Why the President of Clear Channel radio, John Hogan needs to resign...

[LA_Guy]

Why John Hogan needs to resign….

I remember reading an essay John Hogan wrote some time ago. In it he spoke
about radio with the analogy of a boat. It was quite trite, and ended up with
(I’m paraphrasing). And if the wind dies-ROW! John, it’s time you got
into that boat and rowed away!

Under your direction, Clear Channel radio has done dismally. Ratings are down,
profits are down, despite your cutting away everything expenses are up, and CC
stock is in the tank. Your “less is more” plan is an utter failure. You
singlehandedly have done more to ruin broadcast radio then anyone else in
history! I saw yesterday that you have found the ultimate way to cut station
expenses to zero-shut them down and turn in their licenses! Great idea, John!

You wasted millions of dollars on IBOC, now proven to be a joke. Any Engineer
worth his salt could have told you that IBOC is fatally flawed. Of course,
yours didn’t-but maybe that has something to do with his being on the Board
of Directors of Ibiquity! But I’m sure that’s just a small conflict of interest though.
Besides, you can always lay off more employees to pay for all that useless IBOC hardware.
Right??

Let me clue you into something John, Instead of putting scads of money filling
secondary IBOC channels with automated drivel, why not put that money into
making your PRIMARY stations better? After all, those are where 99.99% of your
listeners are. Plug the boat’s leaks before you worry about its back up
engine. That way the boat won’t sink. And buy a few pumps while you’re at
it-many of your boats are already flooded well above the water line.

But wait-I just figured your whole philosophy out. LESS IS MORE! It doesn’t
just apply to spots-it applies to everything you do! Less live shows. Less
Program Directors. Less Managers. Less Engineers. Less promotion. Less
research. And the more: More voicetracking. More commercials. More
unemployment in the broadcasting field. All courtesy of Clear Channel.

John, somehow you’ve missed a fundamental tenet of life: Excellence begets
excellence. On the other hand, you seem to believe that excellence is too
expensive. Being mediocre is much more profitable. There’s only one problem,
John-your stations are LESS profitable then when they strived to be the best!

Perhaps I’m being unfair to single you out. After all, under Farid
Suleman’s rule, Citadel is just about bankrupt. CBS and Cumulus aren’t
doing much better. But I don’t believe I am being unfair. As the head of the
largest radio group in the world, you set the tone for the entire industry.
It’s you that they look to for leadership, and frankly it isn’t there. All
I hear you talk about is how “perception” is hurting radio. Well, the
hundreds of employees you laid off just before Christmas aren’t a
perception, they are a reality! Those hard working people deserved better from
Clear Channel then to be unceremoniously showed the door! So John, it’s time
to lay yourself off, and re-hire ten of them back with your salary. That way
they’ll be a few more people to plug the leaks in the boat. Because the boat
is sinking John and as its Captain you must go down with the ship.

 

[deff junction]

WOW. That has got to be one of the best postings ever on this or any other radio discussion board.

 

[davideduardo]

Under your direction, Clear Channel radio has done dismally. Ratings are down,

Actually, ratings are up slightly.

profits are down,

Actually, on a same station basis, profits are WAY up. Remember, in 2007 Clear disposed of hundreds of stations, so on a "same station" basis (the way retail is evaluated) the improvement is quite large. On an enterprise basis, the 2006 cash flows were $1.84 billion, and in 2007, per Morningstar's average of analysts' projections, it will be about $1.75 billion with hundreds of stations less! That is very good performance in a bad year for radio.

[/quote]despite your cutting away everything expenses are up, and CC
stock is in the tank. [/quote]

The entire market is in the tank. All gains for 2007 have been wiped out, and the averages are 4% to 6% down in the first 40 days of 2008.

You wasted millions of dollars on IBOC, now proven to be a joke. Any Engineer
worth his salt could have told you that IBOC is fatally flawed.

