Friday, March 28, 2008

Radio: Clear Channel's Wall Street shuffle

We now join the telephone conversation in progress…

“After all the things our father did for you and your family...,” whines Mark in a high pitched voice that could cause pain to a dog’s ears.

“We swayed…er…positioned our newscasts in your favor, Mr. President. We even banned the Dixie Chicks and Bruce Springsteen when they dared to insult your vision for America.”

“Sorry, Mark. Believe me. I feel your pain. I have eight years collapsing before me. You have only Clear Channel. Have your dad call my dad. Maybe he can help.”

Translation: Go away, kid. You bother me.

They’re calling in all the chits at the San Antonio headquarters of Clear Channel.

We can only imagine.

“Hi this is Mark” (silence) “Mark Mays” (silence) “Please don’t make me say it…Mark Mays, President and CEO of Clear Channel.” (click!)

You’re Mark Mays and your new wake up time is 3 AM.

Yesterday morning, you orchestrated the press release blast, which told how your family friend (that part omitted) and Texas Judge John Gabriel issued a temporary restraining order against the banks that were backing out of your buyout deal with BainCapital and Thomas H. Lee. The order read that the banks involved would have to complete the deal based on terms consistent with their commitment letter.

“Unusual.” That’s what Lawrence A. Hamermesh, a professor of corporate law at Windener University of Law in Delaware called Judge Gabriel’s action. As a rule, a judge doesn’t issue a restraining order prior to holding a hearing to discuss a case.

So we’re sitting here in limbo until Tuesday, April 8 – the date of a hearing to determine whether this temporary restraining order should be graduated to a temporary injunction.

Translation: Only the lawyers are getting rich on this deal.

You’re Mark Mays and how about the call you got while working damage control.

“Mark, today’s Wall Street Journal. Front page. Above the fold: Clear Channel Warns Its Deal May Not Close.

That’s the front page of the most-read front page in the world. It’s the first headline that most decision makers read in the morning.

My favorite line in today's Journal: If it doesn't go private, Clear Channel will be relying on disgruntled employees to help drive growth in a tough economic climate.

Don’t fret over that front page story, Mark. By Monday, most will be wrapping their garbage in it.

What was that famous line your father was fond of?

"We are not in the business of providing news and information; we’re simply in the business of selling our customers' products."

You weren’t even that.

Don’t think that mentioning your outdoor business instead of radio makes Clear Channel look better. How many unsold boards are you stuck with right now? And what do your projections look like? Thought so.

Even if you manage to pull off a miracle and call in enough chits and peddle enough influence to get you out of this mess, the name Clear Channel will always bring to mind tarnished goods and damaged merchandise.

From Barneys to Big Lots.

How does it feel to want?

It’s like that depression era song by Bessie Smith that was number one seventy-eight years ago today: "Nobody knows you when you’re down and out.”

Remember those good ol’ days when you were buying up everything – whether you needed it or not? There was Katz, Premiere, AgriBroadcast, FoxSports, Inside Radio, Duncan, program and marketing consultants, concert promoters, and venues – and the list goes on. You were forced to sell off the concert business when you tanked it and you stop publishing Duncan when radio billing started going south.

Bet you never thought you’d read the word collapse in the same sentence as Clear Channel back in the days when you convinced yourself the party would never end.

You were what Larry Flynt was in the seventies.

Peter Guber and Jon Peters in the eighties.

Dieter Zetsche in the nineties.

Gerald Levin in 2000.

Buy it now and figure out what to do with it later.

Sure, you got conned by one of the best in the business…but now Randy’s hanging out with Sam Zell and calling the trades to spread rumors that he and Sam may pick through the pieces of Clear Channel just to bust your balls.

And you can’t blame him for taking advantage of you.

This Clear Channel collapse isn’t all bad news. In the weeks and months to come as Clear Channel properties are parted out as salvage for fair market price to smaller broadcast companies – emphasis on broadcast – those whose creativity has been stifled for the past decade – or those that were unwillingly forced out of broadcasting - will find new opportunities to restructure this industry.

In the end, Mark, you were just another empty tyrant in charge of an empire of straw men.

And the one's that got you where you are today are packing their golden parachutes as you read this.

