The industry trades were abuzz with news about Bob Pittman’s big soiree at Cannes, featuring A-list guests as well as heavy hitters from the advertising industry. No, I was not on the list, but Mariah Carey (who performed) and Shaun White (who did not) were reportedly in attendance.
Clear Channel bashers may take the opportunity to criticize this kind of high-priced social networking. Some might even calculate how many lost radio jobs might be restored for the cost of the hors d’oeuvres and place settings. Others might wonder why these same funds aren’t being used to throw some marketing dollars at some of the company’s premier stations.
But that misses the point, because as we have learned first-hand at events like CES, the radio industry is often in the background or not even present at big media gatherings, often to its own detriment. As we at Jacobs Media have also seen first-hand these past few years, showing up where radio and advertising people congregate, connect, and yes, even party can forge new relationships and identify new opportunities. Yes, a lot of business is done in conference rooms, but as has been the case throughout the history of radio, socializing is very much a part of the mix, too.
Pittman’s partying also reminds me of several comments we received about last week’s “Power of One” blog that started out as a piece about Nielsen’s issues with the L.A. PPM, but moved into a conversation about radio’s tepid sales efforts in the “comments” section of the blog.
While some advocated for radio to take more of an automated approach to selling (because that is where the world is moving), others pointed out that the personal touch continues to play an important role in making connections, telling stories, and positioning brands in an environment where advertisers are often more confused than we are.
We have all been to backyard barbeques and parent-teacher nights where regular folks comment – or lament – about the beaten down state of radio. Connecting with advertisers and reminding them that the venerable medium of broadcast radio is very much alive, vital, and moving products and services is something that needs to happen at every formal and informal gathering we attend.
Say what you will about corporate radio and extravagant parties, but the need for radio to get on more front burners is critical at this point in time. Pittman’s arrival at Clear Channel has signaled a higher profile for radio at precisely the time when other media outlets are vying for above-the-fold presence.
There’s also something to say for going big or going home. You no doubt noted that this party was in Cannes – not in Lake of the Ozarks.
And as we have advocated before on this blog, we would love to see The Radio Show stake out bigger turf for the same reason. With all respect to markets like Orlando and Indianapolis, holding radio’s biggest conference in New York City or L.A. opens the doors to a bigger stage. Yes, it costs more to stage an event in the nation’s largest markets, but that’s where the movers and shakers live, especially in the advertising and media industries. I’m betting Pittman just might throw a party at The Radio Show in either of those major markets.
In a Wall Street Journal article about the aforementioned Cannes party, the VP of global media at Mondelez International, Bonin Bough, remarked about Clear Channel, “They are on my radar now.” USA Today also covered this event, underscoring that whether it was an over the top party or not, top of mind awareness for an industry that has taken its share of lumps is important. Someone has to throw their weight around.
Party on, Bob.
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Another amusing article to add to the mix:
Clear Channel boss renovates office with ‘mist tunnel’:
https://pagesix.com/2014/03/19/clear-channel-boss-renovates-office-with-mist-tunnel/
This ‘partying’ lifestyle for a company in horrid financial shape and one that is axing employees left and right, doesn’t actually send a positive message to investors or workers. What are your thoughts?
Alan, I think it works both ways. It is important to showcase radio and its bigness. NPR took all sorts of hits with its new building last year, that featured a chef and another amenities designed to make an attractive space for employees. If we’re going to attract Millennials to the radio industry, environment matters. Of course, content does, too. And that’s an area where radio needs to be developing more compelling programming.
But to be attractive to advertisers also means staying top-of-mind in their world. Every company’s balance sheet can be criticized – especially from the outside. Radio needs to get some “cool” back. How it does it is always going to up for debate.
Thanks for raising these questions.
For a company that is estimated to be $21 billion in debt, and has laid off thousands of employees, I’m thinking there might be better ways to attract ‘Millennials’ into making Clear Channel a workplace of choice than a mist tunnel for the CEO. But then again I’m not Bain Capital either…
Nor am I and while paying off that debt has to be important in the short term (hey, it’s private equity, right?), the long-term health of any company is predicated on the quality today and in the future of its workforce. Thanks, Alan.
When there isn’t enough money to heat the house, kids aren’t impressed when their parents go on an awesome vacation. Its doubtful that Millennials are any more drawn to Clear Channel when its CEO takes his private jet to Cannes.
