• by Mike Skillrud , October 8, 2002

I disagree with Owen Kurtin's premise, as noted in Lawyer: FCC Dismantling Media Rules. Kurtin, chairman of the Information Technology and Communication Group at legal firm Salans, says the FCC has already taken most of the barriers to cross-ownership of local media, and will most likely remove any remaining barriers. This will lead, he says, to new round of mega-deals and media consolidation.

I disagree for three reasons.

1. This is an old, tired theory. Ever since the onset of deregulation, numerous "experts" have speculated that the giant media groups would have a detrimental impact on rates (from the vantage point of the buyer). Speculation was that rates would rise meteorically, as a direct relationship to the unbridled media conglomerate growth via consolidation. In the Minneapolis/Saint Paul market, the opposite is occurring. As a result of companies overpaying for media properties here and elsewhere, combined with the recession, upper management at these corporations have placed such impossible demands (in the way of extremely high revenue demands) that rates have actually decreased.

2. To try to reach these unrealistic revenue expectations, these radio station groups keep adding inventory. In the Twin Cities, most conglomerate-owned FM radio stations are now running at least 16 60-second commercials per hour - in pods of eight or more in a row. Their sister AM stations are running 20 - or more - every hour! This trend is not going to change. It can't. Many of these stations are behind in their projections. Factor in the time-value of money, the cost of debt, interest, etc., and these station groups may never catch up. After all, unlike the print media, broadcasters face finite limitations. There are, after all, only 60 minutes each hour available to sell.

3. Sales managers have been forced to hire and "manage" numerous untrained salespersons, sending them to go out and conquer - armed with nothing more than the weekly "package." Forget building value via a consultancy, relationship or partnering processes, these overworked sales managers have been handed "events" and "non-traditional revenue opportunities" to sell - packaged with radio, in-arena signs, outdoor and whatever other "real estate" is co-owned by the stations. These sellers main prospects are businesses they've targeted by "monitoring" the competition - other radio and TV outlets. Additionally, these companies are not investing in their employees - especially not in the way of training.

The agencies and buying houses are training their buyers and planners. To cut expenses, media companies are slashing commissions, decreasing support staff and dividing up account lists. As professional, senior account managers and high-quality sales managers continue to leave broadcasting, it will not be a fair fight for the remaining "churn and burn" media rep newbies. This can only lead to diminished perceived value on the part of the buyer - hence lower rates for media space and/or time.

As long as the heads of media companies cast aside common sense, disregard the age-old business standards (such as multiples to be paid) and ignore the fact that companies' successes really are because of "the people" Mr. Kurtin should advise media buyers and planners, regarding the issue of "unfair" broadcast time costs, that they can most certainly relax.

Mike Skillrud is Account Manager, AM 1500 KSTP, and President of the Advertising Federation of Minnesota