Citadel Doles Out Stock To Execs, CEO Farid Suleman To Get 1.9 Million Shares

[chas108]

but as this stuck record has learned, it still comes down to who best makes the emotional connection with the consumer.

If that's the case, then what among the list you gave even attempts to make an "emotional connection" with the listener? Internet? Cell phone? Satellite? None of them are even in that business. Yet they certainly are a growth market.

A, that's PRECISELY radio's advantage...the live personality behind the microphone. It's a connection that savvy operators and talent will translate to other platforms as stations transition into cross-platform brands. That's how we stay competitive moving forward. Those who won't/can't relate compelling content with their listeners will be left behind...because then we are no different than an iPod or Pandora.

Actually I take that back...then we're worse off and the medium dies.

 

[TheBigA]

A, that's PRECISELY radio's advantage...the live personality behind the microphone.

It's only an advantage of there's a market for it. Otherwise you're opening a pork restaurant in Israel.

The marketplace has changed. Boomers are still attached to a certain style of presentation. But younger generations very clearly aren't. Which is why they're comfortable with internet, cell phone, etc. And I can say that because a huge majority of radio today is still being done live and local, and it's not causing people to give up their cell phones, internet, or video games.

 

[TheBigA]

Clearly running "on the cheap" is the Citadel way....

I really don't think you're going to find anyone else who will run them differently. Especially if Citadel sells out to a local owner. Ask the folks down the road in Syracuse. They have already seen the future.

The past is over. The future won't look like the past. Until people get used to the new reality, there will be a lot of very unhappy people around.

 

[TheBigA]

It's a connection that savvy operators and talent will translate to other platforms as stations transition into cross-platform brands.

Maybe. Keep in mind other platforms aren't restricted by things like time and place. One of the growing areas is podcasting. It's not live or local. It's taking your best bits and putting them in a format that can be accessed on demand. Same thing with timeshifting of morning shows. All great ideas, but not necessarily live or local. The question is can someone who isn't live or local still make what you call an "emotional connection" to the audience? I believe the answer is yes. I believe it happens every day.

The bigger problem is that the advertising rates on other platforms tend to be about 1/10th that of what people have grown used to on the main channel. Would you be willing to do the exact same work for 1/10th the money? There are a lot of people who would. That's who radio is competing with.

 

[chas108]

A, that's PRECISELY radio's advantage...the live personality behind the microphone.

It's only an advantage of there's a market for it. Otherwise you're opening a pork restaurant in Israel.

Point taken. For example...passive, background formats are less likely to benefit from live personality...but then again there's Delilah, holding court in one of the most background formats that exists.

Sometimes I think the difference between emotional connection and a Tel Aviv Pork BBQ is determined by management giving a jock time to allow the P-1's to become comfortable. But Mama Carlson's "I want a faster turnaround" attitude (from the premiere episode of WKRP) has been put on steroids, to the medium's detriment.

Look at it this way...let's say somebody moves into your neighborhood and immediately upon unpacking invites you to their Super Bowl party. You don't know your new neighbor from Adam...sure you'll be cordial but do you really expect to feel comfortable at this total stranger's house? However, over the following months you see them putting their kid on the bus...setting out the trash...going for a walk...watering the lawn...and you get to know them...and then they invite you to their Super Bowl party. Of course you're going...you'll even stop by Tops and pick up a case of Genny Light. This is human nature...I assume even in places known for their hospitality like Buffalo. (Yes I have that 'KB "Buffalo - A Friendly Place" bumper sticker in my collection. And talk about emotional connection: didn't those Legal ID's feature listeners talking after the voice guy?)

The marketplace has changed. Boomers are still attached to a certain style of presentation. But younger generations very clearly aren't. Which is why they're comfortable with internet, cell phone, etc. And I can say that because a huge majority of radio today is still being done live and local, and it's not causing people to give up their cell phones, internet, or video games.

I never meant to imply that people would give up their electronic doodads for good radio...simply that good radio would continue to find a place alongside those doodads...and more importantly, compelling content created for those other platforms by good radio personalities can - in fact, should - deepen the emotional connection to the overall brand. The era of simply towers and receivers is over. Now it's all about building the brand across multiple platforms. Yes, it all still has to be monetized. I don't have an answer for that one...there's going to have to be compromise on both talent and management sides.