You should’ve listened to the lyrics of that country song by your fellow Texan Kenny Rogers: "You got to know when to hold ‘em, know when to fold ‘em,/ Know when to walk away and know when to run /You never count your money when you’re sittin’ at the table /There’ll be time enough for countin’ when the dealin’s done."

Thursday, March 27, 2008

Radio: Ponzi's back!

In 1918, we had Charles Ponzi.
Ninety years later, we have Peter “Sgt. Bilk-o” Ferrara.
From Ponzi to HD Radio.
Ibiquity has the license and collects the fees. The HD Radio Alliance, which Sgt. Bilk-o runs, does the fast-talkin’, slow walkin’ hype. Right?
Like the other schemes, the HD Radio edition begins with a hard-sell sales pitch to hook you in and establish the product. Right?
How about promoting and marketing HD Radio to the masses? Don’t worry. The HD Radio Alliance will do that for you. All you have to do is give up a large chunk of your inventory to run a hefty schedule of their creative - for free! Right?

To get involved in HD Radio, a company has to invest in, buy the products, and pay licensing fees to become a participant. Right?
When someone’s invested in the operation in addition to buying the services, you’ve got a lock. Right?
An average HD Radio package for a radio station runs between $100,000 and $250,000. Right?
HD Radio is run by a monopoly – Ibiquity. To use their system - the only one approved by the FCC back when Michael "where's my taste?" Powell was its chairman - you have to pay an annual license fee. Its cost is determined by – you guessed it – Ibiquity. Right?
Selected radio consultants, writers, and media organization heads are hired as carporegimes who act like press flacks and indie promoters to back Ibiquity and the HD Radio Alliance. Right?
On certain planned occasions, these hired guns will intentionally disagree with the HD Radio Alliance and Ibiquity on their promotion and marketing creative. That way you don’t think of them being on their payroll. Right? Clever but transparent. Right?
Tech problems? Chances are your engineers told you about them up front – before the install. And those HD Radio salespeople jokingly whispered in your ear how all engineers overreact toward new technology. They even added a “how many engineers does it take…” joke to reassure the decision makers that “all engineers are like that.” Right?
And the HD Radio Alliance even went one step further by putting a few of the more influential engineers – those that love to read their expert names in the trades - on the payroll to help preach the word. Right?

I’ll leave HD Radio’s tech disasters for engineers to discuss. I’ll just say one word. Hash. Right?
I've heard you can make a pretty good buck if you drum up positive HD radio press. Right?

Here's an example. Dress a bunch of radio station interns in Devo outfits and send them through the barren streets of downtown Detroit passing out flyers that read “have you heard HD Radio lately?” Though most of them are still lying in the gutters in and around the safe haven of Greektown, the Coot, who put on that dog and pony show, brought along his digital camera to shoot the shot that appeared in a dozen trades. Right?

You’ve got to give credit where credit is due and the Coot deserves his for being real good at what he does. It’s like mayor of his native Detroit. He’s got the combination of Third World-style corruption and incompetence down. He makes Sgt. Bilk-o a happy man. Right?
Bilk-o really, really loves ya, Cootie, baby! Right?
HD Radio has to be one of the more bizarre schemes of the twenty-first century. Make all the money while radio does all the cash payments and heavy lifting. Right?
Ferrara’s a smart guy. He runs the HD Radio Alliance joint from behind the screw factory aka the Clear Channel compound in San Antonio. You have to wonder who’s zoomin’ who in that building this morning. Right?
You already know who’s zoomin’ who outside the building. Right? Right.

Wednesday, March 26, 2008

Radio: Fear Channel

Don't say I didn't tell you so.

How pathetic.

We’re supposed to feel the pain for what appears to be the imminent collapse of the Clear Channel-Bain/Lee deal?

Bain and Lee want to close. The banks don’t and for good reason. How do you sell a loan with the name Clear Channel written all over it?

We’re supposed to feel sorry for the poor Mays family because they claim that if this deal dies it will force them to cut donations to their foundations and favorite charities?
Then there's the staggering price of jet fuel! Do you know how much it cost that family to keep their private planes flying?

We’re supposed to fear their threat of more Clear Channel employees being fired if the deal doesn’t go through. Mark, get real. It’s the other way around. Bain and Lee already have your latest chopping list. Right?


