When Sammy met Kevvie

Sam Zell made one thing perfectly clear to FCC Chairman Kevin Martin: He wanted radio-television-newspaper cross-ownership for the Tribune Corp. and nothing less.

He didn’t care if Kevin got his full-blown deregulation revisions approved. Zell was only interested in his deal and if Kev didn’t come through he’d be through - and singing soprano, if you know what I mean. He made that fact quite clear in his closed-door meeting with Kevvie last week.

You can always spot Kevin in Washington. He’s has the Zell brand burned onto his backside.

It's rumored that Kevvie didn’t even get a taste – at least over the table.

Memo to GAO: Please check the books and run the numbers in the Chairman’s office at the FCC. Yes, again!

You almost want to feel for Kev. All he ever wanted in life was to be part of the Bush-Cheney brugard.

The stupidly brilliant or brilliantly stupid Martin sought to abolish all cross-ownership bans by his drop-dead date of December 18 but realized that in the current political climate he’d end up in a long, expensive court battle and the image of his Grand Old Party would be further tarnished in the court of public opinion.

He used that pretext as his out for Sam Zell. “I don’t think it’s appropriate to require companies to be divesting properties while there’s litigation going on,” said the boy Kevin while patting the sweat from his forehead.

Zell didn’t get exactly what he wanted. The deal Martin cut keeps everything status quo at the Tribune for another two years.

Still, it’s enough for Zell to take the Tribune private by the end of the year, which is all he cared about. Had he not scored the big wet kiss from Martin, Zell would’ve been stuck with enormous missed-deadline fees. If his proposed $8.2 billion buyout of the Trib been delayed to the following year it would’ve put his convoluted Employee Stock Ownership Plan on a permanent vacation.

Though the deal still needs full commission approval, it’s expected to pass without a hitch.

Trib Chairman, President and EO Dennis FitzSimons released a statement that read, “"We are pleased with Chairman Martin's proposal which, if approved, will enable Tribune's going private transaction to close by the end of the year.” Rather than cite the real reason for getting this deal done, FitzSimons continued, “This will allow Tribune's local media outlets to continue their commitment to outstanding journalism and service to our readers, viewers, listeners and advertisers."

Translation: The layoff and buyout lists are being prepared as you read this.

Radio: The National Association of Bamboozlers

Busted!

Did you hear about the piece in the Washington Post yesterday on the National Association of Broadcasters latest feeble attempt to block the XM-Sirius merger?

The NAB was forced to admit it was behind a total of 8,500 e-mails opposing the merger, which were forwarded to the House and Senate.

Even worse. They’re phonies!

You can’t make this stuff up.

The Post tried to make contact with sixty of those “whose names were attached to similar, anti-merger emails instigated by the NAB.”

Only ten of the names were real and only one recalled filling out something about the merger – but had no position on it.

Fumbles, now you’ve been caught stuffing the ballot box. Did you hire former Ohio Secretary of State and election-fixer Ken Blackwell as your consultant?

What were you drinking?

Is this another one of the “new ideas” you promised the radio industry when you first took over the helm at the NAB?

Did you really believe, given your dubious past performance, that you’d avoid scrutiny on this one?

There’s obvious and there’s painfully obvious. You’re in the latter.

Fumbles, you’re Elmer Fudd to the rascally rabbits and XM and Sirius.

I like the way you hid under his desk and dispatched your doorstop and mouthpiece, Dennis Wharton, to sheepishly confess and confirm that the NAB bought pop-ups on numerous consumer web sites, including PriceGrabber.com and Staples.com.

Love the header: The XM/Sirius Merger will Create Higher Prices. Stop the Monopoly.

The site offered participants a choice: Yes, I’d like to stop the monopoly and an option to file a comment or No, thank you.

None of the people contacted by the Post recalled going through the procedure of supplying personal contact information.

That didn’t stop your boy Wharton from counter-claiming that the NAB has the names, dates, postal addresses, and e-mails to prove the responses were sent by real people.