First, lets address the financials. According to the trades, CC owes over 20 billion, had a 2 billion balloon payment due in 2016 and generates just enough operating cash to service its debt. That means that CC has no long term future. $2 billion won’t appear out of thin air, meaning that there is a near certain bankruptcy coming when they can’t make the payment. It will likely be spun as a reorganization, but the current equity holders will end up with a few cents on the dollar and possibly some additional sweat equity. Mr. Pittman literally paid for his party with his employer’s equity.
As for attracting Millennials, how does spending millions of a private jet and literally partying like a rock star in a culture where the only real constant is job elimination attract Millennials? When current based stations in top ten markets at CC don’t have any music research is this really the best use of precious cash? Particularly given the “regionalization” sales strategy that pretty much ties all revenue to ratings. One share point in a $100 market is at least theoretically worth $1 million.
Assuming that the total cost of his first class gallivanting is $5 million annually, what if half of it was spent on research and the other half on business development? Two and a half million could set up several teams of people who have spent their careers deciding media mixes at agencies to go out and influence those decisions now. Is it really possible that what hes doing with that money is a better investment than that…for a company that will cease to exist in its current form in two years? No, it wouldn’t save the company, but it might save some equity for the people he works for and even himself.
I get the go big or go home concept and generally agree. But this seems more like Jackie O when she found out her cancer was terminal and started eating two desserts – it was her life, but this isn’t Bob Pittman’s company. CC is a terminally ill company and he’s liquidating what assets remain to finance his multinational party. Shame on him!
I totally “get” the logic, but I’m not sure that any of us are in a position to judge the best ways for any company that we only know from the outside to spend its money. That’s why when the story first came out and I read the bashing comments, it just seemed like the typical knee-jerk reaction anytime this company does something – especially something that appears to be extravagant. Would Pittman rather party with Mariah Carey or spend a quiet night at home with his family? Is this money better spent on R&D or on propping up the company’s (or the industry’s) standing and image. We are not privy to the master plan, but given radio’s flagging reputation often at the expense of its new competitors, showing the world that radio still has a cool factor and can frankly throw a good party may not be so crazy after all.
I respect your POV on this (and frankly thought I’d hear from several others disagreeing with me). Appreciate you taking the time to opine.
I doubt that this did anything to prop up the company’s image. Who knew besides the stars and the trades? And how will either of them impact CC’s present of future in any way that matters.
Seems like nothing more than a case of Bob fiddling while CC burns. Point of info – CC being in the debt laden state its in is not Pittman’s fault – not even a little. Though he didn’t dig the hole, its his job to find a way out and partying in Cannes probably isn’t it.
Hard to say, Bob, what moves the needle in the agency world. And lavish spending on parties may not have a clear ROI. But again, thinking and acting big has also been a key element for iHeartRadio, too.
I can’t applaud or condemn. Clear Channel is a desperate company and it needs to do something to ignite top line growth in a business we all know has stagnated.
It might be a bad look from the trenches on main street – but I’m sure those invited from Advertising’s executive suites had an exceptional time. Just look at it as another “value add” for big customers – albeit with few more zeros on the tab.
I don’t think it does anything to make Radio look sexier to anyone that wasn’t there. When people go to their local station there won’t be mist tunnels, Mariah Carey – or even human occupied radio studios in many cases.
Also, let’s not forget – this didn’t happen behind the back of financial puppet masters Bain & Lee. They sign every check. It’s part of the plan.
Jeff, I support that logic. Who is to say what expenditures and activities are most likely to move the needle or change minds? I know this is a tough topic for people who have lost their jobs with the company or who are just squeezing by. Thanks for the comment.
The only (ONLY) thing I liked about Stern’s content in the pre satellite era was that he brought broadcasting back to media forefront. I liked him as a jock from WWWW to WNBC and like him again as the kinder AGT judge.
Somewhere along the line I liked Randy Michaels also, but I may have misheard that one.
P.S. I thoroughly enjoy Jerry’s and your comments
Bobby, you are correct that you have to look past the cult of these personalities to get a sense about what they truly bring to this industry (even Randy). Thanks for chiming in on this one.
Totally agree with you on this one, Fred. You can’t bash radio for not being “cool” AND bash Pittman for trying. Radio needs to be in these conversations and present at these kinds of events to stay relevant to buyers. If radio isn’t relevant to buyers, it isn’t relevant.
