Clear Channel’s Unbelievable New Sales Strategy

The first quarter sales package has arrived at Clear Channel’s seven station Tucson cluster.

The radio industry’s “leader” is at it again.

It appears the Evil Empire has the same low opinion of radio’s value as it does of its employees.

The Tucson cluster rates beginning in January start at $4 and go all the way up to – well, maybe not all the way up -- to $15 a spot.

That’s before negotiating.



And before you dismiss these low rates because Tucson is one of Clear Channel's smaller markets, wait.

Clear Channel has dominant ratings in Tucson. Four of their FMs are in the top five.

And the Clear Channel Tucson cluster used to price spots in the $50-100 range. Talk about off price. Less is More has finally become less.

Clear Channel doesn’t have to drop its trousers to sell ads – the stations are not performing poorly. Their corporate management is.

So much for the "leader".

If Clear Channel doesn’t push back on this prostitution of pricing everyone in the market will be doomed. That’s what happens when empty suits run the largest radio group and investment banks apply the same strategies to managing radio yield.

And speaking of yield, wasn't Clear Channel the company that made a big woo ha out of hiring 50 new yield managers to make damn sure they weren't selling ads for less than they can get?

Or do they really believe $4 - $15 is all they can get for a spot in Tucson.

In the case of Tucson – under this brilliant new strategy – the entire Clear Channel cluster could sell out and come nowhere near what they were billing five years ago. Of course, their owners are not worried about five years ago nor are they concerned about anyone else’s real estate. They’ve cut costs and now they want to sell cheap ads.

Certainly you can see where all this is headed.

If the biggest operator is going to cut rates to the bone, you can see that they will never generate enough money to invest in their air product, Internet strategy or mobile future. I never liked the concept of less is more – who wants less of anything (except pain). And Clear Channel’s new strategy is going to inflict pain on its stations, the markets they do business in and the industry in general.

A Clear Channel salesperson wrote to say:

“I would love to say that you are wrong about Clear Channel, but the 2010 piece...already in motion. After reading your article, I can see the beginning of the plan being put into place. I am one of the top billers in the cluster and am making less than ever. Someone is definitely making money off of me, and it certainly isn't me! I can't even cover my bills each month”.

Low rates.

Fewer sales reps.

A wider variety of rescue plans.

And it’s not as if buyers are that dumb. They know they have you on the ropes when four of five top stations can’t charge more than $15 a spot.

A longtime radio advertiser reminds us that:

“As a business man I have an observation. How do you have a business that employees 13 managers related to sales and only 23 sales people for 7 stations and 2 sports teams. No business in the world has 1 manager for every 2 sales people. Then when they want to reduce costs they fire from the bottom, eliminating the core support people that make the business run. This would be like the Flyers starting the season 0-10 and the owners disposing of 10 players and adding 5 coaches. Just amazing”.

No! He didn’t invoke the name of The Philadelphia Flyers, did he? Now I’m really worried.

But seriously, it all makes no sense.

Good sellers know you don’t decimate the ranks of your account execs, hand off existing business to one person to “manage” and then cut rates drastically. It’s dangerous when any one station does this, but when Clear Channel leads the way you can see why I am worried about the future of this industry we all love.

Because when E.F. Hogan talks, then Cumulus listens.

That’s why the price per spot at Cumulus has turned to spit, too. Lew Tricky Dickey, a Harvard grad with zero experience in sales (or anything else useful to a radio station) is hell bent on reinventing radio as a Harvard Case Study.

A former Cumulus sales person suggests that corporate forcing sales people to sell to their predetermined list of prospects is not going to help:

“I and others (all veteran sellers) went through exactly what you describe. Accounts taken away, commission cuts, even a reduced draw. And then to add insult to injury, CSOS. Here we are … being forced to cold call Cumulus provided 'leads' that were the equivalent of calling random businesses from the phone book. I was trained (at another company) to spend my new business energy targeting QUALIFIED prospects. Needless to say the CSOS system is a total failure but, management credits every piece of new business to CSOS to appease corporate”.

Or as another long suffering Cumulus sales exec says, right sizing and wrong hiring makes no sense, either:

“Recently we lost our sales manager who left for greener pastures in October. He had over 20 years of experience and the respect of everyone around him. Now, we have a number of longtime, dedicated employees who could have easily moved into the management possition (sic). One employee had even been a market manager in other markets and she has 23 years of experience in the business. We have a perfectly capable and ready sales manager in house, handling the agency work as is (which goes back to a prior article).

But who did we hire? Did we bring in another rep from another radio group? Did we find anyone who has managed a radio station or company? Nope. Cumulus hired a 29 year old from Xerox with no sales management skills. Again, No prior work in radio or upper management! While we have tried to retain an open mind, he has not been greeted warmly, but that mostly is his abrasive personality. I share this with you and ask, why would a company not hire internally, especially when you have someone who is ready, willing and capable of filling the spot? It's so bad, we lost a rep of 10 years to a competing radio group.”

A mobile industry exec says he thinks the market for broadcast spots will decline a whopping 50% in the next five or six years. And that radio revenues will be down from the $20 billion all time high in 2006 to $10 billion as equity owners flush their investments down the drain along with a lot of debt writedown.

In other news ...

Citadel is preparing for B-Day January 15th.

Some 18 more people – mostly air talent at their ABC format division in Dallas were shown the street just last week (as in Thanksgiving week). No station relations people. A shell remains. It’s too late for Citadel to be trying cockamamie sales strategies and fire sale pricing.

At Citadel, their employees derisively refer to the January 15th date when the company must come up with $150 million to repay a loan as “Fat Chance”.

But Citadel is ready to go willingly, the Reverend is reading the Bible as they walk down the cell block before the stroke of midnight.

Now we see that Clear Channel is pricing its spots to take that walk next.

Then Cumulus will follow Clear Channel off the Brooklyn Bridge -- doesn't it always?

Because there could be something worse than bankruptcy for these industry leaders – like having to continue to embarrass themselves into further failure.

To borrow a well-known phrase from Visa that applies to consolidated radio these days, “bankruptcy -- It's everywhere you want to be.”

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