Loss Of Trust: How Citadel Media Just Raped Radio

A message from Radio Ink Publisher Eric Rhoads

Before I begin: In the interest of full disclosure, Citadel Media (formerly ABC Radio Networks) is an advertiser of Radio Ink.

Imagine, if you will, that your local radio station has spent 15 years and loads of money establishing a local personality. We all know that the personal connection to the talent on our radio stations is one of the most important assets we have. Radio's value is not its signal or its tower. The value comes from the relationship we have with our listeners.

Our Worst Nightmare
When I was a programming consultant, our worst nightmare was having to find a way to take audience away from a heritage air talent who had a lifetime relationship with the listeners. We knew that if we could get that talent to jump ship, there was often more loyalty to the talent than to the radio station itself. If we could take the two or three most established personalities and move them to our station, we could have a much more successful start -up and destroy a competitor. If we couldn't get them to come to us, we would look for ways to get them hired out of the market. That's how important a strong local talent can be.

Sounding Local
Today, thousands of radio stations around the country rely on radio network feeds of formats and talent. The big sell is that you cannot afford to hire personalities this good in most small towns. Technology has become so flawless that local listeners most of the time don't know that a talent is voicetracked or coming from a satellite network. The ability to sound local has improved significantly. Therefore, to the local listeners, the talent they are hearing is local talent.

Sleight of Hand
Last night we received a press release about how Citadel Media had shifted some talent around. What the spin didn't indicate is that these changes were because of a bloodbath of network talent firings. Today my phone has been ringing off the hook from affiliates who are either immediately canceling their Citadel contracts or talking to alternative providers with the intent of canceling. Why? As one local manager I spoke with said, "Our stations success has been built around two air personalities who have been on our air for 15 years. Suddenly, they have been replaced. Our listeners don't know these are satellite guys. They are local as far as they are concerned."

Destroying Hundreds of Stations
Imagine the impact of this decision, which was economically driven. This casual decision to remove some high-priced talent on several formats is disrupting the competitive advantage on hundreds of radio stations in one fell swoop. One format alone may have several hundred stations that had built their entire businesses around those personalities over decades. Their competitors are popping open the champagne because the toughest talent to beat just got replaced by people who don't have a bond with listeners. Of course, doing this across several formats could destroy (yes, destroy) the businesses of hundreds and perhaps thousands of radio stations. All to save a little money on highly paid talent.

Self-Destruction
This cost-saving move, which corporate executives may see as harmless, could result in loss of ALL of their format affiliates. Citadel Media's competitors are on the phone today with every affiliate. In fact, while I was talking to one manager today, he received a call from Dial Global.

Killing Trust
Look, I would not want the debt, the pressure, the bankruptcy Citadel may be facing soon. And I too would be looking to save as much money as possible. I wouldn't want to be in their shoes (though I'll be one step closer when they cancel their advertising because of this missive). But don't make material changes that kill the trust of your customers.

If you want to do it at your own radio stations and risk losing audience and revenue, so be it. But today millions of radio listeners woke up to new talent, wondering where the people who have been their friends for decades have gone. Radio owners across America just lost their heritage brands, and that has to severely impact their business. Advertisers have talent loyalties too, and this move could kill these affiliates.

How Dare You?
Where is Citadel Media's loyalty to its affiliates? Without them, they have no business. How can affiliates trust Citadel Media now, when they've raped the airwaves in hundreds of markets that built their business on the heritage brands and air talent? Farid, how dare you treat your customers like this?

Broken Eggs
Corporate responsibility must go beyond financial responsibility to shareholders. Thousands of affiliate radio stations had all their eggs in the Citadel Media basket, and those eggs were broken over a decision to make the next quarter look a little better. The ironic thing is that this move will worsen shareholder value because of affiliates jumping ship, knowing they can never trust the company again.

Undo This Decision
If Farid Suleman were savvy, he'd call all those fired talent back, apologize to his affiliates, tell them this was a terrible error in judgment and that he did not realize the negative impact to his affiliates. This, and only this, will save his format business and might prevent a class action lawsuit.

