Memo to Clear Channel: Will you please stop your whining. Take the haircut. Agree to your revised deal with Frequency License LLC.
$350 mil may be 23 percent less than the original $452.1 million offer – but, come on, you’re still getting a good – albeit more pragmatic – deal.
Just cut your losses and get the hell outta Dodge. Now!
This isn’t about saving face. This is about saving your ass. If your biggest deal goes south, you’re a bleeding, wounded animal, ripe for the kill and, right now, your obstinacy is doing nothing other than making a team of rich lawyers richer.
Haven’t you come to grips that the only ones feeling sorry for you are your fellow rats?
For just this once, listen to the Dutch uncles whose counsel you’ve ignored for the past decade.
The spectators I’ve talked to admit that there is something peculiarly entertaining in witnessing the decline and fall of Clear Channel - the company that will forever be known as the one that gave the radio industry a bad name.
It’s a great study for the Harvard Business School – how Clear Channel went from being the name of a media company to a verb whose definition was “screw up” to, finally, a curse.
Clear Channel never got the connection between what they were programming and what listeners wanted and what their clients expected and what they delivered.
It’s not the rank and file’s fault. Not even close. Clear Channel employs some of the most talented and creative people in this business. I’ve talent coached and commissioned Clear Channel’s talent for profitable free-lance projects. The same applies to sales and marketing. Clear Channel constricts talent, which results in an abysmal product while constraining sales to sell it using their method. It’s a recipe for failure.
Do you know how many times I’ve heard, “If they only let us do it this way?”
Facades, no matter how well built, eventually crumble.
Their mash-up mingled lies with a rare truth or two and left it up to the shareholders to figure out which was which.
So, now we have a company that’s closer to dust than flesh.
Last year Clear Channel shareholders discarded the 33 percent premium, which was offered by BainCapital and Thomas H. Lee for the terminally troubled radio division. The deal had to be upped by $800 million. Earlier this year, the standard buy-out price was 15 times cash flow - four times larger than the 2002 level, which corresponded with the level that was reached prior to the leveraged buyout market bust in the late eighties.
The clock is tick-tick-ticking on the BainCapital-Thomas H. Lee-Clear Channel deal. September 25 is the date of the shareholder vote to go private.
There are some things that money can’t buy. One of them is being a fly on the wall at Clear Channel’s headquarters.
The mood in San Antonio has to be like the French during the final days of their doomed aristocracy.
They have problems that even nightmares wouldn’t cover.
Like the dot com bomb, history will record the private equity phenomenon of the past year and a half as another archetypal Wall Street bust.
The abrupt halt of el cheapo financing has inflicted such chaos in the buyout market that it’ll be hard-pressed for BainCapital and Thomas H. Lee to artificially inflate Clear Channel’s true value.
As they say, timing was everything.
On paper, BainCapital and Thomas H. Lee specialize in buying out and rebuilding troubled companies. In reality, they strip them like a car thief and part out the pieces, usually to create new companies and IPOs to dump on gullible investors for a few billion more than they paid for it.
Clear Channel won’t be among them.
It's now a buyer's market, a seller's nightmare and therein lays the silver lining - broadcasters could and should end up back in the broadcasting business! This past decade has proved that only broadcasters know how to make money in broadcasting. The Frequency License LLC deal will bring real broadcasters back into the fold.
Of course it’s not that cut and dry.
Those running radio made it look like an industry managed by circus clowns. Pushing HD Radio as the next big thing while lobbying against an XM-Sirius merger? How about bawling like babies over Arbitron’s people meter glitches in its trial run? Hate to clue you in but the old-fashioned 20th Century diary was already showing high cume, low quarter-hours, and plummeting time spent listening. Then there was FreeFM, Jack and Jill, extreme rock, and a surfeit of other formats that any real broadcaster would’ve rejected.
Radio’s crawl back to legitimacy will take time – and it will, as all other re-invented businesses, have to marry itself with new media in new, innovative ways.
Face it. Who other than real broadcasters should be given the opportunity to bring legitimacy back to the industry?
Radio isn’t dead. It’s an industry in a serious need of a reboot.
Meanwhile, Clear Channel will become an ever-more distant memory in the rearview mirror of broadcasting history.
And that’s the best news of all.
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16 comments:
"Those running radio made it look like an industry managed by circus clowns. Pushing HD Radio as the next big thing while lobbying against an XM-Sirius merger? How about bawling like babies over Arbitron’s people meter glitches in its trial run?"
Great stuff - very amsusing ! I had a chance to sample the HD channel programming at clearchannelmusic.com/hdradio, and except for a few Classic Rock streams, the rest sounded abysmal. No wonder that Slacker.com, Pandora.com, and Last.fm
"personalized" music services have become so popular:
http://siteanalytics.compete.com/hdradio.com+pandora.com+last.fm?metric=uv
John, I have survived five ownership changes in ten years. I have been toiling under the Evil Empire for the past few. They do not know how to manage their stations. They give the time away so they can say they are sold out. My stations are among those in that deal you mention. Just thinking about working for real broadcasters again gives me something to look forward to. Thank you for telling it like it is.
