An unintended consequence of the recession is that the companies that performed so poorly that they had to seek bankruptcy protection will live another day to screw up more radio stations.
That's what is a distinct possibility once Citadel clears the bankruptcy court sometime later this year.
Regent has already been given court approval to emerge from bankruptcy as early as this month.
Therefore, shareholders, employees and listeners have been officially screwed and these companies could be among the first to start buying more stations -- as incredible as it may seem.
That may be insane to you, but you and I don't write the rules.
Bankruptcy apparently exists to help radio companies get out of the financial trouble they got themselves into so they can go back to acquiring stations they probably don't have the management ability to run.
Citadel CEO Farid "Fagreed" Suleman already has his new employment contract locked in for when the lenders officially take control of the company.
That wasn't so painful was it?
Shareholders get nothing.
The original stakeholders fronted by Teddy Forstmann -- next to nothing.
The lenders -- well, they get everything including a chance to be acquirers again.
As scary as that sounds imagine Regent buying stations again.
Keep in mind that these two companies are among several that couldn't navigate through the recession that must now be over. I say that cynically because radio stocks are rising and analysts are back to projecting good old fashioned radio as a growth industry.
I sure wouldn't believe an investment bank analyst. Forgive me but they've got a bad track record on seeing the future.
Radio would be a great business if owners didn't have burdensome debt.
How do we know?
Look at Citadel and Regent -- their debt is about to be erased and advertising is picking up. Expenses have been reduced because of repeater radio programming strategies and voice tracking and lots of free cash flow will once again be flowing soon.
And keep in mind how this convoluted system of ours works.
Once debt is removed, the free cash flow allows failed companies like Regent and Citadel to -- all together now -- get themselves into debt again to borrow more money and buy more stations.
Hey, if they get in trouble again, they have their old friend bankruptcy to turn to.
All this is galling to the thousands of radio people who lost their jobs during the recession, but you won't be seeing any of these new acquirers becoming big employers again.
The model is clear.
Buy or die.
Whether you can run the stations or not is not important because equity holders buy things to sell them again at a profit. It's like a giant game of monopoly and you're still looking to just own Baltic and build a few houses on it.
Today's game in radio is shop and sell.
Now for those of you who want to look beyond the happy talk that is being cranked out on this topic, here's the real deal.
1. Radio advertising will pick up but prices will be soft. Radio has no real ability to raise rates. In essence, it will be a long time if ever before stations will get the kind of ad rates they charged when they actually had a number one live and local morning show, for example.
2. Advertisers, especially national ones, are increasingly dictating prices these days -- low prices. Stations are happy to take what they can get.
3. Radio is slobbering all over itself to get a crack at some of the expected corporately sponsored political advertising from the recent Supreme Court ruling. Remember a time when broadcast stations complained about having to take low cost political advertising? Now they are delirious at the thought.
4. No matter how good things get with spot sales, new media spending is going to continue to increase. To keep things in context -- new media advertising rose all through the recession. Advertisers want to buy new media. So the challenge for terrestrial radio is to offer personality and locality -- an irresistible combination that unfortunately has been compromised over the past two years by employee cutbacks in the name of cost savings.
5. Regent and Citadel and even Cumulus (if they ever really fund their new acquisition company) can buy properties on the cheap but every month the economy gets better, an owner would be crazy to sell to these acquirers unless they paid a premium which they most certainly will not pay.
6. Cumulus is not buying Citadel -- sorry, Lew. It sounds great bragging to your employees but for all the reasons I've stated above, why would they sell to you when they are going to acquire stations?
And one more stark reality.
It sucks to be Clear Channel and Cumulus right now.
And very soon it will be great to be Citadel and Regent.
Why?
Citadel gave its company to the lenders it could not repay and no real debt will exist therefore they can develop streams of free cash flow.
Regent can soon do the same -- debt free.
Clear Channel, as we reported yesterday, is facing $18 billion worth of debt that has to be repaid in four years (or refinanced at ungodly high rates) and therefore even with all the free cash flow Clear Channel could throw off during an advertising recovery, most of it will have to go to debt payments.
Clear Channel will not be acquiring anything but refinanced debt.
And Cumulus -- well, they have a covenant to face within the next year or so. I don't think the Dickey brothers like to share so I can't see them trading debt for equity in Cumulus. Therefore, playing financial hide and seek is likely their future.
Cumulus can't buy anything meaningful without choking on the debt it already has so get those thoughts of Lincoln Financial stations out of your head.
This, my friends, is the real recovery -- unfiltered and true.
If you want to work in radio or invest in it, pick a company that has plans to be a major presence in new media (not just non-traditional revenue from interactive).
My conclusion is: terrestrial radio is a great entree into new media by running live and local stations and using radio know-how to build separate podcasting, iPad, Internet, music, mobile Internet and social networking platforms.
Two companies.
Separate and apart.
No matter what kind of recovery we see, the radio group without a standalone new media division will not constitute a growth business.
Thursday, 15 April 2010
Wednesday, 14 April 2010
Clear Channel's Financial Comeuppance
My Italian father, God bless his soul, never knew how much money he had saved in his life even on the day he died.
That's because he did two things extremely well -- save money from his paycheck every week (he was a career military man and then designed catapults for Navy aircraft carriers).
And he paid everything off.
In other words when he bought something, he started paying the debt down immediately and for as long as it took until there was no debt. He died debt free which I know pleased him.
I have tried to learn the same lessons from my dad. Pay off everything you buy and save money. When I got my big Clear Channel settlement, I didn't buy a Ferrari or take a trip around the world. I paid off my mortgage and outstanding expenses. I think my dad would be proud.
You may be like me in your lives but we often forget that today's equity owners of major corporations don't see a virtue in paying anything off.
They want debt.
They leverage debt to buy more.
They pay whatever the best interest rates are and finance that debt over and over again.
But now there's one little problem.
Many of radio's major consolidators have hit the wall. They purchased radio stations and companies during the deregulation boom with fast and easy money. Bought their stations at multiples that were too high then to adequately handle their debt service now.
Somewhere between 1996 and the recession a few years back, they were forced to finance and refinance that debt to stay within loan covenants often at rates that were unfavorable.
When the economy fell apart and radio advertising began to suffer as a result, some radio groups couldn't make their loan payments thus the prepackaged bankruptcies we are seeing and the draconian cutbacks to stay afloat.
I've said all along that we can look with fascination at Citadel's problems and Regent and all the other financially ailing radio groups but the one we should pray for is Clear Channel. Radio doesn't need its market leader stumbling.
Earlier this year I got a kick out of how the cheerleaders on Wall Street were issuing such optimistic forecasts about Clear Channel under equity owners Thomas Lee Partners and Bain Capital.
While I very much admire the broadcasters, managers and sales professionals at Clear Channel, I am not as impressed with their top management.
And one nagging thought when I heard Wall Street analysts waxing eloquent about Clear Channel being out of the woods was -- what about all that expensive debt including the most recent financing at awful interest rates?
So I was not surprised to see an excellent New York Post article that accurately described the real peril ahead for radio's number one group owner and number one borrower.
The piece said if Clear Channel cannot restructure its debt within the next few years, it will likely collapse according to sources The Post interviewed.
But, get this.
The article says that's exactly what Clear Channel creditors want!
Do I believe it?
Hell yes!
Clear Channel has had no success in renegotiating its debt and The Post reports no current discussions going on.
Clear Channel could plod along for a few more years but eventually the debt issue will have to be solved.
Investment banks look for increased revenue along with better interest rates with which to finance existing debt to keep moving forward. I'm sure Lee and Bain have that thought in mind.
But there are extenuating circumstances now.
Radio advertising will come back, no doubt and costs will continue to be cut even at the expense of quality local programming but radio will never again be a growth business without entering the mobile Internet market as a separate and apart co-business.
