Breaking Down the Clear Channel Firings

Clear Channel President and CEO John "The Chiropractor" Hogan has now completed an adjustment on his patient.

In one day (yesterday) -- 590 people were fired from Clear Channel. Add this to the 1,800 or so that were cleared out in January and all the "little firings" in between and you can see why Hogan has become the CEO (Chief Execution Officer).

And the term "adjustment" is exactly how Hogan described this mass execution of radio talent to the surviving employees in a company letter:

"In January, we took the first steps to adjust our business to the realities that all media companies face this year. Those actions were in response to initial results of a thorough analysis of every part of our business. The actions weren't easy and were necessary to make sure we remain competitive this year, and are in the best possible position once the economy begins to recover. Today, we completed the adjustments based on the final results of that analysis".

Freakin' adjustments!

You may be one of the victims or, like me, know some of them. Yesterday was another sad day in the "Fall of the Radio Industry". So many unemployed -- so few jobs for which to apply.


As Hogan said, "The actions weren't easy and were necessary to make sure we remain competitive this year, and are in the best possible position once the economy begins to recover".

Well, Clear Channel sure makes firings look easy -- maybe because they show so much insensitivity to the victims. Sorry we're going to have to end your career but it's for the good of the company. So that makes it better.

And this business about being in the best position when the economy begins to recover is bull. They just want to hang on.

When the economy does recover, these faltering consolidators will have to come up with another unbelievable excuse and it won't be the real reasons.

This line I do believe Hogan wrote: "On a personal level, one of the most difficult contradictions technology creates is that increased productivity effectively eliminates jobs".

Talk to Apple or Google and see if they agree.

Maybe for radio, an industry led by misguided managers who got lucky, technology means losing your job. If so, why can't they start at the top?

Here's what I mean by being insensitive. Hogan writes "We have introduced and created a host of resources that help us: make better decisions, serve our customers and audiences more effectively, and lower our cost of doing business".

Who is "we"?

Lee & Bain, the investment suckers who overpaid for Clear Channel?

And this poor rationale for top down decision making explains why each month for the past several years Clear Channel has been losing it.

On top of all of this, the company's obsession with calling firings and cutbacks localism when it depletes and undermines local radio is more than an embarrassment to them -- it's a pox on both our houses -- theirs and the overall industry.

That brings me to Lew Tricky Dickey, the chief barker of the Cumulus three-ring circus.

The buzz is that later today, he will hold a conference call with managers and it's not to say, "we're giving you all raises".

In fact, Cumulus, which perhaps is the best example of minimum wage employment, couldn't wait to get started.

Yesterday, one of my "repeater reporters" tipped us that Repeater Radio has hit Dallas-Fort Worth with the announcement that KDBN-FM (Cumulus) has changed formats to "Quality Rock" and a morning show imported from Atlanta.

See what I said yesterday?

Once Clear Channel starts gutting local shows to amortize the expense of syndicating just one show, it is monkey-see-monkey-do.

Cumulus is in short pants -- as are the other consolidators. The only reason these companies can't default on their loan covenants is because their investment banks don't want their stations back.

Radio is no longer a growth business. Bankers have no idea how to run anything -- do we need to get graphic here or is the nationwide banking meltdown enough to make the point?

I'm sorry that these virtual monopolies didn't work, but the reason they failed is because their arrogant CEOs ran up the debt to buy stations at prices that were, frankly, never really worth what sellers pumped them up to. Now they can't service that debt and even though they could probably survive an economic downturn (radio always used to in past recessions), the debt they ran up during the consolidation years is killing them.

Thus, the firings.

And the repeater radio -- one show, many cities -- forget local fiduciary obligations to the licensee. This is about survival -- theirs, not their employees.

Yesterday Clear Channel had the nerve to slap its surviving employees across the face by taking away company 401k contributions until such time as they make 90% of their budget for the rest of the year at which point the 401k match will be restored retroactively.

Fat chance of that.


Radio operators are losing anywhere from 15 to 35% this year. They'll be lucky to end the year with these losses let alone do 90% of their budget.

So the big question is -- why are all the consolidators cutting back budgets?

Some companies like Saga have little debt and others like Citadel are choking on it.

Why are otherwise shrewd people forcing watered down syndicated programming on local audiences when you know, I know and even they know that it will hurt their stations, companies and eventually the radio industry?

Why fire your best assets when they are exactly what you need to compete in a world of emerging new media?

You may not like the answer, but I'm going to give it to you straight.

The banks -- the same institutions that have helped drive the overall U.S. economy into near Depression -- are sticking it to their clients.

Even as I write this, some consolidators are being charged whopping interest rates on their debt regardless of whether they are responsible or irresponsible. And the interest rate increases alone are more than some of these groups can keep up with.

I'm not defending them.

Not making excuses -- after all, radio CEOs were big boys who should have known better.

But so should Chrysler, GM and Ford and the major banks and mortgage lenders that are being bailed out by your tax dollars.

Believe me, Lee & Bain never expected to have a turkey on their hands for $19 billion. They were in it to spin it -- build it, sell it, chop it up into parts -- taking fees along the way and making more money.

They made a lot in fees but are now giving them back in losses.

Greed, my friends.

Not just in radio -- but including the radio industry -- is the reason you're seeing more than a recession here. And, for radio, the timing couldn't be worse.

The next generation -- 80 million strong -- is coming of age and they don't like or use radio. You know what they prefer.

The Internet has prostituted business models.

Think about it, publishing is dead and the dying were the ones who raced to the web to give their content away for free on the hope that they could sell ads and monetize it. News Corp CEO Rupert Murdoch and the publication he acquired, The Wall Street Journal, knew better and continue to charge for online subscriptions -- the exception -- not the rule.

Radio goes online with its content and comes up with ways to cut on-air commercials out and insert Internet spots and still -- there's no business there. They don't get that what consumers want is variety, discovery and control over their content. Not terrestrial formats with new commercials in them.

Few of us will be surprised when Lew Dickey gives the next spoon of laxative to his company.

But the reason he and his compatriots are doing it is because in their ultimate greed, they got caught in a system that screwed them and now they have to screw their employees to be able to keep operating.

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