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Thursday, September 6, 2007
Simple Solution
If nothing else, radio consolidation has taught us there are countless clever ways to finish the
expression, “If you can’t beat them …”
One especially poetic, alb
eit harsh, rejoinder rather than the standard “… join them,” would be to
“eat them.”
Complicated Process
Adopting the name Wicks Broadcast Solutions and hiring Pete D’Acosta as CEO/Operating Partner,
The Wicks Group in 2000 acquired two significant competitors, CBSI and Data Count.
Sometime after that, D’Acosta had friendly talks with Mike Jackson, his counterpart at another rival,
Marketron. “They were really focused on developing a television traffic product then so our
conversati
on didn’t gain any traction,” D’Acosta recounts.
Discussions about a possible merger resurfaced three years ago. “Marketron did, in fact, express an
interest [and] we got very close,” D’Acosta explains. “My recollection is they were attempting to sell
t
heir television traffic division to someone else. Our deal ended up getting undone because their
television [transaction also unraveled].”
The most recent dialogue started approximately a year and a half ago and it has been three months
(6
-8-2007) since a Marketron/Wicks Broadcast Solutions merger was consummated. “In the
beginning because of our competitive businesses, it wasn’t an easy discussion or process,” remarks
D’Acosta, who emerges as CEO of the amalgamated Marketron Broadcast Solutions entity. “I
t was
cooperative but delicate and [consequently] took a long, long time. It required an awful lot of
secrecy and privacy. We didn’t want any of our employees in on what was going on.”
Brand Name
Virtually until the very end neither side was completely
convinced the merger would come to fruition
and D’Acosta didn’t want any business practices or strategies to be changed by anyone knowing he
was in discussions with Marketron. “Our companies were obviously being run independently of each
other and very competitive,” he notes. “Almost all the business we won over the past five years
came at the expense of Marketron and they could say exactly the same thing. We were winning and
losing business to each other.”
If the two companies reached an impasse and continued on their separate ways, D’Acosta opines
there would’ve been very little collateral damage on either side. “I wasn’t able to physically visit a
location or meet any employees until we were able to look at sensitive information with names
attached. If it had come apart then, both companies would have been exposed and vulnerable. It’s
not like one would’ve had an edge. The fact is we both know each other’s business much more
clearly.”
Private equity company Wicks Group owned Wicks Broadcast Solutions. “We were the acquirers of all
the stock and assets of Marketron,” D’Acosta points out. “We call it a merger because we blended the
companies together.”
Selecting the post
-merger Marketron moniker has a rather simple explanation. “Marketron is
celebrating its 40th year in the business and certainly has a very solid reputation and wonderful
brand,” D’Acosta states. “It made perfect sense to me the name would be much more recognizable
and a better name to build around than Wicks Broadcast Solutions.”
Having never met any of Marketron’s developers, sales reps or other individuals who make the
company run, D’Acosta was prepared for a difficult transition. “The only thing I knew was a lot of
second- and third
-hand information,” he comments. “I expected to struggle with them getting to
know me and adopting a slightly different strategy and seeing a different vision. Instead, I got the
most amazing and immediate sense of family and comfort. I don’t want to jinx myself but we haven’t
had any terribly unexpected int
ernal reactions. There’s respect but never a lot of love for your
competitors. I had to model the combined company without ever having met anyone on the
Marketron side. Without knowing the people, I went in with a prejudiced point
-of-view. It floored me
wh
at I came out with.”
Single Focus
Reedsport (OR), Opelika (AL) and Hailey (ID) don’t instantly leap to mind as industry hubs but
Marketron has facilities in each of those three locales. “The [one] in Hailey is beautiful and the
technology is incredibly a
dvanced,” declares D’Acosta. “The people behind it are remarkable. I come
from a small town and sometimes [battle] major
-market settings. The value system I was brought
up on was much more trusting and comfortable. Walking into a small
-market operation seems like
home to me. That’s how it was for me in Hailey.”
Especially in the early stages of these acquisitions, Wichita Falls, TX-
based D’Acosta was frequently
on the road but his actual day-to
-day routine now involves frequent phone calls and emails. “I have
very good managers in every location,” he remarks. “With technology, [particularly the] blackberry, I
never escape. I’m always connected. If you have your mind set on it, you can be anywhere in the
United States in a half-day. That really hasn’t been a problem for me.”
Just over 200 people comprise the combined staff and D’Acosta emphasizes, “It’s not 200 people
building something only a few years old. Marketron had a 40-
year legacy; CBSI and Data Count are
each 30 years old. The depth of experience and radio knowledge is incredibly deep. That’s part of the
reason we’ve done so well operating the company.”
Meanwhile, approximately 7500 domestic radio stations and 700 international stations are clients.
“Before the merger, there were t
wo dominant radio traffic and billing providers that were extremely
competitive,” remarks D’Acosta. “It’s been very difficult in the radio environment the past few years.
These two companies have been in a very depressed or subdued business environment. We
’ve all
had to tighten our belts as we operate in lean operations and had the daily risk and fear of losing
business to our biggest competitor.”
Not that it was any consolation but each player felt the same way. “As we allocate development
resources towar
d the future to advance our product, we always had the concern of addressing
immediate competitive client needs,” D’Acosta states. “When you have limited resources and a very
aggressive competitor, you are challenged to allocate resources properly. We can now focus almost
all our development resources and energy toward advancing radio.”
Technological Advancements
Bullish on the medium, D’Acosta proclaims, “Radio has advanced more in the last three years than in
the previous 75 and isn’t slowing down. Technology is advancing radio at such a rapid pace that all of
us have to be responsive and flexible enough to be able to react with it. Taking the competitive
element away allows us to refocus our effort on advancing the whole cause of radio, which in the
lon
g run will benefit every one of our customers.”
