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| Bob Pittman |
According to Nielsen, the ratings group, radio can generate a sales lift of $6 for every ad dollar spent. Yet radio pricing is a third cheaper than television, Pittman says.
The endurance of car radios means “we’re the only company in America that loves traffic jams”, he says, and with an audience already accustomed to consuming its content on the move, he argues that the more mobile digital media becomes, the more it plays to Clear Channel’s strengths.
If he is making progress it is appearing only slowly. Its radio revenue was up just 4 per cent in 2013, adjusting for political ad cycles. Just over half of group revenue comes from radio with the rest from a more stable multinational billboard business, Clear Channel Outdoor, which is listed with a market capitalisation of $3bn.
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| Richard Bressler |
In April, an $850m refinancing pushed repayments back from 2014 and 2015 to 2018. However, it came with 10 per cent interest rate, double the rate on the debt it replaced. Clear Channel’s expected interest expense of about $1.6bn in 2014 is about equal to its free cash flow.
“Six months ago, if you’d have told me I could refinance $850m of subordinated debt at 10 per cent, I’d have looked at you like you were crazy,” says Richard Bressler, a Thomas H Lee partner who became Clear Channel’s chief financial officer last year. The demand for its debt is a sign of confidence, he says.
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Bob Pittman is inept and will be shown the door shortly. He's had over 5 years to turn things around and every change he's made has been detrimental to the companies growth, creativity and long term viability.
ReplyDeleteThe fact Bain has kept him on so long with such dismal results doesn't speak well for their ability to manage a liability that's quickly approaching 21 billion dollars.
None of this really matters to Bob though, his last contract gives him a golden parachute and the company just paid half, $375,000, to refurbish his personal jet in which he bills all expenses back to Clear Channel.