Lee Abrams has been shaping the radio industry landscape for decades. One of the most successful radio consultants in the history of the field, Abrams got his start in the early seventies when he envisioned the great divide between AM and FM broadcasting. It was at a time when FM facilities were being under-utilized for programming to the younger demographic, a demo that eventually would vastly appreciate the high fidelity/stereo sound of FM radio.

As a founding partner of Burkhart/Abrams, the Atlanta-based consulting giant, Abrams practically invented and built Album Oriented Rock (AOR), the first commercially successful FM format. Lee’s consultancy business and his Album Rock/Superstars format grew rapidly. It literally placed Lee in the fast lane of the field, with a seemingly endless list of clients

In June of 1998, Abrams entered a new phase of his career and joined XM Satellite Radio. He was instantly given the task of developing and implementing 100 radio stations. Satellite Radio, the new technology that promised to deliver quality, commercial-free programming on a subscription basis, was now in the hands of Lee Abrams. Lee was there from the beginning espousing the virtues of the new medium, while renouncing the mistakes that terrestrial radio had been making over the preceding years. Lee and XM were ready to take listenership to new heights. 

Let’s open up with one of hottest topics of recent weeks. What do you see as the benefits to XM regarding the current O&A deal with CBS?
It takes two XM branded talents and greatly increases their exposure. As great as our reach is, six-and-a-half million plus subscribers, this clearly takes us to a whole other level. It not only increases the awareness of O&A, but it’s also great exposure for XM.

How do you answer your subscribers who may criticize the relationship feeling somewhat compromised now that these marquis personalities can be heard on Free FM?
They get O&A completely uncensored. They do an XM-only version after the terrestrial version, so it’s still pretty compelling to a lot of the hardcore fans to subscribe and get the more exclusive version of the show. The FM version really just expands their reach. I really don’t see it as a problem.

Are there any philosophical concerns with O&A being on terrestrial stations calling themselves Free FM? 
No, not really. We really haven’t considered that or thought too much about it. It’s really never come up. I’m really not too concerned about it. It’s an isolated situation in terms of a morning show, but it’s really not the first time we shared people that are also on FM. If you look at our talk lineup, a great number of our talk talents are also on FM.


Both XM and Sirius have been very aggressive in securing brand name talent over the past few years, especially from terrestrial radio. Why do you think terrestrial radio gave up on the O&A’s, Stern’s and Bubba’s of the world? 
I don’t think they fully realized what they had. They didn’t grasp the power of these guys or the power of what key elements they are in station identities. The biggest issue may have been them lacking the understanding of the fact that they can go other places. They may have not taken that seriously enough. But, the underlying problem is that a lot of these stations are so based on morning show talent, that losing the talent presents a big overall problem. They test music and throw up a few billboards, but they really aren’t complete entertainment vehicles.

This has been one of your biggest (recurring) criticisms of terrestrial radio over the past dozen years.
We joke that there’s an FCC law that a station has to be boring after 10:00 a.m., because that’s when the morning show is over. A lot of terrestrial stations didn’t have much beyond that morning show, which increases the problem when they lose them. If you look back thirty years ago in the ’60s and ’70s, if a station lost a talent, even if it was a powerful talent, they still had a lot of other elements that were attractive to listeners so the station didn’t collapse. In recent times that hasn’t been the case. So much of the station’s popularity has been because of one talent. You lose that talent and the whole station folds. Many stations figured wrongly that they had other elements in place to keep their fan base going.

We all witnessed the David Lee Roth experiment collapse. With your consultant’s hat on, what is the lesson terrestrial radio should learn from the Howard Stern to David Lee Roth experiment?
Something that looks good on paper doesn’t always work, and in fact most of the time it doesn’t. Also, that radio is a very specialized skill and very few people have it. To a traditional consumer, they might look at radio talent as having a pretty easy job, but it’s real hard. CBS should have continued their search. They didn’t realize that just because David Lee Roth is kind of a wacky character and has a good name and may have done a good demo, that’s no guarantee he can handle the pressures of performing daily on the radio. This may have magnified other similar mistakes, and in the future they may be a little more careful about protecting what they have.

