Let’s start with what I believe – I believe Robert Pittman (CEO of Clear Channel) wants Barack Obama to be reelected and wants the Democratic Party to have complete control over Congress. Why do I believe that? The last 15 years of political contributions he has made, especially the one to Barack Obama in April of 2007. State Senator Barack Obama launched his campaign in February 2007, and few people knew who he was or gave him any chance of winning the Presidency in 2008.
Robert Pittman has an obstacle in the way of achieving his goal – his employer Clear Channel owns Premiere Radio, by far the biggest provider of “Conservative” Talk Radio, which for 3 years has been airing non-stop Anti-Obama “hate”. Robert Pittman was the founder of MTV, ran AOL and has extensive ties to people in the entertainment industry and Hollywood, as demonstrated how he was able to round up folks for the iHeartRadio launch in Las Vegas. In his youth, Pittman was also a radio programming prodigy with a track record of success. There is no doubt in my mind that Pittman would be fully on board with helping the White House in any way he can, including destroying Conservative Talk Radio from the Inside.
Clear Channel is owned by its debt – something over $20 billion of it. The company is managed by two private equity firms Thomas H Lee and Bain Capital, both of Boston. Mitt Romney worked for Bain Capital, still owns a significant financial interest in it, and personally knows the people who run it. Bob Pittman did not get the job at Clear Channel unless Bain Capital wanted it. I believe, but can’t prove it outright that Harvard University’s endowment fund was a significant force at Bain Capital, at least in the early days. If Mitt Romney wins the Republican nomination, Harvard wins no matter who wins the election.
So now the smoking gun – this is going to take explanation, so I apologize for the length, but think if you care anything about radio or politics or the future of the United States, you’ll want to take the time to understand what is going on.
Tom Taylor published a leaked copy of an email that was sent to radio stations that carry Premiere’s radio shows – that would include Rush Limbaugh, Glenn Beck, and Sean Hannity. (Tom Taylor is not a fan of Conservative Talk Radio at all if you read his own writing)
“To all Traffic Managers: The information below applies to your Premiere Radio Networks commercial inventory. More than 350 different advertisers sponsor the programs and services provided to your station on a barter basis. Like advertisers that purchase commercials on your radio station from your sales staff, our sponsors communicate specific rotations, daypart preferences and advertising environments they prefer. . .They’ve specifically asked that you schedule their commercials in dayparts or programs free of content that you know are deemed to be offensive or controversial (for example, Mark Levin, Rush Limbaugh, Tom Leykis, Michael Savage, Glenn Beck, Sean Hannity). Those are defined as environments likely to stir negative sentiment from a very small percentage of the listening public.”
Now what this means – explaining some of the industry jargon and the context (Disclaimer: I’ve never worked in radio)
“Traffic Manager” is the person who has the job of managing the commercials for a radio station. The Sales Person sells the ads, the Traffic Manager schedules when the ads will run in accordance with the sales contract and the policies of the station, makes sure the ads do run, and tracks to make sure the station is getting paid for the ads that are run (and schedules “Make Good” replacements if the air staff botch the running of the ads or otherwise fail to play the ads correctly). The smaller the radio station, the more likely that some of those functions are combined into one person.
National radio advertising is sold mostly by the one remaining National Representation firm Katz Media Group which just so happens to also be owned by Clear Channel. How the other people in radio allowed this to happen is a mystery to me – when you hear an ad for Ford on your local “independent” radio station, it is very probable that Clear Channel gets a piece of the advertising revenue on that commercial and is cherry picking the best advertising time slots from its competitors.
The “Commercial Inventory” is those commercials which have been purchased by an advertiser, but not yet run.
“Barter Basis” is the most important thing to understand, and hard to pin down, because it is done fairly secretly to the public’s view. Here is an example of how barter works in radio: The Sales Guy wants to get the local Ford Dealer to advertiser on the radio station but isn’t getting anywhere. He proposes a “Barter Deal” – rather than Ford dealer writing a check to pay for the ads, the transaction is done “off the books” – the car dealer provides the radio stations with cars to use and the radio station runs advertisements and does promotions for the car dealer. Barter is done for a variety of reasons – it makes it easier to close the deal with advertisers who don’t like to spend cash, it has implications for purposes of accounting and taxes, and for the dishonest an opportunity to steal from the radio station.
