Mary Quass

Mary Quass has practically seen and lived through it all when it comes to radio over the past three decades. After acquiring her first station in 1988, Quass eventually teamed up with Steve Hicks and Capstar, only to see it merge with Chancellor to become AMFM once the consolidation craze hit. She would leave radio before consolidation went off the deep end and eventually dabbled in an Internet radio station ...years before it would become a legitimate force. In 2002, she decided to get back in the game by starting what is now known as NRG Media, which has 45 radio stations throughout Iowa, Nebraska, Wisconsin and Illinois. Yet despite going through a tumultuous 2009, Mary Quass' desire to succeed - and have fun doing it - is stronger than ever.

You were in the middle of the early days of consolidation when you were at AMFM and Capstar. Care to give us your impression of what it was like back then?

It was a wild ride. We had a great time until it started turning into the "smaller fish getting eaten by the big fish" syndrome, but it was still an interesting time.

I don't know if you ever had the pleasure of meeting Steve Hicks, who is one of the most forward-thinking broadcasters I have ever met. Part of the reason I decided to join forces with him was that I thought he had one of the best concepts going. It was focused on the right things -- how do we realign resources to be able to take advantage of the rule changes of 1996? Who knew back then that world was going to change so much in terms of our space -- from standpoint of not just how we operate radio stations, but an entirely different complexion of our business. Prior to '96, radio was a parochial mom-and-pop business. After '96 it became a big business that got the attention of Wall Street ... and the rest is history

Considering all it has wrought - the voicetracking, the staff cutbacks and, more recently, the huge debt loads that forced several broadcast companies to "reorganizations" -- was it worth it?

It is what it is. It's easy to sit here and Monday Morning QB the events that transpired. While that may be fun for some to do, I'm more interested in what we learned. Some of the lessons I learned, being in the corporate world, I took with me when I started another small radio company. I took certain elements to replicate a new platform for radio stations with an understanding of the most important things you need to succeed.

And the most important things are....

Probably the biggest resource you have is your people ... then you use the technology to assist your people to do what they do best. For me, the experience at Capstar gave me the opportunity to realign the resources we had and add something new to allow our stations to better serve their communities. We provided a better product because we had the opportunity and time to think about what the listener wanted. It was a great time; we grew from just a few stations to almost 500 radio stations in 18 months.

You left corporate radio to dabble with Internet radio in its early days. Even back then, could you tell it would become a potent force?

Let's put it this way: Back then there were a few crazy nuts around, myself included, who believed in it. In 2000 everybody was getting all excited about "dot.coms" which was great ... until it failed as a business model and it became the "dot bombs."

The really cool part about it was the technology, which a few people really thought was the future. I became a believer, too, when I met a young man who was very interested in politics. He had an idea for streaming an Internet-only radio station that was all about politics, called policast.com. Its whole concept was very similar to what's being done today - a streaming signal that talks about politics and would be used and listened to by people into politics.

It was a simple concept. For example, if you happened to be inside the Beltway and your life revolved around what happens on Capitol Hill, you wanted to know everything there was to know about what went on there -- and we'd be providing a streaming radio station to give you just that..

This guy way ahead of his time; he also planned to have complementary sub-channels for state and local government; it was a great model. I was asked to join the team to help figure out a way to monetize the concept to ensure that the business was sustainable. We toyed around with ideas on how make the business work, but unfortunately, while we had a great concept, the business model was too far ahead of its time. It lasted 18 months before we shut it down because we couldn't get a sustainable model or funding.

In my mind, the neat thing about radio today is the same thing I like about the Internet - it's constantly changing. The cool thing about the current environment is that we still have to be nimble and embrace change. It's all about people with ideas, creative types ... people who have the drive.

What brought you back to terrestrial radio?

When I left AMFM, I felt that the business had changed too much for an entrepreneur like me and it was time for a change of scenery. I looked at other industries -- and I saw how the consolidation of radio could be applied to other businesses. I looked at everything from a specialty tire company to Burger Kings - and while I enjoyed the thrill of the acquisition, once I had to start operating the business it was like, "This won't work for me; it's way too quiet, mundane and predictable."

Radio's draw for me was getting to work with a lot of very talented people with huge egos, be they on-air or salespeople, who were creative and constantly thinking. It's sort of like being in a huge brainstorming session all the time. There's nothing off-limits you can do and say when you have ideas free-flowing all the time. That's an environment to be jazzed about. I look forward to coming to work every day. The tire business, while a great business, is not for me. No one is running down hall in a gorilla suit, throwing pies at people!

When you got back into radio, do you have to adjust to changes in the business?

Absolutely. Change is the heartbeat of the radio business business. But I realized that I didn't want a real job, but loved the insanity of radio... and that both radio and I had learned a lot in consolidation. I was back in the business again, hook, line and sinker.

