Interview: Eric Rhoads, CEO, Radio Ink: 10th June 2003

In keeping with Media Man Australia's tradition of tackling any subject, we explore the world of radio broadcasting and what's right and wrong with the radio broadcasting business.

What are your aims and objectives?

I thrive on contrarian thinking. I don't really want the same things others want. For instance, I am not driven by big growth. Many of my friends want their companies to get big, become public and afford them the trappings... the jet, etc. Though I would love to have some of the trappings, I also was fortunate enough to peek through the window of what it means to grow to a big company. Bottom line for me is that you loose control, it takes on a life of its own, and you are no longer doing the things that you love. Instead you are managing people and processes, investors, etc. That is not a world I care to live in. I get my kicks from staying small.

Why?

My number one priority is freedom and time. When I went off to start a dotcom three years ago I thought I was living my dream. Instead I became an implementor of someone else's dream with some of my own influence thrown in. Boards have their own ideas. For me time is king. Its more important than money (not to say money does not have importance). I like the ability to work from home if I want, take a few days, weeks or months off if I want, no one to be responsible to (other than my family and their needs). Less stress (though not stress free). I had a chance to acquire a major company recently. We were down to the wire on negotiations. I took my investment banker aside and said, "what is my life going to look like once we get this deal closed." His response..."it won't be your life anymore. You'll be reporting to the bank." After a few hours of thought I realised he was right. I would loose my freedom and would end up working much harder, and for what? More money? Yes that is great to have, but not at the cost of freedom, sanity, and the perfect lifestyle.

What is your background and that of Radio Ink?

I got into radio as an announcer/ DJ at age 14. Did the DJ thing for about 10 years. Moved into programming, program consulting, station ownership and then service industries to radio. Promotional products and then the magazine (13 years ago).

When did you realize that you had a viable business model?

Sadly it was not viable. I lost $1 million of my hard earned money in the 1st year. Almost went bankrupt. I had to invent a way to make it work. Its a highly competitive business (translation: lots of rate whores) and low margins. Costs continue to soar... cost of paper, ink, and postage. Unfortunately you cannot always account for those increases in subscription prices and ad rates, though you try. Consumer magazines can sell at low prices because they have hundreds of thousands of subscribers. Trade magazines have to sell at much higher prices because the audience is relatively small. But, I refuse to put out a substandard product, therefore I suffer more expense because quality has to be king in the world which I live.

How is your company structured?

It's not. We are very loose. Very non-corporate. Very small. We all wear lots of hats and we are all involved in many things together. I try not to micromanage everything, but at any given time there is one area that must be micromanaged. Micromanagement gets a bad rap as a bad thing... its not, unless you do it to everyone all the time. In any company there is always one area that needs attention.

A CEO needs to get heavily involved in order to understand the true direction it needs to take, and to learn from the problem so it can be fixed properly. Once that is understood, you hopefully teach someone the proper way to deal with it, and let go.

What parts of your business are the most profitable, and do you have any "loss leaders"?

Something that is not that profitable can be a necessary element to profit. For instance the magazine itself is not hugely profitable. But the brand is solid and with the brand comes credibility (hopefully). With the credibility comes followers who will buy things from you. In our case the most profit comes from seminars. If we were some schmoe doing seminars we might have fewer attendees, but when Radio Ink has a seminar we usually sell out. Power of the brand. Sometimes these other elements combined make for a strong profit that would not occur if only one element were in place. We find one feeds the other.

We publish books, seminars and magazines. Soon we will launch some new publishing ventures which we hope will be embraced by the same audience. We also publish outside of radio with other magazines, trying to spread the costs across current infrastructure.

What effect does the FCC ruling changes have: on you?

None on me unless I get back into ownership. But, when the stations are not happy or are not making money, they do not buy from my advertisers. Though we all know better, still advertising is one of the first cuts and one of the last reinstated. So if the stations are not buying products, services and equipment, than the advertising drys up and we have to look for new ways to make money. Consolidation and slim budgets has had a dramatic impact on our clients and thus our business. Its sad, many wonderful people have had to close their companies because big conglomerates are doing less promotion, less new building, etc.

Your clients?

(see above).

Freedom on the press?

We can say or do pretty much anything, and we do. We frequently upset someone. We do not do it just to do it, we don't do it to sell magazines, we just say what we believe needs to be said to help the industry.

My big mouth has probably cost me a few million dollars in lost revenue over the past 13 years. It hurts. Sometimes I have to be critical of people I like and respect who are doing something that is misguided. I've lost friendships. I have paced the floors in the middle of the night trying to make a decision to withhold information so I do not hurt a friend or lose an account. Bottom line, I usually opt to do the right thing. Its painful. But I made a decision when I got into the publishing business that radio was my passion and that I would do whatever it takes (as long as its ethical and morally sound) to grow the industry and help the people in the industry. Its my lot in life....at least one of my lots.