That’s like elections where dead people are still registered to vote.

Stretching the truth, one could say real people they once were.

Those among the living deny sending the e-mails – and some are enraged that their e-mail addresses were pilfered and used by the NAB without permission.

"I have a high degree of confidence in this," Wharton told the Post. "They (the e-mailers) had to physically type in their name and address. It was a fairly rigorous process."

Memo to Dennis Wharton: If you’re going to lie, lie convincingly.

How did XM and Sirius respond to Fumbles’ latest stumble?

"The timing and pattern of delivery of these comments is highly unusual and suspicious," said Kelly Sullivan, a spokeswoman that reps both XM and Sirius. "The letters lack any apparent common tie or indication of the source of the effort, all of which calls into question the legitimacy of the filings."

Fumbles, the standard operating procedure when caught manipulating a self-made poll is to blame it on a data entry problem. Make sure you attribute the gaffe to some “immediately fired” intern.

What you did isn’t exactly hacking – but it does prove that you’re a hack. A fraudulent hack.

Fumbles, this is your life at the NAB, so far.

Your Radio 2020 campaign – all of two months old - is a stiff.

Your claim to being a Congressional insider has proved to be false. You can’t even get the FCC on the line – and that commission is run by one of your own kind.

Now this?

Even your most loyal supporters now cringe at the mere mention of your name.

It’s almost a given that the XM-Sirius merger will go through – and, even worse, just to screw with you, Fumbles, the FCC and Justice Department will almost certainly release their decision when you least expect it.

How about the night before Christmas or the week between Christmas and New Year’s Day?

Fumbles, check your calendar. It’s nearly 2008. Three years ago the Congressional Management Institute polled 350 congressional staffers and learned that half of them didn’t believe form-letter messages were authentic or were sent by constituents.

The House and Senate offices were fed 318 million of these e-mail form letters last year. Do you really believe they’re taken seriously?

You’re useless, Fumbles, useless.

Is this how your NAB members want their money spent? Is this the image the radio industry wants or needs right about now?

You’re not even bright enough to be called a carpetbagger. You’re just a carpet and your opponents are walking all over you.

Read the Washington Post story here: http://www.washingtonpost.com/wp-dyn/content/article/2007/11/21/AR2007112102149.html

Radio: That was then, this is now!

One year ago today!

The lucky sperm club Mays brothers snookered private equity firms to buyout Clear Channel. Providence Equity picked up the TV stations while BainCapital and Thomas H. Lee took radio.

That was then, this is now!

Private equity firms made a staggering number of bad deals over the past year. Among them – you guessed it - Clear Channel.

They used to call private equity “smart money.” Not now.

Clear Channel and BainCapital/Tommy Lee are stuck in a place they can’t get out of. The deals they thought they had in place to unload unprofitable properties disintegrated to dust.

Wouldn’t you love to be a fly on the wall at those crisis meetings at BainCapital and Tommy Lee?

And how much is Clear Channel stock worth now?

I won’t hold you to a number since it’s still dropping.

Hate to say I told you so, but I did.

Is it against the law to yell “fire” in an office building in San Antonio? How about "fire sale?"

Seven years ago today!

Radio stocks were still red hot. Clear Channel stock was doing $90-something, Emmis was $60-plus and it was right around that time when I said if you’re holding radio stock - sell.

I’m no Wall Street expert. Not even close. But I do know radio and it was clear to me and others closest to it that reality was setting in and, clearly, the party was over.

Five words to live by: Never believe your own hype. The radio industry did.

In essence, they bought their own hype about radio having a “captive audience” in cars and being a “forced destination.”

Few decisions in the radio business were made that cautiously thought out beyond the present moment.

When it was becoming apparent that the multiples were truly off the wall and debt would be a major problem to service, radio adopted a new rule: Don’t confuse us with the facts.

If I were doing the soundtrack to what was going on in the radio industry at that time, I’d lead with Frank Sinatra’s “Forget Domaini.”

