MORE CUTS AT CLEAR CHANNEL?

[bturner]

So true! When my owner saw this happening we had lots of conversations about this. As a former banker and CPA he kept saying the buying frenzy would lead to what we see today. He understood what they were doing and why but seemed to think it was just too much...much like a line of credit so high your income cannot make the monthly payment. He felt the 'big boys' would end up with national program directors, national playlist and national talent, as he put it, a throwback to radio before 1950. He said the day of the air talent was fading fast.

He was quite a great guy to work for. He was a local owner who approached this from his business mind but became swept up in the passion we feel about radio. He remarked he loved to come to the station because the employees loved what they did and were always trying to maximize their skills and creativity. He said he had never seen a business where people loved their career choice so much. It was a nice mix, he saw his position as keeping the curtain up on the stage so we could perform our jobs as he sat on the sidelines and marveled at how we did it and learned the business along the way. And financially, zero debt and we paid cash for what we needed. What else would you expect from a former banker and CPA?

 

[austingeezer]

From Radio Online 11/1/11

Bob Pittman Explains CC Massive Layoffs

During yesterday's Q3 conference call, Clear Channel Media CEO Bob Pittman answered one intriguing question from JPMorgan analyst Avi Steiner regarding the massive programming staff layoffs in Clear Channel's medium- and small-markets. Pittman said, "What (CFO) John Hogan has done with his team, and taken quite a bit of thought in it, is really looking at our smaller markets that don't have an economic structure that allows them to do the same quality of programming as the big markets. And [they] looked at how we can use the assets of the big markets to help the small markets, therefore, obviously, giving an advantage to a Clear Channel station, because we have more of the big markets we can call upon."

Pittman continued, "Any company started before the Internet is almost by definition outmoded in terms of its operational structure. So what Clear Channel did was take a very hard look at the smaller markets, try and figure out, okay, it's 2011, we have all of the assets of Clear Channel, how can we make the products better? That was really the driving force. The horrible thing is that it means that some people lose their jobs...By the way, at the same time, we're adding jobs in National Programming Platforms, strategic partnerships and digital. It is a reallocation of resources and a different way of doing business. Realizing and understanding and acknowledging that the world is different in 2011, it is unfortunate about the layoffs, but the good side is that after this reorganization, the business will be in great shape to operate better, to improve the quality of their performance, therefore attracting more listeners and generating more revenue."

Pittman maintains this was a strategic move to improve the quality of the product in smaller markets and that "It was not about cost-savings." (11-01-11)

 

[mmnassour]

From Radio Online 11/1/11


Pittman maintains this was a strategic move to improve the quality of the product in smaller markets and that "It was not about cost-savings." (11-01-11)

Then why do people have to be fired?

Don't piss on our shoes and tell us it's raining.

 

[jd]

This brings to mind something from Jim Rome, who's been saying it for years (in one way or another): "when an athlete says it's not about the money, it's ALL about the money."

 

[grantchester]

I've seen this movie before.
The national executives live in a different world. They believe they have the wisdom and the locals are retarded, stunted and lacking the enlightenment they have acheived.

What they miss is the dynamic of the local market. With fewer local/regional outlets, the station/listener dynamic is much stronger. The personality stands out.

They get the notion that each station is like a spigot, spewing a 'flavor' of product (CHR, Country, News/Talk etc.) They miss the lesson Ron Rogers taught us when KASE flipped from Easy Listening to Country... it wasn't just the music, it was the people and their connections to the community that kept KASE on top.

The fatal flaw in this is the old idea that listeners are 'captive', and if yours is the 'Classic Rock' station in town, the 'Classic Rock' demographics will HAVE to listen to you. 'Taint so no more.
The internet (and Sirius/XM to a smaller extent) bring infinite alternatives. The only thing they can't provide is that local connection. That connection can't be bought. It has to be built.

Clear Channel is throwing it away. All those carefully cultivated local brands could migrate across platforms... but not if there's no 'There' there.

 

[austingeezer]

Even MORE cuts coming to Clear Channel? Perhaps. Jerry Del Colliano in his 11/28 Inside Music Media column writes:
"It’s the calm before the storm as radio companies prepare to gut local stations as never before to reduce costs and recast an industry. Rumblings of more firings at Clear Channel and even Cumulus, with one of the two radio groups changing it's approach to how it fires."