About presentation...we both know that the way it sounded even 20 years ago won't work today...when I speak about presentation I refer to the content...getting to the point...involving the listener...just being a real person in the context of the format and target listener. In another thread I brought up an old Jack Armstrong bit as an example of the lost art of sharing excitement over a new piece of music. Where's the passion for the music (songs and artists) today (format-appropiate of course)?

People still enjoy people who care about them and what they think, whether on-air or off-air.

 

[TheBigA]

For example...passive, background formats are less likely to benefit from live personality...but then again there's Delilah, holding court in one of the most background formats that exists.

The time she's on has a lot to do with it. What she does wouldn't work at another time of day. She's doing something for a narrow audience at a time when it works. Plus it's syndicated so there's less risk.

Sometimes I think the difference between emotional connection and a Tel Aviv Pork BBQ is determined by management giving a jock time to allow the P-1's to become comfortable.

People form their opinions very quickly today. And once those opinions are formed, there's nothing you can do to change them. It's extremely tough for a new talent these days. Unless you walk in with instant credibility, you're dead. That's hard to get in a local market. Easier if you're Ryan Seacrest. It used to be an employee in the local record store could walk into a radio station with instant cred. But now there aren't local record stores. So how do you get credibility if you're not a celebrity? That's the basic problem.

In another thread I brought up an old Jack Armstrong bit as an example of the lost art of sharing excitement over a new piece of music. Where's the passion for the music (songs and artists) today (format-appropiate of course)?

Depends on the format and station, but I hear a lot of it. The problem is the audience is very polarized. You get passionate about the new Dixie Chicks, and it alienates the Toby Keith fans. Vice versa. Like becoming passionate about health care. You can fall into a huge pit that kills your credibility and alienates your audience. And then there's not a whole lot of new music that's worth being passionate about. But passion is one of those things best done in social media. Because if you don't have real music credibility, as in someone who is an artist or has ties to music, you're just another person with another opinion, and those are pretty disposable, as we discover on message boards.

 

[Element9]

Sirrox-
Theres plenty of blame to go around. Citadel overpaying for an over-inflated property (thanks to Sauer). Then over-paying big time for the Bills. Then bringing in not one but two GM's who wouldn't even move into the market (Can't remember the female and then LeGrett). How about then naming your top sales reps Sales managers. Mauer should have never left the streets. He's too nice to be a "hold the reps accountable" manager. There was no clear "management" at those properties for years. LeGrett in and out kicking ass then off to another market. Then the financial problems facing the industry hit and you've got poor performing stations doing worse because of the economy. Now I'm not sure they can right the sinking ship with the people they have in place. Maybe they don't because they want to move it.

How did Sauer cause Citadel to overpay for the properties? Were there two sets of books? Was the cash flow number inflated? Was the billing over stated? Seems pretty difficult to put this on one person, doesn't it? People who were close to the situation say it was Banta who overpaid when he bought WHTT from Pryamid/Evergreen. Was that about $18 million for WHTT and $23M for WBUF?

 

[intheeno]

Element-
All I can say, it surronded the Bills billings and expenses. Over inflated billing, under inflated expenses. In the end its Citadels's fault for not doing due dilligence. Just know, Banta sold just at the right time. If there is such great potential now, why couldn't Sauer put together investors to buy it back awhile back? He may have killed himself in the long run with the shannagons of the past.

 

[SirRoxalot]

First of all, Citadel Buffalo, with the Bills, was making a lot of money for Citadel when the Banta group sold. It was Citadel mismanagement that cost them a lot of good people, and saw revenue drop from #1 to #3. Add the recession, and overwhelming debt of the parent company after the ABC "merger", and bankruptcy was inevitable.

Secondly, why would Banta or "Sauer" want to buy it back? Buffalo's a shrinking market. Why wouldn't they spend their dollars in a growing market? Unless, of course, they could steal the cluster for peanuts, and they saw great potential in growing revenue through improved management and sales.

