We have the deepest respect for Jerry Del Colliano. (Are we the only one who thinks Jerry looks a little like Mad Men’s Dan Draper in this picture?) Inside Radio under his direction was a “must-read.” A radio guy through and through, he took radio to task when it deserved it, and defended radio when it didn't.
More recently we’ve had misgivings about his evolving opinion of radio. Living in Los Angeles can do that. Perhaps he hung out too long with his students at USC. Perhaps he has accepted the opinions of his daughter’s peers too literally. Maybe he’s just drunk too much New Media Kool-Aid. Whatever the reason, he has essentially given up on radio.
Here’s what he recently wrote about declining station prices:
Individuals and small groups could buy back in but as I have said many times, this is a fool's game. Radio is over as we know it. It certainly is never going to be a growth industry again. The geniuses running the major groups sat out the Internet revolution and are now ignoring the mobile phone explosion leaving themselves or the suckers they attract as buyers -- old fashioned terrestrial radio stations aimed at a disappearing audience.
Buyers with Cash for Clunkers are not stupid, they just love radio. They think, "this is my chance to buy in to the business I have always loved at a reasonable price". That part is right. They will ignore (the above), I promise you. If they paid attention to it, they would be slower to invest in a horse and buggy business in the age of space exploration.
As the above quote suggests, Del Colliano believes that radio has ignored New Media opportunities, which is why radio is toast. As we have frequently documented in this space, the “radio is dead” crowd has been shouting this for over ten years. Radio has outlived many of them. Domain directories are littered with the names of long-gone web sites that promised to bury radio.
Radio continues to turn an operating profit, which is something Pandora, Slacker, Sirius, and many others have yet to do. How much money is Facebook burning through? What is Twitter’s business plan again?
We believe that radio stations across the country are quietly integrating New Media elements into their fabric. Perhaps it is not as fast as New Media pundits believe they should, but then again most pundits don’t have a payroll to cover each week.
Time will tell whether Del Colliano’s dismissive reference to radio as a horse and buggy business will come true. Studebaker started out building horse buggies, and continued building them quite a few years after others were building cars. They started building cars when it made business sense. And when they did start building cars, they did it right.
A favorite target of Del Colliano is consolidation. He believes it has gravely damaged radio and he singles out Clear Channel and Cumulus as poster children of what consolidation has done to radio. We too have been critical of consolidation, and believe it has hurt radio. But let’s get real. Clear Channel and Cumulus together own about 1300 stations. There are about 14,000 radio stations in the US. So these two evil companies control less than 10% of the stations in this country. Add in Citadel, another favorite Del Colliano target, and we’re still at less than 11% of US radio stations.
The vast majority of radio stations are not owned by Clear Channel, Cumulus, or Citadel. To slander and dismiss an entire industry because of the actions of a few consolidators is unfair to those who are still trying to do good radio under very trying conditions.
John D. Rockefeller said the best time to buy stocks is when there is "blood in the streets.” Warren Buffet says be greedy when others are afraid. George Soros made most of his billions betting against the pundits. Jerry Del Colliano believes that only fools would buy radio stations. Sounds like a good time to buy!