Why is internet broadcasting a good and bad thing?

Is this a trick question? Its a good thing. It provides the ability to give every listener exactly what they want when they want it. Its not a mass medium. Its a medium with a mass of individuals. No one has figured out how to make money with it. It will be huge, but mountains need to move first. It will be stronger when the next generation starts running the world. (about 10 years)

What have been the highlights of your career?

Dreaming and seeing my dreams materialize. What a wonderful world where you can come up with an idea in the middle of the night and end up making money from that idea a few short weeks-months-years later. I loved being on the air. I loved owning stations. I loved consulting. (I still do a lot of consulting). I loved programming. I loved working my butt off to convince a client to buy my marketing plan and watch his business soar and make him rich. I've loved most of the people I have encountered. This is a colorful industry. My biggest charges have come from setting high goals or challenges and accomplishing them. Standing in front of 3000 people in a chicken suit or doing a fire and brimstone speech in a revolutionary war outfit, or doing a strip in front of them (don't worry it did not turn out as people expected thank goodness).

I love to do things which when I first hear of them it sends chills of fear down my spine. Its a kick to do them. I always wanted to become a film actor. I recently played a role in an upcoming film-festival short. Nothing too big but still I beat 100 professional actors for the part, and now I have a film on my resume.

How do your staff describe you?

Ask them. They either love me or hate me. Those who hate me leave usually. We spoke about contrarian. I think they think I am crazy. I come up with ideas and build businesses around them. Some work, some fail. Most are considered insane. Usually someone speaks up and tells me its a bad idea. I do listen and have changed my mind based on input. But, I get driven on an idea and its hard to stop me. I had an employee leave me once for a better gig. She told me many years later that of all the people she worked for I was her favorite. I was surprised. I never hear the good things. When I asked why, she said, " you're fair". I guess that was a compliment. I do try to give people a chance to shine, I try to let them do what they need to do, I don't yell, I try not to belittle people, and certainly not in front of others. I have done it, and I don't like myself when I do. Like anyone young, I was a jerk when I was first managing, but I eventually grew out of it when I realised you have better results pulling people than pushing them. It took a while to figure that out. SO, they would probably say I talk to much. I am in love with my own ideas. I am cheep (I am). But most of them have been there a long time. Chuck Renwick 11 years, Tom Elmo 10 years... many others many years. (Remember the company is only 13 years old). I don't push them too hard because growth is not what drives me. They work harder than I push them. It works better that way.

How have you and your operation made a positive difference?

I doubt it. We all would like to think so. I'm sure everyone always lies to themselves (and you) and trys to say that they have made a difference in the world. I'm not too hung up on that. I may have written some things which changed direction of a company, or the FCC, or some of the industry organizations. It may have helped radio, it may have helped a career. But no one seems to care about those things. I think the difference I make comes from being frank and willing to be bold at the expense of insult. I try not to lie. I try to give people my perceptions and help their careers. But most importantly, I try to make my reactions and actions a reflection of someone who is living a life as a loving person. What I really care about is my kids. If I can make a difference in their lives, maybe they can go on to do the same for their kids, and so on. I'm sure that some loving person... a great, great, great, great grandfather or grandmother set the tone which I am living today. I hope I can do at least that for my kids. My family is the most important thing in my life. Work is a means to an end for them.

What aspects of radio broadcasting need to be changed?

Got an extra 300 pages? This is a hot button for me.

The best and the worst thing to happen to radio was Bill Drake and top 40 formula radio. It has been huge and very successful, but the proper training did not continue, Therefore most radio programmers today are braindead. What happens when you keep sharpening a pencil? Eventually it is rendered useless. This is the state of radio today. Though I believe I created one of the primary forms of call out research in the 1970s which is still used today, it worked then because no one did it and everyone was programming from gut.

Today everything is over researched and no one is using their gut. No one is inventing or innovating. I recently met with John Hogan the President of Clear Channel. I told him that he needs to pick 10 dog stations in 10 different markets, hire 10 young inexperienced programmers and tell them they can do anything they want to do. The only rule is that you cannot do what is being done, you cannot listen to us or any of our advisors. Cut them loose. 9 will fail and if lucky, one will stumble into something which will revolutionize radio. We are too safe, too formulated, too predictable.