Months ago, I said Clear Channel stock belongs in the teens – not the twenties and definitely not the thirties. Wall Street’s now seeing through their hype.

Clear Channel couldn’t operate radio on such a large scale. Some things aren’t meant to be that big.
You're not the only one. Just ask Farid. Just ask Lew.

The silver lining in the Mays family cloud of doom and gloom is that a fire sale of publicly traded radio stations will open the doors for real broadcasters and entrepreneurs to enter and re-enter a field they have the passion and desire to succeed in.

Cash flow margins may still look good on paper to some. That is, as long as you avoid the veracity of change.

Radio isn’t dead but its condition is critical. For old media to subsist it has to marry itself to the new –and not in the cosmetic way it’s being done now.

While we’re at it - abandon the inanity of HD Radio. The first chain to forsake this folly will be the first to turnaround.

Radio, done best, provides information and a soundtrack to one’s life.

How many radio station-produced spots do you hear these days that don’t sound rip and read?

When was the last time you heard a spot that sparked imagination and produced a saleable visual of the product?

Tonnage replaced creativity. We all know of creative production people who were supplanted because they couldn’t produce fast enough. Something’s got to give and creativity is so overrated.

How can one blame the banks for backing out of this doomed deal? You tell a lie enough times and you begin to believe it yourself. Bain and Lee fell for their own hype that Clear Channel was indestructible.

Captain Edward John Smith of the Titanic believed his ship would never sink.

Clear Channel is threatening to go to court this morning.

Go ahead. Force the issue. Claim your doing it for the kids’ sake. Lowry’s kids.

It’s a deal that should die and everyone linked to it knows that. Cut your losses and get out. Toss the spectators off the field – and get the real players back in the game.

It’s the only way radio will survive.

This Clear Channel-Bain/Lee deal was written when Wall Street had its blinders on.

Mark, I believe you even convinced yourself into believing your stock was worth far more than it was trading for.

Personally, I believe most broadcast companies’ annual reports as much as I do in the tooth fairy, the Easter rabbit, and Santa Claus.

You want an instant barometer on how a broadcast company is really doing? Go directly to the front line and talk to those in its employ.

Check the morale.

Check their logs.

I have enough connections in the ad community to know how much those spots were really sold for and how many bonus spots were thrown in. You’d be surprised. Then again, maybe not.

You know how cheap cable and UHF buys are these days? Radio sells for even less.

If the radio company fired their seasoned sales staff for making too much money and replaced them with tenderfoots whose prior experience was managing the door at a strip club or receptionist at a dental office, you know where they're headed. Don't laugh. You can't make those scenarios up.

What kind of results are the stations' clients getting from their run?

What are they doing for promoting and marketing their own station? Did they just cancel their spring TV campaign? If they can't afford to promote themselves, how do they expect to market their clients?

That little bit of investigative work will tell you far more than the manipulated math of their annual reports.

A radio station’s real worth is not its studios, its computers, or how many other stations are in the chain. It’s people. They are what provide a station’s commodity.

Successful mergers are based on one and one equaling three.

Once real broadcasters are back in the fold – you’ll see. It’s still a people business. Just ask anyone in a successful new media company.

Monday, March 24, 2008

Radio: Deal or no deal?

One down, one to go.

I’ll give David “Fumbles” Rehr credit. He managed to pull off every stall and delay tactic imaginable to prolong the inevitable. But when all was said and done, Fumbles just didn’t have the juice to avert the Department of Justice’s green lighting the merger of XM and Sirius.
“We are astonished the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade,” was Fumbles' farewell whine.
Now, it’s up to lame duck FCC Chairman Boy Kevin Martin to rubber stamp it.

But what about that other deal?
The vernal equinox has come and gone and Clear Channel and BainCaptial and Thomas H.Lee Partners haven’t nudged an inch closer to the altar. We were told that absolutely, positively, without-a-doubt the buyout would be wrapped by the Ides of March.
Then the date was changed to the first day of spring.

Last we heard was that it would wrap this week.

We are now in this week.

Even the stock prices that were inflated to crimes against nature prices to guarantee a quick wrap are sliding in reverse now.

After the last couple of week’s worth of reality checks, it appears the buyout may never get done.

What are the five words Mark Mays hates to hear on Wall Street? Around here we don’t push.

