BE CAREFUL WHAT YOU WISH FOR...

[SRP]

http://www.radio-info.com/news/cumulus-leans-on-citadel-to-accept-its-21-billion-buyout-offer

If this comes to pass it's pretty much a given our favorite Farid bashers will be pining for the "good old days" when he was in charge.

 

[JustPastBuffalo]

Citadel trades on the Pink Sheet over-the-counter market at around $29.75. Volume in this arena is low, for a number of reasons. Most of the companies have been through the mill. Cumulus is offering around $31 a share. Would it surprise anybody if that number is well below the strike price of Farid's options?

The major catalyst-agent provocateur in this maneuver seems to be R2 Investments. From what's been written thus far, this deal would be for cash and Cumulus stock and seems far from being a done-deal-Lucille.

 

[TheBigA]

The major catalyst-agent provocateur in this maneuver seems to be R2 Investments. From what's been written thus far, this deal would be for cash and Cumulus stock and seems far from being a done-deal-Lucille.

What would make it entertaining would be if R2 partnered with Cumulus and an inside/outside deal. That would put even more pressure on the board to strike some kind of deal. There are probably a lot of creditors who want to cash out. This is a chance for them to get their money back quickly. I bet that would be tempting. Not at all what Farid wants, and depending on how many of the creditors want to cash out, this could really cause him problems. But $31 a share in this market is way over value. That makes me very suspicious.

 

[cee]

Cumulus, Citadel, who cares? Employees get screwed, listeners get same old same old.

Corporate radio = crap.

 

[SirRoxalot]

Exactly what "good old days" with Citadel would employees be pining for? The pre-ABC "merger" days?

The worst part is that Lew Dickey is fast becoming a shill for the money men who just want to wring every dime out of radio, then leave it dead at the side of the road. Dickey won't own squat. He just wants to run radio stations, play the "my group is bigger than your group" game, and collect a fat salary in the meantime. He's not looking to build anything. He's just looking to cash in, and maybe be in a position to bargain shop after the money men decide that there's no more profit to skim.

If the deal goes through, Farid will be ticked that he went through all the embarassment of the bankruptcy, and won't collect the big payoff that he's done his damnedest to engineer.

 

[TheBigA]

The worst part is that Lew Dickey is fast becoming a shill for the money men who just want to wring every dime out of radio, then leave it dead at the side of the road.

Who else wants to buy radio stations now? No one. All the companies with cash looking to invest it aren't even thinking about radio. A couple years ago, Google thought there might be some synergies between its advertising business and radio. So they experimented in selling radio ads. They got their clocks cleaned. You won't be seeing companies like that taking a chance with radio any more. It's seen from the outside as a money pit. If you have money now, you're better off buying a boat. At least you can eat the fish. But as I said, I don't think Dickey really wants to buy Citadel. He just wants to rattle a few cages, and show off the fact that he has some cash. Maybe piss off Larry Wilson, who thought he could buy back his old company for a fraction of the money. Now he sees he can't.

As for the idea that Dickey just wants to run them, not own them, that's very smart. There's no money in ownership. The guys in the 80s had the right idea. Let someone else pay the taxes and loss of value. Just make money off operations. LMA. That's what business has become in this country. It's why Chrysler doesn't own the Chrysler building, why Sears doesn't own the Sears Tower, and why RCA doesn't own RCA Records. Foreigners own things, and Americans run them.

 

[Element9]

Citadel or Cumulus. Hobbe's Dilema which Cee hits squarely on the head. (Such vitriol!) Work for a company run by a rat or a snake. Weasel or ferret (although ferrets do kill rats.) Louse or maggot. Only a guy like Lew Dickey could make Farid Suleman look benevolent. Wow! Not only do Big A and Roxalot make good points, they're almost on the same page here. (Previous statement will no doubt set of an argument that gets the thread sent to TIO.) The Cumulus takeover: Lew Dickey's attempt to show all the other owners who has the biggest wang. Speaking of such, maybe a Chinese contingent will make an offer. (Naw, way too smart. Now I'm beginning to agree with A.) The Chinese own most of America's debt and make half the crap we buy. Yes, there are laws against foreign ownership, but it's just a matter of time. The Chinese could make money with radio. Everybody works ten hour days and earns 1.87 an hour. Wait. Isn't that already the Cumulus platform?

