This whole blog started as a way for some guy with some spare time on his hands in the middle of a vast desert to tell the world (if anyone cared) what he thought…basically about politics. But seeing how I spent my adult life in media, it also creeps in every once in a while. Today is that exception.
I used to work for the largest media company in the United States. Thanks to the Telecommunications Bill of 1996 that was signed into law by Bill Clinton, the station(s) I worked for went from being locally owned and operated, to owned by a company from San Diego, to being bought out by a company from Cincinnati, to then being sold to a company called Clear Channel (as did a LOT of radio stations back then!). In 2008, the top dogs of Clear Channel, the Mays family, decided to sell out to a couple of venture capitalist firms, Bain Capital (Mitt Romney’s old company), and Thomas H. Lee Partners. That’s when things went sour.
Bain and Lee didn’t have a clue about radio (and still don’t). They overpaid for the company at a time when radio was in decline, and the country heading into recession. But they signed the agreement and had to fork over the money. I was happy since I was a stockholder in Clear Channel and got a rather inflated amount for my shares. But oh, the price I paid!
They say you should never get involved in buying a business you don’t know anything about, and neither of these companies knew squat about radio. It showed. The decisions they made were first grade mistakes and the company never really took off like it had under the Mays family’s control (who were REAL radio people). Now, IHeartMedia may be heading for its final straw. Bain and Thomas H. Lee Partners have a $350 million debt payment to make this year and don’t have the money to do it. What did they do the last time they had such a payment? They fired half of their sales staff (I wasn’t one of them). They also have gotten rid of legends in various local markets because they wanted to unload some hefty salaries. And now, they find themselves still bleeding cash. Not because the local stations aren’t running themselves right. It’s because top management doesn’t have a clue what they are doing. They never have.
So if you have an IHeartMedia station in your town, look for some belt tightening to happen sometime this summer. More will be coming in 2019 if they make it through this year. That’s when IHeartMedia will have to kick in another $8.3BILLION! If they are having trouble scraping up $350 million, what chances do you think they have of making a payment 23 times larger? Answer: None.
Short answer: It’s the end of the “mega giant radio station ownership” age. That will leave Cumulus radio…which at one time was based in my hometown of Toledo as the largest radio owner in the country. My how the great have fallen! My how I’m glad I’ve retired!
Carry on world…you’re dismissed!