Tuesday, May 12, 2009

Radio: Give us 22 minutes and we'll give you commercials


Come on, admit it.

You can’t help but chuckle every time someone from Clear Channel opens his or her mouth.

Ever since Thomas H. Lee co-president Scott Sperling sputtered, stuttered and fell all over himself a few weeks back on CNBC when asked the question, “Is the Clear Channel deal going to blow up?” it’s been one misstep after another at the Double C Ranch.

Another one? John Hogan. Forget about the swine flu crossing the border. Hogan’s showing severe symptoms of foot and mouth disease. He’s been planting his foot in his mouth every time he opens it.

Local? Live? Is he for real?

Back to Hogie in a moment.

Let’s start with silver spoon CFO Randall Mays and his just-released memo to his employees.

“We’ve had some questions relating to speculation about the health of our business,” he wrote. “Any such speculation is just that.”

Master Randy was countering a New York Times article on Clear Channel in their business section a few weeks back. It didn’t speculate on whether Clear Channel was in financial breakdown. It did speculate on the time frame of when the company will collapse.

So Randy, inquiring minds want to know if they do math differently in San Antonio. You’re saying that total revenues are down 23 percent in the first quarter – and you projected that in your Q1 forecast? That’s a question, Randy, because I don’t recall Clear Channel issuing such a statement.

What we have here is the sibling adaptation of good cop, bad cop. CFO Master Randy plays good brother while CEO Mark is the bad-ass.

Master Randy thanked his employees in his memo, adding, “The most important thing we can all do is turn our full attention to improving our competitive position and continuing to generate revenues. The entire management team is doing the same.”

The same….what?

Come on down, silver spoon CEO Mark Mays. What say you?

“Our companies (radio and outdoor) performed well on a relative basis in a difficult economic environment and weakened ad market,” sayeth the Markster. “We commend our employees for their ongoing efforts to engage their audiences, customers and communities through our strong brands, high-impact mediums, and great portfolio of properties.”

I know, I know. Call for the hip boots.

True, Markie didn’t identify what his strong brands, high-impact mediums, and great portfolio of properties are. Do any of us have a clue? No.

Strong brands? Does he mean Rush? Does he mean Ryan?

High impact mediums? HD Radio? Their soft-core porn rock radio web sites?

Great portfolio of properties? You mean your 70-odd radio stations in cash-strapped Ohio?

We do know that when Markie thanked his employees, he was thanking close to 2,500 fewer of them this year over last.

I’d like to tell the silver spoon brothers that every time they downsize Clear Channel they’re firing their listeners.

Now, put your hands together and let’s give a big Texas style welcome to Mr. Live and Local – our voice is Premium Choice – Clear Channel’s radio CEO John Hogan.

And what has Hogie been up to for the last couple of weeks?

Since introducing his vocal-not-local programming initiative for Clear Channel’s radio group, John Hogan, man of slogan, has increased the spot load at his radio stations to a minimum 22 units per hour, which must run in two spot breaks, twice per hour.  Not three.  Two.

Not counted in those 22 units per hour are station promos, contesting, unpaid HD Radio promos, unpaid “Radio Heard Here” announcements, and those twelve “local – Clear Channel cares about the community (fill in market name here)” public service announcements that Hogan promised Capitol Hill he’d carry.

It also doesn’t include sponsored news, weather, traffic reports, or studio sponsorships (You know – the “Joe’s Hardware and Tackle” studio mentions) commitments.

That means Clear Channel’s music format stations will not be playing music for over one-third of every hour.

Let me put it another way. Hogie’s swapped less is more for more is less.

Imagine being the client whose spot is the eighth, ninth, tenth, or eleventh in the cluster? If a spot runs and no one hears it, should you really get charged for it?

Like everything else at Clear Channel, Hogie would have you believe that the decision to run 22 spots an hour in two breaks is up to the “local” manager and program directors. That may be true. Just don’t expect managers and PDs to continue under the employ of Clear Channel if they dare to disagree with Hogie.

There’s another provision. Say, Hogie calls and tells managers to drop their draws and take whatever dollars they can to fill avails– and they get enough clients take ‘em up on a dollar-a-holler offer that stations end up with too many spots and not enough inventory.

What does a good local manager decide to do  if he wants to stay employed?

Run them. See, it’s a minimum 22 spots per hour. There is no maximum.

That also adds up to more savings with Clear Channel voice-track talent. Fewer live breaks means it shouldn’t take as long to voice-track dayparts.

Or maybe this is Hogie’s way to save more money? If over a third of every hour is dedicated to non-music elements on his music format stations that means the station will be playing fewer songs per hour, which translates to lower-than-expected performance royalty fee payments to the labels.

Or maybe not.

You see, Radio & Records unceremoniously dropped seventeen Clear Channel stations from reporting status since their music is no longer programmed locally. Expect more to follow as R&R and other trades identify even more stations, which are programmed from San Antonio –not their city of license. That means labels will no longer service or call on those radio stations. As far as the labels are concerned, except for paying their performance royalty fees, those stations do not exist.

The same holds true for those that used to listen to those stations.

