Thursday, July 31, 2008

Radio: For $ale


It’s been an eventful couple of days here in radio land.

One can only imagine what the record company’s goon squad – the RIAA – plan to do with what’s left of Fumblina.

How many tire tracks are up and down your back now, Fumbles?

The herd is being thinned at the new BainCapital-Thomas H. Lee privatized Clear Channel.

Some are leaving on their own free will with five figure stock options in tow while others are being involuntarily escorted from the premises.

You have to love the sincere sound bite from child of privilege and Clear Channel CEO Mark Mays, “We are deeply grateful to our loyal employees who have remained focused and generated terrific results through their hard work and dedication.”

Question – How many Clear Channel employees does it take to change a light bulb?

Answer – Both of them.

It may be a new company but it looks like it’s still run by the same old tight-fisted, fishy-eyed, cold-hearted thieves that wouldn’t help a blind child across the street unless they got a time buy for it.

No one will ever deny that Clear Channel didn’t have a major impact on radio. It’s just not the one they expected. Everyone turned them off.

Ken Dardis said it best in Audio Graphics yesterday, “Clear Channel is now privately-owned so, from this perch, expectations are that it will continue perfecting its mediocrity online and off.”

I believe the only chance of the new Clear Channel’s survival is to split itself into two divisions, one good and one evil, which will then battle for what’s left of radio domination.

The new Clear Channel is, however, obligated to spin off roughly seventy-five stations into that Aloha Station Trust to fulfill FCC ownership caps.

Markets include Los Angeles (2 stations), Austin (1), New Orleans (7), and San Jose (3).

One station they can’t wait to unload is KCJB in Minot, North Dakota – one of six on the block in that market.

KCJB is forever ingrained in radio history as Clear Channel’s first “Ooooops” station.

Being a dual formatted country music and news-talker, KCJB was the designated emergency station for the market.

Then came that emergency on a cold January morning in 2002.

A freight train went off the rails, puncturing cars carrying anhydrous ammonia fertilizer. It formed into a burning white cloud of toxic chemicals. Wind pushed it toward a populated area.

Hearing the crash and seeing the cloud, residents turned to KCJB for information – but the station was carrying a satellite feed from another market.

Police responding to the accident tried to contact someone at KCJB – but there was no stink of human at the station.

Their negligence resulted in one death and three hundred injuries.

Later, Clear Channel attempted to pin the blame on the local police, accusing them of not understanding their Emergency Alert System (EAS). They also claimed there was someone on-duty after all at the station during the time of the accident.

Their excuses were negated when other markets weighed in. Reports were compiled on Clear Channel news and information shortcomings and bloopers involving blizzards, storms, accidents, and disasters from all over the country.

Those were the days when if you asked Clear Channel the time they would tell you how to break the watch.

But that was yesterday and now all is forgiven.

You should’ve seen the Mays brothers, Hogan, and the BainCapital-Thomas Lee boys sitting around the campfire on South Basse Drive last night singing “Kumbaya.”

When the sell-off deal was put together in 2006, Clear Channel assumed it would get between $1.1 billion and $1.4 billion. But now with properties worth far less than they were two years ago, the Bain-Lee Clear Channel won’t see a number even close to that dream on figure.

It will be a new spectator sport. Watch them claw after every red cent.

Then there was the confirmation of the worst kept secret in the radio industry when CBS announced that it had put approximately “another fifty medium market stations” up for sale. CBS Radio-TV CEO Les Moonves implied that deals could be announced in thirty days.


Does that have anything to do with the NAB convo in Austin?

Maybe CBS Radio wants to go retro and revisit to the go-go days of the late 90s and early 2000 when radio heads would vie for the title of "cat that ate the most canaries;" using that NAB backdrop to announce their latest multiple station acquisition?

Didn’t the "buy now, pray later" era go out of style with Farid and Citadel?

Markets CBS has on the block include Portland (6 stations), Pittsburgh (4), Charlotte (7), Riverside (4), Sacramento (6), Cleveland (4), Vegas (6), and Orlando (3).

Some believe the announcement was tossed out to divert attention from the real story - CBS Radio revs plummeted 10 percent, from $463.4 million to $416.4 million and operating income crashed - down 16 percent from $179.4 million to $150.7 million.

Does CBS plans to peddle the stations off at Filene’s Basement closeout sale?

Of course, there’s that nagging question again on how one values a radio property in 2008.
*
King Midas in reverse is my guess.

As one radio executive put it to me this morning:

“First, prospective owners are going to have to find someone willing to loan them a pile of dough. Although the pile needed is shrinking daily. Still, it's tough in the credit market right now, which will both slow Clear Channel and CBS as they try to unload their losers, and, when they do find buyers, will put them at a decided negotiating disadvantage.

