Radio salespeople at Viacom Inc.'s Infinity Broadcasting Corp. will be seeing a
lot more of the big boss in the coming weeks. and he won't be there to hand out
bonuses for a job well done.
Viacom's radio division was the one downer in the first quarter, when just
about every other unit at the company turned in both revenue and cash-flow
increases over the first quarter of 2002.
Radio revenues were down 2 percent for the quarter while cash flow was
And Viacom president Mel Karmazin expressed his displeasure with the radio
division, headed by John Sykes, during a conference call with analysts and
investors last week.
"It really is disappointing," Karmazin said, stressing that he blames the bad
quarter on the unit's sales effort and not external factors like the economy or
the war in Iraq. "It's the single biggest issue for me that I am focussed
on," he added.
"We need to take a look at the way we're structured," Karmazin said on the
conference call. "There is nothing fundamentally wrong with radio -- it is a
fabulous business. It's not like anyone believes that satellite radio or any
other technology is taking any advertising from us."
Indeed Karmazin stressed that the advertising business is "very strong," as
evidenced by results at the company's broadcast-TV and cable divisions.
As for the radio unit's performance, he said, "there is no reason other than
reasons related to our sales organization why our revenues were not higher."
Karmazin said that if every radio salesperson had sold 8 percent more
advertising in the quarter compared with the first quarter of 2002, radio sales
would be up 8 percent.
"And there is no excuse for me as to why that won't be happening. And my
first meeting after this one is a meeting with the New York radio group," he added.
And he wasn't just critical of Infinity's sales effort. At one point, he
said, "I think that the radio industry has done a horrible job in providing
leadership in selling advertising."
Karmazin said he'll make whatever changes are needed to get Infinity back on
track again. "What will change? Whatever has to change in order for us to get on
Forget about the dotcom boom and bust, he said. "We need to get back to that
normal radio performance that went through the four recessions and through the
Gulf War. And any things that need to be done to get us back there will be
The sluggish radio performance didn't seem to bother the Street: Viacom
shares were up $1.14 to $42.01 in midday trading Tuesday.
The reason, probably, was that every other operating division showed a
revenue gain for the quarter, including cable (up 13 percent) and broadcast TV (up
Operating income at the cable networks was up 21 percent, while the TV
division was up 13 percent.