The part about radio I like is the ability to have a positive influence over the people you serve in your community ... and to be part of lives of those people. When I came back, I said, "Let's take the great things we learned over the years, replicate those, but let's do it a little differently".

Capstar and big roll-ups in the late '90s was all about acquisitions and amassing lot of radio stations. Conventional wisdom at that time was that you had to get a lot of radio stations -- bigger was better in terms of station count. We've since learned ... at least I have for our company ... is that it's not about quantity, but quality.

In consolidation it was about tying stations together and sharing technologies across platforms. We do that now, but we must never forget that it is all about the content and our product, not just the technologies. When we started this company, our tag line was "Great Local Radio" - and it hasn't changed. I won't say we're immune from voicetracking because we aren't, but we try to use it where it makes sense as a part of a broader allocation of resources. But the point is we MUST deliver a quality product ... always.

Isn't it more difficult to create "great local radio" when you have to invest time, energy and resources into a strong Net presence and possibly HD side channels?

In my opinion, there are way too many radio stations on-air today. We suffer from too many signals and not enough great content. Once you add HD and streaming, you dilute it even more. On top of that, you look down your street and almost every guy who has an ounce of ability and an idea can have his own radio station.

Even back when we just had a lot of radio stations, there was cost to operate all of them, which sometimes made it difficult for radio to supply the kind of product that would grow listeners. What's more, we have an oversupply of inventory. We didn't do a service to our industry by becoming a commodity. In a perfect world, we'll start to see the new technology not in terms of how much inventory you have to sell, but what kind of products you can create, so our listeners can respond positively to them. Then our ability to price inventory and content will become viable again.

It's a great time to be in the radio business -- and it is a perfect time to create "Great Local Radio" because we have the template, the experience and the support of our local communities to do it. Our industry has changed; it will never be like it was when I got into it -- back when the advent of FM was the "wild west" and we were the cowboys -- but that is okay because we now have a new frontier ... and the challenge is how do we become as ubiquitous in the digital world and in the lives of our users as we have become to the terrestrial/analog world? For us at NRG Media, we think that it's by providing content that is unique to the locale in which our listeners/users live ... by continuing to provide "Great Local Radio" in whatever form it takes.

How is the talent pool these days - especially for NRG stations?

That has always been a challenge. Great people are always a hard to find and honestly, that hasn't changed over the years. We continue to have issues trying to get great talent. Some of it has to do with more opportunities today beyond radio ... and some of it is the mistakes that we, as an industry, have made in how we tried to nurture a talent pool.

However, for our company, we're looking at our resources and our needs in the future. When we look at staffing, we're looking for more than an announcer with great pipes. We are looking at people who bring not just the fundamentals of the business, but people with new visions who conceptually understand we're in the business of connection on many planes.

In my opinion, radio was the first social network -- and we have to go back and build on that. For years we were a pretty insular industry and hired a lot from within. Today we want people who can bring unique talents and perspectives to the rest of the group, and stimulate an environment open to new opportunities. We're looking outside the box as well as to radio people who have a love of the industry, be it music or business aspects, as well as entertainment value. The reason this is such a challenge is that we are still unsure exactly what it is we are looking for.

We also have to get serious in how we compensate our people. That is a paradigm shift for a lot of broadcasters, but it must be reviewed.

How do you find and appropriately compensate your talent as well as invest in promotion/marketing ventures when you're on such a tight budget?

Frankly, we haven't totally figured that out yet. First we look at what we're going to look like in five years. What skills will we need? How will we operate? Everything is open for discussion when you're allocating resources. We still need to promote radio stations in many of the same ways - but not all of the same ways. A great promo budget used to be bumper stickers and banners. Should we still spend all our promo dollars in those ways or do it differently?

The Net helps us interact with our audience in a much more cost-efficient way. For listener loyalty clubs back in the day, we did lot of direct mail, phone marketing and other things that had hard costs such as printing and postage. Today we don't have those same costs, thanks to our ability reach people via texting, Facebook and so on.

We're constantly experimenting with things. In many of our markets we have morning shows who love interaction with their audience and who use a lot of different levels. Sure, some of that interaction is comprised of the usual suspects, but we're embracing new things and starting to rewrite the rules. You have to make sure to adjust the business model, to stay in the forefront and look forward.

A good business platform only works with creative people in markets that have a solid underpinning to test things. The challenge remains as to how we appropriately compensate our people in this new, ever-evolving business. We will have to try different models and test results ... and be open to modifying plans as they evolve.

Since returning to start up NRG as radio entered this new digital/online/PPM era, has there been anything about this business that surprised you?

One thing that sort of surprised me -- and it's nobody's fault -- is how long it's taking radio as a group to get off their rears and get going. To me, in the past it always seemed that if a challenge was out there, the broadcast industry ... as disparate as it is ... would rise to the occasion. Much like what happens when there's a flood or tornado in our markets; we are the first people out there trying to help.

