We Don't Need No Steenking Bail-out!!!


In the interest of full disclosure:  At the advent of the so-called 2000 Tech-Wreck my partners and I decided to monetize our equity in radio assets and regroup for reentry once station trading market multiples “rationalized”.   People a whole lot smarter than us have yet to determine that values have “bottomed out”.  Thus, we remain patiently optimistic.

Acknowledged, then, that my opinions could justifiably be dismissed as coming from someone who is currently outside radio looking in.  Granted, too, that while I have personally weathered at least two previous “recessions” in radio ownership and as a workout consultant to media lenders, the challenges faced by the industry today are unprecedented.

As if the inherent cyclicality of the advertising business, cross media-competition faced by radio for audience and advertising revenue, and the maturity of the radio business weren’t enough, in predicting GDP contractions throughout next year Paul Ashworth of Capital Economics recently said. "We’re not only in an economic downturn, but a serious banking crisis. The idea that you can just have a couple of quarters of negative growth and then we’re off to the races is just too optimistic."

David Silverman, a partner at PricewaterhouseCoopers LLP, recently stated that, “a weakening economy will continue to be a challenge for all forms of advertising-supported media.”

Since a taxpayer backed bailout for Detroit’s Big Three has been big news lately – and please forgive the pun – could the Emergency Economic Stabilization Act of 2008 (EESA) – wind up being the Ultimate Clunker? 

After throwing over $700 billion at the problem is it any easier today to refinance your house, access commercial paper to grow your business, or get a car loan?

What was Carville’s mantra in 2000?  “It’s the economy, stupid!”

The United States is unquestionably the world’s largest market.  It is widely theorized that lower taxes supported the American consumer in driving the expansion of our domestic economy for an unprecedented 15 year period between 2001 and 2006.  So isn’t it logical to assume that the quickest fix would be to get the consumer back in the game as quickly as possible?

So, how about a push to reinstate the Federal Income Tax Deduction for interest on car loans and credit cards?

It is absolutely true that America’s spree of profligate consumption is the basis for the current global economic crisis.  So, why not go with a 5 year plan that sets the income tax deduction for consumer loan interest at 100% in Year 1 (2009) and reduces it annually on a graduated basis through 2013.

More people will be in the market to buy cars possibly providing the impetus for radio’s biggest advertisers to restore their drastically reduced marketing budgets to historic levels.  Equally important more auto sales actually improve the chances that the Big Three will actually pay us taxpayers back! 

Make that call or send an e-mail to DC and urge Congress and the White House consider this concept. 

— Paul Robinson, President, Emerald City Radio Partners