Thanks, Tom. That was my “take,” even though it is radio-bashing fashionable to take shots at corporate radio and the people who run it. I’ve had enough conversations with advertisers, people in the tech industry, and just plain consumers over the past several years to know there’s a need for perceptual rehab for radio. Of course there’s a lot more to it than that, but it’s part of what needs to be done. Appreciate you taking the time.
First lets look at where Bob has taken Clear Channel in the past 5 years and ask some simple questions:
Has the company become profitable?
Has the debt load been paid down?
Does moving HQ to NY from San Antonio make tax sense?
Does outsourcing the helpdesk to Mexico City help employees?
Now lets look at some facts, some from SEC filings.
Did Bob just get the company to pay for half of the $750K refurbishment of his jet that his company leases back to CC even though the company has 2 others?
Have thousands of employees been laid off since his arrival?
Did he spend 20 million on the NY offices for refurbishment and a mist tunnel?
Does he have a golden parachute that pays him well even if he fails miserably?
Has the company debt actually increased under his leadership and revenue
fall?
Have many local morning shows been replaced in the last year with ones from larger markets?
Did C bond holders sue and settle out of court when they pushed back debt last year?
Do the interest payments alone on the debt exceed $1.5 million PER DAY?
These are simple questions that have very simple answers but NO ONE in the media ever seems to ask him about them or the affect they have on both local radio and their employees.
The whole way he manages the company reminds me of how Skilling and Lay ran theirs and we all know how that turned out.
Bob, I cannot answer many of your questions because so much of how companies truly operate and make the decisions they make are hidden to us. I know this first-hand with some of the stations and companies we consult. To the outside world, there is an impression that often doesn’t reflect the reality that no one knows about. Even though Clear Channel, Cumulus, CBS, and other are publicly held companies, what goes on in the board room, on the company jet, and even on the cluster level are things that we can only conjecture about. We don’t know.
Have a lot of jobs been lost along the way? No doubt. But to the extent that jobs have been saved locally is something we’ll never know. As it relates to local morning shows that have lost their jobs, doesn’t that present opportunities for other broadcasters in the market to capitalize on this downsizing activity. If a show is truly good and can make ratings and revenue, it will find its way back on the air, doing battle with Seacrest, Limbaugh, and NASH.
The point of the blog was to focus on radio’s image and place in the advertising community. It has slipped a great deal over the years, even though consumption is still healthy. Sadly, revenue is not commensurate with usage, and that’s precisely what Pittman’s efforts are designed to accomplish. Whether this is the best use of Clear Channel’s money is Bain’s problem. I simply applaud the effort to better radio’s profile.
Thanks for taking the time to write and for reading our blog.
I think my point was missed, his lavish spending is returning zero ROI for radio’s image in terms of a positive for advertisers and less so for it’s employees, the listening public, and bond holders.
Has all of the Bob hobnobbing done in the last 5 years pushed the company forward at all in terms of image OR revenue?
I would be the last one to argue with you if it did as my job depends on the company being successful long term.
Replacing established morning shows with canned corporate content doesn’t a ray of positive light for radio or the advertisers. I can speak first hand we lost our 2 morning show that the calls and emails were enormously negative. When national shows replaced them the rates went up and the local mentions small business loved to buy were gone. This didn’t happen in just one market, it happened in many so my question is how does alienating loyal P1’s relate to a positive image for advertisers?
This isn’t pushing a positive image to anyone other than a bean counter who doesn’t look past the numbers and is oblivious to long term market viability.
I have seen successful sellers with over 15 years let go in favor of young sellers with no experience to work for a few commission points less. At the same time I have also seen these long term accounts reduce their spending because they don’t have an experienced AE handling their accounts.
When regionals are forced to carry Premiere content and their spots they’re not allowed to run any national fed spots that feature the same advertiser even if there is good separation. Who wins there? The advertiser gets less exposure and the local station loses their share of the national spot and forced to make good later. Since national make goods have priority this often equates to a local advertiser getting bumped into a day part that doesn’t help them or buried in a long spot block.
With plans of selling radio tower sites and towers to reduce debt also makes no sense in the face of a nearing 21 billion dollar liability. Even if the sale of such sites were to be wildly successful the amount raised wouldn’t dent the debt, plus local markets would lose revenue streams on towers that they own from Verizon, Sprint, and others lease space.
All of this info is publically available to those willing to dig.
His actions parallel those Marie Antoinette or the Roman decadence during the collapse but just like these it won’t stop or change the fact that he’s failing miserably.