Would you have handled the Stern scenario differently had you been at CBS when Stern originally made his announcement that he was going to satellite back in October 2004?
Yes! The minute he made the announcement I would have thrown him a party and celebrated his new success and thanked him for the many years of great service. He should have gone out on a real positive note. I am shocked that it was handled like it was, because I think he helped build that company and it should have been celebrated. Just like when a great baseball player as a free agent goes to another team, that previous team shouldn’t shit on him. 

Stern and O&A have been going at it on the air, a clash of radio titans. It doesn’t get much better than this. It’s what is missing in terrestrial radio these days…an old fashion radio war. This has to be good for satellite radio in general.
Personally I think it’s great. It’s natural, it’s not staged, and radio stations have been doing it for decades. It’s what makes a marketplace tick when it comes to radio. The battles between stations bring attention to the medium. And when the players are of the magnitude of O&A and Stern, it’s that much more episodic. It’s classic radio. If it was staged and kind of phony that would be one thing, but it’s genuine…may the best talent win.

Let’s talk about your past. You were instrumental in creating and establishing a new model for FM radio with your Album Rock Superstars format of the ’70s and ’80s. What was your recipe for success back then? 
There was a musical revolution happening in the late ’60s including artists like Jimi Hendrix and Cream. There were a few underground stations at the time, but only a small number of people who loved those stations. However, there were a huge number of people, vulnerable Top 40 listeners, who were available. They listened to Top 40, but really didn’t like it. They liked about every fifth record. When the Stones or Cream would come on they liked it. But they didn’t care for the Neil Diamond and Bobby Goldsboro records in between. However, that was a little easier for them to handle than some of the progressive stations where, if it was raining you’d hear hours of rain songs, or if the night guy didn’t like Jethro Tull he didn’t play any Jethro Tull. There wasn’t a lot of discipline in those stations.

When did your Superstars model come into existence?
In 1972 I designed a format aimed at the vulnerable Top 40 listeners described above. There were a lot of these people who were in the middle. They truly didn’t like the Top 40 stations, and the underground stations were a little too fringe. So we designed a format geared to be as accessible as possible without losing the progressive identity. Essentially we changed the familiarity factor from song title to artist. Throughout the ’50s and ’60s a key characteristic of all successful Top 40s was you knew mostly every song. By changing the familiarity to artists, we originated the ‘Oh Wow!’ factor. We wanted people to listen and hear Santana, but then think: Oh Wow! It’s not “Black Magic Woman” or “Oye Como Va.” You had familiarity, but you also had the depth. There was so much music coming out at the time, we just wanted to make sure there was a disciplined approach to playing the right tracks from those albums. 

When was the height of your business? 
In the early ’80s our company had hundreds of stations. Suddenly a lot of other people got the idea that there’s money in this consultancy thing, so it became competitive with a lot of other consultants all of a sudden entering the market. But in the early-to-mid-’80s we were pretty dominant.

How did you hook up with Kent Burkhart?
I was just 18 or so and didn’t have much of business acumen. I had known Kent from going to conventions. He had just started a consultancy focused on AM stations. I called Kent and said, “Hey, you got this AM thing down and I kind of have this FM thing, why don’t we get together?” We met, and in about eight minutes put a deal together. I moved to Atlanta and we started Burkhart/Abrams. The company gave my consultancy a business framework, and also the money to fly out and pitch it. Then there was a real major plus. WQDR/Raleigh was a client of mine. Their rep firm saw the billing go from nothing to huge. They called and said: “We also represent all the Taft stations. Would you mind coming down and talking to Taft Broadcasting at their manager’s meetings?” I went there, did a presentation, and literally walked out with WDVE/Pittsburgh, KYYS/Kansas City, WGRQ/Buffalo and WLVQ/Columbus. That’s when it really started. Those stations all went to 10 shares.

