As the radio industry evolves at a rapid pace, critical decisions about the medium’s future become increasingly more urgent. Technology issues have enveloped the industry to such a challenging extent, that the call for radio leaders to be actionable has never resonated so loudly. John Parikhal has never met a challenge he didn’t like, he relishes the very concept. While Parikhal’s client list continues to remain firmly entrenched in radio, the macro version finds him involved with a variety of media and marketing companies.  His latest foray with strategic Internet initiatives with some large clients has him thinking about the future 24/7.  It’s spring and time for our annual check-up with one of our industry’s deep thinkers.

eQB presents excerpts from the FMQB May Magazine Cover Story featuring Joint Communications CEO John Parikhal

On the proposed satellite radio merger… It’s puzzling at best.  Let’s start with the fact that these guys are supposed to be fairly interoperable by now.  As I recollect, that’s what the FCC said dog years ago, that they had to reach the point where you could pick up either one on different receivers. I’m pretty sure they’re either supposed to be there by now, or pretty darn close.  If they had done that, maybe we wouldn’t be talking about a merger.

On the possible financial implications behind the merger… A lot of people have said that some of the early management was a little spendthrift.  The operation costs are huge. The decisions made on the talent got out of hand, although the Howard Stern deal probably did save Sirius.  It might have been the one big bet that really paid off.  Some of those other deals that were made just didn’t make any financial sense.  There are huge areas (of the country) that have very poor radio service, so the satellite model could conceivably expect about twenty million people. I don’t know that merging is going to make it any more popular.

On Mel Karmazin being the prime catalyst of the merger… Mel sees an opportunity.  He knows how to play Wall Street better than almost anybody.  He’s a very smart guy.  He’s the world’s greatest salesman.  I mean that with the highest respect.  He’s the best. But don’t forget, Mel’s all about advertising.  I still don’t think he fully gets the subscription model.  There’s still too much sales thinking going on there.  I believe for this format to be optimally successful, it must be mostly commercial free.

On HD radio presenting formidable competition to satellite radio… To a certain extent you’re comparing apples and oranges. HD as a format is just still radio.  It’s just another spectrum.  People will go to a new spectrum if it has something they really want that they can’t get anywhere else.  In technology, I believe everything is a spectrum. For example, the iPod is a spectrum with one-hundred-million people using it. I don’t see the HD/satellite radio comparison at all.  Satellite’s advantage is that it’s the same everywhere you go. HD doesn’t have that advantage.  HD is still very, very local. 

On the Clear Channel privatization initiative…The first perspective is the stations they are selling.  That’s a whole category itself.  There are more stations moving right now than we’ve seen moving since the peak of consolidation.  Who’s buying them?  Is it private equity that figures they can squeeze even more out of something that can barely be squeezed.  Or is it private equity that’s saying: If we build and invest longer term, three-four years, and really build these properties up, they’re going to be worth way more than we paid for them and that’s going to be a heck of a lot better than we can do in the market right now.  Most private equity I’ve seen is squeeze and bleed. 
     The second perspective is how you can be rewarded for taking a stock from $90 to under $40 and actually walk out with anything, rather than have to give people money back.  That confuses me the most when I look at this deal.  You have a stock that at one point was at $90, and was touted to go even higher. Now, it’s worth somewhere under $40. So taking a $50 loss is okay?  I don’t get that. 

On whether the PPM is a worthwhile long-term proposition for electronic measurement…That’s really an interesting technological question.  You can look at the pros and cons of both but the biggest plus with PPM is consistency of measurement.  If you look at any kind of standardized measurement system, what’s most important to advertisers is consistency from period-to-period.  PPM is already undermining consistency by altering the methodology they used to get accredited in Houston to the one they are trying in Philly.

On using the cell phone for electronic measurement… The cell phone introduces a risk of inconsistency.  For many cell phone users, they misplace or forget or don’t recharge their phones. You could misplace your cell phone and listen to radio an entire day with no credit given. I also don’t buy into the idea that the cell phone is ubiquitous…it’s not true.  This is a real issue.  There are a lot of people who still don’t have cell phones. The cell phone idea is clever on the surface, but doesn’t meet the biggest standard of all, which is to guarantee reliability. 

On radio’s further commitment to an Internet presence… At the basic level of stations, a lot of people are getting better on-line pretty fast.  However, there are still a lot of stations that are woefully out of date.  I went on one the other day online and they still had their Christmas promotion up on the front page.  It’s a reasonably large market too; and why, because they’re understaffed and undermanned. Although I still see sub-optimized Web sites and sites that are not designed to be customer-friendly, I still believe radio is starting to make a good move towards the Internet now. 

On where radio has fallen short of “getting it” in operating in the Internet space… Content isn’t what’s made all the money lately.  The money’s been made by the most primary radio skill of all, which is the skill of formatting.  Radio’s great at formatting, but instead of formatting your favorites of yesterday and today, think about what happens when you try and format a space like YouTube, Myspace or  Google.  What the Internet has really focused on is formatting.  A program director and general manager could have figured those out in advance. Radio should have invented YouTube or MySpace. It already had the audience (and community) requisites.

On Google’s foray into radio advertising… The whole thing is nonsense.  What’s Google going to do?  Commoditize it even more.  Can you believe that?  Here’s radio telling us we’re trying to be special, and then you sell off excess inventory.  It can’t work long term and be good for radio. You can see it’s already a problem. Some companies just say I’m not going to do business with Google.  Others, like Clear Channel are experimenting.  At the end of the day, this whole radio and TV thing from Google doesn’t make sense to me.  Google doesn’t know what to do with its money. 

On less-is-more advertising ideas… First of all, I applaud anybody for experimenting.  Secondly, whether an ad is 15, 30 or 60-seconds, it’s all the same, something demanding I change what I’m thinking about now for the period of your ad.  Each time I have to do that it costs my body energy.  The human body is an energy conserving mechanism by nature.  It doesn’t like to use energy.  As a result, it tunes out stuff that requires energy. A 15-second ad requires the same energy as a 30, because, either I’m paying attention or I’m not and I subconsciously ask, why are you running it. 

On blink spots… Blinks definitely have some potential, if they’re done for very specific clients, because they only work for certain kinds of clients.  They work with very hip, leading edge introductory level clients, or clients who are highly brand associated at a time when you’re in the mood to buy it.  On the other hand, to try and do what I’ve seen people try to cram into a blink, which is way more than a blink, that’s not as effective. They try to put a mini ad in there and it’s horrible.  You can’t invade the consumer.

On the most significant trends you developing in the near term resulting in reshaping radio’s… One trend that is starting to have measurable results is the fact that radio is losing listeners among younger people.  That’s a real big issue.  Now the really good news is, if they come up with something incredibly cool that everybody wants to hear, younger listeners will come back to it.  It probably won’t be music-driven though because they’ve become accustomed to getting their music in lots of different ways.  
     The other interesting trend is that finally, very, very late in the game, radio’s waking up to the fact that the baby boom is really important, and advertisers in some areas are shifting from 18-49 to 25-54 again.  The drum I’m going to keep pounding is 30-59, which is a much better buy for than 25-54.  I’ll argue and debate that with anybody about lifecycle changes and where the money is.  I believe 30-59 is a much more efficient and effective buy for advertisers.  You reach more people with more money who are more consistently the same. You talk about found money.  30-59 would put so much money back in radio’s pocket over night.

Parikhal's Rules For “Thinking” Through The Decision Making Process