History of Learfield: This old house

In 1986 we were full up.  The old house at 216 E. McCarty was our headquarters; the farm reports were being done from our original headquarters near Derry's home in Marian; We'd rented two others locations close to 216–one two doors west and the second above Modern Litho Print on Madison.  We were running from location to location to get stuff done; and, while serviceable, the three Jefferson City locations didn't have great appeal to visitors and potential employees.  And Centertown wasn't an ideal location for studios and backhaul.  We needed something better. 

I built the building along with Dan and Darrell Gordon, two Jefferson City commercial Realtors.  They owned half and I owned the other.  Construction took a year; we moved in 1989.

–clyde

History of Learfield: Good Press in Kansas City

The Kansas City Times did a nice piece on us in 1986 that highlighted our company, but particularly our farm programming and Derry Brownfield. You'll enjoy reading this, I think, because it quotes Derry many times; and he is one quotable fella.  My favorite:

"When your outgo exceeds your income, your upkeep becomes your downfall"

–clyde

Radio network keeps farm news on the air

The Kansas City Times, September 9, 1986
By Gene Meyer Economics Writer

CENTERTOWN, MO – Urban people who wander into radio range of farm broadcaster Derry Brownfield’s broad Missouri voice might think that he’s rattling off his rapid mix of agricultural prices and homespun philosophy from a cow pasture somewhere.

They would be right. But it’s a pretty sophisticated cow pasture. At the pasture’s edge are two farmhouses, one of which has a nearly 30-foot satellite dish outside.  The dish is connected to a broadcast studio, two taping booths and a maze of electronic equipment, all of which is one of the nerve centers of Learfield Communications, Inc. the first totally satellite-linked radio network in the United States.

From 5 a.m. to 2 p.m. each weekday, in 27 reports a day, Mr. Brownfield and two other broadcasters carefully weave market information fresh from US Agriculture Department and news service computers with sometimes deceptively simple business and advice to as many as 2 1/2 million listeners.

“When your outgo exceeds your income, your upkeep becomes your downfall” is a typical offering by Mr. Brownfield.  More pretentious analysts usually take more time, spend more words and use charts to make the same point on asset-liability management.

About 150 stations subscribe to the service, which is called the Brownfield Network and is one of Learfield’s operational mainstays.  A Missouri news service Learfield offers has 60 stations as subscribers, and 350 more take programs from which Learfield is a distributor.

Add the signal-swapping possible with similar systems nationwide, and the system has the potential to expand to about 3,500 stations, the company says.

In downtown Jefferson City, in two row houses on McCarty Street, Mr. Brownfield’s partner, Clyde Lear, tends the company’s other nerve center, where more than three dozen people run more the type of operation visitors might expect to see.

The McCarty Street operation is the home of Missourinet, which the company says is the largest radio news network in the state.  It’s also a sports broadcasting operation that carries half the Big Eight Conference’s football and basketball games, and is the national distributor for two ABC radio networks, broadcasts of St. Louis Cardinals baseball and football by KMOX in St. Louis,  And it offers Paul Harvey commentaries and as many other  diverse enterprises as Learfield’s marketing department can sign.

The operation will bring in revenues in excess of one million this year.  Profits in the closely held organization aren’t disclosed.

Mr. Lear and Mr. Brownfield like to point out another feature of their closely held 14-year-old enterprise.  They say Learfield may be one of the last communications systems that could have been started on a     $50,000 shoestring, as Learfield was in 1972.

“Even we couldn’t do it if we had to start over,” Mr. Brownfield said.

Learfield’s corporate history reflects some occasionally startling changes that have swept regional broadcasting the last few years.

The company’s basic business notion, establishing a successful specialty network, has captivated broadcasters for years.  Mr. Lear even sketched an outline of Missourinet when he was a University of Missouri graduate student.

When Learfield formed its initial network, the Brownfield Network, it joined the ranks of about a dozen farm broadcast networks.  That group includes the oldest in the nation, the Tobacco Radio Network of Raleigh, N.C., which went on the air in 1946.

But then the industry exploded. 

Of the 43 such networks today, 17 were formed from 1975 through 1980, and 13 have been formed since.

Mr. Brownfield and Mr. Lear and most other broadcasters attribute the industry’s rapid growth to a combination of economics and technology.

“Every Midwestern radio station had a farm director and maybe one or two farm reporters during the 1950’s,” Mr. Brownfield recalled.  “By 1966, they were gone.”