Traffic systems for years were designed to track commercials as well as handle receivables and
payables.
Actual traffic functions were pretty simple but things have become much more complex the last few
y
ears as local stations have opportunities to sell digital overlays on weathercasts and traffic reports.
“We have streaming and podcasts/downloads,” D’Acosta explains. “There are sponsorship capabilities
with cell phones that carry local FM stations. Traffic systems were never designed to deal with these
[multiple
-selling opportunities]. We’re working on traffic system flexibility that will allow local
stations the ability to track across all selling platforms.”
Any unit length including micros can be accommodated. “A standard commercial, whether three
seconds or 60, isn’t a challenge,” D’Acosta remarks. “Things get difficult when you begin selling
across [non-traditional platforms].”
Closing The Loop
An electronic transfer process would make things easier for broadcasters and D’Acosta has, in the
past 15 years, watched several other industries adopt that process. “That’s all our children are going
to know [but] it hasn’t [gained acceptance] in radio because of built-
in conflicts of interest. We’re all
de
sperately trying to protect our private kingdoms.”
Somewhat below the radar, the new Marketron is working closely with partners to overcome that
issue and is in the final stages of building an electronic exchange. “We still run into other
complications th
at slow down the actual evolving of the electronic exchange in radio,” D’Acosta
states. “The only way to overcome this private roadblock we face is with scales. In our case, that
means rolling up these traffic companies to create one much bigger [one]. We
now have a company
which represents the inventory of [nearly] every U.S. radio group except Clear Channel.”
Pre
-merger, Wicks averaged 20,000 invoices a month. “We’ve been working on closing the loop on
the electronic order side and have nearly completed building a front-
end translation portal,” D’Acosta
points out. “Marketron, DeltaFlex and Visual Traffic represent almost the complete universe of our
customer base. We’ll be capable of receiving an electronic order from any sender.”
An agency or rep firm could push a single button to deliver multiple orders which would come to a
front-end translation portal. “It would [then] be immediately translated into one of the three traffic
system languages and delivered to the traffic system electronically,” D’Acost
a explains. “In a split
second, an order is sent; received at a station; and confirmation goes back [to the sender].
Assuming [the order] gets approved after a series of steps at the station, [it] moves directly to the
traffic system. Nothing was ever touched, keyed
-in or altered.”
According to D’Acosta our medium is “the most discrepant” of all. “Approximately $19.5 billion a year
is spent on radio and we operate on an 8% discrepancy rate,” he notes. “That’s an incredible number
when you attach it to the
volume of business being done [and it’s] one of radio’s greatest problems.
Discrepancies result because the buy/sell process is so cumbersome and manual. If [someone]
wanted to buy all 40 CBS Radio markets, they must send 40 separate market orders. In my
vision of
the future, they push a single button and [the order] gets electronically distributed to 40 separate
markets.”
Every station inside each market instantly receives an electronic order and D’Acosta maintains,
“There couldn’t possibly be a discrepancy in that scenario. The world I’m describing is coming very
soon. We won’t initially be set up to handle make goods and revisions, but other electronic industries
I know about don’t handle revisions electronically, either. Some are beginning to [but] it is a very
complicated process. The ability to connect buyer/seller electronically makes radio an extremely
attractive option to buy.”
Field Of Dreams
Equating radio to where the airline industry was 15 ye
ars ago, D’Acosta explains airline executives
would sit in board rooms with the collective thought of finding a way to bring inventory to the public
but “They could never agree [so it] never went anywhere. Each airline operated on a private system
[just as] most of us operate on closed proprietary operating systems. Industry leader American
Airlines walked away from the table and built the system with a technology partner. Their idea was
build it and they will come. They built it; installed it; and it worked.”
An open-
access system was created and all other airlines agreed to come aboard. “The underlying
mission of opening up inventory and making it available to everyone is exactly the same as it is for
us,” D’Acosta contends. “As soon as they did that, the
ability [for passengers] to buy/pick seats was
streamlined and was so much more effective; we obviously use that system today.”
That’s what he sees for radio with the first step being the ability to connect buyers and sellers. “It
goes without saying tha
t ultimately we’ll web-enable radio stations’ inventory,” D’Acosta notes. “I
know [many] older radio operators don’t want to take away the local selling process [but] radio
stations, like the airlines, can hold back whatever they want. The ability to control what you expose
is an incredibly powerful tool. Why wouldn’t we want to create a world where [the entire] inventory
we have is exposed to a universe of buyers we’ve never seen before? It isn’t unique to radio. It’s
happening everywhere else [and] we nee
d to catch up.”
Key Battlegrounds
Successful media operation in D’Acosta’s estimation is based on two important fundamental factors,
content and distribution. “If you win those two battles, you win the war,” he asserts.
A third and equally
important element, technology, has recently been added.
In 1985 D’Acosta signed
-on a small independent television station in Wichita Falls.
With the advent of cable, network television then was losing viewers, primarily younger ones, and
VCRs were becoming popular. “Television owned the distribution equation and had to stay focused on
content,” he recalls. “Satellite radio and other innovations will never be the end for [terrestrial] radio
because our distribution is 100%. Our challenge is on the conte
nt side and on that new technology
equation. Radio must focus on innovation [with] the content and technology sides. Broadcasters
must be much more open about introducing young, creative thinkers who will help them understand
how to transition from what we
know in radio to things we haven’t even thought about. Our job is to
reinvent the content and programming we send.”
by Mike Kinosian
John Records Landecker was profiled in Monday’s (9 – 3 -
2007) “Mike Kinosian Interview”
archived
here.
A complete Los Angeles Spring 2007 ratings overview appears “Inside The Numbers with
Mike Kinosian”
(8-30
-2007) archived here.
Thursday,September 6, 2007
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