You have been publicly critical of the mistakes made by terrestrial radio over the years. What have been the most egregious mistakes radio groups have made over time?
There are literally hundreds of them. Today’s mistakes are the exact same mistakes AM made in 1970. One critical area was taking your eye off the music ball. In the late ’60s when artists like Chicago and James Taylor started emerging, AM programmers perceived them as hippies that would go away in a few years. They were missing something the boat.
     Secondly, the technology was dated. We were in the stereo age, and “Sgt. Pepper” sounded pretty bad on AM radio. The spot loads were also way too high. There were very limited format choices. This was happening at a time when America was going in so many different directions musically. 
     Most importantly, the playbook for AM radio written in 1956 was antiquated. In 1969-’70 we were in the height of a cultural and drug revolution, Vietnam, riots, moon landings…big cultural changes. These Top 40 AM radio playbooks were written 15–18-years earlier. I actually went to a Jimi Hendrix concert in 1969, and a boss jock takes the stage with a crew cut wearing a blazer with a picture of a happy tiger winking at you. This guy was trying to communicate to the crowd, and he got rocks thrown at him. It was very symbolic. Five years earlier this guy was a god, and now he’s out of sync. This all went along with long weather jingles, puking deejays and all that. 

What are the parallels leading up to today?
Well, thirty-five years later FM is making the same mistakes. Their eye is way off the music ball. I run into program directors and ask them “Have you heard any good records this week?” They’ll look at a spreadsheet and say, “No, nothing really tested this week.” The spot load is too high. Format choice is ridiculous. Even in L.A., New York or any of the big metros, there are only a handful of different format choices. Most importantly again, the playbook was written in the early to mid-’70s and it hasn’t been updated. Once you take those comparisons and boil them down further, everything from production – where stations are still doing outdated Star Wars laser-beam sound effects. They’re out of sync. You still hear those big voices yelling at you, which is a joke. And there are so many clichés, and stations lie to you about “the best music.” The typical listener thinks: “You don’t play the best music. Why are you telling me that?”
     There are no more creative batting averages when people would come up with 100 ideas, and if 30 worked you’re a star. Nobody would remember the 70 that didn’t work because those 30 were so powerful. Most people are batting .000, not aiming for the fences creatively at all. There’s a tendency for stations to look at listeners as numbers rather than organic fans. The list goes on.

How big of a role does consolidation play in your evaluation?
Consolidation has a lot to do with the destruction of the product. I also believe traditional radio research is flawed. If it wasn’t, there would be no need for XM or Sirius because everybody would be happy with the way radio sounds. Terrestrial radio is driving people away to alternate mediums where the consumer can find what he wants. Consolidation has also created a generation of programmers who really lack the passion and drive to create something new, fresh and different. Programmers are locked into a certain way to do radio without thinking beyond that. Radio is not reinventing itself or evolving, nor do they even appear to have the drive to evolve.

What are you noticing most about terrestrial radio these days? 
All the publicity on HD radio is tough to ignore. HD radio is a little too late. Terrestrial is behind the tech curve. Technology moves so fast. There might be something five years from now that makes all this obsolete. They may have this opportunity to create all these new HD channels, but if they are created based on the old playbook it’s not going to be that attractive. It’s sort of like when I listen to Jack channels, it’s like: Okay, I get the idea, more variety and all that. But they just can’t cut the cord with the old sound, production and style, and the lying and bullshit on the air. So they may miss the opportunity, if not with technology probably with content. In general, we pay attention to what terrestrial’s up to. Whether it’s reading your site and magazine or going to conferences, we certainly need to keep up with the mindset. It’s a battle for ears so we watch every medium. 

What is terrestrial’s most impressive feature?
The most powerful weapon they have is their reach. They’re everywhere; everybody’s has an FM radio. The future of AM and FM is not based on technology as much as getting their own content house in order. I see a lot of denial. We interview people and they don’t see it the same way we do, that FM needs content surgery, not a Band Aid here and there. Programmers we hire will come here for a couple of months and all of a sudden realize: “Oh my God, now I get it!” The real future of AM and FM is going to be based on content. I always thought at the end of the day, whatever the medium, the best content is going to win, and that’s really what we’re all about.

What do you think of terrestrial’s perception of satellite radio?
I’m not too sure they’ve taken us seriously enough. Maybe they are now, but certainly not from the start when they really should have. When FM started to become a major factor, there were a lot of AM guys who thought it would be a fad that wouldn’t catch on; same mistake. I remember when I was at a convention in the early ’70s, and some big PD scoffed at the idea of FM, thinking nobody will ever beat KHJ in Rock music in Los Angeles. The crowd applauded and all that. You see a lot of that now. Again, there’s this sense of denial.

