Can Clear Channel Sink Any Lower?

SirRoxalot said:

What do they get in return? Free publicity, a boost to their corporate image, and a tax write-off for actual expenses incurred for participating.

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Essentially every business expense* is a "write off" as businesses are taxed on the difference between revenues and expenses, commonly called "profits." It makes no difference that the expense is for or on behalf of a charity or the local electric company.

Generally, companies don't go out looking for ways to increase expenses. However, they do spend money on things that are important to the ongoing operation of the business. Supporting community organizations would often be considered one of them.


* Capital expenditures like high value eqipment, vehicles, etc. are not expensed but amortized, and only half of some T&E expenses can be expensed.

Giving It Up

Gentlemen, I understand how the game works. I'm not knocking Clear Channel or any other broadcaster for doing public service and helping out charities.

TheBigA said:

Meanwhile, when the charities need a big donation, the thing they all want is the corporate grant. Clear Channel stations have donated millions to local charities around the country. I doubt that a lot of small local non-profits could make it without CC money.

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TheBigA made it sound like Clear Channel was dipping into their profits and quietly scattering millions and millions of dollars to deserving do-gooders across the land. I was simply pointing out the real mechanics - unsold inventory and volunteer labor on the part of Clear Channel people is what's actually given away in most cases, and the corporation gets significant publicity in return.

It's a two way street. It's good for everybody. I hope that when the consolidators get done, there's still somebody left to work with local charities and help them out with their fund drives and events.

JimmyNeutron said:

CC, Cumulus, and many other corporations require one thing of radio stations, make a profit.

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Nope. That's NOT good enough anymore. I saw where an old friend who was #4 in his demo and daypart in a 26 station market, and had the best ratings on his station - by more than 2.5 shares - got whacked the other day. He was probably making a princely $40-50K per year. This is happening day after day, in market after market. The cut was mandated by corporate, and will very likely cost the company money in the long run due to decreased ratings and revenue.

JimmyNeutron said:

I would like to hear how people on this board would run their radio stations differently from CC and other giants that would make them profitable, including avoiding layoffs?

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Jimmy, the problem is that the consolidators badly overpaid for radio stations in their quest for "synergistic monopolies". The smart guys with the shiny suits forgot to factor the "business cycle" into their calculations when they were paying 15x cash flow for stations, and now they've got more debt than they can pay off. They've driven the value of their stations down so far that they can't sell them for nearly enough to pay what they owe on them. In fact, the reason that several companies haven't (or won't) go bankrupt is that the people they owe money to don't want the radio stations. They don't want to be operators, and they can't recover enough of their investment by selling the properties off to make it worth the court costs. Besides, the Feds are giving the banks billions of YOUR taxpayer dollars to write off bad debt, so whatever they get from the consolidators will be bonus money anyway.

What we have left is the banks squeezing the debtors as best they can, and the consolidators thinking that they can ride out the storm by reducing "expenses". The problem is that the "expenses" that they're reducing is actually their "product".

The real answer? Go bankrupt, and let the market re-establish the value of radio stations. The banks are getting billions from the Feds so they can write off the bad debt anyway. But, that would bruise the egos of too many guys in shiny suits, so that won't happen.

Rox, I take it you mean liquidation rather than reorganization. How do you figure the lenders would operate these stations until (if) new buyers could be found? Probably shutting a good share of them down, and running the few survivors with even more of a bare-bones or non-existant staff. How does that preserve jobs in radio? Your assumption is that new owners would be found immediately, and their lenders would write them blank checks to stuff radio stations with bodies. Nothing is farther from the truth (like it or not, banks know all about satellites and hard drives. I remember hearing about a potential owner a few years ago who wanted to go live and local, the bank said to forget about the DJ salaries or forget about the loan).

Sorry to hear about your friend. In some formats the individual jock doesn't neccesarily have an impact on the bottom line. If you are the personality with your own brand (say Stern or Bob and Tom) that makes more of a difference. If the personality is constantly in demand for live reads or endorsements, that can make a difference.

I'm going to jump in here and strongly support Rox.

Rox is right.

Hey that sounds like a slogan for something! Anyway...

I have learned of several unjustified firings recently. I don't feel comfortable mentioning them because that might cause some problems for the people involved but we are talking about top-rated people doing middays in top 50 cities.

Is this it?

No more live jocks?

My God, what are we doing to this business?

Nope. That's NOT good enough anymore. I saw where an old friend who was #4 in his demo and daypart in a 26 station market, and had the best ratings on his station - by more than 2.5 shares - got whacked the other day. He was probably making a princely $40-50K per year. This is happening day after day, in market after market. The cut was mandated by corporate, and will very likely cost the company money in the long run due to decreased ratings and revenue.

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What was it costing the station to keep him vs letting him go? Being #4 in Omaha, NE doesn't mean it carries the same weight as being #4 in New York. I am using this as an example only. For any corporation, it always comes down to profits. If there is no profit, the company will not stay in business for long.

The real answer? Go bankrupt, and let the market re-establish the value of radio stations.

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I must say I am confused by the statement and I concur with gr8oldies. It seems odd to think that bankruptcy will be the better approach, which has greater risk for a larger number of people than layoffs involving less. So the argument is that "hope" is the better approach, let the corporations crash and burn and hope that the markets will rebound.

Re: Giving It Up

SirRoxalot said:

The banks are getting billions from the Feds so they can write off the bad debt anyway. But, that would bruise the egos of too many guys in shiny suits, so that won't happen.

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I've been talking with people in lots of businesses, and the fact is that the Feds are giving banks money, and the banks are sitting on it, doing nothing. Or spending it on themselves. They're not writing off bad debt, they're not lending it, and they're not looking to renegotiate any loans. I spoke with a guy who runs a non-profit today. His bank just cranked up his payments, so he's had to lay off his entire staff. The situation in the credit world is very very bad. The media isn't reporting how bad it is. I think if the public really knew what was going on, there would be demonstrations outside of banks.