Posted by chicagomedia.org on August 08, 2008 at 11:07:21:
Citadel's still absorbing ABC Radio - and there's some indigestion.
Starting with the $350 million impairment charge Farid Suleman's taking on the value of the properties he inherited with the Disney deal - and continuing with downbeat news about Reach Media and Paul Harvey. With Paul out for many months due to illness, the revenues from his show have been "trending down, but the good news is, he's back, and we'd expect some of his revenues to come back." As for the Reach Media deal, where ABC's still participating with the Dallas-based operation founded by its onetime personality Tom Joyner - it's "a foregone conclusion we will not renew" the deal that expires in a year. (That's usually not good for sales, in the interim.) Instead, Citadel will focus on pumping up its own assets focused on urban radio, like Michael Baisden and Big Boy's Neighborhood. (If you think about how large a role ABC Radio Networks played in urban radio just 4-5 years ago, with Joyner and Doug Banks and more - it's quite a change.) COO Judy Ellis believes that moving all the former ABC Radio stations under the Katz umbrella with a dedicated 40-person staff for Citadel will make a difference (that began April 1). Farid admits that "this company has really under-performed the industry, particularly in the largest markets", and some turnarounds in medium markets like New Orleans and Boise are taking longer than expected.
Farid Suleman's pushing for more cash flow - and more 18-49 women.
The other indigestion complaint Citadel could take to the doctor's office is about some formats and some specific under-performers - and Farid doesn't hesitate to single out Chicago, in a way that reminds you of the teacher handing out completed tests and pointedly remarking that somebody was really disappointing this time. (Not a good feeling, remember?) Suleman says talker WLS (890) and oldies WLS-FM (94.7) combined are now contributing less than $3 million in cash flow. He says "we have the ratings, all we need to do is monetize the ratings." And after reformatting former ABC stations in Atlanta, Dallas and Washington, and whipping Chicago into good fiscal shape, Farid sees "at least $20 million in cash flow." He's also upbeat about the performance of WABC (770), New York-based Don Imus, though he doesn't discuss revenues or cost (some press coverage has mentioned the difficulty of getting national dollars on the new Imus show). Overall, Citadel reports pro forma revenue - including the ABC stations from both years - down 8.5%. It's kinda fascinating to hear a radio CEO talking about the critical importance of getting more 18-49 female listeners - that's TV talk. But Suleman says they're "focusing all our resources to improve those demos", since they have many other demos covered. But 18-49 women is what a lot of buyers are asking for. They're also asking for the meter -
Citadel pledges allegiance to the People Meter.
Farid Suleman says "PPM is here, it is a good thing, and every major agency I have met with, every major client, says we want it." He also says posting - comparing actual audience delivery to the buy - "is going to be the way of the future, whether you like it or not." The CEO doesn't think the People Meter technology is perfect "and I don't like the expense of it. But there are no other options." COO Judy Ellis says "the buying community likes the accountability" and she even sees "an advantage to the age 6-11 ratings", with the potential of new revenue and even - this is intriguing - formats. From Farid's vantage point, it's a live-with-it thing: "The sooner you take away any of the negatives associated with the industry" - like the diary - the better.
Having CBS put more stations on the market is a drag for others - but it's about financing.
Citadel's Farid Suleman admits that "CBS announcing these sales [outside its top 15 or so markets] is not particularly good" for Citadel's own efforts to trim down. But "the markets that we were wanting to sell" are not in the market size of Pittsburgh, Cleveland, St. Louis, Hartford or West Palm. And he says "there seem to be buyers out there, there just doesn't seem to be any financing." He says "several deals that we started" died because "financing could not be found for them." The Citadel call started at 9am, before the market opened. The "CDL" stock slipped during the day, closing off a nickel at 81 cents.
(R-I)