Read that again.
Separate and apart co-business.
Not an add-on to existing broadcast operations.
Not non-traditional revenue to bolster sagging radio revenue.
And both fit well into the same media company because of terrestrial radio's secret weapon -- its talent and experience making content.
Clear Channel spends spit on mobile Internet -- not even 3% of its annual operating budget even though I'm saying without mobile interactive, the revenue will not be there to pay strangling debt.
Lee and Bain should have walked from the $24 billion leveraged buyout of Clear Channel that made the Mays family rich once again back in 2008. The banks even balked. I was surprised that Lee and Bain went through with the buyout.
Bad move.
If Clear Channel cannot come up with better financing terms, it will default on the $18 billion or so of debt that equity partners bought.
Here's how The Post sums up Lee and Bain's dilemma:
"The market for refinancing loans is hotter than at any time since the recession, but that's not helping Clear Channel, whose large creditors -- Centerbridge Partners and OakTree Capital Management -- are not passive LBO lenders. Centerbridge co-founder Mark Gallogly is formerly a Blackstone Group managing director who cut his teeth buying media companies, and OakTree last week repossessed radio company Regent Communications. Both want to own Clear Channel and are prepared to wait, the first source said".
The tactics are classic. The Evil Empire is now on the receiving side of bullying.
Lenders threatening lawsuits like Clear Channel used to do to almost everybody who got in their way.
A threatened lawsuit if Clear Channel borrowed from Peter (Clear Channel Outdoor) to pay Paul (Clear Channel's huge debt). Outdoor being the business throwing off more free cash flow so using that company to raise new debt made sense to them.
Clear Channel finagling the payback schedule to avoid default any time soon but not avoiding harm's way in the next few years. This debt is going to be an albatross around Clear Channel's neck between now and then.
Here's the math from The Post:
Clear Channel generates $1.4 billion in annual cash flow.
Pays $1 billion in interest (that's right billion in interest!).
Spends $200 million on capital expenditures.
Leaving only $200 million in free cash flow.
$700 million comes due in May of next year.
$4.5 billion in July, 2014.
With $2 billion of cash in the bank, Clear Channel will likely squeak past the 2011 loan payment but there's no money to repay the debt that is due by 2014.
Unless, of course, they go back to the trough and refinance their debt again at God knows what rates.
And that's how it is in the glamorous world of radio consolidation. Live from paycheck to paycheck.
My dad wouldn't do it.
You and I don't want to do it if possible.
And the reason why I often say radio has a competitive disadvantage to come back and mount an attack in terrestrial radio and mobile Internet as two separate and apart businesses is not the talented people who manage, sell, program and run Clear Channel stations.
But the irresponsible top management that can run but cannot hide after July, 2014.
It's that serious.
It's that sad for those of us who love and work in radio -- a great source of cash flow for terrestrial radio if it didn't have so much debt.
And with debt being the focus, companies like Clear Channel can't afford to invest in the mobile Internet even though it is the future of content distribution.
I hope this helps to put things in perspective a little bit. I wanted you to get an idea of what drives my thinking about the prospects for traditional media going forward.
To put it in street terms, the bill collector is coming and if Clear Channel (and others) don't have the money, they are going to have to seek out a loan shark.
That would be -- a lender on Wall Street who is offering high interest rates to allow desperate companies more time to sell assets, make more fees and do mergers that generate -- you guessed it -- more debt.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
That's because he did two things extremely well -- save money from his paycheck every week (he was a career military man and then designed catapults for Navy aircraft carriers).
And he paid everything off.
In other words when he bought something, he started paying the debt down immediately and for as long as it took until there was no debt. He died debt free which I know pleased him.
I have tried to learn the same lessons from my dad. Pay off everything you buy and save money. When I got my big Clear Channel settlement, I didn't buy a Ferrari or take a trip around the world. I paid off my mortgage and outstanding expenses. I think my dad would be proud.
You may be like me in your lives but we often forget that today's equity owners of major corporations don't see a virtue in paying anything off.
They want debt.
They leverage debt to buy more.
They pay whatever the best interest rates are and finance that debt over and over again.
But now there's one little problem.
Many of radio's major consolidators have hit the wall. They purchased radio stations and companies during the deregulation boom with fast and easy money. Bought their stations at multiples that were too high then to adequately handle their debt service now.
Somewhere between 1996 and the recession a few years back, they were forced to finance and refinance that debt to stay within loan covenants often at rates that were unfavorable.
When the economy fell apart and radio advertising began to suffer as a result, some radio groups couldn't make their loan payments thus the prepackaged bankruptcies we are seeing and the draconian cutbacks to stay afloat.
I've said all along that we can look with fascination at Citadel's problems and Regent and all the other financially ailing radio groups but the one we should pray for is Clear Channel. Radio doesn't need its market leader stumbling.
Earlier this year I got a kick out of how the cheerleaders on Wall Street were issuing such optimistic forecasts about Clear Channel under equity owners Thomas Lee Partners and Bain Capital.
While I very much admire the broadcasters, managers and sales professionals at Clear Channel, I am not as impressed with their top management.
And one nagging thought when I heard Wall Street analysts waxing eloquent about Clear Channel being out of the woods was -- what about all that expensive debt including the most recent financing at awful interest rates?
So I was not surprised to see an excellent New York Post article that accurately described the real peril ahead for radio's number one group owner and number one borrower.
The piece said if Clear Channel cannot restructure its debt within the next few years, it will likely collapse according to sources The Post interviewed.
But, get this.
The article says that's exactly what Clear Channel creditors want!
Do I believe it?
Hell yes!
Clear Channel has had no success in renegotiating its debt and The Post reports no current discussions going on.
Clear Channel could plod along for a few more years but eventually the debt issue will have to be solved.
Investment banks look for increased revenue along with better interest rates with which to finance existing debt to keep moving forward. I'm sure Lee and Bain have that thought in mind.
But there are extenuating circumstances now.
Radio advertising will come back, no doubt and costs will continue to be cut even at the expense of quality local programming but radio will never again be a growth business without entering the mobile Internet market as a separate and apart co-business.
Read that again.
Separate and apart co-business.
Not an add-on to existing broadcast operations.
Not non-traditional revenue to bolster sagging radio revenue.
And both fit well into the same media company because of terrestrial radio's secret weapon -- its talent and experience making content.
Clear Channel spends spit on mobile Internet -- not even 3% of its annual operating budget even though I'm saying without mobile interactive, the revenue will not be there to pay strangling debt.
Lee and Bain should have walked from the $24 billion leveraged buyout of Clear Channel that made the Mays family rich once again back in 2008. The banks even balked. I was surprised that Lee and Bain went through with the buyout.
Bad move.
If Clear Channel cannot come up with better financing terms, it will default on the $18 billion or so of debt that equity partners bought.
Here's how The Post sums up Lee and Bain's dilemma:
"The market for refinancing loans is hotter than at any time since the recession, but that's not helping Clear Channel, whose large creditors -- Centerbridge Partners and OakTree Capital Management -- are not passive LBO lenders. Centerbridge co-founder Mark Gallogly is formerly a Blackstone Group managing director who cut his teeth buying media companies, and OakTree last week repossessed radio company Regent Communications. Both want to own Clear Channel and are prepared to wait, the first source said".
The tactics are classic. The Evil Empire is now on the receiving side of bullying.
Lenders threatening lawsuits like Clear Channel used to do to almost everybody who got in their way.
A threatened lawsuit if Clear Channel borrowed from Peter (Clear Channel Outdoor) to pay Paul (Clear Channel's huge debt). Outdoor being the business throwing off more free cash flow so using that company to raise new debt made sense to them.
