Death of a Radio Giant; Fear of Technology
Two fascinating entertainment stories caught my eye today — if you have any interest in Entertainment, Technology or Digital Media, then go these out:
• Clear Channel Communication is teetering:
“Clear Channel, the nation’s largest radio station operator and an outdoor billboard company, last year became the biggest leveraged buyout ever in the media business, after it was taken private by Thomas H. Lee Partners and Bain Capital. Now its revenues are plunging and so is its cash flow, making it harder to meet the payments on the billions in debt accumulated in the process of buying out its public investors…
Clear Channel was on track to become the biggest default among media companies and therefore the biggest workout ever in the industry… The company’s options may be limited. Many financially pressed concerns have been able to persuade creditors to exchange debt for equity and thus avoid a default and a bankruptcy filing… The company has $16 billion of bank debt, on which it pays variable rates, and $6 billion more of junior debt. The holders of the junior debt and the equity holders would absorb the first loss in the event of a bankruptcy, so the banks have some protection and less incentive to negotiate.”
That’s a shame . . .
These guys destroyed radio, and deserve to die. Its a shame most of the executives who put together this ugly behemoth have long since moved on. They should have been waterboarded.
• RealNetworks’ CEO Rob Glaser throws a fire bomb at technophobic entertainment execs:
“Hollywood is missing out on a marvelous opportunity, says RealNetworks’ CEO Rob Glaser. Real has presented the film industry with a means to inject renewed interest in DVDs, which is waning, Glaser said minutes after testifying at a hearing in federal court on Wednesday. Real has developed two different kinds of software, RealDVD and Facet, that it says streamlines the movie-viewing experience by enabling owners to duplicate DVDs and store the copies on hard drives.
But the studios, much like they’ve done since the Sony Betamax case, are resisting technological advancement and have rejected the opportunity Real offers, Glaser said. He thinks he knows why.
“Some of the studios are very progressive,” said Glaser, who founded the public company in 1994. “Some of them are scared. It’s been my experience that often the scared voices overwhelm the progressive voices.”
Fascinating stuff . . .
>
Previously:
Radio’s Wounded Business Model (July 20th, 2004)
http://www.ritholtz.com/blog/2004/07/radios-wounded-business-model/
iPod shuffle = new radio ? (January 15th, 2005)
http://www.ritholtz.com/blog/2005/01/ipod-shuffle-new-radio/
Sources:
Radio Giant Faces Crisis in Cash Flow
GERALDINE FABRIKANT
NYT, April 29, 2009
http://www.nytimes.com/2009/04/30/business/media/30clear.html
Real’s Glaser: Some studio chiefs ’scared’ of tech
Greg Sandoval
C.NET April 29, 2009 4:31 PM PDT
http://news.cnet.com/8301-1023_3-10230578-93.html?tag=nl.e703
April 30th, 2009 at 7:39 pm
Barry- how dare you- Waterboarding? I fell faint . . .
April 30th, 2009 at 7:55 pm
i suspect that won’t be the last media company to crash either. a lot of others will also, as to many have to much debt when they were taken over. and to top it off. their big advertisers (car companies) are on life support also. along with just about every other consumer product and service. and you wold also wonder how long before the networks have too. and whether the any of the summer or fall sporting events will actually make it to TV or radio. could be a very dreary year for sports fans.
April 30th, 2009 at 8:07 pm
“These guys destroyed radio, and deserve to die.”
“They should have been waterboarded.”
“Rob Glaser throws a fire bomb at technophobic entertainment execs.”
If you ever wondered why I call Barry “Republican Ritholtz”, you should have no more doubt.
BTW, Ritholtz, are you going to shut down your The Big Picture Conference? By the time your event takes place in June, the Fed will have bought us a jobless recovery, and you, Taleb, and Whalen will look positively goofy talking about macroeconomic fundamentals and how banking and credit are supposed to work. Instead, you might think about setting up a field trip for people to see the Treasury manufacture America’s #1 export product: the US dollar.
April 30th, 2009 at 8:11 pm
Could not agree more about how Clear Channel and the other national aggregates destroyed radio. And they had executives more interested in growing the company to sell it than to create a sustainable enterprise. They liked the Wall Street splash they frequently got. As media gurus. Go figure.
Have tried internet radio but have found the music quality very deficient. In fact wish I had never converted my LPs to MP3, and then donated them away.
willid3
But in terms of the internet and the media, we have not yet seen the final technology consolidation and business model. For the first time in decades, short of going to a bar with the complete game package, this year I was able to watch the NCAA basketball tournament game of my choice in real time over the internet for free. Talk about a treat. And I also watched the MAsters over the internet as well for free.
Clear Channel never improved their technology and business model as they should have.