Economic forces are the chief reason that happened, he said. Declining numbers of farmers made it difficult to attract sponsors for farm broadcasts, so station executives cut the operations.

But the stations clinged to a notion, backed by market research, that their farm listeners still preferred radio to other sources for such things as weather and market news.  So where there were networks to provide these things, the stations used them.

“But things really took off in 1972, when we started,” Mr. Brownfield said.  “You had to remember what was going on then.”

What was going on then was President Richard M. Nixon’s price freezes, high inflation and “housewives rioting in the supermarkets.”

“Farmers and farm stations suddenly demanded news,” he said.  The early 1970s were the years farm networks flourished most, Mr. Brownfield said.  Even so, the economically slow years left some lasting changes.  Half-hour or longer broadcasts with farmer interviews are increasingly harder to find on any network.  Most, like Brownfield, broadcast bursts of one, three or five minutes of market information, with some 10-minute, more detailed market summaries and features later in the day.

A quirk in communications regulations in Learfield’s early years also helped the company expand, he said.  Brownfield and the nation’s other networks, back in those pre-satellite years, leased telephone lines to get their signal from their studios to stations that carried their programming.  And for a while in the early 1970s, it was cheaper to lease lines that crossed state borders than those that did not.  So Brownfield, and other networks, began crossing those borders to offer all their affiliates competitive programming rates.

Later regulatory changes wiped out those advantages, leading to some lean years until satellite capability virtually opened the heavens to broadcasters.  Now any station with a receiving dish can sign up with any network with a sending dish.  Learfield switched its last land lines over to satellite transmission in August 1983.

But the added flexibility is costly.  By industry estimates, a single top-quality sending dish and the equipment to make it work costs $150,000 to $200,000.  Receiving dishes, which network owners usually supply in exchange for an affiliate’s long-run loyalty, cost about $10,000.

History of Learfield: Derry sells his shares

It was the summer of 1985.  Ronald Reagan was President.  Interest rates for all of us — not just credit card interest, but home loans, business loans, car loans — were well above 12 percent; some nearly 20 percent.  The economy was on the skids. Money was tight. And Derry Brownfield, my beloved partner for 13 years, was struggling under his farm debt.  He came to me one day and asked if I'd buy his stock. He needed the cash to avoid the Federal Land Bank taking all of his land–what he'd accumulated over a lifetime.  We had no way to value the company without a formal valuation.  So, he set the asking price at exactly what he needed to pay off his land debt:  a half-million dollars.  Might as well have been Ten Million dollars because I didn't have any money; and the company couldn't borrow five-thousand, let alone $500-thousand!  So, we prayed about it.

Two years prior, 1983, we built the Kansas City Royals distribution system (some 125 points) for the rights holder, Stauffer Communications of Topeka; back-hauling the baseball broadcasts to Jefferson City and sending them out from here.  Stauffer's chief engineer wanted control of his own network and had begun considering building his own up-link facility in Topeka.  Our agreement with Stauffer had a buy-out clause.  Guess what the amount was?  $500,000! 

I went to Stauffer soon after Derry came to me and inquired if they wanted to purchase the complete system–a little earlier than scheduled. They did. Yet, I had another problem:  The equipment was subject to a lien held by Harris Corporation, the manufacturer.  We'd paid on the debt for two years–never missing a payment, but there were many years to go.  So, I went to the guy I'd done the purchase deal with at Harris, Larry Boudre', and told him what was happening–the whole story. 

Amazingly, Boudre' did the unthinkable: he released us from the lien. So I sold the system to Stauffer, continued to make monthly payments to Harris, gave Derry a check for $500,000 and transferred all of Derry's shares to Learfield as treasury stock. 
 
Again, relationships played a big part in bringing all the elements together; strong, honest, open, relationships with Derry, Stauffer, Harris, and Boudre'.  Everyone trusted each other. The objectives were honest and realistic.  The deal came together in less than two weeks.  In fact, I remember going to Topeka, signing the agreement and wire-transferring the cash (fairly unusual in those days) back to our Jefferson City bank.  I'd previously written a check to Derry and on the afternoon of the day of foreclosure he stunned the officials at the Federal Land Bank by walking in with a check to pay off the entire loan. 

Derry is loyal and honest.  He continued to work hard for us for twenty-three years.  Just recently he moved his daily program to independent studios near his home.  His sale back to Learfield made me the sole shareholder of the company. 

