Disturbing
Perhaps the most disturbing aspect to this story is that the financial sharks smell blood in the broadcasting pool. When you start reading things like "the growth of satellite radio is sapping shareholder value" and "negative public sentiment to the terrestrial radio broadcasting market in general", you get the sense that more of this type of activity is in the offing. They wouldn't be trying to drive broadcasting share prices down in order to make a quick hit like this, would they?
Once again, we have Clear Channel to thank for leading the way. If they didn't invent the system, they sure played it to the hilt. Here's how it works:
1. Get shareholders to put up the money for acquisition. Promise big returns through consolidation.
2. Watch the stock drop as the acquisition phase becomes the operating phase, and consolidation impacts both costs and programming, which brings more consolidation, which impacts both costs and programming. Lather, rinse, repeat.
3. Find a private investment fund with the cash to take the company private.
4. Convince shareholders that they'll never get their money back anyway, and that the best they'll do is to take a buyout deal at a couple of dollars more than the current (depressed) share price.
What's the next phase? Sell off the losers, consolidate the winners, and operate efficiently for a couple of years. Anybody want to bet that Clear Channel won't be issuing an IPO for a new, publicly-traded company in a few years? Which means that it will be time to start over with a new set of suckers -er investors who failed to learn their lesson during the last go-round.
PS - Does this remind anybody of a little company that grew fast - but not as big - called Citadel? Does it appear to anyone else that they're on their second spin of the wheel, and that the ABC acquisition is step #1?
PPS - Does anybody believe that satellite radio is a "sirius" threat to well-programmed terrestrial radio? My XMination of their future sees them as a content provider that will reach its largest audience through syndicated programs run on terrestrial radio.
) and the way he believes that can be done is to sell the company.