Guess what? Kids do not listen to the radio anymore. When I was a kid all I did was listen to the radio. Today we compete with games, cell phones, mp3s, internet, etc. We are not relating to them and as a result they are not listening to us. So, what happens. Today these MP3 generation kids are 15. In 10 years they are 25 and are the money demos advertisers need to reach. Does someone think they will take a magic pill when they turn 25 and suddenly decide to like radio. Won't happen. Radio will die if this is not addressed. The only way to address it is for people to take risks and try something bold and new. Groups can do it without hurting a thing because they all have some dog properties that are failing anyway. Will they do it? I doubt it. Thinking is about next quarter not 10 years out.

What's your views on the monopolizing of American radio - eg Clear Channel and other big companies?

I think the press has had a lot of fun with it, but I don't think all of it is so bad. There are some good things that have come out of it. More radio profit, better benefits for radio employees, etc.

My biggest concern is about homogenization of thought and programming. I recently met with another group head who was bragging that they did all of their research for several hundred stations in house. "What if you're wrong" I asked. How stupid is it to have 1000 stations and have one head of programming? Even one head of programming for different formats. What if this person was once good and is now lost his touch? No one will realize it. Stations are falling and no one seems to care because billing is holding up by having more stations. I happen to like the senior people at Clear Channel. I think the new Clear Channel is a sound and responsible company in spite of the negative press freight train. Most of that was a result of a previous administration. But it will take years to turn the tide.

The current president is the best thing to happen to that company. Lets hope they understand that. But, I can find lots of problems too. Nothing is perfect. The biggest disappointment for me is that some 22 year old kid may never have the dream fulfilled of owning a station. I had my first station at about that age. A dream come true. It would be difficult for me to do that today. That is sad.

What one or two key people have made positive changes to the landscape of American radio, and how?

Ralph Guild of Interep. He is brilliant. He is innovative and he truly cares about radio. He is more innovative today in his senior years than he was when he was 30. He really made radio advertising into a business.

Hugo Gernsback. No one has ever heard of him. He published a trade magazine in the 1930s. He has been my mentor. He shaped the industry with his ideas. His ideas are still in play today yet I bet that NO ONE in radio has ever heard his name.

What needs to be done to preserve regional radio stations?

Regional control.

Who are your biggest supports and detractors?

My readers are my supporters. I recently issued an apology over a marketing piece I had written for our Roy Williams conference. Seems some people were offended by statements which they believed were unfair shots at an industry organization. I issued an apology (which is rare for me) because it truly was not my intent. I never received more letters before. I received hundreds who told me I was right, that I should keep doing what I am doing, that I should continue to be a voice of the people. I think there is truth in that.

Radio is controlled by a big clique of people. Mind you there are some very qualified and wonderful people. But, I think the people working in the radio stations see this as old school. They see this as people avoiding change. They see me as someone trying to make change and receiving resistance.

My detractors?

I'm not sure really. I don't think alot about who hates me or is against me. Probably anyone who disagrees with me. I get letters sometimes from people who say I scold radio too much. Get over it. I scold out of love. Radio is in trouble in many ways and it needs to move forward not backwards. People hate change. I know I do. I have to work very hard at forcing myself to accept change and make change. It does not come easily.

At what rate is the American radio industry growing / shrinking?

By what measurement? It is growing in % of total ad revenue and growing in share of local market because for the first time the aggregation of local radio clusters can rival the local newspaper. This is helping. I have no idea what rate.

What are the most impressive new radio technologies?

I have not seen any which impress me. Satellite radio is ok. It will succeed. Give it a few years and we will be blown away by its success.

Why?

Choice of channels and low commercial loads. Radio is killing itself by greed which means long commercial breaks. I'm not against making money. But when change is necessary to compete with satellite radio no one will want to let go of the long stop sets and the revenues (can't blame them). Radio is playing into their hands.

Is the PPM a better ratings system?

There is no good ratings system. PPM is about cost savings (automated). Will it reflect real listening? Yes, in most cases. But it will record things you are listening to that you don't listen to.... environmental radio in places visited. Plus, is your people meter on when you listen in the shower or before you get dressed? Is it there when you're having a romantic candlelit dinner with your wife and some love songs? Its not with you all the time, there are times you remove it. I think it will alter morning (pre-drive) listening. It will create new cume for stations in demos that don't listen (you're in a kids dress shop buying a gift. They have the radio playing, you're there for more than 5 minutes and you just recorded a cume of that station. Is there anything better? No. Diaries are flawed and phone solicitation is over.

How has your website been good for business?

Its hard to say. A website is a necessity just like a listing in the phone book. You cannot not have one today. I have not yet figured out how to make it what it needs to be and still make the investment in it. I'd like it to be more of a resource center than it is today. Were playing with some ideas.

