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Beasley: Revenue May Be Fragile, But Radio Industry Is Strong

A pre-show conversation with the chair of the NAB Radio Board

NAPLES, Fla. — Caroline Beasley has a front-row seat not only in radio’s business activities but also its lobbying efforts.

Beasley is executive vice president, chief financial officer, treasurer and secretary of Beasley Broadcast Group Inc., founded by her father, Chairman/CEO George G. Beasley, in 1961.

Caroline Beasley says, ‘As long as we are delivering good local content and we’re able to follow our listener, then I think we’ll be able to compete effectively.’ She is shown at the fall Radio Show. © NAB

Caroline, 49, has played a big role in shaping the Naples, Florida-based radio group. She joined the firm in 1983 and has held various finance positions at the station and corporate levels. The company went public in 2000. Today it owns and operates 42 stations (26 FM and 16 AM) in 11 large- and mid-size markets.

But taking an industry role beyond the company, she has since 2005 also been a member of the NAB Radio Board and has risen to become its current chair. She’s a face of the radio industry in Washington, prominent in how commercial radio expresses its business and regulatory objectives.

Radio World News Editor/Washington Bureau Chief Leslie Stimson spoke with Beasley about the economy’s impact on radio, radio’s remaining relevant in the dashboard, HD Radio and the industry’s lobbying priorities.

RW: How would you characterize the health of the commercial radio industry?
Beasley: Radio as an industry is strong. When you look at the recent research, it indicates that listenership is at all-time levels. And 93 percent of the U.S. population listens to radio.

In my opinion, these facts represent a healthy industry; however the business is fragile. Our current state of revenue is fragile because of our economy and because radio advertising is discretionary. Radio is very much tied to the economy. So, as our economy continues to improve, our business will likewise continue to improve.

Over the last couple of years, the industry has grown. In 2010 radio revenue increased 6 percent. Last year it was up 1 percent. If you factor out political from both of those years, you’ll see that radio is kind of the GDP-ish-type industry. I go back to the fact that, overall, the industry is strong, however the current state of business, in terms of revenue, is fragile.

RW: Ford Sync, Toyota Entune, Buick IntelliLink — the introduction of these systems means radio is becoming one of many, many choices in the dash. How generally can radio compete with other media in the car?
Beasley: We do have more and more media to compete with; but I think that if we do what we do best, what we’re known for, then that’s how we compete. And that is delivering good, local content. We also need to be able to adapt and change to all of the technological advances in today’s environment.

We need to be on a number of different platforms. We need to respond to what our listeners want; and we need to be able to follow them anytime, anywhere. But at the end of the day, it comes down to content. I think as long as we are delivering good local content and we’re able to follow our listener, then I think we’ll be able to compete effectively.

RW: Internet personalized audio services have been getting a lot of press. Pandora specifically is hiring people to sell against radio in local markets; some of those salespeople used to work in commercial radio. How can commercial radio combat the phenomenon?
Beasley: I go back to your earlier question; it’s by delivering good, local content. Pandora does not do that. As long as we do that I think we will be able to compete with Pandora, with the other media that’s in the car or on your laptop or wherever. It’s our product; it’s our content.

RW: And they’re saying, “We want to be number one in your car, home …”
Beasley: This is from my perspective: I really don’t see them any different than, say, the perspective of satellite radio years go. Everyone was very fearful of satellite radio; that they were going to overtake local radio. That didn’t happen.

There is a place for Pandora in the marketplace. I don’t think that they’re going to come in and overtake commercial radio.

RW: Bob Pittman, chief executive officer of Clear Channel Media Holdings, has said commercial radio has let these personalized Internet radio services get away with calling themselves radio and that they should not be called radio. He likens them to personalized jukeboxes.
Beasley: I agree with Bob Pittman that these services are not radio as you know them or I know them; and I agree they’re a jukebox. They are a music delivery system. They have no personality; there’s no connection with the listener. Radio, on the other hand, it’s a lifestyle, it’s entertaining, it’s engaging, informational. There’s a level of interactivity between the listener and the DJ and the radio station. …You can tell I’m very passionate about the subject.

RW: Has Beasley thought about partnering with Clear Channel on iHeartradio?
Beasley: I think it’s important that radio comes together as an industry in terms of this. So yes, we’ve given thought about partnering with Clear Channel on iHeartradio. Because I think it’s important for us to be where our listeners are, whether that’s iHeartradio or another platform.

We have not made a decision, but yes, it’s something we would like to be on. We would like to be on all the competitive delivery platforms in the marketplace.