That is pure opinion. At the SCBA conference in LA 12 days ago, group managers like Stone, Smulyan and Mason predicted an explosion of HD interest with the new low power chipsets that are now ready.

Of course,
yours didn’t-but maybe that has something to do with his being on the Board
of Directors of Ibiquity! But I’m sure that’s just a small conflict of interest though.

It is just the opposite, since Clear owns a piece of iBiquity. It is usual for investors with significant interests in a company to have representative on the board of that company. It would be highly irresponsible and neglect of fiscal responsibility were Clear not to be represented on iBiquity's board.

Besides, you can always lay off more employees to pay for all that useless IBOC hardware.
Right??

It was paid for years ago. And the amount is insignficant in the markets where Clear has put it.

[/quote]Being mediocre is much more profitable. There’s only one problem,
John-your stations are LESS profitable then when they strived to be the best![/quote]

Clever rhetoric, except for the fact that Clear has monster cash flows and excellent profits.

[/quote] CBS and Cumulus aren’t
doing much better. [/quote]

CBS has been separate from Viacom for only 3 years. The Street consensus is that 2007 will be the absolute best of the three years on cash flow (remember CBS is more than radio), and the best year in a decade for radio.

It would be a lot easier to consider your opinions if you did not post false earnings reports, fail to look at the overall economy, and ignore the relatively low costs of capital expenses such as HD and fail to recognize that major owners of companies always sit the board of the companies they are invested in. Your whole point is built on a foundation of falsehood, making your conclusions equally as absurd.

 

[Starscream]

David, you're posting as much false rhetoric as you're claiming LA Guy. Post stuff to back your points up if you want us to believe you.

 

[davideduardo]

David, you're posting as much false rhetoric as you're claiming LA Guy. Post stuff to back your points up if you want us to believe you.

I gave you the sources on the 2007 earnings on CCU and CBS... Morningstar. The ratings data is easy to check... add up Clear's shares in every market they are still in, and you see they are up slightly.

The HD data is simple... an LA station that bills $50 million like KIIS in LA barely blinks on spending $100 k to put HD in. And it was capex money, not expense money.

The comments by Stone, Mason and Smulyan are public record; I think the SCBA still has a web version of the conference available online.

The current levels of the Dow Jones and NASDAQ averages is (together) public record. Look at the close of each on 12/31/07, and the further losses up to Friday's close. All 2007 gains are gone, and about 5% more has been erased in just 40 days of 2008.

If you don't know that large investors are always given board seats, then discussing business with you is futil.

 

[Starscream]

David, you're posting as much false rhetoric as you're claiming LA Guy. Post stuff to back your points up if you want us to believe you.

I gave you the sources on the 2007 earnings on CCU and CBS... Morningstar. The ratings data is easy to check... add up Clear's shares in every market they are still in, and you see they are up slightly.

The HD data is simple... an LA station that bills $50 million like KIIS in LA barely blinks on spending $100 k to put HD in. And it was capex money, not expense money.

The comments by Stone, Mason and Smulyan are public record; I think the SCBA still has a web version of the conference available online.

The current levels of the Dow Jones and NASDAQ averages is (together) public record. Look at the close of each on 12/31/07, and the further losses up to Friday's close. All 2007 gains are gone, and about 5% more has been erased in just 40 days of 2008.

If you don't know that large investors are always given board seats, then discussing business with you is futil.

Don't wave Morningstar data at me and treat me like a petulant child. I asked YOU to back up up your points. Instead you act like I'm flaming you.

You said that this will be the best year "in a decade" for radio. Oh really? Considering dot coms were throwing money at stations in 99 and 00, I really find that hard to believe.

Again, back up your points and don't put the onus on me. I asked a question.

 

[Starscream]

BTW, David, I already checked.

The strength of CC's earnings is coming from its billboard business. NOT the radio business.

