Radio: The San Francisco treat

Were you surprised that one of the biggest radio stories of the week got so little play?

An FM station in San Francisco – the fourth largest radio market - that sold for $33.7 million in 2004 was just sold again – this time for the paltry fire sale price of $6.5 million. That’s minus $27 million and change in just under 5 years.

Here’s the quick back story.

Joe Bayliss, who’d been a sales manager for AMFM/Chancellor and later CBS Radio, started Flying Bear Media, with the backing of Alta Communications, Tailwind Capital, and Weston Presidio.

Its first and – fortunately - only purchase was a Hip-Hop formatted class A FM, KBTB, licensed to Alameda, Calif., in the San Francisco market. The seller, the Spanish Broadcasting System, wrapped the deal in October, 2004.

Citing an expensive and expansive music research study, Bayliss changed KBTB to a dance music format with the identity - Energy 92.7 – and aimed its promotion and marketing toward the Bay area's gay and lesbian audience.

Eventually, it got calls to match its moniker – KNGY.

Its debut received a large amount of publicity from both the straight and gay press in San Francisco, including these articles from the Bay Area Reporter and SF Gate.

But KNGY generated neither ratings nor revenue – and, last week, the private equity investors took the pipe and unloaded it at a deep discounted fire sale price to Ed Stolz, who used his own money to make the purchase.

Stolz made news a few years back when he attempted but failed to back out of a $25 million deal with Entercom for his KWOD/Sacramento, Calif.

Maybe this fire sale was given little play because it was an isolated case since it was just a single station trading owners?

Just write it off as three smaller and overextended private equity firms that sold off a station to someone with cash on hand.

But isn’t that how these things always begin?

The small guys are the first to get whacked. Private equity backers take the hit, and get out from under a toxic deal by selling it off to someone with liquidity.

Face facts. What right-minded lender is going to invest in a business that’s rapidly down trending in revenue and influence?

You know there are other private equity firms combing old FCC records in search of those who sold their radio stations became overnight multi-millionaires following deregulation when station prices jumped anywhere from fifteen to over fifty times cash flow. They want to unload these properties now. No reasonable offer refused. No, scratch reasonable. We'll take anything.

These firms have to get radio off their books before one of the Terri Schiavo chains - Citadel or Radio One implode – and that Armageddon will happen sooner than later.

It awaits a thaw in the frozen credit market.

You also know there are those we like to call real broadcasters who are awaiting their reentry. Some may even be able to buy back properties they sold for ten cents on the dollar – maybe less.

They have the best seats in the house. They have an unobstructed view of the future radio industry profit centers.

They're not encumbered by that inside-looking-out tunnel vision that’s inflicted those currently trying to wheel and deal their way out of this pit of hell. Most of those running radio today will be faced with the option of stepping out of the frying pan and into a white-hot fire or a bubbling caldron of grease. Either way, it won’t be a pretty sight.

It’s a fact that every economic boom puts the crooks at the top. Somewhere along the way, radio forgot what its business is. Its business, like any business, is defined by the want the customer satisfies when he or she uses the product or service. Satisfying the customer should be the mission of every business. In radio’s case it was the all-but-forgotten listener. Radio also forgot that its only real profit center is a client whose check hasn’t bounced.

The real broadcasters know that this time around terrestrial will have to be matched in unique ways with on-line – and its true audience measurement will be a boon – not a bust for radio. They see the many profitable opportunities that lie ahead for new local, regional, and national revenue streams.

Then there’s the, pardon the pun, big one – the San Andreas Fault of radio chains - Clear Channel. What do you say? Mid-September? Flunking Ethics 101 will be the least of Bain and Lee’s problems. When that one goes, the domino theory will become reality – and the radio will have its own version of the Santa Ana winds fanning the fire sales that will sweep the over leveraged chains.

Yes, this comedy is ending the way it was destined to. Hope you like your radio well done.
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The Buzzard and the Agora

Radio: Campaign research wanted

Yesterday. That was the day that was.

It started with a candid and rational radio industry article in the Wall Street Journal by media reporter Sarah McBride: Heavy Debt, Fewer Ads Put Radio Firms in a Squeeze.

It didn’t cover any new ground other than updating the investment community that the bad news about radio has only gotten worse.

What did raise a few eyebrows and filled my in box with observations – both negative and positive – was her use of an idiom I’ve been applying for the past year to depict the deterioration in radio station valuation – fire sale.

Though radio’s contribution to the unemployment line was mentioned, the industry’s imprudent investment in HD Radio was not. She covered that folly last week.

