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Monday, June 15, 2009

End of the Line For Clear Channel?

Posted By on Mon, Jun 15, 2009 at 11:05 AM

Davey-D
  • Davey-D

The most recent edition of Davey-D's FNV Newsletter contains a bombshell: according to Jerry Del Colliano of Inside Music Media, "Clear Channel is done." As in, stick a fork in it. As in, Chapter 11 bankruptcy proceedings, probably within the "next six to nine months."

Del Colliano cites several reasons for this: the economy is a major factor, as is the over-leveraged status of most CC stations. "Some stations are actually making money, but not enough to pay down huge corporate debt," he says. He believes that "much or all of Clear Channel will eventually be broken up - sold off to raise as much revenue as possible," noting that "Clear Channel is already acting like there is no tomorrow," by "gutting the stations, cutting every possible expense and using repeater radio content from national syndicators and their network to fill up the airwaves."

Del Colliano is so sure of this eventuality, his blog addresses not only the possibility of Clear Channel's demise--and the possible demise of two other commercial radio chains, Citadel and Cumulus--but what the commercial radio spectrum will look like after this happens, which could be as early as the 4th quarter of 2009.

According to Del Colliano, "Many stations will be returned to the marketplace where eager buyers - those who have radio in their blood - will be ready to put together a group to operate."

But what does this mean for the Bay Area, where Clear Channel owns and operates eight stations, including KMEL, KNEW and WYLD 94.9? Some of us might have dreams of putting together an investment group, buying KMEL and turning it into the "people's station" it was supposed to be.

Not so fast, says Davey-D.

"If CC is done," he said in an email, "me and you won't be able to take a station." Banks will be loathe to extend credit to an already-failing enterprise saddled with huge debt, he says, especially because royalty fees will be added cost on top of that debt. Most stations, he says, "are gonna be surviving by going high-tech"; however, "the costs are already there on the digital side."

The possibility of a buying frenzy resulting in "mini Clear Channels" is possible, Del Colliano says, yet he cautions that "only owners who also know how to build new media businesses - podcasting franchises, new non-terrestrial radio streams, mobile content, capitalize on social networking and new media - will really be set for the future."

The one possible silver lining from a CC bankruptcy, both Davey-D and Del Colliano say, is that building radio back to where it once was will likely necessitate undoing some of the effects of consolidation by increasing local presence in the marketplace, which could in turn be fortuitous for local artists seeking airplay. In other words, keep your fingers crossed. Still, if you're a local artist building your brand without commercial radio's help through social networking sites, digital media, and other similar endeavors, don't stop what you're doing.

(An earlier version of this story mistakenly identified Jerry Del Colianno as being part of  Inside Radio. Del Colliano is the founder of Inside Radio but is not currently affiliated with them.)
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Eric Arnold

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