Clear Channel finagling the payback schedule to avoid default any time soon but not avoiding harm's way in the next few years. This debt is going to be an albatross around Clear Channel's neck between now and then.
Here's the math from The Post:
Clear Channel generates $1.4 billion in annual cash flow.
Pays $1 billion in interest (that's right billion in interest!).
Spends $200 million on capital expenditures.
Leaving only $200 million in free cash flow.
$700 million comes due in May of next year.
$4.5 billion in July, 2014.
With $2 billion of cash in the bank, Clear Channel will likely squeak past the 2011 loan payment but there's no money to repay the debt that is due by 2014.
Unless, of course, they go back to the trough and refinance their debt again at God knows what rates.
And that's how it is in the glamorous world of radio consolidation. Live from paycheck to paycheck.
My dad wouldn't do it.
You and I don't want to do it if possible.
And the reason why I often say radio has a competitive disadvantage to come back and mount an attack in terrestrial radio and mobile Internet as two separate and apart businesses is not the talented people who manage, sell, program and run Clear Channel stations.
But the irresponsible top management that can run but cannot hide after July, 2014.
It's that serious.
It's that sad for those of us who love and work in radio -- a great source of cash flow for terrestrial radio if it didn't have so much debt.
And with debt being the focus, companies like Clear Channel can't afford to invest in the mobile Internet even though it is the future of content distribution.
I hope this helps to put things in perspective a little bit. I wanted you to get an idea of what drives my thinking about the prospects for traditional media going forward.
To put it in street terms, the bill collector is coming and if Clear Channel (and others) don't have the money, they are going to have to seek out a loan shark.
That would be -- a lender on Wall Street who is offering high interest rates to allow desperate companies more time to sell assets, make more fees and do mergers that generate -- you guessed it -- more debt.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.
Tuesday, 13 April 2010
Conan on TBS -- Smart?
For Conan O'Brien, getting pushed out of his Tonight Show digs at NBC has turned into quite a profitable business.
NBC paid him off -- $45 million to O'Brien and staffers -- when the network decided to reinstate Jay Leno to Conan's spot after Leno's ill-fated months in the 10 pm weeknight slot.
Everyone thought Conan was headed to Fox -- including Fox -- according to Deadline Hollywood's reporting. More talks were said to be scheduled between Conan and Fox after the NAB Convention now underway in Las Vegas.
Then the shocker.
In about less than two weeks, according to news accounts, Conan O'Brien's people decided to take an offer from TBS to bring his offbeat, youth-oriented comedy to cable.
Smart?
Obviously for O'Brien, it was.
He's getting a reported $10-12 million a year in a five-year deal that also gives Conan's production company ownership of his show with TBS taking a smaller stake in it. Not to mention the four-day workweek.
This is more than a story about a spurned TV comic who was pushed out of his Tonight Show chair and rose to get revenge.
It's about the changing audience, the unusual appeal of paid cable in a free world and, well -- the growth of the Internet.
How so?
Since leaving NBC with all that money, Conan has miraculously discovered the Internet.
He's been attracting over a million people to his online antics and has embraced Twitter like never before. See, his youthful fans are watching more cable and obviously, they are also the Internet generation.
So far so good.
Conan pulled a friendlier coup when George Lopez' current 11 pm TBS show was designated for midnight. Lopez, being the good solider (perhaps better than Conan when NBC decided to restore Leno to The Tonight Show) said he'd love to have Conan as a lead-in come this Fall.
O'Brien cannot be on live television until September under his NBC exit agreement, but he can tour and he's using the Internet to drive his "Legally Prohibited from Being Funny on Television Tour."
As shocking as the Conan announcement was to the traditional television community, you had to see it coming.
Conan's audience grew up on cable -- niche programs more so than the homogenized fare the major TV networks have been used to offering.
They reside on the Internet and as soon as O'Brien figured it out, they flocked to him.
Now it's a win-win-win.
Conan gets rich again with approximately the same salary NBC would have paid him that they already had to pay him to leave.
One win.
The audience gets a cult-figure, quirky, cable-ready O'Brien.
Two wins.
TBS gets to sell advertising and stands to make a profit from the get-go with a former big network talent who is not aging. In fact, he was too young for NBC's audience.
Three wins.
The Wall Street Journal reports:
"The defection of a big-name broadcast TV talent to cable TV comes amid a creep of programming and advertising dollars to pay TV. Cable networks have invested billions of dollars in original scripted shows, high-profile sports events, kids' programming and late-night shows".
O'Brien is quoted as saying, "In three months I've gone from network television to Twitter to performing live in theaters, and now I'm headed to basic cable," Mr. O'Brien said in a TBS statement announcing the late-night show. "My plan is working perfectly.'"
Tongue planted firmly in his cheek but absolutely true.
Here's the future:
1. Cable is a great interim step, but soon an Internet-only video shows like the kind Conan (and other genres) can do will reside only online and on mobile entertainment devices. But they can't be like traditional television. Read on.
2. The content will resemble an assembly of YouTube clips that can be viewed in one session, or individually at the whim of fans exercising their right to get content on demand.
3. Social networking will be included and I'm not just talking Twitter and Facebook. More like a separate "nation" for, in this case, Conan fans to communicate with each other.
4. New forms of ad revenue such as performing in public venues with sponsorship tours. By going to cable, Conan gets to enter the new space while being funded by the traditional advertising model of spot TV. Believe me, advertisers are more than interested in finding their way to new media.
5. Mass communication over traditional media is waning. The future is programming delivered where people now live and will soon reside -- online, on phones and iPads.
Conan saw the future and you see it, too.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
NBC paid him off -- $45 million to O'Brien and staffers -- when the network decided to reinstate Jay Leno to Conan's spot after Leno's ill-fated months in the 10 pm weeknight slot.
Everyone thought Conan was headed to Fox -- including Fox -- according to Deadline Hollywood's reporting. More talks were said to be scheduled between Conan and Fox after the NAB Convention now underway in Las Vegas.
Then the shocker.
In about less than two weeks, according to news accounts, Conan O'Brien's people decided to take an offer from TBS to bring his offbeat, youth-oriented comedy to cable.
Smart?
Obviously for O'Brien, it was.
He's getting a reported $10-12 million a year in a five-year deal that also gives Conan's production company ownership of his show with TBS taking a smaller stake in it. Not to mention the four-day workweek.
This is more than a story about a spurned TV comic who was pushed out of his Tonight Show chair and rose to get revenge.
It's about the changing audience, the unusual appeal of paid cable in a free world and, well -- the growth of the Internet.
How so?
Since leaving NBC with all that money, Conan has miraculously discovered the Internet.
He's been attracting over a million people to his online antics and has embraced Twitter like never before. See, his youthful fans are watching more cable and obviously, they are also the Internet generation.
So far so good.
Conan pulled a friendlier coup when George Lopez' current 11 pm TBS show was designated for midnight. Lopez, being the good solider (perhaps better than Conan when NBC decided to restore Leno to The Tonight Show) said he'd love to have Conan as a lead-in come this Fall.
O'Brien cannot be on live television until September under his NBC exit agreement, but he can tour and he's using the Internet to drive his "Legally Prohibited from Being Funny on Television Tour."
As shocking as the Conan announcement was to the traditional television community, you had to see it coming.
Conan's audience grew up on cable -- niche programs more so than the homogenized fare the major TV networks have been used to offering.
They reside on the Internet and as soon as O'Brien figured it out, they flocked to him.
Now it's a win-win-win.
Conan gets rich again with approximately the same salary NBC would have paid him that they already had to pay him to leave.
One win.
The audience gets a cult-figure, quirky, cable-ready O'Brien.
Two wins.
TBS gets to sell advertising and stands to make a profit from the get-go with a former big network talent who is not aging. In fact, he was too young for NBC's audience.
Three wins.