In Syndicated Radio, how shows are paid for varies, depending mostly on the clout the show has and how many stations are willing to compete to give something of value up to get the show. Shows with no clout just give the show away for free to any radio station who wants to run it (or even pay the radio station to run it) – the syndicator sells ads or products to pay for the show, and leaves holes in the programming for the local stations to run their advertisements to pay their bills.
On the other extreme is Rush Limbaugh – Rush’s ability to attract a desirable audience is well proven for over 20 years. Unless a radio owner is blinded by their own political convictions, they would all jump at the chance to carry Limbaugh. When Premiere is faced with a contract renewal, they have significant leverage to force radio stations to do things the radio station may not want to do. A radio station may outright pay for the rights, but more commonly as alluded to in this letter, the stations agree to a barter deal with Premiere – they agree to take ads from Premiere and run them at other times of the day (like during the desirable morning drive time). The station is not paying cash to get Rush, but is giving up advertising time that it would otherwise be selling to local advertisers. They may have to run “Rush Limbaugh Minutes” during other parts of the day (with the ads embedded), may be pressured to carry other Premiere shows (If you want Rush, you have to carry Hannity), run the show for all three hours live and have no sports preemptions, run “Best of” shows on the weekends, maybe carry Ryan Seacrest on the music station the company also owns. Clear Channel used to own LiveNation and put pressure to promote concerts at venues managed by Livenation, and demand stations run music from artists who had signed to appear at LiveNation concerts. LiveNation has since been spun off as its own company, in part due to pressure from musicians and threats of an antitrust investigation.
“Rotations” is requirements about how the ads are to be run, i.e…. “No more than one per hour, no more than 2 in a daypart, no closer together than 30 minutes, no more than 20 a week, not during the last 15 minutes of the show”…. to generally set the rate at which the ads should be played – if McDonalds is running McRib ads for a month, they may want them spread out over the month, not all played in the first 2 days.
Daypart is industry jargon for “Time of Day” and day of week. For almost all radio stations, “Morning Drive” daypart is the prime advertising that demands the best advertising rate. An ad at 7:45 AM as people are close to arriving at work is much more valuable than one at 1:15AM when the audience is asleep and the people who are listening have little disposable income.
Now to the bullet: The memo doesn’t say content that “Some may find objectionable” – Premiere outright says the list of shows that ARE objectionable in the eyes of advertisers, and gives specific examples:
- Mark Levin – syndicated by Cumulus Media, not Premiere
- Rush Limbaugh – Syndicated by Premiere
- Tom Leykis – Tom Leykis has not had a radio show in about 5 years since the end of Free FM on CBS. He is about to return to radio as his CBS non-compete runs out. The only reason he is on this list is to make it look like Clear Channel is being even-handed and not targeting Conservative Talk Radio
- Michael Savage – Syndicated by Talk Radio Network
- Glenn Beck – syndicated by Premiere,
- Sean Hannity – originally syndicated by ABC radio, but now syndicated by Premiere with a special arrangement for the former ABC radio stations now owned by Cumulus Media
Missing from that list are former Air America host Randi Rhodes, who IS syndicated by Premiere, and at least as caustic and controversial, and any of the “Progressive” hosts syndicated by Dial Global – Bill Press, Ed Schultz, Thom Hartmann, Stephanie Miller, Mike Malloy
So with that background, this is what that message means in blunt language. You are receiving programming provided by Premiere. In order to keep the show, you must run advertisements for free that Katz media (us) have sold to national advertisers, but you may not run them during our offensive shows, nor offensive shows from our competitors if the host is a controversial talk show host [on the list provided to us by the White House].
So you as the station owner now have a choice – you can keep carrying Rush, with almost no national advertisements and also give up the valuable local ad time during other shows – which are how you pay your own bills – or can dump Conservative Talk shows and put on more “Acceptable” shows that won’t be offensive to the people at Media Matters and Think Progress and the New Black Panther Party. Oh, by the way, your banker is on the phone and wants to discuss this with you too if you decide to fight us – the banker whose bank was bailed out by TARP funds.
