It's never a good thing for a troubled industry when companies want to unload assets -- especially your number two operator.
CBS is thinking that it can make still money in the larger markets and there is some evidence to back up that rationale. Meanwhile, CBS has not announced the list of specific markets where stations are going to be put on the block leading one to believe that it can be flexible based on demand -- or lack of it.
Not good, either.
It remains to be seen what kind of interest there will be for mid-market radio stations in an economy where money is hard to come by and credit terms are even tougher. Small market radio has performed better than large markets of late so it could be seen as ironic that CBS would sell the smaller markets, but there's more to it than that.
I don't think you'll see record prices for these stations. CBS just wants to get rid of them and ease the burden on their balance sheet.
Wall Street, you know.
You can't keep reporting the same old losses.
Sumner Redstone (CBS' Viacom parent), you know.
And, if the mid-market stations aren't going to break the bank with new revenue in this economy, you can imagine how CBS would have to discount its major market properties if it were to sell them as well. Not now.
Radio is a declining business with little to no prospect of regaining its growth sector status. Playing by Wall Street rules has nailed the coffin shut. Now you'll be seeing operators trying to climb out.
Keep in mind the Clear Channel bailout by Lee & Bain was done after hundreds of stations were sold off in a painful process -- and that was in a better economy. Although CBS trimmed its station roster previously, the proposed CBS sale would have been unthinkable even a few years ago when it was hard to find good radio properties because a handful of fat cats owned them all.
Now Wall Street pressure is putting the fat cats on a diet.
Too much consolidation and not enough operation has led to a once vigorous industry too bloated to take advantage of opportunities in new media.
In all fairness, CBS Radio has been the most aggressive player of the consolidators in new media doing creative online projects and ventures with AOL.
If Citadel's 89 cent share price doesn't scare you, think about the extremely insignificant amounts of money radio consolidators actually budget (and spend) on Internet radio and mobile content -- the future of media. In a world of iPhones, Blackberries, iPods, social networks, Internet, WiFi, WiMax, online video and on and on -- radio operators are seemingly oblivious to what it would take to enter the digital world.
That eventually leaves them with only one option -- selling stations -- at declining prices.
And before that -- as the vultures circle their markets -- pink slips and draconian budget cuts precede what's increasingly becoming the inevitable only option.
Boy, they really screwed up.
Tribune led by Sam Zell and Randy Michaels is going down with the newspaper and local TV business -- increasingly run by radio people recruited to work their "magic".
Clear Channel is already cutting people -- just 24 hours after going private. That bloodbath keeps on comin'.
Less than a day after Clear Channel retreats into the secret world of private capitalism, CBS drops this bombshell that they are selling 50 assorted mid-sized radio stations but no names are on the list. Bring money and you decide.
I won't go into the management follies where Entercom, Citadel, Cumulus and an assorted number of others operators are doing everything but growing their companies.
Let's make it simple.
Consolidation failed for too many reasons to get into here. But can we agree on that? If it had worked, this industry would either be more vibrant now or it would be more aggressively present in the world of new media. Instead, it's MIA.
Radio executives have proven they are lousy operators.
Let me let you in on a little secret. They were always lousy operators even before consolidation. What saved them is talented, brilliant and colorful managers, programmers, personalities and sales execs who made their bosses look good. And when you could only own 14 or 30 radio stations, how bad could it get? One good station could carry the day and make it possible to own a lot of under achievers. They were that good. Not so today.
I have nothing against the boys who saw an opportunity to play in the big leagues and went for it. I know and like most of them. But this is not about who likes whom. It's about whether radio has the ownership skills to operate at a major league level.
And when they can't even understand what this level is -- then you'll see what I've been predicting for years now. I remember saying it wouldn't work back in 1996 -- and a lot of folks didn't like it. The reality is that you have to be an operator if you're going to own consolidated assets.
Otherwise, that makes you a player.
And that brings me back to yesterday's punch in the stomach -- CBS selling 50 "you name them" stations in the middle of a crappy economy with a credit crunch going on.
Not exactly good news for the handful of radio execs who got radio into this mess in the first place.
Sorry to say it. But it's the truth.
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