Tuesday, June 24, 2014

Local Radio: No Longer A Sustainable Model



The calls and emails and social media direct messages began about 11 o’clock yesterday morning, from pals who wanted to know if I could confirm that my friend Mitch Henck had been fired by WIBA-AM.  Very early in the afternoon I knew it was true. The ax was falling at Clear Channel stations all around the nation – again.

It’s a wonder Clear Channel has anyone left to fire, except sales people.  More on that in a moment.

Hearing the news about Mitch Henck was not surprising in any way, but it was still tough to take. You can’t spend four decades working in broadcasting, as I did, and not be dismayed at how it’s really no longer a sustainable model.  People can get music anywhere today. New songs aren’t “broken” by radio stations any more – they’re first heard on social media sites. A local, live DJ after 9 AM has become rare. Newscasts, if a radio station even has them any more, are rare after 9AM and even then may originate in a city far away.

Mitch was upbeat when he talked to the Wisconsin State Journal late yesterday. (The article is here.) He knew it was coming; it was not a matter of “if”, but a matter of “when”, and for Mitch – and a bunch of other people at the Madison Clear Channel cluster, and at Clear Channel clusters all around the nation, the “when” was yesterday.

Mitch had a very good career in broadcasting, spending the last dozen years at WIBA-AM after a long stint in TV news. His “Outside the Box” show had excellent ratings; his demise had nothing to do with that. Mitch was never a partisan hack, like so many of the talk show hosts you hear today, either whining the left-wing agenda or screeching the right-wing agenda.  Sure, Mitch talked politics – but he also talked basketball, music, and above all, Mitch talked about LOCAL stuff.


He even shared his struggles trying to get his golf score down.

That’s the puzzling thing: about the only thing radio has left going for it is the “live and local” aspect, but shortsighted broadcast managers for the past seven years have steadily gotten rid of the only thing they really had going for them: local talent who talked about local stuff, whether they were doing a music-based show or a talk-based show.  That’s why they’ve made the model unsustainable. They’re getting rid of the only thing they really have going for them any more.


Mitch let us right into his personal life. He turned his struggles with weight (that’s Mitch’s official Plan Z By Zola "before and after" photo above) into a part of his daily show. A little over a year ago Mitch suffered a mild stroke that took him off the air for nearly four months, and we followed his progress as he came back and finished his re-hab on the air.  He said “I sound like I’ve had a couple of stiff blasts of Scotch on the rocks, but I haven’t!” in explaining his slurred speech as he battled back from the stroke.


We heard him constantly plug his “moonlighting job”, doing a Vegas-style review involving Sinatra songs and stand-up comedy which he calls “The Big Show”. 

That’s the thing about local personalities: even though we may not actually know them, or maybe briefly met them at a remote broadcast once or twice, we feel we know them – they become part of our lives, part of our daily routine. We know their hobbies, their pet peeves, their personalities.  Like the rest of us shown the door by shortsighted radio management, Mitch will land on his feet.  He’s smart, has a great personality, knows how to talk with people (as opposed to yell at them), and he’ll find the right fit for him and do well at whatever he chooses to do.


Now, a word about the company that fired Mitch, Clear Channel.  It’s the largest owner of radio stations in the nation, with 800+; it has absolutely unsustainable debt, and is slowly but surely drowning. While the Clear Channel top execs enjoy a lavish lifestyle with huge salaries and perks beyond your wildest imagination, their ship is sinking, and with it, radio everywhere is going down.

The debt is courtesy of Mitt Romney and his pal Bill Bain, who formed a company called Bain Capital in Boston in 1984 that set up the highly leveraged deal that allowed Clear Channel to become the biggest radio operator in the country, but saddled it with debt and management fees that no sane person would ever have agreed to.  Now, the model has reached the tipping point. In order to refinance its latest round of borrowing to stay afloat, Clear Channel has to (again) cut operating costs, which they translate to “programming and news salaries”.

Mitch knew it was coming, and it arrived for him yesterday.

Be well, my friend – life is better and brighter on the other side. Living well truly is the best revenge.

10 comments:

  1. I too am sorry to see Mitch leave, and not surprised at the way it was handled, and also not surprised that Mitch took the high road out. That sort of local radio, you say, is not a sustainable model, but that doesn't mean that local radio is not sustainable. It means that local radio should return. Mitch didn't walk on water, either. He had his rants and sore spots, and daily exposure means exposing the good and the bad. Oddly enough, I found him to be among the most reliable commentators on college basketball I have ever heard. I too wish him well.

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    1. Local radio can return if, and only if, local bankers can figure out a way to get around the concept of asset-based lending. Otherwise, the money is too expensive for local operators with local talent. Thanks, George.

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  2. Could have been KKR instead of Bain. I have no use for either of 'em. By the way, the financialization disease you see is in no small measure the result of Gramm-Leach-Bliley's repeal of Glass-Steagall AND Arthur Anderson's re-jiggering of acceptable buy-price values from the old 5X earnings to 7X. AA (now dead for very good reasons, indeed) introduced EBITDA. To normal humans, that really stands for "Earnings Before Indictment, Trial, Disposition, And (Incarceration.)

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    1. Egad, dad29, I find myself in agreement with you. Is this some sort of political climate change?

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  3. An excellent summary. The media picture is changing. Also consider competition from Sirius, iTunes, Beats and other music streamers. Bain Capital makes a convenient hobgoblin but who does Lee Enterprises blame for paying top dollar for the Pulitzer chain? They're getting competition from Craig's List on advertising; or American TV competition from Amazon, etc.?

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