If we knew then what we know now...

[davideduardo]

Good Morning, David. Maybe my question should be used to start a new thread. When did the concept of LMA's in their common current usage come about? Time Brokerage of limited time blocks has apparently been around for a long time. But the LMA of a station's entire inventory of time has to be much more recent.

The first LMA's I was acquainted with were done in the 1996 and on period, and the reason was to avoid the uncertainty of FCC approval time. A transfer might whip through in 90 days, or might take a year... and with the volume of trades, the delays were both predictable and real. So stations did LMA's and since the Commission realized that the tight control on trafficing and ownership was a thing of the past, the LMA was accepted.

This was not "rent to own" but a way of immediately building a cluster and putting all the pieces together without waiting for the sale to be approved as there was almost total probability of getting that approval.

 

[amfmxm]

But you know what they say about "Inside The Beltway Syndrome"--you're so close to the action that you assume everyone sees what you see.

Problem is, you're also so close that--what's the saying about not being able to see the forest because of all them trees?

You also get the facts and the truth, which is sorely missing from Fran's posts.

Believe what you want to believe, but everything I say is documented in the Congressional Record, and you can't argue with that. And you can call Russ Withers if you think my big city bias is coloring my views.

Read "Clear Vision" by Reed Bunzel, the authorized/underwritten story of Clear Channel published in 2008 (and copyrighted by Clear Channel). Yes, it's really a 300-page PR piece, but it tells--brags, really--how Lowry Mays used his position within the NAB to work on degregulation for 10 years--actually WRITING the draft legislation that became The Bill. And how they used the NAB to lobby for The Bill--confirming Fran's observations.

But most importantly, "Clear Vision" tells how Clear Channel worked very quietly for years leading up to The Bill, so that they would have an enormous advantage over everyone else in the business. Mark Mays brags in the book that it gave them an 18-month head start--and by the time others began to catch up, Mays and co-conspirator Tom Hicks (CapStar, AMFM) were ready to merge into the final version of Clear Channel.

Look, that's not some anonymous poster on radio-info spinning yarns from deep in the woods. It's the Mays Boys bragging about how they scammed the industry.

Yeah, it was a "heist."

 

[Goat Rodeo Cowboy]

This was not "rent to own" but a way of immediately building a cluster and putting all the pieces together without waiting for the sale to be approved as there was almost total probability of getting that approval.

Thank you for introducing the term "rent to own" into the conversation. That is exactly the description of what is happening in a lot of "low dollar station purchases" and is the only way that many people who have long had a dream of acquiring their own stations can make the transition.

A number of years ago the industry was shaped by the old Capital Gains Tax Law which required that the seller of a business could only quality for the favorable treatment of taxable income by accepting no more than 29% down in the sale of their business, and then stretching the payout over seven years minimum. I worked for some people who became owners via that provision of the tax law and had hopes that would be my route into ownership.

Alas, a change in the tax law caused the owners of many types of small business to suddenly change their exit strategy to: "Here's my price and I want ALL cash. If you need credit, see your banker."

That certainly gave the Wall-Street-savvy-and-connected consolidators the upper hand in the years 1996 and following.

 

[amfmxm]

The Hicks brothers (Steve & Tom?) did the first LMA in the Beaumont-Port Arthur, Texas market around 1990. Hicks Broadcasting concocted the scheme to "rescue" a "failing FM" at the point when so many of the idiot buyers who had rushed into radio with all the "free money" from deregulated S&Ls (remember Savings & Loans?) paid waaaaayyyyy too much to get into a business they knew nothing about and quickly crashed and burned.

The NAB (with fellow Texan Lowry Mays' encouragement) portrayed this to the FCC as proof that "radio was in dire financial trouble"--and persuaded the commission to allow LMAs, but--remember--the LMAed property had to be shown to be in "financial trouble." Just another way to expand the ownership cap.

The whole thing only lasted a few years--before the commission simply expanded the ownership cap.

 

[Fran]

The Hicks brothers (Steve & Tom?) did the first LMA in the Beaumont-Port Arthur, Texas market around 1990.

Interesting fact you came up with.

The first LMA I had ever heard of was in Mississippi between Steve Hicks (owner of WMSI) and his friend Don Kirkendall (owner of WJDX). . . .Hicks and Kirkendall worked in the same Texas office building. At that time an LMA was the only way to operate a local FM/FM combo. Their LMA was challenged in court, but their LMA withstood the court challenge. A little later on (not sure of the year), the FCC allowed Hicks to buy Kirkendall’s station. At that point it was game on. Just find a trusted buddy (or family member) to buy a station for the purpose of working a deal where they would lease the station back to you.

At some point the FCC relented and gave permission to actually own the FM/FM combo.

