Goldman is being accused by the SEC of shorting the middle class by selling products that they allegedly not only knew were bad investments but by betting against the products they sold at the same time.
I understand that there are a lot of political repercussions to the Goldman story but the shorting of our own radio industry has happened by similar investment banks that have done damage to shareholders, employees, listeners and advertisers.
Radio industry CEOs are licking their chops at resuming business as usual which is, as I call it, screwing more people while the few, the shamed, the consolidators make out-of-this-world money.
Take, for example, Lew Dickey's compensation package for running Cumulus into the ground -- that is, his worst performance ever.
Nothing I am about to say cannot be corroborated in Cumulus' own 10-K. As one "repeater reporter" told me "I had to read this particular page in the "Notice of Meeting and Proxy Statement" several times over because I couldn't believe my eyes."
What it speaks to is how wannabees like radio consolidators get overpaid just like CEOs of Goldman Sachs.
Turn to page 15.
Take Lew Dickey's goal of a minimum of $85 million in EBITDA for 2009.
If he hit 95% of that goal, Dickey would earn a "bonus" equal to half of his salary.
Hit 100%, take home 75% of his salary in the form of a bonus.
And exceed 100% of the EBITDA goal by even 5% and get 100% of his salary as a bonus.
The goal was $85 million.
Cumulus turned in a performance of $72.6 million meaning Mr. Dickey, Jr. missed his goal by $12.4 million.
His sales people better not miss their goals by even one penny or they don't get their bonuses, incentives or agreed upon compensation.
But when Tricky Dickey gets to hand pick his corporate compensation committee, they come up with language like "Mr. Dickey made significant contributions to the company in 2009 including providing strategic leadership of our operations..."
Captain Lew wasn't exactly making chump change earning over $900,000 a year while his company underperformed, yet he comes away with financial bonuses.
But apparently the compensation committee just felt so compelled to reward Lew for his strategic leadership in alienating workers, homogenizing local radio and nationalizing operations while cutting costs that they awarded him ....
Cha-Ching!
$496,000 in additional bonus money.
That's right -- for underachieving.
After all, it wasn't Lew that underperformed, it was the economy.
I guess this means a new day for Cumulus, right? If his market or sales managers miss their numbers by 15% like Lew did they, too, will get rewarded like Lew was.
Don't hold your breath.
It doesn't work that way.
They'd be lucky to keep their jobs. Or maybe not so lucky since Cumulus is fast gaining a reputation for being a very hostile workplace under the strategic leadership of Lew Dickey.
Cumulus revenue has been declining for years, but its CEO keeps making bonuses.
Of course Lew's flaks report that Dickey had a contractual $40,000 raise coming to him this year and Lew magnanimously didn't take it. Very impressive until you do the math both ways.
Add the $40,000 raise to his current salary or $496,000 bonus to his current salary. Hell, you'd leave your contractual raise behind for that.
As we say in New Jersey, "What are they nuts?".
Cumulus employees have been fired in unprecedented numbers during the four years of Lew's good fortune to be supplying strategic vision to his company.
Cumulus has been hit with a class action suit in California that has him nailed. Mark my words, can you say settlement? And there's new revelations coming out of that class action suit that I will soon share. It may be worse than anyone thought.
So, let's get this straight.
Dickey takes his bonuses. The company deteriorates in employee relations. Local radio is all but out the window. Repeater radio arrives and shareholders have taken a big hit on their original investments. No strategic leadership plan for new media.
See the similarity?
Goldman Sachs is accused of betting against the investments they were selling clients and Cumulus (and other consolidators) were, in my view, betting against the best interests of their shareholders in return for doing what was in their personal best interest.
Look at Citadel.
Fagreed Suleman is pitching a fit over an offshore company named Aurelius (Mark Brodsky) purchasing 16.7 million of Citadel's bankrupt shares. Fagreed ran to bankruptcy court asking emergency action to void the purchase.
See Fagreed can dish it out but can't take it.
The game is dirty. It's for snakes in the grass.
It's not what you and I want it to be -- all about good programming, the best interests of the listener and local community and turning an honest profit for investors who make growth possible.
Some 30 years ago top executives at S&P 500 companies earned an average of 30 times what their workers earned.
Take a guess at what that multiple is today?
How about 300 times what their workers make.
Fagreed Suleman had $10 million years and private jet getaways that would make Robin Leach and Adnan Khashoggi envious. Okay, Les Moonves' salary doubled in 2009 to $43 million probably leaving Lew Dickey green with envy.
For some reason the radio industry doesn't want to link itself to the real world. Maybe that's because radio has always been in a world of its own and if you have been reading the news accounts lately about how the consolidators are revving things up once again, you need no more proof that the scoundrels are back in action.
Let me lay it out for you:
1. Citadel will struggle even when it emerges from bankruptcy to find listeners and advertisers who have passed them by. Improved numbers, no debt but no growth.
2. Cumulus will have to jigger the loans again in about a year to avoid running up against default and the brilliance of Tricky Dickey's platform will be -- an improved, but underperforming company. But he won't have to worry because the Dickeys get paid no matter what the outcome is. Turn to page 15 of their latest 10-K for proof.
3. Clear Channel will shock some people who have fallen asleep in fantasyland thinking Lee and Bain are operators. They are not. They are speculators who will sell or may have to sell. Four years and counting until $18 billion in debt comes due for them -- keep an eye on Clear Channel. I say they are for sale -- even in pieces.
4. There will be more bankruptcies. I know that sounds awful because you are probably reading the same happy talk publications I read each day that assure us everything is coming up roses. Yes, business will get better. No, radio will not go back to 2002 -- there is too much new media competition that radio companies are unwilling to invest in.
5. The big "broadcast" companies will likely be new media companies with one or two (or more) principals from traditional media companies who are crossing over to the other side. Not existing broadcast companies who don't get it.
The rodents are at it again.
The economy is getting better but none of the things that caused the recession have been fixed.
Suspicious?
Not radio CEOs.
Investment bank oversight -- still out of control after all these years.
Housing sector -- in a slump for many more years.
Mortgages -- thanks for asking, try to get a good one.
Hedge funds and their deleterious effect on the economy -- fugetaboutit!
Radio -- lost a generation but resents anyone telling them about it.
Nothing has changed.
Earlier today, despite tight security, corporate paranoia's and CIA agents, a Cumulus minion wrote to me to put it all in perspective. These are his (or her) words, not mine:
"We are all at the Market Manager/Sales Manager meetings in Atlanta as i type this. Matt Kearney is the lunchtime entertainment.
Our "welcome kit" came complete with the April edition of Radio Ink magazine featuring Lew Dickey on the cover with the title 'Lew answers tough questions'. Ha! Oh and we were not told who the special guest was for our noon keynote. - it's Eric Rhodes! (Radio Ink's Publisher who did the Dickey interview). What a shill....
We were also provided with a luxurious Bic Round Stick pen, polo shirt with Cumulus the Power of Radio embroidered. Finally in the kit is an hourglass with the Cumulus logo. Nobody can figure out what it's supposed to mean, our time is limited?
Couple hundred people in Atlanta probably cost nearly as much as Lew Dickeys bonus. Lew's note in the welcome kit says it's been a tough year, have fun while you're here!
The Koolaide fountain is pouring blue, but only the Cintas and John Deere people are drinking. The rest of us know better".
They're baaack!
But nothing has changed except the consumer, the advertiser and technology.
The important things remain the same.
Like executive compensation.
So who's worried, right?
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