Local and national radio revenues were down from less advertising sold in automotive, retail and political advertising categories, although billboard revenue increased 14 percent to $817.5 million during the third quarter of 2007 compared to revenues of $720.3 million for the same period in 2006.

 

[davideduardo]

BTW, David, I already checked.

The strength of CC's earnings is coming from its billboard business. NOT the radio business.

Local and national radio revenues were down from less advertising sold in automotive, retail and political advertising categories, although billboard revenue increased 14 percent to $817.5 million during the third quarter of 2007 compared to revenues of $720.3 million for the same period in 2006.

You are confusing gross revenue with earnings or cash flow (EBITDA). Gross revenue is not "earnings." Operational earnings or net income are the two metrics of actual profitability, with EBITDA being a better indicator of opearations as it excludes non-operating expenses.

As I said, if you go by a same station basis, the radio cash flow (revenue is immaterial) is up. Interesting, billbord expenses are up more than the gross revenue increase... check the SEC filings.

 

[LA_Guy]

David, if all you say is true and 2007 profits were so rosy, then there was no need to lay a single person off last year. The FACT is that they laid off HUNDREDS of people! Why? Things must not be nearly as rosy as all the hyped up reports claim! Either that, or CC is as greedy as Exxon. Either way, as a company they SUCK from a human standpoint. That "all hands" letter Mark Mays wrote last week proves how purely clueless and greedy HE is! Save one for the Gipper, huh? Why? [EDIT]

At Clear Channel, the fish is rotten from the head down. At least under Randy Michaels, it was fun to work there. Now it sucks to work there! How do I know?
I worked there under both Jacor and Clear Channel. Many of my friends still do work there. EVERY SINGLE ONE (and there are over 100 of them) would quit in a heartbeat if there was somewhere else to go. Unfortunately, due to consolidation there isn't-so they put in their time until they get canned or finally can't take it any more.

To Clear Channel, employees are NOT assets. They are liabilities-to be eliminated whenever possible. Working under these conditions when you know they'd can you in a second if they could does not produce rosy morale. Telling them to take one in the ass for the Gipper rubs salt in the wounds.

Now they want to go private-and the Mays will walk away with BILLIONS! As far as I'm concerned, it's blood money and they will receive their Karmic reward for all the families they have ruined with their layoffs. I hope they rot in Hell-where money means nothing by the way!


[EDIT-vulgar content]

 

[Starscream]

David, that point too. There is no reason CC would have put on that hardcore of a hiring freeze unless there was a major money problem. Did you not read Hogan's memo? He all but said the sky was falling at CC.

 

[davideduardo]

Don't wave Morningstar data at me and treat me like a petulant child. I asked YOU to back up up your points. Instead you act like I'm flaming you.

Well, since I had previously mentioned Morningstar, when you asked for backup I had already given, I felt you did not get the meaning of a Morningstar reference.

You said that this will be the best year "in a decade" for radio

No, you are taking that purely and ingenuously out of context. I mentioned that CBS was more than just radio, but that radio, meaning, in context, CBS's radio division, would have an excellent 2007.

Oh really? Considering dot coms were throwing money at stations in 99 and 00, I really find that hard to believe.

The dot come thing blew in 99, and radio advertising categories are cyclical. The most cyclical is automotive, which was not strong in 98, 99 or 2000. Today, we have lost the financial institutions... every year something is off and something else took its place. Older demo stations got little dot com buisness, so the impact is relative to the mix of formats.

Again, back up your points and don't put the onus on me. I asked a question.

I had already sourced the data, if you reread the post.

 

[davideduardo]

David, that point too. There is no reason CC would have put on that hardcore of a hiring freeze unless there was a major money problem. Did you not read Hogan's memo? He all but said the sky was falling at CC.

All the trades point to Bain and Lee as the source. The liklihood is that they wanted no material changes up to the closing.

 

[justareporter]

LA guy should be nominated for a "Best Poster" award. David...well that is another story.