Let's not delude ourselves into thinking that just because CC is selling stations that things are going to get better. In many cases they only get worse. I have a friend that worked in a CC cluster, and as soon as his station was sold, he was fired and replaced by a syndicated morning show that had already failed once in the market. He got his severance from CC, but being unemployed still stinks. Just because a new owner comes in, does not mean they are going to do things the right way. They paid a ton of money for these stations, and one way or another, they are going to make that money back as fast as they can, and the first thing they are going to do is cut costs by letting local staff go.
Good article, but on behalf of
Circus Clowns everywhere I object
to that comparison.
to big apple airchecks. i know of many people who found themselves unemployed by an ownership change. i think john gorman is making a point that this company that wants to buy a group of cc stations is comprised of broadcasters that understand radio and what it takes to be successful.
I take issue on the "rats" comment. clear channel makes rats look good.
I never thought about it that way. Radio has to look foolish to those not in it. It is amazing that agencies would even do business with radio considering its many follies from HD radio to fighting technology. Clear Channel isn't the only offender although nearly every other chain copied their style from overspotting to treating employees like s#!+. I worked for CBS and it was no picnic there. You could find more up to date computers and printers at a Goodwill or the Morgie than at any of their stations. Broadcasters come home. We need you.
Not all real broadcasters are really good however. Bob Howard, John Garabeedien and John Tenaglia immediately come to mind. I have worked for some in the seventies and eighties that were almost as bad as Clear Channel. John, I do feelyou are on to something. Banks and other lending institutions still have to make money so it is not as if investment dollars are all dried up. Like the company you mentioned they got funded because of a radio background. I think CBS radio will be right behind Clear Channel in getting out of the radio business too. I would not want to see the next generation of John Teneglias and others like him back in radio. It will be a slippery slope.
Dutch Uncle? I had to look that one up. Where do you come up with these anyway?
Enjoyed the blog. I would listen to radio more if it offered a greater variety.
I am not in the business and would not want to be.
Radio and TV are among the losers on Wall Street and even in the good times Clear Channel and Viacom could not get thier stocks to perform. One reason is that smart investors heard the product Clear Channel and CBS Radio delivered on the air and wisely resisted funding those losers. It also applies to the lack of fortune of other radio stocks. The investors were the first to spot the phoniness and smoke and mirrors in broadcasting and the tough talk by Lowry Mays and Mel Karmazin backfired when there was no product to back up their reasons for investing in their product. They should listen to you. Cut their losses since it willonly get worse and sell their stations to broadcasters that know how to run radio and TV stations for a reasonable and realistic price. I also agree that radio is not dead and that to survive it will have to reinvent itself by ultilizing new media.
I really appreciate your analysis of the decline and fall -- it was very nuanced to delineate between the powers that be and the rank and file. Piss poor talent management is responsible for the decline and fall of many a large organization. "Bringing in new blood" to salvage a drowning ship only results in more rats fleeing it. Not enough attention is paid to the "talent management" crisis outside of HR circles -- but your case study brings home the point.
Great job!
Your comparison to the French aristocracy is perfect. Nero and Rome would be another one. Those at the top really don't have a clue and assume as you once said "the masses are asses" but as you also said once "even asses know when they are getting kicked".
Real broadcasters will recognize creative talent and realize that they are the key to both ratings and revenue and you cannot have one with out the other.
Small and some medium sized markets have performed better than the majors in part because the multiples were not so out of whack with reality and those doing best are mom and pops - independently owned stations. They are owned by radio broadcasters who are in the business because it is in their blood. That reinforces what you are saying here. Only broadcasters should own radio stations. When it went beyond duopolies it went too far. The one problem all size markets will face and will hurt the small markets most is the proposed royalty payments to the RIAA. That is one area radio needs to address and soon before it ends up being too late.
Just the other day Iheard on a promo on a Clear Channel owned station about HD radio. It explained nothing. It did not make me want to go out any buy the product. Why is radio wasting time on this when they should be fixing their terrestrial stations' formats. That goes for CBS, Radio One, Greater Media, Entercom and all other chains that are spending needless time and energy not to mention money on one of the greatest follies of all time - HD Radio. Real broadcasters don't need to hide behind HD radio. I should also mention that I heard the station (one of those all over the place Mix stations) while in a convenient store. I just want to make it clear that when it is up to me I will not listen to any station owned by Clear Channel or Greater Media. The HD radio pimps.
I work for Clear Channel in at a "northeast" station. I have been in radio since the early 1980S and worked my way up the ranks from small to large market. I can honestly say I have never worked for a more antisemite, homophobic and racist company that keeps getting worse. My station is not among those "on the block" by Clear Channel. I hope when the time comes at this station that the next owners address the uncontrollable situation here. The worst problem is that these practices go all the way to the top management.
I am not fully convinced that those who acquire former Clear Channel stations will know what to do with them or hire the right people to straighten out sales and programming. The same old names and faces of programmers, general managers, sales managers and even jocks keep showing up over and over again in the trades. How about fresh blood and those who have been on the sidelines? I know you say it will happen. I just can't see how. The radio industry has become so inbred that I fear that we will see the same names doing the same things for the new owners.
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