Steve Goldstein

Saga Communications couldn't help but get caught in the economic storms that have impacted businesses nationwide over the past couple of years. However, the company never was in danger of capsizing due to overleveraging or obsessions with quarterly reports. Thanks to prudent management and an emphasis on face-to-face sales and promotion - without using Arbitron ratings, for the most part - Saga's stations have maintained a solid foothold in their respective markets. EVP Steve Goldstein offers some insight into what has made Saga tick through thick and thin.

You spent two terms as Chairman of the Arbitron Advisory board. What was that experience like?

I did it twice over a 10-year period. During most of that time, Arbitron was in the planning stages of PPM and had just rolled out Houston and Philadelphia, so it was the early days. At the same time, we focused on strengthening the diary service, which impacted most of our stations and has its own set of challenges.

What did you take from the experience?

There's a pretty dedicated group of people there, but being in the research business today is an extraordinarily difficult challenge, whether it's the PPM, the diary or any market research. Getting cooperation from respondents is a far greater challenge than it used to be; just look at the rise of cell phone-only households.

Ironically, even after two stints with the Advisory Board, Saga isn't using the diary in most of its markets -- and hasn't decided on using the PPM in Milwaukee and Norfolk when they go live. Why?

My time with the Advisory Board is not related to our decision on the PPM, which doesn't arrive in our largest market until September. We may choose to use PPM, but for the moment we have chosen to go without the diary in most of our markets. The diary has its own set of challenges. It's a 50-year-old technology; it's been around since Beaver Cleaver. Running without rating information forced our sales staff to become much more client-focused, which we feel is a good thing in a world where a lot of business has become very transactional. We've had our ups and downs going without Arbitron, but in most cases it has brought us closer to the client as we try to problem-solve for them.

Are you interested in Nielsen's sticker diary?

We're not interested -- it's still a diary - there's no significant improvement with that methodology.

Would I be correct to presume that the door is still open for Saga using the PPM in Milwaukee, Columbus and Norfolk? Are there certain characteristics of the PPM, be it sampling size or its passive-based measurement, that trouble you?

We're in discussion with Arbitron about the PPM. We have great faith that electronic measurement is a better way to go. It's a completely different system, although we realize that every ratings system has its own bias. I'm sure you have noticed that by and large the broadcasters who have complained about PPM are the ones who haven't done as well in transition from the diary to the PPM. Some of it is due to bias in using a meter system, but some of it is about the bar being held higher as you go from an image and recall system with the diary to actually measuring minute-by-minute listening. Stations with great diary ratings can tank in PPM - is that because of the methodology or possibly because their image was stronger than their actual programming?

I've talked to many managers in large markets that have the PPM today, who did really well in the diary, but initially didn't do as well in the PPM. In some cases, they eventually discovered that the product had deteriorated. The music wasn't tested, the personalities were talking, or they had content that wasn't relevant to their audience.

What happened in these instances is that PPM revealed that the programming wasn't as good as managers thought it was. As I said, the programming bar is set higher in the PPM.

Should you decide to use the PPM in your two markets, are you prepared for the difference between your station's previous diary "big Spring book/Fall book" efforts and your future month-by-month PPM data programming and marketing?

Sure. Ready to change. First of all, contests used to be focused on Thursdays under the diary, which as we have since found out under the PPM has nothing to do with real listening patterns. Audience engagement is important in PPM. We need to move audiences around. There are going to be a whole series of new tactics, although we're probably in the first or second inning of developing effective tactics.

The PPM has also been known to prompt radio operators to flip their stations to more PPM-friendly formats. Is that what happened in Milwaukee, when Clear Channel suddenly flipped the Brew to Top 40 while a Saga station was in the midst of stunting?

We had a couple of options available to us. We had done our homework on several of them. We had heard rumors for a long time that the Brew was going to make a change because they weren't doing particularly well, yet they had let the station languish. With that in mind, we prepared multiple strategies, so when they rolled over on one of them, we did a different one. We're quite happy where it ended up ... although there were a couple of nail-biting moments.

