Options: Dispersions and Volatility Spreads

[Chris McConnel]

Howard Stern says goodbye


Howard Stern's final day is the last day many people will ever listen to terrestial radio by choice.

But he didn't bring us here alone.

How many of you heard Metallica at their head banging height? Or Ice Cube's Amerikkka's Most Wanted?

On the radio.

You didn't.

I remember a day in 1991 when I just lost it. I'd heard Eric Clapton's Layla on the radio again and I said, "jesus fucking Christ, Clapton again? This isn't 1968".

Radio ossified in the mid-1980's, relying on paylists and then payola to foist hacks on us. So what had been the exciting, but unprofitable , free form radio, turned into a steady, and exclusive diet of reliable hits and a few new artists, Springsteen, Billy Joel, U2, REM. As pop formats switched to talk and New Country swept away artists like Willie Nelson and Johnny Cash, radio, before Stern, before Mel Karmazin, was moving into a tightly controlled and formatted medium.

Talk grew quickly as well. As music became less relevant, talk grew. Howard Stern was only the first of the talk DJ's to make his mark. Less flamboyant people like Rush Limbaugh would ride the back of the conservative revolution to massive market placement and high ratings. But what the rise of talk radio did, often replacing AM music stations, was to relegate music to tightly formatted FM stations.

Getting new music on a playlist soon became a financial incentive asmuch as talent based. Jennifer Lopez was pushed because selling her music was a multimedia play. The fact that she can't sing was deemed irrelevant.

People like to blame Clear Channel for the decline of radio or even the FCC, but the reality is that Stern was one of the few risks in a risk adverse industry. While annoying right wing hacks, Clear Channel are bottom feeders and may eventually be stuck with useless properties across the country.

One of the things he likes to point out is how radio has no respect for itself. DJ's are disposable cogs, a point the "Jack" format made clear. Desinged to emulate an iPod, it ruined the historic WCBS oldies station and drove away listeners.

Even without the FCC, the audience was moving away from radio because of those playlists and the lack of music. Because of the FCC restrictions, a lot of acts could not get airplay. Those demands, as much as anything else, drove the MP3 into the mainstream. Then it created internet radio. But the problem with internet radio is that it doesn't allow for easy movement away from the computer. But it proved that new radio formats, some incredibly specialized, could not only be created, but draw an audience. Radio spent more time killing low power radio than worrying about the power of the internet.

Then we have podcasts, which are to radio what MP3's are to music, which is seperating the radio show from the radio.

But by the late 90's, it was clear that radio was creaking. Stern was creative and popular, but never had more than a 60 station distriubtion deal, at his height. Ironically, by firing Stern, Clear Channel may well sow the seeds of its own destruction.

But the problem for radio, and one which has Viacom scrambling to replace Stern with Never Was Adam Carrolla and Has Been David Lee Roth, is a dearth of creative talent. Talent which wasn't nurtured because it would eventually be too expensive. So you get Stern raking in millions, but constantly battling fear-based management.

Viacom spent years trying to develop talent to put a break on Stern. The closest anyone came was to pump racist drunk Imus into some kind of Beltway phenominon. I didn't think he was funny as a kid and he isn't funny now. I cannot wait until Stern tells the truth about him on Sirius. Then there was the judgment impared Opie and Anthony, who were fired for having a non-priest fuck a non-teenage boy in St. Patrick's. Maybe if they had banged their secretary and taken her on vacation with her kids, they might have gotten over, like one of the senior priests did there

Old fashioned radio is a cesspool of religious programming, tightly formatted music and conservative talk. Which appeals to fewer and fewer people every day.

Stern, who signed five year contracts, was unlikely to resign with Viacom for two reasons: the increasing power of Les Moonves, who Stern has publicly said was untrustworthy and Mel Karmazin being shoved out of the Chairman's role. The Street wanted him to take over, and Sumner Redstone wants his daughter to take over when he dies or retires. He'd done the same to Frank Biondi in the 90's. The fact that his daughter may not be qualified to run a multinational empire may not bother the King Lear of Broadway, but it bothers other people.

While the FCC was a problem, it wasn't the only one.

The FCC is a political body, responding to elected officials and the public, so they act accordingly.

The problem is that censorship makes things worse. James Cuelho, a former FCC commissioner, hated Howard Stern and drove the fines against him. The problem was that only enhanced Stern's reputation. Finally, after the Janet Jackson nipple slip, the FCC got serious and made leaving old fashioned radio all the more enticing.

But the real problem was less the FCC than fear of the FCC and their fines. Once that was in play, it was only a matter of time that target number one Stern would move to a safer environment.

The problem, Stern's leaving has moved Sirius from 600,000 subscribers to 3m by the end of the year. My bet is that Stern moves at least another 3m by next year, at a minimum. What that means is that for every Stern listner who moves to Sirius, old fashioned radio is dead to them. Within three years, not only will the audience base be much larger, old fashioned radio will lose it's most affulent customer base, men-25-54.

So by pressing censorship, the financial base of terrestrial radio will defect rather quickly to sattelite radio.

This is the pattern for every attempt at censorship in the US. Comic Books moved from mild horror to uncensored sexuality. Movies moved into pornography. Now radio will air the same content as cable TV. What the FCC wanted to do was crack down on radio, but with both internet and sattelite radio, there are just too many options to control. Their jihad against Stern may have sunk the entire industry by making him the HBO of sattelite radio.

As I posted in the first part, HBO came before basic cable. Stern could be the harbinger of broadcast stations moving to national exposure on sattelite. But how ever that happens the FCC may well have forced the end of old fashioned radio.


http://stevegilliard.blogspot.com/