Radio stocks

[cm454]

What are we to make of the dramatically lower stock prices of so many broadcast companies?

Citadel just closed at .87 today! Scary.

Are outfits going to have to engage in even more dramatic cross-the-board staff cuts by the end of the year? I am no stock guru, so I am curious about how these low, low prices are to affect daily ops at clusters around the country.

And how ironic is it to see CCU (Clear Channel) sitting pretty with a stable stock price, when they are the single biggest offender when it comes to devaluing this industry's personnel assets.

 

[Goat Rodeo Cowboy]

I don't know if you speak as a person whose entire business experience is in broadcasting, or a person with a wealth of business experience in other lines of work, so I shall cautiously offer some observations.

I have been employed by two companies who suddenly and dramatically slammed the doors shut in bankruptcy. I worked for two others who were struggling to make sure they did not capsize and they threw a bunch of people overboard to lighten the load, and I was included in the castaways.

Been there, Done that, Got a lot of tee shirts that I wear when doing sweaty yard work.

In corporate American I see no evidence that "how you treat your people" is an immediate and direct cause of business failure. We like to think employees treated well are more productive, but employees mistreated and hounded within an inch of their life can be pretty productive also.

Bad stock price (companies in general) can sometimes simply represent taking on too much debt at the wrong time. One of my employers who went bankrupt had a wonderful product, management knew how to make customers happy, but IBM had introduced a new computer series (The AS/400) and the company committed to converting from the S/36s in an aggressive manner which was making our customer base quite happy and excited. Success was going to be a sure thing. Then, an industry we had nothing to do with, the Savings and Loan industry, got caught with their hand in the cookie jar. (circa 1989-1990). The US government was embarrassed and issued new, very tight lending rules. Our bank called our note. We were out of business. Totally unrelated to our management effectiveness.

That's much too long a story to say: You would almost have to be an auditor/consultant with access to multiple broadcasting groups finances to be able to say with any certainty: THIS IS WHY radio stock prices are low.

My guess? Too much leverage. Too much debt. No more room for growth. (Wall Street likes growth.... even if you business model has a few flaws and you haven't figured out how to make money.)

 

[SirRoxalot]

Citadel Solution

It's all part of a conspiracy. Farid's going to drive the stock price so low that he and Judy Ellis can use their bullet-proof bonuses to buy controlling interest, then take the company back private. They'll suck up profits for a few years, then wait for the right time to go with another IPO so they can retire with BIG money.

 

[davideduardo]

What are we to make of the dramatically lower stock prices of so many broadcast companies?

What are we to make at the Dow going from around 14,000 down to near 10,000 in the last few months?

how these low, low prices are to affect daily ops at clusters around the country.

Stock price does not affect operations. Many times a low stock price is symptomatic of being in an industry in disfavor, like drugs are today.

And how ironic is it to see CCU (Clear Channel) sitting pretty with a stable stock price, when they are the single biggest offender when it comes to devaluing this industry's personnel assets.

Clear is holding up because they are going porivate with a fixed buy out price. Why sell if you are going to get more in a few months?

 

[Surfer]

I'll buy any major market radio property for a dollar. Why? Because that's what the medium is now worth and, thanks to boards like this the word about how lousy the medium has become is finally getting to investors. Radio may simply die due to lack of funding.

 

[Basnya]

Sure, stock prices are down.. but will station prices follow suit? I can only hope so...

 

[12 In a Row]

Careful what you wish for.

Reading most of these, you would think radio is the only industry going through changes, lay-offs, technology moving at the speed of light, etc.

Stocks are in the tank.
Energy costs are out of control, trickle down to food costs.
Auto industry continues on a free fall. (one of radio's largest advertiser)
Housing and new construction, at a stand still.
Fannie Mae, Freddie Mac
The dollar is worth little in the rest of the world.

THE PERFECT STORM

Here's the answer, lets get "live & local" a.k.a. "save my job"
and all will be well in the world.

 

[SirRoxalot]

SS, Different Thread

Screw disk jockeys. And auto workers, construction workers, factory workers, and anybody else who can be replace by automation or outsourcing to third world countries who'll be glad to work for slave wages.

Profit is the only motive.

Of course, it's hard to profit if you have no consumers because those people now working in the "service economy" at greatly reduced wages (while profits temporarily soar), and have no money to spend.

Radio isn't delivering what it promised - or what it used to deliver. Advertisers and stockholders are both catching on.

But, you continue along your current path, continue to chant the same "my survey says" mantra, and sup more of that corporate Kool-Aid. What's that about "doing the same things over and over, and expecting different results"?

 

[12 In a Row]

Re: SS, Different Thread

Screw disk jockeys. And auto workers, construction workers, factory workers, and anybody else who can be replace by automation or outsourcing to third world countries who'll be glad to work for slave wages.

