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Radio Show 2011 Raleigh, NC, September 22, 2011 -
According to a new study released by Harker Research, Radio’s Future: Listeners and Content, broadcast radio still holds the top spot for today’s audio consumer given the changed landscape when it comes to the number of available audio devices and how consumers use them.
While it may appear that broadcast radio is getting pressure from newer audio devices and delivery options such as streaming, listeners aren’t looking to replace the convenience and local connection that radio delivers. Radio’s Future: Listeners and Content, which debuted on Friday, September 16th at the Radio Show, produced by the Radio Advertising Bureau and National Association of Broadcasters in Chicago, focused on the media day of today’s audio consumer, how their media usage has changed, and what they expect from media devices in the future.
Here are some key findings of Radio’s Future: Listeners and Content: •Listeners are Media Multi-Taskers.
•Listeners are still tuning in to radio… just with many more devices than before.
•Audio consumers are streaming in record numbers - and listening to many local radio stations.
•Broadcast listeners prefer their P1 station to Pandora.
•With so many choices, no audio source is “irreplaceable”.
•Convenience is key to radio’s success and listeners expect broadcast radio on every device.
•Radio’s social interaction remains important. It has just moved to the web.
•Local information and personalities drive media consumers to radio.
”An increasing number of available audio options isn’t a zero sum game,” said Glenda Shrader Bos, Managing Partner, Harker Research. “Our research shows that the increase in options is driving people to listen more. Streaming doesn’t replace the local aspect and convenience that broadcast radio offers listeners.” “We were excited to work with Harker Research on this study. It was important that we share insights into broadcast radio’s strength and the complementary impact of online audio consumption,” stated Jeff Haley, RAB’s President and CEO.
"This study continues to prove the power of radio’s brands in the changing media landscape." How the study was conducted: A survey of 500 men and women between the ages of 18-49 were conducted in Chicago, New York, Raleigh, San Francisco, and Tampa. In addition, we have conducted over 25 Triads, IDIs, and Focus Groups regarding media consumer trends and media advertising in the past year.
The qualitative and quantitative segments of the study were conducted in a hybrid fashion- online and over the phone. Respondents were required to listen to at least 30 minutes of radio a day. Download a copy of the presentation Radio´s Future: Listeners and Content here. About Harker Research: Harker Research is a full service market research firm that provides state-of-the-art, actionable research to industries specializing in media/entertainment worldwide. Media Contact: Amy Green, Harker Research, 919-954-8300, Amy@harkerresearch.com
Until now Pandora Media has gotten nearly all of its advertising revenues from national advertisers, but that is changing. In his first quarterly conference call with Wall Street analysts, and after reporting record results, Pandora CEO Joe Kennedy said the company is “investing aggressively” in its sales force – and he made it clear that selling local advertising is where the company sees big growth coming.
Kennedy noted that local advertising tends to command higher CPMs than national. Pandora has already started a local sales initiative in Portland, OR. That’s still too small to have a real impact on the company’s total numbers – but it is just the beginning.
The CEO focused on the market-by-market data it recently released from Edison Research to make his pitch that Pandora is a strong competitor to local radio. The figure claimed in the quarterly report is that Pandora now claims 3.6% of all US radio listening. Kennedy pointed to the Edison calculations of AQH numbers to contend that Pandora is now a major player in every market as a “standalone radio station” in delivery of 18-34 listeners.
The objective over the next few years is to monetize that listenership by selling local ads. The company is hiring and plans to put feet on the street.
Chris Note: Ummm. Could be time consuming, expensive, and difficult sell.
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In his new role as Chairman of Media and Entertainment Platforms for Clear Channel Communications, Bob Pittman appeared Wednesday as a featured speaker at a Credit Suisse Investor Conference in Miami. He gave attendees an earful about why he invested $5 million in Clear Channel and on why radio is not going away.
“Radio is still America’s companion,” Pittman said, “you can’t live without it.” But that was just a little part of the cheerleading warm-up. Then he got down to dealing with what’s supposed to be the latest threat to radio.
“Radio is quite different than playlists or music lockers. Typically people have had their radio they love and they’ve had their music collection. Things haven’t changed. They still have a music collection and they have the radio stations. One is programmed for them, one is where I program stuff myself and look through it and play it and have specific interests,” Pittman explained.
“What makes radio different than custom radio – a Pandora-like service, playlist, or music locker, Spotify, etc. – is that radio’s curated and dynamically changes. What that means is we have to do an enormous amount of research every week to understand who that tribe is we’re programming to and what their tastes are. And guess what – those tastes change every week,” said the new Clear Channel executive, who knows a lot about music not just from his days as a radio programmer, but also from being “The Father of MTV.” “So as you’re getting tired of a certain song, it begins to disappear. As you discover a new song, miraculously it appears and starts being played more and more. And every week, every month, every year the station is constantly changing in reaction to changing consumer tastes.”