“For those of you paying attention, a number of us have been saying this day would inevitably come since the beginning of consolidation. A shame thousands of people had to lose jobs and careers to make a couple of dozen people very, very rich. Oh yeah, and they managed to pretty well eviscerate an entire industry in the process. Neat. A twofer!”

I’ll bet the corner loan shark will offer a more reasonable rate than the vig a legit lender will charge on a radio purchase deal.

I think the best solution for both Clear Channel and CBS in selling off their properties is to bundle them together and create their own country. Then they can declare war on the U.S., lose – and live off the war reparations. They’ll probably get a better deal that way than trying to peddle ‘em off on the open market.
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32 comments:

Anonymous said...

Is Joel Hollander consulting CBS Radio? This CBS Radio announcement is the dumbest thing I have heard since Free FM and Extreme radio. I grant you that markets like Cleveland and Pittsburgh under perform and should be dumped. Charlotte and Las Vegas on the other hand? There is strong future potential in those markets. I agree that this announcment was to offset their devistating radio losses but they aren't the only major chain losing money. I can't think of one that isn't. Either this was Moonves grandstand play or Randy Michalels and Sam Zell are really going to waste more money and buy properties just to eff with Clear Channel. I think someone put acid in the water supply. This is a financially dumb idea all the way around and if they expect to get even half of what they paid for those properties they are dreaming.

Anonymous said...

So let's see how the new owners do in terms of localism. I've been following a lot of the spin-offs, and so far, none have made any drastic changes to their programming. I think five years down the line, most people will not notice any difference between large corporate owners and small local owners. They're all cheap. The only way you guys will get what you want is government-owned media.

Anonymous said...

The big story not mentioned in this blog is that four of the fifty CBS stations likely to be sold are in Cleveland, home of John Gorman.

So will Gorman get back into broadcasting? Will he be able to put together a consortium of local people to buy at least one of these stations and show us all how to make money with better radio?

We're waiting.

Anonymous said...

Please don't let it be one of the existing chains. If this business is to survive it badly needs fresh blood and the input of experienced broadcasters and management that either sold or were pushed aside when deregulation brought in the crusades of Clear Channel and CBS.

Anonymous said...

The story about the Minot stations is CC had sold them to a local group more than a year ago for $450 million. Then the company financing the sale pulled out, and the sale fell through. The station has been on the market for a year. So much for local ownership stepping up to the table.

I really think we will see a lot of small market stations like the ones in Minot go dark. A market that size can really only support 3 or 4 stations. They have 12. That's way to many.

Anonymous said...

And, the gangsters at iNiquity expect HD stations to replace transmitters, etc., if the 10db power increase is approved for FM-HD. Has anyone hear about this HD station being held hostage by iBiquity from the lack of authorization codes:

"HD Authorization Codes"

http://tinyurl.com/6yjo26

Anonymous said...

Not surprised about the Minot deal. $450 million. No wonder why. What lender is going to part with that much money for the Minot market. For that matter $450 million for a half dozen stations in a 1.5 - 2.0 million market is too much. How can you service that debt? It is not local that is the problem. It was a total disregard for financial reality that killed that deal.

Anonymous said...

I worked for Gorman. He was the toughest, most demanding programmer I ever worked with and the very best. He took time, worked with me, explained in detail how he wanted me to sound, which direction I should take. I owe a lot to the man. I would work for him in a moment. I do hope he has motives for putting a group together.

Anonymous said...

CBS has buyers lined up? Doubful unless they are quietly dealing with the devil (Zell, Michaels). Is this a method to drive up price? I hope CBS is ready to take a serious haircut. Most of those stations are worth a fraction of what CBS paid for them. Look at their billing. Expenses. CBS has to know that it is putting stations on the market at the worst possible time.

Anonymous said...

The only announcement made at this year's NAB should be that Fumbles got fired. Useless jerk.

Anonymous said...

The only announcement made at this year's NAB should be that Fumbles got fired. Useless jerk.

Anonymous said...

Great blog. It is so true. This industy's ineptness cost thousands of jobs, ruined many a career and made a handful of bastards wealthy.

Does not make me very proud to be in this profession though I am in the former not the latter.

Change will come.

Anonymous said...

What do CBS and Clear Channel hope to get for the properties they have to sell? Ballpark?

KaitoWRX911 said...

Anonymous said...

"Great blog. It is so true. This industy's ineptness cost thousands of jobs, ruined many a career and made a handful of bastards wealthy."