Revenue Lost
I don't make a habit of cutting my own throat. I know I'll never see another advertising dime from Citadel Media. I know Farid will probably decide not to make his annual appearance on the group heads' panel at our Forecast conference. I don't care. I'm livid, and someone has to speak up and defend these radio stations, even at the expense of losing a substantial advertiser.

Hundreds of radio stations may be destroyed over this, millions of dollars in advertising may be lost, entire businesses may be destroyed because of this decision, which could impact the incomes of hundreds or thousands of radio station owners. This decision was simply irresponsible.

Best,
Eric Rhoads
Radio Ink

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Comments

[Eric MGladwell]

Gosh, maybe Eric finally grew a pair... Took him long enough while sucking up to the very forces destroying our industry!

What next? Maybe he should reconsider having a CBS executive at the top of his conference..

Oops!

Haven't they consolidated us to death as well?

[Mike Wilson]

Eric,

Very well said. Thanks for consistantly putting the industry and it's interests first. Many things that look good on paper are a disaster when you step back and view the totality of the decision.

Regards,

Mike Wilson
President and COO
Bicoastal Media LLC

[Tony Hernandez]

Kudos to you Eric. That took real BALLS.

[Reuben Scott]

Finally, finally finally - one industry publication has the guts to write the truth. For years, radio media has been quoting their ideas as if they had a clue. Asking the Mays', Dickey's and Suleman's of radio how to succeed is like asking the Chicago Cubs how to win the World Series.

[Rick Segers]

Thanks for saying something that very much needed to be said. I was victimized when ABC owned the shop and they pulled the plug on a format we had that was very successful for us. We were in mid-contract...

[Harry]

Good job. It takes courage as a publisher to speak the truth to powerful advertisers. I know. But it's the right thing to do. Well done.

[James Steele]

AMEN!!! My email to Citadel this morning was slightly more blunt and too the point, if you get my drift.

[Gary L. Glaenzer]

Well said, Eric

VERY well said

Thank you

[Tom Taggart]

Add a bankruptcy in first quarter (as all but predicted by even Citadel management) and this will be pretty much the end of these networks--unless they are sold to someone else first.

[Hal Widsten]

Eric,

After all the stuff you've written that really made me angry, you have finally told it like it is. Thank you.

[Phil]

Great editorial! The "Four Evil C's of Broadcasting" are seeing one of their ilk begin to totally collapse. I feel for the 'Timeless' affiliates who just got screwed, and for the talent getting equally screwed. It never ceases to amaze and sadden me the way radio is just going away.

[Barry Cohen]

Eric,
Thanks so much for standing up and telling the truth about the travesty at Citadel Radio. Consolidation and the "Wallstreeting of Radio" has relegated the needs of listeners and advertisers to the bottom, while placing shareholders and investors at the top. This scenario has resulted in gutting radio product, which serves no one. Let's hope that the investment capital begins to flow--to the smaller group and independent operators that are and always were committed to live and local radio. As for the Farid Sulemans of the world, we can only hope that the shareholders will pressure the Board into firing them. What was a $10. a share company when he took over is now a seven cent a share company. Keep telling the truth--no matter how ugly it gets.
Barry Cohen
AdLab Media

[Bob Gordon]

Great article! From a guy who got the shaft from Citadel after giving them 17 years of service!
(33 years if you count working for stations they later bought!)

[James]

To be honest, I usually don't read the thousands of radio news emails that I get in every day. Today this popped into my email and it was the only one that I read. Great headline.
We were "raped" by the Citadel scam a few years ago. They talked our owners into firing have of our popular morning show staff that was carrying the whole station. ALL of the money was because of the morning show. They placed some watered down generic morning show from ABC and lost half of the revenue.
We're a small station and 60 thousand a month is pretty good right here. We lost about 40 thousand of that right off the bat. But to the higher ups, it was ok because we were saving on two salaries using Citadel. I DON'T THINK THESE TWO SALARIES TOTALED 40 THOUSAND A MONTH!

Thank you Eric for standing up for the small guys!

[Jon Jaxon]

It's not just Citadel. It's the entire concept of corporate radio. With large corporations dominating the industry, this was only a matter of time. I was part of the big Clear Channel cut and I'm still looking for a decent gig. I had been with that station nearly 18 years. There just is not enough revenue in radio to support upper management and stockholders. Radio can only be successful if it is local.

