Radio Waves: 10/21/16

My FM Lounge

KBIG (My FM, 104.3) has teamed up with furniture retailer Living Spaces to award a teacher’s lounge makeover at a school near you.

Teachers and students can enter the contest by uploading a picture of their school, tell why the school deserves a teacher’s lounge upgrade, and then vote. Submissions can be made through October 28 at 10 a.m.; voting will take place starting October 28 at 3 p.m. and continue until November 3rd at 3 p.m.

The winning school gets $5000 for the makeover. I believe that is more than the total value of everything in every teacher’s lounge I have ever seen … combined.

Lawrence Passes

Don Barrett broke the sad news on LARadio.Com that former KFI newsman Jay Lawrence passed away on September 22, due to a massive heart attack. He was 69.

According to Barrett, he died returning from a golf game, an activity he loved. A bachelor until the age of 50, he is survived by his wife Reni, who told Barrett: “Our life was magical. We shared the love of golf, made some extraordinary friendships, and we were best of friends to each other and truly loved each other. I will miss him deeply.” I can add, we all will.

Reverse Stock Split Approved

Cumulus Media, owner of 450 radio stations nationwide including KLOS (95.5 FM) and KABC (790 AM) here in Los Angeles, announced last week that shareholders approved a reverse stock split in which shareholders receive one share of stock for every eight they previously held. The effective date of the reverse split was after trading hours on October 12; the new “improved” stock was available on the NASDAQ market beginning at the opening bell October 13th.

The plan was designed to have Cumulus avoid being delisted from the exchange due to its inability to maintain a price above $1 as required by NASDAQ. Cumulus has been trading in roughly a 20 – 40 cent range for most of the past year having lost over 95 percent of its value over the past decade or so.

The opening price on October 13th was $2.39, reflecting a value of just under 30 cents a share pre-reverse split. It closed October 13th at $2.01, then closed on October 14th at $1.95 (24.4 cents pre-split), a decline in value of of a little more than 18 percent in two days. Not exactly the direction the Board intended.

Why? What’s the problem? Isn’t Cumulus adding to stockholder value through innovative programming yada yada as told to me by Thom Callahan, President of the Southern California Broadcasters Association? In a word, no. And it’s not just Cumulus; iHeart Media is in similar dire straits, and CBS is still trying to figure out what to do with its stations. The companies are just too big to manage their stations successfully.

As I have said for years, the current model for radio isn’t working, and it has never worked. Promised efficiencies never materialized; cost-cutting took away the creative and competitive drive to keep listeners — and advertisers — happy. It is time for the FCC and Congress to save radio by bringing back limits on ownership to no more than ten stations nationwide, no more than one each of AM, FM and television in any market.

It’s going to happen anyway, one way or another (read: bankruptcy liquidation, unless the companies start selling off properties). Cumulus isn’t alone in being worth more as the sum of its parts than it is as one company. But the rules must be in place to prevent this from ever happening again. There are a lot of talented people working in radio still, let’s let them work their magic without the constraints of top-heavy corporate bean counters and the massive debt the companies hold.

A much smaller Cumulus would actually succeed. Time to do it.