What’s your decision? Are you ready to die on this battlefield? How important is it to keep radio “free” of government control of your programming content? How much pressure from the FCC over your license are you willing to fend off in the future against claims that you weren’t acting “in the public interest”? Are you willing to “out” the list of advertisers who are blackmailing you into staying silent?
Poking a little deeper, Katz offers a tool to show you who is the national sales rep for each station:
http://www.krgspec.com/
Katz operates 6 “divisions” for radio (Katz also markets to TV to make one stop shopping for a national ad campaign). The six divisions are:
– Katz Radio,
– Christal Radio,
– Eastman Radio,
– Univision Radio,
– CBS Radio Sales,
-Entercom Radio Sales
-Katz 360 Sales (Digital advertising online)
Pulling up New York City and sorting by Rep, we see just how much Clear Channel’s rep firms dominate the business:
CBS: WCBS AM, WCBS FM, WFAN-AM, WINS-AM, WWFS-FM, WXRK-FM
Clear Channel (itself): WAXQ-FM, WHTZ-FM, WKTU-FM, WLTW-FM, WWPR-FM
Christal: WABC-AM, WPLJ-FM (Cumulus Stations)
Eastman: WBLS-FM, WLIB-AM, WOR-AM, WWRL-AM (Black radio + Buckley)
Katz: WEMP-FM (Merlin), WQHT-FM (Emmis) WRKS-FM (Emmis)
Univsion: WADO-AM, WQBU-FM, WXNY-FM
Not repped by Katz/Clear Channel
Ethnic: WKDM-AM, WPAT-AM, WWRU-AM, WZRC-AM, WSNR-AM
Non-Commercial: WNYC-AM, WNYC-FM
Bloomberg: WBBR-AM
McGavren is the rebirth of the competing ad rep firm Interrep which filed Chapter 7 bankruptcy October 2008 (immediate liquidation) McGavren handles the people who refuse to play ball with Clear Channel:
http://www.mcgavrenguild.com/general/ourclients.jsp
They represent:
Disney: WQEW-AM (Radio Disney), WEPN-AM (ESPN)
Salem Radio: WMCA-AM (Religious), WNYM-AM (Conservative Talk)
WNYC: WQXR-FM (Classical Music)
WSKQ-FM (Spanish)
In something completely coincidental, Katz started firing people on Friday:
http://www.radio-info.com/news/clear-channel-owned-katz-rep-makes-senior-changes-at-both-radio-tv
A good number of the national spots in the Limbaugh show are so-called “live reads” by Rush, presumably the spots of national advertisers who want to be associated with him. I don’t believe that those ads are part of the barter inventory referred to in the memo, and that may also be the case with other advertisers who want to be on the Limbaugh show and pay for the privilege of being there. Presumably, such national spots would continue in his show and not be affected by the edict concerning barter advertisers.
Also, the excerpt from the memo would have us believe that EVERY LAST ONE of Premiere’s more than 350 barter advertisers have SPECIFICALLY asked to be excluded from “offensive” shows, some of which are the “bread-and-butter” shows of the Premiere Radio Network. There is an ellipsis in the excerpt in the memo. Is there anything missing that would counteract the impression that there is not a single barter advertiser who wants its spots to run in the network’s most listened-to program?
Tom Taylor is responsible for that edit. Apparently there was an attached list of 90+ advertisers who were specifically mentioned but I don’t have that list. The wording by Premiere is slippery enough to give the impression that the other 200+ would prefer to not be on those shows, but don’t want to appear on the official list. It’s been clear to me for some time that almost no national advertisers want anything to do with the people who defend capitalism every day. When you turn to music radio, all those advertisers are still there. Radio advertising is an $18 billion a year business.
Let’s say that list became public – do you think people would make enough of a stink that they care?
As to the Live Read ads – you’re correct that they are not the subject of this memo. Tom Taylor went into more detail about the bedding company. They’ve been affiliated with Rush since his days in Sacramento, and after pouncing on the bandwagon and temporarily withdrawing their ads, Rush has told them he won’t endorse them any more. (Leaving the door open that maybe they’ll advertise, but Rush won’t be doing the ads)
Advertising falls into a couple general categories, and the willingness to advertise is closely tied to how well an advertiser can track whether the ad had any effect on people.