The Wall Street Journal reports:
"The defection of a big-name broadcast TV talent to cable TV comes amid a creep of programming and advertising dollars to pay TV. Cable networks have invested billions of dollars in original scripted shows, high-profile sports events, kids' programming and late-night shows".
O'Brien is quoted as saying, "In three months I've gone from network television to Twitter to performing live in theaters, and now I'm headed to basic cable," Mr. O'Brien said in a TBS statement announcing the late-night show. "My plan is working perfectly.'"
Tongue planted firmly in his cheek but absolutely true.
Here's the future:
1. Cable is a great interim step, but soon an Internet-only video shows like the kind Conan (and other genres) can do will reside only online and on mobile entertainment devices. But they can't be like traditional television. Read on.
2. The content will resemble an assembly of YouTube clips that can be viewed in one session, or individually at the whim of fans exercising their right to get content on demand.
3. Social networking will be included and I'm not just talking Twitter and Facebook. More like a separate "nation" for, in this case, Conan fans to communicate with each other.
4. New forms of ad revenue such as performing in public venues with sponsorship tours. By going to cable, Conan gets to enter the new space while being funded by the traditional advertising model of spot TV. Believe me, advertisers are more than interested in finding their way to new media.
5. Mass communication over traditional media is waning. The future is programming delivered where people now live and will soon reside -- online, on phones and iPads.
Conan saw the future and you see it, too.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.
Monday, 12 April 2010
Cumulus Is US Air and Bonneville is Southwest
You’ve probably heard that US Airways, the financially troubled airline based in Tempe, AZ is at it again trying to buy a company larger than itself -- United Airlines.
This reminds me of Cumulus.
CEO Lew Tricky Dickey is talks all about growing -- acquiring more stations even if the company he runs is upside down himself on its loans that come due in the next year.
That’s why Dickey has engineered a faux $500 million investment pot with Crestview to scare people into thinking he actually could make major acquisitions.
Accounts from Cumulus employees say that His Royal Ego is mouthing off about buying financially-troubled Citadel (again) just as US Airways has been “talking about” buying United again.
Just what the country needs -- two piss poor airlines rolled into one.
Just what radio needs -- two God-awful companies under Dickey mismanagement.
In so many ways, Cumulus is US Airways.
Both companies are poorly run and in financial jeopardy.
Both have CEOs drunk with power.
Both have the unhappiest employees in their segment working for them.
Both Cumulus and US Airways are giving their customers less.
US Airways is charging more and Cumulus would charge more if they could get it from suspicious advertisers. US Airways passengers hate the airline and local Cumulus audiences have to hate the fact that their stations are off-the-air at times, filled with irrelevant content and devoid of personalities.
On the other hand, Bonneville is the equivalent of Southwest Airlines.
Bonneville is definitely not in financial trouble and makes business decisions as operators not speculators.
Both Bonneville and Southwest Airlines have management that is smart, employee friendly and strategically on track. Neither is perfect, but they are at the top of their game faults and all.
Everyone seems to want to work for Bonneville if they are serious about staying in radio and Southwest is the best airline job to have in their industry.
Customers of Southwest know what the discount airline is and appreciate not having to pay silly and deceptive charges for checking luggage. Bonneville listeners get a quality product even in an era of less is more, repeater radio and fake localism.
What we have here is a perfect analogy for what happens when Wall Street sharks takeover two industries that have “air” in common (in and on).
It’s unimaginable that almost-bankrupt companies like US Airways and Cumulus could be in talks to acquire even a lemonade stand from two 7 year olds yet there you have it -- US Airways wants United and Cumulus just has to have anything and everything.
On Wall Street, however, this is the order of the day because it is not about successfully operating companies, it’s about acquiring, earning fees, getting out at a profit. The actual businesses as with airlines and many radio companies are simply collateral damage.
This kind of mentality clouds good strategic thinking -- the quality Southwest and Bonneville possess.
That’s why troubled airlines in the hands of lenders and speculators think it is just fine to charge customers who have already purchased a ticket to pay for checking their luggage. These add-on charges are helping poorly run airlines generate lots of revenue even if it kills off passenger loyalty.
Spirit Airlines (or as I call it MeanSpirit Airlines) is thinking about charging passengers $45 per bag for carry-on luggage.
Cumulus thinks the same way.
Cumulus cuts back on a different kind of “air” -- on-air programming -- generating pap that it calls local content and doesn’t worry about ratings, listeners or loyalty. This saves Cumulus a lot of money.
Failed airlines know the only way to survive is to get bigger -- not better.
Better doesn’t matter in the world of equity investors. Continental turned down United’s offer to merge and some industry experts think flirting with US Airways again will make Continental jealous and thus, merge with United.
Hard to believe?
Not really.
Continental sure doesn’t want to be left out when the last big legacy airlines become the few, the shamed, the consolidated.
Merge or die -- that’s the order of the day.
Except if you are Southwest or Bonneville.
Then it is operate or die.
Last year when the rumors circulated that Citadel was looking to sell some of its ABC properties to avoid bankruptcy, Bonneville was mentioned as a buyer (maybe because they were the only prospect that had cash on hand). I never believed for a minute that Bonneville’s Bruce Reese would buy even one of these formerly glorious ABC stations.
I believe Farid Suleman believed it, but not Reese.
Suleman is a circus clown.
Reese is a media executive.
Both radio and airlines have turbulence in common.
Airlines are victims of fuel prices, poor management, poor employee relations and bad customer service so even when the market picks up their pilots and flight attendants will not be happy.
Their inability to hedge prices on fuel (as Southwest does very successfully) makes them a continue victim of the oil cartel.
Fliers have to hold their noses when airlines recover because these airlines have no clue how to serve the public -- nor do they particularly care.
They just move bodies from airport to airport.
Radio companies like Cumulus, Citadel and Clear Channel have a dirty little secret you rarely read about in the press.
The only way they can keep operating when their debt is so high is to either hand over their companies to the lenders or borrow more at higher almost-impossible-to-repay rates to meet loan covenants and bide more time.
Or both.
This is the world we live in.
The one that worships Shitty Bank (I mean, Citibank) and failed Goldman Sachs and thinks of Warren Buffet as an old man.
Buffet buys management first and secondarily, the company along with the know-how.
Radio’s three biggest groups -- its trendsetters -- worship anyone who will lend them money to perpetuate all the mistakes they’ve made that can’t be fixed by further acquisition.
Goldman Sachs CEO Lloyd Blankfein stands to collect a $100 million bonus.
Lew Tricky Dickey just took an almost $500,000 bonus for running his company into the ground last year and that number could be as high as $1 million if he meets certain targets and God only knows what they are or how easy they are to meet.
How does the already wealthy Dickey take that kind of money when his employees are getting fired, working overtime for free in some cases and complain about being abused?
So if you ever wonder why the radio industry is acting more like the airline industry that’s because they are the same thing.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
This reminds me of Cumulus.
CEO Lew Tricky Dickey is talks all about growing -- acquiring more stations even if the company he runs is upside down himself on its loans that come due in the next year.
That’s why Dickey has engineered a faux $500 million investment pot with Crestview to scare people into thinking he actually could make major acquisitions.
Accounts from Cumulus employees say that His Royal Ego is mouthing off about buying financially-troubled Citadel (again) just as US Airways has been “talking about” buying United again.
Just what the country needs -- two piss poor airlines rolled into one.
Just what radio needs -- two God-awful companies under Dickey mismanagement.
In so many ways, Cumulus is US Airways.
Both companies are poorly run and in financial jeopardy.
Both have CEOs drunk with power.
Both have the unhappiest employees in their segment working for them.
Both Cumulus and US Airways are giving their customers less.