Nearly every day we’re faced with a new tortured explanation about what may have gone wrong with the Clear Channel-Bain/Lee deal.

“We have a hard contract with the banks that was set up in May 2007 to provide a hard underwriting.” That’s Tommy Lee co-president Scott Sperling speaking last week.

So, what’s it gonna be, Scotty? Yes or no? Hard or soft? In one week we’ve gone from a nearly done deal to a nearly dead deal.

Bain and Lee are ignoring their own rule: an investor’s base isn’t the people who are with him when the company’s right; it’s the people who are with the company when it’s wrong.

Last week, Bain and Lee claimed they’d be unloading stations that aren’t – in their word – “core” to the company.

But who’s buying – and at what price?
"You want what - for that?"

There are three tell-tale signs that’ll tell you when your deal has hit a rough patch: 1. everyone from CNBC to the Wall Street Journal can’t stop laughing at you; 2. your stock goes in reverse, and 3. Those you fear the most begin talking about waiting you out.
If the deal ever goes through you’d have to believe Bain and Lee will ask Mark Mays to retire due to ill health. The company will be sick of him.

Whatever the case, there’s an old saying about a bad deal: stupidity is expensive, no matter what price tag you slap on it.

Wednesday, March 19, 2008

Flash in the pan

It's a short pop culture shelf life for both Ashley Alexandra Dupre and Elliot Spitzer.

The call girl formerly known as the ex-New York governor’s pay-for-playmate was offered $1 million to appear in a non-nude pictorial for a new magazine owned by reality porn king and Girls Gone Wild creator Joe Francis.

But the proposal was pulled when a quick check of the Girls Gone Wild video archives found seven reels of Ashley super-freaking in a bisexual romp during a Miami video shot in 2004. She was celebrating her 18th birthday.

Now a sample of the vintage Ashley footage is on line – and the full video is yours for $4.95. That’s $4,297.05 less than Spitzer shelled out for 2.5 hours. And Rogers saved himself a cool million.
Spitzer probably believed he was buying into an exclusive club featuring the finest women money can buy. Now he knows that she was one part party girl and one part opportunist and could’ve gotten what he wanted for a couple of beers and a ‘lude.

Spitzer’s old news, too. His successor David Patterson and his wife Michelle confessed to numerous infidelities during a rough patch in their marriage and Jersey gov Jim McGreevy, who’d previously outted himself, topped Spitzer by admitting to a three-way with his wife Dina and his aide and driver Teddy Pedersen.
Spitzer’s already so yesterday on the political sex scandal circuit.

It was front page news when the identity of Spitzer’s enigmatic call girl Kristen was revealed. We learned that Ashley/Kristen was an aspirant blazing Hip Hop and R&B wannabe singer. She logged over three million hits a day on her MySpace page before it was taken down. Her cyber-friends included real-life stars Madonna, Whitney Houston, and Amy Winehouse.

After she racked up those numbers I’m surprised My Space owner News Corp. didn’t do a social network for hookers – MyFace-or-YourPlace.

It must’ve p.o.’ed Madonna and Whitney. In their prime it cost five to ten grand per station to get airplay on a hit radio station. Here’s Ashley. Spitzer shells out a mere $4,300 – and she’s getting out-of-the-box morning drive play in New York, L.A., and Chicago – and no one got a dime of it except the Emperor’s Club’s lawyers.

Two of Ashley’s songs were posted on Aime Street, a download site for indie musicians. By last Thursday they were sampled over 200,000 times and the company upped the price of her downloads from twenty cents to ninety-eight cents.

As a singer, Ashley shouldn’t give up her night job.

It looked like she’d be in the same league with upscale sex scandal Sidney Biddle Barrows or – if she could sing and act - Vanessa Williams. Now she has about the same cache as Jessica Hahn. A celebriwhore.
The best she could do was a has-been governor. She's no Monica Lewinsky.
She’s not even in the same league as Donna Rice, Paula Jones, or Gennifer Flowers.

Since Ashley was pimped by a Madame, she lacks the indie cred of former blogger babe Jessica Cutler aka Washingtonienne, whose daily updates kept readers current with her paid Capitol Hill trysts with Bush appointees and other Republican heavies. She scheduled her appointments while working out of Ohio Senator Mike DeWine’s office. For the record – DeWine claimed he knew nothing. He thought all those GOP VIPs were dropping by to say hello to him.
When outted, Culter did a Playboy spread, wrote a book, but she faded fast and ended up broke.

