Big talk radio realignment possible

Thomas Lifson
Hardball corporate negotiations may well end up causing some of the top hosts in the radio world to go head-to-head against each other in the same time slots. The two biggest players in the national radio market, Clear Channel and Cumulus, are clashing over renewal of the syndication arrangements for Rush Limbaugh and Sean Hannity, the number one and two shows. Dylan Byers writes at Politico:

In a major shakeup for the radio industry, Cumulus Media, the second-biggest broadcaster in the country, is planning to drop both Rush Limbaugh and Sean Hannity from its stations at the end of the year, an industry source told POLITICO on Sunday.

Cumulus has decided that it will not renew its contracts with either host, the source said, a move that would remove the two most highly rated conservative talk personalities from more than 40 Cumulus channels in major markets. 

Cumulus, which owns "approximately 525 stations in 110 cities," gained ownership in 2011 of the important, big market, high powered AM talk radio outlets developed by ABC radio in the nation's largest cities. But the acquisition of Citadel Broadcasting, which had purchased the talk radio blowtorches from ABC, was expensive. And Cumulus has been struggling with its earnings, and has blamed Rush Limbaugh's Sandra Fluke controversy for some of its profit weakness.

As Jeff Lord at the American Spectator put it, Cumulus "bit off much more than they can chew."

Among other things, the Dickeys [Lew and John, brothers who control the company] may have overpaid for the stations Cumulus purchased. A decent profit is a problem when, as the Atlanta-Journal Constitution noted, the $2.4 billion Cumulus deal to buy Citadel and its formerly ABC properties meant that "Cumulus is swallowing an elephant." Cumulus repeatedly draws starkly negative reviews for its treatment of employees, such as this one, which has a mere 28% of Cumulus employees saying they would recommend the company to a friend.

Lord's long article is highly critical of Cumulus, and includes links to radio discussion sites where the company is raked over the coals.

There has been a lot of public bad blood between Limbaugh and Cumulus. Peter Weber at The Week writes:  

Limbaugh and Cumulus CEO Lew Dickey have been effectively negotiating in public since May, when Limbaugh threatened to leave Cumulus because Dickey had blamed Limbaugh's 2012on-air insults of Georgetown Law student Sandra Fluke for driving advertisers away and costing Cumulus millions of dollars. Now, Limbaugh critics are calling this apparent breakdown in negotiations a win for the post-Fluke boycott.

The celebration on the left is ridiculous. This is about money, and the alleged boycott effect has nothing to do with the negotiations.  Cumulus is a cost-cutter, and wants to drive down talent costs. Clear Channel, with over 800 radio stations in its portfolio, has properties that could take Rush and Sean in a heartbeat -- for instance WOR in New York could take the shows from WABC. In San Francisco, Cumulus already lost Rush to Clear Channel's station. Weber continues:

Readers should take Politico's entire report with a healthy grain of salt, says Radio Ink . "A story like this always seems to pop up around the quarterly earnings call," and it's most likely a negotiating tactic as Cumulus and Premier haggle over a price. For what it's worth, "a source tells Radio Ink nothing has been decided and a deal could even be worked out in the next month or so."

Maybe it will. Maybe it won't. But my guess is that Limbaugh and Hannity have the upper hand. If Premiere asks too high a price from Cumulus, Clear Channel can't really then pay Limbaugh and Hannity less than its subsidiary was demanding. But even if neither Clear Channel nor Cumulus are willing to pay up, Limbaugh has a large fan base that would follow.

Byers of Politico notes:

 ...in recent weeks, Cumulus has been quietly reaching out to radio talent agents and political insiders about new local and regional station hosts to fill some of the airtime that will be left vacant by Limbaugh and Hannity, industry sources said. Cumulus is also expected to move some of its existing talent -- which includes Mike Huckabee, Mark Levin, and Michael Savage -- into one of the slots.

If Cumulus lets Limbaugh and Hannity go to Clear Channel stations in the biggest markets, my guess would be that they would put Michael Savage and Mark Levin in time slots directly opposite them, moving from lower listenership evening hours to higher listenership daytime. We would then see quite a vigorous competition.

Conservatives have a stake in the health of talk radio. It is our medium. But we also believe in a free market economy, and so must watch and wait for the bargaining to conclude. This may all be a tempest in a hardball negotiating teapot. Or we could see the largest talk radio audiences fragmenting and new competitive rivalries developing.

