Lee & Bain Channel

Clear Channel went private yesterday at long last.

Thomas H. Lee Partners and Bain Capital Partners are in charge now. They are investment buyout companies and their business is buying companies to sell them for greater profit.

Clear Channel -- the Mays version -- ended as a colossal failure when shareholders lost confidence and eventually the founders saw privatization as the better option. Running 1,100 stations turned out not to be as easy or as accretive to investors as originally hoped.

Once $90 a share, the investors walked away with $36 yesterday.

We've all heard and read a lot about what went wrong, but what's worth considering -- and learning from -- is what could have been.

Clear Channel was arrogant.

A bully full of itself.

It failed to realize that the assets it purchased, the stations, were not the key to productivity and profitability. Its real assets were the talented people it inherited with each acquisition and along the way for the past 12 years -- stifling, mismanaging and disrespecting these assets eventually did it in.

Are you other consolidators listening?

Here's what could have been:

1. Clear Channel missed a chance to take the largest group of assets -- not the physical stations, the talented managers, salespeople and programmers -- and build a strong terrestrial presence market by market that would exceed what one owner could previously do. They established the playbook -- buy, close, cut, cut, cut and cut. You see what they got. An asset -- no not the people this time, but the towers, transmitters and real estate -- that couldn't be considered a growth business after twelve years of trying. They had it all wrong from the start. Lesson one.

2. Imagine the Internet possibilities today if only Clear Channel could have imagined it then -- in 1996 or 20o1 or even today. The number one radio consolidator showed the Emperor Wears No Clothes on Internet matters. Instead of shoring up the terrestrial side and methodically using their talented people to establish a beachhead on the Internet, they chose to pander to quarterly earnings pressure. They spend a miniscule part of their budget on new media. And why did such smart people make that mistake? Because Clear Channel along with other consolidators believed they would be able to get away with another round of deregulation. They miscalculated once again.

3. Had the consolidator not been such a big bully, they would have been an industry leader worth emulating. In the later years of consolidation, Clear Channel appeared to become less litigious, but it was too late. They put a lot of people in a bad way by their sheer brawn and power. Instead of being approachable, they became feared. Texas Justice was meted out when the Mays family went quietly into the night after failing on nearly everything they set out to do. These boys were just not ready for prime time. I said it all along. Events proved me right. There is no joy in saying this as the industry has suffered and thousands of talented people have been put at risk.

And let's look at the tragedy of Clear Channel's rhetoric in their own words:

CEO Mark Mays told Reuters “From a listener perspective, I don’t think they will see anything radical or different. This is really a capital structure change rather than a programming change".

Too bad he is right. There will be five more years of John Hogan and the two buyout firms employing him. Yes, Mark is right - no change (other than layoffs).

“The media stocks clearly are still out of favor in the equity markets. When will that be corrected? As soon as the media stocks are able to change the incorrect perception and realize that today’s traditional media, radio, the newspaper, or television, still reaches a mass audience and still gives great results to our advertising customers".

Thank goodness few people believe Mark Mays when he speaks. He's kidding, right? Does he really believe that traditional media has a future without the next generation? If so, I've got some Clear Channel stock to sell you -- oh, not any more.

And, finally, the man who brought us Clear Channel as well as Mark and Randall - Lowry Mays:

"We believe Clear Channel's people are our most important asset. Our teams make the critical difference in how we perform and their skills, talents and determination separate us from our competitors. We also believe people can achieve their full potential when they enjoy their work, so it is a priority to provide a workplace where growth, success and fun go hand in hand".

I'm going to be sick.

Did this man say people cannot achieve their full potential unless they enjoy their work in a workplace where growth success and fun -- did he actually say fun -- go hand in hand?

• I guess you reach your full potential when your budgets are cut endlessly.

• I guess you reach your full potential when you run three or more stations at the same time without the appropriate compensation and budget.

• Do you think people enjoyed their work last Christmas when Clear Channel felt the hot breath of Wall Street down their backs as they handed out pink slips to lots of fine folks?

• Do you think people have fun when they have less control over making decisions -- when they have to watch their bosses sucking up to San Antonio -- tell them how to program, manage and sell?

It's a tragedy -- but not for the Mays family.

For the survivors -- the next casualties -- the listeners who are too frequently getting a second rate service -- warmed over by program duplication from foreign markets.

Mark my words -- Lee and Bain will take a sharp knife to the remnants of what was once the mighty Clear Channel empire. You might be wishing for the Mayses back -- I'm sad to say.

In today's real dog-eat-dog business world, there is little room for entrepreneurship. It's about size, leverage and resale price.

Radio is in a battle for its future -- not the one that has to do with losing the next generation (that one, too) -- but being a pawn in the real world of American business where companies are bought not to operate them but to sell them for the profit of a few with little regard for public interest.

Welcome to day one of Lee & Bain Channel.

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