doing the same thing. They're pricing inventory based on the data we're providing and at reduced rates that the industry is accepting.

How did the PPM Coalition meeting with the new Arbitron CEO, Bill Kerr, go?

I'm very impressed with Mr. Kerr. He seems to understand our concerns. I don't want to get into the specifics of exactly what was discussed during our conversation, but I will say it was a very cordial and respectful meeting ...and we anticipate further discussions with him about our concerns in the future.

With PPM spreading nationwide and showing no signs of stopping, what alternative does Inner City have to the PPM in offering your advertisers the necessary data on your stations' audience -- and your ability to sell their products to them?

Right now, as you know, Arbitron is a monopoly in the major markets. If you don't agree with the PPM and choose not to encode, the radio station basically doesn't exist. We work on a dual track. From a corporate perspective, we're working to bring about the necessary improvements, enhancements or corrections to PPM methodology. At the same time, our program directors and market managers have to run our properties the best way we can to maximize the results we get from the PPM.

So you can't rely on "relationship selling" that a Saga Communications or Beasley can do.

We do in smaller markets, but in larger markets that can only carry you so far. There's a different buying dynamic in New York and San Francisco, in comparison to the smaller markets. Relationship selling is still important; I don't want to minimize that, but even that's a lot different in the larger markets.

Inner City has been going up against the corporate radio giants for years now. With the seemingly weakened state of "the bigs," in terms of them handling their debt load, has that leveled the competitive playing field for you a bit?

I certainly don't believe those bankruptcies and massive debt loads have helped anyone at all. Yes, we have been competitive, but we do so by focusing on content. The difference between us and the larger broadcasters is that out of necessity we provide local services to our communities. We rely on locally-oriented programmed and local air personalities. Local management has relationships with various organizations in the community. Focusing on the local aspect in our communities has allowed us to remain competitive.

Much has been made about the importance of "localism," yet there's more syndication and nationalized air personalities than ever before. How do you balance the conflicting trends?

Localism is more important than ever. It is difficult for some broadcasters to find a balance between localism and cost savings. We are using some syndicated programs; we have Steve Harvey's morning show on in New York City and Columbus, SC, so we certainly do believe in it. Primarily, however, we have local-oriented programs in many of our markets. It's about finding a balance where you're as entertaining as possible, but you're still providing the local service that your community expects and requires. Our stations continue to find that balance; it's one of the biggest challenges facing us today.

Considering the state of the business, do you still have plans for growth in terms of acquiring more stations in the future?

We would all love to feel that we can grow, but that's not in our immediate, short-term plans right now. We're looking to better balance our company portfolio, to maximize what we have in each market, so that when an opportunity to grow presents itself, we'll be ready. It's a mission for our company to grow, but right now expanding isn't our primary focus.

Have you changed your future goals with Inner City ... and if so, how so?

As always, we're looking to outperform the industry. We still have goals and expectations for each of our market managers. We realize that we have to work to provide the right resources for them to achieve their goals. It's not just going to happen because corporate dictates that. We set solid, short-term goals that generate the kind of success needed to reach our long-term ones.