[Bob Lobdell]

As of today, Citadel stock is worth one one-hundredth of its value on the day it acquired the ABC properties from Disney. They have been on a path of destruction from Day 1.

[Miami Chris]

"Imagine the impact of this decision, which was economically driven."

That's all that matters.

I also find it "funny" how the local affiliate can complain, "Our stations success has been built around two air personalities who have been on our air for 15 years. Suddenly, they have been replaced. Our listeners don't know these are satellite guys. They are local as far as they are concerned."

Hey, you foisted this deception on your own listeners based on an "economic decision" and now you're stuck by someone else's economic decision.

[Bobby Rich]

Thank you Eric for your continued support of the "show" and the"business" of broadcasting. You speak your mind and I've never minded hearing it.

[Jim Brady]

Great piece Eric. These corporate pirates are killing radio at an even faster pace than I could have ever imagine. After 38 years in the business, I look at what I see going on and its like watching your daughter marry the really bad boyfriend. Citadel can go straight to hell, and they can drag Clear Channel down along with them.

[Art Morris]

Eric is like the rest of us. Watching our industry collapsing around us, watching thousands of jobs lost, watching advertising revenue dropping like a rock. And, I'm sure he's looking at the future of his publication. As radio collapses, what's left to write about?
It's going to take an almost total collapse of station values, before smaller, more innovative people get back in.
When we de-coupled revenue from programming, it was just a matter of time. I've been screaming about it for years. Many other have, too.
The time to pay the piper is here. Eric sees his own future going down the tubes with ours. It's time for ALL of us to stand up for our beloved business, before we're as anachronistic as buggy whips.

[Linda Jones]

I can't begin to tell you the shock of receiving a memo from Citadel Media yesterday afternoon firing the on air talent of fifteen years or more. I have three formats and they are pretty much all affected. It is as you said listeners think the talent is local so it appears as if I let them go. When I called to ask about what was going on and about liners I was told they didn't know at this point what they were going to do and to please try and work with them. This weekend we will be working to replace those liners with local events,ect. What Citadel Media did was unforgiveable and not good for the affilites. In closing I have always felt that Citadel Media did not understand the principle of how small market radio and satellite radio work hand in hand and this action by their management proved it.

[Bryan K. Fowler]

Very well said. Imagine this...rebranding a station, new signage, business cards, website, jingles, imaging over 1,000 total pieces of new audio for "Timeless" over the last few weeks to have engineers come in next week and install the feed.... and last night found out "Timeless" won't exist. I am extremely aggravated. I never got the station on the air!!

Oh, by the way---here is the now USELESS website: http://1080amtheriver.com

[Mark Heller]

First to the posters. Bankruptcy is sooner, not later. The announcers let go, would have been in worse shape in the trades, had it happened between Thanksgiving and Christmas, and we all know that. All of you posters, seem to be married to the 'plastic voice on your dashboard'. The going rate for a part-time announcer at brand D-G in Valencia is something like $25.41 an hour! Paul Harvey is dead, and Hannity jumped ship.
That was the 'bread and butter' of ABC Radio - now Citadel Media. I'm on a format with one jock, and he has 60 affiliates. Tough to sell network spots for a 60 station syndicate. You 'Timeless' guys can look up www.johnrook.com and get your fill at their new format...BUT, you might have to throw a couple hundred their way every month! I'm certainly not standing up for Farid and Judy Ellis, but they have to make business decisions they can live with. If the agencies aren't buying 55+, why maintain a network for per-inquiry ads? Watch Fox News Channel and count the per-inquiry ads there. Their age groups match this format. I heard all these arguments, and they were just this strong, when 'Elevator Music' or 'Beautiful Music' vaporized from FM stereo, too. Anyone remember Schulke music?

Second point to Eric, that your Citadel advertising would be over in 30 days regardless of what you said. They just don't have the funds for external promotion any more. As a friend who was an insider on Montfort Drive told me two years ago, 'this is the story of the minnow who swallowed the whale'...and the indigestion killed Citadel Media.

[cross]

Look buddy, don't use the word rape like that. Very low class. Just to get people to notice your rant? Get off your high horse long enough to see what you aren't seeing.

