Lee Capital Partners and Bain Media overpaid for the once mighty radio and outdoor company fully expecting that they could initiate economies of scale and eventually turn the properties around for a nice profit.
Without a Plan B, Lee & Bain are initiating one of the largest and perhaps deadliest cutback plans that promises to reshape the radio industry.
Last week, the other shoe dropped.
While you were being fed happy talk about the gigantic size of the national radio audience and while RAB CEO Jeff Haley was bragging about radio's survival, the brain trust (sorry about that description -- brain and trust in the same sentence with The Evil Empire), Clear Channel was busy implementing its latest "I shrunk the radio industry" strategy.
Here's the inside story.
In company-wide emails by each one of the five corporate executive vice presidents -- some distributed as early as the end of February -- market managers were told in blunt, no-nonsense terms to make arrangements to have a person on duty 24/7, 365 days a year in each studio location.
Now, if you're thinking "this is great, Clear Channel is hiring again and acknowledging that they need to run local stations", don't get too excited.
The directions do not quibble over what qualifications they are seeking for this warm body job description other than to park their butts unceremoniously at the various studios in spite of whether they are capable of running a legal unattended operation.
The market managers were not told why all of a sudden a live body had to be at every studio site. Each EVP communicated the mandate in their own language but the message came through loud and clear as market managers scurried about to comply.
Here's an example of one email said to be widely circulated throughout Clear Channel:
Effective immediately, you are to staff each of your locations 24/7/365. I am reviewing the plans you’ve sent me and will advise how you are to proceed in a cost efficient manner. Meanwhile, take steps to cover immediately. Night/overnight personnel must be able to communicate emergency situations to station management clearly and concisely. Ideally they will do other important work such as production, affidavits, and similar work.
This commitment is being made by us to guarantee provision of services to our communities that they rightfully should have, in case of a civil or weather emergency. To review: take appropriate action and get coverage in place immediately. I will be reviewing your most cost efficient long term solution and will get back to you fast.
So, I know what you're thinking -- Clear Channel just wants to get ready in case another blizzard or toxic spill hits one of their markets.
That, too.
I'm thinking Clear Channel is setting the table for expansion of its Repeater Radio concept that will allow corporate to make the music while their sticks become repeater stations under the guise of serving that local community.
You heard what the man said, didn't you?
"you are to proceed in a cost efficient manner" and " immediately".
That means no new hiring and JFDI -- John Slogan Hogan's motto "Just F#%king Do It". Didn't Clear Channel fire a slew of part-timers last month?
Are they going to make their veteran weekday talent come in on a Saturday or Sunday to do a weekend shift live? Well, a live airshift on the weekend would certainly be a novelty!
Of course, this is only speculation until it happens. And I believe it is going to happen.
Lee & Bain and their knee-jerk Clear Channel radio CEO John Hogan have to whip that operation into a moneymaker. They can't defy the troubled economy or the advertising bust, but they can cut costs.
They have already eliminated thousands of jobs since the start of consolidation in 1996 and many recently.
But, as incredible as it may seem, those cutbacks are still not enough.
You've seen me coin the phrase "Repeater Radio" and you see Clear Channel's move to ram Ryan Seacrest and mini-Ryans down local manager's throats so they can save on salaries and become a virtual radio network.
But there is one small problem.
Congress.
Two, maybe.
The FCC.
But I think Congress is the reason this group of suits has come up with the live-studio afterthought.
After all, Clear Channel could be liable for blatantly not serving their communities. How will they be able to defend against accusations that may someday arise that their LA radio content didn't fulfill their license requirements in Anytown USA?
Oops.
And don't think Clear Channel isn't serious about this one-format-for-all-markets concept.
Just recently, Clear Channel program directors found a new virtual ‘Classic Hits’ station called “CCFL Format Labs 6” in their NexGen system. The songs on the log are now in the library so they are ready for voice tracking a shift or two on a future "Phantom Station".
There’s a log, with voice-track holders, songs, sweepers, empty spot break holders, and a place to insert “local sweeper close.”
And a check around the country has unearthed three of these "Phantom Stations" in the Philadelphia system and two in New York.
New frickin' York -- the nation's (and world's) number one radio city.
You should know that these are not actual automation servers that can go on the air on any one of Clear Channel's local stations -- yet.
But the server is based in the Cincinnati market. And it appears, I am told, that it is mapped so someone can voice track a shift to be used somewhere else.
These latest developments raise a lot of questions.
• Number one -- Clear Channel appears to have been less than forthright about their intentions if I am correct.
• The mass firings are consistent with the march toward Repeater Radio.
• Someone at corporate or legal apparently has had second thoughts about Clear Channel's exposure in all of this. After all, it is unthinkable that the largest radio group could single-handedly take 800 licenses and rip up the local responsibility part for financial gain.
• Radio is sounding as bad as Wall Street but it hasn't stopped the new masters of radio from pissing all over radio listeners -- you know, the 234 million that Jeff Haley brags about. Hope they like voice tracking. Hope they like generic programming. Personally, young people have it right -- iPods, the Internet, NPR and file sharing.
• Will the GM or PD even remember to turn his or her cell phone ringer on for the night while this scam is perpetrated on the public?
• Will they have a way to get on the air on all their stations to get the word out? Will they have a way to find out what the word is?
• How will the minimum wage attendant be made aware of a public emergency in the middle of the night or at any time? Will they have a phone code to dial out? Or even a phone list of five or six management people she or he can call? (Come on, CC corporate, we have questions here!)
• Is the program director or air talent of today capable of sounding cogent for hours on end, talking about an emergency? Or is it all for show -- to justify the screwing that consolidators are about ready to give to Jeff Haley's 234 million best friends.
Look.
A Democratic senator just yesterday introduced a bill to allow newspaper companies to restructure as nonprofits with a variety of tax breaks -- of course, they are intending to restrict political coverage by forbidding candidate endorsements. But what do you expect from politicians?
Nonetheless, Congress seems to have an appetite for even bailing out our newspapers that have been dying for decades.
Clear Channel and John "I'm No Peter Drucker" Hogan have just handed you a gold plated, fool-proof, guaranteed way to speak up for radio listeners and loyalists who want their local radio back.
In fact, they've bent over and showed you their -- well, Achilles heel.
Unstaffed Repeater Radio.
That's why they are trying to fix it in private -- at least, until now.
So, if everyone who has ever been screwed by a radio consolidator got ten of their closest and even powerful friends to contact their local U.S. representative or Senator -- my math shows that friends of real radio would have more than enough support to derail the latest bad plan to make a national treasure a national embarrassment.
It's up to you.
There's the phone.
Here's your laptop.
Tweet.
Act.
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