Radio's "Recession" Started A Long Time Ago

The Fed further cut interest rates by three quarters of a point in an emergency move that is designed to help the U.S. economy avoid a deep, dark recession.

The market lost 465 points before greed saved the day and buyers took advantage of lower stock prices and bought back in.

The housing market is one of the major problems and the subprime mortgage mess goes along with it.

As the vaudevillian comedian "The Old Philosopher" used to say, "is that what's bothering you, bunky?"

The radio industry actually started its "recession" early.

After spending record amounts of their investors' money to put together groups of radio stations -- allowed for the first time by their friends in Congress -- it wasn't too long ago that stock prices of radio issues began their eventual steep decline.

A friend put together this list of key radio companies before yesterday's roller coaster ride on the Dow. Look how well they have built shareholder value for their investors.

Spanish Broadcasting
High 42.00 -- Recently 1.54 -- Loss of 96.33% (1.50 yesterday)

High 62.34 -- Recently -- 2.47 -- Loss of 96.04% (2.62 yesterday)

Radio One
High 31.33 -- Recently 1.77 -- Loss of 94.35% (1.68 yesterday)

Citadel Broadcasting
High 22.79 -- Recently 1.69 -- Loss of 92.58% (1.52 yesterday)

High 14.19 -- Recently 1.49 -- Loss of 89.50% (1.32 yesterday)

High 33.65 -- Recently 4.63 -- Loss of 86.24% (3.93 yesterday)

High 67.75 -- Recently 11.00 -- Loss of 83.76% (11.00 yesterday)

Cumulus (Private buyout in progress)
High 22.70 -- Recently 5.90 -- Loss of 74.01% (5.43 yesterday)

High 23.44 -- Recently 5.90 -- Loss of 74.83% (5.97 yesterday)

High 19.34 -- Recently 5.05 -- Loss of 73.89% (4.48 yesterday)

Cox Radio
High 34.67 -- Recently 11.10 -- Loss of 67.98% (10.89 yesterday)

High 20.31 -- Recently 7.27 -- Loss of 64.20% (6.03 yesterday)

Clear Channel (Private Buyout in Progress)
High 91.50 -- Recently 34.42 -- Loss of 62.38% (32.14 yesterday)

High 35.50 -- Recently 24.00 -- Loss of 32.39% (22.28 yesterday)
(New issue missing most of the loss).

I am using the term "recession" loosely here to describe the receding radio stock prices, however the real recession -- the one we're sinking into deeper and deeper every day -- isn't going to do much to improve the sorry performance of radio's consolidators. Their stations are directly affected by the local economies. Now, it is no longer just Emmis that must deal with softening in their major markets such as New York and LA. Now it's Main Street USA.

I can just hear all those Apple haters out there. Apple's profit rose a whopping 58% in the first quarter compared to last year but its forecast going forward wasn't enough for analysts to stop running scared -- the stock price fell to $155.64 (off 3.4%). Imagine if Apple can't beat this market, how can Citadel?

It's getting ugly out there.

The usual way public companies deal with recessions is to layoff, cutback, slice and dice. Hey, radio has been leading the way on this, too. The radio industry still can't see the connection between reduced expenses and reduced earnings.

What bothers me is that radio industry professionals know what to do to make their situation improve. Even a few of the consolidators get it. What they can't do is ignore Wall Street. After all, they owe Wall Street investment banks for everything and when I say owe I mean owe. The Street is in no mood for radio to spend money to make money.

One of two things is going to happen.

Either someone in a leadership role decides to make some hard and tough decisions to grow terrestrial radio (to the extent it can without the next generation listening) and get into the Internet and mobile content business beyond simply doing websites and outsourcing text messaging tie-ins with radio formats.


Radio companies will continue to become devalued with the sale of assets and more economies of scale.

In that case, it will be a long farewell.

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