US Airways is charging more and Cumulus would charge more if they could get it from suspicious advertisers. US Airways passengers hate the airline and local Cumulus audiences have to hate the fact that their stations are off-the-air at times, filled with irrelevant content and devoid of personalities.
On the other hand, Bonneville is the equivalent of Southwest Airlines.
Bonneville is definitely not in financial trouble and makes business decisions as operators not speculators.
Both Bonneville and Southwest Airlines have management that is smart, employee friendly and strategically on track. Neither is perfect, but they are at the top of their game faults and all.
Everyone seems to want to work for Bonneville if they are serious about staying in radio and Southwest is the best airline job to have in their industry.
Customers of Southwest know what the discount airline is and appreciate not having to pay silly and deceptive charges for checking luggage. Bonneville listeners get a quality product even in an era of less is more, repeater radio and fake localism.
What we have here is a perfect analogy for what happens when Wall Street sharks takeover two industries that have “air” in common (in and on).
It’s unimaginable that almost-bankrupt companies like US Airways and Cumulus could be in talks to acquire even a lemonade stand from two 7 year olds yet there you have it -- US Airways wants United and Cumulus just has to have anything and everything.
On Wall Street, however, this is the order of the day because it is not about successfully operating companies, it’s about acquiring, earning fees, getting out at a profit. The actual businesses as with airlines and many radio companies are simply collateral damage.
This kind of mentality clouds good strategic thinking -- the quality Southwest and Bonneville possess.
That’s why troubled airlines in the hands of lenders and speculators think it is just fine to charge customers who have already purchased a ticket to pay for checking their luggage. These add-on charges are helping poorly run airlines generate lots of revenue even if it kills off passenger loyalty.
Spirit Airlines (or as I call it MeanSpirit Airlines) is thinking about charging passengers $45 per bag for carry-on luggage.
Cumulus thinks the same way.
Cumulus cuts back on a different kind of “air” -- on-air programming -- generating pap that it calls local content and doesn’t worry about ratings, listeners or loyalty. This saves Cumulus a lot of money.
Failed airlines know the only way to survive is to get bigger -- not better.
Better doesn’t matter in the world of equity investors. Continental turned down United’s offer to merge and some industry experts think flirting with US Airways again will make Continental jealous and thus, merge with United.
Hard to believe?
Not really.
Continental sure doesn’t want to be left out when the last big legacy airlines become the few, the shamed, the consolidated.
Merge or die -- that’s the order of the day.
Except if you are Southwest or Bonneville.
Then it is operate or die.
Last year when the rumors circulated that Citadel was looking to sell some of its ABC properties to avoid bankruptcy, Bonneville was mentioned as a buyer (maybe because they were the only prospect that had cash on hand). I never believed for a minute that Bonneville’s Bruce Reese would buy even one of these formerly glorious ABC stations.
I believe Farid Suleman believed it, but not Reese.
Suleman is a circus clown.
Reese is a media executive.
Both radio and airlines have turbulence in common.
Airlines are victims of fuel prices, poor management, poor employee relations and bad customer service so even when the market picks up their pilots and flight attendants will not be happy.
Their inability to hedge prices on fuel (as Southwest does very successfully) makes them a continue victim of the oil cartel.
Fliers have to hold their noses when airlines recover because these airlines have no clue how to serve the public -- nor do they particularly care.
They just move bodies from airport to airport.
Radio companies like Cumulus, Citadel and Clear Channel have a dirty little secret you rarely read about in the press.
The only way they can keep operating when their debt is so high is to either hand over their companies to the lenders or borrow more at higher almost-impossible-to-repay rates to meet loan covenants and bide more time.
Or both.
This is the world we live in.
The one that worships Shitty Bank (I mean, Citibank) and failed Goldman Sachs and thinks of Warren Buffet as an old man.
Buffet buys management first and secondarily, the company along with the know-how.
Radio’s three biggest groups -- its trendsetters -- worship anyone who will lend them money to perpetuate all the mistakes they’ve made that can’t be fixed by further acquisition.
Goldman Sachs CEO Lloyd Blankfein stands to collect a $100 million bonus.
Lew Tricky Dickey just took an almost $500,000 bonus for running his company into the ground last year and that number could be as high as $1 million if he meets certain targets and God only knows what they are or how easy they are to meet.
How does the already wealthy Dickey take that kind of money when his employees are getting fired, working overtime for free in some cases and complain about being abused?
So if you ever wonder why the radio industry is acting more like the airline industry that’s because they are the same thing.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.
Friday, 9 April 2010
Why No Radio On the iPad
Steve Jobs just made it easier for iPhone users to multitask on their cell phones with an announcement regarding upcoming changes to the new iPhone operating system.
Phone users have been begging for multitasking capability on their iPhones. Apple offers some multitasking but it has been limited to a few Apple applications.
The new iPad -- introduced over a month ago -- was announced with the old operating system that does not allow non-Apple multitasking.
Perhaps the bigger news out of the Jobs event was the introduction of ad serving (iAds) that Apple will use to give Google a run for mobile advertising money.
You don't get Jobs pissed off.
When Adobe did it, he removed Flash from his iPhone plans and you'll note that Flash does not work on the new iPad.
That's not fair.
Childish.
Mean.
Vindictive.
But somehow Jobs gets away with it.
When Eric Schmidt turned on Jobs (Schmidt runs Google and was on the Apple board of directors), Jobs plotted revenge. Schmidt wanted a piece of the mobile phone business and went from partner to competitor with the Android.
Result: iAds -- Apple's revenge against Google.
At least when Jobs acts with revenge, he's intelligent if not mean. When the three blind mice of radio consolidation are vengeful, they kind of act like dummies.
One reader wrote to me yesterday that he has heard Cumulus CEO Lew Dickey brag that Cumulus is going to buy Citadel. Well, I've heard that one so many times it's laughable. Dickey is apparently delusional.
He'd be lucky to buy Regent (and I don't think he will).
Now just why would Farid Suleman or his investors want to sell to Dickey when the radio business is supposedly looking at a recovery?
Suleman has a new deal to stay on and continue to continue the same level of excellence that forced Citadel into bankruptcy.
Which brings me to the real issue which is -- why are radio CEOs so obsessed with yesterday and not tomorrow?
Buying up bankrupt radio groups, stations in distress, turning the industry into one big radio national network. That's yesterday.
Every time Steve Jobs opens his mouth, another piece of well thought out strategy is revealed. Usually -- almost always -- Apple prevails and advances its fortunes.
It is not an accident that built-in radio capability is not included in most Apple products and in the Touch, where it is featured, the radio feature has laid an egg.
This is not to say that radio is bad.
It's more complicated than that.
Radio broadcasting -- you know, 24/7 -- is not necessary in an on-demand world. I'm not telling you that -- consumers are. Even Pandora is consumed differently than broadcast radio. It is not a turn it on until you can't listen anymore experience.
Perhaps with multitasking readily available this will change.
But I doubt it.
I'm giving Steve Jobs the benefit on this one. He'd put a radio smack in the middle of every device he built if it would sell his products. (Please re-read that last sentence).
It might be nice to have radio playing in the background while you are using apps, but you can have music to your liking now if that's what you really want. No need for repeater radio on a cool device like an iPhone or iPad.
My friends who run the radio industry are so used to being a monopoly that they can't fathom that broadcasting doesn't really fit into an iPhone or iPad. The much heralded iPod Touch got radio capability added and the happy talkers in the broadcasting industry saw this as the most important event since Marconi.
But my theory was tested again -- in an on-demand world consumers want content ...
... when they want it ...
... for as long as they want ...
... and they want to have the ability to hear it, see it or read it.
That is not the current definition of radio.
So, the next time you read about analysts projecting radio revenue up a whopping one or two percent next year, stop and think what it could really be if radio CEOs actually studied the real revolution taking place -- that of and by the consumer.
