Cumudel — What Happens When You Cross a Cumulus with a Citadel

You've heard of the banking concept called too big to fail?

The proposed merger of Cumulus with Citadel is too failed to be big.

Everyone thinks Cumulus CEO Lew Dickey is forcing a merger with the recently bankrupt Citadel to grow his media empire.

Well, don’t fall for it.

Dickey is trying to save his own neck as I will go on to explain. The last two radio groups anyone would put together is the red ink drenched Cumulus with the fresh from having screwed their investors Citadel.

Two radio groups behaving badly – only a desperate radio CEO could come up with this idea.

And make no mistake about it, Lew Dickey is desperate.

Cumulus has failed to turn around local sales even with the Atlanta-based national sales system that even a dummy can follow. Unfortunately for Cumulus, their salespeople are not dummies – at least not all of them. And those poor suckers hired from other industries with no experience are probably more naïve than stupid.

Face it.

The best part of watching Lew Dickey try to engineer an unfriendly takeover of Citadel is seeing Citadel CEO Farid “Fagreed” Suleman sweat and “Tricky” Dickey beg – in public.

Go ahead, admit it!

But the prospect of Cumudel is a not-ready-for-primetime maneuver born more of necessity on the part of Cumulus than the need of Citadel to sell out for $31 a share.

This battle is a Christmas present to all the screwed employees of radio. It has everything a drama could ask for – greed, jealousy, power and sex. Okay, three out of four ain’t bad.

I feel like I know these two pretenders like the back of my hand and believe it or not I know how the desired merger of Cumulus with Citadel is going to end and what it is going to mean. 

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Music Media Predictions for 2011

Today I have 12 predictions for you about the year ahead in music and media, radio and the mobile Internet. Most of you who have been reading me for a while know we’ve had a pretty good record of seeing the music and media future. 

Here’s a taste of my predictions (counted down in order):

  1. What I think Apple will do to impact music and radio in 2011
  2. The Performance royalty for radio – yes, no?
  3. One major label will go bankrupt in the year ahead – we name it
  4. The future of Pandora
  5. The most endangered radio group CEO (take a guess)
  6. The hostile takeover of Citadel
  7. The first radio company to derive 10% of total revenue from new media
  8. The biggest new media business not on radio’s radar screen (but should be on yours)
  9. What’s next after Facebook and Twitter
  10. The future of paid subscriptions
  11. The unseen obstacle to providing content to 40 million iPads
  12. Clear Channel’s secret preparations for their big move in 2012

As low as 38 cents a day to subscribe to Inside Music Media. My 12 Music Media Predictions for 2011 might be a great way to get started.

Check out the options to subscribe (monthly billing or one year discount) by clicking “read more” then let me know what you think of these predictions. 

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Radio Royalty Revolt

This piece is about real alternatives to the damaging music performance tax that is ready to be imposed on radio stations either by law or by concession.

There are real alternatives but you wouldn't know it from what's being discussed.

Just yesterday, there was some last minute maneuvering in Congress to get the performance rights tax for radio ready for House passage with an eye toward later Senate approval. Sooner or later, the music tax is coming to radio. I’m betting sooner.

There is a discussion in this article about the snowball effect on radio’s capitulation to the music industry even if it is initially at 1% of a station’s revenue. This piece outlines the latest behind the scenes machinations and the threat to music in new media.

Today’s piece also reveals new options going forward for radio stations and individuals who want to negotiate their own deals instead of having the NAB do it for them. There is precedent. A little known action as recently as a few weeks ago. I’ll fill you in.

Then, the “plan”.

Four steps that are completely legal and in your hands that can lead you to a livable deal with record labels.

The stakes are high.

The return of terrestrial music radio to a healthy place is on the line and without this approach, you can pretty much forget about harnessing those 40 million iPads that analysts say will be in the hands of consumers by next year at this time.

If you’d like to access this story, check out the options under “read more”.

Have a great day! -- Jerry 

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Massive Radio Firings Ahead

This piece focuses on how the three major consolidators – Clear Channel, Cumulus and Citadel will reduce their number of employees over the next 12 months. It is my best projection and I name percentages and the most endangered positions.

There is a discussion about the mentality of venture capitalists who run today’s radio groups to get an idea of how they think on cutbacks and downsizing and there is a projection of what’s ahead for each group.

Clear Channel: The two biggest areas where personnel will be dismissed over the next year. The changing severance package likely to be offered. I’m predicting the eventual selloff of hundreds of Clear Channel stations due to the inability to pay off $19 billion in debt and how this will impact employment. How much smaller Clear Channel will be next December compared to today expressed as a percentage.

