Accuracy in Media Forecasting Department
Yesterday, we predicted that shock jock Don Imus would retain his gig at CBS, despite the recent furor over his remarks about the Rutgers women's basketball team. As we noted at the time, the Imus franchise was a valuable one for the network's New York affiliate (WFAN), and its syndication arm, Westwood One, which aired the show on 60 other stations around the nation. By some estimates, Imus generated more than $40 million a year in advertising revenue for WFAN, CBS and local stations that carried the show. That made the I-man a highly valuable commodity in a radio advertising market that's been flat in recent years.
Yet, almost as soon as we made our prediction, the suits at CBS weighed in and announced that the Imus program would be cancelled, effectively immediately. Initially, network executives had suggested that a final decision on Imus' might be delayed, while they monitored the situation. That indicated that some of the network bigwigs still had hopes of "saving" Imus, or (alternatively) they were awaiting marching orders from the very top of the CBS/Viacom hierarchy. Those would come from Sumner Redstone, the Chairman of the Board, and Les Mooves, President of CBS.
Alert reader "Wheels" observes that Imus' fate was effectively sealed when Mr. Redstone told Newsweek that he had expected Moonves to "do the right thing," although he didn't specify what that was." Mr. Redstone, whose media empire also includes Paramount Pictures and a host of cable channels, has expressed strong opinions on troublesome "talent" and the long-term economics of the radio business, positions that clearly influenced CBS' decision concerning Imus. On the former issue, you may remember that it was Mr. Redstone who ended the long-term production deal between Tom Cruise and Paramount, because of the star's increasingly bizzare off-camera behavior.
Various business publications also report that the Redstone has doubts about the medium/long term profitability of the radio business. Mr. Redstone, who controls over 70% of Viacom's stock, has long viewed CBS's radio division as a drag on share prices and corporate earnings--a position that put him at odds with Mel Karmizan, the former CEO who built the radio unit into a powerhouse. Karmizan was also a powerful ally of some of the network's highest-paid (and most controversial) radio talent, including Howard Stern and Don Imus. Stern followed Karmizan to satellite radio, but Imus elected to remain at CBS--without his friend in the boardroom.
Against that backdrop, CBS President Les Moonves apparently followed Mr. Redstone's wishes in cancelling the Imus' program yesterday. The issue now, of course, is how the network plans to fill that gaping hole in their broadcast lineup and revenue stream. In today's radio environment, $40 million is still a significant chunk of change, even if it was generated by a host who's been branded a racist. Imus' audience demographics were among the best in the industry, and finding somone who can retain that upscale audience is a herculean assignment for any radio executive.
And the suits at CBS seem particularly ill-suited for the task. Remember, this is the same bunch that had the bright idea to replace Howard Stern (in various markets) with performers like David Lee Roth and Adam Carolla, who had no prior radio experience. The Roth "experiment" in New York lasted only four months before he was fired; Carolla is still on the air in Los Angeles and other western cities, although his ratings are abysmal.
CBS execs also had the epiphany to replace their popular "oldies" formats on stations in New York and Chicago with something called "Jack FM," which features everything from Tony Bennett to the Beastie Boys. CBS's New York "Jack" outlet (WCBS-FM) had been an extremely popular oldies station, as had its Chicago counterpart, WJMK. Under the new format, both stations are languishing; latest Arbitron ratings have WCBS-FM in 19th place in New York City (it was a perennial Top 10 station playing oldies); in Chicago, WMJK ranks 23rd among local radio stations, with less than half its previous audience as an oldies outlet.
Obviously, it doesn't take a radio executive to figure out that lower ratings = fewer listeners, which (in turn) means less advertising revenue and lower profits. That trend will also be evident at Imus' former New York flagship, WFAN. The station has been one of the most profitable in the CBS line-up, but with the I-man's departure, WFAN's days as a cash cow may be over, according to industry publication Radio & Records.
As for Imus himself, we'll stubbornly stick with our prediction that he still has a future in radio. CNBC's Jim Cramer believes that the I-man will quickly surface on satellite radio, and predicts that his move could increase subscriptions by as much as 10%. His likely new home? Sirius Satellite Radio, run by Imus' old buddy, Mel Karmizan.
Did CBS do the right thing? From a public relations perspective, the answer is obviously "yes." Nothing makes a scandal die faster that getting rid of the person who caused the controversy. From a business angle, the answer is probably "no." By dumping the I-man, CBS has created a chasm in its radio division that will almost impossible to fill.
And finally, from a free speech perspective, CBS made the biggest mistake of all. While Don Imus' remarks were reprehensible, the network allowed race-baiters like Al Sharpton and Jesse Jackson to define the limits of hate speech, and (even worse) perpetuate the double standard that exists over the larger debate. Compare the furor over Don Imus' remarks with the tacit public and corporate approval that greets the racist, mysognistic rants of gansta rappers, who denigrate whites, women and police officers in terms that are simply appalling.
But you won't see Al or Jesse going after the rappers in a similar fashion, and you certainly won't find CBS dropping rap formats at its stations that play that kind of "music." It's the kind of moral and personal hypocrisy America has (apparently) grown comfortable with, and sadly, it will long outlive the Imus controversy. And that's a prediction that we can make with complete confidence.