Karmazin likes to play a business-suited version of a radio shock jock, and indeed Howard Stern and Don Imus work for him. Which is one reason that this week, shareholders are expected to approve the acquisition of Karmazin’s Infinity Broadcasting Co. by Westinghouse/CBS for $4.9 billion, creating the biggest radio company since people huddled around their sets listening to FDR. And Karmazin is the key player in a postmodern drama: a big media corporation is finally making radio a front-burner part of its strategy.
He doesn’t use fancy language about “synergy,” though. “The biggest appeal of this for CBS,” he says, “is that we’re a successful company that makes a lot of money.” Fair enough, but such plain talk is a little jarring for those who harbor the romantic notion that radio is an intimate refuge from the storm of beeping computer screens, 87 cable channels and space-alien movies with marketing budgets big enough to buy most radio stations. Listeners connect to radio differently. For example, with movie or TV stars, there’s a sense of distance, but when radio’s few recognizable personalities venture out into public, their fans are all over them. “I go into the little market where I go for the weekends,” says Imus, “and Paul Newman’ll be in there, or Jason Robards, and they’re much more famous than I am, but none of the rich Yuppies talk to them. They come up to me. They think they know me.”
Radio can be a comfort zone. It’s listening to Vin Scully doing the Dodger game, finding a great old song on a faraway 50,000-watt station on the highway late at night. It’s how Sylvia Poggioli says her name on NPR when she signs off from Rome. Ah … never mind. With more than 10,000 stations in the United States, radio remains, in places, remarkably local, personal and quirky.
Some just call it pedestrian. Radio has long been the poor cousin of the media, tagged as obsolete ever since the advent of television. Many on Wall Street still consider it to be a sleepy, antiquated sideshow. Ad agencies spurn it as inferior to TV and not worth the effort. The big media companies often seem to ignore it. Even the ones that happen to own radio stations wound up with them because they were packaged with more glamorous things like MTV and ESPN. And they’re difficult to unload because of tax problems. For a Disney or a Viacom, a business grossing a couple of hundred million dollars can seem like small potatoes. But more than that, radio isn’t the flavor of the month. It isn’t very global, and it isn’t “content” that can be put in a vault and recycled forever like sitcoms or movies.
“It’s a nice little cash-flow business,” says one media chieftain who oversaw stations, “but we weren’t prepared to put a lot of money in something that wasn’t a strategic asset.” Indeed, the only people paying much attention to radio’s growth prospects have been radio-only entrepreneurs. These are not people who show up in Vanity Fair or attend Herbert Allen Jr.’s media supersummit in Idaho every summer. Instead, they make sales calls and take advantage of the easing of ownership rules to put together chains of stations.
Karmazin was the best at this game. In the last 15 years, he has bought 40 major-market stations for Infinity. He repeatedly knocked on the doors of Westinghouse, CBS, ABC and Viacom, begging them to sell to him. When they wouldn’t, he reversed course. Last June, after Westinghouse bought CBS, Karmazin agreed to sell the new media conglomerate his radio empire. The new combination will create a radio company nearly three times the size of its next competitor. It will own no fewer than eight stations in Chicago, seven in New York, six in Los Angeles, eight each in Dallas and San Francisco. The deal also will make the hallowed CBS more of a radio company than a television company: Westinghouse chairman Michael Jordan predicts that radio will generate more profit for CBS next year than TV will–perhaps $500 million in cash flow. And Karmazin will run it. “I asked him how long he wanted to stay,” says Jordan. “He said, “What else would I do?'”
Jordan and Karmazin are gambling that by controlling 30 or 40 percent of the major-market radio audience, they can offer advertisers one-stop shopping and will be able to cherry-pick which listeners they want to reach through a range of formats. There are some cost efficiencies, but there aren’t many costs in radio you can cut. Karmazin is known for hiring more salespeople at his stations and keeping sales staffs separate. Karmazin also wants to push national programming like Imus and Gordon Liddy through his 25 percent stake in distributor Westwood One, which used to be known as “Westwood One-and-an-Eighth” until Karmazin became chairman and coaxed up the stock price about eightfold.
Jordan will try to cross-pollinate his stations with CBS television. Since his TV network is a little creaky at reaching younger viewers, he can promote David Letterman on his rock stations. Perhaps, too, more shows could do double duty with TV and radio: CBS already has “60 Minutes” on the radio in eight markets.
More important for Jordan is to prove to Wall Street that CBS can make money–and quickly. TV takes a long time to turn around, developing and rehabilitating a prime-time schedule. CBS expects Karmazin to do some tweaking and shuffling among his new mix of stations. “Radio responds well to aggressive management,” says Jordan. “You can go in, reformat, get Imus and turn it around in a matter of months.”
So, should sentimental radiophiles root for these guys? Some argue that this big-media consolidation actually will make for more varied programming as the behemoths have the incentive, and money, to differentiate their many stations in each market. As for originality, whatever one thinks of Stern and Imus, they’re not canned and colorless. Karmazin took chances–and heat from the FCC–for backing them. Who does he listen to, Imus or Stern? He returns to his tough-talk mode: “Whoever’s getting higher ratings this week.”
The Inescapable Voices of America Thanks to the strength of syndication, a handful of radio personalities reach listeners coast to coast. The estimated weekly audiences of radio’s most successful talking heads:
