The Radio Equalizer: Brian Maloney

04 October 2008

Radio Broadcast Industry Teetering On Brink Of Collapse


Who Will Own America's Most Successful Talk Stations?

*** New Sister Site: CNBC Doom ***
*** Syndicator Westwood One Faces Delisting, Now Trades At 38 Cents ***
*** Citadel (ABC Radio): 47 Cents ***

In recent weeks, your Radio Equalizer has become disgusted with the atmosphere of panic which is clearly beginning to damage our economy (so much so that we're testing the concept of a new site to address the issue). Sure, a number of banks and investment firms have been destroyed by heavy exposure to subprime mortgages.

But now, the baby has been thrown out with the bathwater, as perfectly good companies are being crushed by excessive and irrational negative sentiment.

That doesn't mean there won't be winners and losers in all of this, however, which has already become apparent with the demise of Bear Stearns, Lehman, WaMu, Wachovia and others. Bank of America, Wells Fargo, J P Morgan and others will emerge stronger than ever after this nightmare is finally over.

But the radio business, sadly, is a different story: most of the current owners are now likely to fail, with bankruptcies, fire sales and even station shutdowns (that has already begun) set to become the norm. Only a handful will survive (Clear Channel and perhaps one or two others) and even they may not have access to enough credit to purchase their faltering competitors.

At our regional talk radio site, we've been covering the downfall of Entercom, which owns WRKO and WEEI in Boston, KMBZ in Kansas City, WWL in New Orleans and several other talk stations across the country. Ten years ago, ETM shares traded at over $66, but closed yesterday at a shocking $3.94.

For Citadel, owner of ABC's major market talk stations including WABC/ New York, KABC/ Los Angeles, WJR/ Detroit, WLS/ Chicago, WBAP/ Fort Worth-Dallas and many others, the situation couldn't be worse, as the debt-heavy firm's shares have fallen to a mere 67 cents. The NYSE is now poised to de-list Citadel's shares and industry observers wonder if it can possibly survive.

CDL's market capitalization is now well under $200m, which a few years ago was the value of just a single major-market station. As the industry collapses, those outlets are now potentially worth pennies on the dollar. We've been covering the company's troubles for over a year.

Despite large audiences for talk radio, gross mismanagement and sinking ad revenues across the media business are taking a grave toll. Citadel really couldn't afford ABC, but the deal closed anyway. And its current senior execs haven't a clue when it comes to the talk radio format.

The endangered list is long: Salem Communications, owner of both secular and Christian-based talk stations, now trades at $1.02, down from over $30 just a few years ago. Radio One (NASDAQ: ROIAK), Regent Communications (NASDAQ: RGCI), Emmis Communications (NASDAQ: EMMS) and Spanish Broadcasting System (NASDAQ: SBSA) are all well under a dollar per share.

The irony is that talk radio is more popular than ever, especially during this hot election year. Major syndicated shows have plenty of sponsors and ratings are solid. But the broader industry collapse is beginning to take a toll.

From this point, talk radio fans and industry observers should watch the situation carefully. Who will own these once-great stations when their parent companies fail?

The risk is that a George Soros-type could swoop in and buy these stations for the sole purpose of shutting down conservative talk radio. At this point, the task could be accomplished on the cheap.

Could this fulfill the left's ultimate dream, that of eliminating opposing voices for good? Don't think for a moment they haven't already thought of this.

When this subprime mess is over, expect companies such as Wells Fargo, Cisco and others to emerge in strong positions. In the media industry, however, there will be many casualties as credit tightens and ad revenues sink into the abyss. It could affect newspapers even more than radio.

Who will maneuver through this mess and survive?

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  • I hope that mom and pop companies buy the radio stations like it was beforehand. This would mean more competition, more formats and greater chances of real success because stations would be competing against each other, not themselves. Also, the talent should be local. Radio and Records had an article that said, "Tight repetitive playlists and loss of local control are hurting radio." They also need to fire the expensive radio consultants and let the program director do their job. If the program director needs a consultant, they shouldn't be the one programming the station. Spend the money instead on T-shirts and local events to be out in the community and let people know that you're their radio station to listen to. The economy didn't kill radio, it was put in the hands of those who don't know how to run a radio station. They only thing they saw was dollar signs rather than serving the customer. So, while cut-backs produced great revenue in the short term, it has now hurt them such that who knows when or if there will be a recovery. Hopefully, with the PPM showing a much more accurate view of what people are listening to, this can also help radio recover.

    By Anonymous Anonymous, at 05 October, 2008 19:01  

  • anonymous...just what I would've said. But tell that to the people of WCOJ Radio in Coatesville, PA, west of Philly. Their owner Route 81 Radio goes belly up. Last week, WCOJ signed off the air after financial troubles hit. Well, the station found a new owner, but will have ZERO local content. In fact, it will carry Catholic radio from EWTN (Eternal Word TV Network).

    Remember Jim Cramer's rant against radio owners? He couldn't be any more spot on. Maloney, think you can recall it?

    By Blogger The Real Bob Anthony, at 06 October, 2008 07:10  

  • Do you have any evidence you could provide that would prove, without a doubt, that Soros funded Air America? I've worked at Air America, personally gone through financial records, and I've never seen his name once. I'm not saying that he didn't give them money, but I would like to know why you keep saying he did, if you have information proving this claim.

    By Anonymous Anonymous, at 07 October, 2008 14:05  

  • What do you expect when Boston has to endure a degenerate liar and functional illiterate like Curtis Sliwa? Is that what Cidadel thinks of it's audience? The contempt to put this moron on in Boston. It's bad enough that he's on twice a day in NYC, but now Boston? Do we have to endure his lies and stories? He is no "crimefighter", but just a b.s. artist who has made his living off of lying and taking money from the naive and innocent who believe his stories. Sorry Cidadel, you deserve this for putting a degenerate liar on the radio in ANY city!

    By Anonymous Anonymous, at 08 October, 2008 21:24  

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