Posted by chicagomedia.org on March 11, 2008 at 13:30:13:
NEW YORK -- A year ago, Dan Mason returned to CBS Radio to tackle sluggish station ratings and return the unit of CBS Corp. to a growth trajectory amid flattish sector trends. As president and CEO, he has successfully reformatted key stations and pushed new technologies, such as streaming and high-definition radio. Mason spoke to The Hollywood Reporter's business editor and New York bureau chief Georg Szalai about his company's digital initiatives and business outlook, a possible recession, as well as the proposed satellite radio merger.
The Hollywood Reporter: Last week, CBS Radio announced a partnership with AOL that will combine the two companies' radio streaming efforts. How does this elevate your game in digital radio?
Dan Mason: For a company that didn't stream until 2005 to become one of the leading or the leading radio streaming platform in the world is pretty cool. And I can't imagine what the cost would have been if somebody had just woken up with an idea one day to create such a platform. Through our creativity and the combined force of our two companies, this is what has occurred. From a programming standpoint, it makes available the great brands we have, such as KROQ in Los Angeles, WFAN in New York, on AOL's platform. From a sales and revenue generating standpoint, it gives us an opportunity that if a KROQ salesperson is selling an advertiser anything digital, it gives them an opportunity to now also offer AOL's Los Angeles audience. And AOL has 200 channels.
THR: Who are your closest competitors in online streaming?
Mason: Well, I suppose if Clear Channel did a similar deal with Yahoo, that would create a large platform because Yahoo is pretty far up the rank. But at least for today, we have that platform.
THR: How will you split up revenue with AOL?
Mason: That's a confidential arrangement. But I will say it is beneficial to both parties.
THR: Do you have any targets for how much revenue could come from Internet radio over a specific time horizon?
Mason: Sure. I can't disclose that, but we did our homework for what the potential would be. We have had exploding growth in the last few years in the digital space. And we've seen our own revenue (go) up substantially from streaming and other digital products we do. We think it's a significant amount -- a very good augmentation of our traditional radio revenue. The numbers are significant enough for us to recognize that they could be much higher if we have a platform like AOL.
THR: You have said radio must be more aggressive about taking its message to Madison Avenue, so that advertisers don't overlook radio in the digital age.
Mason: Yes, we are very vocal, and I am very vocal, because I do believe in the power of radio. It reaches 95% of the population every day. By comparison, satellite radio reaches 5% of the population every day. I am also excited about the future of radio with elechicagomedia.orgonic measurement, or Personal People Meters, as Arbitron calls it. In the test numbers in New York, WFAN for the Super Bowl had an audience of 1 million people. That could not have been measured in the antiquated diary methodology. Adding this to our streaming elements, what you see is a big movement toward measurability. Now we can measure even in real time how many people are on our streams on AOL.
THR: What's the outlook for traditional radio advertising this year? Some analysts have been predicting a possibly flat or down year.
Mason: It probably rides along with other media. I don't see a big difference right now between radio, television, even newspapers. Outdoor seems to be growing faster right now. It's not a situation where radio as one medium is down. I am not saying we're having an ad recession. But advertising is down and probably is trailing the GDP, which is a fact and has been a fact. And we, along with other media, suffer from that. However, the online pot of advertising is very deep and is becoming more significant. That puts us in a position to overcome any type of recession that might be down the road, because we're absolutely fishing in a new pond.
THR: You have also talked about political advertising as a growth area.
Mason: From what we have seen so far, we probably are further ahead in the political arena than we have ever been. We haven't run into the heavy spending yet, because we have a long way to go until (the elections in) November. But for a comparable period in other election years, we're doing very well. There have been estimates of $3 billion-$5 billion in political advertising spending this year. We certainly want to get more than our fair share of that.
THR: What's the fair share?
Mason: Let's say more than we have ever gotten before in any political year by a significant margin.
THR: You mentioned a possible recession. Some have said that your presence in bigger markets may insulate you from economic pressures a bit. Do you agree?
Mason: I could make an equal case pro and con for that. It's true that if a recession came, advertisers would tend to go with the larger markets. That happened in the past. I have seen that happen in the '70s and '80s. But I could also make a case for the smaller markets, because they are less dependent on national advertising as the larger ones.
THR: How do you manage a possible economic slowdown then? Do your technological initiatives help here?
Mason: Absolutely. That's the play. It protects the company from things that could happen down the road. It diversifies its revenue streams.
THR: How are things going in high-definition radio?
Mason: Were you upset that Smooth Jazz is off the air in New York? All you would have to do is spend a couple of hundred dollars -- if that -- and buy an HD radio. Smooth Jazz in New York City is on HD2 right now on 101.9. And AM on HD sounds like FM. The progress has been somewhat slow in HD due to lack of creativity. That has hurt. We're going to make another major announcement about what we're doing in HD in New York in a few weeks, which will be exciting in itself. New things are coming to HD. In L.A., on our station JACK we just launched a new format called Amp Radio. It's geared to 8 to 14-year-old girls. Once people know more about what's available out there, more (people) will go buy radios. I'm excited about the whole business. It kills me to hear misinformed people talk about how no one listens to the radio anymore. If that was the case, how could a million people have listened to WFAN for the Super Bowl?
THR: What is the biggest competition to radio these days? Satellite radio, iPods?
Mason: I think an iPod is an appliance. And as far as satellite radio -- when you only reach 5% of the population, that's just not even to a level that's mass yet.
THR: So, you don't really care if the Sirius-XM merger happens?
Mason: If the merger occurred, I'd like to see HD chips in satellite radios. That would certainly level the playing field. Then every car radio in the U.S. could come equipped to run several channels -- HD2 and HD3 in addition to satellite radio.
THR: Do you expect more consolidation in terrestrial radio?
Mason: I don't know if I want to call this consolidation. But there will be an aggregation. We will be aggregating our ratings and efforts to compete in the marketplace as a cluster of radio stations versus singular stations. AOL is a perfect situation where you will add all our streaming audience in New York and add it to AOL New York. We can sell advertisers this aggregated audience.