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.

Monday, July 28, 2008

Radio: Recycled Fumbles

I swear. I should just recycle my old David “Fumbles” Rehr blogs.
Everyone's telling that "what does the acronym NAB stand for?" joke again.

Don’t pick a war you can’t win, Fumbles.
Even better, don’t pick a war.

You haven’t, you can’t, and you will never win.

Your 410-day war against satellite radio is over – and you‘re toast.
Karmazin 4 Fumbles 3. Your own Grand Old Party buds at the FCC, including Boy Kevin Martin voted you out.

You’ll never be in their club.

True, the dim lad FCC Chairman got the gig because of his wife’s Cheney connection. Yes, we know you were a "Bush pioneer,” raising all that money for his last presidential campaign. Maybe you actually believed you were someone - but to those that defined position you were the grunt guy, the ticket-taker, the worker bee hero of that long-forgotten moment.

How many times must you hear it before it sinks in?

You’re a loser. You have no juice. You’re the radio industry’s status woe.

Psychiatrists call it “compartmentalization,” the proficiency of being able to separate feelings, memories and tasks. It’s a practical skill in dealing with complex issues while still leading a useful productive and even successful life. Cops do it. Lawyers do it. But you can’t.

Fumbles, you wasted how many millions on your second-rate lobbyists to work the FCC?

How about all of those cans of Tabs you’ve downed over the past few decades?

The cyclamates must have had a cumulative effect on your brain cells.

You had at least ten firms lobbying on the NAB’s behalf – with the lion’s share going to the Ashcroft Group, headed up by former Attorney General John Ashcroft. What were you thinking?

XM used the Palmetto Group as its lead dog while Sirius signed on with Wiley Rein. XM and Sirius also employed Mehlman Capitol Strategies, run by former GOP National Committee Chairman Ken Mehlman – and just to keep it on an even keel also hired Quinn, Gillespie and Associates, headed by Jack Quinn, the former aide to Bill Clinton and chief of staff to Al Gore and Ed Gillespie, a GOP lobbyist, and current White House counsel to George W. Bush.

Satellite radio got even while you were getting odd.

If you accomplished anything it was to position the NAB as, at worst, the black hats – and, at best, obtuse and out of touch.
You knew it was a done deal when you were tipped off about that delivery of blank pink slips to the McGraw-Hill building last Friday.

Fumbles, you might’ve lost – but am I the only one calling this decision as good for terrestrial radio? I believe the radio industry actually won one in spite of your infinite incompetence.

Hear me out.

XM has 9.7 million subscribers. Sirius has 8.4. That doesn’t mean the merged company will have 18.1 million subscribers.

It’s no different than a radio station taking out a competitor in the same format. Shares don’t double for the victor. There are many occasions where they don’t even increase.

The same rules apply to a combined XM and Sirius.

A merged XM and Sirius also mean fewer stations in total.

In the interim, the companies will offer a $16.99-a-month bundle called "Best of Both,” available to both XM and Sirius subscribers.

They haven’t released a list of the channels – but how much you want to bet that the package will not include the specialty pro sports channels or Howard and Oprah? That means there may not be a whole lot of takers for the “best of…”

Subscription churn will be a problem. Younger demos aren’t opting into satellite at all – and can you blame them? They’ve already on Internet radio.

A friend who is an XM subscriber is disappointed that Sirius will be the controlling party of the merged company – but he told me he’ll still keep his subscription because of the MLB access.

He’s a displaced Bostonian and bought XM primarily to hear Red Sox games delivered by the hometown radio announcers.

Then I told him he could get the same MLB package on line with Internet radio and listen to it on his brand new 3 G iPhone – and that he’d also have the option to watch live (well, a few seconds delay) video of the game.

He also enjoyed the wide variety of music available on XM.

So, I showed him how to navigate through and receive the hundreds of formats and thousands of Internet radio stations on line.

I didn’t mean to kill a subscription, but I did. It was that easy.

The NAB should leave well enough alone – but it won’t.

Fumbles’ NAB mouthpiece Dennis Wharton whined, “Given such overwhelming opposition, we’re not convinced the final chapter of this book has been written.”

The NAB is threatening to file a petition for reconsideration. Since that’ll hit a brick wall, they will take their complaint to the U.S. Court of Appeals. Fumbles may even try to lobby Congress to reverse the FCC’s decision, which will also go nowhere.

Don’t you hate it when the only friends you have left, Fumbles, are your enemies?