–clyde

History of Learfield: Roger Gardner

Roger250
Roger Gardner was in Future Farmers of America while in high school over in Harrisonville, where his dad taught vocational agriculture.  In February, 1982, Derry hired him to drive over from Mizzou to do farm reports, especially the early ones when Derry had returned late the night before from a speaking engagement.  Roger went full time in May of '83, after graduating from MU with an Ag-Education degree.  Naturally, I saw Roger as a strong addition to our farm broadcasting staff and the eventual successor to Derry. 

Until he came to me with an odd question in early 1984:  "How do you see my future here?" he asked.  I told him my vision.  "Well, I don't see myself being a farm broadcaster." he told me.  Eeeek!  Now what was I going to do?  I liked the guy, but…  So, I asked him if he'd move to Des Moines and along with Greg Brown run that new property (Iowa State).  He was only 22 and newly engaged.  Here's what he says today about revealing the news to his fiance', Cheri:

[Read more…]

History of Learfield: It was a terrific investment!

Recall there were four men who helped Derry and me start this business financially:  Buell Baclesse, Jim Wunderlich, George Stiles and Jack Murphy.  Jack died in July, 1975, and his wife, Lela, took his shares.  Remember, Buell, Jim, George and Jack owned fifty percent and Derry and I owned fifty.   They'd each bought in for $3,000 in 1972.  While there'd been no distributions, there were monthly director's fees starting at $150 and increasing through the years to $500.

The early eighties saw a change in the makeup.  In December, 1981 Buell–wanting to liquify his portfolio, offered–under the Shareholder Agreement–to sell his shares back to the Corporation for $40,000.  The Corporation agreed.  Then in August the following year, Lela offered hers for $50,000.  George offered his in November of 1984 also for $50,000.  And Derry offered his on August 9, 1985. 

Both George and Derry were cattlemen.  They'd amassed significant land holdings by leveraging existing land to buy more over the two prior decades.  But the terribly high (15-20-percent) interest rates of the Carter era, brought down their scheme.  The cattle business couldn't pay the interest on the notes and they quickly were close to default.  George took bankruptcy and had to sell his assets, including Learfield.  Derry was more fortunate as I'll tell in a later story.

The shareholders did pretty well on their stock in our company; judge for yourself:  they paid $3,000 for their investment, received annual director's fees of $6,000 and ten years later sold out for about $50,000!  
Here's the other side:  they personally guarantied the financial success of a very risky business run by a 28-year old!  Without them, there wouldn't have been a Learfield.  While they were well-compensated for sure, it was worth every cent!

Which brings me back to a macro view of free enterprise.  High risk; high reward.  Some states–wisely, I believe–offer tax credits to people (like Buell and the others above) when they invest their money into fledgling, new, upstart business ventures.  These "angel investors" are oftentimes the only financing available for an entrepreneur.  I've gotten great satisfaction recently by investing as an angel-investor in upstart businesses.  Most fail.  But some have really been home-runs.  How am I doing financially?  On balance, I'm ahead.  But the real fun is the satisfaction I get by mentoring and being with these, mostly young, entrepreneurs. 

–clyde

History of Learfield: Our “Learfield” name

We incorporated as "Missouri Network, Inc." in November of 1972; never expecting to grow beyond the boundaries of the state.  We’d outgrown the state of Missouri for our Ag Network with affiliates in bordering Illinois, Iowa and Arkansas.  So, we used the "Missourinet" name for our new news network covering Missouri, and took Derry Brownfield’s name for our ag network.  But what name should we use for the Corporation? 

What makes a good name?  Distinctiveness–will it be remembered?  Is it dissimilar from all the others?  Can it be easily "cleared" legally; that is: are there other products or services with names too similar?  Can it last for years or can it become dated?  And finally, what attitude does the name conjure when first heard by an average customer? 

To accomplish this, I used the "Q-Sort" methodology developed by Missouri professor, William Stephenson.  I collected hundreds of name ideas for our company from employees, friends and customers and put each on a card and then had these same people rate the names from best to worst; the winning name was "Learfield Communications". 

I still have those cards someplace.  Some of the ideas were terrible; many were trendy, but would quickly grow out of date.  And some would have proved impossible to clear as a nationally-used service mark because others were using it or something similar.  Of course, "Learfield" is a combination of "Lear" and the -field from Derry’s last name.  Interestingly, there aren’t any others similar out there; it has proved easily clearable; google-it if you don’t believe me.  It’s a top-notch name.