You see, radio thinks of all new media as non-traditional revenue. And that's the problem.
Sure, adding interactivity to radio can bring you a mobile sponsor, a banner ad or even an application patron but that's not the growth industry I see ahead.
Interactive, new media is not non-traditional radio revenue.
It is a separate industry of Internet content, social networking, mobile content that will be monetized by event marketing, subscriptions and mobile advertising.
Or to put it in a more dramatic way --
While Cumulus CEO Lew "Tricky" Dickey is off bragging about $500 million he hasn't raised yet with Crestview purportedly to acquire stations that aren't for sale in a market that doesn't have loan money available for rates higher than a loan shark would offer them, you see why only Steve Jobs is channeling reality.
In the end, it will not matter if radio is ever enjoyed on a mobile device as a broadcast medium.
What does matter is that content created and marketed by radio talent and radio companies becomes part of the mobile Internet that our good friend Mr. Jobs is rapidly moving into already.
Can you begin to see that we're not insulting your mother when we say mobile users don't need 24/7 radio?
The mobile Internet is the future of radio or else there is no growth business for the industry.
And, again ironically, while radio companies ineptly try to add interactive non-traditional revenue to broadcast radio and then foist it upon mobile users, they are hurting the industry we call radio.
Let me be clear.
Firing personalities, creative program directors, managers, sales professionals and support staff to save money is the exact worst thing radio CEOs can do. Make good radio for people who still want to listen to radio.
That's what NPR does.
That's what KCRW does.
That's what many small and medium market local operators do.
But don't stop there.
A separate new business is the mobile Internet and it's not the same as radio.
Just because Dickey, Fagreed Suleman, John Slogan Hogan and their admirers don't get it is no reason why medium and small groups can't see the future.
The consumer always tells you your next move.
Not the three blind mice of radio.
P.S.
Dr George Pollard interviewed me recently for Grub. It's a long interview that covers everything from my relationship with Clear Channel to how I see the future. If you're interested, here's the link.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Phone users have been begging for multitasking capability on their iPhones. Apple offers some multitasking but it has been limited to a few Apple applications.
The new iPad -- introduced over a month ago -- was announced with the old operating system that does not allow non-Apple multitasking.
Perhaps the bigger news out of the Jobs event was the introduction of ad serving (iAds) that Apple will use to give Google a run for mobile advertising money.
You don't get Jobs pissed off.
When Adobe did it, he removed Flash from his iPhone plans and you'll note that Flash does not work on the new iPad.
That's not fair.
Childish.
Mean.
Vindictive.
But somehow Jobs gets away with it.
When Eric Schmidt turned on Jobs (Schmidt runs Google and was on the Apple board of directors), Jobs plotted revenge. Schmidt wanted a piece of the mobile phone business and went from partner to competitor with the Android.
Result: iAds -- Apple's revenge against Google.
At least when Jobs acts with revenge, he's intelligent if not mean. When the three blind mice of radio consolidation are vengeful, they kind of act like dummies.
One reader wrote to me yesterday that he has heard Cumulus CEO Lew Dickey brag that Cumulus is going to buy Citadel. Well, I've heard that one so many times it's laughable. Dickey is apparently delusional.
He'd be lucky to buy Regent (and I don't think he will).
Now just why would Farid Suleman or his investors want to sell to Dickey when the radio business is supposedly looking at a recovery?
Suleman has a new deal to stay on and continue to continue the same level of excellence that forced Citadel into bankruptcy.
Which brings me to the real issue which is -- why are radio CEOs so obsessed with yesterday and not tomorrow?
Buying up bankrupt radio groups, stations in distress, turning the industry into one big radio national network. That's yesterday.
Every time Steve Jobs opens his mouth, another piece of well thought out strategy is revealed. Usually -- almost always -- Apple prevails and advances its fortunes.
It is not an accident that built-in radio capability is not included in most Apple products and in the Touch, where it is featured, the radio feature has laid an egg.
This is not to say that radio is bad.
It's more complicated than that.
Radio broadcasting -- you know, 24/7 -- is not necessary in an on-demand world. I'm not telling you that -- consumers are. Even Pandora is consumed differently than broadcast radio. It is not a turn it on until you can't listen anymore experience.
Perhaps with multitasking readily available this will change.
But I doubt it.
I'm giving Steve Jobs the benefit on this one. He'd put a radio smack in the middle of every device he built if it would sell his products. (Please re-read that last sentence).
It might be nice to have radio playing in the background while you are using apps, but you can have music to your liking now if that's what you really want. No need for repeater radio on a cool device like an iPhone or iPad.
My friends who run the radio industry are so used to being a monopoly that they can't fathom that broadcasting doesn't really fit into an iPhone or iPad. The much heralded iPod Touch got radio capability added and the happy talkers in the broadcasting industry saw this as the most important event since Marconi.
But my theory was tested again -- in an on-demand world consumers want content ...
... when they want it ...
... for as long as they want ...
... and they want to have the ability to hear it, see it or read it.
That is not the current definition of radio.
So, the next time you read about analysts projecting radio revenue up a whopping one or two percent next year, stop and think what it could really be if radio CEOs actually studied the real revolution taking place -- that of and by the consumer.
You see, radio thinks of all new media as non-traditional revenue. And that's the problem.
Sure, adding interactivity to radio can bring you a mobile sponsor, a banner ad or even an application patron but that's not the growth industry I see ahead.
Interactive, new media is not non-traditional radio revenue.
It is a separate industry of Internet content, social networking, mobile content that will be monetized by event marketing, subscriptions and mobile advertising.
Or to put it in a more dramatic way --
While Cumulus CEO Lew "Tricky" Dickey is off bragging about $500 million he hasn't raised yet with Crestview purportedly to acquire stations that aren't for sale in a market that doesn't have loan money available for rates higher than a loan shark would offer them, you see why only Steve Jobs is channeling reality.
In the end, it will not matter if radio is ever enjoyed on a mobile device as a broadcast medium.
What does matter is that content created and marketed by radio talent and radio companies becomes part of the mobile Internet that our good friend Mr. Jobs is rapidly moving into already.
Can you begin to see that we're not insulting your mother when we say mobile users don't need 24/7 radio?
The mobile Internet is the future of radio or else there is no growth business for the industry.
And, again ironically, while radio companies ineptly try to add interactive non-traditional revenue to broadcast radio and then foist it upon mobile users, they are hurting the industry we call radio.
Let me be clear.
Firing personalities, creative program directors, managers, sales professionals and support staff to save money is the exact worst thing radio CEOs can do. Make good radio for people who still want to listen to radio.
That's what NPR does.
That's what KCRW does.
That's what many small and medium market local operators do.
But don't stop there.
A separate new business is the mobile Internet and it's not the same as radio.
Just because Dickey, Fagreed Suleman, John Slogan Hogan and their admirers don't get it is no reason why medium and small groups can't see the future.
The consumer always tells you your next move.
Not the three blind mice of radio.
P.S.
Dr George Pollard interviewed me recently for Grub. It's a long interview that covers everything from my relationship with Clear Channel to how I see the future. If you're interested, here's the link.
For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.
Thursday, 8 April 2010
Staking a Claim - Part 2 - Brave New World
I finished the previous post by saying that if we can look after our music as best we can and then get it out there, we shouldn’t have to worry about what the pop music world is doing – but............... how do we get it out there?
I think we’re at an interesting point in the development of the way music is disseminated, in that the old combinations which were used to publicise and disseminate music – print media/broadcasting/recordings – are disappearing over the historical horizon and we’re entering a new world which, I believe, is very much terra incognita despite what the confident prognosticating of the online pundits might say.