When it was apparent that the stock slide wasn’t a fluke, the Mays family trotted out every cheap cliché in their playbook.

Don’t you hate when that happens?

Now, Clear Channel’s failures and misfortunes are thisclose to devaluing all radio.

Let it happen. The grim reaper’s already set up shop. There’s not much left to artificially prop up.

The faster it happens, the sooner we can deal with the how to’s for its recovery.

And the end result could be good for most in radio. At least for the creative types.

Real broadcasters will benefit from the fire sales and buy smartly and hire wisely. The spectators will be cleared from the field.

In fact, real broadcasters may buy back some of the stations they sold to Clear Channel and others for the same price they were worth before the Telecom Bill land grab falsely inflated their value.

So what have we learned from all of this?

It’s as easy as one, two, three.

One, there’s only so many radio stations you can own and manage efficiently.

Two, private equity firms and the radio industry don’t mix.

Three, Radio’s free and still relatively more accessible than any other medium, which means any success is driven by the product.

Better days could be ahead.

Meanwhile, back on the ranch.

I hear that the Mays family members and their former friends in private equity will be dining on cold shoulder and hot tongue this Thanksgiving.

Kevin, we hardly new ye!

FCC Chairman Kevin Martin is about to throw himself out of Washington, D.C.

He’s a clue-challenged failure and a fraud.

And what does a failure and a fraud do when confronted with that reality?

Run for public office.

Yesterday, Kev returned to his roots - North Carolina - to speak on a rural health care pilot program.

Rural health care? What does that have to do with the FCC? Nothing and everything.

Kevin, who was born in Charlotte, is pushing what would be a 42-state broadband tele-health (those Republicans love their double-speak) network.

What Kevin’s really doing is testing the waters.

Though his FCC term as a commissioner doesn’t expire until 2011 – his Chairmanship will almost certainly be replaced under new Presidential leadership.

Some in Washington feel this is Kevin’s exit, stage left for his return to North Carolina and a run for something, anything.

Hate to tell you this, Kevin, but no one’s going to miss you in Washington.

You were inept and dropped the ball one too many times – and this is what your friends in high places think of you. The rest of us wrote you off a long time ago.

You weren’t the guy the Bushoids hoped for. You were nothing more than a sheep in sheep’s clothing – and even that’s giving you too much credit.

Even Sam Zell had to grab you by the lapels and throw you against the wall or something close to it. He needs some temp waivers from the FCC to get his $8-plus billion buyout of the Tribune corp. so he can close the deal and avoid the almost- imminent financial penalties due if the deal doesn’t get done by year’s end.

Kev, you told him you could walk that through. What happened? Zell rhymes with Hell and that’s what he’s putting you through for your lack of obedience.

It doesn’t help, Kevvie, that you didn’t cover your tracks well and word got out on your clandestine meetings with Zell, which breaks a whole lotta FCC rules and regs. Then again, Kevin – what’s another rule and regulation to break when you’ve broken so many already?

I think the GAO lost count of yours.

All Zell wants is to keep WGN radio and TV in the empire. Is that too much to ask? It’s not like Chicago is market size one or two. Kevin, that’s easy stuff made easier. There was enough diversion with Iran, Iraq, gas prices, recession, and other fun stuff to slip your Zell deal through.

If you trace Clear Channel back far enough, you’ll find Zell’s fingerprints all over the Jacor side of the deal. It was Zell that helped create golden parachutes for all those ham-fisted executives Clear Channel can’t get rid of.
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And it’s not just Zell you’ve frustrated. You’ve enraged the top-of-the-chain radio groups for your inability to lift the eight-station cap on large markets. What’s the problem with one company owning just about every radio station in a major market?

That kind of dominance just may make radio valuable again, at least provisionally - for all the wrong reasons.

You should’ve re-read your job description as defined by the current administration. You were supposed to eliminate those exasperating ownership caps once and for all while garroting any remaining free media.