I’ll identify them for you: the two FCC Democratic commissioners that voted against the merger, Michael Copps and Jonathan Adelstein – and the activists groups who have been victorious in blocking further radio deregulation. They’re the only ones on your side. Pathetic.

Fumbles, I think the threat of you writing more twenty-page letters to the FCC, the U.S. Court of Appeals, and everyone in Congress would be taken seriously.
That is, it would be taken seriously by environmentalists - but no one else.

Tuesday, July 22, 2008

Radio: How much?

How does one determine the actual worth of a radio station today?

There is one certainty. Most are worth less – and far less in some cases and markets – than they were a year ago.

If nothing else, the radio industry proved to be an accurate barometer of where the economy was headed.

Does that P.T. Barnum quote immediately come to mind when you think of those who invested heavily in radio?

Let’s travel back twelve years and six months ago when Bill Clinton got this party started by signing the Telecommunications Act of 1996.

Remember the rallying cries of getting more than ten cents of every ad dollar?

Or the one about “owning” a “captive audience” that has to listen to radio in their car?

How about all that non-traditional revenue that would add so much added value to radio?

In one month – close to $2 billion in radio deals were announced. In just one week, five of the largest radio chains bought eighty-two stations.

To paraphrase Paul Harvey, you already know the rest of the story.

All radio had to do was resist some of the greed when the blue skies began clouding up at the turn of the century.

When it didn’t – and radio entered its Dark Ages – it became an industry of schemes and scams.

Instead of hiring qualified account executives, managers were ordered to hire sales people right off the street. Instead of respected radio station a.e.'s, accounts were getting called on by glorified Tin Men that received no training and knew nothing about selling time.

We’re how many shopping days from July 30 – the day Bain Capital and Thomas H. Lee are scheduled to absorb Clear Channel?

This deal was announced several hundred-thousand Chivases ago – or in a time frame we’re more accustomed to – twenty months ago.
Come on, you had to laugh when a couple of the banks that weren’t caught in the web of Bain-Lee’s Black Widow Clear Channel deal – used that very reason to illustrate their solvency – unlike, let’s say, Wachovia, which can't.

Think about it. Those banks were sagging into their cream-cheese based foundations even before they blindly entered into this Clear Channel deal with Bain and Lee. Why didn’t someone tell them the party was over a long, long time ago?

So, let me see if I get this straight. These banks are now trying to find suckers…er…investors to help finance the $17.9 billion leveraged debt buyout. Deutsche Bank AG and Citigroup have been offering $3 bil of that debt to potential investors for low-to-mid 80 cents on the dollar – and that’s down from the 90 cents on the dollar they were peddling back in late March.

Don’t feel bad for the smarmy brothers, Masters Mark and Randall Mays. They’re not headed for the poor house anytime soon.

Sure, they’ve wrecked the old man’s company – but give ‘em a break. According to an SEC filing, CEO Mark and President/CFO Randall will each roll over $10 million – and will each receive - oh, just $20 million of restricted stock when the deal’s wrapped – plus stock options equal to 2.5 percent of the fully diluted shares of the new company.

Even after I read Alec Foege’s Right of the Dial Clear Channel book, I still get the Mays brothers confused. Is Mark bad and Randall evil – or is it the other way around?
That’s like the slogan, “Together we can,” which is used by the Institute for Educational Leadership. It’s not to be confused with the Mays family slogan, “Together we con.”

Whatever the case, the obits will be posted and requiems will be sung for the next round of layoffs to be announced from the San Antonio Kremlin headquarters of Clear Channel in another month. You need not shed a tear for the Mays family and their obedient servant John Hogan. They will continue to live long and prosper.

But back to the question at hand: How does one determine the worth of a radio station license?

Cash flow? Projections? Physical plant? Management? Staff – if you have any? Does it have a pulse?

The days of clustering-up a market and putting a price tag on the whole shebang are over.

The original definition of a successful merger is when one and one equals three. Can you name a single radio merger that produced those results?

Don’t you hate it when you’re talking to a group of radio people about Citadel – and one says, “How much life is left in that company?” True story. Worth every penny of its eighty five cents.

We have to get a twenty-first century radio pricing guide readied.

Radio lives in a world where nothing is for sale and everything is for sale. That is, if no one’s buying – is there really anything to sell?

If no one is listening to radio – is anyone really hearing it? For those of us who still believe the radio industry can be salvaged, let’s hope that’s not the case – but we’ll know for certain fairly soon.