Pop culture can be cruel.

And that brings us back to Ashley. Now instead a million bucks from Girls Gone Wild, she’s down to one B-list offer. It’s to promote the Queens-based Georgi brand vodka for a low six-figure sum. She’ll endorse the brand on the backs of buses as the Georgi “butt girl.” Get it?

From high cost to bus exhaust.

Butt girl. She may as well take it. She’s already yesterday’s girl.

Nineteen years before Ashley was born, Mick Jagger and Keith Richards wrote these lyrics: Who wants yesterday's papers/Who wants yesterday's girl/Who wants yesterday's papers/Nobody in the world/Seems very hard to have just one girl/When there's a million in the world.

Ashley, we hardly new ye.

Monday, March 17, 2008

Radio: Really strange bedfellows

This is not meant to be an insult and I don’t believe it will be taken as one.

I applaud the efforts of the Voice of Webcasters (VoW) and, if nothing else, its “Day of Silence” was successful in drawing more attention to Internet radio.

It has also kept the RIAA from forcing their royalty payments schemes on more streaming audio stations.

The problem remains that Internet radio is hampered by having too many foster parents.

It becomes a victim of its own independency.

The result is one medium being spoken for by many mouths.

When everyone’s in charge, no one’s in charge.

It also leads to defectors – like the streaming audio sites that have already cut royalty deals with the RIAA’s SoundExchange division. Those amount to a fully-legal “pay-for-play” system that only major labels and acts can afford.

They call it “direct licensing.” Those that know better call it “dark payola.” Read about it here.

This is why both the terrestrial radio industry and Internet radio should combine forces to answer the RIAA’s attack on streaming media and royalty payments.

You don’t have to get along. Just agree.

And what you must agree on is that the RIAA should not be given one cent in royalty fees – period.

Don’t push for the opposite – threatening to charge the labels to play their music. They’ll call you on that one – and win.

What has worked up to this point for terrestrial radio will work for streaming audio.

Airplay exposes music – regardless of medium.

Mitch Bainwol, the CEO of the RIAA, runs with a shady pack.

He lobbies for and answers to the four major multinational label groups – two of which are foreign owned. He answers to the labels’ bosses, under-bosses, and their consigliore.

Another RIAA subsidiary is the MusicFirst Coalition. They’re out to extort a tariff for streaming music to terrestrial radio.

I’ve spoken with some terrestrial radio people that swear to “inside information” that when the RIAA forces end up in control of Internet radio, they’ll back off terrestrial.

The Easter Rabbit died for your sins, too.

MusicFirst really burns me – and some of the artists they’ve trotted out as mouthpieces should know better.

I’ve heard former Supremes singer Mary Wilson complain that she hasn’t received money owed her from the many million-sellers her group performed.

She has a legitimate complaint. But it’s not radio’s fault.

She should take that one up with her former Motown boss Berry Gordy, Jr.

Of course, Ms. Wilson may have to follow a paper trail – if there is one. Who owns the rights to Motown’s master recordings today? It’s not like the Supremes stopped selling. Just watch one of those half-hour p.i. spots on TV and cable for greatest hits and soul collections. Someone’s making money.

Stations keep running and running and running those p.i.’s because they produce revenue and those carrying them get a taste of every unit sold and those generating the most units get the highest rotation.

Mary, when was the last time you got a check from whatever company’s leasing your masters for those compilation CDs?

Here’s the problem. We need unity. We’re talking strange – really strange bedfellows here. But it’s the only way to defeat the RIAA machine.

If only David “Fumbles” Rehr could concentrate on more than trying to stop XM and Sirius from merging and blindly propping Peter “Sgt. Bilk-o” Ferrara and iBiquity’s HD Radio scam.

He needs to focus on winning the war with the RIAA.

Never underestimate the value of a hot concert ticket. Just ask the RIAA what they do when they need to grease a few palms to see someone who’s impossible to see in Washington.

