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Can Clear Channel Survive the Flight of Advertisers and Rush's $400 Million Payday?

How long will stations be able to sustain the ad losses on Limbaugh's show, and how does the host justify his $400 million pay in the face of the advertiser revolt?

 There was something very telling, and even morose, about the  commercial break Rush Limbaugh took deep into his third hour of broadcasting on Tuesday's show. Still at the center of an advertising  firestorm that rages around his program as corporate America turns its back on the AM talker in the wake of his ugly, invasive, three-day smear campaign against Sandra Fluke, Limbaugh  boasted he had thwarted the left-wing attack and they were the ones "shell shocked" at the turn of events.

But the truth was that for days on his flagship station, WABC in New York, Limbaugh's show had been stripped of key advertisers. Instead, the once robust revenue-generating program had turned into a feel-good forum where during commercial breaks WABC ran  nonpaid public service announcements on behalf of the United Negro College Fund and New York Office of Emergency Management. That's because WABC didn't feel comfortable putting lots of advertisers on Limbaugh's show, which up and down Madison Avenue had become poisonous in this wake of his misogynistic Fluke debacle.  

So towards the end of his show on Tuesday, the  nine-figure salary talk show host went to commercial break and a paid advertiser did pop up. And it was a new advertiser, a sponsor who apparently had signed on amidst the controversy. The sponsor's name? The Holy Name Cemetery in New Jersey, which was advertising a "pre-planning open house weekend."

How fitting.

Whether Limbaugh's show is in the midst of the death throes, only time will tell. But one thing is clear, the radio industry has never seen anything like the sponsorship controversy surrounding Limbaugh's once-untouchable program. And it's certainly never seen anything like the wholesale decision by his syndicator, Premier Radio Networks, to suspend barter ads for two weeks in an apparent effort to ride out the controversy. That was soon followed  by news that advertisers are requesting Limbaugh's affiliated stations provide "Rush-free programming grids" so sponsors can verify that their brands aren't appearing on his show.  

"It's unprecedented," Holland Cooke, a  talk radio consultant, tells  Media Matters. He says Premiere's startling advertising move "suggests things are worse than we know."

The question is: How long will stations be able to sustain the ad losses on Limbaugh's show, and how does the host justify his $400 million pay in the face of the advertiser revolt?

The boycott comes at a bad time for Premier's  parent company, Clear Channel. A conservative-friendly media  behemoth with a soft spot for right-wing radio, Clear Channel  continuesto struggle not only with a depleted radio audience as more and more consumers migrate away from the AM/FM dial, but it's also sagging under the weight of massive debt.

From a  Forbes report, earlier this year:

Clear Channel's consolidated businesses are struggling amid a sea of losses and a $19.9 billion debt load, meanwhile its largest revenue source, radio broadcasting, is a loss leader. Overall, the combined company is set to lose over $200 million in 2011 after notching $4 billion-plus annual losses during the recession. 

And now comes the Limbaugh debacle. Like Fox News when it was hit with a sweeping advertising boycott of Glenn Beck's show (a boycott that eventually drove him off TV), Clear Channel executives are downplaying the impact of the current controversy. A company source  told the New York Times that the advertising action had only cost the company $1 million per week in lost revenue, stressing the pain to the company's bottom line has been minimal. The source also suggested the company is simply taking advertisers who want off Limbaugh's show and finding spots for them on other Clear Channel programs.