New York, L.A., and Chicago – the top three radio markets are switching from Arbitron diaries to go exclusively with the people meter, which reports real-time radio listening. That means whatever radio station you happen to hear – whether it be at home, at work, in the car, at a store, in a waiting room – will be recorded.

Will it show that having a favorite radio station is now just a nostalgic memory?

Will it show that morning drive is losing both the TSL it once did to command premium rate?

And how does one equate the worth of radio when major league radio accounts like A-B, GM, and Coke are pulling their dollars out of radio. Some, like GM, are doing cuts across-the-board. Others, like A-B are redistributing the wealth to other media - including Internet.

What does one do when a radio station’s worth less than what is owed on it?

We already know what that means in the housing and automotive market.

Monday, July 14, 2008

Radio: EmmiS.O.S. - a review

Last week, radio stocks took their tumble and Emmis became the lightning rod for all things wrong with radio.

It’s not fair to single out Emmis except that when you have underperforming (putting it kindly) properties in the top three radio markets you become a case study - plus picking on Clear Channel is so yesterday.

Let’s pay a quick visit to those cities and Emmis' problematical stations.

In New York, Emmis has WRXP - a rock format designed by committee. Don’t get me wrong. I’m the last to recommend or support specific format definitions – but, now, after umpteen weeks I have to ask, “What are you?” Don’t say evolving. Every format is supposed to do that.

When RXP signed on, its web site carried an exhaustive rationalization for the first two songs it played (R.E.M.’s new “Supernatural Superserious” and the Velvet Underground’s thirty-eight year old chesnut, “Rock & Roll.”) to define its format. That page has now disappeared from view.

Remember that Lovin’ Spoonful song, “It’s like trying to tell a stranger about rock and roll?” Exactly. If you have to explain….

RXP was too hip for the room. It pitched the hipster. Mistake number one. Hipsters don’t like anything popular. A successful format needs its superstars and established artists. Don't want to go that route? There's always college radio. That's what it's there for.

The original alternative rock format of the eighties and early nineties was, with few exceptions, a one-share format because most dropped artists from airplay once they gained mass acceptance. That meant the playlists of alt-rockers were top-heavy on acts that could draw fifty people on a good night.

Gray hairs will recall a time when the album rock format would delete artists from its library when they had a crossover hit. Artists like Led Zeppelin and Crosby, Stills, Nash, and Young "sold out." A top 40 hit translated to a kiss of death for the band from the hipsters. These album rockers weren’t even cracking a one-share back then – and for good reason.

In all fairness, RXP just got a new PD – a creative, innovative PD; they’re still hiring an airstaff, and fine-tuning their music. But I ask…why? Those elements should have already been in place when RXP signed on. It was rushed-on the air for all the wrong reasons.
In the age when radio was still cool you could build a station while it was on the air. Z100 in 1983 is a perfect example.

But in these modern times, when attention spans are minimized, you’d better be right the first time. You may not get a second chance to win over potential listeners.

In Los Angeles Emmis has Movin’. Two words: Jammin’ Oldies. Three more: Just as successful. When someone digs themselves in a hole, you don’t pick up the shovel and dig another one right next to them.

Let’s visit Chicago and Emmis’ two shattered stations – victims of paralysis by analysis. In the latest Arbitron both stations are tied for 19th place.

Remember when these stations were to be “reinvented”?

I deliberately sent in an application for that job – just to see if it had anything to do with straightening out their two troubled stations’ programming. It didn’t. The Coot had that part “under control.” In other words, it wasn't his fault they had no listeners. It was the marketing. Uh-huh?

The Loop? A station that’s lost in music, lost in time. Its talent trapped in a dated, image-less station stuck in an unholy relationship with prophet of doom. There’s no excuse for the Loop’s lock at the bottom of the Arbitron though the Coot always seems to find a dozen of them up his sleazy sleeve.

Then there’s Q101. The Coot doesn’t know his alternative from active rock. Music on shuffle? That’s so Jake! Did he even read his own “bedroom” “study” (quotations on purpose)? If he appraised his own “research” he’d learn that the alternative rock audience doesn’t want to hear some radio station’s shuffle – especially a commercial station they used to listen to until it got too Edged out – and doesn’t have a remote idea what alternative is or what music is popular today to its listeners.

Here’s a free clue. Not every male listening to rock music is a member of Knucklehead Nation. In fact, most aren’t. Capish?

I think the Coot needs a new slogan for his “research” and unctuous cheerleading: Fake – but accurate.

For Emmis, I agree that obits have been precipitately posted and its requiems are being prematurely sung.

There’s a difference between committees and teams.

