How did Citadel get in this position?

[The Nose]

To analyze this situation you must work backward.

They are over a billion in the hole...$848 million more than last year. Yes revenues were down, but not so you had to cut the heart out of a station to save it. The story behind the story is this: Farid bought more car than he could afford. He HAD to have this radio division, at any cost, and when the price went up, he had to cover the depreciation, not to mention the extra administrative costs. It was a bad business deal for such a small radio company. When you paint yourself into a corner and you have to eviscerate the creativity out of your radio stations, then the blame lies at the very top of Citadel. Feel sorry for those people who are left behind. This is the beginning of the end for Kicks.

But it has to be said that a lot of the blame on how Kicks/Eagle came to this point goes to Victor Sansone. He totally misjudged the Bull and allowed them a foothold.

 

[taylorengineer]

I'm not sure I agree that Victor could somehow predict ClearChannel doing something "right" for a change but I do agree with your synopsis of the Citadel mess.
"Too much car" is a very good analogy. Farid, indeed, wanted something more than he could afford. But like most good Americans.....he bought it anyway. And being the eternal optimist.....he never saw the downside right around the corner.
I wonder what the entertainment landscape will be like in 20 years. Will radio survive the swirling sea of technology change around it? Will broadcast leadership have what it takes to help radio change and prosper?

 

[Tibbs4]

Why has no one admitted this company is bankrupt? To cut expenses they are cutting the lifelines to
the community out and leaving empty shell stations hoping listeners and advertiseres will just sit there
and blindly accept inferior products? This is the stupidest, short term logic. Pencil pushers think it looks
good on paper. It is another example of following the leader mentality. Why in the world doesn't some-
one create a epicenter of great talent, and even if you have to smoothly voice track the majority of
the company for a while,and create great entertaining sounding radio. Instead it's a how low can you go
mindset...failures in the making. 2008 will be a great year of watching many radio companies finally
figure out they paid way to much for a typewriter-industry. Why it took those "in the know" this long,
when most everyone else knew it a decade ago, shows how absolutely hidden from reality these
corporate clowns are. But, as long as they continue to dress nice, shake the right hands and look
everyone in the etye and lie, this shell game will continue...

I am surprised it took this long to finally happen. Nothing a little blip in the economy won't affect.
Meanwhile listeners will certainly tune in for nothing but static...since these clowns laid off all the
revenue generators and keep the house full of leaches.

 

[IFB64]

>>>>>>these clowns laid off all the
revenue generators and keep the house full of leaches.


Truer words have never been typed! Nicely put.

 

[AnimatronicAbeLincoln]

>>>>>>these clowns laid off all the
revenue generators and keep the house full of leaches.

When it comes time to fire people, the leeches / asskissers / brownnosers who are generally the loudest, most colorful, and most social are often the people who get kept because those are the people who are familiar. Those are the people who the people at the top are familiar with and therefore comfortable with.

The guy or gal who spends most of the time in his or her office getting the work done - well, they don't know that person. That person is "distant." That person is "aloof." That person doesn't blend in with the "Corporate Culture." Probably trouble. We don't need them around.

It's simply too confusing for most of the folks up top to understand - because that's how the people up top got there - by being loud, colorful, asskissers and brownnosers. An alarmly large percentage of them don't really know anything about what they're doing.

 

[RoddyFreeman]

But it has to be said that a lot of the blame on how Kicks/Eagle came to this point goes to Victor Sansone. He totally misjudged the Bull and allowed them a foothold.

I'm can't speak for Victor, but I know enough to tell you that your statement is ludicrous.

Like him or not, Victor made tons of money for ABC over the years. And he successfully fended off The Bull, still dominating the country ratings a year after The Bull introduced.

