Thursday, June 23, 2005

"The significant problems we face cannot be solved at the same level of thinking we were at when we created them" Albert Einstein

Gannett and Belo have warned investors, both saying not to expect significant improvements in the second half of this year. The fundamentals of ad supported measured media are changing. Industry best practices used to generate the top lines of ratings and revenue are out of touch with the marketplace. The cold hard reality is the business model that delivered results yesterday and for decades prior will just not continue to produce. Dr. Gary Hamel may have said it best...

"Dakota tribal wisdom says that when you discover you're on a dead horse, the best strategy is to dismount. Of course, there are other strategies. You can change riders. You can get a committee to study the dead horse. You can benchmark how other companies ride dead horses. You can declare that it's cheaper to feed a dead horse. You can harness several dead horses together. But after you've tried all these things, you're still going to have to dismount. The temptation to stay on a dead horse can be overwhelming...Denial is tragic. Delay is deadly...Success has never been more transient...The companies that are creating new wealth are not just getting better; they're getting different - profoundly different...the future is not an echo of the past"

It's not about hiring more sales people and training them to make calls they're never going to make, it's not about plug and play content solutions (e.g., jockless juke boxes in radio, or opening up more weekend and weeknight hours to paids in broadcast television). It's about leadership. Please allow me to again quote the good Doctor Hamel

"Am I learning as fast as the world is changing? Senior executives have the same chance to be radicals as everyone else - but it is hard, because they have more to unlearn. Look at a company that is underperforming, and invariably you will find a management team that is the unwitting prisoner of its own out-of-date beliefs. When it comes to business concept innovation, the bottleneck is at the top of the bottle...better execution won't fix a broken business concept."

Most of the initiatives now employed to create revenue growth and the majority of cost cutting moves presently popular are unsustainable. The effective solution has nothing to do with beating up the station people, or one-time savings from cutting out labor. The problem is at the top of today's media organizations, this is where change must happen. I remain optimistic, as I have said before, certain that the glass is half-full, I am more concerned with who is pouring. You may read my earlier comments about the crisis in music radio here and the real problems facing media ad sales here.

For a great many years the ad spend flowed like tap water into electronic media, these riches often bought programming the time needed to fix any product issues (as an owner of CBS affiliates in the 1980s I've been there). It has been said that during the final days of the last century a trained seal could have produced the same results as most general managers, it was hard to get out of the way of the money. People got paid large sums of cash to show up, manage the inventory and keep the cost of separating the commercials and running the joint to a minimum, ah the good ole days. Those days are not returning, welcome to the world of managing decline, of entropy, of systemic collapse. A new day where management is proud to say they were down this quarter but not as much as the market. This condition is, in my opinion, iatrogenic (a five dollar way of saying we, the experts, the professionals, did this to ourselves, we put the business in the hospital).

Today's challenges are a perfect storm of product and sales issues. There are no silver bullets. Wall Street only loves those that promise and deliver growth. While this can happen for broadcast it will demand a fresh perspective, perhaps a radical point of view and a brutal honesty to finally face the problems and the realities of the situation. Broadcast still enjoys a great starting point to go forward, radio alone reaches 94% of the US population, over 228 million unique listeners every week. What happens next is far more important than what has happened before but serious consideration and bold action are no longer optional. Creativity and innovation must be high on the agenda of every CEO, business as usual is a death sentence. Free over the air broadcasting is at the crossroads, it's time to stop making excuses, time to stop delegating the blame; let's go cold turkey on the graduate level dog ate my homework stuff.

Objectivity is illusory. You need only listen to the comments and questions during the next round of conference calls to understand this to be true. As Don Quixote tells Sancho Panza "This that appears to you as a barber's basin is for me Mambrino's helmet, and something else again to another person." Broadcasting can be reinvented just as the dead tree guys will yet find a way to survive. To start we need to make something happen on the air and on the street. It will be hard work, it will require inviting freaks to the party, real show business folks, the odd balls, the gifted creatives, the hardcore news animals, the geeks, and all those other "difficult to manage" types. And we need to fill the station with them...programming, sales, accounting, marketing, every department gets a carney, a certifiable loon. Every all hands meeting filled with dissent and snark, pregnant with fresh ideas and enthusiasm. Every department manager gets to take a flyer, make an educated bet, or guess, and spin the wheel. We have to learn how to fail faster to succeed sooner. We have to have the guts to do something for no other reason than because it makes great TV or killer radio. Once it's fun to work in the station again you will see it on the tube, it will be heard on the speakers, you will feel it in the halls. We have to do what it takes to make a difference again. It will have to get messy before it can get any better. Walking into a station lobby need not feel like walking into an investment bank, this is the first clue we have a problem. Let's put the show back in business to stay in business. If I am being wrong-headed here, should I be missing something, should you sense that this is too harsh please let me know. I remain open to suggestion and will reply to your email.