Bob Pittman

[SirRoxalot]

I guess we'll have to wait until we enter the "era of infinite channels". We certainly aren't there yet, and the cost of bandwidth is rising, not falling. One of radio's best friends is the increasing cost of high-speed cellular. Why do you think that the cellular carriers are fighting the idea of turning on the FM tuner that most phones already have?

 

[fmradio1]

I think the "endgame" is to develop their online presence, and IHeartRadio is a step in the right direction, and then begin to dismantle the terrestrial infastructure. It would start by CC selling off the smallest markets to local broadcasters. At this point those markets are almost fully automated anyway, and as long as they get something for them, it will help their bottom line by having less stations to service. In the larger markets, I could see most of their AM properties (with certain exceptions like WLW) being dealt to companies looking to reach minority audiences. Even some rimshot FM's could go in this scenario.

Once all that happens, it would leave the company with a stable of large and major market FM's and a lot less overhead chasing small money in small towns. That portfolio would continue to feed content to their online efforts (as they do now) but the company is smaller, and much more attractive to potential investors in an IPO or takeover bid.

 

[TheBigA]

I think the "endgame" is to develop their online presence, and IHeartRadio is a step in the right direction, and then begin to dismantle the terrestrial infastructure. It would start by CC selling off the smallest markets to local broadcasters.

CC has been trying to unload hundreds of smaller stations in their Aloha Trust for about 5 years, and they've had very few takers. I'm starting to think there isn't much interest in this kind of thing any more.

 

[fmradio1]

Most people aren't going to bite on one or two small, rimshotters in a market. Especially if the price is too high. CC may have to take a bath on those. However, entire clusters are a different story. Regional broadcast groups may take a chance on a cluster if it fits their existing group and the price is reasonable. It's a process that could take awhile, but as each year goes by, so does "stick value." Eventually the resources needed to operate these stations will outweigh their value to the company, and they'll do what they must to get rid of them.

 

[SaltyDog]

I guess we'll have to wait until we enter the "era of infinite channels". We certainly aren't there yet, and the cost of bandwidth is rising, not falling. One of radio's best friends is the increasing cost of high-speed cellular. Why do you think that the cellular carriers are fighting the idea of turning on the FM tuner that most phones already have?

We have infinite channels now in the way I interpret the phrase, whether or not those channels are being programmed. All I mean is that the Internet allows anyone to start a radio station (audio-only entertainment) without an FCC license or big honkin' transmitter. I'm not naive. I know that an Internet radio station is not now competitive with a terrestrial radio station but as smart phone listening grows, and in-car internet listening grows the value of the FCC license shrinks. It may or may not move slowly but the trendline is inexorable in my view. You're right that the cost of bandwith has risen but it's unclear to me whether it will continue to increase or flatten. The rising cost of Internet does not appear to have dampened it's popularity. It will among low income people but that's part of the potential damage to radio business plans if they don't have an adequate Internet strategy. The listeners they lose from terrestrial are the most affluent which is what the advertisers want for the most part. After the early adopters, the masses follow. Remember when cell phones used to be a status symbol among the well-heeled?

Funny you should mention the FM tuner in cell phones. I found an FM tuner app for my Android and tried it even though I don't see why I need it since I can listen to local stations on apps if I want to. The first thing it told me to do was plug in my earpiece because it functions as an antenna. I just laughed and deleted it.

 

[SaltyDog]

Once all that happens, it would leave the company with a stable of large and major market FM's and a lot less overhead chasing small money in small towns. That portfolio would continue to feed content to their online efforts (as they do now) but the company is smaller, and much more attractive to potential investors in an IPO or takeover bid.

It could end that way but I don't think they will increase value through elimination of small markets. As "stick values" continue to fall, and fall they will, it becomes increasingly important that they invest money in content. I know getting rid of a lot of on-air talent is a step in the other direction but it might be a culling before the replenishing.

So instead of thousands or even hundreds of individually weakly-branded stations, they invest heavily in relatively few brands that are then distributed both through transmitters and via the Internet. A sports brand, a few CHR flavors, a couple of iterations of country etc. But the brands have to be strong to transcend the delivery mechanism. It would require expensive talent and lots of it. The current example of this kind of brand is ESPN. Huge amounts of money has gone into hiring talent and it's all about the ESPN Brand. The ESPN brand is delivered on multiple cable channels, through terrestrial radio stations, a magazine and a phone app. I am a huge consumer of ESPN content and it doesn't much matter to me how I receive it, it's all ESPN. I began this discussion by posting Bob Pittman's aversion to brand-building which is ironic because I think it's exactly what he has to do. In fairness to him, 2002 was a long time ago so what he said then may not be what he feels or believes now.

I know it would be expensive and hard for Clear Channel to execute, but it's the only path I see... that is unless they really just want to remain another radio consolidator.

 

[borderblaster]

No doubt in my mind it's all about re-branding the whole company as iHeartRadio. If Pandora and Spotify can attract the money that they have, CC figures iHeart could do the same, plus have all of those terrestrial transmitters all over the country that Pandora and Spotify don't have. May be great for the company; bad for traditional air talents in smaller markets.

 

[SaltyDog]

No doubt in my mind it's all about re-branding the whole company as iHeartRadio. If Pandora and Spotify can attract the money that they have, CC figures iHeart could do the same, plus have all of those terrestrial transmitters all over the country that Pandora and Spotify don't have. May be great for the company; bad for traditional air talents in smaller markets.

