Just recently, Clear Channel, the nation's biggest radio company with over 1100 stations, announced budget cuts that stunned everyone. The company is trying to sell itself to a couple of private equity firms, but the stock is down about 10 bucks from where it was when the deal was announced last fall.
I admit I know as much about the stock market as I know about nuclear physics-none. But, I'd like to think I know a few things about the radio business and these cuts, in my opinion,will make things worse.
CC has slashed all research and promotion money and put a hiring freeze in place, right after a bruising round of staff cuts in December. Great for morale, huh? It's hard to do great work when you're afraid you'll be unemployed next month. The promotion budget thing makes me laugh. Radio's whole business model is convincing businesses to promote themselves. How hypocritical is it that a station refuses to do that? What message does it send to advertisers? Without a marketing effort, the station fades away in a sea of competing media. Budweiser, despite being the number 1 beer,advertises heavily. Why? To stay that way.
Worse yet, other large radio companies are playing follow the leader. CBS Radio just laid off over 140 people last week, with cuts at other companies also. Look, I understand the need to control expenses, but these kind of draconian slash-and-burn tactics (for no other reason than to prop up a lagging stock price) will further degrade the product (which is what comes out of the speakers!) Poor product causes fewer listeners and advertisers, causing more cuts. I've lived this cycle...I've seen it destroy station owners profit and people's lives. Executives need to realize that investing in your product pays big dividends. Tell Wall Street and their quarterly earnings expectations to take a hike for a couple quarters and rebuild the station. Everyone wins. Even the CEO's and stockholders. There's more to the radio business than making the numbers.
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