William Burroughs wrote in Naked Lunch of a frozen moment – a flash in time when everyone sees what is on the end of every fork. John Hogan, you are so close to yours.
----

143 comments:

Anonymous said...

If/when CCU fails, would the HD Radio jammers be pulled off the air, since all they do is cost annual royalty fees to those scammers at iBiquity, and double electrical bills. Maybe, Bob Struble could chime in here for once? Also, it looks like the RIAA has a good chance at passing the over-the-air royalties tomorrow, which would further drive up the expense of each HD Radio channel, with no possible ROI.

Anonymous said...

Here is my prediction. You will be able to buy Clear Channel in top 20 markets for $5/spot. John Hogan will eliminate supply and demand. The bad news is that this will play havoc on other chains which will have to drop their rates even further to compete.

How much is radio worth? $110/hour. You will make more money as a high end mechanic.

Anonymous said...

Hey! This is GREAT SHIT! Even more boner pill ads than before! And with a little bit more luck, they'll run Roy Masters on ALL Clear Channel Outlets! Who says radio's dyin'?

Terry Purvis said...

At a station I worked for in South Africa, some years ago, we dropped the advertising minutes per hour from 12 to 6 and the revenue went up by 30%. The reasons why that was are very simple to understand, even today. Yet, it seems, others cannot.

Anonymous said...

At economic challenging times like these successful companies find ways to innovate and utilize the talents of their staff. If you believe in your future you make full use of this opportunity. Clear Channel takes the opposite approach. We add spots, we cut sales people to sell the time. We need to produce creative spots so they will be effective for our clients and we can show the reach, frequency and draw of radio so we fire our creative production directors and leave the copywriting/ creative up to the sales people. At a time when people are staying closer to home and relearning the surroundings Clear Channel eliminates local programming. John Hogan, did you ever stop to think that you are going in the wrong direction?

Anonymous said...

Every time someone from Clear Channel opens their mouth something absolutely absurd comes out of it.

This is a company doomed to fail.

Bain and Lee cannot run radio like retail outlet or a factory. It works on different principles.

Wake me up when the fire sales begin.

Anonymous said...

I cannot wait to have their hound dog faced sales person call on me so I can "relay" this latest information to them on why I will not buy time on their stations anymore. A friend who also stopped advertising with them said his sales guy promised a call from the station manager who would "straighten things out". He never called.

Clear Channel, you do not have a clue how to run your own business. Why would I buy a "national" station?

Anonymous said...

John--100% correct. Now, will other operators take advantage of the crap that Clear Channel has on the air to (a) market against the barrage of commercials and (b) actually put stronger programming on the air? If you said, "yes," then you probably expect a huge swine flu outbreak from the attack of the flying pigs.

Anonymous said...

Dan Mason and Lew Dickey are already taking notes. Monkey see, monkey do. Mason is the smartest guy because he can hide behind Moonves. If you tally up Mason firings he is right up there with John Hogan and Lew Dickey. Mason is an assassin. He shoots, he kills and tells no one where Dickey and Hogan love to brag of the kill. Clear Channel is still the leader. Whatever they do, the others will follow. It will also follow all three companies to a premature death. I'm banking on the fire sales, too.

Anonymous said...

This is going to get interesting. But I don't see a fire sale coming. I do see an accounting lesson here, though.

In CC's case, Bain Lee is reasonably convinced that if they pass the hat for more investors, they'll not only come up empty they'll be lucky to get the hat back. That's the bad news. The good news is that the banks that are on the hook to CC are standing behind their lines of credit. They realize that if they pull the line of credit, the loans don't perform and they get an even bigger problem. But how far will the lines stretch?

With a hedge of a billion or so available, the company is in a flat out race to keep breathing until the economic recovery. The game plan: The economy picks up in the fourth quarter, delivering a slight X-mas ad bump and the company squeezes over the hump and slowly starts recovering mid-2010.

On paper, the plan can work. Barely. Oh, it may take a few more layoffs, but should be doable with one big question mark. The X-factor is whether advertisers will come back to radio if they have a few bucks to part with in the fall. My guess is that they won't. So then what? Fire sale time! Not so fast.

Most readers here probably noticed what happened to Nassau Broadcasting. They turned over the keys to the operation to its lender Goldman Sachs the other day. All parties agreed that there was no way for Nassau to pay its debt, and no way to restructure that wouldn't require a huge hit to Goldman. A bankruptcy would have resolved matters and determined the fair price of the stations. But instead, Goldman Sachs took the stations. Why? Does Goldman Sachs believe Nassau stations will return to profitability? Fat chance. The answer is that mark to market accounting was repealed earlier this year. The bank can now keep these assets on their books without any harm because they can set the value at whatever they want.

In a bankruptcy, Goldman might get 30 cents on the dollar. But as long as it carries the properties on the books, the bank hasn't lost a cent. It could theoretically even claim the stations are appreciating. Down the road, of course, the loss will eventually have to be taken. But for now, when the banks are desperately seeking new investors, it's far better to let it wither on the books than take the hit and sell. When the time comes to hand over the keys to Citi, Deutsche, RBS, and the rest, the equation will be this: The banks can pay out chump change to keep stations operating on autopilot for a couple years until the banks can handle the hit to the books. Or, sell the stations for chump change and take a $20 billion + hit immediately.