BTW: Reed Bunzel sends out a weekly newsletter (strangely enough he uses gmail and offers no web site). Next time I receive one of his emails, I shall ask him to join in. . . .that should put an end to all the rewriting history going on by the world-is-flat gang.

 

[gr8oldies]

First LMA I was aware of was Jacor LMAing the 550 frequency in Cinncinati from (I believe it was still) Taft. That was around 1991 or 1992

 

[TheBigA]

Look, that's not some anonymous poster on radio-info spinning yarns from deep in the woods. It's the Mays Boys bragging about how they scammed the industry.

Yeah, it was a "heist."

Your use of language like "co-conspirators," "scam," and "heist" make it clear that you're not interested in facts. And you'll even accept stories from people you don't like if they substantiate your opinion. In the meantime, you completely ignore 20 years of regulation that is really at the center of what destroyed radio. The real de-regulation happened in the early 80s: Over-licensing the spectrum, disqualifying newspapers as owners, eliminating public service requirements, and even the elimination of the 7-7-7 rule. It all happened long before the 96 Act, and it laid the groundwork for what happened in 95-96. That change in ownership law would never have happened if all the other things didn't take place first. To blame one or two people ignores the real facts. And the ownership law change didn't affect programming, because all those changes had already happened ten years earlier. Couple that with the budget cuts placed on the FCC, and the resulting exodus of skilled people from that agency, and the 96 Act seems pretty tame. Rather than waste time with books that substantiate your already-held opinions, why not study the real facts?

 

[davideduardo]

The NAB (with fellow Texan Lowry Mays' encouragement) portrayed this to the FCC as proof that "radio was in dire financial trouble"--and persuaded the commission to allow LMAs, but--remember--the LMAed property had to be shown to be in "financial trouble." Just another way to expand the ownership cap.

Even going back to the required audited financials stations had to submit to the FCC from the 50's into the 80's, we saw that half of US stations did not make money. Granted, some of these were small stations where the sole owner took a nice salary instead of submitting earnings to double taxation.

Docket 80-90 overpopulated most small and medium markets, making even more stations either unprofitable or marginal so as to be a poor use of capital.

One of the big issues for radio into the early 90's was that radio was such a small business that it could not get financing, particularly for smaller owners to expand. So radio was a cottage industry, employees did not have benefits comparable to other industries, etc.

 

[SirRoxalot]

Rather than waste time with books that substantiate your already-held opinions, why not study the real facts?

Yeah, instead of wasting time with books that substantiate your already-held opinions, simply agree with TheBigA's already-held opinions. His "facts" are the only real "facts". He has all the answers, right?

PS - Note that I didn't say that he has all the right answers.

 

[TheBigA]

One of the big issues for radio into the early 90's was that radio was such a small business that it could not get financing, particularly for smaller owners to expand. So radio was a cottage industry, employees did not have benefits comparable to other industries, etc.

This is very true, and even now, with all the talk about minority ownership, there is no program where individuals can obtain SBA loands for broadcasting. The ONLY way a lot of these companies could get the investment capital they needed for the the equipment upgrades in the 90s was by IPO. There were lots of small and medium market stations that didn't have basics like air conditioning or proper phone systems until they were bought by one of the big companies. Most didn't have computers or even CD players, as the entire industry was changing over from vinyl. Call it a "heist," but these stations needed money, and there wasn't any available. They were operating out of cinderblock shacks next to their towers, or double-wide trailers in cow pastures (I visited a lot of them). The minute they were bought by a big company, they moved into a new building and got long-needed modern equipment. They would never have had those improvements without outside money.

 

[TheBigA]

Rather than waste time with books that substantiate your already-held opinions, why not study the real facts?

Yeah, instead of wasting time with books that substantiate your already-held opinions, simply agree with TheBigA's already-held opinions. His "facts" are the only real "facts". He has all the answers, right?

PS - Note that I didn't say that he has all the right answers.

I didn't say I have all the right answers either. If you read my posts, I clearly refer you to the Congressional Record and other people who were on the NAB board in the 90s. I'm not asking anyone to believe me. I'm asking you to do real research with the actual documents.

 

[amfmxm]

Look, that's not some anonymous poster on radio-info spinning yarns from deep in the woods. It's the Mays Boys bragging about how they scammed the industry.

Yeah, it was a "heist."

Your use of language like "co-conspirators," "scam," and "heist" make it clear that you're not interested in facts. And you'll even accept stories from people you don't like if they substantiate your opinion. In the meantime, you completely ignore 20 years of regulation that is really at the center of what destroyed radio. The real de-regulation happened in the early 80s: Over-licensing the spectrum, disqualifying newspapers as owners, eliminating public service requirements, and even the elimination of the 7-7-7 rule. It all happened long before the 96 Act, and it laid the groundwork for what happened in 95-96. That change in ownership law would never have happened if all the other things didn't take place first. To blame one or two people ignores the real facts. And the ownership law change didn't affect programming, because all those changes had already happened ten years earlier. Couple that with the budget cuts placed on the FCC, and the resulting exodus of skilled people from that agency, and the 96 Act seems pretty tame. Rather than waste time with books that substantiate your already-held opinions, why not study the real facts?