One commonly expressed viewpoint is that what has happened regarding the disappearance of the old record company/jazz magazine hegemony is a great thing for all independent jazz artists since we’re no longer in thrall to vested interests which we can’t control, but are now able to control and shape our own destinies through the internet. Through the internet we can ‘maximise our fan base’ and ‘target our audience’ and get in touch with our fans worldwide therefore maximising our impact and ability to work as creative musicians. Well that’s a great scenario – in theory. But is this true? Is this what is happening? Are there musicians out there now who have made a breakthrough (and by that I mean become big enough names to be able to tour and be highly visible on the scene and attract audiences worldwide) solely via this brave new internet world? Has anyone used the confluence of website/Myspace/Facebook/Twitter/Youtube to enable them to make the leap from unknown toiler in the jazz vineyards to jazz household name - or what passes for a household name in the jazz world?
I don’t think so.
The biggest names around are still people who have made their names and reputations under the old system – Mehldau, Metheny, Hancock, Shorter etc. They may benefit from the new media and use it skilfully (or their record companies may do), but they are nevertheless products of the old regime whereby their music was picked up by a major record company and then publicised through the conventional jazz outlets of jazz publications and radio programmes. Even more recent popular acts such as the Bad Plus or Vijay Iyer have come out of the more conventional record label/jazz publication combination – their popularity and ability to reach their public may be sustained, or help to be sustained, through the internet, but their origins as a commercial entity are rooted in a system which is fast disappearing.
The received wisdom is that the disappearance of the old system is a ‘good thing’, allowing us to break free of the shackles of the record industry, and the self-appointed taste gurus, and to reach out directly to our public. But is this happening? In my experience, not really – or at least if so, in a very limited capacity. Under the old system if one worked hard and had some ability one had a shot at being a big enough fish in a small enough pond to be at least visible. Even if it was only around your own country (in the case of Europe) or your own local scene in the case of the US, you had a chance of gaining visibility through a recording that was reasonably well distributed, and/or well received in the jazz media. Now, rather than being any sized fish in any sized pond, one is swimming in a vast ocean populated by millions of other fish, all of whom have the same access to the attention of the other fish as you do.
In theory we now have direct access to our fans and to people interested in our music, but in practice it’s incredibly hard to make yourself heard above the din of all the other people clamouring for this same attention. Setting up a Myspace page is free, setting up a Facebook account is free, so even the rankest beginner can set up one of these pages and/or accounts and get their music out there. Which is all well and good, and one may argue that this shouldn’t concern the more experienced or accomplished player – after all quality will tell in the end, right? Well it might if it gets a chance to be heard. But how is even the most interested listener able to find the wheat among the chaff, find the kind of music they like, even the kind of jazz they like, among the thousands of musicians, the hundreds of thousands of pieces of music out there? Who has the energy to trawl through the internet in the hope of finding something they like? A few people may discover your music through the internet, but will enough of them discover it to make any difference to your chances of making a living?
Under the old system finding music you liked or might be interested in was a simpler affair – you bought magazines and read the reviews, building up a trust in certain reviewers through experience, knowing they they could point you in the direction of stuff you might like to check out. Or you might find the music recorded on a certain label to be generally in the musical neck of the woods that you like to inhabit. This system focussed the attention and helped direct the listener towards music they knew and music they might not know but may enjoy discovering. Of course in theory this is even more true of the internet – all musical life is there, but the problem is that there’s just so much of it! How does the new listener make sense of the plethora of music and musicians out there, and how does the jazz musician get the attention of this new listener? I don’t know!
This is not a lament for the old system – it was riddled with problems such as very poor journalism and lack of knowledge on the part of many critics, and the exclusivity and fashion consciousness of many labels meant that some deserving people never got a fair shake. But has the internet redressed this situation – does the genuinely creative artist have a better chance of exposure under this new system or is it even harder for them due to the sheer volume of people who have the same access to the internet for promotional purposes?
I honestly don’t know, but all I can say is that I’ve yet to see a new jazz artist who’s been ‘broken’ by the internet. Whose value was spread across the jazz world by electronic word of mouth.
I believe that my music probably appeals to a few thousand people across the world, but despite my use of the now traditional tools of the internet I also believe I probably reach only a few hundred of those. And I don’t really know what the answer is on how to bridge that divide between the interested people who are genuinely receiving the message and the much larger number who aren’t. I do believe there’s an answer somewhere – there’s a way of getting people to the gigs and alerting them to available recordings, but we haven’t cracked it yet. Plenty of food for thought, but in the meantime I have to try and put food on the table!
Cumulus Radio Imposters, L.P.
We had another earthquake yesterday but it wasn't in Mexico or Indonesia.
It was in Atlanta -- home of the number two radio group in the world and by far the meanest when it comes to how they treat their employees.
I was having lunch with my Scottsdale Study Group radio friends yesterday when we all learned that Cumulus CEO Lew Tricky Dickey did it again.
Cumulus apparently cobbled together what looks like, feels like and sounds like yet another arm of its radio empire which is to be called Cumulus Radio Investors, LP with partner Crestview and unnamed co-conspirators who, we are told, together are investing up to $500 million in new equity.
But it turns out that Cumulus Radio Investors should more aptly be named Cumulus Radio Imposters -- in other words, someone who pretends to be someone else.
By now you have probably read trade accounts about the second coming of Lew Dickey and his Cumulus Empire. If you didn't know any better, you'd think that Cumulus has raised all this money to start buying stations and become an even bigger player in the industry.
My take is that this well orchestrated and under-funded foray back into the spotlight was timed perfectly and is not what it appears to be.
The Dickeys had just taken more bonuses -- an affront to all the slaves they have working for them at low wages or working for no wages thanks to mandatory overtime.
Then there is the cover story in Radio Ink -- a puff piece interview that makes Lew Dickey sound like he's, well -- Warren Buffett.
But if you're looking for my read on all of this and many of you had texted or emailed me yesterday asking for it -- my take is that there is nothing there.
It's "Tricky" being tricky again.
A slight of hand.
An illusion that could earn Lew Dicky an additional nickname -- "Slicky".
I'll outline the ways this latest Cumulus-Crestview Partners deal is an illusion, but first look at the premise upon which their company was formed (in their own words with mine to follow).
The partnership seeks to "invest in premium radio broadcasting companies that present attractive opportunities for significant long-term capital appreciation".
What?
Nothing a Cumulus company has done (including the Susquehanna subsidiary) has ever returned significant long-term appreciation. And apparently the market thinks the same way I do as yesterday's announcement of this earth-shattering event only got them a 15 cent increase in their resulting $3.60 share price.
"The partnership’s objective is to deliver significant value and achieve attractive returns through Cumulus' proven skills in radio station management and operations, as well as its proprietary technology platform".
Hello?
Now this sentence is the official definition of bullshit, I'm sorry.
Proven skills in radio station management and operations?
Surely they kid.
Shame on any investor who buys Cumulus stock based on this promise. In reality Cumulus is the joke of consolidation. Even Clear Channel, the recognized Evil Empire, acts competently sometimes but Cumulus has alienated its employees, some advertisers and listeners while the Dickeys get rich.
"Under the terms of the partnership, Crestview will lead an investor group that would invest up to $500 million in equity in the partnership, to be called Cumulus Radio Investors, L.P. (“CRI”)".
Stop!
Red Flag.
Read that sentence carefully. Crestview is leading an investor group not investing $500 million of its $4 billion in investments. And keep in mind that Crestview helped fund the ill-fated Cumulus takeover of Susquehanna, a move that has led Cumulus deep into debt.
"Together with debt financing expected to be available through the capital markets, CRI could target acquisitions totaling in excess of $1 billion".
Lots of luck.
No one is selling.
Financing is not available except for unbelievably high interest rates.
This isn't a new business strategy. It's pure braggadocio.
Now, don't read the next quote on a full stomach, please.
