By Jeremy Mullman-Crain's Chicago Business
10/27/03
Few people understand radio consolidation better than Ron Gleason.
Two-and-a-half years ago, the longtime program director at sports talk haven WSCR-AM was dismissed when owner Viacom International Inc. decided it no longer needed a program director for each of its stations in Chicago.
Now, Mr. Gleason is hoping to cash in on the trend that cost him his job.
In a partnership with veteran syndicator, Brad Saul, the two have launched UBC Radio. The Chicago-based syndication startup has inked deals with TV Guide, late-night talk show host Craig Kilborn and television's Judge (Greg) Mathis. Industry sources say UBC also is in talks with cable network CNBC to air radio broadcasts of its news and talk programming.
All of UBC's pacts call for splitting advertising profits evenly between the network and the talent. Messrs. Gleason and Saul believe the revenue-sharing arrangement gives the syndicator a chance to compete in a market dominated by deep-pocketed, big-name giants.
UBC projects first-year revenues of around $5 million.
Clear Channel Communications Inc.'s Premiere Radio Networks Inc. (annual revenues: $330 million) offers a lineup that includes Rush Limbaugh, Dr. Laura Schlessinger, Jim Rome and Casey Kasum. The lineup at Viacom's Westwood One Inc. ($550 million) includes Don Imus, Bill O'Reilly and a long list of sporting events, including National Football League play-by-play broadcasts.
"I'm sure there are programs done this way (with revenue sharing), but I don't think it's ever been the premise for an entire company," Mr. Gleason says in the smooth voice that fans of DePaul University basketball have come to know during his seven years as the team's play-by-play announcer. "This is a way to try and make it work without spending too much up front."
Industry insiders say the concept of an entire syndication network run on revenue-sharing deals is intriguing, but far from a sure thing.
"That could work," says James C. Roberts, CEO of one of the remaining independent syndicators, Washington D.C.-based Radio America. "But this isn't the most favorable environment to be starting something new in."
Not that Mr. Gleason had much choice.
Life After 'The Score'
After leaving WSCR, Mr. Gleason found that part-time gigs covering DePaul and working the sidelines of Chicago Bears games as a reporter for WBBM-AM weren't enought to satisfy him professionally or financially. When longtime acquaintance Mr. Saul called with an idea for a new syndication network, Mr. Gleason jumped at the chance.
"Frankly, I was getting bored," he says. "And it was a job."
Things haven't been dull since. Working out of the office of Mr. Saul's Matrix Media Inc., a more traditional Chicago syndication outfit with annual revenues in the high seven figures, they began seeking big-name talent willing to enter into revenue-sharing pacts.
"The idea was to go after brands, not to try and build the next Laura Ingram or Rush Limbaugh from the ground up," says Mr. Saul. "We wanted talent where there's already some equity in the name."
It was far from clear that they'd find it.
For example, Sirius Satellite Radio Inc., which distributes programming via satellite to subscribers, recently signed former "Baywatch" star Pamela Anderson to host a show for a reported seven-figure contract.
"I fail to see how that works in this environment," says Rick Cummings, president of the radio division of Indianapolis-based Emmis Communications Inc., a minority UBC investor. "The revenue sharing thing makes sense, if they can find people willing to do it."
They've managed to find a few takers so far.
"What's On from TV Guide," the magazine's first foray into radio, is a daily half-hour program highlighting suggestions from the magazine's editors on what to watch each evening. UBC will also begin syndicating the audio portion of the "Late Late Show with Craig Kilborn," while "Judge Mathis" will tape a radio-specific talk show.
The TV Guide program is carried on about 125 stations around the country. The other UBC offerings will begin airing in the first quarter of 2004, according to Mr. Gleason.
The talks with CNBC, confirmed by Mr. Cummings, could fill out the UBC lineup substaintially, bringing aboard personalities such as Lawrence Kudlow, James Cramer and Tim Russert, who have shows on the cable network.
Neither Mr. Gleason nor Mr. Saul would comment on the CNBC talks, but both men say more deals are in the works.
"That's a pretty good start," says Tom Taylor, New Jersey-based editor of trade journal Inside Radio, "but the feeling (around the industry) is that it's just the tip of a pretty good iceberg."
Taking the Chance
Mr. Cummings says consolidation in the syndication market has left UBC an opening, if it can sign the right talent.
"Most of the syndicators have all been snapped up by people like Premiere, which has cut a lot of shows out of its portfolio," he says. "These guys are doing what (independent syndicators) used to do, and it looks like they've found a way to do it and keep their costs down."
In the short term, UBC has modest goals. Longer term, says Mr. Saul, the firm wants to be bought by a larger player or go public.
"The radio syndication market is about $1 billion," says Mr. Saul. "That's a nice-sized pond to play in, even if you're not one of the bigger fish."