It’s time for radio to stop blaming external forces for its calamities. Hauling out the old enemies list on cue - the iPod, Sirius XM, and mobile phones is like calling the turntable, the CD player, the Walkman, and the auto cassette player competition in the seventies through the nineties. Actually, back then there were some radio stations that did consider the latter three competition. The losing ones.

And blaming SiriusXM? I know Mel’s saying it could be up to fifteen years before they’re able to fully integrate the two services – but I’m more concerned with whether they’ll be around fifteen months from now considering their pecuniary instabilities.

The only way to get an edge in any fight is by identifying the fear in your opponent. You can fight and win against someone twice your size with the resolution to win. Lucky sperm clubs and industry connections mean nothing when it’s just you, your opponent, and the gloves are off.

Whenever an industry's business plan reads "buy them now and figure out what to do with them later," it’s doomed to fail. When radio hired an unlimited number of unqualified, untrained sales people and set them loose on the streets - with orders to sell against new media it set itself up to fail. In the process, the industry let its content rot.

Young people aren't listening to the radio at all. No reason to. It doesn't provide their soundtrack. Those in older demos that do listen are listening less.

The radio industry isn't dead. It’s in stasis. It has to ally with new media and rebuild and develop content for survival and future growth.

Raise your hand if you believe Paragon Research’s claim that more people are listening to the radio.

Thought so.

I got the same response when I asked if anyone believed Paragon Research’s claim about the rising popularity of HD Radio, too.

Those that know or have worked with me know my feelings about radio research.

Most of it is crap and easily manipulated to show whatever results you want it to. That does nothing for no one in the long run.

If there is one single problem I can identify with most radio research is that most persist on asking the wrong questions.

Even worse. How many station groups do you know that applied research results from one market to another, under the assumption that they were similar enough to do so?

My favorite? Detroit, Philadelphia? Both the same kind of lunch bucket market. Use Philly’s research.

A couple of stories that should’ve caught the radio industry’s eye – but didn’t – dealt with President-elect Barack Obama’s campaign and post-campaign on-line strategies.

Let me clue you in. Radio has much to learn from Obama’s campaign.

Let’s start with the second story first. On November 5, his team launched Change.gov. - an interactive site, which allows users to learn about Obama’s executive priorities and his upcoming agenda – and to provide their own input and participation through pages named Share Your Story and Share Your Vision.

Could you imagine a radio station inviting its listeners to partake in its programming decisions? Too radical for radio – but not for a new President?

Another feature in Change.gov allows prospective applicants to apply for positions in the Obama Administration.

Scratch that for radio. It’s not hiring, only firing.

It’s been mighty cold in Hell this week. Maybe that’s why the Republicans countered Change.gov with RebuildTheParty.com – as a means to win their self-declared “technology war” against the Democrats through social media.

But here’s the first part of the story. Prior to launching Change.gov, the Obama camp already had a database of three million-plus. Change.gov will only add to it.

Obama did what radio fails to do. He fashioned a social network that can micro-target specific groups on certain issues. They can be logged demographically, regionally, and by rank of importance.

Let’s not forget that radio was the original social network - from nightly requests and dedications on top 40 radio to talk formats. Instead of defining Facebook and MySpace as competition, the radio chains should’ve bought them instead. And what did radio invest in? Millions wasted on HD Radio licensing and conversions.

You must never forget who you are. But somehow radio did.

Just prior to Obama’s acceptance speech, the three-million in his data base received this e-mail:

Friend —

I’m about to head to Grant Park to talk to everyone gathered there, but I wanted to write to you first.

We just made history.

And I don’t want you to forget how we did it.

You made history every single day during this campaign — every day you knocked on doors, made a donation, or talked to your family, friends, and neighbors about why you believe it’s time for change.

I want to thank all of you who gave your time, talent, and passion to this campaign.

We have a lot of work to do to get our country back on track, and I’ll be in touch soon about what comes next.

But I want to be very clear about one thing…

All of this happened because of you.

Thank you,

Barack

Could you envision a radio station personality sending out a client-sponsored e-mail blast before his or her show? I could. Imagine recapping a major concert or event from the previous day or promoting the premiere of a new song that will be premiered later that day? Local talk radio could advance-promote topics.

True, it’s a little challenging to pull off if one is voice-tracked from another market.

Are you as amazed as I am when told by some self-appointed radio specialist how the “average listener” doesn’t know the difference between live and voice-tracked or pre-recorded?