 

[yeahIwasinradio]

:-[ They let go of everyone at KMXR in CC. My question is this, why are they keeping market/ops managers who aren't on air? I mean, get someone who does both and save cash that way.

 

[daypart]

My question is this, why are they keeping market/ops managers who aren't on air? I mean, get someone who does both and save cash that way.

Wouldn't it make more sense to have market managers who are also doing sales? Sales is the accelerator pedal that makes the bus run. On-air people decide what happens on the bus while it gets to where it's going. You should want to have the person driving the bus understanding what makes the bus go.

 

[austingeezer]

Jerry Del Colliano in his 1/24 Inside Music Media column says more changes at Clear Channel are coming: "Mandatory changes are weeks away from going into effect. Changes that will pave the way for even more cutbacks of live talent, especially on morning shows. With this, Clear Channel will be well on its way to running its prized radio stations on nothing but spit. Here’s what’s about to happen next:

1. Clear Channel will expand getting rid of morning talent to pocket the savings.
2. New systems that will enable a cheap morning show to replace live and local personalities.
3. A new Programming czar mandating on local music choice and local content.
4. New rules for local operation of automated stations – the future for more Clear Channel medium and small markets as well as an aid in reducing major market costs.
5. What staffers call “trained monkeys” to make all of these new changes work."

 

[captex]

it would be best to sell most of thier stations, to preserve the broadcast standards of the past. with local dj's, weather info. and news updates and programmed music locally. cumulus and other big operator's will fall in the same place very sad..

 

[Gumboots]

Private Equity is legal and very profitable to the fund managers. Thanks to the de-reg craze of the 80's-90's, '00s, leveraged buyout companies have gobbled up the broadcast and other industries en masse. Private Equity is virtually unregulated, and makes a few people very rich at the expense of middle class jobs. While PE is legal, it's mighty shady. Thomas Lee and others who bought Univision in 2009 for $12.3 Billion paid a premium for a company that was clearly under-performing. It doesn't make sense! Buy low and sell high, right? Were these investors crazy? Yeah, crazy like foxes. Private Equity guys dangle huge offers to broadcasters who would be nuts to tun them down. After over-paying for 1,000+ stations, in 2008 Clear Channel sold for $18.7 billion in cash plus the assumption of $8 billion in debt. Consequently, you have seen huge personnel cuts at these entities and deterioration of the product. These crazy foxes aren't worried,though, because A) They collect 10-15% management fees whether the investments thrive or not, and B) they eventually declare bankruptcy on their properties, neglecting to thank the US government (taxpayers) for their bailout, getting off the hook for most of their debt. In leveraged buyouts PE firms buy companies using little of their own money, fire people and cut services to the bone, get out of their debt with bankruptcy, then walk away rich, leaving a trail of unemployed and decimated companies in their wake. So using financial mechanics, such as borrowing against the value of a company in order to buy it, the rich guys get richer by destroying jobs, companies, and entire industries. Who thinks this is fair?

This article paints an interesting picture:
[url]http://www.msnbc.msn.com/id/46093730/ns/business-us_business/#.Tx8FyErpGIG [/url]

 

[davideduardo]

Private Equity is legal and very profitable to the fund managers.... Private Equity is virtually unregulated, and makes a few people very rich at the expense of middle class jobs. While PE is legal, it's mighty shady. Thomas Lee and others who bought Univision in 2009 for $12.3 Billion paid a premium for a company that was clearly under-performing.

First you say that private equity is very profitable and then you say that the investors in Univision have written off billions (about $7 to be exact, and then sold 40% of the remaining part for less than $2 billion, making the haircut over $8 billion).

Please, either you make money or lose. You can not do both.

In fact, Univision was overperforming the sector, but the economy went in a nosedive and the media was particularly hard-hit. That has little to do in this case with the investment in UVN.

After over-paying for 1,000+ stations, in 2008 Clear Channel sold for $18.7 billion in cash plus the assumption of $8 billion in debt. Consequently, you have seen huge personnel cuts at these entities and deterioration of the product.

What you saw was a near-depression and the new media explosion. The prices Clear paid in the late 90's were appropriate at the time for the BCF they were generating and the business model was sound. Today, radio has lost, as an industry, around 30% of it's non-inflation-adjusted revenue compared to 1999, and perhaps 55% in inflation-adjusted dollars. That means that everybody, big and small, has to adjust their expenses.

This part has nothing to do with the owners. Even little ma and pa stations were generally financed by private equity... bank loans, independent lenders such as GE Capital, or local investors.