I'm a little perplexed as to why, as a group, we are still trying to say that the changes we have lived through are not affecting radio to a great degree -- when we all know it has. I see two reasons for that: One, our industry has changed in the scope and focus of our people; everyone is trying to do lot more with less. On my first GM job, I had one AM and one FM to oversee and make a profit. Now you have Market Managers trying to make a half-dozen or more stations successful. When you have that much on your plate, there's not enough time to be able to think great thoughts; we are just trying to survive.

Secondly, we continue to just "bolt on" more features, if you will, instead of looking at our business model and reinventing how we do our business. We can't just add on a digital component and continue to operate radio stations like Marconi did. Digital, HD and streaming are real elements and can't just become a cost-add, so we're looking at ways to find out the best ways to set up our new business model, create a better layout of our facilities to suit our needs and design how the radio station of the future needs to look..

The bigger problem is the broader one - that as an industry, we stopped taking chances to meet the changes in our business. I thought that because we were such a scrappy group back then, we would've gotten out there quicker. We seemed to have lost our way ... but I do get a sense that we are finally getting going.

So how bad was this economic downturn for NRG?

Bad ... I've never seen our business decline so much as in 2009. I've seen slowdowns and recessions, but what we went through was particularly challenging. It was a bigger drop than past recessions because it was precipitated not just by one or two sectors, but it was a huge reset in our economy -- locally, nationally and globally.

It wasn't just bad; it was swift, too. It seemed that once a few sectors got soft, the landslide began. Even with all that, our company top line was down only 7% in 2009. And because we took deep expense cuts, our BCF did not dramatically suffer. It was flat to slightly up. Unfortunately, what was good, from a survival perspective, was very difficult from an operating perspective and we had to ask our people to make some tough decisions ... which they did. Our team did some amazing things to get through the year, and made me very proud to have the chance to work with all of them.

So how is 2010 looking?

We're having a good year. Q1 and Q2 were up -and we're pacing well for the back half of the year -- as long as the nation and the world don't get hung up in a self-fulfilling prophecy of a double-dip. I think we're going to have a good year. Regardless of the results, there's a new tenacity that this group of people has after going through such a tough time. It will allow them to weather any sort of slowdown better than they would had they not come through this recent dip.

Considering what you've seen larger radio groups go through, do you have an urge to grow NRG through acquisition?

We recognize that for NRG Media, bigger is not necessarily better when it comes to the number of stations you have. We try to right-size our company in terms of a suitable platform. I don't think it's fair to have tonnage to the point where we can't provide stations in our markets with the resources they need. It has become clear that we are operating with a finite amount of resources where not everyone can get all things they need. We have pared down and realized that, for us, we must learn from our mistakes.

With that said, the multiples have come down for radio stations to where it would be feasible to consider selected acquisitions that would add to our group and not constrain our resources. The unanswered question is where will the credit markets land? We're still functioning in a very tight credit market, making transaction pricing difficult, and we still have a gap between the bid and the ask. But are we looking to grow ... yes. We are committed to being in the radio business.

You make getting through the station buying craze seem as if radio pretty much is walking back from the edge.

Are we coming back to a less crazy time? From an acquisition standpoint, yes. I look at this current lack of transaction activity as a time for us to focus on organic growth. The focus needs to shift to the fundamentals of our business ... and to the products and services we provide. We need to make time to figure out what our new business model is and how we will compete in the dual role we must now play ... that of being a traditional radio station in an analog world and a cutting edge brand in an interactive digital world. No easy task, but critical to our survival...

All in all, are you as bullish about the future now as you were when you started NRG?

Coming out of this recession is like coming out of a cave and squinting up at the light ... hoping nothing else falls from the sky and wondering if it is safe to come out ... yet I'm probably more bullish on our industry now than I have ever been. That's saying a lot because a year-and-a-half ago I wouldn't have been so optimistic. I think we're coming back to a time where we, who have chosen to stay in the business, will focus on creating the ideas that will sustain our business.

Wall Street is looking the other way; they're not enamored with this business as a growth industry - and maybe that's okay for now. What I'm excited to see is the operators who are interested in staying in and those wanting to get back in business, all of whom are focusing on what brought us all to this party - having a great product. That's the exciting part of the business -- bringing the resources we need back, be it talent, credit or just the opportunity to change.

I am often asked when I will retire; I say when it is no longer fun. That is a word that hasn't been associated with radio for a while ...fun! It's a great time to be in radio ... it is starting to be fun again. I am beginning to see a lot of real creativity. This has been a numb business for the last five years, but I look at some of the stuff my guys are doing now and think ... the magic of the mind is working again -- and it is so cool. When was the last time we said that about our business?

At this rate ... I could well become one of the oldest broadcasters in history!