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Tuesday, July 30, 2013

Are Rush Limbaugh and Sean Hannity Overpaid?

oped: Well, let's not pick on Hannity and Rush let's get to the root of the problemo... all talking heads/pundits,actors,politicians,pro athlete's are all way overpaid...just a fact Jack..."Some do some act"...thats where the world of today has gone...pay high wages for BS/shock jock mentality ...pay low wages for real people  actions...*Da plan Boss Da plane* ~'Fantasy Island'....sorry state of affairs folks~ imho... whats yours?

Limbaugh acknowledging cheers before a Pittsburgh Steelers game in 2011
Talk—spittle-flecked, bombastic, right-wing talk—might finally be getting cheap. Cumulus Media (CMLS), the second-largest broadcaster in the U.S., appears to be at an impasse with talk-radio stars Rush Limbaugh and Sean Hannity, who fill its airtime from noon to 6 p.m. every weekday. The conservatives are the country’s highest-rated radio jocks, and they are very expensive. With both contracts up at year-end, Cumulus is reportedly shopping for replacements, according to Politico.
Cumulus said in a statement that it “is not in a position to comment about negotiations with talent under contract.” Premiere, a unit of Clear Channel (CCMO), handles distribution rights for Limbaugh and Hannity, as well as Ryan Seacrest and some 90 radio shows. If Premiere—which also declined to discuss negotiations— doesn’t strike a new syndication deal with Cumulus, the right-wing pair would be likely stay in-house and broadcast on Clear Channel stations.

The nature of syndication contracts don’t give Premiere the freedom to walk away—it is already paying, no matter who airs the shows. Hannity’s 2008 contract with Premiere was valued at about $20 million per year, according to AdWeek. Limbaugh’s is particularly dear, with a 2008 deal that amounts to $50 million a year until 2017. Here’s how Limbaugh described his value to the New York Times a few years ago: “My first goal is to attract the largest possible audience so I can charge confiscatory ad rates.”
When measuring a return on investment for a company such as Cumulus, the math doesn’t always work in favor of the superstars. As in Hollywood, the gravity of massive celebrity can become a black hole for value. Take this summer’s blockbusters: A Johnny Depp-bloated budget made The Lone Ranger a total bust for Walt Disney (DIS), while Man of Steel and its lesser-known star absolutely crushed expectations. Familiar with Henry Cavill? Probably not, before he donned that cape–and that’s exactly what Warner Bros. (TWX) was betting on when it sat down to negotiate with him.

Star power is a bit different in radio. Jockeys like Limbaugh command huge followings and in turn, inflated ad rates. Cumulus doesn’t have to worry about keeping all its listeners, it just has to worry about keeping enough of them, relative to its talent costs. From that perspective, possible replacements such as Mike Huckabee and Mark Levin look pretty good. Both have serious conservative cred and are likely to work a lot cheaper than Limbaugh and Hannity. Huckabee even plays a decent guitar.
Broadcasters in general need to play more hardball these days. From 2008 to 2012, 10 percent of radio revenue disappeared, according to the Radio Advertising Bureau. The stars of talk radio love the free market. It’s time to see if its famous efficiency comes to cut their paychecks.
Stock is an associate editor for Businessweek.com.

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