BALA CYNWYD, PA. — If anyone has a playbook on how to combine technical operations of two major radio broadcast groups smoothly, John Kennedy and Paul Donovan likely will want to see it.
Kennedy, corporate director of technical operations for Entercom Communications, and Donovan, vice president of engineering for CBS Radio, are overseeing the complex integration of engineering staff and technologies pending federal approval of the marriage between Entercom and CBS Radio. The new entity will have a total of 244 stations in 47 markets with operations in 23 of the top 25 markets in the United States.
The success of the combined company, which will become the second-largest radio broadcaster in the United States based on revenue, will depend in part on the combined work of the engineering, IT and digital departments responsible for the backbone of the broadcast group’s technical operations.
The estimated $2.5 billion deal, being scrutinized by the U.S. Justice Department, could close by the end of this year, according to those familiar with the agreement. That leaves little time to plan out such a herculean effort.
It’s not clear exactly how many people in the engineering and technical staffs at the two companies will be affected, though there is some market overlap between them. Entercom has announced it is placing 14 FMs in a trust for future spinoffs.
Execution of their integration work will be scrutinized by those inside and outside the company, according to people who have been through complicated mergers.
Kennedy declined to be interviewed for this story while a CBS Radio spokesperson declined on behalf of Donovan. Given that we were unable to speak directly with them, we asked four expert outsiders, former corporate engineering executives who have been through a variety of mergers and acquisitions, to comment on what a technical game plan for such a huge merger might look like and the potential pitfalls. Respondents were Gary Kline, former VP of engineering for Cumulus; Milford Smith, longtime director of engineering for Greater Media; Bert Goldman, one-time VP of engineering for ABC Radio; and Andy Laird, former vice president and chief technology officer for Journal Broadcast Group.
RW: What are some of the first engineering management issues that come to mind when merging broadcast companies?
Kline: I typically start with the big-picture outline and then narrow things. The big picture may include departments you are not directly responsible for but somehow may touch. For example, HR systems may be on the engineer’s list because there’s interaction with IT or access in the local markets — things which engineering should be involved with but more in a support role. In the early stages of a business deal, you may not be permitted to discuss anything with the other party or their employees, even though you may know them well. Radio is a small business, especially in the engineering ranks. So in the beginning, I’d form a list of questions that the business development and legal teams can request.
Smith: Whereas it might seem like equipment, budgets, procedures and the like would be first up, I would make a case for people being the first priority. Such transactions are fraught with anxiety, fear of the unknown and insecurity on the part of all the staffs involved, technical staffs included. Good broadcast engineers are extraordinarily difficult to find and more challenging still to “lure away” in the event of an opening. Thus, it’s my opinion that the number one priority is to immediately get acquainted with the new folks suddenly joining the organization and to allay their fears and concerns going forward. It’s important, too, to make sure “your” people have any concerns addressed relative to the merged entity. These are unsettling times, and efforts made to make the situation less scary and to provide positive assurances is very much time well spent.
Laird: Both companies are very successful, so job one is do no harm!
If there is a broadcast engineering technical mandate that needs to be understood, ask: What technical procedures and records are in place at each company? How good is the physical diligence for the properties? What are the reporting structures for each technical group and how do they differ? How do the two companies differ concerning FCC related issues, representation? How do each of the companies handle expert technical work — in-house, consultants? Since one company is mostly major market and the other large and medium market, does it make sense to consolidate technical management across the combined group? Major changes take time for personnel buy in, for trust to develop. Certainly the merger improves capital purchasing leverage. How can communication among CEs be fostered for sharing best practices? The collaboration tools we have today are a great help.
RW: How is redundancy in technical operations typically handled?
Goldman: There are two kinds of redundancies.
Technical equipment redundancies is the first type. As part of the overall planning, office/studio and transmitter leases should be evaluated as to cost, lease restrictions and term. If it makes sense, and as part of the due diligence budget, any potential consolidation should be examined and budgeted. FCC allotments should be checked to see if consolidation of tower sites and/or facility upgrades should be considered. The lease terms for studio and transmitter seldom line up with the acquisition schedule, so there’s usually some period of time when operations remain separate and redundant.
Personnel redundancy is the second type. This is tough and varies considerably by company culture and overall needs. From a corporate standpoint, the corporate engineer of the company being acquired is seldom retained, at least not in the same capacity. Regarding local station staff, questions come up very soon after the merger announcement as to what the new company’s intentions are both from incumbent and by the engineers being acquired. In my experience, however, unfortunately, I’ve found that the engineering personnel are the last to be considered when companies are merging. Ultimately, upper management and imposed budgets make hard decisions necessary.