I am a long time admirer of Pandora and remain somewhat skeptical that iHeart Radio can replicate the Pandora experience. It took ten years of using actual musicologists working on the Music Genome Project to get Pandora to this point. For iHeart to be able to achieve a similar effect using some automated process (assuming that's how they accomplish it) seems unlikely. But I will keep an open mind. I was surprised and impressed with the buzz generated by iHeart Radio's concert. I use iHeart Radio purely to listen to certain spoken word format Clear Channel stations in remote cities. Funny. As a kid I used to have to listen to AM radio at night to do that. Now I just punch up iHeart Radio or Tune In.

And you're right that while the terrestrial transmitters may be a long term liability, they are an intermediate asset to building the brand or brands on an Internet platform... assuming that is in fact what Clear Channel intends to do.

 

[TheBigA]

I am a long time admirer of Pandora and remain somewhat skeptical that iHeart Radio can replicate the Pandora experience.

I don't think the goal is to really "replicate the Pandora experience." Each one of these things has their very own distinct approach. There's also the CBS last.fm system. And you mentioned Spotify. All are different. I mean if they both do the same thing, what's the motivation? Regular users of both tell me the difference is in terms of which one is more user-friendly, and which one gives the specific experience one prefers.

And you're right that while the terrestrial transmitters may be a long term liability, they are an intermediate asset to building the brand or brands on an Internet platform... assuming that is in fact what Clear Channel intends to do.

That's exactly what they intend to do, which is why they're branding all their OTA stations "an IHeartRadio station."

 

[KFodor]

I think the "endgame" is to develop their online presence, and IHeartRadio is a step in the right direction, and then begin to dismantle the terrestrial infastructure. It would start by CC selling off the smallest markets to local broadcasters.

CC has been trying to unload hundreds of smaller stations in their Aloha Trust for about 5 years, and they've had very few takers. I'm starting to think there isn't much interest in this kind of thing any more.

In most cases, I've heard the "asking price" was way...way...way too much. You're not going to pay 10 million for a rimshot that gets a 1 1/2 share in a market...

 

[SirRoxalot]

CC is jobbing the system. The Aloha Trust could sell stations tomorrow if the price reflected their real market value. CC has inflated the prices so they can continue to reap the profits. The stations simply aren't worth what CC paid for them, and that's what CC wants out of them.

 

[TheBigA]

CC is jobbing the system. The Aloha Trust could sell stations tomorrow if the price reflected their real market value. CC has inflated the prices so they can continue to reap the profits. The stations simply aren't worth what CC paid for them, and that's what CC wants out of them.

BS...for most of these stations, the costs exceed the revenues. That's why they're on the block. If they sell for less than what they paid, they can write off that loss, so it's a win for them. But would you want to buy a station where the basic cost of operation exceed the potential revenue? That's why they've been donating stations to minority groups.

 

[borderblaster]

They are trying to sell the dogs of the cluster and unless KLove shows up no one wants weak rimshots (in Dayton OH case KLove grabbed a big signal non comm)

 

[SirRoxalot]

Most of these properties have been in the Aloha trust for years. If the FCC told CC that the Aloha Trust had to be closed by a specific date or they'd be turning in licenses, they'd figure a way to get rid of the properties. And I doubt they'd be giving them away.

 

[TheBigA]

Most of these properties have been in the Aloha trust for years. If the FCC told CC that the Aloha Trust had to be closed by a specific date or they'd be turning in licenses, they'd figure a way to get rid of the properties. And I doubt they'd be giving them away.

It will be five years in 2012. Me thinks the FCC prefers leaving them in the trust, because at least they stay on the air. If they forced the issue, and demanded they turn in the licenses, then the FCC would have to run them, and that would be a bigger disaster. Or shut them off, which is not what the FCC wants. It's what I like to call the Amtrak conundrum.

 

[SaltyDog]

If they forced the issue, and demanded they turn in the licenses, then the FCC would have to run them, and that would be a bigger disaster. Or shut them off, which is not what the FCC wants.

I'm sure the FCC doesn't want to run them, but it's not like foreclosing on a house where you're forced to take it over. Why wouldn't the FCC want them to shut down which would allow them to reclaim the frequency for another purpose? I would think that's the right path.

 

[SaltyDog]

CC is jobbing the system. The Aloha Trust could sell stations tomorrow if the price reflected their real market value.

I'm sure that's true because it's true of anything of value. People all over the country say they can't sell their houses "for what they're worth" but that just means they aren't worth what the owners think or want them to be worth. Drop the price low enough and you can sell anything. But just as with a devalued home, there are the equivalent of mortgages on radio stations and no one wants to start a fire sale and admit to their true present value.

 

[TheBigA]

Why wouldn't the FCC want them to shut down which would allow them to reclaim the frequency for another purpose? I would think that's the right path.

A station is worth more on the air than dark. I've started a station from zero, and it's not a lot of fun. And there really is a glut of stations on the market right now. Not a good time to be a seller. Especially if you have a dog of a property to sell.

But just as with a devalued home, there are the equivalent of mortgages on radio stations and no one wants to start a fire sale and admit to their true present value.

The difference is you can write off a business loss. A short sale on a house just kills your credit rating.

 

[borderblaster]

The FCC is not about to demand that the stations in the trust go silent..thus depriving towns like Englewood OH "service". Of course CC in the case of Dayton OH put the dogs of the cluster in the trust thus making it not a great buy for an operator

 

[SaltyDog]

The FCC is not about to demand that the stations in the trust go silent..thus depriving towns like Englewood OH "service". Of course CC in the case of Dayton OH put the dogs of the cluster in the trust thus making it not a great buy for an operator

I don't ever see thte government demanding that any small town stations go silent. I'm going to guess Englewood, OH has a station that still serves the community. But what about stations that are little more than repeaters for satellite programs or mp3 players attached to transmitters? Are they really "serving the community"? What if these stations become so unprofitable no one wants them at any price? They become the equivalent of post offices. Lots of small towns are looking at losing their post offices.