MTV seems to be doing a better job of exploring new approaches. Check out MTVMusic.
With my son’s help they are getting it right.
On topic. Does this mean FNJ is returning?
April 30th, 2009 at 8:27 pm
Where is Clear Channel’s bailout? I mean, c’mon, we can’t possibly allow one of our biggest media conglomerates (however useless they may be) to fail. That would be catastrophic for the economy and country.
April 30th, 2009 at 8:46 pm
US PHX,
these catz: http://polygraphradio.net/musicsite/ say their IP Radio stream is of better quality than the avg. run of the ‘tubes.. 96K sampling rate..still seems a little low, but, then again, too many peep think MP3s are ‘music’..
but, Clear Channel is Guilty of Stripmining, in more ways than two, they were, at the minimum, a huge DM/DW op/psyop, and Financial Arsonists. They made Carnivore look tame, and Mad(e)off, piker-grade, by comparison.
http://www.slideshare.net/nesi/business-intelligence-33876 (DM/DW)
http://epic.org/privacy/carnivore/
April 30th, 2009 at 8:48 pm
US PHX,
these catz: http://polygraphradio.net/musicsite/ say their IP Radio stream is of better quality than the avg. run of the ‘tubes.. 96K sampling rate..still seems a little low, but, then again, too many peep think MP3s are ‘music’..
but, Clear Channel is Guilty of Stripmining, in more ways than two, they were, at the minimum, a huge DM/DW op/psyop, and Financial Arsonists. They made Carnivore look tame, and Mad(e)off, piker-grade, by comparison.
http://www.slideshare.net/nesi/business-intelligence-33876 (DM/DW)
clusty.com knows Carnivore..see EPIC
April 30th, 2009 at 8:49 pm
mannwich-
HAHAHAHAHAHA- no shit- no company to insignificant too fail- unless you actually make a product
April 30th, 2009 at 8:51 pm
How do you really feel Barry. You seem to be holding back your true feelings! For the record I wholeheartedly agree, except I might insert a few words between “deserve” and “die” that the FCC won’t let Clear Channel put on their radio stations. Their death would be a something to celebrate in my book! Splinter them into a thousand pieces and never let it happen again. For the love, can we get some antitrust regulation in this country again!? We’ve proven having only three car companies, a few giant banks and handful of media conglomerates results in crap, crap and more crap. And don’t get me going on Windblows! I’m just waiting for Verizon to really start suckin’ it up like Sprint did when they merged with Nextel; then where do I go? Alltel? Oh, wait, no. So we’ve proven big giant companies suck. Can we run with this?
April 30th, 2009 at 8:51 pm
Hey,
Hey, it’s almost Friday. Why don’t we start the music early.
http://www.mtvmusic.com/playlists/mtvm/?contentId=1609015
April 30th, 2009 at 8:59 pm
As a long time radio afficianado I have many fond memories of late night travel which can be attributed to the far reaching strong signals cranked out by KMOX.
April 30th, 2009 at 9:04 pm
usphoenix-
thanks- great song- quality of video on this site much better than Youtube
April 30th, 2009 at 9:33 pm
@MEH Thanks for the polygraphradio link. Music quality may be a little better hard to tell. Forced me to use nero player, and I have come to detest nero. They tried to take over my PC. And then when I tried a link they said I needed another plugin and then they were unable to find and install it.
Funny you should mention carnivore. I helped out it. Back in my “dealing with the FBI” days.
April 30th, 2009 at 9:44 pm
Here’s a much better one that fits in here perfectly. You have to listen to the lyrics.
http://www.mtvmusic.com/playlists/mtvm/?contentId=1609015
April 30th, 2009 at 9:44 pm
“That’s a shame . . .
“These guys destroyed radio, and deserve to die. Its a shame most of the executives who put together this ugly behemoth have long since moved on. They should have been waterboarded.”
LOL!… that’s awesome!
April 30th, 2009 at 9:50 pm
Once we kill the newspapers, MSM news, and radio, what’s left? The rantings of left/right idoelogues. A scary place indeed.
April 30th, 2009 at 9:51 pm
Hard to imagine Clear Channel going down, but it would be a dream come true…
April 30th, 2009 at 9:52 pm
Barry….
It was interesting to go back and read your 2004 Blog post on Clear Channel….
Here’s the question, though….you had a really well thought out thesis about why CC was totally doomed. Did you ever short their bonds?
I agree with you….CC really did destroy radio…I can’t remember the last time I listened to a radio station…
April 30th, 2009 at 10:10 pm
usphoenix
it’s the same link
April 30th, 2009 at 10:12 pm
@Brendan:
Absolutely! We need to break up these huge companies and not let it happen again. They’re anti-competitive and represent too much systemic risk to our economy. Small and nimble is best. If we don’t come out of this “TBTF ” crisis with some changes in that regard we’re screwed. Just one of many issues, but one of the big ones.
