The Take on Radio

By Daren Fonda

Like television, radio is dealing with its own segmentation issues that are giving static to broadcasters. CBS Radio CEO JOEL HOLLANDER, who recently lost his big moneymaker, Howard Stern, to satellite radio, spoke to TIME's Daren Fonda about reviving his business and keeping listeners on the terrestrial dial.

TIME: How does AM/FM survive in a world of satellite radio, iPods and new stations on cell-phone networks?

J.H.: We have to give better experiences for people when they turn on the radio. That's content driven. And we have to figure out ways, which we have, to put our content into other devices: cell phones, online.

TIME: You just lost your biggest star, Howard Stern, to satellite radio ...

J.H.: Who?

TIME: He brought in $100 million a year in ad revenues. How are CBS stations faring without him?

J.H.: Certainly there will be a drop [in the ratings]. The good news is we're getting a lot of new advertisers that would not advertise in Howard's content. We're cautiously optimistic.

TIME: Does the competition from satellite radio keep you up at night?

J.H.: There's a business there. I just don't think it's the mass business they think it is. This new technology, HD [digital] radio, is starting to get traction. This is technology that will help terrestrial broadcasters.

TIME: You've changed a lot of formats, expanded programming online, moved stations to HD. When will investors see profits from all this?

J.H.: Everyone's expecting 2006 to be a difficult year because we had to replace 27 morning shows [that ran Stern]. We launched a new talk format, Free FM. We just hired James Cramer, Penn Jillette, the Radio Chick here in New York. We believe '07 can be a year that these investments pay off.

TIME: Sony BMG and Warner Music agreed last year to stop bribing stations to play certain songs. How do you convince listeners that new music is being picked on its merits and not because of some backroom deal?

J.H.: Our program directors sign affidavits that everything is being done aboveboard. We have very strict rules. Listen to KROQ in Los Angeles, one of the best alternative music stations. We're playing new music.

TIME: The question is whether it's being chosen on its merits.

J.H.: That's why our program directors have their jobs: to pick the best music people want to hear.

TIME: Disney is merging its ABC Radio division with Citadel in a $2.7 billion deal. Analysts say that's less than it could have got a few years ago. Why do you think radio is a growth business?

J.H.: At the end of the day, content is king. We're proving that with the Jack format. Hopefully, we'll have the same success with Free FM. If the content is good, people will listen. I believe these businesses will grow again. There's a lot more choice for consumers. That's the issue. It's not that radio's a bad business.

TIME: What's your favorite station?

J.H.: WFAN. I ran it for 12 years. It was the first sports station in the U.S.

TIME: You're a sports junkie?

J.H.: I'm a big sports fan.