Bottom line: zombie banks equal zombie radio stations. By the time these stations and their licenses are sold, broadcast will be well and truly dead.

Anonymous said...

The sad thing about the entire Clear Channel matter is that too many OTHER companies have followed suit. Apparently radio executives are unable to think for themselves. They have to play another round of follow the leader...right off the cliff.
John Hogan, the Mays brothers, the Dickeys and all don't care about radio. All they care about is opening their golden parachutes before the radio plane hits the ground. It should happen just about anytime now. HD by the way = Highly Dead.

Anonymous said...

I had to read this twice. I thought it was a joke or a parody at first. Then I realized it wasn't because I work there (tho not for much longer) and you are so right about this disfunctional company from the top down. From Sperling to the Mays Brothers to John Hogan - we have the most disorganized, futile group ever assembled at a broadcast organization. The bigger they are, the harder they fall. I hope the other silver spooner Lew Dickey takes a moment from looking in the mirror and saying "Mirror, mirror on the wall. Who is the smartest of them all?" to copy the latest Clear Channel news and info and add them to his playbook. The same goes for the M&M twins - Mason and Moonves. The sooner these guys go down, the better it will be for the rest of us.

Anonymous said...

To the poster regarding not seeing the fire sale coming.

I hope your'e wrong. I do not disagree with anything you say. It may come down to the banks and others realizing they can no longer do 'business as usual'.

A large number of AMs and 8090 FMs will sign off for good. There are too many of them. Many companies failed to maintain their AM stations and are paying the price now with a diminished signal.

Other AM owners misread where the population was moving to and these stations lost audience to those now out of the pattern. Still more lost audience because of programming and marketing neglect.

The 8090s -Some were smart moves, most were not.

I again say that I agree with you and only hope there is a change of thinking and enough people within the industry and lending institutions that can explore the ways and means to revitalize what is now a dying industry.

Anonymous said...

When will Bain and Lee realize that their brain trust at Clear Channel has neither brains nor trust by anyone to save that hulk of disasterous programming and marketing? Scott Sperling, cut your losses. I can't believe you know Hogan and his scheme team and don't see the obvious.

Anonymous said...

Where are you getting this 22 minutes of commercials information? Is this in print somewhere because we compete against a large cluster of CCU stations and none of them are anywhere near 22 minutes an hour. Trust me, we'd party like it's 1999 if that were the case, or is this made up speculation combined with wishful thinking?

Anonymous said...

Yeah if anyone has a link to an article that talks about this 22 minute deal please post it.....our management team would love to know if this is true.

Anonymous said...

Del Colliano covered this on his site, too. I think Del Colliano had some of this info before Gorman. They probably got it at the same time but Gorman only does his blog updates once or twice a week and DelColliano does his daily.

From my understanding this is a brand new rule that has not been put into operation yet but will be shortly. The orders from above......

We heard it's coming. I appreciate Gorman & Del Colliano's updates. It's the only way we find out what is really going on here and neither one has been wrong yet.

Anonymous said...

you will know when it is official. when your cc ae comes in to pitch you & drops his trousers & bends over even before he says hello you will know that the 22 minutes is policy. i can't wait to program against it.

Anonymous said...

22 units could mean a lot less than 22 minutes but when you add in the other promos, sponsorships & so forth it could mean even more than 22 minutes an hour will not be used for programming. What are they drinking, smoking, shooting in San Antonio these days? Whatever it is, keep it there.

Anonymous said...

We had 18 minutes an hour plus incidentals when I was doing old top 40 on AM. We ran a spot after every song, almost. The old Group W stations like BZ, WOWO, WINS and KDKA ran two spots between each song in some hours. Different time, different costs. We had engineers up the ying yang and could not run our own boards back then. It did not sound bad in that context. Spot clusters were stolen from beautiful music and album rock FMs in the late sixties. If Clear Channel must run 22 minutes an hour they should give up running them in clusters.

Anonymous said...

Jesus Christ is Hogan Ugly!

Anonymous said...

Stations de-listed from R&R will still get record service -- they'll just download the track from the main Clear Channel server. And who gives a shit about record labels anymore? When was the last time a record label spent a dime on a radio station?

Anonymous said...

Ya gotta admit - Hogan's puss truly deserves to be the FACE of Clear Channel!

Anonymous said...

I think the reason why labels won't spend a dime on stations that do not support them is self evident. There are labels mostly indie labels that still support the few formats that play them like AAA.

Randy Michaels killed the relationship between radio and records when he started charging the labels thousands of dollars to meet with PDs and to get music played.

The music at most formats got out of whack with reality and what most wanted to hear that radio lost its ability to be a trend setter.

The labels are no more right than radio and deserve to suffer a similar fate.

Anonymous said...

DId anyone from Clear Channel ever take a business course? What they did goes opposite of what you do in a situation like they are in. Is John Hogan really that dense? The competition will be circling that chain like hungry hyenas. It is all over but the funeral for Clear Channel now.

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