Who needs low power FM neighborhood stations that serve specific communities when you can approve and blanket markets with Christian-right programming from a central, national location? At least that much you did.

Kevin, you were put in position to be the bagman for big media – and given all the tools and political clout to do so and, somehow, you still found a way to snatch defeat out of the jaws of victory.

I’ll hate to see you go. Without knowing it, you actually aided and abetted the other side.

Kevin, my boy, you walked into a field of land mines. House Commerce Committee Chairman John Dingell (D-MI) put it in writing that he has “serious concerns” about your December 18 deregulation time line.

Go back to North Carolina. Run for something, anything.

And take your wife, please. She’ll be out of work as soon as Dick Cheney, her employer, is out of office.

You won’t miss those small-talk conversations at Washington dinner parties that always end up with “I pity you,” whenever you’re asked what you do for a living.

Three words, Kevin: You blew it!

I don’t think we’ll be seeing you around Capitol Hill much longer. North Carolina’s calling and maybe you still can save enough face to run for something as long as it doesn’t require too much skill and follow-through.

Radio: XM-Sirius - Everybody Wants Some

Today’s the day of the merger vote for XM and Sirius shareholders.

The Sirius side votes this morning; XM, later this afternoon.

It’s pretty much a given that most will vote in favor of it, which would put both companies, worth an estimated $4.7 billion on paper, under Mel Karmazin/Sirius rule.

That doesn’t make it a done deal. The official federal nods, which should come down the D.C. pike in the next 30 days, will be from Justice and the FCC – but don’t expect a bottleneck there.

That rubber stamp is already wet with ink.

If you see Fumbles, buy him a drink and find a designated driver so he doesn’t smash his NAB company car on I-395 tonight. Poor Fumbles. All those letters, all that Johnny Ray-style crying on Capitol Hill – all for naught.

You’ve heard of Karmatic retribution? Call this one Karmazinatic retribution.

Fumbles, call your office. You have a dozen broadcasters waiting on the line. It’s not pretty.

But just when you think there’s nothing else to worry about other than who to downsize at the merged companies, along comes the Bethesda, Maryland based Georgetown Partners, a minority-run private-equity firm, asking the feds to grant them control over the satellite channels aimed at minority listeners.

The spinmeisters at Georgetown oppose the XM-Sirius merger on the grounds that it would limit the number of channels for minority programming. The firm demands that if the deal goes through some of the channels must be turned over to a minority-controlled entity and that entity should be Georgetown Partners.

How convenient.

That’s their way of saying they want hope and opportunity when, in reality, they’re hoping for an opportunity.

The firm claims that if the merged company offers channels a la carte as it all but promised it would, that would put minority niche programming at a disadvantage since subscribers would be most likely to select the mainstream channels.

Say that again?

They are asking to lease 60 of an estimated 300 channels from the combined company, which it claims will be used to create free, advertiser-supported channels in addition to the subscription-based channels. So far, both the DOJ and FCC remain mum on the Georgetown proposal.

This is one of those times where inertia in government is good.

Both XM and Sirius claim Georgetown’s in it for the hand out – and that most minority organizations, including the NAACP, support the merger.

Minority-owned terrestrial radio operators remain opposed to the merger. James Winston, he being the executive director and general counsel of the National Association of Black Owned Broadcasters came up with the line of the week, “Putting conditions on a monopoly still creates a monopoly."

Georgetown knows how to make a buck or two. In 1999, it combined forces with GTE to acquire $3.2 billion in cell phone licenses from Ameritech. It later became part of Verizon Wireless.

It makes one wonder that if Georgetown got their way who they’d eventually flip the stations to.

Radio: Is it really that bad or is it worse?

Imagine starting your day listening to the top rated morning show in the market and hearing this promo: Ever think of advertising on (call letters)?.....Now is the time. We have great deals, but they won't last long. Contact (sales manager) today at (phone number)."

A friend brought up the fact that this is the kind of message one would expect from an anxious small suburban AM or on a TV station that runs incessant p.i.’s.

