Tuesday, January 27, 2009

Is Clear Channel Fooling Itself?

Last week’s Clear Channel bloodbath took an especially high toll on the sales departments. I am not questioning the need for cutbacks in the current economic environment. Clear Channel certainly is not the only company that has laid off employees. And Radio is not the only industry that has laid people off.

I’m just wondering about Clear Channel’s math, and its judgment. After all, good salespeople should pay for themselves. Sales personnel in most companies work against a draw. (Yes, some Radio companies pay them commission only.) Anyone not making or barely making his or her draw should not be working there, in good times or bad. But salespeople earning far more than their draw in commissions are worth their weight because they contribute big-time to the bottom line. Yet Clear Channel cut some senior people who were big billers, and then divided their accounts among more junior staff whose respective draws were smaller.

Okay, I get it. The draws or additional commission earned by the top sellers are no longer part of the P&L statement so the “P” gets a lot bigger. Armed with the numbers, John Hogan gets a back pat from the Mays Brothers, who in turn deliver the good news to Bain Capital.

The “P” getting bigger, however, takes into account a big assumption. That assumption is that revenue remains the same. And that’s what I wonder whether Clear Channel is understanding or wants to understand.

I am not talking about revenue influenced by the economy. I’m talking about revenue brought in by the client relationships, selling talent, knowledge and creativity of leading salespeople. In other words, the Clear Channel business model assumes that without top sellers, station billing remains the same since the accounts have been reassigned. Not so fast.

And what about new business? If you look at which salespeople historically have grown billing, you will be peering at senior sellers.

That CC’s decimation of sales staffs was done in this fashion was not a surprise. For several years, the company has been driving out senior people in favor of inexperienced types who agree to knock on doors in return for a paycheck. In fact, Clear Channel had been prodding its sales staffs to bring in more direct business as opposed to agency business; that way, the cluster does not have to rebate commission to an agency. Of course, virtually all major advertisers retain agencies.

A lot of media buyers at large agencies are voicetracked so to speak. With multiple markets to get on the air quickly, knocking out buys is sometimes a numbers-crunching, almost mechanical process. But relationships and solutions still count. And, those of us who have been around for awhile value the talent of senior sellers that cannot be replicated by the folks knocking on doors around town.

For many years, ABC used WYAY-FM as a flanker to protect Kicks (WKHX-FM), its Atlanta flagship. Yet Citadel chief Farid Suleman was once overheard by local staffers expressing his puzzlement regarding why two country stations would be in the same cluster. Enough said about leadership of today’s radio companies. Brace yourself for an interesting 2009.

You can email me at roddyfreeman@bellsouth.net. Thanks for reading.


  1. Roddy, if there is no product to sell than you can't fault the sales people. How can a CC salesperson go out and beat the bushes for ad dollas for a cluster of stations that draws no listeners? Who in their right mind would advertise on WGST, a fourth rate "new" station featuring one local show that gets trounced by WSB? Why would a bar spend valuable ad dollars on Bull that has re-launced after one year on the air? Add to this all the il will towards CC over the past few years. The CC brass made thier beds, now they have to lie in it.