Perspective – Implications of Clear Channel’s new deal


What does the Clear Channel bank deal mean to radio?  Not Change but Hope for Improvement.

1. Shareholders still have to approve the reworked buyout, which they most likely will do, just from the fact of wanting their money after such a long period of time, especially during these difficult times. The average person needs cash. And if the deal did not happen, then a stock price freefall would be a serious possibility – witness Cumulus. $39 may not have looked so hot last year, but we’ll bet $36 looks pretty good right now.

2. The banks involved in this took the smart route to settle instead of going to court and misdirecting more of the diminishing returns on this deal to the lawyers. Also, you do not want to fight a dog in their own backyard, TX courts. All parties involved did the smart thing for a change — they wanted it done and the grind to be over with.

3. Once this is approved by all concerned, then the real deal making starts and the next level of grind begins.

4. Highfields Capital Management and Boston-based Abrams Capital LLC have a major stake in this transaction. But hedge funds are not in the business of operating the day-to-day management of any corporation, no less the largest radio group and all other Clear Channel entities. The private equity sponsors of the buyout, Bain Capital LLC and Thomas H. Lee Partners LLC, have sent teams of so-called know-it-alls to go over every inch of Clear Channel operations in an attempt to find a better operational plan. I’ve been told that Bain and Lee think they are bringing fresh ideas, but don’t know anything about running radio.

5. So slicing and dicing is in my forecast. Clusters will be broken down and sold and a new Clear Channel will evolve. Smaller and hopefully more manageable because being manageable means profitable.

6. As for forecasting CCU’s upper management, I particularly do not see many names staying on current parking spaces at the Texas HQ when it is all over.

7. It is said that Mark and Randall Mays are likely to stay on the job. I don’t think that is very likely. Other top execs have left to join Randy Michaels and others at the station level have been fired over the past couple of years. That leaves John Hogan at the top and many do not see him staying around. Others like Stu Olds at Katz and Charlie Rahilly at Premiere should be fine.

I don’t see any further shake down at most of the other holdings of the company.

8. The completion of this deal will take one thing right off the table – a heaping helping of ill will that had been growing between the principals. And taking the Wall Street off-ramp will allow the new operators to restructure the company without the Street’s green-visor boys and girls looking over their shoulders.

9. Why ill will? I’ve been told by a few that have worked for Sumner Redstone of his saying of a deal – “A good deal is when both parties in the deal feel they have screwed each other.” In this case it happens to be true. The Mays Family got richer and bankers poorer unless the bankers again start to deal.

10. A new Clear Channel? Maybe but only if new upper management is put in place and I mean true media operators. People that have the passion and experience with proven successful track records. Not yes men or women. But pros with experience, for which there is no substitute.

11. There has to be stabilization inside Clear Channel. No more firings. No more cost cutting. No more backroom managing and not supporting the media that has made them rich. It is a long time between now, 5/27/08 and 12/31/08.

12. Time to invest in leadership with new management. Take a lesson from CBS, where Les Moonves took out Joel Hollander and brought in a proven pro/operator in Dan Mason. Clear Channel needs these pros at every level: GMs, GSMs, PDs, On-Air, etc. and they need the budgets now to do their job.

13. Oh yeah, move the HQ out of San Antonio, TX. Never a good idea to have your world HQ in a city that you have to change planes to get there.

14. We all know that Clear Channel under its current upper management is not loved by most in the business today. Maybe that’s not a good goal for a company in a competitive business, but it seems Clear Channel has lost the respect of many of its competitors as well. I’d like to see new management state and work toward positive goals that will not only forward Clear Channel, but also benefit the entire radio medium. A healthy radio industry will float all boats, including the Clear Channel dreadnaught, so by working for the benefit of all, Clear Channel stands to benefit the most.

15. Last piece of free advice from this 40 year media veteran – be honest.

Clear Channel still has tremendous value with excellent assets. I hope they find a level of ownership that they are comfortable with and can manage effectively, and that they spin the excess to professionals who will the same with the rest.

So when this is all done I hope that Clear Channel will not just change but I hope to see improvement to this media company. And it all begins with honesty. And we can hope for the best.

Jim Carnegie
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