April 30th, 2009 at 10:41 pm
Call me ahab: Thanks for the heads up.
You have to scroll down to “No Draws Blues” by Valerie June.
Sorry about that.
April 30th, 2009 at 10:49 pm
US PHX,
doesn’t polygraph stream from an ‘on-site’ player?
yes, Carnivore is the joke, so many peep think that ‘wiretapping’ was invented AT&T/NSA in SF c.2001+
so much for ‘thinking’, but not knowing. Research, how tedious..
April 30th, 2009 at 10:54 pm
Waterboarding is too kind! These are the killers of A.O.R radio, finding a DJ that “got you and your music”. They homogenized the airwaves and killed what I believe is still a great technology. I mean, what else lets you reach so many people with so little build-out? What a remarkable device that revolutionized communication in the last century.
Fortunately, thanks to the internet, my Denon let’s me “tune” into some of the few remaining great radio channels. WOXY in Miami of Ohio, WXRT in Chicago, KCRW in L.A., KEXP in Seatle…plus stuff from around the world.
Clear Channel did to radio what Gannett did to newspaper–except with radio it wasn’t inevitable like with newspaper.
The FCC has a great low-power radio station program that is helping a new crop of creative stations pop up. They discovered that in Hurricane Katrina, these were the only ones who stuck it out and continued to broadcast critical information, so there is funding for the small indy that is looking for a start…
April 30th, 2009 at 11:02 pm
JasRas,
what do you mean by: “These are the killers of A.O.R radio”?
link(s)?
May 1st, 2009 at 12:27 am
Way back in the 1980’s, a book was published by the unlikely name (then) of the “Media Monopoly.” It was written by Ben Bagdikian, a former associate editor of the Washington Post. He described in the book how ‘just’ 50 corporations controlled almost everthing that Americans see, hear and read.
The latest edition of the book has that number down to 6 corporations which control most of what America sees, reads, and hears. So much power, so few hands.
Have any of you ever eaten in New Orleans? Do you know why the food is so good there? It isn’t because of the geography, or so much the availablility of fresh ingredients, although that certainly plays a part.
It is because there are (or were) over 2,ooo seperate dining establishments in the city. Everything from the mom-and-pop po-boy shop on the corner to Commander’s Palace. Not a single one of them a part of a chain. If your food isn’t very good, then you are toast. Simple as that. Be good, or be gone.
That’s what’s wrong with the media today. There are dozens of media venues, but everthing looks and sounds so very predictible on every station. It is predictible because it represents only the interests of the owners.
Innovation is not only allowed, but is encouraged. Too bad that Clear Channel had none of it.
May 1st, 2009 at 12:38 am
Great news Barry!
We the real musicians (no DJ’s here please!), enjoy the process.
May 1st, 2009 at 12:45 am
From techdirt.com
Did Frank Zappa Come Up With A Business Plan For File Sharing In 1983?
from the looks-like-maybe… dept
Reader SunKing sends in this little tidbit that I’d not seen before (perhaps some of you have). It comes from The Real Frank Zappa Book and discusses his response to “the home taping movement” and the attempt to get everyone to rebuy their old albums on CD by proposing a system where you could subscribe to whatever genre of music you wanted and get it delivered in batches. He first talks about how ridiculous it is to focus just on selling discs of music:
MUSIC CONSUMERS LIKE TO CONSUME MUSIC . . . NOT PIECES OF VINYL WRAPPED IN PIECES OF CARDBOARD.
Then he talks about how to “embrace” home taping:
It is our proposal to take advantage of the POSITIVE ASPECTS of a NEGATIVE TREND afflicting the record industry today: HOME TAPING via cassette of material released on vinyl…. First of all, we must realize that the taping of albums is not motivated by ’stinginess’ alone …. People today enjoy music more than ever before, and, they like to take it with them wherever they go. THEY CAN HEAR THE DIFFERENCE BETWEEN GOOD AUDIO AND BAD AUDIO . . . THEY CARE ABOUT THAT DIFFERENCE, AND THEY ARE WILLING TO GO TO SOME TROUBLE AND EXPENSE TO HAVE HIGH QUALITY ‘PORTABLE AUDIO’ TO USE AS ‘WALLPAPER FOR THEIR LIFESTYLE’.
So he makes the following suggestion:
We propose to acquire the rights to digitally duplicate and store THE BEST of every record company’s difficult-to-move Quality Catalog Items [Q.C.I.], store them in a central processing location, and have them accessible by phone or cable TV, directly patchable into the user’s home taping appliances, with the option of direct digital-to-digital transfer to F-1 (SONY consumer level digital tape encoder), Beta Hi-Fi, or ordinary analog cassette (requiring the installation of a rentable D-A converter in the phone itself . . . the main chip is about $12).