Buffalo ain't losing money for Citadel. It's producing profit. Citadel may very well want to sell off markets outside the top 25 - especially shrinking markets - but they need to find buyers. Most of the major companies are thinking the same way, that the money is in the major markets, and the medium and small markets aren't worth their time. So, it would likely be a small-to-mid market group that would be interested. We saw what happened to Regent when they decided to jump up in market size. Seriously overpaying for Buffalo was a major factor in taking the company down. So, Citadel Buffalo will have to go a fire sale prices, or remain a Citadel property.

 

[intheeno]

Sirrox-
We will continue to disagree about how much money Banta was making. Just know for sure, the Bills were costing him almost a million dollars when he sold the group. Thats 1 million after you subtract revenue from expenses. The last year WBEN had the team, they made a profit on the Bills operation. Sauer was if fact trying to buy back the group, thats a fact. He was working investors big time. I know this for sure. Don't think he wouldn't love to come back to Buffalo to try to play the role of "king" again. The guy was in the right place at the right time. Thats all. Lots of wine drinking, very little skill.

 

[Element9]

Most of the major companies are thinking the same way, that the money is in the major markets, and the medium and small markets aren't worth their time. So, it would likely be a small-to-mid market group that would be interested. We saw what happened to Regent when they decided to jump up in market size. Seriously overpaying for Buffalo was a major factor in taking the company down. So, Citadel Buffalo will have to go a fire sale prices, or remain a Citadel property.

I dunno, Rox. If Citadel was going to sell (Buffalo), wouldn't the company have done so prior to or during the meltdown that lead to bankruptcy? I concur with the premise that Citadel wants to unload small and medium markets, I just don't see it happening until the banks and lenders loosen the money supply.

Not to make this political, but I don't see the money supply spigot being turned on until a Republican is elected president because Wall Street and the Banks are holding the Obama administration accountable for passing and enforcing laws that hold Wall Street's feet to the fire. (Time to bring back The Glass-Steagall Act?)

Back to radio.

As to the Bills, it seems that over the past twenty years the radio rights to this small market gem have gone through the roof. The trek up the slippery slope began when Rich Product threw scads of money at the team to wrest the rights from WBEN. From then on, radio rights to the Bills constitute a financial "loss leader." The games largely benefit programming, as they often increase cume, reach listeners that might not normally listen to the station and promote dayparts or features within the broadcast of the game.

The ancillary expenses associated with the broadcast rights, such as satellite and distribution charges, talent, both play by play, color and feature shows by former players or coaches (who are often paid as much or more than any station staff member) add to the cost of doing the games. Some companies choose to swallow the pill, other companies have re-thought the value of cutting a deal because, especially in this economy, there are too many variables.

Legacy AMs like WGN, WCBS and KMOX benefit from baseball. MLB seems content to have their games on AM, where it makes more sense because of the nature of the game (soporific) and the audience attracted to baseball and AM radio. Baseball presents problems too: Rain delays, rain-outs, re-scheduled games, doubles-headers and weekday games in afternoon drive and the MLB schedule runs April through October.

At one of the league's annual meetings years ago, the NFL years ago established a "recommendation" to its teams to award the radio rights to FM stations having "formats compatible with the game's demographics."

What Entercom FM has a format "compatible with the game's demographics?" The Lake. But this station has a marginal signal. Star is the monster signal of the group, but its Hot AC format is female-centric as is Kiss.

Furthermore, Entercom might have a difficult time securing the broadcast rights to the Bills because the Bills are said to despise WGR. The bad blood goes back to the days of Art Wander and Chuck Dickerson and Bill Polian advising Wander to "get out of town." Such irony. Wander was working for Metroplex, (WUFX/WWWS) doing a sports talk show on 1400 WWWS. And it was Polian who got out of town, first going to the Carolina Panthers, then winning the Lombardi Trophy as GM of the Indianapolis Colts... a team that itself "got out of town," leaving Baltimore under cover of night.

It might be that Town Square is better positioned to challenge Citadel for the rights to the Bills: T-S has fresh money (arguably, so does Citadel), four big FM signals and WBUF/Jack... to say nothing of WYRK. The question is, "Does T-S need cume re-enforcement at any of its stations (save for Jack) and would T-S want the Bills and the added expense associated with the team?" I'd suspect they'd pass.

 

[TheBigA]

Question: Do the Buffalo Bills make money? How safe and secure is that franchise in that town?