Profit is the only motive.

Of course, it's hard to profit if you have no consumers because those people now working in the "service economy" at greatly reduced wages (while profits temporarily soar), and have no money to spend.

Radio isn't delivering what it promised - or what it used to deliver. Advertisers and stockholders are both catching on.

But, you continue along your current path, continue to chant the same "my survey says" mantra, and sup more of that corporate Kool-Aid. What's that about "doing the same things over and over, and expecting different results"?

I'll take your many references to drinking the Kool-Aid as something good.

Keep drinking your poison, complain about how live use to be and how corporate America has screwed you.

As stated earlier, risk your life savings and buy a station.

 

[davideduardo]

Re: SS, Different Thread

Screw disk jockeys. And auto workers, construction workers, factory workers, and anybody else who can be replace by automation or outsourcing to third world countries who'll be glad to work for slave wages.

Except that, based on the cost of living in other places, what you refer to as slave wages is actually a decent income. If rents are below US$ 100 a month, public transportation is the equivalent of a dime, $15 a day in wages is not slave wages.

Profit is the only motive.

Profits even propel the government sector. If business does not make money, there are no taxes. If business does not invest in infrastructure, there are no taxes on assets. And if business does not profit, there are no wages and benefits.

Of course, it's hard to profit if you have no consumers because those people now working in the "service economy" at greatly reduced wages (while profits temporarily soar), and have no money to spend.

Speak for yourself. Overall, we have a transitional economy because the world is catching up to the US ans parts of Europe. That means less market for US goods, since in many areas we are no longer innovative and we have never in general terms made our exports user friendly (In Latin America, Japanese and European broadcast equipment companies toook over all TV gear and most radio stuff decades ago because US companies had no manuals, support or communication in Spanish or Portuguese, while other providers, especially Japan, did).

Radio isn't delivering what it promised - or what it used to deliver.

Again, you are hurling brickbats but not explaining what it is that was promised or delivered.

Advertisers and stockholders are both catching on.

Advertisers pay by the pound... it does not matter if market TSL goes from 20 hours two decades ago to 17 hours now... rates are accepted by advertisers based on delivery, not on image or whatever.

Current ad declines, like the Dow going from 14,000 to about 11,000 in a couple of months, have to do with the economy, particulary the distressed automotive and financial sectors, and not the desirability of radio advertising.

It's not a growth industry, but radio has lots of life in it as long as it continues to reach nearly everybody at least a few times a week.

 

[SirRoxalot]

The Power of The Dark Side

Ah, the Poster Children for Corporate Radio have spoken. All we need is Gr8oldies to chime in, and the picture will be complete.

PS - Have you geniuses improved radio's position as an investment yet? Or in the last 7 years? Get back to me when you get a broadcast company back up to 2005 levels, OK? Then we'll talk about getting back to pre-2001 levels. Radio survived challenge after challenge over the last 75 years through innovation. So far, all I'm seeing from you guys is "fail, rinse, repeat".

PPS - Ah, the old "attack the messenger" response. Corporate radio hasn't screwed me. I've managed to make a nice living in spite of corporate - but then again I'm one of the lucky ones. As I've explained before, my concern isn't about me, or about young people in radio (there aren't any). It's about the people I know who are hanging on by their finger nails after a life time of delivering audiences to advertisers while being abused and underpaid by corporate radio. I know people who are asked to take pay cuts in spite of increased or stable ratings that are at or near the top of the target demo. I know sales people who have had their commissions cut, or been displaced because they "made too much money". I've yet to see top corporate management take a pay cut, or miss a multi-million dollar bonus. Apparently, the pain that we're supposed to share doesn't reach into the penthouse suites.

 

[12 In a Row]

Careful what you wish for.

Reading most of these, you would think radio is the only industry going through changes, lay-offs, technology moving at the speed of light, etc.

Stocks are in the tank.
Energy costs are out of control, trickle down to food costs.
Auto industry continues on a free fall. (one of radio's largest advertiser)
Housing and new construction, at a stand still.
Fannie Mae, Freddie Mac
The dollar is worth little in the rest of the world.

THE PERFECT STORM

Here's the answer, lets get "live & local" a.k.a. "save my job"
and all will be well in the world.

Did you even to bother to read this?

The national economy is heading south.
NO consumer confidence=NO spending=Massive cut backs, lay offs, closings everywhere!!

General Motors alone has called for a 10 billion dollar cut.
Translation....LESS money for advertising on TV, print and radio.
They have just announced they are cutting way back on NASCAR.

Radio is just one many.

 

[adma]

Re: SS, Different Thread

Current ad declines, like the Dow going from 14,000 to about 11,000 in a couple of months, have to do with the economy, particulary the distressed automotive and financial sectors, and not the desirability of radio advertising.

