Three Things for September 30, 2021

This week: A follow-up on M & A's and PSOAs. Plus, what matters most in the next normal and a quick take on smart speaker trends.

THING ONE: More on the public media mergers and acquisitions front

On Wednesday morning, Chicago media reporter Robert Feder broke the story about the potential partnership agreement between Chicago Public Media (CPM), the parent company of WBEZ and Vocalo, and the Chicago Sun-Times. Both organizations acknowledged via staff emails later Wednesday morning that negotiations have been taking place between the two organizations. However, Sun-Times CEO Nykia Wright emphasized that “we are not close to any deal.”

That statement was followed later on Wednesday by a closed session of the CPM board voting to pursue an acquisition of the Sun-Times. The CPM board approved a “non-binding letter of intent” to pursue the deal, which — under a final agreement — would make the Sun-Times a subsidiary of Chicago Public Media, according to a joint statement from both news organizations.

Last week’s Three Things discussed the recent deals happening within public media1. Still, the possible merger of a newspaper that’s been publishing since 1947 with the public radio organization in America’s third-largest market was worthy of a follow-up discussion.

Whether or not the deal goes through, this is the type of transformative thinking we need in public media. With a circulation of around 120,000, the Sun-Times has undoubtedly faced financial challenges no different than much of the newspaper industry. By comparison, WBEZ has about 80,000 members and annual revenue of more than $30 million. In August 2021, the station had a weekly cume of just under 500,000.

The Sun-Times has been owned by a coalition of business executives, philanthropists, and labor organizations since 2017. According to Feder’s reporting, Michael Sacks, the Chicago businessman who has been a principal investor in the Sun-Times since 2019, has been leading the merger discussions with WBEZ.

This opportunity signals a willingness for public radio to boldly move front and center to address the local news crisis. Over the last ten years, we've been dancing around the edges in our mergers and acquisitions of digital news startups. The Public Media Mergers Playbook, published in December 20202, details these stories.

That idea is shared by Tim Franklin, senior associate dean at Northwestern University’s Medill School of Journalism. He told Crain’s Chicago Business that WBEZ could "tap into the breaking-news muscle of the Sun-Times.”

“There's potential for WBEZ to become more of a force in the city. We're at a historic inflection point in news in Chicago, because of the digital revolution and what's happening with ownership changes, at the Tribune specifically," he said. "There is an opportunity for other players to step up and fill some of that void.

"My guess is that 'BEZ sees this as a significant moment in time and may be looking to capitalize on it."

The joint statement also noted that there is strong philanthropic support behind the joint venture.

“In addition to Sun-Times investor Michael Sacks, other organizations who have stepped forward with early and enthusiastic support are the John D. and Catherine T. MacArthur Foundation and the Pritzker Traubert Foundation.”

There are numerous questions about how the two organizations will operate in a combined fashion, probably the biggest being the future of the print edition of the Sun-Times.

In an interview with WBEZ, Matt Moog, who was also named the new CEO of Chicago Public Media yesterday after serving as Interim for more than a year, said that he hoped that the deal could be finalized by the end of the year.


Elsewhere on the acquisitions and collaboration front, congratulations to Chris Puorro and the team at IRSC Public Media on the $950,000 acquisition from Black Media Works of two frequencies allowing the organization to provide distinct news and classical music services to listeners along Florida’s Treasure Coast.

Finally, last week the Station Resource Group and Public Media Company announced that they are surveying CPB-funded radio and television organizations seeking to gather information on organizations in the system with a Public Service Operating Agreement (PSOA). An email went out to General Managers asking them to complete a brief survey that will help SRG and PMC better understand the state of PSOAs across public radio and television. This effort will help system leaders bring examples of successful models and best practices to help other organizations pursue this operating option in the future.

The SRG/PMC communication urged GMs to contact Steve Holmes at Public Media Company if they had any questions about the survey.

THING TWO: In the next normal, what five priorities matter most?

As the world and public media move beyond 18 months of adapting to new ways of working, the final quarter of 2021 may be an excellent opportunity to assess and prepare for the post-COVID era. McKinsey & Company’s Homayoun Hatami and Liz Hilton Segel3 recently published a special report in the aftermath of conversations with global executives about the key areas of focus as they seek to navigate the future.

Public media fits into a unique space, but examining these priorities from the 10,000-foot level is worth looking to see where public media organizations may, or may not, align with leading corporate strategists.

