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Is this the Beginning of the End for Consolidation? Radio Employee Uprising

By Jerry Del Colliano

There is a new spirit I am feeling lately that a movement is underway to take radio back – back from the consolidators who have pillaged it.

But when I say take radio back, I don’t necessarily mean by putting groups of investors together to attempt to buy failed stations from failed consolidators.

It’s more significant than even that.

Friday I shared a story with you about fired San Francisco Cumulus sales rep Brian Mass who was not only shown the door but had it slammed on his attempt to seek unemployment.

Mass eventually sought the services of a New York employment attorney named Robert Ottinger who recently filed a class action suit against Cumulus for employment law violations.

That is, Cumulus did not pay Mass (and apparently others in California) overtime when their sales jobs were allegedly categorized as outside sales when he is alleging that the job by state law definition is an inside sales position. There are also issues that expose Cumulus on expense reimbursements that are tied to the status of an inside or outside sales person.

If Mass prevails in court or through a likely settlement, every Cumulus worker in California affected by their company’s violation of employment law will receive some form of compensation automatically.

And, Ottinger is looking for employees from Cumulus and other consolidators for lawsuits and class action initiatives from additional states.

In the first 24 hours after my story ran, 15 other Cumulus employees contacted Ottinger about either joining the class action suit or seeking to start a separate action of their own. And that’s just the first day’s response. Judging from the email I am receiving, others are preparing to contact Ottinger because he appears to be willing to help them without upfront money or undue risk.

That’s what convinces me that radio people are beginning to take their industry back.

There are plenty of lawsuits-in-waiting for Citadel and Clear Channel as well because mean management is not limited to Cumulus – although they are the industry leader. This Brian Mass may have awakened the people who actually know how to run the consolidators’ radio stations and presented them with the most effective tool to fight back.

The courts.

But now, it’s different.

Clear Channel, Citadel and Cumulus have run roughshod over their people and because the recession and downsizing made it hard for good folks to seek other work in the industry they loved, the “lucky” ones had to put up with it.

Everyone else was laid off – a term that still rankles me because the dictionary defines it as “to dismiss (an employee), esp. temporarily because of slack business” when radio consolidators don’t take this action temporarily.

In fact, some companies, like Cumulus actually have been rehiring on a massive basis – they even brag about it. To them, it is their version of ethnic cleansing except there is no discrimination – Cumulus is an equal opportunity firer.

But now, I believe we are seeing the beginning of the end for radio consolidators especially Clear Channel, Citadel and Cumulus but I’m not leaving out NextMedia or other pretenders who operated from the 3C Playbook.

Think about it.

Cumulus will be tied up for the entire year and maybe longer if more people come forward and sue them. Initially, they don’t have it in their DNA to settle.

This is the start of consolidators on their heels in an area they never saw coming – employment abuses. They got away with it because people needed work.

Now, these same radio people have had it. They are stepping up. I am privy to legal actions being considered by some wronged individuals that are potential major problems for consolidators if they file actions.

So, consolidators may have stolen their licenses from the public interest, convenience and necessity and they may have turned radio into a commodity at the exact worst time possible, but now they will be hamstrung in court by the average Janes and Joes they abused.

In fact, the only way out is to settle class action suits out of court and for those brave souls who will start individual lawsuits, settlement money. If I am seeing this right, in another year or two, the 3Cs will be looking to settle everything in site – lost will be the bravado that comes when the Complaint arrives in the mail.

But there are more changes ahead.

While radio advertising revenues should increase in 2010 and comparables between this year and the abysmal 2009 fiscal year will look favorable, new media will eat up more advertising budget than radio consolidators anticipated. After all, they are the ones who decided to sit out the Internet revolution.

Flat growth – if there is such a term. Well, there is irrational exuberance, isn’t there?

Stations will come on the market again and sell at 1-3 times cash flow – that’s my prediction and you’ve got it in writing.

And why would stations sell so cheaply?

Because consolidators have run radio into the ground, driven listeners and advertisers into the hands of digital media.

And, after all, the equity holders that have taken ownership control in lieu of debt payments cannot make their money unless they generate more fees and you generate fees from selling assets.

One more thing.

Radio people are beginning to move on.

I saw that at my Media Solutions Lab where impressive radio execs and talent were hot on the trail of new media. Paths to new media will become more apparent as the next year or two unfolds.

So you see radio people are beginning to believe that they can have a management, sales or programming career in digital media at the same time failed consolidators get bogged down with a flat-ad market and an increasing docket of employee lawsuits.

My mother used to always remind me that “every dog has its day” and for talented and loyal radio managers, programmers, sales people and talent, I am here to tell you I see signs that your day is coming.

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