RW: Switching to your role as chair of the NAB Radio Board. You’ve had several board roles over the years, including a stint as the head of the former NAB HD Radio Technology Advancement Task Force. What is your interaction like with NAB President/CEO Gordon Smith?
Beasley: Gordon is one of the finest and most intelligent people that I have ever met, and the industry is very lucky to have him leading the helm at the NAB.

Beasley may now be publicly held but it’s still a family affair. Caroline Beasley, right, is executive vice president and chief financial officer. Also shown: Bruce Beasley, president; Brad Beasley, vice president and market manager for the Southwest Florida market; George G. Beasley, chairman and chief executive officer; Brian Beasley, executive vice president of operations. The December event marked the company’s 50th anniversary. Photo by Debi Pittman Wilkey

Honestly, I speak with him quite a bit, and on a personal level I would love just nothing more than for my kids to be able to sit down in a room and just speak one-on-one with him so that he can share his wisdom. … John David, the EVP of radio, we are so lucky to have him as well; because he looks after radio’s interests every day. Over the last couple of years, I’ve worked closely with John. …

[A]s far as the NAB itself, it’s an important organization; and if you’re not a member, you should be. Because this association, they advocate for our interests every day, all day, on the Hill and at the FCC. It’s mind-boggling to me the number of groups that are out there who are constantly going after radio or TV.

Steve Newberry is still involved with the NAB, as he is past joint board chair and attends all the board meetings.

RW: What is the NAB AM engineering study? Kevin Gage, NAB’s executive vice president and chief technology officer, told me earlier this year the gist was to give AM stations technical options.
Beasley: The study outlines a number of different options regarding the future of the AM band. The study did not make any recommendations. It just outlined various options and it was to serve as a starting point for the NAB.

We have formed an AM Task Force that will be reviewing this study, along with the Radio Technology Committee. That committee is made up of engineers from the various groups around the country. So the AM Task Force, along with the Radio Technology Committee, will review the study and then report back to the board with the options that they feel that we should go with regard to AM.

Kevin Gage will oversee the task force.

RW: Would this all happen before the show?
Beasley: No, I do not see this happening before the show. It’s a lengthy report and it’s an important topic, so they really need to spend the time to go through it, and there could be various studies that will have to occur that will result from this study.

RW: Can you talk about some of the options they’re considering?
Beasley: No, I can’t. It’s a confidential study.

RW: What is the future of AM? I’ve had engineers say to me to look for a selloff in the next few years, not of major high-power AMs but among the smaller stations, because they’re more expensive to maintain vs. the revenue they bring in.
Beasley: You’re right, so that brings us back to why the study was commissioned by NAB. We know that there’s concern about the viability and the future of AM so we want to be proactive here.

RW: Are you personally worried? Beasley has AMs.
Beasley: Yes, but … they’re primarily brokered programming. That’s low-cost, high-margin-type AMs.

I am concerned. It’s one of those things that keeps me up at night. I think this is something five, 10 years down the road, so hopefully, it’s something that we can address — for these niche, programming-type formats that are on the AM band.

RW: The FM chip topic seems to have gotten new life recently. An NAB staffer wrote a blog with NAB renewing its call for wireless companies and handset manufacturers to voluntarily integrate an FM chip or enable the chip that’s already in their devices. Why is now the time to push for that and how is the effort going?
Beasley: It’s going well. I think the timing now may be because of market-driven sources, if you will. Wireless companies are cutting back on offering their unlimited plans, so it might be a normal transition for the industry. And with us being able to provide HD-enhanced user experiences on mobile devices — I think that’s something that the wireless companies may have been looking for, so we’re responding on the technology side.

A little over a year ago NAB FASTROAD approved a project with Intel, iBiquity Digital and Emmis Interactive. [BIA/Kelsey also has a role.] Intel is working on the chip that would be integrated into a smartphone. Which is what we were talking about; we need to be in mobile devices.

There would also be an enhanced HD app. That’s going to be showcased at the NAB show. This app plays into the interactivity that we were talking about, showcasing Artist Experience, Advertiser Experience — all the exciting things that you can do with HD on your cellphone, this app will be able to do. [A press conference related to HD Radio and smartphones is slated for Monday, April 16 at the NAB Show.]

RW: HD conversions in general have slowed. What do you think can be done to spur more interest in converting?
Beasley: I think it’s down because of the economy; and it’s not an insignificant dollar amount to convert to HD. You had that factor; and then you had not a lot of penetration into the marketplace of HD receivers. That is improving with the number of announcements from the car manufacturers and whatnot, so we’re seeing that increase.