"Cumulus would provide all management, financial, operational and corporate services to the partnership and its operations pursuant to a management services agreement. Cumulus will be compensated through management fees as well as incentive compensation based on investment returns".
Fees. Fees. Fees.
There's that word again. These Wall Street deals always pay off for the principles even if they stiff their shareholders because the partners make -- fees.
In reality, how can Cumulus manage more stations when it can't manage the ones it currently owns. Even if they reduced the acquisitions to a shell -- which I guess is their strategy, they do a piss poor job of it.
"Cumulus successfully formed a similar private partnership, Cumulus Media Partners LLC (“CMP”), in 2006 with three other leading private equity funds to acquire the radio broadcasting business of Susquehanna Pfaltzgraff Company in a transaction valued at approximately $1.2 billion".
Successfully?
That's not true.
They ruined a perfectly good -- no, an outstanding company in Susquehanna built by David Kennedy and they saddled themselves with so much debt doing so that Cumulus is now upside down.
Successful?
In your dreams.
Now, here's the evidence I promised so that you, my readers, don't have to drink the Kool-Aid being dispensed by the Dickeys with help from the press:
There is nothing there.
All smoke. Not even mirrors.
Cumulus is trying to smoke out desperate sellers so they can buy some properties on the cheap -- very cheap.
So that's the real deal on the Cumulus Crestview deal in my opinion.
Not what it appears or what the Dickeys would have you think it is -- a new company with lots of money to buy stations and make the Dickey Nation larger yet.
What it is is a thing that is not what it purported to be which is the dictionary definition of -- a sham.
Now, back to our previous programming already in progress -- a recession, a try at a recovery, tight money, high interest rates and no sellers.
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It was in Atlanta -- home of the number two radio group in the world and by far the meanest when it comes to how they treat their employees.
I was having lunch with my Scottsdale Study Group radio friends yesterday when we all learned that Cumulus CEO Lew Tricky Dickey did it again.
Cumulus apparently cobbled together what looks like, feels like and sounds like yet another arm of its radio empire which is to be called Cumulus Radio Investors, LP with partner Crestview and unnamed co-conspirators who, we are told, together are investing up to $500 million in new equity.
But it turns out that Cumulus Radio Investors should more aptly be named Cumulus Radio Imposters -- in other words, someone who pretends to be someone else.
By now you have probably read trade accounts about the second coming of Lew Dickey and his Cumulus Empire. If you didn't know any better, you'd think that Cumulus has raised all this money to start buying stations and become an even bigger player in the industry.
My take is that this well orchestrated and under-funded foray back into the spotlight was timed perfectly and is not what it appears to be.
The Dickeys had just taken more bonuses -- an affront to all the slaves they have working for them at low wages or working for no wages thanks to mandatory overtime.
Then there is the cover story in Radio Ink -- a puff piece interview that makes Lew Dickey sound like he's, well -- Warren Buffett.
But if you're looking for my read on all of this and many of you had texted or emailed me yesterday asking for it -- my take is that there is nothing there.
It's "Tricky" being tricky again.
A slight of hand.
An illusion that could earn Lew Dicky an additional nickname -- "Slicky".
I'll outline the ways this latest Cumulus-Crestview Partners deal is an illusion, but first look at the premise upon which their company was formed (in their own words with mine to follow).
The partnership seeks to "invest in premium radio broadcasting companies that present attractive opportunities for significant long-term capital appreciation".
What?
Nothing a Cumulus company has done (including the Susquehanna subsidiary) has ever returned significant long-term appreciation. And apparently the market thinks the same way I do as yesterday's announcement of this earth-shattering event only got them a 15 cent increase in their resulting $3.60 share price.
"The partnership’s objective is to deliver significant value and achieve attractive returns through Cumulus' proven skills in radio station management and operations, as well as its proprietary technology platform".
Hello?
Now this sentence is the official definition of bullshit, I'm sorry.
Proven skills in radio station management and operations?
Surely they kid.
Shame on any investor who buys Cumulus stock based on this promise. In reality Cumulus is the joke of consolidation. Even Clear Channel, the recognized Evil Empire, acts competently sometimes but Cumulus has alienated its employees, some advertisers and listeners while the Dickeys get rich.
"Under the terms of the partnership, Crestview will lead an investor group that would invest up to $500 million in equity in the partnership, to be called Cumulus Radio Investors, L.P. (“CRI”)".
Stop!
Red Flag.
Read that sentence carefully. Crestview is leading an investor group not investing $500 million of its $4 billion in investments. And keep in mind that Crestview helped fund the ill-fated Cumulus takeover of Susquehanna, a move that has led Cumulus deep into debt.
"Together with debt financing expected to be available through the capital markets, CRI could target acquisitions totaling in excess of $1 billion".
Lots of luck.
No one is selling.
Financing is not available except for unbelievably high interest rates.
This isn't a new business strategy. It's pure braggadocio.
Now, don't read the next quote on a full stomach, please.
"Cumulus would provide all management, financial, operational and corporate services to the partnership and its operations pursuant to a management services agreement. Cumulus will be compensated through management fees as well as incentive compensation based on investment returns".
Fees. Fees. Fees.
There's that word again. These Wall Street deals always pay off for the principles even if they stiff their shareholders because the partners make -- fees.
In reality, how can Cumulus manage more stations when it can't manage the ones it currently owns. Even if they reduced the acquisitions to a shell -- which I guess is their strategy, they do a piss poor job of it.
"Cumulus successfully formed a similar private partnership, Cumulus Media Partners LLC (“CMP”), in 2006 with three other leading private equity funds to acquire the radio broadcasting business of Susquehanna Pfaltzgraff Company in a transaction valued at approximately $1.2 billion".
Successfully?
That's not true.
They ruined a perfectly good -- no, an outstanding company in Susquehanna built by David Kennedy and they saddled themselves with so much debt doing so that Cumulus is now upside down.
Successful?
In your dreams.
Now, here's the evidence I promised so that you, my readers, don't have to drink the Kool-Aid being dispensed by the Dickeys with help from the press:
- Crestview is an equity company and if they put up anywhere near $500 million out of their $4 billions of resources they will be risking a lot of their own money. That isn't going to happen. And notice how they are not announcing how much of their own money they are putting up.
- Cumulus is essentially a failed enterprise close to being in violation of its existing loan covenants and the only way out is bankruptcy, paying higher interest rates to refinance or trading debt for equity.
- If Cumulus plans to buy stations, lots of luck financing them -- at least at rates where you can handle the interest payments. There's no money available, duh! Sellers are upside down. That's why no one is buying. And owners don't want to sell now because values are low, duh (again). This is a sham.
- Most of the major players are broke meaning this Cumulus fantasy of a new company is just a hyperbole. The Dickeys are probably trying to take their losses and spread them over to new guys.
- Crestview in my opinion is so smart that they are getting into bed with a failed company.
- Equity holders borrow on their invested stake so what do you think they can borrow without even $500 million raised and no money available from lenders at reasonable rates -- again, a sham.
- Foreign investors are out so do the Dickeys have any more rich relatives to throw money into this pot?
- The economy is still broken. Banking and Wall Street haven't been fixed. Oversight is an issue. The radio industry lost the next generation. What kind of an investment company is this?
There is nothing there.
All smoke. Not even mirrors.
Cumulus is trying to smoke out desperate sellers so they can buy some properties on the cheap -- very cheap.
So that's the real deal on the Cumulus Crestview deal in my opinion.
Not what it appears or what the Dickeys would have you think it is -- a new company with lots of money to buy stations and make the Dickey Nation larger yet.
What it is is a thing that is not what it purported to be which is the dictionary definition of -- a sham.
Now, back to our previous programming already in progress -- a recession, a try at a recovery, tight money, high interest rates and no sellers.
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