[Charles]

Cross, why on earth is using "rape" low class? He doesn't mean actual rape, it's a euphemism for what Citadel has done. And what isn't Eric seeing? He's sticking up for local radio, and I think local radio will make a comeback when radio "unconsolidates". The Clear Channel rollup of the 90s is going in reverse. Public company execs make money when they either buy things or sell things, never the status quo. So now they're selling things. This is the new reality and it's probably a good thing. Local is back in.

[Trevor Calder]

Tragic. A great opportunity exists for those broadcasters in each of the CM markets...for god's sake take it.
Good Stuff ER.

[Marshall Johnson, Sr. - Pres. CBCM, Inc.]

Eric,

Bravo for your brave and forthright view of the truth.

When the Citadel Affiliate V.P. left a short time ago, I knew something was up. He knew ahead of time it was going to hit the fan. This money situation being experienced by Citadel is not an overnight surprise. The powers-that-be have been wishing and hoping the economy would improve. Question: Do Managers in small markets operate on a wish and a hope? No, they problem solve on the fly. They use what they have for resources and circle the wagons and join the fight.

Farid, is trying to fly his jumbo jet sized corporation like a small, local, mom & pop single engine aircraft/station. Well, Farid, too little, too late. Fire this clown, reorganize the debt or sell the company to someone with the balls and creativity to be in the radio business.

Integrity with our listeners, our advertisers and our communities should remain our greatest asset. If Citadel is unable to participate in that partnership with honesty and integrity, its time for them to leave the industry, permanently.

[john spencer]

When Citadel files for bankruptcy they'll use this as proof they've been willing to make the tough choices to put their financial house in order. Perhaps then the court won't make them sell off properties or remove Farid. Hopefully someone tells the bankruptcy judge that it was Citadels custumers and those 27 dismissed employees that made the sacrifices. They are the ones facing the toughest decisions. Not Farid.

And Eric, as you choose your words, remember there are still people who work on Montfort. They're badly hurting over losing friends, their collegues and the dismantaling of their formats. These are good and talented people who will be doing all they can with whats left. They're paying the price for Farid's mismanagement too.

[walter@hitviews.com]

No broadcaster would be in this position if banks didn't fund them on their terms.

No CEO takes joy in cutting heads or services. They don't.

They do it to meet their banking terms. Revenue down 20 percent, cut costs 20% and avoid bankruptcy which would cut everyone and negate all contracts.

The problem is in the lie of the 5th year. When you go to a VC for money, they look at how high is up. They look at the 4th and 5th year for the return on their money. The reason I never owned any radio stations is that I put together business plans that showed truthful projections with reasonable growth. I was told, repeatedly to raise the 4th and 5th year. I wouldn't, it was a lie. I didn't get the stations. But my projections turned out to be true.

No I'm not saying others lied, I'm saying what happened to me.

[Daniel J Duman]

Eric:
Right on. The bigger story is that this is just an additional symptom of the same problem the industry has been struggling with. It has lost sight that first and foremost - its about the consumer (listener) and two - its all about content. In the post dereg world, content has become secondary to profits and streamlining. In addition, we have failed as an industry to deliver the content anyway the consumer wants it. We have been asleep at the switch as the technology continues to change and it is no accident that XM and Sirius were developed at all - the classis overbuild and discontent with the industry.
The industry is screaming for an advocate that understands and appreciates the long term and is willing to put the rabbit ears in the closet. Its all about the franchise and the brand that we have spent millions to create.
Daniel J Duman
York Street Partners

[Rex Williams]

Took some guts go after a major advertiser like that. Hopefully Citadel snaps out of their short-term, myopic thinking and considers the bigger picture.

[Helen Johnston]

Hello, Mr. Rhoades and thanks for this article. I'm just a radio listener and this gave me a bit of insight into what's happened at Classic Hits Radio. It still has its format, but Citadel got rid of 2 of their best DJs/personalities, replacing Mike Preston - my favorite. I'm going to tune my radios to other stations now, and also will try to find out if Mike is on another syndicated station that I can receive. Citadel is delusional if they think these crazy decisions will help the almighty "bottom line".