 

[SirRoxalot]

Everybody works ten hour days and earns 1.87 an hour. Wait. Isn't that already the Cumulus platform?

Isn't $1.87 about what they pay for an hour of radio "show" to people who VT 10 hours a day? We don't need the Chinese to "tighten, lighten, and brighten". The value added to radio gets "lighter" every time one of these deals goes down.

 

[TheBigA]

I keep hearing this line that some day, "real broadcasters" will return to radio, start buying back stations, and return radio to it's former glory. It reminds me of Harold Camping of Family Radio, who is buying billboards across America saying that May 21, 2011 is the day of redemption. Maybe he has it wrong, and that May 11 is the day "real broadcasters" are coming back. Or maybe those two things are the same kind of thing. People keep hoping and praying for the return of "real broadcasters" who will sit in judgement of all that's happened since 1996. They'll buy back stations at fire sale prices, invest in programming, and hire back all the people who've been fired. These two things sound very similar to me. Let us pray.

Here's the other thing: It used to be that public radio was a refuge for people who wanted to escape radio companies. Things seemed pretty stable there. No mass firings or quarterly numbers to hit. Then the Juan Williams thing happened, and now every Republican governor in the country is looking to cut funding to public broadcasting. In New Jersey, the entire state system of radio and TV is on the block. And no one is rushing to buy. The colleges are broke, the non-profits are struggling, and it's looking like the only potential owner is WNET, who would simply use the stations as a satellite for its New York-based programming and ignore local New Jersey news. Sound familiar?

 

[Mike Sheridan]

"Real broadcasters" won't be coming back. Most of the ones I have talked to are bored with it and have no interest. The opportunity just isn't there to make enough money.

As stations get more and more expensive to buy, owners are less willing to take chances. I can certainly understand that!

Public radio was tight and very lean even before Juan Williams. While they don't have ratings pressure they do have pressure to go with a format that brings in the most contributions from listeners. The NPR talk format is shown by the public radio station research to have the most active listeners. So we end up with mostly NPR fare and BBC overnight with maybe one or two locally produced shows.

I talked to a public radio station about a combo on air / assistant tech position. I got the run around. They never said no but they never said yes either. So much for that idea.

 

[TheBigA]

As stations get more and more expensive to buy, owners are less willing to take chances.

My point isn't that they're more expensive to buy. The price has dropped from 10 times cash flow to about 4. From what I can see, the Cumulus offer is between 4-5 times cash flow. Which is half of the going rate a few years ago. What's become more expensive is operations. People, facilities, and time cost money. It costs a lot of money to run transmitters and towers. It's become obvious that the actual station has limited value in and of itself. So any new owner has to invest in all the technology and multiple platforms that will integrate with the station. That costs money, and small time owners don't want to spend money there. It's simply not efficient to run a single station by itself any more. It really hasn't been since the mid-80s. Put that station on AM, and you're really digging a deep hole. The technology keeps changing, and these stations have to keep up. It all costs money. So buying the station isn't the real expense. As colleges, universities, and state governments have discovered, the real cost is in operations. They don't mind owning the license. They just don't want to run the stations any more. That should tell you a lot about where the real expense is.

 

[SirRoxalot]

The real problem is that nobody knows what radio stations are worth anymore. Will broadcast radio still be around in 10 years? Or will streaming be the "new" radio? Will the feds decide to force a switch to "digital radio" in order to reduce bandwidth and recapture more spectrum for wireless access?

Nobody knows these answers. The biggest guys think that they can control the future if they have enough money and influence. If they do, you can bet that they'll throw smaller operators to the wolves at the first opportunity in order to reduce competition. Smart people are in the content creation business, which is somewhat insulated from the delivery method. The big problem is figuring out how to monetize their content, which our current Internet generation expects to receive for free.

 

[Element9]

Imagine how the employees at Citadel Buffalo are taking this news. They've been through staff downsizing, salary and vacation cutbacks and have clawed their way back, even re-hiring Tom Tiberi for nights at 97 Rock plus a few part timers. Now another debt-levereged takeover by of all companies, Cumulus. Not what you'd want to hear going into a new year. Like going from the frying pan into the fire.