The most direct is the “Pay for Action” – the revenue is based directly on people doing something that is measurable. You called an 800 number for auto glass replacement that was specific to Rush Limbaugh, so when you dial the number, they know there was a direct connection. This has long been the dominant type of advertising on Talk Radio. The station or syndicator gets paid based on what is sold – or if not, then at least the advertiser knows and will stop advertising if the calls or purchases don’t justify the cost.
Brand or Image advertising is advertising that doesn’t have a specific purpose other than to build the recognition of a brand and get the name of the company in your mind. These types of ads tend to be run over a wide swath of media, not just radio. So that ad for Lowe’s or Home Depot isn’t really suggesting anything specific, just making you aware they exist. After a few 1000 times of hearing the name, it’s firmly implanted in your brain – so when you think… “Hey, I need to buy some lumber, where can I get it?” your brain answers with Lowe’s and Home Depot instead of you going to the yellow pages and finding a local lumber yard. This type of advertising depends very much on the advertiser’s belief in the ratings, or that the ads are run on every station at the same time so it doesn’t really matter which station you heard the ads on.
Campaign advertising is short term advertising for a specific product – usually a product or major change – McDonald’s right now is running advertisements for the Filet-o-Fish sandwich for some reason. The success of the campaign is measured by how much sales of that specific product go up without being able to track exactly where or why it affected people’s decisions. People will say “No, I didn’t come to McDonald’s today to buy a fish sandwich because I saw/heard an ad for it”, but they are just fooling themselves into thinking we have free will. Just ask B.F. Skinner
Liberals push the boycott type stuff much more than the right so you’re right, it probably wouldn’t matter much if the list was public.
Levin made an interesting comment last night — he said GM was interested in advertising on his show but claimed he discouraged it because he knew the blowback from the left would cause problems sooner or later for all concerned.
I listen to Rush and do quite a bit of surfing on the web – there seems to be an increasing departure from reality. Was it Krauthammer who came up with ‘bush derangement syndrome’? It seem as if a derivative of that is becoming the liberal mainstream norm. I mentioned to one of my neighbors that we are facing a battle of good and evil. He looked at me like a ‘special needs senior citizen’ with a full Depends. I believe that circumstance and conscience will put me at odds with my government and the repulsive NGOs. I will gladly be cannon fodder for my nephews liberty.
I find it very interesting that Pittman probably “hates” conservative talk-radio and their hosts but at the same time, it is a cash cow for Clear Channel which is swimming in debt.
I suppose if he was somehow able to kill off Premiere and their shows that Comrade Obama would probably bail out Clear Channel as a “thank you” much like he bailed out GM and Chrysler for the UAW…
Clear Channel laid off most of the staff of Premiere just before Christmas 2010 when Dr Laura and Dr Dean Edell left, a month after Clear Channel hired Pittman.
http://www.clearchannel.com/Corporate/PressRelease.aspx?PressReleaseID=2818
Another probably related development in the past few days.
Clear Channel is made up of two main pieces – the Radio company in the United States, and the separate Clear Channel Outdoors. If you drive a lot and see those new huge LED billboards along major interstates and look at the bottom, many of them say “Clear Channel Outdoors”. CCO also has a major presence throughout Europe with advertisements on benches and bus stop shelters, where the culture doesn’t embrace huge billboards.
While Clear Channel Radio has at least some tenuous rules that “foreigners can’t own more than 20 or 25% of American Radio or TV Stations” – and lending money may be deemed as “ownership” (Unless Bain Capital is acting as a middleman to insulate the actual lenders), Clear Channel Outdoors is under no such restriction.
