Alec Foege, the author of “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio,” continues his chat today about his new book. The interview begins here.

HITSVILLE: What’s your sense of the state of the company right now? My impression is that the stock of Clear Channel proper is in the toilet and the attempt to take the company private has been going through seemingly unending difficulties. There’s always been a sense that the company has basically been sucking the industry dry; is there in fact much left, or is that too harsh of an assessment? In five years, what will Clear Channel look like?

As for the behemoth concert production arm, that was spun off and renamed Live Nation. The jury is still out on the dollars-and-cents reality of its transformation to a so-called 360 artist-friendly outfit—last I looked, its stock was 50 percent off its high, a year ago. On the other hand, it certainly has been getting some good ink for its Madonna, Jay-Z and U2 deals.

And is it just me or has the press developed a sense of amnesia about it once it changed its name? Can you imagine U2 a few years ago making a multi-million-dollar deal with anything with the words “Clear Channel” in the name?

ALEC FOEGE: Indeed, Clear Channel’s stock price is hovering in the high $20s, a far cry from its height of $90-plus a few years back. Of course, radio as a sector and traditional media as an industry are having a terrible time on Wall Street these days. None of that is specific to Clear Channel but more a reflection of the digital (r)evolution ripping through the biz.

I think where Clear Channel’s business approach has left it exposed, perhaps more than others, is in the content department. After years of cutting content and staffing costs to the bone, there’s not much more to cut. They’ve certainly earned their nickname Cheap Channel—though, as I detail in my book, that pejorative label was actually worn as a badge of honor in the early days. The early CC execs considered themselves good businessmen who knew how to make the radio stations they acquired lean and mean—that is, appealing to listeners and profitable. I’m not sure they’ve got much of that spirit left at the company.

I’m not convinced that HD Radio, which CC is promoting heavily, is going to be enough of a success in time to rescue the radio industry. For one, the name is terrible—it sounds like a cheap knock-off of HDTV, and what is high-definition radio, anyway? People don’t think of sound as “high-definition.” The term used to be “high fidelity,” but even that sounds way too retro. So that should give you an idea of how well-conceived the whole initiative is to begin with: Are the masses really crying out for radios with marginally better sound? Audiophiles are an extremely small and unsociable group.

I think you’re going to see Clear Channel sell off more and more of their non-core stations. Just in the past year they’ve sold off a lot in small and mid-sized markets—they were down to 963 from around 1,200 the last time I checked. In other words, it’s the end of an era and the end of a business model. Clear Channel got so big because Lowry Mays decided the bigger the better, from a financial perspective. In its late 1990s-early 2000s heyday, the company was a virtual cash machine.

As far as Live Nation goes, I agree with you that the jury’s still out on the Jay-Z, Madonna and U2 deals. Will they be profitable? In the short run, it doesn’t matter. A quick look at the company’s financials reveal that Live Nation is leveraged to the hilt, with nearly a billion dollars in borrowed cash at their disposal. On the other hand, Live Nation’s 360-degree approach is one of the first meaningful attempts I’ve seen at trying to shape the future of the music industry. It seems clear to me (and has seemed clear to me for about 8 years) that the recording industry is deader than it realizes. The big-money deals Live Nation is signing right now may never pay off in pure dollars, but they may pay off as bait for less established artists who now might consider taking a similar jump.

Some critics of Live Nation’s approach say the live-entertainment company doesn’t know anything about making and marketing CDs (despite the fact that Jay-Z’s deal, for example, reportedly includes three $10 million payments for his next three albums). But so what? CDs are not going to mean much in the new world order of the music biz. At best, they’ll be souvenirs, since anyone under the age of 25 will have downloaded and listened to the whole album for free before they shell out mega-bucks to see their favorite act in concert.