True, radio’s run those RAB “who listens to radio” promos for decades – but this one sounded desperate as in a seven percent drop in revenue from a year ago when you were only expecting one percent max.

Every month that big black cloud returns to blot out the sun and each month it gets larger and stays around longer.

Another friend who buys time – but a whole lot less on radio these days - told me of another shocker. Twenty-five years ago this station averaged $500/spot (worth about a grand in today’s dollars) in morning drive. This station is now on its knees, kissing your shoes and begging for $50/spot (around $25 in today’s figures).

That company’s even begged him for trade deals.

Does this disturb you as much as it disturbs me?

Has it become easier to herd cats than sell radio?

Of course, regarding those RAB figures, I got a piece of the spin, too, and was told by a sales manager that I hadn’t heard the whole story. There were some areas where radio revenue was up as high as nine percent? Nine percent? I had to check that one out so I went to the Radio Advertising Bureau’s web site to read the breakdown the numbers. Look at them for yourself: http://rab.com/public/pr/revenue_detail.cfm?id=91. If you find any good news in there, please let me know.

Do we now agree that deregulation made things harder – not easier – to accomplish?

There’s more. I don’t know how across-the-board this one is – but a market manager I know who’s with Clear Channel was ordered to fire one full-time person at each radio station he oversees and he oversees a lot of stations. And he has to do it now!

At least it’s like the old days in one respect. If you really have to let someone go, you do it before Thanksgiving. It’s fair to the employee and smart for morale. And you carry them through Christmas.

Most of the time radio’s not smart and there is no morale. Last year Clear Channel fired staffers a week before Christmas.

The mass slaughters have begun at Clear Channel stations in Minneapolis, Houston, Detroit, and Youngstown. If it hasn’t happened at a CC cluster near you, stay tuned. It probably will.

With television writers on strike, the networks are forced to add more reality shows to fill their hours. I have an idea for one: Survivor: Clear Channel.

Some industries were never meant to be that large. Radio is one of them. Radio survived and the great stations thrived when there were long range goals placed on a station’s performance. A respectable product created and nurtured by talented people? What a concept.

When the radio industry’s business plan and philosophy were summed up in 12 words: Buy ‘em now and figure out what to do with them later, it was obvious to those not buying the hype that this would be the end result. Radio got big, its problems got bigger.

I’ve been on the talk and interview circuit promoting my book (plug: The Buzzard: Inside the Glory Days of WMMS and Cleveland Rock Radio. The perfect Christmas gift). As expected, there are the usual discussions about old media versus new, but when the conversation turns to radio all ask the same question: Will radio survive? A year ago the word was turnaround. One market manager I talked to this week used the word jumpstart to describe what radio had to do to get back in the game. Usually, jumpstart means there’s no plan in place.

I hate the term old media – but it stuck. That’s the industry standard line and we’ve got to live with it. Newspaper’s considered old media. Television’s considered old media. And radio? It’s not even being considered.

And those predicted fire sales?

One can only begin to imagine the generosity in the early Christmas presents Sam Zell is passing out to those that’ll decide the fate of his plan to go private with his shaky Employee Stock Ownership Plan for the troubled Tribune corp. He needs FCC approval and his Sherman-in-residence at the FCC, Kevin Martin, is always an easy mark – but the jury’s out on whether the other commishes can be conned. If Zell falls short, he’s dead in the water with financing and (sniff) – where there’s smoke there’s fire.

Clear Channel has to close its deal by end of the year or BainCapital and Thomas H. Lee will also fall short and (sniff) – where there’s smoke there’s fire.

Fumbles, hate to break the bad news to you and your fellow hacks at the NAB - but no one’s buying into your Radio 2020. They’re more concerned with radio, 2007.

Radio: Dormant, not dead

Last week I had lunch with a radio friend who was passing through town.

He brought up this blog and a comment another radio person made to him about it: Why does John hate radio so much?