Corporate bean counters don't understand market conditions. If a station does great one year, corporate expects even more greatness the following year. So if a station outbills its corporate budget, the budget gets set even higher the following year. From what I've heard, Kicks/Eagle had such a huge 2006 that even though 2007 would normally have been considered a good year, Citadel expressed disappointment because of the comparison to 2006. The radio market simply wasn't as strong in 2007 across the board. And yes, just the fact there was some country competition put pressure on Kicks/Eagle to reduce rates.

As an observer, I think Victor and crew performed as well as was possible under difficult conditions. His track record speaks for itself.

 

[radioworld]

It all boils down to this, Wall Street doesn't understand Radio and Radio doesn't understand Wall Street. More companies will go the Clear Channel route and return private. For some it will be too late and they will go bankrupt and those with vision and capital will be able to buy sticks for 6x cash flow in the near future.

 

[Tibbs4]

Three times CF would be sane. Six is even going to be a tough call. This 10 and 20 X is crazy. Wall Street finally
realized the biggest con game of any media industry. They banked on the more is better logic and it's coming back
to bite them. Eron = Radron. Plus, a lot of companies like Crumulus have bought into smaller markets oversaturated
by signals and it's sinking them at $5.00 a spot. I could go on with experiences I have seen or dealt with, but the
real issue is kinda shocking (IMHO) --- that it took this long for the house of cards to start to show signs of problems
and begin to crumble. That seriously says that a kept house (hence well run radio station with stars that are allowed
to be free to talk and not just read three sentence liners, proper imaging and MARKETING and good music diversity)
can be successful. The theory of running on a shoestring budget to MAKE MONEY is as backwards as it gets. YOU
WANNA WIN REVENUE you gotta have something going for you.

At least ATL radio is trying to find some niches and make money. Sadly, the decisions like Project or a stale Dave
are short term thinking. You gotta go for number one and not look back. To say it's okay to be 17th is failure, yet
the logic of the big companies is just that. The cash register has and will continue to stop ringing.

 

[The Nose]

As an observer, I think Victor and crew performed as well as was possible under difficult conditions. His track record speaks for itself.

One thing is indisuputable...those who worked for him, know the truth. On the outside, if you hit your numbers all looks rosy...but in this case it's also about how you got there.

 

[masteroftheblaze]

As CEO, Farid's primary responsibility is to grow the stock price for the shareholders. As a shareholder, I have seen the price do nothing but tank under Farid's leadership. Now, to divert attention from his own lousy bean counting decisions, he will slash expenses, i.e. pesonnel, and wallstreet will treat him as a hero
As so often happens in corporate america, "When the crops are bad - shoot some slaves"

 

[taylorengineer]

You have those pesky shareholders and their wanton desire for profits.
When the crops aren't good....they oughta shoot some shareholders. Wouldn't that be a better solution?

 

[Tibbs4]

As CEO, Farid's primary responsibility is to grow the stock price for the shareholders. As a shareholder, I have seen the price do nothing but tank under Farid's leadership. Now, to divert attention from his own lousy bean counting decisions, he will slash expenses, i.e. pesonnel, and wallstreet will treat him as a hero
As so often happens in corporate america, "When the crops are bad - shoot some slaves"

Great comments!!

Farid saw things getting worse in the medium markets before they tried to save things with the ABC fiasco. Very very very poor and ineffective
leadership. I cannot believe he would be around after lunch Monday. What everyone was missing was that his fiduciary responsibility is to the shareholders who for some reason couldn't see the writing on the wall. Listen to the demise of most of Citadel's now sad sounding stations. Look at
who have been all but taken by his bad management. To think that by cutting MORE of the very essence of radio's allure is a positive move, even to
Wall Street, shows you how laughable this entire industry has become. To many CEO/CFO's were more interested in selling stock than growing
revenues to increase stock purchases. Using that money coming in to plug the holes in the sinking ships can only last so long. This is going to
be a fun ride. Paying 30x the reasonable price for stations that are now suffering is just another example of radio executives total lack of forethough. Real question here, but how did all these people get to the top and look at the countless hatchet jobs they have caused. Did no one really see this coming?

