Montag, Dezember 18, 2006

Air America and the Twilight Zone...

So, Air America is going tits up. You can read what the NYT says here...

Like this is surprising?

Back when I was living in DC, one of the jobs I had was working on the fair market value of radio and TV stations. The basic methodology was to estimate the market, then the market share trend of the radio or TV station according to the demographics, and then do a discounted cash flow, based on current balance sheets and estimated cash flow from their continuation, to determine what the fair price should be, i.e. the price where the purchase is financed out of the cash flow, plus an up-front payment for the actual plant and equipment. The difference between the fair value and the actual purchasing price reflected immaterial value, such as station reputation, the DJs involved, etc. That was always fun writing up.

Air America was doomed to failure from the start, since as you can read above, they had no business plan. The professionals involved were constantly stymied by the political nature of the program, but more critically by the absolute incompetence of the left-wing supporters of the station.

But that's typical of the left: no business plan, but let's burn through lots of other people's money. They burned through $45mn, top heavy with management that wasn't worth a tenth of what they were being paid, and no attention paid to market share.

All in the name of challenging Rush Limbaugh.

What the left doesn't realize, isn't capable of realizing, is that in the radio and TV business, it isn't enough to get on the radio or TV and gab. Rush tried that with TV and failed: he is much, much better on the radio, purely on the radio.

But first and foremost you need to have a business model. But that is anathema to the left: that takes work, putting one together, and it takes real work to implement it, going out and making sure that your program is listened to in order to sell advertising.

I have the very first show that the Twilight Zone produced, made to sell the series. We all know and love Rod Serling, the man with that profound cadence and pacing of his melodious voice, the announcer of that show. He didn't pitch the show - probably the best TV material ever done, although Farscape comes close - as the best of writing and the best of acting, but rather sold it first and foremost as entertainment that would lead to people buying the advertiser's product. And he finished off his spiel with the prediction that Sanka Instant would be the best selling instant coffee on the market in the new season (I'm assuming that Sanka financed some of that first show).

That's what makes TV and radio work: not the decision to make a new series with good acting and great stories, or in the case with Air America, bad acting and political dogma, but rather meeting the needs of those who finance you.

And apparently, according to the Grey Lady, that was the last thing on the minds, if I might use that term with great liberty, of Air America.

And I disagree with the NYT on one count: I rather doubt that Air America really ever had 2.4mn listeners.

If they had, and if they had been able to get advertisers, then they wouldn't have had to go into bankruptcy. But that's typical for the at least a significant majority of the left in the US: no business experience, no ability to put a business plan together that doesn't require the destruction of capital, and above all no hesitancy in wasting other people's money.

The sad thing is that they now control Congress...

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