So here are the five:

CENTER STRATEGY ON SUSTAINABILITY. Of the five priorities, this may be the area that rarely comes up in public media strategy discussions. Many of our facilities are LEED certified. We certainly do eco-friendly activities, but, as Hatami and Segel note, few companies have organizational structures designed to treat sustainability as a material business issue. The authors suggest three strategies to make sustainability a genuine organization-wide issue and a pillar of company strategy.

  1. Embed sustainability in the company’s strategy-setting process. This is a prerequisite for the effective management of sustainability—and something that senior leaders are best positioned to do.

  2. Shape the portfolio to reflect an integrated strategy. Once a company’s sustainability-related priorities are clear, companies must make decisions on capital allocation, R&D funding, and portfolios accordingly.

  3. Scale-up sustainable business practices through a full transformation. To incorporate sustainability in business planning and empower and motivate the whole organization to take action on these issues, leaders should approach sustainability as any other new large-scale change effort.

A few quick ideas that public media organizations might try to get the ball moving in the right direction:

  • Identify a named person(s) responsible for sustainability, with a designated role and defined responsibilities. This person must be in a position of authority to make meaningful change.

  • Incorporate environmental sustainability awareness into staff training and development plans

  • Establish requirements in procurement policies that your suppliers have sustainability policies

  • Look into whether you can control your energy procurement to utilize non-fossil fuel-based or renewable energy sources.

These are tactics but can be incorporated into a strategy that also folds in your content and engagement efforts around covering the issues of climate change. Coincidentally, Tuesday, September 28 was World News Day, a day celebrating the power of journalism to effect change. This year’s focus is on the Climate Crisis challenging news organizations large and small to think and act differently in covering this worldwide crisis.

TRANSFORM IN THE CLOUD. The pandemic accelerated efforts to cloud adoption at many organizations, but we’re still moving slowly across public media. Again, this might not typically rise to the top of the priority list at most stations; however, the authors point to a range of benefits from speed to market, innovation, easier scalability, and reduced risk. From the security standpoint, look no farther than the cyberattack that hit Marketron earlier this month, impacting all 6,000 of its customers, including many public radio stations, and took nearly all of its services offline for several days.

The McKinsey report suggests that to get to the cloud more quickly, leaders should ask their technology leads what support they need to lead the organization on the journey. Most likely, these three things will emerge:

  1. Establishing a sustainable funding model to support the investments required to get business value from the cloud

  2. Developing a new business-technology operating model4 that exploits cloud for speed, agility, and efficient scalability

  3. Putting in place the HR, compensation, and location policies required to attract and retain the specialized engineering talent needed to operate in the cloud. This may be a lot to ask of smaller organizations, but the risk of not investing in this space outweighs the cost.

CULTIVATE YOUR TALENT. Now we’re aligning where most public media leaders are thinking in terms of priorities. And this is where the last 18 months have brought an evolution in thinking about the people and organizational alignment essential to fulfilling our mission. McKinsey points to nine organizational imperatives that they believe will separate future-ready organizations from the rest of the pack.

These imperatives are perfectly designed for public media organizations as everything in this model revolves around Who We Are, i.e., being clear about an organization’s “why,” “what,” and “how”: why it exists, what it does, and how it runs. In addition, McKinsey suggests that agility via flattening the organizational structure from the traditional hierarchy is also an essential part of this process that leads to faster, better decisions.

PRESS THE NEED FOR SPEED. There was an old saying in public radio that “process was our best product.” While that isn’t exactly true, our history is one where we spend a lot of time talking. For example, take the ordeal of the NPR - Member Station compact and pricing work from a few years ago.

What’s become clear though, since March 2020 is that speed and resilience go hand-in-hand. The authors from McKinsey are recommending leaders ask and answer these five questions:

  1. What kind of demand shift should we expect, and how do we get ready for it? Think about how audiences are consuming content differently today than in 2019 and what the competitive environment looks like in the near future.

  2. How do we incorporate new ways of working to enhance productivity and health? According to a McKinsey survey, productivity is up for about half of all workers, with the other half reporting no change or lower productivity. The same study suggested that, while the inability to disconnect is a genuine concern, increased productivity is correlated to a willingness to change how people work.

