Tuesday, July 7, 2009

Clear Channel: FAIL (Again)

The New York Post yesterday published a story about the latest sign that Clear Channel, the largest broadcast group owner in the known universe, is about to default on its loans - again. The huge Texas-based conglomerate, which owns six radio stations in Madison, floated another loan offer through its billboard division, and it sank.

Seems nobody wanted to buy another 3 billion dollars in debt from Clear Channel. This sets the stage for the company to further annoy its lenders this fall, by breaking the loan agreements again. Clear Channel has fired over two thousand hard-working broadcasters in the past year.

Managers fired? Not a one. Worker bees? Just about everybody. It’s no scoop that most of the stations owned by Clear Channel, Entercom, and Cumulus are down to bare-bones on-air staff. Early-afternoon news on Madison’s WIBA-AM often comes from a Clear Channel station in Grand Rapids, Michigan.

My former employer, Mid-West Family Broadcast Group, which owns seven radio stations in Madison, went through what it called “economic” staff cuts late last fall. Vaunted local TV operation WISC last week went through still another round of cuts and layoffs, and for the first time, the station terminated a news anchor’s job, along with several others. News anchors are the most public faces of the local TV stations, and are usually “safe”.

Not in this economy.

Advertising dollars have gone away from broadcasting and onto the internet, where they can be carefully targeted and efficiently managed. The typical radio or TV station gets 99% of its revenue from advertising sales, and about 1% from renting tower space to cell phone and pager companies. One look at the Sunday paper’s want-ads, and you know times are tough there, too.

The economic model for large-scale broadcast (and print) ownership is no longer sustainable. Wall Street bankers have fleeced the big group owners for outrageous loan fees and terms for more than a decade, and while there may be still one more round of that ahead, it’s gonna die. You just can’t “make the numbers” any more.

Who’ll survive? For lack of a better term, the “mom and pop” operations. Owners who don’t have a boatload of debt on untenable terms, and who’ve made their money since day one by serving their local communities with local news and information, local sports, and helping local merchants with affordable and effective advertising.

Those which will fail and disappear are those who have a company executive in some other city telling them what news to cover, which shows to run, what music to play, how to sell commercials, and a CFO who’s constantly trying to feed the beast called “debt service”.

1 comment:

  1. With this shiny new toy called "The Internet," there has been a lot of speculation as to what the demise of local broadcast will be. Why pay thousands of dollars to broadcast via Radio Frequency when one can broadcast to the world with minimal overhead? Couple this with the mass conglomeration of media assets by large companies, and there is a link there somewhere.
    The history of the daytime/nighttime power levels for AM stations reveals a plan where there was supposed to be a handful of super high power transmitters covering large swaths of the nation. Three digit call letter stations will reveal some of these beasts; WGN, WOR, etc... I guess we still don't learn from history.
    The success in broadcast has been in exactly what you say, Mr. Morrisey; local mom & pop outfits. I believe localization of the market is EXACTLY what will save broadcast. Radio is the warm fuzzy blanket I wrap up in to connect with my community. I want to hear people, not robots, or robots imitating people. I want to know what it's like outside if I'm busy inside. I want a chance of being able to call in and say my peace. I want humans like me talking to me.
    The silly thing is, my experience at WSUM has shown that there are so many people ready to line up to get behind the mic and talk to their community. No, they may not be the best calibur of talent or use fancy words, but I bet they will work for cheap and play songs I haven't heard 1001 times! That's community building to me. Don't agree? You have never listened to WORT.