I too worked for CC companies during this almost 40 years in broadcasting. I rmember when they first started out with 10 stations. "Less is More" was their operating philosophy back in the 80's. They came in, fired just about everyone that wasn't absolutely necessary (looking back the fact that we had a news department is now a "luxury" by their standards)...sold anything that wasn't bolted down and reduced all costs, human and otherwise to the bare minimum.

To those who spend hours discussing radio as a P/E statement a quick reminder: this is broadcasting. this is not the 7-Eleven or your local IHOP. Those owneers got the chance to make bushels of money by agreeing to follow certain rules and regulations. One was that they serve the public interest and necessity. It was and is a simple trade: owners get the right to make LOTS of money assuming they do certain things.

CC does none. They have emptied radio stations of staff and thereby relegated their signals to nothing more than a repeater. They have violated the terms of the agreement and one can only hope that as their stations come up for license renewal there are local companies or individuals that can find enough money to rip the license out of CC's greedy little hands.

As laughable: Lowry Mays is the winner of a "Distinguished Service Award" from the NAB. For what? Reducing hundreds of stations to the broadcast equivalent of an empty gas station located on the middle of a Texas state highway? No one works there anymore and they are out of gas...but the pump is still there.

The Mays legacy is they killed an industry.

 

[eyg2181]

i know why the president of clear channel needs to resign, clear channel sucks! the only thing good cc owns is Radio 1045 in Philadelphia. every cc station i ever heard calls themselves something their not....EXAMPLES: 102.5 out of Reading PA, calls themselves "Rock", they have close to zero new rock therefore the format should be classic rock, and the new stuff the do play is like KT Turnstall...HOW IS THAT ROCK? then theres 95.1 WZZO, a hell of a lot better that Y-102, ZZO is a Rock station as well, but they lean WAY too heavy on the classic rock (being that there are 3 local classic rock stations to listen to in allentown) and they play some new stuff, but not all...EX: the will play Sixx AM, some Seether, Alter Bridge, but they will not play System Of A Down, Korn, Tool, ETC...

 

[cflmusiclover]

David, that point too. There is no reason CC would have put on that hardcore of a hiring freeze unless there was a major money problem. Did you not read Hogan's memo? He all but said the sky was falling at CC.

Why no heat on CBS and Emmis for their major firings this past week? Why not criticize Cumulus and Citadel for operating even more lean than CC?

The original post in this thread is typican and usually no more than the rantings of a board-op who can't make it, a frustrated radio veteran who finds themselves out of a job or just some mediocre DJ who sees no future for themselves in the biz and is taking it out on the biggest target.

 

[davideduardo]

David, if all you say is true and 2007 profits were so rosy, then there was no need to lay a single person off last year. The FACT is that they laid off HUNDREDS of people! Why? Things must not be nearly as rosy as all the hyped up reports claim!

In case you did not notice, we are in the early stages of a potential recession or a major slowdown in the economy. There are job cutbacks in every sector of the economy. In case you have never been through a recession in an ad medium, you should know that many businesses cut advertising very early in such a scenario.

 

[TomT]

In addition to the recession, CC has some other problems. (BTW, what recession? Our sales were up 5% last year at my two FM's, 2008 is looking reasonable so far.)

While CC has sold perhaps 100 stations in small markets (about 40 stations in TX/LA to GAP broadcasting, plus perhaps another 25 GAP picked up in Idaho and the mountain states when the Blue Point deal cratered; another smaller cluster in in Oregon, and two very small clusters in Ohio); the big sale (36 markets) to Good Radio/Frequency License is dead.

In addition, the sale of the television division to Providence Capital has not closed yet.

CC has spun off some major market radio stations (Cleveland and Miami, among other markets) to Aloha Trust. This was a condition of the privatization, as the new private CC would then have too many stations in these markets under new multiple ownership rules. This does not represent a "sale" yet, CC does not get the money until these stations are sold out of the trust. Nor does CC receive any revenues from these stations, --those go to the trust for operating expenses.

