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Revolting reps return; but will Clear Channel spin off rep firms?

The coup is over. But while defecting staffers have returned to Katz Radio and Christal Radio, RBR has learned that Clear Channel is in talks to exit the independent radio rep business by spinning its Katz Radio Group off to a new company controlled by client station groups.

Last Friday Stu Olds was shocked to get a phone call while traveling that 130+ staffers had left Katz Radio Group to join Interep. Yesterday it was Ralph Guild who was shocked to find empty desks where he had expected to see those new employees who were supposed to build two new rep firms for him.

RBR's bulletin hit shortly after noon (click here) - - Katz/Christal staffers who'd fled to 100 Park Avenue were back at 125 West 55th Street. Unaccounted for, though, were the three ringleaders - - former Katz Radio Group President Steve Shaw and his two deputies, former Katz Radio President Mark Gray and former Christal Radio President Tucker Flood. RBR's attempt to reach the three were unsuccessful.

"As of this afternoon, we are in the process of welcoming back all the sellers who had worked within Katz Radio and Christal Radio in New York and throughout the regional offices as of last Friday. We are very excited to have them return to the Katz Radio Group," said Katz Media Group CEO Stu Olds in a statement, continuing to avoid talking directly with reporters as he had throughout the revolt.

RBR heard from multiple sources, though, that the next step is going to be for Clear Channel, which owns Katz, to eliminate the conflict of repping its competitors by spinning off the independent reps, Katz/Christal, to a new company to be owned primarily by client stations, with Clear Channel retaining only a minority interest. Last night, however, Clear Channel President Mark Mays denied in a phone call to RBR Publisher Jim Carnegie that any such deal is about to happen.

"That has always been talked about for years and years and I think, ya know, if it ever becomes a long term plan that creates an opportunity for other companies to have ownership positions in the rep firm, we would look favorably on that....we're not opposed to that ....we're very focused ...I think, though, on what's best for the industry and how we all get radio's share of the dollar - - and that's what we always need to focus on is what's the best structure of doing that. Obviously that's what we're focused on because if the industry grows faster then we're gonna grow faster, so that's really what is really the best thing for the industry," Mays said.

Pressed on the issue, he insisted, "We are not selling anything - - period. And if some time in the future we sit down with the group heads discuss ways that are better for us to sell, to sell the whole industry, then we will address that at that time," Mays concluded.

The Clear Channel President was, however, gleeful over the outcome of what had been a revolt against his company. "Those guys left not knowing their clients didn't want to leave...[the] clients all wanted to say with us and therefore they [staffers] all came back. That about sums it up," he said. Mays also denied that anyone was paid a big signing bonus for returning to Katz.

Clear Channel Radio CEO John Hogan also weighed in with a comment expressing pleasure over the outcome: "We are delighted with this turn of events, and we are very happy to welcome back these employees."

Meanwhile, back at Interep, Guild was threatening legal action. "Interep is aware that Katz Radio Group today took actions to interfere with our recent expansion of our staff and leadership team. Although Interep strongly questions the legitimatcy of Katz's behavior we are still gathering the facts. When we have all the information we will take any and all necessary lawful actions to stop any wrongful interference with our business that may have occurred."

RBR observation:

It seems there are lots of losers in this game. The obvious ones are Steve Shaw, Tucker Flood and Mark Gray, who bet that their clients were more loyal to them than to Stu Olds and the Katz institution - - and lost big time. Interep and Ralph Guild obviously lost, since their plans for great expansion have evaporated. We weren't able to learn yesterday what will happen with the $50M investment that Boston Ventures was supposed to make in Interep, but the initial $15M hadn't yet changed hands - - and we somehow doubt that it will.

Did Stu Olds win or lose? Certainly he was harmed and hurt by the mass defection. Although the staffers for Katz and Christal eventually came back, the whole event was certainly a black mark in the history of Katz Media Group and for Olds personally.

The radio industry was certainly a loser. Ad billings were put in jeopardy for several days and the whole circus has made radio look unstable to outsiders. It may yet be a win, though, if the Katz/Christal client groups succeed in acquiring control of the independent rep companies. That would give radio three strong major rep company groups - - one repping Clear Channel's own stations and two repping all the other groups. That would be good for competition. And, despite Mark Mays' denials, our sources say it's much closer to happening.