By Jerry Del Colliano(Pictured left, front, then clockwise next to John Sebastian, Bill Gardner and Todd Wallace)
At our monthly lunch out here in Scottsdale, John Sebastian, Bill Gardner, Todd Wallace and I kicked around a lot of topics as is our custom. But the one that I'd like to share with you today is what the radio industry could have been if Clear Channel had not become the largest owner and radio's default industry leader.
What a day for this conversation!
Citadel's stock closed at just 87 cents! I mean, that's not possible. You'd have to work at making a company with so many assets and talented people worth less than $1 a share especially for a company that panders to Wall Street about shareholder value.
87 freakin' cents.
It was a day when Emmis, an excellent company with outstanding people in my opinion, reported a 3% decline in same station (U.S.) revenues in the fiscal first quarter doing a bit better than everyone else's 4% decline. Decline being the operative word here. This is a well-run company. They treat their people well. God knows Jeff Smulyan has tried to take the company private. Emmis stock is down 26 cents to $1.74. That's a great company worth less than $2 a share.
Unthinkable. Really.
CBS is down to $17.47 as of closing yesterday and it includes radio and a lot of other things. It's tough out there. Radio is just one of their challenges.
Clear Channel?
Glad you asked. Their stock closed at $35.40 -- very near the buyout price and just waiting for that agony to be over.
The vaudevillian comedian The Old Philosopher used to say, "Is that what's bothering you, bunky?"
That, too.
What's worse, Citi Investment Research analysts yesterday predicted radio revenues will fall 5% in 2008 as advertisers spend less. Radio groups face higher debt as interest rates rise and credit conditions remain difficult.
Citi downgraded Cox and Entercom from "hold"to "sell". Cox is down to $10.28 -- off a dollar just yesterday. Looks like Bob Neil has more pressing issues than fighting the People Meter, doesn't he?
Entercom is worth $5 and change - down over a buck at closing yesterday.
Citadel is rated by Citi as a "sell" -- ya think?
STOP!
It didn't have to be this way.
You can't do anything about interest rates or a soft economy, but you could have positioned yourself to be in a more competitive position.
So we got to thinking, what if Steve Jobs ran Clear Channel instead of the Mays boys.
Automatically you get the feeling radio would not be as bad off as it is today. That somehow he'd have a plan because -- well, Jobs is an operator. He may not be any nicer than a radio CEO, but he sure sees the future and gets things done.
Well, for one thing Jobs would have a nicer Gulfstream jet than the Mayses and no one would care because Jobs actually knows how to make money and they wouldn't likely begrudge him his private jet. Jobs did it at Apple once. Again, a second time. Then at Pixar. Again, when Disney bought Pixar and Jobs became the single largest shareholder of Disney.
So let's continue.
• Jobs would probably recognize that radio needed to be local. Only people who take their eye off the prize could buy a local medium and try so hard to make it more regional or national to save money. Jobs would do local radio. No doubt.
• Jobs would take on long-term projects that could eventually contribute to the bottom line while radio CEOs just focus on the next quarter -- basically, cutting expenses and maximizing profits. Jobs would grow Internet (of course) and mobile and would probably undertake projects that took more than three months to pay dividends -- unlike Farid and his ilk.
• That Jobs would hire and not fire people. You can say what you want about Apple (or Pixar for that matter) but Steve Jobs has a history of adding assets not deleting them. This one thing could have strengthened radio's hand now that things have gotten tough. Instead, for radio today it's like playing baseball without a third baseman and left fielder. Why? Because radio CEOs would figure the shortstop can also play third -- he's that close -- and the center fielder can cover left. And the team saves two salaries! Ridiculous.
• Jobs would make radio a brand that just happens to be delivered over a terrestrial tower. But I'd like to think he'd consider himself a content provider always looking to put content into new technology. He'd reject HD as the joke that it is. And I'll bet Jobs wouldn't include a traditional radio signal on his iPods and iPhones if he still ran Apple. He knows that 24/7 radio doesn't translate to Gen Y, a generation that can do 24 different things in seven seconds but not listen to radio for hours at a time (okay, I'm exaggerating, but you get the point).
Remember, it didn't have to be this way.
As long as radio is being run by the same people who consolidated their stations and failed to build the shareholder value they promised investors, future prospects are dim.
Today, Apple will begin selling its new 3G iPhone -- you know, the one still on the worst cellular system (AT&T), with very few areas currently able to even receive faster 3G service -- with greatly diminished battery life -- but cool applications, and added refinements.
No one wants to buy an HD radio -- even with the 30% discount they were shouting about on the front page of Inside Radio the other day.
But they'll line up to buy the next iteration of an iPhone.
They want products and services that meld with their lifestyles -- cool, intuitive, useful.
Put a guy like Jobs in charge of one major radio company and you'll see the end of making local stations national, the end of the talent brain drain, the end of cutting sales staffs back because the money finds its way to the stations without them (right, Farid?). The end of declining ratings. The end of the fight to commit ratings suicide by trashing the People Meter in front of the advertising community. The end of no mobile or Internet strategies.
But...
It could be the beginning of the end of $1 stock prices and bean counter mentality that has led this one proud industry into such a terrible mess.
I'm just sayin'.
For those of you who would prefer to get Jerry's daily posts by email for free, please click here. IMPORTANT: First you must check your mail or spam filter to verify your subscription immediately after signing up before daily service can begin.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.