All accounting for royalty payments, billing to the customer, etc. would be automatic, built into the initial software for the system.
The consumer has the option of subscribing to one or more Interest Categories, charged at a monthly rate, without regard for the quantity of music he or she decides to tape.
Providing material in such quantity at a reduced cost could actually diminish the desire to duplicate and store it, since it would be available any time day or night.
Monthly listings could be provided by catalog, reducing the on-line storage requirements of the computer. The entire service would be accessed by phone, even if the local reception is via TV cable.
The advantage of the TV cable is: on those channels where nothing ever seems to happen (there’s about 70 of them in L.A.), a visualization of the original cover art, including song lyrics, technical data, etc., could be displayed while the transmission is in progress, giving the project an electronic whiff of the original point-of-purchase merchandising built into the album when it was ‘an album’, since there are many consumers who like to fondle & fetish the packaging while the music is being played. In this situation, Fondlement & Fetishism Potential [F.F.P.] is supplied, without the cost of shipping tons of cardboard around.
We require a LARGE quantity of money and the services of a team of mega-hackers to write the software for this system. Most of the hardware devices are, even as you read this, available as off-the-shelf items, just waiting to be plugged into each other so they can put an end to “THE RECORD BUSINESS” as we now know it.
Just imagine how different the music industry might be today if he’d been able to move forward with that idea. 1983 was probably too early, but jump forward ten years… and we’d be facing a very different sort of music industry.
May 1st, 2009 at 6:25 am
Buh bye CC! No tears shed. Hopefully they don’t get a bailout.
You won’t find music like this on CC stations:
==============
Devil Doll @ Key Club – St Christopher
http://www.youtube.com/watch?v=av7QNQWj4K0&
Bourbon in your eyes by Devil Doll
http://www.youtube.com/watch?v=jLrKdPOyva4
==============
For those who want to try some internet radio, here’s a good free player:
http://www.radiosure.com/download/
May 1st, 2009 at 6:27 am
A.O.R. used to stand for Album oriented rock. There was a time in the seventies when DJ’s on some of the independent stations played the music off an album they wanted to play and ignored the coordinated “hit single” of the record execs. Many of these stations garnered loyal followings because the music was view as such, music, not a single to push. Granted there have always been stations that play “hits”, but there used to be stations that played the “deep tracks”… Some of them still exist. Most don’t.
The one in our area “Q-95″ (home of the infamous Bob&Tom Show, which is now neutered, sanitized and syndicated by Clearchannel), got bought, turned into “classic rock” and plays the same 500 songs that Clearchannel deems as that genre—even though there are thousands more out there.
There were three types of radio that pushed the edge- A.O.R. , college radio, and the shock/entertainment jocks (Howard Stern, Bob&Tom, the guys out at K-Rock, some others…) All got “Gerberized” so it was palatible to the general public and could be syndicated, and licensed (ie. leveraged).
Nowadays, Ryan Seacrest is what you have to look forward to in almost any metro area for at least part of the day as well as some other satellited in talent that I don’t even know…my wife listens to radio still–I do NPR, iPod, and the occasional CD.
May 1st, 2009 at 7:31 am
JasRas,
thanks for the explain on A.O.R., I hear that, now.
james hogan, above, makes a good point. Monoculture (“neutered, sanitized and syndicated”) blows.
~~
Frank Zappa was a genius. His point about cableTV was inspired. similiarly, even, a portion of, the Broadcast signal, otherwise unused, could have been used to transmit Music/Data.. a company called WavePhore was trying to make that happened (can’t find any remaining mention of it ‘on the web)..
May 1st, 2009 at 7:43 am
I am way late to this thread…but here goes anyway because no one mentioned this above:
It was just a year ago when CC managers and lawyers sued the banks to force the loans to go through with the buyout previously agreed upon well before the credit crisis. They forced the banks to hold their noses saying it was the honorable thing to do even though so much had changed…and some people watching said lend to them including a judge somewhere! Now less than 12 months later management is holding their hands up saying “wow, times have changed, we need to renegotiate!” And since no one is prepared to take over these properties they figure they will get the better deal.
Here’s the thing; no matter what happens the deal is a loser for the banks. The market for ad spots is weak and not likely to get up and start running very soon but, the market for radio properties is worse and likely to get much worse if you use a multi year time frame. Digital is now effectively competing with radio and in a few years the distinction will not be enough to justify these assets prices. So add a new category of toxic debt to the list.
May 1st, 2009 at 10:37 am
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