BEFORE SALE, CLEAR CHANNEL PURGED PROGRAMMING ASSETS Katy Bachman - Mediaweek Radio consolidation came full circle last week. Clear Channel, owner of the nation’s largest radio group, announced it will cash out to a team of private equity firms in a deal valued at $26.7 billion—that is, if shareholders are willing and a better deal doesn’t come along before Dec. 7.
Concurrent with the deal, CC announced it will divest its 42 TV stations and 448 of its 1,150 radio stations, focusing on the top 100 markets. The assets for sale account for less than 10 percent of the company’s revenue.
Once the industry’s most aggressive consolidator, CC quickly achieved the efficiencies that came with merged operations. But in the last two years, growth ground to a screeching halt, leaving CC and Wall Street seeking a boost for the stagnating radio market. Last year, in an effort to turn things around, the company spun off its live entertainment division and 10 percent of its outdoor company. Still the stock languished, leading to the private equity offer. Even as the company sought a buyer, it sent marching orders to its stations to hold the line on expenses. Over the last few weeks, that has resulted in layoffs -- nearly all of which are in programming -- at many of the company’s radio stations in the top 100 markets.
Stations in more than a dozen markets have dismissed on-air talent, program directors and music directors, including top-level talent at top-rated stations, such as Bill Buchner, morning anchor at WLTW-FM in New York, who exited after 17 years. Programming staff got walking papers in Philadelphia, San Francisco, St. Louis, Baltimore, Indianapolis, Orlando, Hartford, Conn., Charleston, S.C., Spokane, Wash., Memphis, Tenn., Macon, Ga. and Providence, R.I. In some cases, the exiting talent will be replaced with “voice-tracked” talent from another market. Elsewhere, the remaining talent will do double duty. CC declined to comment about the layoffs.
At a time when radio is facing a soft advertising market and mounting competition from new media, CC’s strategy is curious. The time people spend listening to radio has declined at the rate of 1.5 percent a year over the past decade, according to Arbitron. While CC likes to characterize itself to Wall Street as a content company, the content cuts don’t fit that bill. Earlier this month, CC told Inside Radio, a publication it owns, the changes will accommodate a shifting business. “We’ve been structured to almost completely support on-air broadcasts. But we’re clearly going to have to support our high-growth initiatives, like online and others, moving forward,” said John Hogan, CEO of CC Radio. “You’ll find that in some markets, there will even be a net gain of bodies, but those bodies will be doing different things.” So far, the only new bodies CC has announced were two new local Internet/new media positions in New York and San Francisco.
The changes could be to gird the company for soft growth in the radio market. During its third-quarter conference call, the radio giant said revenue was pacing up 8 percent for fourth quarter and it expects to end the year up 5.7 percent. At first blush, the increases are healthy. But they pale when compared with last year, when CC revenue was down 6 percent in fourth quarter due to its “Less Is More” spot reduction initiative. By the time first quarter ’07 rolls around, CC could be looking at eking out 1 to 2 percent growth -- not atypical in radio, but certainly not an indication of a turnaround.
“CC Radio has gone sideways for three years,” wrote Jim Boyle, an analyst with CL King, in a recent report. “The radio industry should likely finish the same three-year period up 1 percent, indicating CC Radio has lost share even after two years of its ‘less is more’ pledge and alternative revenue strategies.”
Agencies chalked the changes up to more of the same activity they’ve seen since consolidation changed the radio industry forever. Rich Russo, director of broadcast services for JL Media, said the moves were indicative of the soft radio market. “When things are bad, you eliminate a level,” he said, adding “I can’t get upset any more when [radio groups] fire programmers, because no one is programming anyway.” |