I slapped the device on my windshield out of the way under the rear view mirror and I could cruise through toll plazas on the Jersey Turnpike, Garden State Parkway, Lincoln Tunnel and the bridges leading into Manhattan and Philadelphia.
It was seamless. Just put your travel on your tab (credit card) and cruise right through to your destination. No stopping to pay the toll.
Kind of reminds me of Clear Channel.
Clear Channel has been using its own type of consolidator's EZPass for the last 12 years. But no situation was more egregious than what happened yesterday.
The Department of Justice proposed a settlement to make it possible for Lee and Bain investment capital groups to bail out Clear Channel. All that has to be done is to sell some stations in Cincinnati, Houston, Las Vegas and San Francisco and the world can rest assured that we won't have one bit of monopoly in the radio business.
If you want a good laugh read the DOJ explanation or try to make it through this paragraph without getting sick:
"The Department said that the transaction, as originally proposed, likely would have resulted in higher prices to purchasers of radio advertising in Cincinnati, Houston, Las Vegas and San Francisco because Bain and THL already have substantial ownership interests in two firms that compete with Clear Channel in those cities. Bain and THL have ownership interests in Cumulus Media Partners LLC (Cumulus), a large nationwide operator of radio stations, and THL also has an ownership interest in Univision Communications Inc. (Univision), a large nationwide operator of radio stations that broadcast primarily in Spanish".
In other words, Clear Channel uses EZPass again and this deal from hell continues to race toward closing by the end of the first quarter.
EZPass comes in handy -- even in radio -- as witnessed by these events:
1. Clear Channel stock is $29.49 -- about ten dollars less than what Lee and Bain have agreed to overpay and yet no one is suing anyone. The arbitragers are out in full force but in many other cases when the buyout price far exceeds the actual price the buyer(s) usually demand to renegotiate the sale price downward. Not here because Clear Channel has EZPass.
2. No one wants to renegotiate. EZPass.
3. CCU stock has been steadily declining over the years from its post-consolidation high point in the $90 range and yet shareholders are unusually passive and accepting. Maybe they like to lose money -- lots of money. Another benefit of Clear Channel's EZPass.
4. According to the DOJ "Bain and THL raise pools of capital from private investors, controlling and managing that capital through private equity funds and co-investment vehicles that invest in discrete opportunities, such as venture capital, public equity, and leveraged debt assets. Bain and THL, either directly or indirectly through management teams, typically manage and operate the assets in which they invest". They bought assets that will likely be worth less than they paid for them in an industry that analysts say will have flat to modest revenue growth at best. And Lee and Bain don't bail on the deal. Another benefit of EZPass.
5. About 400 odd stations will have to be sold to complete the acquisition that will leave Lee and Bain with some 700 properties. Money is tougher to raise right now and deals are harder to close. But it doesn't bother these fat cats. EZPass to the rescue.
6. Now that the buyer will be forced to divest itself of stations in four markets to win DOJ approval, Clear Channel is not likely to get a premium for them. Hell, they're not likely to even get a fair price. I mean, the DOJ is saying sell them or else -- what kind of pricing power does that leave Clear Channel with potential buyers who know they are under the gun. Mark Mays said in Inside Radio that "he is pleased they won approval, and says the merger continues on track for a first-quarter close". Everything is beautiful in its own way. Ray Stevens, the singer, was right. No problem. EZPass does it all.
7. Clear Channel guts its stations, devalues and dismisses its employees -- careers are ruined, jobs are eliminated and not one politician (you know, the ones who are saying we need to create jobs to get our economy rolling again) speaks up or acts. The consolidator has its way and everyone looks the other way. EZPass again.
8. Advertisers were told that what radio needed was fewer commercials -- you remember, less is more. Clear Channel implements a slight cutback in its hourly commercial inventory and forces clients into shorter spots that fit its game plan. Not to mention the black eye Clear Channel gave the radio industry when it screamed to advertisers from the rooftop that radio is loaded with commercial clutter. Yet, advertisers kept buying and some lemming operators followed suit. How did they get away with this, you ask? EZPass.
It's a seemingly unending litany of circumstances where others might have paid a price and yet Clear Channel continues to exact a price.
Clear Channel is Teflon.
It's as if the legislative and judicial branch of our government know they created this monster and now they want to help it go away.
It's as if investment banks that made Clear Channel consolidation possible have no shame -- what's wrong with one more deal. The Mays' get rich all over again and Lee and Bain somehow turn this lemon into lemonade.
Everyone seems to want this deal to go through.
Forget that the sale is not worth the $19 billion acquisition price. Forget monopoly -- oh, we already forgot that one. Forget that advertisers, listeners and loyal employees are getting screwed. Forget that money is hard to come by.
Just do the deal.
I think Sam Zell is waiting in the wings to buy some or all of the Lee and Bain acquisition. And do you think Randy Michaels wouldn't want to get his hands on the Cincinnati spinoffs?
Clear Channel was given an EZPass to lead the way into consolidation and now it is getting an EZPass to lead the way out.
EZPass might work for a toll road, but the real toll is being paid by the employees of Clear Channel who, I'm afraid, are in for one final screwing.
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