This past Sunday, the op-ed pundits weighed in on how Obama would deal with the realities of Washington. Obviously, the holy war to save our economy is imperative– and most agreed that several campaign promises may have to be back burnered until the main event can be fought.

Last Friday, NPR brought up Obama’s disdain for lobbyists – and how these influential blood sucking two- legged mosquitoes will not be easy to eradicate in Capitol Hill culture. But with Obama’s administration having facility to poll and retrieve opinion from its data base on a myriad of issues, it will present opportunity for his administration to counter lobbyists with tangible citizen opinion and persuade compromise on their behalf. Lobbyists won’t go away – but they’ll now be faced with the prospect of being sprayed with the equivalent of Deep Woods Off.

Conceive of radio having the same user input for its talent, its music, its topics, its promotion and marketing? Think of how it could also sell clients that have soured on radio.

And what could radio learn from this? Lots! But will it? Or must it take a fire sale and new owners that recognize that we’re in the 21st century in order to breathe life back this industry?

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.

Radio: Broom and gloom in Pittsburgh

Did you hear that David “Fumbles” Rehr is still coming to work every morning at the National Association of Broadcasters (NAB)?

Here’s the clown that carpet-bombed the radio and television industry out of any hopes to achieve parity with new media in the twenty-first century – and he’s still allowed in the building?

Come on, Fumbles. This is broadcasting. Capishe?

There are no fare-thee-wells. When you’re out, you’re out.

Just ask the thirty-five former employees of Sheridan Broadcasting’s three radio stations in Pittsburgh.

Unlike Fumbles, who botched nearly every NAB assignment on Capitol Hill and knew his days were numbered, the employees of WAMO AM and FM and WPGR -AM had no such advance warning that last Friday would be their last day.

They were called into a mandatory meeting late that afternoon.

WAMO-FM’s Hip Hop/R&B format was consistently Abritron-rated top ten – and placed eighth in 12+ total audience ratings in the Winter ’09 Arbitron with a 4.5 share – up from a 4.0 in the Fall ’08 survey.

Both WAMO-AM’s Urban AC and WPGR’s gospel formats were syndicated and had ratings lower than whale excrement. WAMO-AM, 1,000 watt day/830 watt night and licensed to Millvale, PA, placed eighteenth with a 1.2 12+ total audience share while WPGR, 5,000 watt day/1 watt night, and licensed to Monroeville, didn’t even show.

The WAMO call letters, which have been in continual use in Pittsburgh for sixty-plus years, signify the city’s three rivers– the Allegheny, Monongahela and Ohio.

At the meeting, employees were told the stations were sold to an unidentified company.

Those that qualified received a severance package.

Employees were asked to clean out their lockers, turn in their keys and ID and were wished well on their future endeavors.

Following the meeting, Sheridan contacted local news media and released information that the station’s new owner, St. Joseph Missions, would change the three stations’ formats, leaving market number twenty-four without a formats serving the Pittsburgh African-American community. Arbitron estimates Pittsburgh's African-American population at 8.2 percent.

No information was provided nor could be found on-line regarding the identity or background of St. Joseph’s Missions, which purchased the three stations for the such-a-deal fire sale price of $8.9 million.

Rather than answer questions about the sale, Sheridan hired a spokesperson, Russell Bynum of the Pittsburgh-based Bynum Marketing and Communications, who referred to St. Joseph Missions as "religious-oriented.”

"This was a difficult decision for the owners, but it was a necessary situation for them," he added. "When we look at Sheridan, we are looking at a strong organization that has had to make these changes to adapt to the movement and the changes in the marketplace."

Translation: It takes money to make money but Sheridan was obviously not making enough of it.
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Sherdian Broadcasting, which is headquartered in Pittsburgh, is the principal owner of the American Urban Radio Networks group, the only African-American network group in the U.S. American Urban runs three networks, which they claim reach an estimated 20 million African-American radio listeners. The company still owns radio stations in Atlanta, Birmingham, and Buffalo – at least for the moment.

Sheridan Broadcasting owner Ron Davenport Sr. bought WAMO-FM and AM in 1973, His son, Ron Davenport Jr., is the general manager. The company purchased WPGR-AM in 2001.

"This is a business decision," he said. "That's the reality of the marketplace. The marketplace determines how businesses go, and industries have to change with the times."

Fear of the future – specifically, the insurmountable obstacles following NAB’s botched negotiation with the RIAA’s SoundExchange on streaming audio royalties and the forthcoming almost-certain-to-happen performance royalty fee were the unofficial reasons for Sheridan’s decision to pull out of station ownership. Arbitron’s people meter ratings and their effect on urban formats was also rumored to be a deciding factor.