 

[SirRoxalot]

Sirrox-
We will continue to disagree about how much money Banta was making. Just know for sure, the Bills were costing him almost a million dollars when he sold the group. Thats 1 million after you subtract revenue from expenses. The last year WBEN had the team, they made a profit on the Bills operation. Sauer was if fact trying to buy back the group, thats a fact. He was working investors big time. I know this for sure. Don't think he wouldn't love to come back to Buffalo to try to play the role of "king" again. The guy was in the right place at the right time. Thats all. Lots of wine drinking, very little skill.

Gee, I'm beginning to think that you don't like Bill Saurer - a guy you know so well that you can't even spell his name. Yeah, he and Banta must have been idiots. Which means that Farid and Legrett must have been even bigger idiots, because Citadel has re-upped at least twice on the Bills, for even bigger money than the Banta/Saurer regime.

I'm sure that Banta and Saurer have looked at buying Buffalo back because they see an opportunity to improve revenue, and it's a home-town property for Banta. But, they're only interested if they can steal it at fire-sale prices. They know the sations, and they know the market. They aren't, however, interested in pulling Farid's onions out of the fire.

I don't know if Buffalo will be sold or not. At this point, there's not a lot of movement because the market for radio stations is so depressed. If you can figure out what the "correct" value of a radio station or cluster is under the current tight-money scenario, with radio being challenged by new technologies, then you're smarter than most of the people in the business. One thing I know is that the days of 12-15 times cash flow is OVER. And, for my money, cash flow was a stupid number anyway, because your can move a lot of cash and still lose money. PROFIT seems to be a better predicter of success.

 

[intheeno]

Sirrox or should I just call you Mr. Know-it-all?
Where did I say I know your boyfriend Saurer so well? I know what was going on at the cluster and I knew the numbers. You can tell alot about a man be reviewing his work and seeing the type of people who were willing to walk through walls for him. You have your opinion, I have mine. You seem to vary on yours, meaning if someone made alot of money they must have been successful. If thats the case Citadel upper management must be geniuses. I read your posts, you must be in or had some serious management positions ie. Group Pres, Regional director, Pres of the USA, program director, General manager and sales manager. Or maybe are you one of the weekend board ops who like to dream of the big time? Its easy to sit back and think you know it all. Did you ever get a chance to show that you do know it all?

 

[chas108]

Question: Do the Buffalo Bills make money? How safe and secure is that franchise in that town?

Trying to veer the thread away from "take it outside" status...and acknowledging my status as a market outsider, haven't the Bills been working on building their fan base across the border?

I remember reading somewhere about playing some "home" games in Toronto, or maybe it was a pre-season game and the author was speculating about eventually splitting home games between Toronto and Orchard Park. I don't remember where I read the article...of course it brought up Buffalo's shrinking market size compared to 1960 when the team was founded...but on the other hand, the way the NFL is structured I don't see how market size matters all that much...think of Green Bay for example.

 

[TheBigA]

the NFL is structured I don't see how market size matters all that much...think of Green Bay for example.

That's why I ask the question. The NFL gives a lot of deference to owners, and the Packers are owned by the city of Green Bay. That was done in part to keep the Packers there. I don't know what kind of loyalty the current ownership has to the city of Buffalo. Not that Canada is all that more enticing. But I was having a conversation with someone about the continuing campaign by Los Angeles to attract an NFL team. I would think that teams like the Bills and the Chiefs are ripe for the picking.

With all the discussion around Citadel and the Bills, I wonder about the wisdom of broadcasters depending on the loyalty of a sports franchise for their bottom line. What would the loss of The Bills do to Buffalo and Buffalo radio? Would Buffalo fans continue to follow the Bills if they moved? Obviously I'm just speculating. But I've learned that nothing is permanent.

 

[chas108]

Excellent speculation IMO. Given what I've read here combined with my admittedly limited knowledge (like how much the entire Thruway corridor has shrank since 1960)...I'm inclined to think the blow would be more psychological and emotional than financial.

One thing I don't see is Bills fans following their team to LA or elsewhere no matter how the story is spun. I've seen fan betrayal first hand...like when Art Modell moved the old Cleveland Browns to Baltimore and throngs of angry Clevelanders came to Pittsburgh to boo their own team the last time the Steelers and old Browns played.

