Monday, March 12, 2012

Change, change, change...change of fools...part deaux

Sorry to get into a rut here, but I just learned about yet another long-time, loyal, and fabulously successful broadcaster who was shown the door by one of today's brilliant broadcast operators.  His only sin was staying with the same company for four decades, making it millions of dollars, and, maybe, earning more money than they wanted to pay him.

That fine, fair, forward-thinking operator: the publicly traded Cumulus Broadcasting.  There is a reason that many in the industry dub them "The Cloud People," and it has nothing to do with their company name.  Here's what I mean.

On the same day that the loyal, proven broadcast manager was jettisoned, the company's Q4 financial results were reported in the industry trades.  God's gift to radio lost another $13 million during the quarter while cutting their way to success.  But its CEO, Lew Dickey, assured stockholders that, what with their recent acquisition of another dim-bulb of a radio company, better things were on the horizon:  "The integration of CITADEL into CUMULUS is ahead of schedule as we have achieved 100% of our stated run-rate synergies in the first 100 days. With this large and transformative acquisition, we have built a true platform company with multiple organic growth drivers, including compelling new content, that will enable us to generate significant free cash to rapidly de-lever our balance sheet." 

Lord, that's poetic!  Lew wins—hands down!—the “Most Buzz Words Crammed into a Single Statement Award” for the year. For those unfamiliar with the terms, here’s a translation:

“Run rate synergies”—If it draws a salary fire it. If it does not directly keep the transmitter on the air, cancel it. If it has any chance of earning a sales bonus, shoot it.

“Transformative acquisitions”—Purchasing legendary and highly successful radio stations and promptly emasculating their management so they’ll leave without severance, cutting anything that requires writing a check, whether it’s a good thing or not, and quickly transforming some of the only broadcast properties in the business that were doing it correctly and breaking them all the way down to the Cumulus standard, thus assuring and hastening the demise of a truly magical entertainment and advertising medium. That, my friend, is “transformation!”

“Platform company”—a model company that will be studied by business schools and Wall Street analysts for decades to come, all in order to learn how to strangle the life out of a group of living, breathing broadcast properties yet still find a way to pay staggering bonuses to the people who committed the crime.

“Multiple organic growth drivers”—I believe my grandpa called this “fertilizer.” And most of our fertilizer came from the area of the barn where the mules resided.

“Compelling new content”—Adding a couple more out-of-work disk jockeys to voice track more stations, while changing the rotation on the same 300 songs once a moon-phase to reflect whatever the corporate VP of programming ordains.

“Free cash”—Not, as generally believed, the prize in a radio station contest. They don’t do those anymore. People will listen to whatever they put on the air because it is there and free, and broadcasters don’t have to promote themselves. What else are they going to listen to? Satellite? Their iPods? The Internet? Give me a break! “Free cash” in this context is what the company believes it will generate when it has fired all its creative talent, de-incentivized (and chased away) its management and sales staff, canceled all the tools its former programmers and sales management might have been able to use to actually generate business without ratings, and brought to a halt any expenditure not totally necessary to keep the doors open and the lights on. And if all this actually does generate some “free cash,” they can go out and buy some other group or two and show them how it is done in the 21st century.

“De-lever our balance sheet”—Wall Street-speak for as long as you hold the majority of the stock and nobody else has enough of those worthless certificates to challenge you, and you continue to promise stockholders and analysts that things will get better soon, what with all that spectacular “political” and “auto” and “retail” spending out there just beyond the horizon, then nobody can do a damn thing about it.

Don Keith

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