WHAT IS THE REASON FOR RADIO?

[landtuna]

Debt is simply a tool.  Nothing more, nothing less.  Used effectively it can produce expansion and/or the eventual ownership of something not otherwise possible.  Used incorrectly/excessively it can kill your personal or business finances.

[Goat Rodeo Cowboy]

  If you truly want to understand radio... The Big Picture...  get over this fundamentalist view of debt!   

 Debt is good? Tell that the Citadel employees.
 

No, tell that to the employees of practically every healthy corporation in America today.

Go to the website of any stock brokerage company in America and look at the list of companies that will gladly sell you BONDS for your retirement plan.  Until inflation began eating our society alive, all investors with a careful, conservative (small c conservative) savings and investment plan purchased BONDS in the well known, great American companies.  As you get older, if you have a retirement plan like a 401k or an IRA,  your broker will become rather insistent on moving your savings away from stocks  (which GROW in the long haul, but sometimes temporarily go way, way down... fast, fast, fast... as in 2008???)  and into BONDS.  Bonds are company DEBTS.

I'm sorry  if this comes across like I think I am talking to a 12 year old, but If the year after you retire and begin living off your savings and you have too much of your money in stocks,  you are selling your savings at 50-cents on the dollar to put food on the table.  (That is why 2008 is branded on my forehead!!!)  If companies all operated on a we-always-pay-cash format and didn't need to sell stocks and bonds,  where would we all park our money that is supposed to get us through the Golden Years?

Did Citadel have too much debt?  Did Citadel have a bad operating plan?  Did Citadel find buy-out offers were much more attractive than to keep operating?  I don't mean this as a political statement,  but Bain Capital is in the news.  Venture Capitalist, including Bain Capital,  seldom buy companies to own for ever and ever and ever.  They buy companies with borrowed money,  they wash and scrub them and dress them in their Sunday Best, and then operate them only long enough to receive "an offer they can't refuse."  It's like "flipping" houses in the real estate business.  You buy it, you paint it and deodorize it, and you sell it.  A lot of American corporations... as they are structure at this very minute,  do NOT play to continue ownership and operations for another 10, 20 or 30 years under their present business plan.  They buy companies with borrowed money,  mow the lawn and pull the weeds, and the sell for profits you can never hope to earn by packing your lunch and going to work everyday for the next 30 years as the owner of the company.

[SirRoxalot]

What GRC has describe is "bubble economics". The problem is that sooner or later, somebody has to live in that dressed-up house and be able to pay the mortgage. If the cost of the mortgage, along with taxes, repairs, and hundreds of other costs associated with living in that house become greater than the income of the resident, that house ends up going back to the bank, and a bunch of people end up on the street.

As a nation, we're facing a bursting housing bubble. Values shot up in the early 2000s. People borrowed more than they could afford to either buy into the market with the hope of earning more, or figured that they'd ride the rising prices and sell for a profit in a few years. Bankers facilitated it by serving up bubble loans that didn't require much up front, or much early on, but had a balloon payment a few years in. When it came time to pay the balloon, the housing bubble burst, and selling was not an option. House values fell, and millions are under water on their mortgage.

The banks got bailed out, but they have limited interest in bailing out their borrowers. In fact, they're holding onto their money looking for a better deal - like radio companies who need to refinance old debt at even higher interest rates. Or, satellite companies looking for an "angel", who suddenly are facing that "angel" looking to take control.

Yes, debt is a tool. Like a lot of tools, you'd better know how to control it if you want to keep yourself intact.

[TheBigA]

As a nation, we're facing a bursting housing bubble. Values shot up in the early 2000s.

Oh I don't know about that.  Values had been shooting up since the 60s with very little rollback until 2008. 

But here's the question: Is the fear of debt a reason not to buy a house? Does that mean you're a renter for life?  I know people like that, and it's pretty tough to live after retirement age without some kind of asset, either a home or a full pension.  I had an uncle who rented until he died, but he had a postman's pension.  That was pretty healthy.

The problem right now, and this will be an issue in the election next fall, is can we afford to be so cautious about debt that we forego the lifestyle we feel we deserve?  Someone has to invest in companies, personnel, and infrastructure so we can continue to grow as a country.  Someone has to take the risk to hire all the unemployed people, as well as the new generations graduating from school.  So if we've said that banks aren't lending, and the government is constrained by politics to invest, who does that leave?

[Goat Rodeo Cowboy]

What we had happen in the financing of housing from around 2000 to 2007 is like nothing I have seen in my lifetime!!!

As a supplement to my retirement savings, I got this bright idea in 2005 that I would become a Realtor.  I watched my wife do it 30 years earlier.  This will be a "piece of cake"!

I went to the staff meetings.  I listened to our in house mortgage originator give us weekly updates on available financing.  I kept thinking... this reminds me of something from recent days... like... like... ENRON!!!  The seasoned veterans with connections had everything wrapped up.  There were no "walk-ins".  There were no people on the phone:  "We are new in town and need some help and advice."  Then I came to realize that the number of agents had tripled since 2000.  An amazing number of DOT-COM-BUST folks all decided:  This is what I am going to do.

I walked away.  When the news broke and the hearings started and we learned about the "liar loans",  the number of people owning 20 and 30 homes with no equity... most of them real estate agents...  everything began to make sense.