But if the Dow were a radio stock, it'd be down to 1,100 by now.

 

[TheBigA]

The only reason anyone knows the revenues of the public radio companies is they have to publish them by law. So it's easy to attack the corporate guys as the only ones in this situation, but it's way more widespread. You just can't see it because their results aren't published and their stock isn't publicly traded.

One thing any investor will tell you is you can't improve the value of a stock by cutting costs. What any investor is looking for is possible growth. I believe THAT is what is hurting radio more than the profits.

The truth is that radio no longer has a monopoly for the ears of the public. They have other options. Once that happens, there is not going to be any growth for companies that strictly operate as terrestrial radio stations. If they move into other growth areas, they have a chance. But it will require lots of investment, and lots of time, neither of which appeal to investors.

The two best things radio companies can do in order to improve stock price is (1) Combine with other technology companies, or (2) Take your undervalued stock off the table, and re-introduce it at a time when the your company is better positioned for growth. Anyone who thinks you can improve stock price by spending more money on traditional over-the-air programming simply doesn't understand Wall Street. Investors don't make their decisions on programming or other emotional issues. It's strictly about the numbers, and right now, radio isn't growing, and it won't as long as the circumstances stay the same.

 

[LasVegasRadioJunky]

What are we to make of the dramatically lower stock prices of so many broadcast companies?

Citadel just closed at .87 today! Scary.

Citadel was at low at .17 today. Closed at 19 cents.
Scarier!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[SirRoxalot]

Note to Corporate

Citadel is quietly cutting more positions around the country. I'm watching them cut on-air staffers that have decades of service behind them, great numbers, and bring in sponsors that want to be on their show. They're being cut by edict from corporate.

We're at the point where each cut reduces the value of the programming, which reduces the ratings, which reduces the revenue, which leads to further cuts.

Note to corporate: YOU CAN'T CUT YOUR WAY OUT OF THIS MESS. Unless, of course, you cut the layers of UPPER MANAGEMENT that contribute NOTHING to the bottom line. Radio is inherently a LOCAL business. Let LOCAL managers do their jobs, and STOP PAYING UPPER MANAGEMENT MILLIONS. They're the idiots who overpaid for radio stations with borrowed money, leading to the current crisis. Every million that doesn't go to upper management means 15 staffers at the local level who can improve the product, and sell it better to local advertisers.

 

[TheBigA]

Re: Note to Corporate

Radio is inherently a LOCAL business.

That in a few words is why radio is in the toilet. Local radio sales are way off. As much as 40% in some places. If radio is local, and local advertising is down, then what do you do?

 

[SirRoxalot]

Re: Note to Corporate

Radio is inherently a LOCAL business.

That in a few words is why radio is in the toilet. Local radio sales are way off. As much as 40% in some places. If radio is local, and local advertising is down, then what do you do?

Reduce costs at the CORPORATE level. What do THEY bring to the table? Are they "studying more acquisitions"? Are they "bringing in more national money"? If you think that local is "way off", you'd better check out what's happening with national revenue. What's the corporate answer? "Reduce costs". How about reducing the number of VPs and "regional managers" and let the LOCAL managers do the job?

You've got a company like Citadel with the "Farid & Judi Show" uttering statements like "We don't need sales people. Radio sells itself. All we need are salaried order-takers to service most accounts. We're spending too much on sales." Yeah, cut the number and/or quality of people who bring money in the door. BRILLIANT! Next, cut the people who provide the differentiation between every other music provider and your product. BRILLIANT!

On top of it all, you've got high level executives getting bonuses while the product suffers, and revenues decline. Their answer? Dilute the product even more. BRILLIANT! Next they'll be trying to borrow more money to buy radio stations at inflated prices so they can "corner the market" and "create cost-saving synergies". BRILLIANT!

 

[TheBigA]

Re: Note to Corporate

Reduce costs at the CORPORATE level. What do THEY bring to the table?

The numbers are in the field, not at headquarters. But if you want to get rid of the accounts payable folks, I'm sure they can cut a few there.

On top of it all, you've got high level executives getting bonuses while the product suffers, and revenues decline.

No one at the top is getting bonuses this year. Bonuses are based on stock performance, and we know the story there.

 

[davideduardo]

Re: Note to Corporate

No one at the top is getting bonuses this year. Bonuses are based on stock performance, and we know the story there.

Boinuses are generally based on earnings... BCF, EBITDA, etc. Stock price may be a (minor) component, but in a normal market, earnings drive share performance.

By the way, your read on "dividends" in the case of Citadel is also off... long story, but basically, CDL traded restricted stock grants for under-the-water options and they guaranteed retroactive dividends on the transaction... to understand it, I had to get an audit trainer from one of the major accounting firms to red the 10k and 8k reports as this is a fairly unique transaction.