Now, once the DOJ signs off on the transfer/privatization to Bain Capital and Thomas Lee, additional moneys will be needed to pay off existing shareholders. Obviously, the private equity folks were hoping these sales would have closed in order to have the capital available to pay off the stockholders. Meanwhile, while the initial proposal was to pay some 39$/share to the shareholders on taking CC private; the current price of CCU is $28.79/share.

It looks to be an interesting year at the Borg.

 

[davideduardo]

While CC has sold perhaps 100 stations in small markets (about 40 stations in TX/LA to GAP broadcasting, plus perhaps another 25 GAP picked up in Idaho and the mountain states when the Blue Point deal cratered; another smaller cluster in in Oregon, and two very small clusters in Ohio); the big sale (36 markets) to Good Radio/Frequency License is dead.

There have been many more sales, including two large clusters in CA (Victor Valley, SLO, Yuma, etc., in one and Santa Barbara and others in another) plus significant clusters in the Dakotas, New England, etc. The count is more like 200+ sold so far.

The purpose of the sales was expressed, if I recall correctly, to pay down debt already on the books.

In addition, the sale of the television division to Providence Capital has not closed yet.

Also to pay down debt.

CC has spun off some major market radio stations (Cleveland and Miami, among other markets) to Aloha Trust. This was a condition of the privatization, as the new private CC would then have too many stations in these markets under new multiple ownership rules. This does not represent a "sale" yet, CC does not get the money until these stations are sold out of the trust. Nor does CC receive any revenues from these stations, --those go to the trust for operating expenses.

Nope. Once sold, any superavit of money earned over money spent goes to CCU. Many of the trust stations do not need to be sold, thus the ironic Aloha name ( it means hello as well as goodbye). There will be no need, once TV and suburban stations are sold, to actually divest some of the trust properties, such as Cleveland and Orlando, etc.m unless they simply want to get rid of some dogs, like the 540 and 740 in Orlando.

Now, once the DOJ signs off on the transfer/privatization to Bain Capital and Thomas Lee, additional moneys will be needed to pay off existing shareholders.

That comes from the buyer, not the seller.

Obviously, the private equity folks were hoping these sales would have closed in order to have the capital available to pay off the stockholders.

Actually, the asset sales were to deliver the company with a lower debt assumption, not to move the cash from the company to the buyers.

 

[NewsStud]

David, that point too. There is no reason CC would have put on that hardcore of a hiring freeze unless there was a major money problem. Did you not read Hogan's memo? He all but said the sky was falling at CC.

Why no heat on CBS and Emmis for their major firings this past week?

This is the first time I can recall that Emmis has made any major layoffs. And If comparing Clear Channel to WQCD/WRXP, Clear Channel's layoffs usually have nothinng to do with changing a station's format.

As for CBS, I congratulate Dan Mason for cutting the real fat: Redundant levels of management. While CC keeps cutting below the line producers, talent and support staff making pennies, CBS decided they didn't need 1) a bunch of Vice-Presidents/GMs/GSMs who didn't do much but earned six figures, or 2) two program directors earning six figures for two stations running similar formats.

Whereas the below the people end up taking on more work after each round of layoffs at CC... the managers barely leave their offices to help out in the trenches. Maybe CBS noticed this and decided to keep the more cost-effective people as opposed to letting numbers of people go.

 

[tashamaxwell]

LAGuy that was a great great post! Don't worry about the Eduardo dude cause anyone that calls us loser types that can't make it or something like that is someone who is gainfully employed and holding on to his stake in the business. He can't stand the thought of us so called losers having a say and expressing our viewpoints without tearing them down. Notice he he does it like it's almost his job to do it. He is tireless and relentless. He seems to know the things a higher up would know so you know we just irritate the mess out of him. But keep on posting your thoughts. He'll get his soon and maybe he can spend more time on his yacht and away from his computer. Until then losers unite!