But then you also have to be able to monetize this. And radio has not been able to monetize this to date. So it’s been a little economy; chicken and egg as far as receivers; monetization — all those factors have played into not as many digital conversions over the last three years or so.

We were talking before about the wireless companies and FM or HD coming to wireless mobile devices. I think that the offerings that are available from HD, Advertiser Experience being one, allow us to be able to monetize this product. I’m actually very excited about HD Radio today compared to two or three years ago. I was excited then, but now we see an avenue to actually really generate some dollars.

If we’re able to get the HD Radio chip in the mobile devices, then I think that would be very, very significant. And I think that you would see more stations convert to HD at that point.

RW: Beasley has two AMs and 15 FMs converted to digital. Have any of your FMs increased their digital power?
Beasley: We have five FMs that have increased digital power or are in the process of increasing their digital power. We’d like to focus on the larger markets first.

RW: Beasley had announced plans awhile ago to implement the “Advertiser Experience.” How is that going?
Beasley: We’re ready to roll that out, and we need more receivers in the marketplace to be able to sell that. It’s pretty exciting; you’re bringing pictures to your radio.

When Caroline Beasley was in high school, her mother was traffic manager at the local radio station. ‘I would go in and help her do the logs.’

Advertiser Experience is offered at one of our stations, KCYE(FM), in Vegas right now. You’ll be able to see that out in Las Vegas during the NAB Show. Additionally, WXTU(FM) in Philadelphia and WKIS(FM) in Miami are ready. We just need the receiver penetration in the marketplace; iBiquity is doing a great job of making sure that happens.

RW: For your Advertiser Experience implementation, you’re making a distinction from Artist Experience. Is it album art for the ads? And it still works the same way where the software has to look ahead into the automation system and see what ad is going to be playing and then match up the art to that and have it all ready to go?
Beasley: Exactly. We’re using Jump2Go technology and also Que, that’s the insertion system [for both Advertiser Experience and Artist Experience].

RW: Is the idea behind it that you can charge more for these ads?
Beasley: Absolutely. This is the way to monetize it. It’s very exciting.

RW: It’s a more engaging ad …
Beasley: Yes, and if you’re on your cellphone or whatever device, you can have options on the ads to click for coupons and then you’re going back and forth, toggling between using data from the wireless companies to using your HD Radio. It’s a win-win for the wireless company and the radio stations because you’re using both.

The interactivity that would be allowed between the listener and the radio station, and the technology that you would use, circles back to why getting HD Radio in cell phones or mobile devices — why this might be a market-driven force, because of spectrum and the unlimited data plans going away. But you’re also able to use the data plans now because you’re having interactivity between the listener and the radio station that you can listen to the music over the FM HD chip.

RW: Regarding Mission Abstract Data. Has Beasley been approached to pay a licensing fee for the automation patent?
Beasley: We are one of the defendants in their suit against a number of broadcasters. That’s really the only thing I can say in that regard.

RW: What is Beasley’s biggest challenge at the moment?
Beasley: Our biggest challenge is the economy. Driving local; and if the economy stabilizes, then many of our other issues will be resolved.

RW: How many engineers does Beasley have? I know VP/CTO Mike Cooney heads the department, but how is that structured?
Beasley: We’ve got Mike as our CTO. Most markets have at least one engineer on staff. However there are some markets, rather than have an engineer on staff they may have a contract engineer. We do have a couple markets where the chief will oversee a smaller market that’s adjacent to their market. For example in Philly, we have our chief engineer there, but he also oversees our Wilmington [Del.] station; and we have a contract engineer at our Wilmington station.

RW: So on average how many stations is each engineer responsible for?
Beasley: It depends. Here in Fort Myers, we have five stations and one engineer. In Philly, we have four stations and one in Wilmington, so that would be five.

It depends on the market. They have their plate full.

RW: I realize you’re in a family business. Did you hear about radio all the time growing up?
Beasley: As a child our summer vacations were actually going to visit radio stations. We grew up in North Carolina. So when we were going to Florida we would stop at every radio station along the way. My dad would just go in and start talking to whoever was there. We definitely grew up in radio. That’s a very vivid memory that all of the kids have, just stopping at radio station after radio station.

RW: How did you eventually get involved?
Beasley: It’s what I always thought I would do, go to college and then come back and work in the business. That’s what I did.

RW: What kinds of jobs did you start out doing?
Beasley: When I was in high school my mom was the traffic manager at the local radio station. I would go in and help her do the logs. Then I went to college and came back and started working in the corporate office.