The news was that Clear Channel Outdoors just sold $2.2 billion in new debt, and immediately turned most of it over to the parent company to deal with its liquidity issues. Because of the Greek Debt crisis, the European central bank has been forcing banks in Europe to take money they don’t want, creating a flood of cash. At least at the creation of this arrangement, Germany’s Deutsche Bank was the lead bank putting together the financing of Clear Channel.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/03/02/bloomberg_articlesM07R6R1A1I4H01-M09QB.DTL
http://www.thedeal.com/content/tmt/clear-channel-shareholders-sue-over-loan-from-subsidiary.php
So are the people holding the $20 billion in Clear Channel bonds willing to risk Clear Channel losing money and maybe defaulting in a few years if they walk away from Conservative Talk radio? You betcha.
Since I’m piling on, I probably shouldn’t stop here.
If you think Clear Channel itself has a bunch of people who are Conservatives to hold back Mr Pittman, a little more history is in order.
After the 1996 deregulation of Telecommunications, there was an orgy of mergers, because the national cap on how many stations one company could own was lifted. Clear Channel started off from an AM station in San Antonio and began its buying binge, and then joined forces with Jaycor which was being run by a man named Randy Michaels who had acquired Premiere Radio along the way. Randy Michaels would eventually run Clear Channel, which at its peak had acquired over 1,200 stations.
The Mays family no longer have any management positions at Clear Channel. Michaels was fired in 2003 and took much of the management staff he had over to Tribune Corporation in Chicago. The guy who ran Premiere during its heyday is now working for Glenn Beck. I don’t know if Randy Michaels has any political leanings or if that played any role in his acquiring the rights to Limbaugh. I suspect his only concern was ratings and revenue.
Glenn has seen this coming for a long time. Rush Limbaugh has also, but he has confidence in his own clout to handle the big guys and fend them off. Rush has refused to be heard on Sirius / XM, citing that he is gonna stay with the ones that brung him to the dance – but has been hedging his bets with Rush 24/7 – but he unfortunately did that as part of his contract with Premiere. Hannity has his Fox TV show to pay his bills.
It’s probably also worth mentioning that probably 2/3 of the radio stations carrying Air America were Clear Channel, although you can easily make the case they did almost nothing to promote it or try to make it a sucesss.
Premiere suspends all sales of ads for two weeks… that’s this afternoon’s update from Tom Taylor.
A significant part of the money Premiere pays Rush is a share of the ad revenue from their ad sales. By stopping selling ads, that’s essentially putting Rush on unpaid leave, since they have no ability to actually suspend him or fire him. You probably noticed that Rush took the day off on Monday – Mark Steyn indicated Rush will be back Tuesday and Rush was just playing golf.
The suspension of ad sales does not affect the ads inside the program – only the requirement that stations run ads using their local advertising slots (called “Avails” in radio jargon)
Rush has an annual charity golf commitment that kept him from Monday’s show — in listening to him talk about it, it sounded like he would have preferred the tournament were some other weekend so he could be on the job as usual.
Tom Taylor has mentioned twice now that someone has retained the services of a ” Crisis Management” PR firm – the type you bring in when your hotel in Vegas catches on fire or people who take your pills suddenly fall over dead.
I’m a bit unable to be sure how this affects non-Clear Channel radio stations and generally what their reaction is going to be. If I followed the dots correctly… let’s say their deal with Premiere is…. “We’ll pay you $10,000 a month for Rush, and you give us ads you want run during our local spots – 500 spots @ $20 each – both numbers having nothing to do with any real pricing.
So with Premiere yanking their ad inventory for 2 weeks, suddenly I have 250 empty spots to sell via my own sales staff (which I may not even still have!) or try to get Katz to directly place ads on my station… and I’m gonna get a bill from Premiere for $5000 at the end of the month – all of this with zero warning.
Radio stations tend to be an ornery lot to begin with, from my general observation from afar.
Lew Dicky held his quarterly financial update yesterday, and the subject of Huckleberry….. errr Huckabee came up. Dickey says they already have 120 affiliates signed up for the launch on April 4th (of which maybe as many as 90 will be his own stations!).
I really think while Huckabee is not looking for a confrontation, he has the radio skills and the true Conservative credentials to be a viable alternative to Rush, something that hasn’t existed before now. Timing is everything.
The latest update from Tom Taylor is that while Premiere is pulling their barter ads for two weeks from local stations, they still expect the stations to pay for Premiere’s shows in cash instead.