You and I have had this conversation before--or, at least, very similar conversations (been hanging around this same bar too long)!

No, I'm not a fan of what they did--although I've always grudgingly admired Tom Hicks for being smart enough to come up with the idea (as America's LBO King, Hicks had the kind of Wall Street savvy that Mays--who veered-off from investment banking into radio more-or-less by happenstance--just didn't have). Sort of the same way I've always admired Coach K for using the Sociology department to skirt real Duke academics and put low-SAT Blue Chip affaletes ("Special Admits") on the floor... and be praised for running such a clean program! Not ethical, but very clever.

As I think I've mentioned before in prior conversations, I had a ring-side seat while all this was coming down. All Reed Bunzel's book (a Puff Piece, remember, for-and-by Clear Channel) was confirm what I witnessed. Hell, I didn't write it, and I certainly didn't pick it up expecting to find them bragging about how they had fooled Congress and the rest of the radio industry by doing an end-around on the FCC by getting the laws changed to allow them to dominate the biz. But that's what I found.

I don't quibble with your contention that deregulation began in the eighties--that's Reagan's legacy. All Hicks and Mays did was recognize that the feds were friendly to dereg and take advantage.

It was like shooting ducks on a pond.

 

[davideduardo]

As I think I've mentioned before in prior conversations, I had a ring-side seat while all this was coming down. All Reed Bunzel's book (a Puff Piece, remember, for-and-by Clear Channel) was confirm what I witnessed. Hell, I didn't write it, and I certainly didn't pick it up expecting to find them bragging about how they had fooled Congress and the rest of the radio industry by doing an end-around on the FCC by getting the laws changed to allow them to dominate the biz. But that's what I found.

You are putting your own spin on the book. The book clearly describes legal lobbying efforts and discussions which were done to support their desire to own more stations. You say they "fooled" Congress, while another person might say that they simply lobbied effectively witin the system and with a compelling argument.

You also say that Clear came to dominate the business while the fact is that they reeached 1200 stations and are now around 800 of them in an industry with 14,000 stations. WHile that is a significant presence, it is certainly nowhere near "dominant."

You accuse Clear of "fooling" the industry and the regulators, yet you are doing the same thing yourself: putting a personal spin on things that other people may see totally differently.

 

[amfmxm]

As I think I've mentioned before in prior conversations, I had a ring-side seat while all this was coming down. All Reed Bunzel's book (a Puff Piece, remember, for-and-by Clear Channel) was confirm what I witnessed. Hell, I didn't write it, and I certainly didn't pick it up expecting to find them bragging about how they had fooled Congress and the rest of the radio industry by doing an end-around on the FCC by getting the laws changed to allow them to dominate the biz. But that's what I found.

You are putting your own spin on the book. The book clearly describes legal lobbying efforts and discussions which were done to support their desire to own more stations. You say they "fooled" Congress, while another person might say that they simply lobbied effectively witin the system and with a compelling argument.

You also say that Clear came to dominate the business while the fact is that they reeached 1200 stations and are now around 800 of them in an industry with 14,000 stations. WHile that is a significant presence, it is certainly nowhere near "dominant."

You accuse Clear of "fooling" the industry and the regulators, yet you are doing the same thing yourself: putting a personal spin on things that other people may see totally differently.

You're right, of course. They only scooped up 1,200 of the roughly 3,000 stations that were worth significant money. They only purchased stations in about 250 of the 300-or-so Arbitron-rated radio markets, and didn't fool with the thousands of stations serving tiny little markets and scrapping over nickels and dimes. They only went where the money was. But some people would say that "where the money was" IS the industry. And now they've pared that down to the 800 stations of those 1,200 that are really, really worth hanging onto. Only the best performers.

Look, I don't have a whole lot to complain about, personally. It has all worked out nicely for me, individually. And I'm guessing that it's worked out positively for you and Big A (if, indeed, there are two of you involved). I've never worked for CC or CapStar/AMFM. But I do have many friends in the business who did (or still do), and some of the stuff that they had to suffer through wasn't very pretty. And, beyond that, the impact of Clear Channel's actions--which have been very far-reaching--have not been positive for tens of thousands of people in the radio industry.

And, as you know, there are millions of people outside of radio who hold them accountable for what they perceive as having turned radio into a shell of what once was a great industry.

So, yeah--back to the original question "If we knew then what we know now," one would hope that we would have had a different outcome.

