An Employee Takeover of Clear Channel

Chrysler is doing it.

Why not Clear Channel?

You heard last week that Chrysler was nudged into bankruptcy by the Obama Administration so it can pursue a do-or-die alliance with the Italian automaker, Fiat.

In essence the plan allows the United Auto Workers (the union) through their retirement plan to take control of Chrysler with Fiat and the U.S. government as minority partners.

The government will lend another $4 billion to Chrysler to ease the transition (above the original $8 billion). It's a no lose for the autoworkers who now have their pension guaranteed by the government.

The employees are protected -- even though they are voluntarily taking pay cuts. And what's even better is the message this is sending to the far more troubled General Motors which has been reluctant to swallow the bitter medicine it needs to remain viable.

What's really important to those of us who watch from the media sector is that President Obama acts in frustration and anger after a small group of debt holders held out for a better deal -- you just can't take the greed out of Wall Street.

Imagine Clear Channel being taken over by its employees.

There are so many similarities that they deserve a look-see even though the chance of this happening is slim to none (and in this case, both Slim and None are on vacation).

Take core business values.

The automakers went down with large gas guzzling cars because for decades they refused to be motivated by ecological or financial issues -- this the Hummer, et al. Then, the recession comes and they're left holding a lot of cars that no one wants in today's world. Fiat builds fuel efficient cars and the autoworkers have every reason to work with them to finally build the cars the marketplace wants.

In radio, Clear Channel has spent the last 12 years contracting.

Once they put their consolidated radio group together some 12 years ago, they started making economies of scale. Maybe they weren't earth shattering but they began the long process that ended with firing 20% or more of their total work force.

At least I hope the firings have ended.

If Clear Channel went into bankruptcy (a possibility as early as this year) and the government as well as another healthy partner participated, the employees could rebuild the kind of radio that time has shown audiences love.

Not repeater radio, voice tracking and under nourished programming, but 100% local radio with news and community involvement that reflects diverse local needs.

If Clear Channel winds up in bankruptcy, it is likely that a judge will allow them to violate their pension and severance responsibilities. A lot of good people are going to get screwed if that happens. And that's what I liked about the UAW/government deal to protect the workers. After all, it was their bosses who messed up.

What if it were the other way around for radio?

Take away the consolidators' present management and let the employees run the company (with support from the government and another solvent investor).

This arrangement would allow out-of-control executive compensation to be brought back to reality.

No more $8 million "signing" bonuses for Lew Dickey just to continue to work in a company he's not leaving.

Or $11 million years for Fagreed Suleman.

Or boards of directors that are puppets for these abusers of corporate funds.

A Chrysler-type employee takeover of Clear Channel would also solve the issue of penny stocks -- the residue of greed by radio CEOs who continue to prove they take care of themselves before they worry about investors.

It also stymies investment banks, arguably the cause of radio's demise in the first place.

For years they simply redid the loan arrangements to consolidators who borrowed too much at inflated multiples to get themselves in trouble. Even now, when you see that a group escaped bankruptcy for a few more months, they likely did it by agreeing to even higher interest rates.

The investment banks have nowhere to go. They certainly don't want to foreclose on radio stations they don't want, can't run and can't sell, but they're acting like they have the upper hand.

At least President Obama put his foot down with the greedy debt holders that got in the way of the Chrysler workout and pushed Chrysler right to bankruptcy perhaps for its own good. That ought to send a message to Wall Street.

I've said all along that radio as a terrestrial business has a short shelf life remaining.

The entire next generation that was raised without previous generations' addiction to radio, have moved on to the digital future. Radio is still trying to broadcast to these people 24/7 when they can get what they want when they want it on mobile and smart devices or over the Internet.

If I am correct that radio can have no future without the next generation (you look at the actuarial tables), then any employee takeover of a failed radio consolidator will also fail unless it also includes a plan to build what the marketplace wants (mobile and Internet content as well as old fashioned terrestrial radio).

Friday, I outlined some of the missed opportunities that radio ignored while it was playing monopoly. As many of you commented to me, these opportunities are golden chances to become relevant in the digital beyond.

You see the automakers firing their top execs.

Rick Waggoner forced out at GM and Bob Nardelli indicating he will move to Cerberus Capital Management where he belongs.

The fish stinks from the head.

Same is true of radio.

If all the consolidation CEOs quit and walked out tomorrow, nothing bad would happen to their companies.

But, on the other hand if they stay, bad decisions and policies will continue.

You wonder why talented and loyal employees have to be fired but there is no place else left to cut back. Radio CEOs don't even care how it looks. They are still keeping their excessive salaries.

Let them eat Repeater Radio!

Cumulus is a joke by asking its employees to sit at the front desk and answer phones for an hour as part of its farcical 5-day furlough abortion.

An even bigger joke for telling these hard working people how to sit at the front desk. Are they kidding?

These employees are being told not to make their own sales calls or do their weekly reports while they’re on the front lines. Also to please make a good first impression for the callers.

I notice that Lew Tricky Dickey and his brother, Long John are not taking their five mandatory give back days.

And, Cumulus is at work on a fully automated radio platform that may be one or two years away so it can run its version of Repeater Radio from Atlanta -- unless of course, employees and ex-employees go to their elected officials and ask for help in preserving local radio.

Meanwhile, when the economy bounces back and everyone finds out that it was not the recession that was killing radio, maybe then someone will like the idea of turning radio groups over to their employees.

After all, they are the ones who built local radio into such an appealing business that Wall Street overpaid to get into it.

And, I'm arguing, that the local employees are the only ones who can turn this debacle around on a dime.

I only wish it could happen.

Save the radio business by kicking out the carpetbaggers and letting the employees take back radio stations that their owners have proven they cannot operate when left to their own devices.

For those of you who would prefer to get Jerry's daily posts by email for free, please click here. IMPORTANT: Service doesn't start until you verify an immediate email from "Feedburner" (may have to check your filtered mail).

Thanks for forwarding my pieces to your friends and linking to your websites and boards.