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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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Not surprisingly, according to a Times article last summer about Limbaugh's new pact, a Clear Channel exec conceded that during the negotiations the possibility of Limbaugh jumping to satellite radio wasn't even discussed.

As for the other large traditional, terrestrial radio companies, such as Cumulus, Citadel, CBS, Emmis, and Radio One, lots of them are in as bad, if not worse, shape as Clear Channel, and some have flirted with bankruptcy. The industry is in meltdown mode, and it's just not plausible to think that anybody in the radio arena last year could have -- or would have -- stepped up and outspent Clear Channel for Limbaugh's services.

And yet Clear Channel, bidding against itself, rewarded Limbaugh with a $14 million-per-year pay raise for a package totaling $400 million -- the precise number the company's now desperately trying to chop off its books. And in order to achieve that savings, the company is willing to lay off thousands of employees and ransack the programming on radio stations across the country. But Limbaugh's purse remains untouchable.

Yes, Limbaugh's show brings in untold millions in advertising revenue. But a chunk of that goes to local stations that air Limbaugh -- stations that aren't necessarily owned by Clear Channel. And it seems self-evident that Limbaugh would have continued to bring in beefy ad revenue without a 40 percent pay raise. Also, keep in mind that, according to the Times article

last year, Limbaugh himself controls 25 percent of the ad slots for each hour of his program, which represents ad dollars that never end up in Clear Channel's coffers. Limbaugh also earns extra by hawking products on the air. Again, that's money that goes into his pocket, not Clear Channel's.

Keep in mind that Clear Channel has a long history of playing politics with its talk radio. Around the time of the Iraq war in 2003, when Clear Channel was paying to produce and promote pro-war rallies hosted by Glenn Beck (which the company insisted were merely "pro-troops" rallies), several on-air personalities claimed they had been yanked off the air for voicing anti-war opinions; that they were warned point-blank by their Clear Channel bosses to tone down the anti-war rhetoric or face professional consequences. Clear Channel's CEO has also personally defended Limbaugh's ill-advised rants in the past.

In February 2004, Clear Channel pulled superstar talker Howard Stern off its stations after he veered to the hard anti-Bush left. Yet, now, Clear Channel rewards superstar talker Limbaugh as he veers to the hard anti-Obama right. Even though the content of Stern's show hadn't changed much in years, Clear Channel bosses in 2004 insisted Stern's show was suddenly "vulgar," and that's why it was taken off the air. Yet skeptics couldn't help but notice that as soon as Stern began bashing Bush, the shock jock got yanked from all Clear Channel stations.

Over the years, Clear Channel's management team has advertised its ineptitude in several kinds of lethal ways, like spending too much money to buy too many stations while gutting local programming. But in light of its current payroll crisis, I can't help but wonder if Clear Channel's affinity for right-wing talk radio, and its determination to overpay Limbaugh, isn't also doing real damage to the company's bottom line.

 
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