Lew Dickey began his career in 1985 as the founder of Stratford Research and built the company into a leading provider of market research and strategy consulting to the radio and television industries. He co-founded Cumulus Media in 1997 serving as Vice Chairman leading the acquisition effort responsible for over 130 separate transactions to build Cumulus’ platform which is the second largest in number of stations. He was appointed CEO in June of 2000 and today is Chairman, President & CEO of the company which owns and operates 350 radio stations in 68 markets.
Lew Dickey
Lew Dickey began his career in 1985 as the founder of Stratford Research and built the company into a leading provider of market research and strategy consulting to the radio and television industries. He co-founded Cumulus Media in 1997 serving as Vice Chairman leading the acquisition effort responsible for over 130 separate transactions to build Cumulus’ platform which is the second largest in number of stations. He was appointed CEO in June of 2000 and today is Chairman, President & CEO of the company which owns and operates 350 radio stations in 68 markets.
eQB presents excerpts from the May FMQB magazine Cover Story with Lew Dickey, Chairman, President & CEO, Cumulus Media
“Clearly the capital structure is the most serious issue facing broadcasters today for the simple reason that these businesses were capitalized in better times and are supporting capital structures that were geared for a much higher top line.”
“When you leverage something you gear it at a multiple, and when revenue declines by 15%, which is what most analysts predict this year, you’re going to see a multiple of that on cash flow decline. So you can see cash flow declining as much as three times that for a number of radio groups putting it in the 40-45% range.”
“At Cumulus our approach has been the farther we get away from the customer the more aggressive we are in our cost cuts, and the closer we are to the customer the less we want to cut. We clearly don’t want to cut sales people who are our feet on the street. We feel at the end of the day that coverage is essential and is the anecdote for the problems we are facing with today’s transactional business.”
“Our goal is to flatten our organization without losing any contact with our customers. The business very much needed to do that and it took this kind of a crisis to serve as the catalyst to make us rethink the fixed cost structure in our business and as a result we’ve taken a lot of the costs out of the equation.”
“I don’t want to seem antiseptic about this. It’s tough as hell when you have to lay people off. It’s a very difficult thing to do and it weighs heavily on me and frankly I’m hurt by the fact that we have to go through this process, but it is part of running a business and we are not alone or unique in this. It’s something we have to do and in essence you need to cut off the limb to save the patient.”
“We can all look smart or dumb in hindsight. The Clear Channel deal was done at a time when leverage was plentiful, the buyout rage was moving and the buyout shops were flush with cash, so it looked like a wise deal at the time. We’re going through a trough in the cycle right now. We’ve experienced a severe ad recession unlike anything since WWII. Quite frankly this economic maelstrom we’re currently in has caught virtually everybody by surprise.”
“The radio business has digressed into a wholesale model where the industry sells to a small concentrated group of sellers (ad agencies) in bulk who in turn sell the product at commoditized rates. It is completely commoditized and as a result there is an extreme downward pressure on rates. It’s compounded by the one part of our business model that won’t change which is our fixed inventory model. “
“We have to create more demand in order to give us greater leverage over the buyers so we can transform ourselves into price setters rather than price takers. That’s the change that has to take place from the sales standpoint on the revenue side. However affecting that kind of cultural change in an organization is incredibly difficult to do. You have to have basic fundamental behavioral changes within an organization.”
“I believe live and local wins every time. That said we’ve tried to be extremely thoughtful in the way we’ve had to take costs out of our business. We’ve tried to focus on keeping drive times live as much as possible while eliminating other live shifts like mid-days, nights or weekends. As the business returns and we start to see top line growth again these positions will return. It’s a competitive marketplace and your radio station will sound much better if you have a live and local personality in a slot. There’s no doubt about it.”
“When you talk about the pros and cons of PPM we have to separate that into electronic measurement which is coincidental measurement, and the PPM which is a technology designed to measure radio consumption. I’m a huge believer in coincidental measurement where you can have a device people carry which will pick up encoded signals and concurrently measure the consumption of the radio station.”
“If properly harnessed, I believe the technology of measurement should include a single source GPS equipped device that captures radio, television, outdoor and consumer behavior. I’m a big believer of using Smart Phone technology to capture compelling data about the consumer that encompasses all forms of media.”
“Cumulus has entered into a deal with Neilson ratings service because we feel that on the diary side they have a superior product based on sample frame and methodology. In addition, the qualitative information they supplement it with can give us better data to more effectively sell the value of our individual stations. Neilson is the largest research company in the world and they’re extremely focused on developing a device that employs Smart Phone methodology.”
** QB Content by Fred Deane **