Hey, that sounds like the bastards at iBiquity, that are only looking out for themselves.

Anonymous said...

Decades ago Rashaan Roland Kirk recorded his masterpiece "Volunteered Slavery". As I began to read your blog and its previous entries (I am a new reader) I put RRK on my ipod and listened as I read through. I could not ask for better background music. Your blog is very good, accurate and had a spicy dash of humor to tie it together. I respect your love and support for the people in the radio and media in general. Keep up the good work. You should be part of the Gawker network.

Anonymous said...

It looks like CBS and CC will have the opportunity to put your valuations to the test. When you factor in the drop in revenue, the drop in rate, the drop in listeners, it adds up to these stations being worth far less than they paid for them. In cases like this it's best to get them off the books. They will not re-increase in value under these owners. It does create a marketplace for those who have been priced out of the business for a while to get back in. Better days could be in store for radio as long as it recognizes that it is a very different world from 12 years ago and having a place on the internet will be as important as a full market signal.

from the CC gulag said...

You said:

>>>It may be a new company but it looks like it’s still run by the same old tight-fisted, fishy-eyed, cold-hearted thieves that wouldn’t help a blind child across the street unless they got a time buy for it.<<<

I work for Clear Channel and that is a brilliant description. This is the year that everyone is quoting Pete Townhend...meet the new boss, same as the old boss.

Anonymous said...

Supply and demand alone would cause stations to sell and trade at a fraction of what they paid for them just a few years ago. I wonder if the original game plan was a government bailout and more deregulation. Whatever the case, the American public are wise to the scheme in more ways than one and showed their response toward big radio domination. They stopped listening. See you in the bargain bin.

Anonymous said...

I cannot understand why CBS would choose to put their stations up for sale now unless they are expecting to take a bath and just want out of those markets. I think as you said earlier they may be best to sell off stations individually or as smaller groups rather than the entire 50 to one operator (if anyone is really interested). Charlotte is a growth market and stations are doing well there whereas Cleveland is dead market and from what I understand CBS radio's worst performer per capita. Charlotte would be worth far more than Cleveland. Sorry, John. I know you live there.

gmanhater said...

you jerks praise gorman. he was a ruthless mf. he stole away the best jocks, promo, sales for his stations. he came into markets & figured out who was doing what & steal them away. it was the people he stole not gorman. he was just a sneaky sob that put together radio staffs from other winning stations.

Anonymous said...

If David Johansen quits the New York Dolls Fumbles could take his place. The resemblance is uncanny. Fumbles could also start a Buster Poindexter tribute band even tho he is anything but hot hot hot. I hope this year's big announcement at the NAB convention is that Fumbles was fired. Sadly, I think we will be forced to put up with that annoying on line Steve Goldstein promo from now until mid Sept. The NAB has turned into one big joke. Had it not been for our devaluing dollar, attendance in Vegas would have been half of what it was. The Europeans picked up the slack and got a goot chuckle on how messed up U.S. media has become.

Anonymous said...

WNCX and WKRK in Cleveland sound terrible. Its time to gut those stations and start over

Anonymous said...

Unlike Clear Channel which has to sell their over caP properties CBS has no reason to put those stations up unless they project some damaging revenue news in the coming months or do they need the cash due to some other investments? Whatever the case CBS will be lucky to get pennies on the dollar for these worthless properties. Even KMOX and KDKA are shells of what they once were and Cleveland performs so poorly they may have to pay someone to take the stations off their books.

Anonymous said...

I agree with CBS Sell them now because it is only going to get worse later especially in some of those CBS markets where they have been struggling. Wait six, nine months and values will drop especially under CBS which cannot handle the load. CBS is doing it the right way. They should own major markets and leave mid size to regional owner/operators. Do what you do best.

Anonymous said...

When is Michael Stanley finally going to retire? He has to be hands down the most boring on air "personality" in Cleveland history

Anonymous said...

KDKA was once an excellent news talk station. Since CBS it has been reduced to rubble. I have not heard KMOX for a long time. I wonder if neglect set in there, too. Thsoe stations are definitely not worth what they once were.

Anonymous said...

You mean St. Dan Mason is giving up his medium market flock? What would the eskimoes say?

Anonymous said...

"KDKA was once an excellent news talk station."

Right, and Ronald Reagan was once the President. So what? He's dead and so is AM radio. Write when you get work.

Anonymous said...

Michael Stanley is still on the air? How long till the usual Michael Stanley Band reunion at Blossom? zzzzzz.

Catholic Layman said...
This comment has been removed by the author.
Rick said...

I think I am going to withhold judgment on this one.

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