Smith: I think communication with staff is the key. There will obviously be some painful changes that will ultimately have to be made — and I can speak from personal experience! — but if humane measures are put in place as to any reductions in staff the potential pain can be considerably eased and the negative turned into at least a partial positive. For those unfortunate enough to be RIF-ed [slang for fired], there are new opportunities out there. Any severance arrangements should allow the individual impacted time to seek them out.
RW: What kind of technical issues must be laid out and managed? How are legacy networks and various brands of equipment dealt with?
Laird: Any technical issues that can put a license in jeopardy require immediate attention. Do all the stations have established procedures that are followed daily, weekly, monthly and yearly with record keeping? Example: tower inspections, history of transmitter and antenna parameters, server back-ups, testing of back-ups, etc. How are the ongoing inspection results reported to the station manager and to corporate technical management? Legacy technical networks and various brands of equipment within an enterprise of this size are normal. This is not necessarily a bad thing as long as proper IT structure and security is in place to protect them. The need to change is sometimes driven to get new features or because of discontinued hardware and/or software support. With the merger, station technology changes may be needed to support back office initiatives, centralized traffic, billing and IT management. Considering audio programming, will file sharing and voice tracking be expanded?
Kline: The first higher-level engineering things that come to mind are the major backend systems for each. Then there are lots of questions to be answered about HR/payroll, accounting, CRM, billing/traffic, music scheduling, streaming, etc.
Goldman: Regarding legacy networks and equipment, I advise folks not to move too quickly. If the stations are all being consolidated into a new facility, I’d wait until then to make major changes. All involved staffs should have a hand in deciding what brands of equipment are purchased. Some equipment by necessity must be the same, but many equipment items can remain specific to the needs of the individual stations or even specific people, such as preferred production equipment. When deciding on a common equipment platform, like consoles and automation, solicit input from everyone. It may not change the ultimate choice if there’s a company preference, but it may prompt some tweaks to make it more user-friendly to the newcomers on the chosen platform.
RW: There are likely culture differences between the companies. How does a manager handle operational differences?
Smith: Likely, at the outset, the right way to do things, the right way to structure the organization, management wise, and the right level of staffing is pretty much thoroughly ensconced in each organization. Before blindly imposing the right way of doing things on the acquired company, it is very wise to take a good look at how they are doing things and see what positives one might want to incorporate in the new, merged organization, and obviously any negatives that might need to be eliminated. There will certainly be changes, and a lot of them; but letting people know in advance what is being done and, more importantly, why it is being done is critical to buy-in. Without such buy-in, the transition period is doomed to be a rough one.
Laird: Consolidation of best practices in this area should be pursued. Each location should have a list of items that need inspection procedures such as fuel tanks, generators, UPS, building mechanical systems, real property issues, roofs, electrical panels, fire suppression, etc. There should be procedures specific to FCC, such as tower lights, EAS, Part 101 license renewals not associated with the station license. And what about OSHA compliance issues, noise, personal protection, physical hazards and RF exposure? Standardized reporting helps corporate engineering properly oversee technical management responsibilities. This is usually not a big issue with technical personnel, especially if they know they get support when issues arise.
RW: How much time is given to deciding who reports to whom and can you describe the process?
Goldman: Usually, the acquiring company and people associated with the acquiring company take the upper hand in the reporting process. I think it’s simply a trust issue. The corporate staff knows and trusts the local station manager, who knows and trusts the department heads. That’s why I suggest waiting for a while before making any particular staff cuts or organizational changes until more is known about the people coming into the company. Speaking for myself, I have experienced being forced to make decisions before I could properly get to know the new people I was managing. As a result I didn’t make the best choices.
RW: What little things tend to bog you down when planning a merger? From your experiences what potholes can be avoided?
Smith: Trying to focus on the minutiae right out of the box is, I believe, a mistake. That can tie you up in knots and result in noting much of consequence being accomplished.
Laird: Many potholes with technical staff can be avoided by establishing a clear path for technical communication on closing day. The first day communication package is critical for reducing those problems. If there’s a lack of information the void will be filled with bad speculation. Anticipate likely questions by starting a FAQ. Have the org chart available with contact numbers.
Goldman: The biggest potential pothole I’d say that a technical manager must keep in mind when going through a merger is that you must minimize future surprises. Corporate managers really hate surprises. Learn as much as you can as fast as you can about the technical facilities and the people managing those facilities to provide good intelligence and minimize surprises after closing.