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UNDERPAID

By: Walter Sabo

Kudos to the executives who signed those stars to their new deals. Each of those radio stars out-performs 99% of the stars of TV, film, and publishing every single day.

You’ve been watching hosts/jocks like them at work for so long, you may no longer recognize what they accomplish.

A RADIO STAR creates hours of original entertainment content everyday. Rush creates 15 hours a week. Stern, 25 hours a week. They work alone. A little writing help. Some production assistants. But it is essentially created from their obsessive preparation. They may get an award at a ceremony seen by seven of their friends. Regardless of how you do the math, they return for their employer at least a 50% profit. Hold that thought.

A MOVIE STAR works on a movie for one month. They say someone else’s words. They are dressed, primped, fed, given a home, an assistant, a gym, whatever they want.
The result: 90 minutes of content. Average commercial release film profit percentage:
Zero.
Their reward, about $8M and an award presented at a ceremony seen around the world.

A PRIME TIME TV SITCOM STAR works 22 weeks a year. They say someone else’s words. They get their special food catered. Many assistants. A press agent.
The result: 11 Hours a year of content. Profit percentage first run: Zero.
Their reward, up to $30 M a year and an award presented at a ceremony seen throughout North America.

BANKER MATH: Rush is on 600 stations. Pretend they were all doing poorly before he arrived. Let’s say 500 are doing much better now. 500 went from loss to profit.
At 10 times cash flow, a station making $1M profit is worth $10,000,000. That’s $500,000,000 in increased value.

ADVERTISER MATH. Snapple advertised on Howard Stern and Rush Limbaugh. The company was purchased for over $1 Billion by Quaker Oats. They didn’t like Rush and Howard and pulled the spots. A few years later they were forced to sell it for $300M and the Chairman was um, gone.

PAUL HARVEY MATH. To get Paul to do a live read, advertisers have to commit to one year -- firm. There is a waiting list. Paul Harvey, properly, earns more than Peter Jennings and Ted Koepel combined. They don’t read live spots.

STUNNING MATH. Strategic salaries paid to top performers has a secret result. It increases -- revenues -- for the radio industry. There is more than enough ad dollars available for any station to exceed its budget this year. Proof? In every city, the single daily newspaper grosses more than all radio stations combined. (Including LA.)

The secret: In most cities, regardless of ratings, the number 1 biller isn’t number 1 in ratings. Usually its overall ratings stink. The number 1 biller is often the station that costs the most to operate. Motivation comes in many forms.

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