...they eventually declare bankruptcy on their properties, neglecting to thank the US government (taxpayers) for their bailout, getting off the hook for most of their debt.

What radio company has been "bailed out?" In the event of bankruptcy, the lenders and unsecured creditors take the loss. The "government" in the form of withholding taxes, FICA, etc., is a secured creditor and the taxpayers are not taking a loss.

In leveraged buyouts PE firms buy companies using little of their own money, fire people and cut services to the bone, get out of their debt with bankruptcy, then walk away rich, leaving a trail of unemployed and decimated companies in their wake. So using financial mechanics, such as borrowing against the value of a company in order to buy it, the rich guys get richer by destroying jobs, companies, and entire industries. Who thinks this is fair?

This is the way business has worked for centuries. The investment of capital carries a risk. Investment Banks (Private Equity) find investors wanting to make a return on their money. They invest in companies, with the hopes that income or the fruits of an eventual sale will be a reward for risking the money. Sometimes, the risk is more real than perceived, and the investors lose part or all of their capital.

This is also the way the stock market works... if you had shares in Washington Mutual before the recession, you know what the word "loss" means. Nothing evil, nothing unfair. And a lot less risky than betting on the spread or on a pony.

 

[fredcantu]

Nothing evil, nothing unfair...

True... But nothing has ruined more successful and profitable local radio stations like throwing debt payment and high expectation of return into the mix.

 

[MisterRadio]

What I have taken away from all of these postings is that this is the way the people with all the money do business and those of us who make our livings working in these industries are fodder to be used and then tossed aside when we are no longer convenient for them. And you wonder why there are people camping out on Wall Street and in cities all over the country saying this crap doesn't work for them anymore....

 

[mmnassour]

It's called capitalism.....in its most brutal form.

We are nothing but fodder....a commodity...to those who run the radio groups.

If the history of CC proves anything.....it's that.

 

[MisterRadio]

Capitalism isn't the problem. Unfettered capitalism is the problem. People as a rule are no damn good unless society as a whole makes rules to keep them in check.

 

[Tom Wells]

Private Equity is legal...

That's about the best argument that can be made, but that's a pretty lame excuse for what amounts to theft.

As one who is "enjoying" a situation where my employer operates illegally, I am fed up with parasites like this.

Money can only be earned by production of value.
Playing with other people's money ( and leveraging it ) and then keeping a disproportionate amount of "profit' is what got us
into this mess.

One way or another, this theft corrodes and corrupts those who live by this method.
I'm not rubbing my hands with glee over anyone's financial misfortune, but do eagerly look forward the full collapse of
this flawed yet "legal" system.

Mr. Romney is an excellent example. I'd just soon see a pornographer become the president.
They make lots of money, but actually produce a product, albeit equally slimy in its fruits.
Oh, and it's legal too.
At least pornographers aren't trying to convince everyone else that it's a perfectly acceptable and moral way to make a living like
Mr. Romney is.

When I had to take the last pennies out my 401k ( another little Theft-Profit franchise), the money got cleared off the books
as it was supposedly released to me, then there was the wait for a check in the mail.
The local bank, either having not heard of Wells-Fargo, or not trusting Wells-Fargo, would not release the funds for another week.
During this time MY money was off the books, Wells Fargo was out having a wild time with prostitutes and crap tables using my money,
and when they handed it to me I could still smell the stink of where it had been.
And somehow, it wasn't as much money as I gave them in the frist place.
They offered me no excuse or apology for their mismanagement of my money.
I'd rather see simple erosion of the dollars in a matress than hand it over to those who would use my money to fund bad ideas and ventures.

This is no different from hiring unsavory types to do work on your house and then discovering theft of private property.

Such a huge corpse will Clear Channel become.....

 

[mmnassour]

Capitalism isn't the problem. Unfettered capitalism is the problem. People as a rule are no damn good unless society as a whole makes rules to keep them in check.

Completely agreed. Too bad we gave up on those some time back (see: deregulation).

 

[Tom Wells]

My ire perhaps caused an incorrect statement....I have reason now to believe
CC will not die, but will be broken into a dozen or more entities.

This will be good for all, except those who have been at the root of maintaining ignorance and mis-information.

 

[CTHank]

CC is much like a stolen car, it's worth more to Bain Capital in bits and pieces than it is as a fully functioning broadcast operation.