Regarding its decision to abandon the African-American radio audience in a market it’s headquartered in, Bynum claimed that Sheridan tried to find minority buyers for the Pittsburgh stations but – no surprise here - none were able to secure financing.

He added, "I believe someone will fill the void."

That’s more than one can say about Fumbles, whose continued relationship with the NAB should just be voided.
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vintage video aircheck from 1985

Radio: Of schadenfreude and obsolescence

And so it comes to pass.

The radio industry as we’ve known it for the past decade is a bloated mess. Wall Street doesn’t want it. No one wants it – at least in its current state.

The word is schadenfreude. It’s the art of taking pleasure in the downfall of others, especially when they’re sanctimonious carpetbaggers who have it coming to them.

Is it my imagination or is there a marked increase in schadenfreude ostensibly directed at the radio industry these days?

By the way, did I mention that I’m reading Alec Foege’s book on Clear Channel, Right of the Dial. I recommend it.

There was a good piece in Sunday’s New York Times Business section on Disney and Pixar and how well that merger is playing out.

In the same time frame that Disney CEO Robert Iger acquired Pixar, he also unloaded its ABC Radio chain to Citadel. Disney successfully rid itself of the old at the same time he was bringing in the new.

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Pixar is Steve Jobs. Farid Suleman is Citadel. Whose wagon would you prefer being hitched up to?

It’s safe to say that Citadel’s acquisition of ABC Radio is, at least for the foreseeable future, radio’s last bad, bad, incredibly bad deal.

Disney, under Iger, couldn’t hide his disgust at the mess ABC Radio had become.

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A country club disguised as a radio chain.

We hear a lot about supply and demand.

There’s a glut of radio stations on the block – but who’s buying?

If everyone’s selling and no one’s buying, prices drop.

The Clear Channel owned Inside Radio referred to the radio business on Monday as being on a “death spiral.”

And some of you were upset with me for using the words fire sale?

And some of you were upset with me for putting the word devalue in print?

Believe me. Lenders are already bundling and reselling their radio debt at Filene’s Basement closeout prices. 50% off.

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And that’s before the automatic markdowns come into play.

As more owners default on their loans, more stations will go on the block and as more stations go on the block…you know the drill.

Clear Channel’s latest 8-K form filing to the SEC mentions that 173 of their stations are “no longer being marketed for sale.” Crisis over? Hardly.

Now, for their next trick. Dig deeper and you learn of another 275 “non-core stations” (a fancy way of saying “we don’t want them anymore”) that they’re trying to dump. When Clear Channel didn’t go private as planned, it was forced to reclassify dozens of stations as “continuing operations” instead of “discontinued operations.” (I don’t make this stuff up) Translation: those formerly put-up-for-adoption stations are now back in the family fold – for now.

Eventually, some of their stations will fall into the ownership of those that actually know how to run a radio station in the twenty-first century.

Remember when Clear Channel was one big happy family?

That is, if you were part of the family. The Mays family.

Now, that family’s as dysfunctional as their stations.

The father, the sons, and their holy roast.

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When you don't want to get up and change the record

Radio: Stay of execution?

Pick your own analogy.

Stay of execution?

Persistent vegetative state?

Does it really make a difference?

Some of the best-known radio chains in the U.S. are the equivalent of the 1987 Mobro incident.

Remember the Mobro? It was the name of that renowned New York garbage scow that was turned away by every state along the eastern seaboard and three other countries. No one wanted their trash.

We have radio chains defaulting – or close to it –but the banks don’t want to take possession.

Since there’s no credit to be found there are no buyers to be had – even at fire sale prices – both sides are still stuck in deals they can’t get out of.

Take Citadel.

Disney sold their ABC Radio group to them the same week

they bought Pixar from Steve Jobs in an unrelated pair of deals, which could be best described as out with the old and in with the new.

ABC Radio was the country club of radio chains. At ABC, you didn’t have to work hard. You hardly worked.

History will record it as one of the worst radio deals ever concocted.

You can find the gory details here. Put another way – this one was about Disney selling their real “Mickey Mouse operation.”

Citadel renegotiated its deal with creditors twice this past year and landed a waiver for its leverage requirements through the end of this year. On August 15^th, Citadel missed a $2 million interest payment on its subordinated debt. It had previously renegotiated its deal with creditors twice over the past year.