Cumulus: Lew Dickey is not really going to complete an unfriendly takeover of Citadel but he is going to continue his unfriendly takeover of Cumulus. The jobs most likely to see turnover even while Dickey is hiring wet behind the ears replacements. Some of his clusters will be running on empty so we’ll discuss the strategy, as we understand it. Cumulus’ workforce will be reduced significantly over the next 12 months. Don’t count on using the company copying machine to print resumes or much severance pay, for that matter.

Citadel: This odd-duck company is cutting workers for a reason different than Clear Channel and Cumulus. There is also a new influence to reckon with for employees there. This article discusses where the cutbacks are coming from and who will be wielding the axe going forward.

All in all – 2011 will have a deleterious effect on radio as we have known it and I’ll project where it will all end up in the next five years.

If you’d like to access this story, check out the options under "read more".

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3 Media Monopolies To Fear

Yesterday, Nielsen announced it was giving up on the radio ratings business in the United States after several frustrating years. With that word Nielsen becomes the umpteenth radio ratings company that failed to upend Arbitron.

Be afraid. Be very afraid.

Arbitron is fresh off of its own announcement to mark the one-year early renewal of Clear Channel as its biggest radio client to re-up for Portable People Meter (PPM) ratings through 2015.

That’s a half billion dollars from their monopoly to Arbitrons.

At the same time, there is growing evidence that the Evil Empire of the new media world is Google with new concerns arising that Google’s vast search empire is buying up businesses in non-search areas making it pretty hard for the Feds to stop them.

Google matters to media companies because what Arbitron is to radio, Google will be to whatever businesses such as radio become in the digital arena.

There is a third monopoly that could have as big an impact on the media business as both Google and Arbitron put together. More on that in a moment.

First, what’s up with Nielsen dropping radio ratings?

I talked to some very nice Nielsen people at the NAB Radio Show in Philadelphia a few years back and told them that I was skeptical about their chances of penetrating Arbitron market share. Of course, they were predictably optimistic.

One thing about monopolies, it takes one to know one and in the case of monopolistic type companies, they suck the air out of other businesses often with the help of other companies that suck the air out of other businesses.

Take the monopoly Arbitron being supported by the monopoly Clear Channel to the tune of $500 million. Is it any wonder that Nielsen pulled up stakes the day after Arbitron’s whopping Clear Channel renewal became public?

Nielsen said all the right things like we were making money, had 51 markets including some Cumulus small markets and 17 Clear Channel cities. They had Maverick Media, ESPN but it didn’t have a half billion from Clear Channel.

Lew Dickey, who championed Nielsen as a cheap alternative to Arbitron, is left holding the bag of money he can now spend on that Citadel takeover (Ha Ha). Cumulus is as cheap as any broadcaster and what Nielsen needed was a real monopoly – the kind that spends what it doesn’t have.

Like Clear Channel.

It’s interesting that Nielsen will continue doing radio ratings in 11 other countries presumably where Arbitron does not dominate.

So what’s going on?

Radio is stuck with one ratings service with flawed drive-by technology that consolidators just happen to love because it over reports listening to stations that mostly play music.

New media is afraid of Google which is under investigation in other countries and even here in Texas for allegedly punishing search clients who become rivals of the many companies Google is acquiring.

And then there is this blockbuster. 

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Clear Channel Becomes Cumulus

What kind of screwed up industry is radio when the largest radio group initiatives another of its many rounds of cost cutting while simultaneous signing an early Arbitron renewal contract for half a billion dollars?

A company that values Bob Pittman’s $5 million stake in Clear Channel as entre to his new position as head of entertainment and new media while preparing to initiate more draconian cutbacks that will make your hair curl.

And this from a radio giant that owes $19 billion in debt – due within two years – with no known way to pay for it other than bankruptcy (which means, not paying for it).

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Howard Stern’s Big Mistake

How can a guy who has already made well in excess of $500 million in satellite radio make a mistake signing on for millions and millions and more?

From the money perspective - you go, guy!

A new five-year mega deal with SiriusXM sounds like a great move for Howard Stern. After all, Stern gets what he says will most likely be his last radio contract, lots more money and more time off.

While Stern can take the money and run, if you place the bet he just did on the future of radio, you’ll most certainly lose without the benefit of Stern money.

Howard Stern made a big mistake and he’s not alone because media companies are making the same one right now. 

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