Predictions

I’ve got five bold predictions for you in radio, new media and music that I think you’ll want to know.

• Which radio group will start selling stations – possibly as soon as next year – in spite of the fact that station prices will be very depressed and money is hard to come by. Learn why, how much these stations are likely to get plus what type of person is the ideal buyer. You may be surprised.

• The unintended consequence of the new music royalty tax on radio which, as you know, I believe is a foregone conclusion. Here’s my best thinking of when the tax will be settled and when stations will likely have to start paying.

• What’s up with streaming media, an industry that has already been mugged by the music industry royalty tax? However there is a workaround on the horizon. Details follow.

• Apple’s next move. The usual holiday sales should be brisk, but that’s not what I am talking about. There is a game changer ahead that will impact the music industry and terrestrial radio.

• How big will local new media ad sales get? There is evidence that it is surging in some local radio markets, but I’ve got the percentage of all local business that you can expect to go to new media and a time frame.

Read this story today.
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Anonymous tipsters copy and paste internal memos or emails here.  

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Clear Channel’s Next Owner

A lot has been made of the recent appointment of former MTV and AOL head Bob Pittman to a high level executive position at Clear Channel – the presumption being that Pittman’s arrival signals a new day for its radio, entertainment and new media prospects.

But there is a developing back-story that could constitute more than an executive personnel change.

Clear Channel could have a new owner in the not too distant future.

The plot thickens because the wheels may already be in motion so Clear Channel owner Lee and Bain can escape from a huge investment gone badly for them.

This real time scenario is unfolding even as the company claims to be searching for a replacement to departing CEO Mark Mays.

But this is what is likely to happen.

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Lew Dickey’s Thanksgiving Turkey

Cumulus Media just can’t figure out how to sell.

Harvard and Stanford grad and Cumulus CEO Lew “Tricky” Dickey has been beating up his employees for years about their underperforming sales ways.

He’s thinned out their ranks. Told me face-to-face in Philadelphia that maybe it’s not a bad thing to get some fresh blood into the company.

Dickey, who never enjoyed a career as a radio salesman, had a lot of blame to throw around for Cumulus account execs who actually know how to sell.

Sales meetings conducted from the Cumulus headquarters in Atlanta beamed to local stations via Skype. Local sales staffs hate this because it keeps them off the streets and away from clients who do spend money with them. Dickey likes it because he can badger them to sell to new categories like health care.

As the Dickey Empire totally remade local sales, it took key accounts away from the salespeople who attracted and maintained them and dished them off to so-called Key Account Managers who got paid a lower commission for managing the business.

Increasingly more local sales were made through Atlanta to prevent the higher local sales commissions from being paid – a big incentive for a sales profile. Of course, I am being sarcastic here. Nothing throws a wet towel on selling like messing with the seller’s commission.

Lew Dickey held his most recent conference call with analysts where he was snagged for the company’s underperformance in local business by blaming the economy. Truth to be told, many radio groups are doing poorly in local, but Dickey is comfortable simply blaming the recession.

CBS is up over 3% in local for the same period and interestingly enough, President Dan Mason uses a traditional sales approach with account execs deployed in local markets. Could that be something that would interest Lew Dickey?

Of course not.

The smartest radio guy in the industry (at least in his own mind) has yet another play date with local sales that is more like a senior project than a sales strategy.

It’s called Value Alert Notification.

And you won’t believe what it forces sales people to do and how it actually works to kill local sales.

If you are a subscriber to Inside Music Media, click through to unlock the rest of the story. To become a subscriber, it’s as low as 39 cents a day. Sign up here.

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Facebook’s New Messages

Facebook is getting ready to offer consumers a new communications system called Messages.

Mark Zuckerberg did a presentation a few days ago about this new way to handle email and text messaging that is worthy of your attention.

Email s becoming slow and outdated -- young people use it sparingly.

Facebook’s move is about how changing consumer habits have forced the largest player in social networking to change before they lose critical mass.

See any similarities between Facebook and how radio, the music industry and new media do things?

Neither do I.

But it’s never too late to learn. 

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Bob Pittman Is the New John Hogan

Nice move.

Hire the man who brought MTV and AOL to prominence and call it a step in the right direction for an outdated radio company to embrace new media.

And why would Clear Channel have to recycle the well-traveled Pittman?

Let me count the ways.

One, Clear Channel owes $19 billion in debt due in two years and has no earthly way to pay it back. That means the company will either be chopped up or sent to bankruptcy – neither of which sounds that bad to me when you look at how other radio companies did when they emerged from bankruptcy.

They did fine. Everyone else got screwed.

Two, go back and read one.

Clear Channel is lucky to generate a few billion a year in profit with its radio and outdoor operations. Not likely that it could repay $19 billion in debt at that pace.

So you do the next best thing.

Turn to unearthly ways to get into digital media and for investment bankers that means hiring one of their own to work with a “management team” so owners Lee and Bain can sell this as a great reason to help refinance that $19 billion in debt.

Or as one of my readers wrote upon hearing of Pittman’s appointment:

“Exactly the kind of call someone who knows nothing about radio would make. The smoothest move since Ted Forstmann tapped Farid Suleman to run Citadel”.

So while others are reading about this game changing appointment of Bob Pittman as chairman of its media and entertainment divisions, you’re likely seeing through the move as one that has more to do with window dressing than substance.

If not, and with all due respect to Pittman, I could have named a hundred executives who could lead the digital way but no – the Clear Channel investment bank owners has to have Pittman who ironically also has experience running the real estate company Century 21 which means it really is all about the real estate.

Now you know that a smart organization doesn’t make a major appointment like this without having replaced CEO Mark Mays who leaves within the next few months. But that doesn’t stop Lee and Bain because whoever that puppet is, the investment bank owners are going to name Pittman as head of media and entertainment anyway.

Who needs to have the new CEO sign off on it?

After all, they are all puppets and Lee and Bain pull the strings.

But beware.

Think John Hogan.

Something big is up. 

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