Speaking of emptying your pockets just to see your favorite artists perform, I too am astounded how Live Nation has erased any public memory of its Clear Channel affiliation. Meanwhile, Lowry Mays and Randall Mays still sit on the Live Nation board, as does one of Clear Channel co-founder Red McCombs’s daughters. The word is good on Live Nation’s CEO Michael Rapino, who ran his own concert business before it was bought by Clear Channel. Still, Live Nation still does a lot of the same controversial things that made Clear Channel Entertainment so loathed. I still can’t believe that they renamed Irving Plaza in New York as Fillmore New York at Irving Plaza. To any music fan who has any positive association with the original Fillmore East, run by the legendary Bill Graham in the 60s, the association is a real credibility killer. Anybody else wouldn’t catch the reference anyway. So why do it? Clear Channel Entertainment pioneered a lot of the overpriced concert gambits such as charging an extra $20 bucks or more at its amphitheaters for “VIP parking.” Shouldn’t parking be free if the venue comes with its own lots?

The thing is that, these days, concert fans are aware of more options than ever, thanks to the Internet, so it’s unlikely that Live Nation will be able to retain its dominance if it doesn’t deliver the goods, and at a reasonable price, to attendees at its live events. And that is as it should be.

To read the interview from the beginning, click here or hit the “read more” button below.

Read more

2 comments

Alec Foege, the author of “Right of the Dial: The Rise of Clear Channel and the Fall of Commercial Radio,” continues his chat today about his new book. The interview begins here.
HITSVILLE: It is a terrific story. Now let’s get to the meaty stuff. When I look back on what we were talking about the other day—about how Mays & Co. focussed on the bottom line—I was struck again how the federally mandated requirement to operate in the public interest was basically ignored. That’s gotta be high on the list of Clear Channel’s outrages. Is it fair to say that at least part of the company’s (initial) success came from this—that there are probably a lot of businesses in which you can innovate and make a lot of money if you ignore the laws that your competitors are basically trying to operate under?
Then you have the process you elucidate in such detail in the book, essentially the debauching of the country’s radio stations, quality wise. There’s the bureaucratic legerdemain the company used to get around ownership caps; the dirty tricks played by programing chief Randy Michaels; the increased use of “voice-tracking,” wherein DJs in one city would record programs for another city, with local references tossed in, and listeners none the wiser. …

What’s your favorite Clear Channel crime?

ALEC FOEGE: As a reporter, I think I’m partial to their stonewalling of the press. For example, the company is notorious for denying access to reporters and then complaining later that they were misrepresented. Most good public-relations pros know that it’s always better to provide some access to make sure the corporate perspective is represented. Besides, if you’re a public company, you want to appear as transparent as possible, especially if you’re a media company legally required to operate in the public interest. It sometimes seems as if Clear Channel rose from local powerhouse to global giant so quickly that they didn’t understand the rules had changed. If you suddenly buy up a ton of radio stations, billboards and concert promoters, some journalists and public-interest groups are likely going to have a few questions, and it’s usually a good idea to be prepared to answer them promptly and honestly. Indeed, it’s the American thing to do.

But Clear Channel has rarely taken that road. In the process of writing my book, I spoke to many executives who had worked at Clear Channel over the years, but the members of the Mays family who control Clear Channel never even acknowledged my numerous requests for interviews. I communicated as many times as I could that I was taking the objective route and held no grudge against the company or its activities. As far as I was concerned, the controversy surrounding them was just part of the company’s history—something that was out there, which had to be acknowledged in a credible book, but not necessarily the final word on their corporate image.

Indeed, since the controversy has died down, Clear Channel has been one of the more proactive radio groups in terms of developing new ways to distribute and broaden the scope of radio content. With all the negative press Clear Channel has received over the years, one would think they’d at least be eager to talk about these new initiatives. Instead they seem to have a preternatural aversion to the press, or else an extremely naïve understanding of how the press works. Like what they’ve done or not, Clear Channel would probably have a much more positive public image if the company had been more proactive in responding to their critics and showing them that the company was willing to make some changes–if not in the name of public interest, at least in the name of maximizing revenue growth. That’s what most public companies do, and—at least to some degree—it usually works.

—-

TO read the interview from the beginning, click here or hit the “read more” button below.

Read more