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Limbaugh's $400 Million Contract Is an Even Match for Clear Channel's Layoffs

What does Limbaugh think when he reads about the collapse of his radio employer while lounging in his 24,000-square-foot Florida estate?

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The astronomical worth of Limbaugh's eight-year pact: $400 million. The amount of money Clear Channel execs have been trying to scrimp and save this year as they lay off thousands from the struggling company: $400 million. Ironic, don't you think?

The simple truth is that Limbaugh lives in the lap of Clear Channel-backed luxury, while Clear Channel employees are being axed with abandon. And those who are lucky enough to keep their jobs are told to do the work of three or four employees.

Would cutting back Limbaugh's salary completely solve Clear Channel's financial woes? No. But there is something bizarre about Clear Channel going out of its way to so dramatically overpay the host while the rest of the company suffers through the throes of a depression. It would be like the bankrupt Tribune Co. paying its Chicago Tribune editor millions annually while the newsroom got decimated by wave after wave of layoffs.

Context: Clear Channel now pays Limbaugh more than NBC pays late-night ratings king Jay Leno. Who thinks Limbaugh brings in more ad revenue for Clear Channel than Leno does for NBC? FYI, The Tonight Show generates

approximately $200 million annually for NBC.

Is Limbaugh's program a huge success? Without question. Does the radio superstar deserve a big, fat contract? No doubt. Were Clear Channel executives smart to make sure they hung onto a proven AM superstar? Yes, but they wildly overspent, which raises all kinds of questions. I don't have the answers and I'm not suggesting any deep conspiracy. But this marriage of media and politics deserves a closer look.

At the time of his renewal last summer, Entertainment Weekly insisted, "It's probably worth it for Clear Channel to pay him an exorbitant sum of money ... than to risk losing him to another radio network when his current contract expires."

My guess is that was the spin coming out of corporate headquarters in San Antonio. But it's flat-out false. And that's where Limbaugh's monster contract and Clear Channel's employee purge collide: Why does Clear Channel, now desperately trying to stop the corporate bleeding, feel the need to support Limbaugh with a quasi-welfare state arrangement? Why is Clear Channel so anxious to pump tens of millions of dollars into the Republican's bank account each year?

Because here's the real oddity about Clear Channel's pact with Limbaugh: Last summer there was nobody else in a position to steal Limbaugh away. Clear Channel was basically bidding against itself and decided, in the end, to give Limbaugh a 40 percent raise, which included writing a $100 million signing bonus check to celebrate his contract extension. That right: A nine-figure signing bonus. At the time, it was a puzzler. Looking back at it today, the $100 million goodwill gesture, viewed against the backdrop of Clear Channel's doomsday woes, makes no business sense whatsoever. (That $100 million bonus could have saved maybe 1,000 Clear Channel jobs this year alone.)

It's true that in 2005, Sirius overpaid for the rights to add Howard Stern to its lineup. That's when Sirius and XM wrote lots of overly generous checks in an effort to shore up exclusive programming as a way to lure in subscribers. But last summer, when the Limbaugh deal was being inked, struggling satellite radio was in no position to lure Limbaugh away with a weighty contract.

In fact, just one day before Limbaugh's monstrous, nine-figure deal was announced, published an article about how when Stern's gigantic contract with Sirius satellite radio expired in 2010 he was likely going to have to take a huge pay cut, because neither the struggling Sirius nor its then-competitor, XM, could possibly afford to pay him so much money. They were "deeply in debt, cash-strapped and suffering an ominous sales slowdown," noted. (Sirius and XM have since merged.)

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