A camel is a horse designed by a committee.

I know of no successful radio station built by a committee but I can easily recognize the most successful stations as the end result of teamwork.

I’d try explaining teamwork to the Coot but, once gain; it would be like trying to tell a stranger about rock and roll.

Monday, July 7, 2008

Radio: Okay, Rehr. Where’s the beer?

David “Fumbles” Rehr, chairman of the National Association of Broadcasters, this is your life so far this year:

You demanded that the FCC compel DirecTV to provide local TV service in every market by the end of 2008 as a provision on the transfer of News Corp.’s 40 percent investment in the satellite TV provider to Liberty Media.

Didn’t happen.

You demanded that DirecTV and Dish Network "provide empirical evidence to support their claims that they lack capacity to offer local-into-local service in high definition.”

Didn’t happen.

You demanded that the FTC deny the XM-Sirius satellite radio merger.

Didn’t happen.

You demanded that the FCC deny the XM-Sirius satellite radio merger.

Didn’t happen yet.

Now, you claim that even with your supposed connections in the beer industry as the former president of the National Beer Wholesalers Association –you had no advance knowledge of Anheuser-Busch’s plans to pull their advertising off radio?

Where was your head? Never mind. We already know and the visual isn’t pretty.

Does the phrase “a day late and a dollar short” come to mind?

Fumbles, don’t even think of blaming this move on the attempted hostile takeover of Anheuser-Busch by Belgian brewer InBev.

A-B isn’t cutting back on ad spending – they’re just taking radio out of the equation and distributing their $800 million ad dollars elsewhere.

This is the news rock and sports formats didn’t need to hear. Bye bye, Bud; Nice knowin’ ya, Mich; we won’t be seein’ you at Sea World.

That’s what – almost 60,000 spots – that radio lost?

Fumbles, beer is your old stomping ground and there wasn’t a brewer you were closer to than A-B.

You bragged about hanging out with August III and August IV.

You were “the beer guy,” remember?

But where are your brewski connections when radio really needs them?

Were you to the beer industry what you are now to radio? A big nothing?

Sure, we still have Coors, Corona, and Miller – but, if anything, A-B’s move will most likely influence their future ad buys.

Fumbles, when you were first introduced as the new NAB head, your initial meet-and-greet was billed as “NAB a beer with Rehr.” Remember? We do. Apparently, the beer industry doesn’t.

You must've had some expensive A-list publicists covering your ass when you were peddling the hops.

Do you recall, Fumbles, addressing the 2005 National Beer Wholesalers Association convention in Vegas?

You channeled Senator Joe McCarthy’s fight against Communism when you said, “There are foes poised to destroy us. We need to fight for beer’s rightful place in American culture (and) regain what is rightfully ours."

Even microbrews and imports were on your enemies’ list.

You assailed the American Medical Association (AMA), for trying to get the NCAA to ban beer spots from college sports programming: “There were more than 120,000 accidental deaths caused by physicians last year. You would think that might be a little more pressing than beer advertising."

You proudly stated, “I am Satan to them,” to Modern Brewery Age magazine in September, 2002, in reference to your on-going feud with Mothers Against Drunk Driving (MADD).

What happened? When did you turn into a dead fish?

How about your political connections? You were a “Bush Pioneer,” raising over $100,000 in individual contributions for the Bush-Cheney re-election drive.

That had to buy you an in with the GOP.

Fumbles, it’s an election year - just in case you’ve forgotten.

And your presidential candidate, Senator John McCain, is one part horny old goat and one part smooth operator.

He did what any red-blooded American gigolo would do. He married into money. But he also married into beer.

That's your cue, Fumbles.

His second wife, the former Cindy Hensley, who he married a month after divorcing his first, is an heiress to her father’s Anheuser-Busch distributorship in Arizona – and worth over $100 million.

Fumbles, you have something in common with Cindy McCain. You both love political action committees. When you were heading the NBWA, you routinely wrote checks totaling over $3 million on your PAC.

Anheuser-Busch's PAC was one of McCain's first donors. McCain’s father in-law and other Hensley beer distributor executives funneled so much money to McCain that the Federal Election Commission stepped in and ordered McCain to give some of it back.

And how large is Cindy McCain’s A-B distributorship?
Try third largest in the U.S. Last year it moved over 23 million cases of brew.
Fumbles, that means she carries some weight and could put in a good word about putting some dollars back on radio – but you have to start working her now.

The election is only three months away and a gigolo has never been elected President of the United States.

Just ask John Kerry.