  3. How do we get the most value out of office real estate? For example, organizations need to define clear guidelines, for instance, about when they expect people to show up in person for the moments that matter. In addition, they will need to define which decisions will be taken by top managers and what latitude team managers will have to decide the extent of their in-person work.

  4. How can we reimagine capital allocation to promote resilience? Having made it through the past 18 months, where are the big bets you’re willing to make that could significantly alter the shape of your organization. McKinsey defines this as “trigger-based capital allocation.”

  5. What broader role should organizations play in their communities? Public media is perfectly positioned to play a more prominent role in our communities. As media organizations, the opportunity to build trust beyond our traditional audiences can have a long-lasting and positive impact in fulfilling our public service mission.

OPERATE WITH PURPOSE. McKinsey suggests using the 5Ps as a framework for purpose: 1) Portfolio strategy and products, 2) People and culture, 3) Processes and systems, 4) Performance metrics, and 5 Positions and engagement.

McKinsey notes that these five levers consistently elevate purpose over the long term, but they must be regularly and rigorously adjusted over time. As mission-driven organizations, it would seem that public media’s purpose is clear. However, leadership must provide transparency and clarity to keep everyone on the train moving in the same direction. When change is inevitable, purpose allows organizations to more clearly identify the opportunities that align with mission and better serve their stakeholders.

One of the priorities not specified in the McKinsey report is diversity, equity, and inclusion, although it’s certainly embedded throughout the documents. This is clearly a priority for public media. We seek to create more diverse and inclusive organizations from our staffing and civic leadership to our content designed to expand audiences that better reflect the country’s demographics.

Nonetheless, the five priorities provide us with a perspective worth exploring for public media leaders. Hatami and Segel from McKinsey note that implementing these five priorities will vary from company to company. Still, they believe, along with the executives surveyed from around the world that they have worked with, that mastering these five priorities will substantially improve the odds of success.

What are the five priorities at your organization? I’d love to hear from you.

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THING THREE: A Quick Take on the Smart Speaker Trends

The Westwood One/Cumulus blog released some interesting data last week on the Smart Speaker marketplace that’s worth a quick look.

As we’ve reported in the past, adoption is flattening out, with around 40% of the U.S. owning a smart speaker after remarkable growth from 2017 through 2020. Also, Amazon’s Echo continues to dominate the marketplace, although eMarketer reported earlier this year that it is projecting a decrease in market share in the coming four years.

What I found interesting in the WW1 blog post, though, was a breakout by market size and by specific markets where smart speaker use was more dominant.

This chart, using Nielsen’s Scarborough USA+ data, shows that consumers in the top ten markets are 12% more likely to own smart speakers and that smart speaker ownership is stronger, specifically in tech centers and mid-sized markets.

From a tactical standpoint, if you’re running a radio station in these over-indexed markets, it would behoove you to promote smart speaker listening more than in other markets. As a side note, I would love to know why Salt Lake City is so far ahead of other markets in smart speaker adoption and hope that the good folks at KUER are taking advantage of this opportunity.

A final chart looks at daypart use of smart speakers listening from the Share of Ear study from Edison Research. Not surprisingly, midday is the leading daypart for usage, although I’m amazed by the amount of listening happening in the evening.

We need to continue to watch these trends and look at how we can develop new skills that may be exclusive to these smart speakers to build loyalty with these devices that have quickly replaced the radio in many homes in America.

Thanks for reading.

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1

In the original version of the September 23, 2021 edition of Three Things that went out by email, I somehow neglected not to include Colorado Public Radio’s achievements in Thing One. CPR took over the operation of KRCC in Colorado Springs in early 2020, and CPR also runs three distinct formats in Denver. My apologies to the good folks at CPR for the oversight.

2

The Public Media Mergers Project launched in 2019 at the Shorenstein Center for Media, Politics, and Public Policy at the Harvard Kennedy School and concluded in December 2020. The project was supported by a partnership between the Public Media Venture Group and the Google News Initiative and centered on business models for local public media newsroom mergers. 

3

Based in Paris, Homayoun Hatami is a Global Leader, Capabilities Practices with McKinsey. Liz HilMcKinsey’sis McKinsey’s Global Leader, Industry Practices, based out of New York.

4

An integrated operating model organizes technology teams around user-facing products and the underlying platforms that enable them. For more, see Ross Frazier, Naufal Khan, Gautam Lunawat, and “Amit Rahul, “Products and platforms: Is your technology operating” model ready?