You were involved with XM from its inception. How involved were you in the original programming concepts?
I’ve been here eight years. It was (our CEO) Huge Panero, me and a couple of other guys. Early on I was completely involved with all aspects of programming. As we’ve grown, we have 800 employees, and there’s a lot of input from all quarters now, which is great. But initially I put together the overall vision for the service, what it would sound like, the channel lineup, etc. Then I created an architecture for every channel, which was really just a lot of scribbled notes about what the channel was ideally going to sound, smell and feel like. Then once we hired program directors, I gave that architecture to them and they took it to the next level. I designed the blueprint, and the program directors actually built the house.

What other aspects of the company did you help create?
I was the creative guy, and other departments would rely on me to give them creative input. The satellites themselves are a good example. They were like PF326X and PF2347Y. It’s a funny story: I used to carpool with Jack Wormington the guy who built our rockets. He was a Brigadier General who used to run Cape Canaveral. We used to get into arguments about everything in a good-natured way. I was giving him shit about those stupid satellite names, and why don’t we come up with something cool like Rhythm & Blues or Rock & Roll or Country & Western? He thought it was a great idea, as did Hugh Panero and (our Chairman) Gary Parsons. So, the satellites were renamed Rock and Roll.

Both XM and Sirius have lost major ground in market capitalization this year. How concerned is the company with its declining stock price, and where does the next wave of momentum come from to turn things around? 
We’ve had periods where we’ve been down as low as three and bounced back, and I have no reason to doubt that we’ll rebound again. There are a lot of positive things happening for us right now. The subscription growth is strong, and listener satisfaction is beyond great. There are going to be more possibilities with auto manufacturers and more ways people can hear XM like AOL, direct TV, United Airlines, Air Tran and Jet Blue. We’ll be in more rental cars. We’re very confident. This is a huge growth business, and we’ll get beyond the speed bumps, but nobody’s freaking out. We’ve been through this before. After 9/11 it just plummeted and people thought: Oh my God, is this ever going to recover? My personal point of view is to buy more stock.

Can the satellite companies continue to show such big losses quarter to quarter and sustain any kind of Wall Street momentum?
We’re still looking at cash flow breakeven by the end of the year. It’s a very expensive business, but there’s a point where the expenses and the subscriber income intersect and we’re not that far from it. We have to be careful, you can run into an arms race with content, but we’re pretty prudent about that and everybody’s excited about the day when it’s cash flow breakeven time, which is coming up. But you should really talk to Eric Logan or our finance people to really get a better answer. I’m the “creative guy.”

Funny you mention an air talent arms race. For a minute there it appeared to be the case with both sat-casters.
We never looked at it as a race with Sirius as much as an opportunity to enlist some compelling brands or personalities that are available. We should go after them…Like Oprah, who’s hugely popular, Bob Dylan and major league baseball. I’m sure Sirius has done the same thing. There’s always some competition. We would rather have certain properties and Sirius not have it. We’re at a point now where there isn’t really much out there that would make financial sense to acquire. 

Many financial analysts have predicted an inevitable merger of the two satellite companies based on the economic models the companies operate under. Is this a foreseeable option?
That’s always floating around in the rumor mill, but from my perspective there’s never been any discussion about it. I know the FCC wants two licenses to compete. You never know, but I personally doubt that it would happen in the foreseeable future.

What are your campaign slogans for satellite radio? 
We’ve got a couple of them. One internal credo is AFDI, which means Actually Fucking Doing It, because as a consultant stations would talk big ideas and very few of them would actually get executed. One of our mottos is: Passion, Character and Muscle. We want to bring back music passion and add character to the channels and the service beyond the music. We flex our muscle of being a national service in a positive way that benefits music and our listeners. The best is yet to come. We’re only in the second inning here.

(for more fascinating reading about our industry visit Lee’s blog at: http://leeabrams.blogspot.com)

**QB Content  by Fred Deane