"Radio: Wall Street Shuffle"

What's the big deal?

Radio stocks were plummeting long before fears of a recession. At last
the radio industry is first in something again - first to be worst.

A couple of weeks back I listed devalued radio stocks. It's only
gotten worse.

That 90 percent-plus club keeps growing: Spanish Broadcasting, Radio
One, Emmis, Citadel, Regent. 90-percent. That's the value they've
lost.

Let's take a quick trip to Los Angeles - the number one radio market
in America. Even in the worst of times there were always buyers
awaiting an opportunity to pick up an FM or two or three in that
market. But that was yesterday.

Supply and demand? It's not even a buyer's market. No one's buying.

You have two major chains - Radio One and Emmis - and neither one's
getting as much as a nibble for the troubled FM properties they're
trying to unload.
So do you take them off the market and try to make another go of 'em
with new formats, which you can't really afford to change or market -
or do you hang a sign on 'em reading, "New! Lower Price?" That's the
one you put up before "Priced to sell" and "Fire sale."

This is the first time I've heard excuses being made for the Los
Angeles radio market. My favorite? There are too many stations in that
city. That used to be the last-ditch line you'd use to define Rust
Belt markets.

Could it be that there are no greater fools remaining - as in there
are always greater fools willing to pay even more than you did for a
property you paid too much for?

How about those leveraged buyouts? Will BainCapital and Thomas H. Lee
determine that they're better off paying the $500 million break-up fee
to back out of the Clear Channel LBO deal? Breaking up may not be that
hard to do.

Remember, they're doing it for the children. Lowry's children.

Here's the choice. Stay the course while Clear Channel continues to
plummet? The deal, which was supposed to close last year, is now
targetied for February or March. What'll their value be by then? Will
Bain and Lee's backing banks risk it or cut their losses. I'd say flip
a coin except that it's a heads I win, tales you lose deal. There are
few things worse than to have a vested interest in a dysfunctional
corporation.

Bain/Lee offered $39.30. As I write this Clear Channel's down to
$32.14. Ask yourself - what would (BainCapital founder) Mitt Romney
do?

It's a shame when facts keep getting in the way.

I got an advance on what the number one song will be on Clear
Channel's corporate playlist. It's a remake of Prince's "1999." They
changed the lyrics to "...we're gonna party like its 1929."

And did you hear the one about the Cumulus and its go-private deal?
The gelded bulls at Merril-Lynch lost $8.6 billion and have problems
far more pressing than a radio deal gone sour - especially when those
that set up the deal are no longer with the company. We're talking -
what - a five dollar drop since the deal was set? The deal's clouding
up.

There's buyer's remorse and there's buyer's morose. With Cumulus it's
one and the same.
*
I understand the bad blood started when everyone in the room claimed
to have the superior intellect.

And if you need proof that there's a glut of too many radio stations -
drop by the FCC offices where they held an auction for 14 AM radio
stations in various markets and no one showed.

We already know of a few deals where clusters in smaller markets sold
for less than their original purchase price. There'll be more.

We also know that there are creative, resourceful managers and talent
waiting to get back in when the proper pragmatic deals are done. Other
smart managers and talent that still have jobs are laying low and
pretending to being good soldiers as they await the inevitable.

When radio is restored it'll be different and will require the skills
of linking old media with new - and that means far more than just a
stream encircled by lowest common denominator features.
*
Years ago Bob Sillerman told me that thriving businesses have fun,
make money, and having fun making money. He's right.

You know the problem is the crisis stage when pro-radio trades begin
expressing commiseration for all involved and offer optimism that a
judicious resolution to the calamity will be found.

Just and rational. Those words haven't been uttered in radio since the
Telecom Bill was passed in 1996.

The math is simple. The values have to be realistic for radio to be
profitable again.

Going down?

http://gormanmediablog.blogspot.com/...t-shuffle.html

Well, Eduardo - which will it be?