How Our Street-Smart Skills Would Save iHeart
IHeartMedia filed two things with the SEC on the same day this week. In one filing, the company explained that they’d decided not to make about $60 million in interest payments to its creditors.
In the other filing, they detailed their plans to award over $15 million in bonuses to their management team for 2018.
Let me put it another way: On the brink of bankruptcy, iHeart is stiffing the people who have kept them alive and rewarding the people who have ultimately failed to do so.
It should be noted in passing that the iHeart management team, to keep themselves afloat, sacrificed countless hard-working employees in annual “force reductions” that quickly became as much a holiday tradition as mistletoe. It should be further noted that one year’s worth of executive bonuses could have saved over two hundred $75,000 jobs.
I have a certain amount of respect for Bob Pittman, a very bright guy and a talented programmer—basically a master showman—but without discernable business acumen. He’s now two for two in that department: Prior to iHeart, he helmed AOL, and look how well that turned out.
But Mr. Pittman has always known how to take care of Mr. Pittman; he knows that the corporate game has as much to do with optics as it does with results. Take, for example, his first contract renegotiation after he’d been with iHeartMedia (then Clear Channel) for three years. Here’s how it was reported by Paul Hodgson in The Motley Fool in 2004:
Clear Channel Outdoor Holdings (NYSE:CCO) has just renewed CEO Robert Pittman’s employment agreement. And that in itself is a little odd. The company’s share price has shown no real net gain at all since his appointment in October 2011, but perhaps it’s early days.
And it’s not the $1.2 million salary, it’s not even the $2.7 million in restricted shares. It’s the specific mention of the make and model of the corporate aircraft to which Mr. Pittman will have access.
I’ve been writing about pay and governance for more than 20 years and I’ve never ever seen specific mention of the kind of corporate jet in a CEO employment agreement. This is how the agreement terms it: “During the term of his employment, CCMH [Clear Channel] will make an aircraft (which, to the extent available, will be a Dassault-Breguet Mystere Falcon 900) available to Mr. Pittman for his business and personal use and will pay all costs associated with the provision of the aircraft.”
Okay, small market owners and managers: Let’s say you had a manager or sales manager who came to you after three years of flat performance and demanded a salary boost and—forget about the plane—a company car, what would you do? I have a feeling you’d show that poor soul the door—and it wouldn’t be the door to a Cadillac.
I know a lot of small market owners who have their own planes—usually a used single-engine Cessna—which they pilot themselves.
For example, in our interview with Bud Walters for the Small Market Radio Podcast (http://www.smallmarketradio.com/category/podcast/), Bud talks about acquiring just that aircraft in the early 70s and using its range to define the geographical scope of his broadcasting company. He still flies the same equipment today, and he’s done very well building a group of stations within its range.
Does it sound like Mr. Pittman was thinking first and foremost about visiting his radio stations when he threw the plane into his negotiation? Methinks not.
I will say this in Mr. Pittman’s defense: iHeartMedia, nee Clear Channel Communications, was born as a flyer by a Texas wildcatter, raised by a hedonistic con man, and mismanaged by the scions of the wildcatter. When Mr. Pittman took the steering wheel, there wasn’t very much to steer. When viewed in that context, Mr. Pittman’s hubris fits nicely into the narrative and provides a fitting end to the story.
But when viewed in the context of small market radio, the story would have ended a long time ago. As probably it should have. A peaceful passing, surrounded by friends and family.
As I’ve said before, I join the multitude of broadcasters who fervently hope that the happy ending to this three-act tragedy involves a reversion to real community radio operated by real radio people, where the only people who lose their jobs are tone-deaf corporate executives—and private-jet pilots.