Hate radio? I was taken aback that anyone reading this blog would make that hypothesis.

I don’t hate radio. I love it. What I don’t like is what has happened to it.

My book, The Buzzard, is out today. You’ll like it. You should buy it. It’s about a championship radio team.

My publisher’s promotion and marketing departments set up its release by scheduling interviews with public and commercial radio, TV, and the press.

All ask of me the same question.

What happened to radio?

Ask yourself why they’re all asking the same question.

Even those working in radio are asking me if it’s dead.

Here's my reply.

There’s an average of four terrestrial radios per household.

Nearly all vehicles have terrestrial radio.

But just because everyone has direct access to terrestrial radio doesn’t mean they have to listen to it.

Why aren’t young people listening? Why are there four million fewer radio listeners than there were a year ago? How many millions were lost over the past decade?

Many – try most - young people don’t listen to radio at all.

Yet, they tell me, they would consider listening to radio if it provided the soundtrack to their lifestyle.

They like new music. Hell, they even like news and information if it’s delivered to their liking.

Since that’s not happening, they’re getting it from the Internet.

They’re getting their new music from – take your pick – TV shows, spots, Internet radio, and word-of-mouth.

Radio’s nowhere.

The industry’s radio listening decline excuses are just about spent.

Radio is up against iPods, Internet radio, satellite radio, video games, blah, blah, woof, woof.

Radio used to be up against cassette players. Remember when some radio stations refused to give away cassettes fearing that winners would prefer hearing their own music on a Walkman?

Did cassettes cut into radio listening? No.

How long have video games and video arcades been around? Long before radio listening deteriorated.

Radio is doing a poor job at holding audience by not providing its listeners – and potential listeners – what they want and what they need.

The Jack format was doomed to failure for many reasons, including its slogan: “We play what we want.” We not you.

HD Radio? It didn’t dupe Wall Street. If anything, that machination made the Street even more skeptical of terrestrial radio. Side channels will serve a purpose for Internet radio in the future – though they will be competing with independent stations that are programmed with passion.

Satellite radio? Terrestrial radio should choose its battles wisely. This isn’t one of them. The NAB’s campaign against the merger is a poor excuse to make Fumbles look busy. It’s like invading Iraq to capture Osama Bin Laden. The NAB essentially provided satellite radio credence by protesting the merger.

Will satellite radio be around in five years?

But I’m not writing off terrestrial radio.

I am writing off those who have controlled the majority of radio stations over the past decade: corporate decision makers who know nothing about the markets they serve; consultants who put their best interests ahead of their clients by imparting dated concepts and hollow, rehashed ideas. Then there are the consultants and advisors that continue to double-dip by using your playlist to make a few extra bucks with labels and artist managers at your expense.

That's the equivalent of mugging and robbing someone, then offering to take them to dinner using the money they just stole.

Those controlling most radio programming today should be provided a cash disincentive for screwing up. Watch how fast that’ll get the spectators off the field.

There are those in the radio business that are about to feel like the smaller reptiles did when the mammals took over.

Did the post-deregulation radio buyers ever stop to think how preposterous it was to believe that radio’s values could not only go up? There’s an old saying: If prices can only go up, all sellers are fools and all buyers are wise. Radio fell for it. Realtors did, too.

I have the perfect slogan for lending institutions: Buy now, pray later.

Just ask the weak chins at Clear Channel. Except for those whose surnames rhyme with Daze or those who Randy Michaels set up with golden parachutes, the morale in San Antonio is almost as dreadful as it is for their radio managers, programmers, and employees.

Just ask Lincoln Financial - where no reasonable offer will be refused.

Is there any radio station in America that is not for sale right now?

Instead of “Gone but not forgotten” it’s “Forgotten –but not gone.”

The only ones who know what the real reasonable offers are – the broadcasters – are waiting in the wings.

They will not be bullshat by the pretenders running and consulting radio today.

Therein lays optimism. And that’s why I still love radio.