Radio stations are not being purchased with government guaranteed, no-money-down "liar loans". 

Wow. We are on a roll here.  A topic where it hasn't become a political shouting match like the conversations about Talk Radio.  I do have an observation that I want to make and I hope it doesn't ruin the main theme of what we are talking about.

A big issue in the current political climate is BANK REGULATION.  Does the housing bubble that ruptured in 2008 suggest that the banking industry must be regulated since they proved they can't behave like gorwn-ups...   or was it government meddling in housing loans that kept the natural market forces from doing their job.  How you come down on that question is probably related to how you come down on how radio stations are bought, sold, and financed. 

[amfmxm]

You're right--no "liar loans." And very few station acquisitions of any kind. A few are being bought with cash, and the bigger stuff with private equity. And though it would be an exaggeration to suggest that private equity is equivalent to loan-sharking, I don't believe that it's much of an exaggeration to say that they lend on a very short leash. Not much patience... they don't want to hear about any recession...

[Tom Wells]

I've held off a long time, reading this thread and coming to a considered opinion.

I love the question.  It's fun to restate;  Why IS there Radio, What is Radio For, and  Who needs radio.

The matter is one of communication, and no different than the connection between people or neurons.

Information needs to flow, and existence, the universe or "whoever" has defined certain ways to transmit information.

Before humans knew they word, they made noises.  DNA of lifeforms was already 'way ahead in information technology.

When humans devised speech complicated enough to describe intangible things it must have been exciting.

It was the beginnings of useful collective consciousness where fear could be overcome.

Every major step in communications humans have developed, like writing, the printing press, or modern connectivity
have been aimed at a more "useful" consciousness.

These developments have always been exciting and seemed like "instant" communications when new.

Sometimes no further steps occur until someone discovers an unseen dimension, as in radio.

Methods are then invented to expolit the behavior of the instant information technology.

And when any devised or discovered  method is useful enough, it has always been employed to profit.

If/When telepathy is pefected, your thoughts would become the next advertising technology and
no power would strong enough to keep people from trying to monetize the technology.
Those who see radio as a business only will have no problem with the idea of profiting from telepathic advertising.

What arenas of human endeavor, thought or technology are so important that money should not invade?
Will we grant anything in existence freedom from prostitution?  It must ALL serve money?

Nothing exists until it exists in the imagination, and money never had any helpful part in imagination.

I will not say Radio should not be, or be "able to be" a profit making businesses.

I suggest it's far too important and valuable as a  "connection"  to be so enslaved by such a crass concept as money.
There are aspects and functions of radio so important that money should be the least and last consideration.

Radio never needed money to exist. 
But Money only wants more money, and it's only too happy to use radio for its ends.
We built it to be that way in this country, but this is not the only way it can be.
Nor does it need to follow the requirements and models set forth by other governments.
Few governments would not twist  media into power for themselves or the selected winners.

The radio is no different than what happens between neurons:  Information passes.
Except it's a live connection between people, not neurons.

[Surfer]

And THAT answer, my dear friends, is EXACTLY what I was hoping for.  Why is there radio?  To communicate.  What is Radio for?  To communicate.  Who needs Radio?  People...in order to communicate more effectively.  Up till now, effective communicaion and radio seems to consist of time, temperature and the hot hits or how to bash some political idealogy.  Radio was designed as a TOOL to help HUMANS COMMUNICATE MORE EFFECTIVELY!  Well said Mr. Wells...well said!

[TheBigA]

Radio was designed as a TOOL to help HUMANS COMMUNICATE MORE EFFECTIVELY! 

Well, depends who you think the designer was. 

[TheRover]

Isn't broadcasting a business?  Don't businesses need to make money to survive?  Most businesses will do whatever they have to (legally, of course), to survive.  Radio is no different.  Cutting costs, cutting people, running packaged programming.  It's all designed to stretch the dollar.

Radio was designed as a TOOL to help HUMANS COMMUNICATE MORE EFFECTIVELY! 

Radio was designed as a TOOL to help HUMANS COMMUNICATE MORE EFFECTIVELY!

But, more accurately, Radio is now designed as a TOOL to help HUMANS CORPORATIONS COMMUNICATE  CONTROL WHAT INFORMATION IS AND IS NOT COMMUNICATED, MORE EFFECTIVELY!

When private equity firms and venture capitalists are allowed to buy and control radio station comglomerates, then the result is not good for the public airwaves.

The slash and burn policies of these "owners" when it comes to owning giant radio holdings is Not a good thing for the radio consumer.

Do you really feel good about a group of venture capitalists deciding what does and does not get on the public airwaves ? ?

Slash and burn is the worst policy for the public airwaves.

I'd like the 1996 Telecom Act to be rolled back. But now, that the money boys have got their hands in it, there's no way that's going to happen. You will forever be listening only to what they want you to hear, and most of that may not be uplifting.

But go on, be a good lemming, and happily hop and skip to their sick beat.

You don't even see what's happening.

The race to the bottom for profits, is alive and well, unfortunately.

So how do you like oving in a Corporate State?

You probably think whatever turns a buck for the stockholders and the bondholders is a good thing.

All Hope for radio IS lost.

The Bad Guys really won, and there's no one left to turn this debacle around.