 

[gr8oldies]

Are you kidding me? Clear Channel didn't get the cream of the crop without taking a bunch of dogs. Two daytimers in Crossville TN when there were powerful FM's in town. Stations in places like Norwalk and Chillicothe OH. Yes in some cases it was to engineer move ins but not every case. I don't know who was in fierce competition to buy the Lima cluster that CC is trying to sell.
The question remains: if there had been no Telecom '96 (whether it was cooked up by the New World Order or not) would we all be playing the hits live and partying like it was still 1979? I remember in those days of yore when we wished for a real radio company, with some pockets, to buy the stations we worked for. Now we want insurance companies to own them again. I wonder how
Mom and pop with their 7 stations scattered across 7 cities would have dealt with the internet and iPhones. Would they still be paying us to sit behind the board and say witty things between the hits? Have my doubts

 

[davideduardo]

You're right, of course. They only scooped up 1,200 of the roughly 3,000 stations that were worth significant money. They only purchased stations in about 250 of the 300-or-so Arbitron-rated radio markets, and didn't fool with the thousands of stations serving tiny little markets and scrapping over nickels and dimes.

Clear had the idea they could pile up lots of stations in a state (Ohio was biggest example) and even got Arbitron to do a statewide tabulation; it did not work because advertisers don't buy states, they buy markets. Clear ended up with stations in unrated Ohio markets as well as small rated ones... and a lot of dogs because they came with the stations they wanted.

Or the rocky mountain area... buying stations in Casper and other places that are no bigger than a Rose Bowl crowd. 11 stations in Wyoming alone! That did not work either...

Or maybe the cluster in the Victor Valley market, the lowest income metro in CA, where no station covers the whole market... AM daytimers and Class A FMs a few of which they still have...

They only went where the money was.

That's not true. Unless you hink Bozeman is where the money is. Or how about an AM daytimer or two in Austin or Mankato, MN?

But some people would say that "where the money was" IS the industry. And now they've pared that down to the 800 stations of those 1,200 that are really, really worth hanging onto. Only the best performers.

Yes, they got a lot of good stations along with about 800 not so good ones. CBS bought smarter, so did Entercom and Cox. The hardly got 1200 of the best stations... more like 300 of the 2000 best stations.

 

[Fran]

. . . simply agree with TheBigA's already-held opinions. His "facts" are the only real "facts". He has all the answers, right?
PS - Note that I didn't say that he has all the right answers.

They really have No Credibility Whatsoever. Anyone who states “ . . .the 96 Act seems pretty tame” and my fave quote from the ’95 LA NAB convention. . “. . . . so if the FCC Commissioner was vague, that has nothing to do with anything. A regulator should not discuss pending legislation unless asked during Congressional hearings.”

Honestly, the posts from him and his chum have become the laugh tracks for this topic.

 

[TheBigA]

Honestly, the posts from him and his chum have become the laugh tracks for this topic.

You obviously don't understand the difference between a regulator and a legislator. You don't know the protocols. No wonder you think crimes were committed when no one, including Promethius or Free Press or any of the people who've written books in the last ten years have been able to come up with anything that was illegal. You just don't like the results. Just like the birthers who're trying to accuse the President of not being a US citizen so they can overturn the election.

 

[TheBigA]

All Hicks and Mays did was recognize that the feds were friendly to dereg and take advantage.

It was like shooting ducks on a pond.

I wouldn't put it that way at all.

After ten years of disasterous legislation, they realized they (and many others) needed to get more involved.

To me, the real bad guys here were the feds, who screwed up radio, and then stopped regulating. You can't blame businessmen for looking out for their investment. But you can blame taxpayer-supported regulators who stopped doing their job. And it hasn't gotten any better. If anything, I'd say it's even worse.

 

[davideduardo]

Honestly, the posts from him and his chum have become the laugh tracks for this topic.

You somehow seem to find humor in truth... or is it in reality?

You claimed 7/7/7 was in effect till 1996. It wasn't.

You claimed that the examples I gave you of market duopolies were due to LMAs, but they weren't. Of course, prior to that you said I could not name any market duopolies prior to 1996, when in fact there were dozens and dozens of them.

You claimed Clear and the NAB scammed and lied to Congress. In fact, nearly half of all stations were losing money in the early 90's, and lobbying is not illegal and presenting one's desires and proposals for legislation isn't illegal either.

Of course, I don't find that disinformation funny. I just want to groan.

Oh, and I was at that NAB Radio Convention in LA, and I did not hear what you heard. I heard typical government stuff about "we will see how the act as proposed is implemented" which usually means how they will create administrative law, policies, review procedures and such... things that had not been developed yet and could, thus, not be talked about. The Hill was about to send a big gift package, but the FCC neither knew how to unwrap it nor where to put the contents.