John Dickey

A year ago, Cumulus Media Chairman/CEO/Pres. Lew Dickey offered his insight into the company and the state of the radio business. A lot has changed since then; radio seems to be coming out of a deep financial hole created by the recession. Here, Co-COO/EVP John Dickey provides an update on the current radio environment, Cumulus' place in the industry and its outlook for 2011.

What's your take on how 2010 will be for Cumulus?

I think the year has been somewhat unpredictable, although positive for the industry. We are hopeful of seeing more of a rhythm to the outgoing months and quarter ahead of us. What I mean by that is there have been some spurts where things looked to be on track -- and then there were some stalls. The economy at large behaved that way, which has been reflected in our business and radio in general. We are seeing signs of stable growth in Q4.

Do you agree with the notion that national is doing better, but local is lagging?

The facts are certainly behind the perception that national is coming back, as a percentage, in greater amounts, but it had a lot farther to go. The first thing that happened when the recession hit was that larger advertisers turned the spigot off on national advertising, so it is bouncing back on a higher percentage perspective. Political is certainly adding to that. The majority of political is coming through national, which has definitely been far more robust, but local is starting to come back, too.

Are you doing anything new or different to goose local sales?

It's not a question of focusing more or less on one or the other. In our company the process is ongoing; we're always doing things on a sales perspective to help grow our local business, including going for the maximum rate on available business.

In a past Power Player interview, your brother Lew cited the importance of maintaining rate integrity, something that other group heads have reiterated of late. Are you satisfied that the industry, overall, "gets it" in terms of maintaining optimal rate integrity?

Yes, the industry is cognizant that you have to attack the rate problem, but there is still far too much discounting. When you talk the talk, you have to walk the walk. Those are two different things, but from our perspective we're endeavoring to talk the talk and walk the walk. Our proprietary traffic and billing system is very helpful in that regard. We can flag orders that are not coming in at a desired/target rate and have a conversation about a particular piece of business before it is accepted.

You have software that maintains rate integrity?

Yes, we have our own traffic billing system where that functionality is built in the system; it helps us attack and address that issue in our company. But this is a long-term thing; the software is not going to address rate overnight. It's an ongoing process; we have a system in place designed to flag deals that come in below a defined rate level. Beyond that, growing rate is an education process. All of this takes time.

How has the PPM impacted the way you program the?

I don't think anybody has figured out the absolute perfect prism to look at PPM and figure out how it ties into programming strategies. We've all got better ideas based on the methodology and changes between the diary and PPM -- specifically when it comes to quarter-hour listening being credited. We all understand that the any changes will translate into changes in programming tactics.

Ultimately, as far as understanding the PPM and how take full advantage of methodology, I think that's a work in progress. I also think Arbitron has more work to do on the methodology and sample construction to make that measurement system more representative. They've got their work cut out for them. They're making progress in that area.

Cumulus was an early supporter of Nielsen's sticker diary. Are you satisfied with the results?

What Nielsen has proven with the sticker diary is that although the diary is not as effective a methodology as the PPM, it's still a viable, cost-effective methodology for smaller markets. Nielsen has proven that if you focus on sample quality, you can put out solid, representative data with stable audience estimates.

What we've learned and seen through Nieslen is that by increasing sample size and employing an address-based sample, you collect better data. I'd like to see that be rolled out through all diary markets surveyed, be it Nielsen or Arbitron. I should also mention that Arbitron has certainly been making improvements in those areas, too.

Where does Cumulus stand on the performance royalty issue; is Cumulus solidly behind the NAB's efforts -especially with its recent compromise?

Lew is running our company on this issue; he and folks from other groups have been contributing to that NAB - and they're hard at work on this issue. Our perspective has changed to where it is now squarely in line with the position of the NAB ... and I'll leave it at that. We're supportive of the NAB and we're contributing to the shaping of that policy.

In his Power Player interview a few months back, Lew Dickey was also somewhat cool on digital strategy in terms of there not being a significant ROI. Has your views changed on that since then?

If you ask that to 10 people about digital, you'll get 10 different answers. Streaming makes sense in that it extends our brands and makes them more portable. We have not seen the return on investment that others have poured into their digital initiatives. We are always weighing things on this front and continue to have discussions with lots of people and companies. For now, we are focusing our resources and energies on other foundational issues within our company - namely, sales structure and strategy.

Earlier this year, Cumulus announced that it will be working with Crestview and Jeff Marcus in an effort to generate funding for new property acquisitions. How is that going?

I certainly can't comment on the specifics of that, but I can tell you that we are partnering with Crestview and Jeff Marcus. Lew is evaluating lots of opportunities to put significant capital to work.

In past Power Player interviews, other radio group owners - who are also interested in acquisition - have complained that sellers are demanding pre-recession prices for their properties, which has stifled any deals. Have you seen the same thing?

It's hard to generalize where people's expectations are in selling individual properties. I'm sure some sellers still believe that their price is right; others are more realistic and some are in between. There's always a disconnect between what the buyers will pay and what the seller wants to get ... and that's exacerbated when the industry goes through an economic cycle we've been going through.

Looking ahead to 2011, are you satisfied with the staff size of Cumulus, or could there still be more downsizing to maintain a profit margin?

I think we've got a very good team in place. We feel very good about our team - and we're looking forward to 2011. We fully expect to be hiring in 2011 -- specifically in sales. We are on the hunt for good sellers.

You've got an economy that's currently favoring the employer. There are a lot of talented people who are displaced or downsized and out of work. We're in a very unique period where we can bring very talented people into our industry; it's a good time to be aggressive in staffing.

Cumulus, along with Citadel, Clear Channel and CBS, are the perennial targets of interests who think consolidation has been bad for radio. Has any anti-consolidation sentiment impacted your efforts to recruit talented people?

Not at all. Look, our industry overall is relatively unconsolidated. You've got three main companies that control the vast majority of the record industry. That's a very consolidated business. The airline industry is becoming more consolidated; the telecommunications industry is highly consolidated, as is the software industry. The Internet search and consequently display industry is practically an oligopoly; where Google controls 65% of the search business.

Almost every other company that pundits like to hold up as a great business benefited greatly from being involved in a highly consolidated industry. Our industry has suffered because it hasn't consolidated to the extent it needs. From that perspective, I feel we need more consolidation, not less. Pundits like to strike a rallying cry for less consolidation, but they have their own agenda and motives.

Are you worried that the pundits' constant criticism of corporate radio's business practices could hurt staff morale ... to the point where you've taken action to maintain a positive outlook in-house?

Our employees are highly focused on positive things and like what they're doing to grow their careers and their paychecks. I don't think it makes a difference to us what the pundits write. We have a lot of exciting things on our plate and we are focused on growing our people and our business.

So what will be the keys to Cumulus' success in 2011?

I'm bullish about our company. We've got a lot of great things we're working on and we're much farther along as a result of the time we've worked on these issues in 2010. We will continue the hiring initiative we started in 2010 and expect to hire additional sellers in 2011.

Of course, I can't control the geopolitical situation and macro-economic issues that may come our way. We hope that things are somewhat stable in those areas. If we have an economy that continues to come along, stabilize and grow, as far as what we can control to grow our business ... yes, I am optimistic that we will continue to grow our business in 2011