In markets where your stations don't use a ratings service, despite your emphasis on more face-to-face and results-oriented sales pitches, have you noticed your competition trying to use the fact that you don't offer ratings as a reason for clients to use them and not you?

Just because we're not getting ratings doesn't mean we're not important to agency buyers. They have access to the ratings in all of our markets, large and small, so from a programming standpoint our job remains the same - delivering the largest audience we can.

Today's clients are more focused on their businesses and their ROI. For example, how many cars can our ads and promotions move for you? How many people can we bring to your event? How much do you want to increase sales and what can we do to aid that? I think that's a much better equation than simply citing CPM numbers.

Shouldn't we be judged that way? Shouldn't we be judged by what kind of value we deliver to our clients? We live in a ROI world; it doesn't matter what business you're talking about. The clients all want to know what kind of return on investment you're providing. That's the way all marketing is moving, not just radio

Speaking of ROI, there seems to be a debate between those who believe in pursuing an aggressive web strategy for radio, and others who believe the significant investment isn't warranted because the ROI isn't there. What's your take?

We feel it's critically important. Radio is way behind in capturing its share of a $12 billion business; we're taking in about 2% of local interactive dollars - and that's embarrassing. TV has gone from 4-10% in three years. Others are entering the marketplace. It's long past time to leverage our platform more effectively.

What kind of mindset do you need to have to successfully build a profitable Net strategy?

Jeff Vettrus is heading up our interactive strategy and has done a terrific job. What we're trying to create is a multi-platform ecosystem. We have a company campaign entitled

"On-air, Online, On Site" -- and it really is the thrust of moving our whole company.

Our goal is to be skilled at audio podcasting, mobile, and Internet and social. Clients are looking for interactivity.

For instance, we have a "vertical" site in Asheville, NC, focused on pets, and a relaxation vertical in New Hampshire. We launched a news-oriented vertical in Clarkesville, TN, and five days after the launch came the Nashville floods. We did just under a million hits in a three-day period.

NPR honcho Vivien Schuller recently declared that it's inevitable that radio will go from a towers and transmitter business to an Internet streaming one. It would appear that you would go along with that sentiment. True?

I would look at it a bit differently than that. I would say that today we talk about old and

new media; in five years it's just going to be about media. The survivors need to master multiple platforms or risk extinction.

You earlier mentioned Saga's sales efforts are very local, face-to-face and results-driven. Do you use that kind of "live and local" approach when it comes to on-air talent as well?

We're very focused on local talent. The real key is making eye contact with the community. In most markets you'll find that the top-rated morning shows are local.

Being local is our company's natural advantage. The big guys can leverage a Ryan Seacrest. That's their advantage. Ours is to reflect and touch the community.

Has the consolidation and personnel downsizing in the major groups been beneficial to Saga in acquiring more quality talent?

Yes, we're taking advantage of their weakness in our markets and strengthening our talent lineup where it makes sense. We've had the opportunity to pick up some larger-market talent and managers. We just hired Larry Sharp, who used to be at KSAN/San Francisco, to program KISM/Bellingham, WA. We have several managers from larger markets.

What impact would a performance royalty have on Saga's music stations?

Our CEO, Ed Christian, is very involved with this, so he'd have more insight. If you are asking whether we would bail out and go to "spoken word," it would depend on the success of the individual station.

Are you bullish on Saga's prospects for 2010 and beyond?

I'm not an economist, but we do see some choppiness. Some months are stronger than others; for instance May was weaker than June. I don't have the visibility to say how things will look through the rest of the year, but I can say it certainly feels better today than it did a year ago.

What's the key to future growth?

The way for us to grow is to get beyond the 250 clients normally associated with every cluster. There are thousands of businesses in each market with whom we have no relationship. A multi-platform strategy is the catalyst to growing our customer base.

Would Saga consider growth via acquisition (should CBS and others put stations on the block)?

We would love to own more radio stations, although we've always been very prudent - and we will continue to be. Our balance sheet is among the strongest in the business; you haven't heard terms like "reorganization" when it comes to Saga. We'd love to [grow via acquisition], but the financing has to be right and the pricing realistic. That magic formula hasn't been here up to this point.