New Imus Employer - ABC Owner Faces Troubling Financial Picture

BRACING FOR THE WORST

New ABC Radio Owner Reports Disturbing Outlook





*** UPDATED BELOW ***


After their new employer delivered a grim financial outlook to Wall Street today, already jittery ABC Radio employees are bracing for substantial cutbacks across the board. For talk radio, the impact could be huge, as popular talk hosts, anchors and other staffers are caught in the crossfire.

Citadel - ABC owns and operates major talk stations across the country, including WABC/ New York, KABC/ Los Angeles, WLS/ Chicago, KGO - KSFO/ San Francisco, WBAP/ Fort Worth- Dallas, WMAL/ Washington, WJR/ Detroit and many additional outlets in smaller markets.

Making matters worse is the new and expensive Don Imus deal, which is expected to send many successful talkers to the unemployment line.

Though rumors of layoffs had been circulating for some time, Citadel Communications CEO Farid Suleman all but confirmed a coming wave of housecleaning in a conference call for analysts and investors held earlier today.

In fact, the earnings report was so dismal that it shocked industry analysts and led to yet another drop in Citadel's already sagging stock price, pushing it further into penny stock territory.

Given a brutal outlook for the radio business and its own particularly alarming financial future, the company was forced to write off an unexpectedly large portion of the value of its stations, sending investors running for cover.

At 1pm Eastern, CDL shares were collapsing, down $1.06 to a mere $2.80 per share, a more than 26% drop. That represents a loss of $280,000,000 in market capitalization.


There's no question that Citadel will attempt to right itself by slashing employee headcounts to an extent perhaps never before seen in radio. But the loss of so many successful hosts and highly- skilled newsroom staffers will greatly harm ABC Radio's product.

And even with drastic reductions, the cost savings will be minimal, especially considering the amount it is paying Imus.

In particular, the Imus deal is the wrong move at the wrong time, but by the time Citadel realizes this, it will be too late. Previously, we listed key hosts that are believed to be most in danger of termination.

In the end, the big question is whether Citadel bit off far more than it could chew in acquiring ABC Radio. It's too bad that ABC's airstaff is likely to pay the price for their new employer's mistakes.

Worse, the damage done to talk radio across the board will be substantial and hard to overcome. While the medium remains more popular than ever with listeners, some of broadcasting's top managers seem determined to kill it off for good.


UPDATE: as the trading day continued, CDL shares were pounded even further, closing down $1.46 at $2.40 a share (a 38% loss in just one day). Volume was a heavy 11.5 million shares (405% higher than normal) and Citadel's total market cap loss for the day was a staggering $385,000,000.

As recently as 2003, Citadel shares traded as high as $23.00.


FOR New England regional talk radio updates, see our other site. New: will continued arrogance get in the way of a new Howie deal?

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