Its next payment is due next Tuesday, September 15. The company has $27.8 million in cash and south of $2 billion in debt. Can you spell default? Remember this date: January 10, 2010. You know how time flies when you’re on the run. Tick, tick, tick.

The economy only adds to radio’s problems, which stem from overpaying for properties back in the immediate post-radio deregulation days when the battle cry was “buy ‘em now and figure out what to do with ‘em later.”

That U.S. media ad budgets fell by $10 billion-plus in the first six months of 2009 just added to radio’s misery. The Financial Times breaks it out here and they didn’t even bother to mention radio.

I spend a fair amount of time with ad people. Radio clients – past and present – noted a decrease in effectiveness over the past decade – some of it attributed to too many spots in a cluster while others feel radio listening is in a steady decline; therefore, less effective. Eventually, the ad market will bounce bank. When it does will radio be part of their plan?

I carry the curse of being a magnet for opinions and discussion about radio. It’s nearly a given that when I’m introduced to others in a social setting, the conversation will tilt toward radio as in “what ever happened to…”

That leaves me to explain why something that’s free and so readily accessible is used by so few.

Then there are always a couple of people in the crowd that are proud to say that their subscriptions to satellite radio are worth it. And, these days, at least one or two people will whip out their smart phones to turn me on to their favorite on-line Internet radio stations (which I thoroughly enjoy). It's the new "what's on your iPod?"

Clear Channel corporate complain that they’re the lightning rod for everything that went wrong with radio, post-deregulations. But they deserve every bolt thrown their way. What Lowry and his silver spooned children didn’t realize was that deregulation would lead them into a death march, forcing everyone to lower rates, lower revenue, lower payroll, have fewer employees do more and find themselves in a downward spiral where the

only solution to death is to keep downsizing.

Last week the Wall Street Journal did another throwaway piece on the state of the radio industry. Did you see the headline? Radio Firms Beg Lenders for Mercy.

Is that the same kind of mercy Cumulus shows its staff? Earlier this year, in the court of the Crimson King, CEO Lew Dickey informed his managers that they’d be penalized with a 5 percent salary cut if they failed to reach their goal. One manager in a particularly difficult market hit 99.59 percent of his second quarter revenue goal – but because he fell short by 0.41 percent, he got the

5 percent slash.

Since Lew (how many times did he tell you he went to Harvard?) claimed on more than one

occasion that he subscribes to the ethic of reciprocity (that’s the Golden Rule for those of you not worthy of his “smartest man in the room” title), don't you feel that Cumulus should be treated with the same respect the next time their troubled finances come up for review with their lenders? Do unto others, as you wold have them do unto you. Right?

America’s stuck in neutral and will continue to be until credit begins flowing again – albeit cautiously. Whatever the case, radio chains are ready to unload properties at fire sale prices but no one - including those who have the wherewithal to reinvent the medium, are liquid enough to go on a buying spree.

Until then, we’ll have to put up with borrowers and lenders acting like a last-place baseball team with the pitchers blaming the hitters and the hitters blaming the pitchers.

You know that game some morning drive shows play – Dead or Alive? Contestants are told the name of a celebrity and they have to guess whether they’re living or dead.

I think they’ll be a new version of that game dealing with radio groups.

Citadel…dead or alive? What about Cumulus? Emmis? CBS?

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How the Rock Hall was won

Radio: Wall Street Shuffle

What’s the big deal?

Radio stocks were plummeting long before fears of a recession. At last the radio industry is first in something again – first to be worst.

A couple of weeks back I listed devalued radio stocks. It’s only gotten worse.

That 90 percent-plus club keeps growing: Spanish Broadcasting, Radio One, Emmis, Citadel, Regent. 90-percent. That’s the value they’ve lost.

Let’s take a quick trip to Los Angeles – the number one radio market in America. Even in the worst of times there were always buyers awaiting an opportunity to pick up an FM or two or three in that market. But that was yesterday.

Supply and demand? It’s not even a buyer’s market. No one’s buying.

You have two major chains – Radio One and Emmis – and neither one’s getting as much as a nibble for the troubled FM properties they’re trying to unload.
So do you take them off the market and try to make another go of ‘em with new formats, which you can't really afford to change or market – or do you hang a sign on ‘em reading, “New! Lower Price?” That’s the one you put up before “Priced to sell” and “Fire sale.”

This is the first time I’ve heard excuses being made for the Los Angeles radio market. My favorite? There are too many stations in that city. That used to be the last-ditch line you’d use to define Rust Belt markets.

Could it be that there are no greater fools remaining - as in there are always greater fools willing to pay even more than you did for a property you paid too much for?