–clyde

History of Learfield: Too big for my britches

Prior to ’77 we were rockin’ along.  We were slowly growing, and always profitable.  Then we bought Missouri Life, and began losing money month after month.  Almost every entry in the minute book reflects this frustration.  In fact at the March, 1979 meeting Derry suggested finding a broker (PDF) who’d sell our whole company!

I continued to wheel and deal, successfully bidding on M-U in September, 1980; doing the Chrysler deal, moving my office to the Missouri Life Building and charging the company rent for a building I personally owned.  And while Derry and the other board members were in the loop, I was moving fast; often getting deals done prior to telling them.  All that probably would have been okay had the company been hugely profitable, but it wasn’t.  We were struggling.  And, we weren’t getting any help from a sluggish national economy. 

So, I got my hands slapped.  A summary of these frustrations (PDF) was sent to each Board member and included things like employee duties and pay; the new Mizzou deal; the Chrysler deal (see my previous Chrysler blog entry); the rent for our building, and finally a summary of what Derry thought needed to be done about all this.  He wasn’t after blood, but he wanted changes; he wanted to be consulted before deals were done and he wanted to be involved.  Derry’s plan was considered at the April, 1981 meeting and approved.  It was the five others against me.  I submitted.   

Was I wrong? Yes.  Was I prideful?  Yep.  As the leader of this venture did I deceive the other shareholders?  Could have.   Did I do so purposefully?  Absolutely not.  Was this hard for me?  Yes, but I knew they loved me.  What did I learn?  That I was under authority and needed to submit to that authority.  Have I followed that spirit going forward?  Most of the time, but not always.  What else did I learn?  Being under authority has its purpose and submission is empowering, is cathartic, and freeing. 

–clyde

History of Learfield: The Chrysler Deal

One day in 1980 I got a call from the ad agency for Chrysler asking me if I’d be interested in doing a media trade for a Chrysler automobile.  This was in the days when Chrysler Corporation was hurting badly.  The general economy was sour and Chrysler had acres upon acre of new cars it couldn’t sell or deliver to dealers.  Their idea was to trade these cars for media time they’d use later.  Here’s how it worked for one $10,000 car for example:

Chrysler provided us with the car and we’d promise them $15,000 in advertising on the network, plus a small additional trade amount ($1,500) for the ad agency as its commission.  However, as the trade was used Chrysler would agree to buy for cash an amount equal to 50 percent of the new car price (in this example, $5,000) in cash advertising.  In summary we got a $10,000 car and $5,000 cash when the advertising schedule was run and Chrysler got $21,500 in airtime. 

So, I said "yes", and got a Dodge Ramcharger pickup for Derry.  That was so easy, I called the guy and ordered a Chrysler station wagon for myself.  Then, I got a fancy Chrysler for Mizzou Coach Norm Stewart to use (that’s another story for later blog!)  Then five of us took an Amtrak train to St. Louis to drive back five Dodge Aspens for a "sales fleet".

Recall that Missouri Life Magazine had to be closed?  Well, we had significant debt which I retired by giving printing companies–and others to whom we were obligated–cars, vans and other vehicles to eradicate those debts.  Our FY 1982 balance sheet shows deferred income to Chrysler of $331,000!  In total, we traded 21 cars. Here’s a compilation of notes (PDF) Derry put together and a legal opinion about how to move these assets from Learfield’s (Missouri Network’s) books to Missouri Life’s books to settle debt obligations.

Now, for the rest of the story: Chrysler never used any of its advertising time. 

–clyde

History of Learfield: George Stiles

Stiles250
George died yesterday. He was a friend of mine and to many. He was one of Learfield’s incorporators and initial board members.

When I first met him, Derry had asked him to become a shareholder in our venture and we met at Home Savings to go over the details–the six of us. George had moved Jeanne and their large family to Jefferson City so he could serve as State Veterinarian. Their real home was in Windsor where he was a substantial cattle man. George was a big man — tall and imposing. One son, Phil, remains in Jefferson City working for the city’s Parks and Rec.

George was a good board member and loved his association with us and the friendly political banter with Buell and Jim–our two strong Republicans.  He was helpful in getting our buy-sell agreement hammered out.  He sold his stock in the early eighties and left our board.

Of the initial six, only Derry and I remain.