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Airwaves: March 7, 2008

Citadel Tanks, Cuts

More and more, it appears that being a big player in radio is a bad thing, not only for listeners but for the companies themselves. Clear Channel, for example, spent years buying up other companies and individual stations, only to have the stock price tumble. Similar story with Viacom.

With the ink barely dry on the deal for Citadel's purchase of ABC's radio stations -- making it the third-largest radio station owner behind Clear Channel and Viacom -- the walls started crumbling down. Last Friday the company reported a staggering fourth-quarter loss of $848 million. Citadel had closed on the ABC major-market stations, including KLOS and KABC, June 12th.

The loss is so huge that some observers don't see an out for the company, especially considering that it has no real experience running stations in the major markets. That it could essentially run into the ground, within eight months, profitable former ABC stations that some circles considered the crown jewels of the radio world speaks volumes about the capabilities of current Citadel management led by CEO Farid Suleman. I myself have doubts, considering that no radio company in history has ever cut its way to success.

Yet that's exactly what Suleman and his cronies are doing: cutting. Deeply. Locally, at least 12 positions were cut including KABC's Peter Tilden, KLOS' Mark Isler, and 20-year KLOS assistant programmer Bernard Pendergrass.

More cuts are expected, and KABC is rumored to be working toward dumping their entire weekend schedule in favor of brokered (infomercial) programming. That may fly in Poedunk, Iowa, but this is big-time Los Angeles, and Citadel appears unfit to run here.

Yet that's just the beginning. Citadel stations across the country are dumping personalities, support staff and hosts in a massive cost-cutting effort that should quite completely take the soul out of just about every radio station it owns. Radio needs compelling product to succeed ... Citadel doesn't seem to know this, though you'd think watching it's larger competitors lose listeners over the years as they too cut costs would have caught their attention.

One good thing may come out of this: for the third time, we have conclusive proof that consolidation does not lead to more profitability. It is just too hard to run a huge group of stations profitably when creativity gets tossed out the window. Consolidation made Clear Channel go private. It cost Viacom dearly. Overall it cost listeners more than several legendary stations, and most certainly has limited choice on the part of listeners and advertisers. And now it may totally destroy Citadel.

Indeed, consolidation has brought the entire radio industry to its knees. The real effects, almost all negative, are 180 degrees opposed to what was supposed to happen. It now appears that the winners in all of this will be the smalltime operators and smaller group owners who bucked the trend and can actually market their stations to their local communities. Only one question remains: Is the FCC and Congress taking note?

Birthday Wishes

Go Country 105 turned a year old on February 26th, although Go Country 1260 was on for a couple months prior to the launch on FM. Regardless, happy birthday! G-C is one of my favorite stations.


Copyright © 2008 Richard Wagoner and Los Angeles Newspaper Group.

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