You can paint this picture as rosy as you’d like as an outsider and I won’t fault you for that, but as a guy in the trenches of this mismanaged behemoth I respectfully disagree with your view.
I am an outsider, but like many in radio, I’ve been touched by Clear Channel as well. Our company lost 23 stations (SFX and Capstar) when the Clear Channel deal closed. But that’s not the point – how any of us have been personally or even professionally impacted by the company isn’t where I was going here.
The blog was about Pittman’s quest to build up radio’s image and presence in the ad community – nothing more or less. It was not a referendum on how the company conducts itself. That’s not my place, I don’t have the knowledge, and even though (as you suggest) much of it is publically available, there is always more to the story than the data we read.
And please don’t take this as crass or cold because it is not intended to be that way. While I feel for people who are trapped in their jobs or working for companies they find distasteful, I also believe there are options. We may be entering a period where owner diversity is growing again. If you wish to work for a company that believes in live talent and strong local sales, you can talk to Peter Smyth, Larry Wilson, Ginny Morris, and many others. There are many different operating philosophies right now in radio, and I encourage those so motivated to pursue companies that are simpatico with your values and skillsets.
I truly appreciate the comment, and the heartfelt feeling behind it. Thanks for taking the time and for adding another viewpoint to the mix. That’s why I love doing this blog.
Let’s stipulate Woody Allen was correct in saying “80 percent of success is showing up.” Shouldn’t the nation’s largest radio company have some kind of presence, visibility at the world’s largest annual gathering of advertising and marketing professionals? Seems appropriate, savvy to make a showing at an event which attracts Sir Martin Sorrell and others of his orbit – advertising’s most influential and powerful decision makers.
Radio’s next opportunity to connect with these leaders happens in 89 days at Advertising Week in New York. It’s a safe wager the cool kids will be there and it’s a smart move for Radio’s leadership to be involved, visible.
Going all in with you, Fred. Thanks for taking a stand.
Most appreciated, Dave. Clearly this level of “showing up” was lavish but when in Rome…or Cannes, radio needs to be represented at the highest levels. Thanks again.
Let’s hear from one who has been downsized…cleverly re-budgeted…err fired from Clear Channel.
This is a company that is drowning in its own debt from poor choices made long before Bob walked into the building. They have to try something to get on advertisers radars… I’m lost on the drama here.
If this was a football team, it’s 3rd & 23 deep in their own territory. Have you ever written out the debt that that company has on a sheet of paper? It’s a very big number and he has an awful lot of networking that he needs to do if that number is to get smaller.
Sadly short cuts will be taken, and probably for the wrong reasons but ultimately that’s their decision to make. The real story here might be other companies follow this groups lead on decisions and choices they make for their company based on what Clear Channel is doing.
I don’t see a huge deal in what Bob did/does/is doing here Fred.
Lenny, my point exactly. I know there is a lot of emotion from those who have been fired along the way, but that’s not what this post was about. It’s difficult for people whose lives have been impacted to put aside the vitriol and compartmentalize these attempts to move the needle among the advertising industry. This is not about Clear Channel’s debt, programming strategies, or network/syndicated programming. It IS about elevating broadcast radio’s position among those who spend their money on behalf of their client. Thanks for taking the time to comment.
I get what you are going for but the perception is that he’s about the party over elevating radio’s position.
I get where you are going, too. And it’s hard to say where the priorities truly are. It is about the end result – is the perception of radio’s viability as a media player heightened as a result of this expensive “social networking?”
3rd and long is not the time to deploy limited resources on team paid refurbs of wealthy CEO’s personal property or international partying. I’m all for improving radio’s image and making it hipper. I don’t see how just showing up and hobnobbing with the stars really does that. Take the total tab for that trip and apply it to specifically improving radio’s image and I’m sure that the net result would be more impactful than this foray into star-you-know-whating.
What if this was the Lions or the Tigers, they had just enough money to get one really good free agent and the CEO spent the money “improving the teams image” by partying half a world away instaed? Would folks be taking the same “you never know what goes on behind closed doors at the boardroom…who are we to judge what we don’t know” position? I doubt it
And its perfectly legit to look at publicly available numbers and parse them and activities related to them. Consultants and pundits do it all day long. The bottom line for me is twofold – 1) I don’t agree that anything was done that improved radio’s image. Neither did his office refurb – but I’ll bet some much needed cap-x at some of their properties might. I wonder how the CC cap-x budget compares to the CEO’s T+E line. Where do dollars spent do more to enhance radio’s image? Or how about marketing? Does anyone really think that marketing dollars equal to this trip cost focused on radio’s image wouldn’t impact it more than this party? 2) If anyone’s nieces and nephews were running round in shoes with holes in them and their parents took a lavish trip to Europe to enhance their image, my guess is there would be more universal judgement here.
