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The Shape of Radio to Come – Four Predictions

Several things are likely before this year is out.

First, one or more major radio groups are likely to default on their debt obligations. This, sadly, will not be a surprise.  And it's hardly news.

Second, the Radio Advertising Bureau will likely vanish.  If that happens it may not make a big difference to your bottom line, but it sends a very bad signal to our agency friends on Madison Avenue. I'm hoping this prediction is wrong, for the record.

Third, the structural problems of all media tentacles – especially newspaper, TV, and radio – will likely alter the FCC's ownership rules so as to allow further consolidation, including cross-industry consolidation.  A shrinking industry can survive by owning more of the remaining real estate, and that's exactly what's likely to happen.

Fourth, plenty of smart broadcasters will be left standing – and lots of them will be staging for a new growth curve as they redefine their structure and their very fundamentals.  And how will those be redefined?

From MediaPost:

With rare exceptions, we won't be going back to double-digit station multiples," said Mark Fratrik, vice president of the BIA Financial Network and a former executive of the National Association of Broadcasters. The reason reaches beyond the recession to systemic changes occurring in all of media and advertising. Advertising dollars are expected to be 10% to 12% lower than 2008, which was the second-largest-ever spending decline. Marketers are clearly paralyzed or bankrupt waiting out the recession, during which time digital technology is radically altering the media game board. When Madison Avenue revives in 2010, marketers will be spending less and seeking more of the target consumer connections and qualitative data they can only get on the Internet and connected devices.  "Every local media company must broaden its thinking about what they are and how they go about their business," Fratrik says. That means partnering with Google and adopting its online ad auction model, partnering with local newspapers and other stations, aggressively getting into e-commerce and multicasting, and charging for their unique local content and services on mobile handheld devices, he said.

Now, more than ever, it's time to ask what business you're really in.

And that means what are your unique leverage points and how can you solve the problems of your constituencies better than anybody else?

To quote one of my favorite TV characters from the 90's, "the truth is out there."

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