Is there a funny DJ or Shock Jock story you can share with our audience? (not expecting you to crucify anyone) - just to lighten up the interview.

Stan Kaplan was a radio owner in the Carolinas. Short, mustache, groucho marx kind of guy. One morning in a sales meeting he was telling a story to the sales staff. "I was visiting an advertiser who I have known for 20 years. The phone kept ringing and interrupting my pitch. So when the phone rang again, I got up, ripped the phone cord out of the wall. I reached into my wallet, threw down a $100 dollar bill and said, "Get it fixed when I'm finished." They had a good laugh over it. That night a green young sales kid came in with his shirt ripped and bruises on his face. When they asked what happened he said, I made a cold call on a new client. The phone kept ringing and interrupting, so I got up ripped the cord out of the wall and threw down a five dollar bill and told him to fix it later. They guy beat the crap out of me.

What are your current projects?

I'm doing a lot of consulting projects I cannot reveal yet. I also have a new start up company I cannot yet talk about, but we think it will generate revenue on radio without the need to sell ads. I am launching a new consumer art magazine, and I am reinventing one of my other magazines. Plus raising triplet toddlers.

What else should our audience know about you and your operation?

Every company, every person needs to have an unbudgable set of standards. You will be tested on your resolve regarding those standards. Greed sets in and we can easily violate the things that are our life principals. We have a firm handle on what those are and we never, never, ever violate them. Every company must have these. Most do not. They make decisions clear. In my case they keep me from having to deal with jerks, they keep me from destroying my lifestyle, and I can sleep at night knowing I am treating people fairly. I may never own my own Gulfstream because lifestyle and principal is more important to me than financial success. If I can get financial success while having these principals and values in place, perfect. But, usually there are sacrifices.

Where do you turn for advice?

It's hard to get good advice. How many of us ask a waitress if a meal is good? Yet, that waitress is in a different place than you are. She may be eating bologna at home because she has not been exposed to what you have. You may have acquired a taste for gourmet French food. Her recommendation of the dry-overcooked meatloaf is because that's they way her grandmother made it. Point being, few are in the same place you are. So, advice is difficult. I call my dad a lot. He has been there. I search for executives who have owned small entrepuerneral businesses because they lived my life. A guy in a big corporation cannot relate to my struggles. I also read the book of Soloman and Eclasties and Proverbs a lot. It is amazing that those three books solve most business problems.

How do you stay on top of all the latest trends?

How do you stay sharp? I subscribe to dozens of magazines. Most have nothing to do with things I am interested in knowing. But, I learn from all of them. Almost any free subscription I can get, I take it. I always learn something. Also take at least one seminar a year, preferable two. Out of industry is better. You won't listen in your own industry. Also take regular weekly classes in something like art, something that takes you away and uses a different part of your brain. It works.

How does one revolutionize a business?

My favorite story is one Roy Williams told me recently. Henry Ford started out building one car at a time and was going into bankruptcy due to the high cost of production. He asked himself what industry could teach him a better way to build cars. He studied other businesses and looked for industries like his own. He ended up at a meat packing plant one day. They hung the cow on a rack and as it slid down the conveyer each butcher cut off a different portion of the cow. They did this in record time. By applying this to his business, he reversed it and invented the assembly line.

What businesses are similar to yours?

In radio, who has inventory that expires and how do they do business? Airlines? Hotels? Car Rentals? We need to go out and learn from them.

What is your current mission?

I'm tired of the same people training our industry. They are all competent, but nothing seems to change. I intend to start with my own publication by seeking new voices with new ideas. I plan to create seminars with non-radio instructors teaching us from other industries. I just hired a guy who trains car dealers and asked him to tell us how to sell car dealers in his magazine articles. I'm on a mission to reinvent myself and my magazine.

You mentioned taking classes in art. Do you do this?

Yes and I take it very seriously. I schedule it like I do meetings. I spend a lot of time on it because I am working toward selling my oil paintings in galleries. I'm almost ready. I have studied under some of the masters of today's art world. I ws painting old masters portraits and now am painting landscapes en plein air (going out of doors on location). Its refreshing, clears my brain, recharges me, and I learn things in painting that apply to business. I had no art skill, this is learned behavior. I highly recommend it. Its frustrating for a while but very rewarding when someone comments on a beautiful painting in your home not realizing you have painted it.

...end.

Editors note: An educational, hard hitting and interesting interview, all in one. Eric Rhoads knows his stuff. I have a feeling we will be hearing many more good things about anything Eric Rhoads and Radio Ink get involved in.

Links:

Radio Ink official website