Arbitron and Edison Media's Infinite Dial Report will be out in a few weeks. What we know so far from its advance hype is that there’s an estimated 33 million U.S. citizens – 12+ total audience – listening to streaming audio at least once per week. That’s up from 29 million listeners a year ago.

Fumbles, hitch your wagon to the one heading in the right direction.

Here’s the scary part and why we need these strange bedfellows. Think of Fumbles and Bainwol in a cage match. Who do you think would come out alive?

Social networks are the future. Terrestrial radio chains should’ve been buying them up instead of blowing money on HD Radio. Sixty three percent of streaming audio users have a profile on a social network site – predominantly MySpace and Facebook. Are we getting through, Fumbles? *
* **
Appeals, schlameils…the NAB has to agree with and partner with VoW. And they should follow their lead. The Internet radio people have the terrain down.

I know the other side of the story. I’ve talked with station owners that view independent (meaning not connected to a terrestrial radio station license) streamers as competition – even the enemy.

That is not the case.

As Tacitus, the Roman historian said, “In valor there is hope.”

Picture an intersection with four vacant corners. A restaurant moves into one vacancy. For that restaurant to be successful its owner will need one on every corner to drive more traffic to that destination. The same applies to streaming. Safety in numbers.

Internet radio – like terrestrial radio – exposes and sells music. And it should be allowed to program music based on merit – not the pre-paid shenanigans the RIAA is trying to pimp.
What are the odds of such a bizarre coalition ever occurring?
That’s reality. Independent Internet radio will have to continue the fight on its own against the RIAA’s multi-million dollar label funding and political clout on Capitol Hill.
For Internet radio, so far, so good – but that isn’t good enough.

Too many Internet radio stations have already gone dark – for absolutely no reason other than the RIAA’s greed.

This time - resist some of the greed. It’ll pay off for years to come.

Why HD Radio is NOT the future

Who needs HD when you have Internet radio - or as its users in the States prefer to call it - streaming? The future is overseas and it's only a matter of time before it arrives here.

How it's being marketed:

....and how to hack Sony to get full Internet radio service beyond Shoutcast:

Peter "Sgt. Bilk-o" Ferrara....have a happy St. Patty's day.

Listen to streaming Internet radio from Ireland.

Friday, March 14, 2008

HD Radio: Why no one is buying

You gotta eat – that’s why.

Some food costs have increased at a rate not seen since Gerald Ford was President.
For the past two decades the cost of food staples – eggs, dairy, and flour grew minimally. Now, the U.S. Labor Department is informing us that the same food staples have increased in double-digits. Dairy is up twenty-six percent, beef – fifty.

I paid thirty cents a gallon more for gas on Wednesday than I did the previous Friday.

But that’s not the problem.

The average household spending for gas is around four percent. Food accounts for thirteen percent!

Let’s go back one year ago today. You paid sixty percent less for eggs. You paid thirty percent less for veggies.

Oil + production and transportation costs = even higher food prices.

The demand for corn and soybeans for alternative fuel sources like ethanol and biodiesel, corn prices have more than doubled and soybeans have tripled in the commodity markets over the last two years.

The rise in corn prices also adds to cost of livestock feed, which translates to higher prices for meat, poultry and eggs.

And a bad wheat-growing season caused their prices to triple.

The higher food costs hack away at discretionary income and slaughter consumer confidence.
When one spends more for the basics - other expenditures have to give.

Add this: Few are making more money than they did two decades ago and more are out of work.

The weakened US dollar, which has fallen to historic lows against other currencies, is also impacting consumers with higher prices to make up for the loss in value.

Inflation fears increase, which in turn make commodities a buy to investors viewing them as holding value during inflationary periods. Follow this. Investors buy. Demand grows. Commodity prices go through the roof.

If you were around in the seventies, you remember those nine percent a year increases in food prices.

Get this. They’re already up a full five percent from a year ago. That’s over double the average rate of the previous decade. Some forecasters who follow such things now predict an annual food increase of seven and a half percent!

Do you really believe anyone is going to spend a hundred bucks or more on an HD Radio?

Just asking.
photo: President Gerald Ford in 1976 with Dick Cheney (left), then Ford's chief of staff, and Jim Baker.
The weekend edition of All Things Considered on National Public Radio will feature a special piece on The Buzzard book.... and see a classic Buzzard St. Patrick's Day ad here.