Posted by Bob Shannon on October 22, 2005 at 11:49:39:
In Reply to: Re: Re: Re: Re: Re: Infinity girding for major losses posted by Marty Brooks on October 22, 2005 at 11:24:43:
Good analysis of the situation..and simplified, this was no doubt part of the plan. But I've also pointed towards, in earlier posts, the profit margin aspect. The stockholders want profit--billing is just part of the formula that leads to it.
Even if billing was increased for the station back into the Top 10 or 5, the overhead to run it remains the same. So profit stays flat or continues to decrease.
This is why I've written about Jack as a "blessing" and "g*dsend" for the company...not just for CBS-FM but for many of their other not-so-profitable properties.
In the specific case of CBS-FM, various attempts were made to tweak the existing oldies format and lower the demo. From the company's POV, they didn't work to the PROJECTED level. Projections complicate things further--they're a very important benchmark in corporate-think. (there are other factors at play too, like a sales staff not skilled in selling the oldies format--but let's not get too complicated here).
Anyway, to the point: The format readjustments didn't "work", ratings are going down, the demo is too high, sales can't deliver, the jocks are highly overpaid, etc. Along comes the Magic Bullet format: Jack. No djs, limited staff, looking successful in 25-54 in trial run markets...it was a marriage made in heaven, and almost a no-brainer to flip to. Infinity had already obtained first-refusal rights to the format from Jack's creators/marketers, so they weren't about to let anyone else have it--or beat them to it with a NYC clone (like Ben in Philly).
HOWEVER....if the last Arbitrend (May '05) is believable, the tweaking of the format with Dave Logan at the helm WAS working...ratings were up, demos down, etc. But the decision had already been made, and the flip committed to, before those statistics were in.
So--if Jack tanks, for any number of reasons, including rather negative publicity :-) -- where do they go from there? From whence comes the projected JACK PROFIT? We shall see....