Life at corporate radio headquarters is looking a bit sour these days. The glum faces on corporate executives is because fewer dollars are coming in the door and the cost of financing the collective debt incurred by the radio giants is increasing. Its fall out from tighter borrowing policies by bank and the higher interest rates they charge as the result of the sub-prime crisis.

Fewer dollars in the door accompanied by more dollars required for servicing what radio groups already owe means that costs of day-to-day operations are again being closely looked at. Most likely managers, already operating with small staffs, will be told to cut essential personnel. Promotions, and on air are the likely choice. VT will become a bigger factor than it already is. The ugly part of this means somebody has to go. Those with fat on-air contracts will be expected to do more. Producers will not be part of a morning show. The same amount of work will be done by fewer staff members.

Share holders must be satisfied with their return on investment. But, it doesn't seem to be part of their fiscal future.

Here is the basis for my prediction:


NEW YORK (AP) -- A Citi Investment Research analyst said Thursday (7/10/08) that radio stocks will fall as advertising revenue continues to decline and lending and credit pressures increase.

Tony Wible said industry revenue will fall about 5 percent in 2008 as advertisers spend less, meanwhile companies face larger amounts of debt as interest rates rise and credit conditions remain difficult.

Wible thinks the sector's stocks are expensive and expects Wall Street to trim its targets. He downgraded Cox Radio Inc. and Entercom Communications Corp. to "Sell" from "Hold," lowering his price target on both companies, along with "Sell"-rated Citadel Broadcasting.

The analyst said radio ad spending fell about 5 percent per month from January to May, and because radio is a "secondary media buy," the industry is likely to feel a strong impact from decreased advertising spending.


Wible cut his target on Bala Cynwyd, Pa.-based Entercom to $5 per share from $9.75, and his target on Atlanta-based Cox to $8.50 per share from $12.50. He reduced his target price for Citadel went to 50 cents per share from 75 cents.

Entercom and Cox Communications did not immediately return calls seeking comment

Coincidence that CC decides to go private?

IMHO, private is a really great move right now.

If the right kinds of investments are to be made, they are going to have to be the kind that take more than a quarter or two to realize.

Wall Street does a lot of harm with it's quarter over quarter growth and revenue expectations.

Probably the single biggest contributor to the "Innovators Dilemma", where an established company suffers huge because the need to realize current revenue is not properly balanced with those investments required to realize future revenue.

So, some little guy does it, produces something disruptive and kicks their ass. These days, the bigger players make solid use of attorneys and litigation to keep that from happening, rather than spend those same dollars actually adding value instead of preserving their perception of "value and or revenue entitlements".

Wall Street has become a government of its own, taking on " Nation status ". We might as well cede them a portion of the US so they can become the North American version of Switzerland !

Radio , unfortunately , wont be bailed out like what is likely to happen to Fannie Mae/Freddie Mae.

I don't think it needs to be.

The existing infrastructure has a lot of value. Somebody will put it to use. If they want good returns, they will do those things necessary to make it relevant and potent.

And everybody wants those returns, meaning I think the right things will happen, but only after all the easy, low cost things have tried and failed.