 

[heydaybegone]

Rox...I would quote your whole response..but I'm limiting it.

The real problem is that nobody knows what radio stations are worth anymore.

that's been said awhile ago.

Smart people are in the content creation business, which is somewhat insulated from the delivery method.

Said that too..

Is this a new thread? Hardly

Rox..you are consistantly on target (well most of the time)

HDBG

 

[Paul_Warren]

...Smart people are in the content creation business, which is somewhat insulated from the delivery method. The big problem is figuring out how to monetize their content, which our current Internet generation expects to receive for free.

Unfortunately, to be successful, content has to be tuned to the delivery medium and the lifestyle of the user. Creating content to be platform-independent compromises its usability.

I discovered, quite by accident, that there's a niche to be exploited in producing spoken-word audio podcast content for specific industry channels, and next month I'll celebrate six years doing it as a full-time living. The monetization scheme has varied, but for the last four years I've worked primarily on a monthly retainer for a news service. There are other ways. But it's probably not ever going to allow focusing on the art while someone else handles sales and admin overhead, which is the luxury so many of us enjoyed in radio careers. And most podcasting is not distributed using RSS, but by users clicking a link on a web page. In fact, the whole RSS thing appears to have never escaped the novelty/geek audience, and may actually be declining as a modality.

The only reason I bring this up is because radio companies, so far, do not seem to be doing a very good job of optimizing their content for other platforms. KNRS here in SLC, a Clear Channel station, promotes what's called the "Rodcast" in association with Rod Arquette's excellent, local afternoon talk show. It's just an uncut aircheck of the first two hours of the show! I guess that serves a purpose as a kind of on-demand radio rerun, but it's certainly not making optimum use of podcasting.

Webcast content can generally attract a salable audience only when it escapes the geographical limits of radio coverage maps, and deals with niche topics of interest worldwide. Local radio stations don't generate this kind of content. Nobody outside Utah cares about the governor's I-15 Corridor Contractor Scandal. I've only made my own thing work by being among a very small pool of providers serving resource investing or aerospace industry news, and dishing it up worldwide.

Another unfortunate truth is that there's no sustainable economic model, now or in the foreseeable future, for webcasts in a format anything like the music/jock formats we all miss, and there's just not enough bandwidth to reach enough mobile devices in real time for an audience of thousands of people.

 

[Mike Sheridan]

As stations get more and more expensive to buy, owners are less willing to take chances.

What's become more expensive is operations. People, facilities, and time cost money. It costs a lot of money to run transmitters and towers. It's become obvious that the actual station has limited value in and of itself. So any new owner has to invest in all the technology and multiple platforms that will integrate with the station. That costs money, and small time owners don't want to spend money there. It's simply not efficient to run a single station by itself any more. It really hasn't been since the mid-80s. Put that station on AM, and you're really digging a deep hole. The technology keeps changing, and these stations have to keep up. It all costs money. So buying the station isn't the real expense.

Okay on the expense for the transmitter and towers. Much of the new technology has brought down the cost of maintaining a radio station. Just about everybody in any business these days has to deal with the expense of computers, servers and networking. No more cart machines or reel to reel machines to worry about and the newer transmitters actually save money because they are more reliable and use less power. Salaries for the on air folks haven't increased much in years and where you had a full time airstaff of 5 or 6 now you have 3 and one of them is the PD. The promotions staff is run by one person and a team of interns who also set up and do remotes. Engineering in the smaller stations is usually handled by a contract engineer. So while stations have some higher costs they also have been able to save money in a few areas.

If after the savings, it's still too expensive to run a station, sell it or turn it off. I haven't heard of too many stations going off the air where I live. Just don't ask me to feel sorry for the owners.

 

[Mark Giardina]

What is even more of a shame is that smaller market stations at one time were (or still are) being gobbled up by these mini-me conglomerates.

However there are still a handful of small to medium market radio operations owned by former announcers or managers that are doing just fine.

The station that I work for (part-time) happens to be one of those stations. The staff is small, and there have not been any layoffs in memory. Everyone does more than just one job but the morale is high and the station is surviving.

Maybe the key for radio's survival are stations like the one I mentioned. One won't get rich, but at least they have a job plus people are working at something they love doing.