How about those leveraged buyouts? Will BainCapital and Thomas H. Lee determine that they’re better off paying the $500 million break-up fee to back out of the Clear Channel LBO deal? Breaking up may not be that hard to do.

Remember, they’re doing it for the children. Lowry’s children.

Here’s the choice. Stay the course while Clear Channel continues to plummet? The deal, which was supposed to close last year, is now targeted for February or March. What’ll their value be by then? Will Bain and Lee’s backing banks risk it or cut their losses. I’d say flip a coin except that it’s a heads I win, tales you lose deal. There are few things worse than to have a vested interest in a dysfunctional corporation.

Bain/Lee offered $39.30. As I write this Clear Channel’s down to $32.14. Ask yourself - what would (BainCapital founder) Mitt Romney do?

It’s a shame when facts keep getting in the way.

I got an advance on what the number one song will be on Clear Channel’s corporate playlist. It’s a remake of Prince’s "1999." They changed the lyrics to “…we’re gonna party like its 1929.”

And did you hear the one about the Cumulus and its go-private deal? The gelded bulls at Merril-Lynch lost $8.6 billion and have problems far more pressing than a radio deal gone sour – especially when those that set up the deal are no longer with the company. We’re talking – what - a five dollar drop since the deal was set? The deal's clouding up.

There’s buyer’s remorse and there’s buyer’s morose. With Cumulus it’s one and the same.
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I understand the bad blood started when everyone in the room claimed to have the superior intellect.

And if you need proof that there’s a glut of too many radio stations – drop by the FCC offices where they held an auction for 14 AM radio stations in various markets and no one showed.

We already know of a few deals where clusters in smaller markets sold for less than their original purchase price. There’ll be more.

We also know that there are creative, resourceful managers and talent waiting to get back in when the proper pragmatic deals are done. Other smart managers and talent that still have jobs are laying low and pretending to being good soldiers as they await the inevitable.

When radio is restored it’ll be different and will require the skills of linking old media with new – and that means far more than just a stream encircled by lowest common denominator features.
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Years ago Bob Sillerman told me that thriving businesses have fun, make money, and having fun making money. He’s right.

You know the problem is the crisis stage when pro-radio trades begin expressing commiseration for all involved and offer optimism that a judicious resolution to the calamity will be found.

Just and rational. Those words haven’t been uttered in radio since the Telecom Bill was passed in 1996.

The math is simple. The values have to be realistic for radio to be profitable again.

Going down?

Radio: The song remains the same

You haven’t heard from me because there’s been little to write about.

I know. There was Citadel and NextMedia. Those were inevitable.

Citadel. It’s the tale of the bean counter that couldn’t count his own beans. There are reasons why proficient number twos make terrible number ones. Number twos believe in cutting and firing their way to a victory they never achieve.

That’s why other radio chains utilizing the equivalent philosophies will be condemned to same fate.

Are they even worth writing about when we already know the end of the story?

Then there’s NextMedia.

Its business plan was to buy up smaller market stations and sell them to greater fools for more than they paid for them. One problem. They paid some hefty multiples to acquire these stations.

They initially benefited from a bounty of takers but the company didn’t heed Kenny Rogers: Know when to hold them, know when to fold them.

There was that moment in time when they should’ve sold while the greater fools were still buying- but exit strategy disagreements ensued - and Next Media ended up holding on to yesterday.

There’s more.

Lending institutions continue to hold on to their bad assets and allow those that got them into this jam to continue running their empty shell companies.

What was that quote from Citadel’s CEO and architect of doom Farid Suleman?

“Business will continue as usual.”

I keep saying it over and over. I couldn’t make this stuff up if I tried.

That means Citadel, and the other major radio chains, will continue to downsize and devalue their programming, promotion, and marketing. Instead of investing in content, they’ll pick up long-in-the-tooth Donnie Osmond or some other syndication off the bird. Live and local? Get real. The stink of human costs money. Promotion and marketing? That’s a needless and costly expense.

It wasn’t all that long ago, actually, that the only stations that carried nets and syndication in their most important dayparts were small market stations.

Maybe Farid was duped into believing that Donnie can host the 21st century version of Don McNeill's Breakfast Club.

I’ll bet Suleman truly believes that Citadel could survive as a content provider for news, sports, and programming.

It gets better. The other radio chains teetering on bankruptcy believe their eventual bankruptcies will be considered as a cost of doing business.

What about real broadcasters? They’re exercising great patience. Two words: Fire sale.