When its third and long, and your resources are limited, you conserve those resources and apply them to players and coaches…
Bob, the opinion you express is not that different in substance from what I’ve heard from several people who believe that Clear Channel is blowing it on fancy parties. Conversely, given radio’s flagging image in the agency community, I also talked with others who totally “get” what these parties are designed to accomplish. During tough times, deploying dollars is a challenge and it gets increasingly difficult to know where to spend, given the numerous needs.
I am not buying the sports analogy. That industry is in good shape, assuming you field a decent team. Radio is truly suffering from image problems in the ad community even when the product and the ratings are solid.
Thanks for contributing to a very interesting conversation.
Did any of the believers ever call on these agencies? Poor social skills didn’t hurt radio’s image at agencies, not adequately assessing and reacting to their clients changing challenges and current needs did and they can’t party their way out of that. There is too much bottom line pressure on agencies for then to make wholesale media shifts because a sixty something CEO flies his jet to various functions.
If radio wants to improve its image at large national agencies, it should hire people who have worked at them to learn their marketing challenges and address them. Give THOSE folks some T+E to get to know the people who really make those decisions and some things could really change.
You couldn’t even party your way onto major business in the 80s and 90s…you sure can’t now.
It didn’t work for Lindsay Lohan either. Thanks, Bob.
Fred,
This article found me somehow, as I do not frequent the trades any longer. Since 2006 my only work radio-wise is on the internet. Having said this, I still listen to Boston radio every day, and I enjoy both of Clear Channels pop stations, Kiss 108 and Jamn 94.5. Your piece here points out the image problems radio is having very well. But the real issues behind the image are perfectly exemplified by the hubris of Clear Channel’s corporate game plan. It’s as if the company were a huge Cadillac, with a flat tire, that Mr. Pittman simply intends to keep driving at top speed. Terms like “bashers” or the pop culture “haters” are used to belittle critics, and many times, ignore the reality. Radio is not being “bashed”, it is hearing a collective frustration, or even the sound of millions of Americans who have left the party altogether – you know, the one where Bob is not interested in the local community or what the listeners might find creative. So while Emerson College phases out radio classes, and hires professionals to go on the air, even the non-commercial landscape has drastically changed. Change is inevitable, but the changes that Clear Channel has championed to dominate ownership across the country have brought blandness and a distinct lack of local connection. Worst of all, these tactics have now been endorsed by the other cluster owners, publicly and privately owned. It’s a nation of empty hallways, with the soul of an insurance company, and the vibe of the registry of motor vehicles.
Tai, well-written and points well taken. At many operations and in many radio companies, the soul has left the building. But I tend to look at the radio industry in much the same way the political world has taken very distinct sides. There are companies and still many stations left – including in Boston – where good radio is being done, it’s locally driven, and programmers and managers have the freedom to create viable products. There aren’t as many of these as there were 10 or 20 years ago, to be sure.
The shifts you speak of – including the college radio morass (and we blogged about WRAS in Atlanta earlier in the week) – may be part of the inevitable impacts of the disruption that’s around us. It’s now an environment where broadcasting companies and student-run radio stations need to adapt to these changes or face dire consequences.
I’m glad you found us, and invite you to contribute when you are so moved. Thanks, Tai.
NOW we have a conversation. Jerry, I seriously did not receive an email from you (maybe you sent it to an old address), but fred@g5j.8ac.myftpupload.com always works). I really tried to come at this from a different angle, and based on the responses I received (here in the blog and in person), there are passionate people on both sides of the fence. I knew where you’d come down on this, of course, because you’re consistent on this topic and on the guy.
I have no personal dog in this hunt, as we do absolutely no work for Clear Channel. And while it’s easy to parse executive salaries and perks – and lavish parties – Pittman has elevated radio’s image since joining Clear Channel, like him or not.
At any rate, you’ll keep doing what you do. I’ll keep doing what I do. And we will respectfully disagree on this one. Thanks, Jerry, for getting on the keyboard and not letting me down.