Farid Suleman, Citadel's $11 million man, has found a way to re-sign a talk show host he needs on several of his stations without spending much money -- a bean counter's dream.
The deal with the devil is with Clear Channel's Premiere Radio Networks for Sean Hannity.
I asked my colleague Joe Benson to help me look inside the Hannity deal and you probably won't be surprised to find that it was Farid Suleman at his best -- cutting costs -- not building the future:
• Hannity gets at least $100 million for the next five years (after his present contract expires). But he'll get compensation from endorsements and live reads that will bring his salary much higher. No word on whether Citadel or Premiere pays these added expenses.
• Farid gets off the hook for huge major market affiliate fees as Hannity is certain to keep airing on WABC, New York; WMAL, Washington and WLS in Chicago.
• For Farid's non-ABC Citadel stations, he will still recoup syndication affiliation fees for medium and small markets just as Clear Channel does from its own stations. Incest at best as Premiere goes after Clear Channel stations for affiliate fees as they would any other company. Same for ABC Radio Syndication for other Citadel stations.
• Farid gets to cut his national sales staff to sell Hannity. ABC will go after the money until December 28th and then Premiere/Clear Channel has at it for all stations outside the ABC Radio stations -- including Citadel. The genius of Farid Suleman -- if you'll pardon the expression -- is that most of the $100 million Hannity talent fee is absorbed by Premiere since they will be the ones selling the show and pocketing the sales.
• No matter what sales are done on a national basis now, ABC Radio will be the one to sell it and rightfully claim the commission and the income as long as these contracts last.
This is Farid Suleman at his sharp pencil best -- cutting costs at all costs. It's a Farid kind of deal -- not a lot of upside. True, he gets to keep an important talk show on a few of his critical stations but he has basically sold his soul to Premiere which can make all the profits on the upside.
And "Monkey-see, Monkey do" has just happened again.
Westwood One is forming a partnership with Cumulus.
In plain language, Cumulus is whoring itself out to Westwood for Billy Bush's three-month old evening show in eight Cumulus markets by August 4th and 25 Cumulus-owned Billy Bush stations will air a new weekend countdown show.
Let's see how smart my readers are.
Why would Cumulus want what is tantamount to free programming at night in all these markets? (Hmmm. Of course, I don't need to answer that.)
Why would Cumulus want a weekend show for basically nothing so they don't have to even pay to voice track the time segment? (Oops, I answered it.)
Why would Cumulus, a local small market radio company, want to put more national programs on its stations when it could develop local shows and get ratings? (I forget, radio used to be local -- now it's just an affiliate to any programming that is free or costs next to nothing).
Hey, if radio is going to get out of the programming business and get into the affiliate business, why not do business with Dial-Global which gives their formats away for two minutes an hour of commercials?
Fire everybody, close the office and really cut expenses.
So, there we have it, another week of radio as usual.
While Farid is high-fiving his people on the genius deal he just worked out with Premiere -- the one in which he pays nothing, has no expenses and gets to be a free Sean Hannity affiliate -- here's what he should have done in my opinion to actually build his radio group up in value, say -- to a $2 a share company:
1. Give each ABC and Citadel station a budget. Tell them your expectations and don't call or email them them for a year. Do it on a sheet of paper. If the goals are met, reward the parties. If they are not, feel free to make changes. This way the employees know what is expected and the company knows what to expect of employees.
2. All hiring and firing would then be done locally based on the financial nut that Farid gives each station.
3. Smart move would be to triple the sales team at every station -- not cut back as Farid wants to do. Pay all commission -- raise the commission -- and provide sales training. Sales is not an expense, it's an investment.
4. Mandate local radio. This is not to say local management cannot bring in the odd national show at their discretion -- just not to save costs and turn the station into an outlet for a syndication company.
5. Fire your entire corporate staff -- keep the profits if you like. Put the savings to the increasing cost of aviation fuel, if you like. And, let all the local stations report to one independent executive who reports to you -- preferably not a family member.
Beware of "partnerships" between syndication companies, networks and radio groups. Their main purpose is to provide free or cheap programming.
It's not about the air talent.
It's about the lack of talent in today's corporate offices.
This corporate partnership will work for Premiere, an outstanding radio network and for Hannity, a proven talent with a following, but it's just another name for failure if you're a Citadel shareholder.
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.