Fans in both cities were happy when the new Browns got established as the rivalry was reestablished. We just love to hate each other...but I think that rivalry mindset is pretty universal.

 

[JustPastBuffalo]

The Buffalo Bills franchise is robust. Check the Forbes list as to its estimated value. More importantly, check the team's revenue and operating income. That's not chump change.

Given the NFL's revenue sharing structure, teams don't really lose money. The issue is better framed as "some teams don't make as much money as others." The Bills don't make as much as the Washington Redskins, the Dallas Cowboys or the NY Giants, due in large part to luxury seats, expanded rights fees and inside-the-park-revenue generating plans, which are not part of revenue sharing.

The biggest question regarding the Bills is the age of its first and only owner, 90 year old Pro Football Hall of Fame member, Ralph C. Wilson. Because of estate taxes and associated estate costs, as well as expressed wishes, upon his passing the team will be sold. The question is, who or what conglomerate will buy it?

Depending on different estimates, Buffalo is the second or third smallest market in the NFL (New Orleans and Green Bay being the other two small market franchises.) The Bills have a stadium that seats 77 thousand. During thir Super Bowl contending years, the stadium seated 80 thousand and it was sold out. Second or third smallest market. Eighty thousand seats. Wind chill -24 degrees. Sold out. I was one of those screaming lunatics.

The Bills haven't made the playoffs in ten years, yet fans continue to attend games, many of which are sold out, as is this Sunday's home opener against the Dolphins. Very likely, at least four home games will be sold out this season. Comparatively speaking, the cost of a ticket to a Bills game at Ralph Wilson Stadium is a bargain, which is one of the reasons season ticket holders chose to renew, despite the team's abysmal performance.

As to the question which team will move to LA, there are franchises in the NFL that are far more challenged than the Buffalo Bills; Jacksonville and Minnesota being the two most often talked about, as well as Oakland, which has already dabbled in the LA market and San Diego, "just down the road" from Los Angeles. LA isn't as NFL friendly as most observers might think. California is damn near broke and won't build a stadium for the NFL moguls; a privately financed stadium there is in the works, but remains on hold.

Any NFL team in LA will have to compete with two NHL teams, two NBA teams and two MLB teams, as well as USC and UCLA (which might just as well be 'professional football' teams)... not to mention the beaches. Surf's up, dude.

NFL attendance league wide is down about 3% over last year, yet viewership is up. The Buffalo Bills have pulled more than their weight in keeping the league's attendance figures up. The team's moving one or two games to Toronto was a smart move because it establishes territorial rights in Canada's largest city. But don't expect the Bills to up and move to Canada. There are too many issues to overcome with the Sovereign Government of Canada, the CFL Toronto Argonauts and the CFL itself as a protected entity. What's more, as a season ticket holder who's spoken to hundreds of Canadian fans, (no exaggeration, I worked Bills pre-game shows at the field house) our neighbors from the Great White North seem to overwhelmingly prefer coming to Buffalo to watch a game.

One more ingredient. As long as Chuck Schumer is the Senior Senator from NY, the Billswill stay in Buffalo whether Wilson owns them or not. The NFL does not want to tangle with Congress and Schumer, one of the most powerful committee members in that august body.

One of the smartest moves made by the team was the moving its training camp to Rochester as it reaches another important segment of the fan base. The Bills are supported to great extent by the locals from Buffalo, with help from Rochester and Canadian fans from Niagara Falls, Ontario to Toronto.

 

[TheBigA]

Great post, Jim. Thanks.

Back to Citadel, I don't know how long their deal with the Bills is, but I imagine they'll want to scale down the rights fee in the next go round. A few years ago, CBS let the NFL go from several of their cities, including DC and Tampa. The rights fees started to hurt the margin. And with advertising still in a tailspin, I would imagine it hasn't gotten any better. It's one thing to keep the rights away from Entercom if they're making money. But if they're not, there's no point in a post-bankruptcy situation to hold on to such a high cost property, especially since the rights are so limited. As General Patton once said, no man ever won a war dying for his country. He won it by making the other side die for his.

 

[John C]

Excellent summary of the Bills situation, Mr. Pastrick!