Hardball corporate negotiations may well end up causing some of the top hosts in the radio world to go head-to-head against each other in the same time slots. The two biggest players in the national radio market, Clear Channel and Cumulus, are clashing over renewal of the syndication arrangements for Rush Limbaugh and Sean Hannity, the number one and two shows. Dylan Byers writes at Politico:

In a major shakeup for the radio industry, Cumulus Media, the second-biggest broadcaster in the country, is planning to drop both Rush Limbaugh and Sean Hannity from its stations at the end of the year, an industry source told POLITICO on Sunday.

Cumulus has decided that it will not renew its contracts with either host, the source said, a move that would remove the two most highly rated conservative talk personalities from more than 40 Cumulus channels in major markets. 

Cumulus, which owns "approximately 525 stations in 110 cities," gained ownership in 2011 of the important, big market, high powered AM talk radio outlets developed by ABC radio in the nation's largest cities. But the acquisition of Citadel Broadcasting, which had purchased the talk radio blowtorches from ABC, was expensive. And Cumulus has been struggling with its earnings, and has blamed Rush Limbaugh's Sandra Fluke controversy for some of its profit weakness.

As Jeff Lord at the American Spectator put it, Cumulus "bit off much more than they can chew."

Among other things, the Dickeys [Lew and John, brothers who control the company] may have overpaid for the stations Cumulus purchased. A decent profit is a problem when, as the Atlanta-Journal Constitution noted, the $2.4 billion Cumulus deal to buy Citadel and its formerly ABC properties meant that "Cumulus is swallowing an elephant." Cumulus repeatedly draws starkly negative reviews for its treatment of employees, such as this one, which has a mere 28% of Cumulus employees saying they would recommend the company to a friend.

Lord's long article is highly critical of Cumulus, and includes links to radio discussion sites where the company is raked over the coals.

There has been a lot of public bad blood between Limbaugh and Cumulus. Peter Weber at The Week writes:  

Limbaugh and Cumulus CEO Lew Dickey have been effectively negotiating in public since May, when Limbaugh threatened to leave Cumulus because Dickey had blamed Limbaugh's 2012on-air insults of Georgetown Law student Sandra Fluke for driving advertisers away and costing Cumulus millions of dollars. Now, Limbaugh critics are calling this apparent breakdown in negotiations a win for the post-Fluke boycott.

The celebration on the left is ridiculous. This is about money, and the alleged boycott effect has nothing to do with the negotiations.  Cumulus is a cost-cutter, and wants to drive down talent costs. Clear Channel, with over 800 radio stations in its portfolio, has properties that could take Rush and Sean in a heartbeat -- for instance WOR in New York could take the shows from WABC. In San Francisco, Cumulus already lost Rush to Clear Channel's station. Weber continues:

Readers should take Politico's entire report with a healthy grain of salt, says Radio Ink . "A story like this always seems to pop up around the quarterly earnings call," and it's most likely a negotiating tactic as Cumulus and Premier haggle over a price. For what it's worth, "a source tells Radio Ink nothing has been decided and a deal could even be worked out in the next month or so."

Maybe it will. Maybe it won't. But my guess is that Limbaugh and Hannity have the upper hand. If Premiere asks too high a price from Cumulus, Clear Channel can't really then pay Limbaugh and Hannity less than its subsidiary was demanding. But even if neither Clear Channel nor Cumulus are willing to pay up, Limbaugh has a large fan base that would follow.

Byers of Politico notes:

 ...in recent weeks, Cumulus has been quietly reaching out to radio talent agents and political insiders about new local and regional station hosts to fill some of the airtime that will be left vacant by Limbaugh and Hannity, industry sources said. Cumulus is also expected to move some of its existing talent -- which includes Mike Huckabee, Mark Levin, and Michael Savage -- into one of the slots.

If Cumulus lets Limbaugh and Hannity go to Clear Channel stations in the biggest markets, my guess would be that they would put Michael Savage and Mark Levin in time slots directly opposite them, moving from lower listenership evening hours to higher listenership daytime. We would then see quite a vigorous competition.

Conservatives have a stake in the health of talk radio. It is our medium. But we also believe in a free market economy, and so must watch and wait for the bargaining to conclude. This may all be a tempest in a hardball negotiating teapot. Or we could see the largest talk radio audiences fragmenting and new competitive rivalries developing.