And 2.0 was Lowry and sons Randall and Mark with Randy Michaels telling them how to build radio clusters. It was when Jacor and AM/FM were acquired to build the 1,10o station platform Clear Channel used to dominate the industry, that is -- until it ran out of gas.
Now, what's Clear Channel 3.0 likely to look like.
Clear Channel is aggressively moving to get the new deal to take the company private approved by its shareholders. The Mayses have moved the voting date up to the end of July -- smart tactic in an industry that is posting declining revenue every month. Keep in mind that shareholders must approve the new terms – and if they don’t send back a ballot, that ballot counts as a no.
The $36 buyout price is a few bucks lower than the one negotiated well over a year ago. A lot has changed since then. I think the big institutional investors might be in the mood to take the money and run.
Shareholders would be crazy to let this elongated, painful and public privatization bailout go on any longer. It’s time to take the chips off the table, suck up the losses and move on. The principals will be more fortunate.
They will take more profits and what will likely emerge is a new Clear Channel – not influenced by the Mays family but run for a while by buyout firms that have only one thing in mind – getting out whole one day. Getting a return on investment.
Lee and Bain, the investment firms now have the banks ready to close and once they do, look out for the new Clear Channel.
OPERATIONS
I can’t imagine that the new owners will have any use for Mark or Randall Mays. They may get an office somewhere, but if there were ever two nonessential managers, these would be the two.
Want three? Add John Hogan, their man although Hogan could be a critical force in a time of great transition.
Since the company is likely to be downsized, management will be cut back as well. Lean and mean. With the emphasis on mean. But it is also possible that better management will be put in charge. This would be a good thing for the many Clear Channel employees who have endured so much and it would be in the best interest of Lee and Bain if they want to hold the assets together at a time when the economy stinks and radio is facing that plus an aging audience and no digital strategy.
LAYOFFS
More pink slips are coming as these non-radio owners will do what they do best – look for economies of scale.
That means more stations carrying Ryan Seacrest doing his national show mornings or midday's on a local medium. Believe me, these bean counters are not going to get caught up in the local radio argument. They need cost concessions. So, what's wrong with an LA morning show in many other markets. Or so they think.
Voice tracking and program duplication will increase.
Cheap talent will be employed.
Multitasking will continue or grow – one PD to run many stations. One GM to – well, you know – they’re doing this now. And these PDs are likely to have their private parts cut off meaning they won't be able to stand up and do what they know has to be done.
Increased use of syndication.
Pruning expensive air talent.
SALE OF STATIONS
If Randy Michaels and Sam Zell ever wanted to get back into radio, this is their chance – buying devalued properties that Michaels knows better than anyone since he set many of them up in the first place.
The naysayers would have you believe that Zell can’t raise the money to buy some or most of Clear Channel, but that is not true. And don’t discount the potential sale of the Tribune Newspapers or Local TV. Don’t lose the name Rupert Murdoch, either.
It’s always possible Lee Abrams, Jerry Kersting, Bobby Lawrence and the increasing number of radio folks who are defecting to the newspaper business really want to end their careers once and for all with the apocalypse that is called the newspaper business.
But I see more Clear Channel people crossing over to the Michaels side after they get their money. A lot more.
More newspapermen in training?
We report. You decide.
A few of my readers are believing that Michaels and his followers have detoxed from radio -- I don’t believe it.
I see Zell and Michaels cherry-picking what they want at very favorable prices. In fact, I think they’ve probably already kicked this topic around with Lee and Bain. The Mayses can’t stop the stations from going to their nemesis, Michaels. And Zell doesn’t have to buy everything.
I'm worried that if more Clear Channel people defect to the powerful and charismatic Randy Michaels to work in newspapers that they should be careful if he asks them to drink any Kool-Aid next. It could be deadly for their careers.
So, Lee and Bain will act as a work out company – cutting, pruning, slicing and beefing up the remaining stations and assets for sale. There are few that believe dealmakers like Lee and Bain want to be operators any longer than they have to be to make a profit.
INTERNET, MOBILE AND THE FUTURE
Don’t hold your breath. Mobile content provided by broadcasters for new media will take a long time to ever be reflected in the real value of a traditional media company. Therefore, you can expect gratuitous (at best) efforts in new media by Clear Channel.
EMPLOYEE PROSPECTS
If you’re working for Clear Channel now and survive the onslaught of belt-tightening to come, you’ve likely retained a job in a more stable setting. The game plan is obvious: cut costs, improve revenue, sell the assets.
But outside of the very fatest of fat cats, money is hard to come by and radio is not exactly a growth industry -- at least by Wall Street standards. So, Lee and Bain will have to operate for a while, fatten the bottom lines and sell where possible.
The long anticipated privatization of Clear Channel has been too long in the making. It’s been real tough on the professionals who keep the good content flowing under tough restrictions.
But there is always hope – after the Mayses are out of the decision making process.
You may be working at a Clear Channel station that will be sold to another owner -- eventually.
Perhaps a better owner – maybe not.
An owner who understands that terrestrial radio has a short shelf life without the next generation and one that wants to be part of the mobile future.
The more likely scenario is that the next three to five years under new management will be as difficult and challenging as it was under the Mays family.
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