Randy Michaels was the man behind much of what is Clear Channel Radio today. He had the vision that a large company with a strong engineering and technical force could buy up and upgrade the equipment at 100s of failing radio stations, operate with new state of the art digital equipment and computers – making them more efficient with news and traffic from regional hubs – and use those savings to increase the EBIDTA (“cash flow”) to justify borrowing more money to add more stations to the Clear Channel empire to better use economy of scale, like having a news/talk 100 radio stations all running Glenn Beck, Rush Limbaugh. Sean Hannity and Coast to Coast with no more than 3 hours of local programming. Clustering would result in 4 or 5 radio stations operating from one building with one sales force representing all of the stations.
Then the bubble burst in 2000 and really exploded in 2001. People began to realize they had taken on way too much debt in the bidding war following the 1996 deregulation and the competition from the Internet was going to change radio and the music business.
Accounting reforms included in the Sarbanes-Oxley Act caused the FASB to issue new rules requiring corporations to prove that “untangle assets” like radio station licenses really had provable value, not just the price paid to get them. The radio industry took writedowns of those licenses over the next few years of around $10 billion – the amount everyone overpaid to feed their egos to buy up stations as fast as possible.
Clear Channel stopped acquiring and Randy Michaels and Clear Channel parted ways in 2002. Clear Channel went in a different direction, ultimately going private in 2008 – selling off most of its small market stations, selling off its TV stations, spinning off its interest in LiveNation and looking for a way to remain viable under a $20 billion debt load it can’t handle.
After working with OakTree Capital for a few years (Oaktree was behind forming GAP, the company that bought most of those small market clear channel stations), Michaels then landed at Tribune Corporation in Chicago in 2007 with dreams of creating another radio empire – he lured away so may top Clear Channel executives that Clear Channel filed suit against him to stop the losses.
Almost immediately, Tribune Corporation (publisher of the Chicago Tribune, WGN-AM, WGN-TV and the Chicago Cubs) went into bankruptcy after the company was taken private – the Cubs were sold off, and the media company still has not gotten itself out of the bankruptcy quagmire, as the creditors can’t agree on the plan to split their losses and who will run the company. So Randy Michaels was forced out a year ago, following by most of his Clear Channel friends.
Yesterday it was announced that Emmis Radio (another big radio company tied up in a debt straight jacket) is going to sell 3 major market stations to a new company to by run by Michaels – two FM stations in Chicago (WLUP-FM and WKQX-FM), and one (WXRP-FM) in New York. The rumors at radio-info.com include that the LMA of a station in Los Angeles (currently being run by a company from Mexico) could also be in play.
Randy Michaels was CEO of Jacor when it acquired a company called Premiere Radio, who owned the contract with Rush Limbaugh, and later Glenn Beck. The rumor is that this new company is going to change one station in Chicago, one in New York and possibly the one in Los Angeles to news/talk and/or All News stations. The three stations will sell for about $130 million, but that’s a little misleading as Emmis will be part owner of the new company, with a Chicago based private equity firm providing most of the cash.
In New York, CBS runs two all-news stations WCBS and WINS, both of which make a ton of money. WABC-AM owns news/talk and the folks in Connecticut run WOR-AM as if it is a small town station. The Left and Soros folks cheered when they put enough pressure on WOR (it probably didn’t take much) to get rid of Glenn Beck, leaving him again with no “clearance” in New York.
For reasons nobody has been willing to volunteer, Glenn Beck is not on any of the former ABC radio stations that dominate the major news/talk markets on AM – perhaps he some something anti-Disney to Roy Disney 20 years ago…. (as of late Beck has been sucking up to Walt Disney as his inspiration when he isn’t talking about his trip to Israel)
In a couple months, the purchase of ABC/Citadel by Cumulus should be complete and big changes should start to happen – most likely Cumulus will start cutting costs like local programming. If the rumors are true that WRXP-FM is going to News/Talk, then Beck goes from zero stations wanting to carry his show to probably two fighting over him in the #1 market.