Mays Departure from Clear Channel Meaningless

Mark Mays, the outgoing Clear Channel CEO, didn’t build the company.

His father did.

Or should I say Randy Michaels did because Randy’s skillful knowledge of programming and engineering led to the best decisions about which stations to buy and where to buy them.

Mark Mays never really ran Clear Channel.

He had no operating experience. After all, he’s the one who elevated John Hogan to the position of president over the more qualified Michaels and frankly, I can’t see any other radio company picking an unremarkable market manager like Hogan as their radio president.

Mark Mays didn’t seize the mobile and Internet future when he had the best resources and product platform to do so.

The reason?

Mark Mays didn’t have the experience.

In fact, Mays was so naïve that when he kicked Randy Michaels out for John Hogan, he sent Michaels to Clear Channel’s version of Siberia – the non-existent Internet division.

Remember that?

What’s worse, he probably would have stumbled into success if he let Michaels and his crew have a crack at new media. But the “promotion” was really a punishment. I think -- and this is my personal opinion -- that Mays felt threatened by Michaels who had the experience he did not.

Mark Mays seemed to make all the wrong decisions.

Therefore, his departure by year’s end will be unremarkable. The damage is already done.

The Mays family used Wall Street investors to line their pockets. They never really knew how to run a larger radio platform but someone in the family knew how to play the investment bankers game.

Again, that would not be Mark Mays.

The reason Mays is giving his resignation is that it is time to let a new media person run Clear Channel.

Why does that scare me?

It seems that Clear Channel will do its obligatory executive search for the next few months. It’s hard for me to believe that Lee and Bain, the investment bankers that overpaid for Clear Channel in the first place, don’t already know who their new CEO is.

Betcha he’s not a formidable Internet executive with an enviable record.

Betcha he’s not a she – that is, very slim chance of a woman running the biggest boys club in radio.

Betcha he’s not a man of color --- oh damn, you get my point.

So the departure of Mark Mays also puts in doubt the future of John “Slogan” Hogan, the man without a plan. Hogan knows how to say, “yes, sir” better than anyone in radio and that may be the most important advantage in keeping his job at Clear Channel.

But I’ve got bad news for you.

Even if Hogan stays, he’s not the boss.

Hasn’t been the boss.

Never will be the boss.

The big story on Action News tonight is Lee Capital Partners and Bain Media are in charge the way Alexander Haig thought he was in charge at the White House when President Reagan was shot.

Who is really running Clear Channel?

The debt holders.

Keep in mind that Clear Channel runs up against its almost $20 billion debt covenant in the next few years. They either have to pay it off or refinance it at God knows what high rates. This is not good.

Or, Lee and Bain can pull a Citadel and file for a nice pre-structured bankruptcy. It’s too early for that talk, but pre-packaged bankruptcies are the rage these days. Trade that debt by giving up equity.

Think they won’t do it?

The game we radio people can’t seem to stomach about investment banks is that it is all about making fees. Succeed or fail, every investment bank makes money. And there are always assets left to sell off and earn – you guessed it, even more fees.

So what Lee and Bain really need is a workout specialist to get the debt under control. Clear Channel doesn’t make anywhere near enough money to repay its costly debt so you can see where this is all headed.

And that’s the other thing.

Investment banks, unlike responsible individuals who pay their bills, operate only when they can leverage debt. Use other people’s money to expand their vast holdings – and forgive me – so they can generate more fees.

So while some look at the departure of Mark Mays as a new day, it is more likely to be business as usual.

And that business is leverage and buy.

Refi-and sell.

Earning fee after fee all the way.

That’s bad news for the fine people at Clear Channel who are hoping that the new CEO will be an Internet and mobile media maven. That’s like asking Sony to become Apple after they missed the portable device revolution and don’t have the people to do it now.

This is good news for radio competitors who are showing signs of being operators.

I had to laugh the other day when I saw PwCs projections for radio based on the optimism that radio operators will embrace new media. In other words, PwC joins the other analysts who insist that radio cannot grow without mastering new media.

Isn’t that what we’ve been saying for years?

Advantage: the small radio group that can get a leg up on the big boys while they are playing monopoly.

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