 

[livingfruitvirus]

As CEO, Farid's primary responsibility is to grow the stock price for the shareholders. As a shareholder, I have seen the price do nothing but tank under Farid's leadership.

Serves you right for investing in radio. :/

Fun fact: CDL has lost value year over year for over 4 years. Less than 5% of stocks do that.

 

[bgwilde1]

With the Kicks/Eagle cuts, you must look at the other markets they are dismantling....

- In NY, Rocky Allen is out (WPLJ), John Gambling is out (WABC)
- Lots of folks out WLS, Chicago
- Chris Core out at Wash. DC WMAL. Also, did they blow out a whole airstaff at one of the DC stations?

They own 223 stations and, from the bit of reading I have done, they started cutting staff at smaller stations late last year, out of the eye of the big markets and chat boards.

the same buzz also says this is just the beginning, and (I hate rumors, but this one is spinning much harder than usual), the buzz is WPLJ may soon flip formats.

They have well-respected big talent that can pull in money, so just what the heck happened?????

 

[OgOgglby]

Are we allowed to use the name Farid? Is that his middle name?

 

[trusty]

Did anybody else hear SSS on TRG say that Eagle was run like a church?



Guess the donations didn't come through....

 

[jal41]

You have those pesky shareholders and their wanton desire for profits.

We have a WINNER!!!!!!! ;D ;D ;D

If I recall, the sale took well over a year to complete. It seemed like people were on edge waiting to see what would happen, or even if it would happen.

Doesn't matter, because soon all those shareholders will get are stock certificates that can be used as toliet paper or packing material.

Citadel's stock did rise today (3/3), up 0.20 to 1.30. Everyone must be buying the "reorganization" plan.

Transcript of earnings call
http://seekingalpha.com/article/669...-corporation-q4-2007-earnings-call-transcript

 

[Tibbs4]

You have those pesky shareholders and their wanton desire for profits.

We have a WINNER!!!!!!! ;D ;D ;D

If I recall, the sale took well over a year to complete. It seemed like people were on edge waiting to see what would happen, or even if it would happen.

Doesn't matter, because soon all those shareholders will get are stock certificates that can be used as toliet paper or packing material.

Citadel's stock did rise today (3/3), up 0.20 to 1.30. Everyone must be buying the "reorganization" plan.

Transcript of earnings call
http://seekingalpha.com/article/669...-corporation-q4-2007-earnings-call-transcript


can you buy 1/2 shares so you don't have to go completely broke when it goes into negative values in six months???

 

[FloydB]

And, keep in mind, guys, that this wasn't because Eagle was hurt by the Bull by any means. Their numbers were steady. It's just that they're the victims of being in a large corporation and, because Citadel's hurt, they have to take it out where they can, in this case, everywhere. Unfortunately, Eagle will be hurt by the Bull because of their own blood letting. Hey, wasn't the practice of blood letting is what killed a sick George Washington?

You guys have all pointed out the obvious: If Citadel would've left everything alone in Atlanta, then the Eagle/Kicks cluster would've made money for the corporation. But, since they didn't, it'll be more lost revenue due to the loss of advertisers and listeners, ergo the loss in ad rates as well.

On the other hand: What if Citadel targets a niche audience that's currently starved (i.e. Rock 100.5. Yes, the 99X die hards (myself included) are hurt that our heritage stations is kaput, but TRG fans and lovers of a deeper track classic rock playlist (myself as well on the latter) are praising 100.5)? Would it be a gamble worth sacrificing Kicks' flanker and handing the Bull a gift?

 

[Tibbs4]

Floyd --- you are assuming Chitadel wants to make a good, educated decision. Right, now I cannot think of one
good one they have made --- why should they start. I really though a few years back this company was decent.
What a waste of everyone's time and energy. Let them tank first, then maybe someone real will do it right. Oh,
they have tanked. Wait....