And then here are the human beings. Pittman noted that when MTV started he and the other executives had to decide whether to have people as hosts, or just play the music videos. The decision was made that people were needed, and that proved to be a correct choice because viewers bonded with the VJs (video jocks) who became the faces of MTV. Likewise, radio hosts are companions as people drive along and stations have strong local brands which are identifiable to their audiences.
Pittman doesn’t totally discount “jukebox radio,” noting that Clear Channel has done a deal with Thumbplay to add the music service to its iheartradio Internet-based streaming operation.
But services like Pandora, he said, are not radio. “What you’re really looking at is a playlist.” Pittman asked attendees if they’d all made their own playlists when they first got an iPod. “Remember how great it was for a while, but over time you got sick of listening to your own playlist. It burns out. That’s exactly what happens here, because what you’re going to find with Pandora, or even with our service as well, it’s a shortcut to create a playlist. You’re putting in a song. It creates a playlist. It’s a benefit – I’m not knocking it – it’s good, but it ain’t radio. You create a playlist and then the songs are put on constant shuffle, to use the iPod analogy, but it constantly shuffles songs that are the same group of songs. And if your tastes change or you get tired of that new Lady Gaga song, it’s still there. And if a new song appears, guess what, it doesn’t show up there. So what you do is you go create another playlist – and another one,” he said.
Pittman noted two studies which found the same thing – the longer someone listens to Pandora, the less they like it. Radio, unlike jukebox services, introduces new songs, has personalities to bond with and delivers local content. Personalities do make a difference, he said, noting that Clear Channel wouldn’t have paid Ryan Seacrest $60 million if it didn’t need to.
RBR-TVBR observation: We’ve long considered Bob Pittman to be one of the smartest guys in media, even if he is now an exec of the company which owns one of our competitors, Inside Radio.
He saw the potential of music videos on cable when most people didn’t, the media value of the Internet when it was still new – and now he’s back to touting the value of radio when the supposed cutting edge view is that it is long past its prime.
If you somehow missed our extensive RBR-TVBR interview with Pittman before he took his new job, it is worth your time to listen.
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You may have read uninformed commentary elsewhere that Pandora Media’s IPO may not be busted because the stock price could still rally back to the IPO price. Sorry folks, it doesn’t work that way.
There’s no official definition of a busted or broken IPO, since the big investment banks don’t want to think about their bad deals. The rule of thumb, though, is that an IPO is broken if it closes below the IPO price anytime within a month of the offering. Pandora Media has now done so twice in three days of trading.
A late rally on Friday made Pandora’s performance positive for the day. It closed at $13.40 - up 14 cents for the day but still well below the $16.00 IPO price. The stock has now traded in a range of $12.16-26.00 in three days of trading, with the only close above the IPO price coming on Wednesday (6/15) at $17.42.
Pandora now has official coverage by a second Wall Street analyst. Richard Greenfield of BTIG Research, who had been a critic of the IPO, has initiated the stock with a “sell” rating and a target price of $5.50. That’s actually up from his pre-IPO estimate of $4-5 as the real value of the stock.
The analyst sees Pandora turning profitable in 2014 after a few more years of red ink. He points out the obvious problems with the business model: “While Pandora is creating a large active user base, its reach/frequency continues to pale in comparison to terrestrial radio, as does its profitability. Pandora’s fundamental problem is that active users and listening hours are growing rapidly, but those listener hours have fixed (and annually escalating) royalty costs per streaming hour (fees to music labels).”
Greenfield joins John Tinker of Maxim Group in covering the stock. They have somewhat differing views of the company’s worth. Tinker rates Pandora a “buy” with a target price of $23.
That’s a huge spread, of course, from $5.50 to $23.00. For now, the stock price is hovering around $13 – kind of in the middle. The coming week will tell whether Pandora can hold onto a double digit stock price or start sliding toward penny stock territory (anything below $5).
RBR-TVBR observation: At this point it may be optimistic to project that Pandora will be able to post a net profit in 2014. You first have to post an operating profit before you can think about getting to a net profit.
RBR-TVBR seems to be the only one to notice that Pandora’s operating (negative) cash flow moved the wrong way – and big time – in fiscal Q1 after improving last year.
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Kathy Jones on her 50 calibre machine gun.
"B-17’s Rule the Sky", she later stated to the Press with a ever-so-pleasant smile.