November 30, 2015

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First Mediaworks

A Lifetime Of Leadership: Clear Channel Chairman L. Lowry Mays (07/04/05)

By Reed Bunzel, Editor-in-Chief

Even the most casual observer of this annual issue of Radio Ink will notice that L. Lowry Mays (the “L” stands for Lester), co-founder and chairman of Clear Channel Communications, is conspicuous in his absence from the 2005 compendium of The 40 Most Powerful People In Radio. A perennial list-topper, he held the pole position for the past four consecutive years and has been no lower than number 5 in the 10 years we've been doing the list. Mays was “pre-empted” this year to make room for his son Mark, who has taken control of the communications empire his father built from scratch over the past 30-plus years. Health issues and subsequent physical rehabilitation have occupied much of the senior Mays' time and energy since last year's 40 Most Powerful issue was published, although he insists that he regularly spends time in the company's offices, keeping an eye on its 1,200 radio stations, 36 television stations and 770,000 outdoor advertising displays.

A former Air Force officer and investment banker, Mays describes himself as an “accidental broadcaster.” The “accident” that would evolve into Clear Channel Communications started inauspiciously in 1972 when he and a friend, automobile dealer Red McCombs, formed a partnership to purchase KEEZ-FM (now KAJA-FM) for $125,000. The San Antonio station, which had 13 employees and was cash-flow challenged, was located on the top floor of the city's then-tallest building, offering Mays a vast view of the community that was home to what would become the world's largest radio corporation.

“While I knew something about the radio business, at the time it was not an industry I had ever been exposed to, from a work-and-investment standpoint,” recalls Mays. “Essentially, I had to learn it from scratch. I asked Red if he knew anything about radio, and he said, 'Sure' - but the truth of the matter was, he knew less about it than I did. What he meant was that he bought radio advertising, but because of that, he knew it worked.”

From those humble beginnings, Mays and McCombs grew San Antonio Broadcasting over the next three years, adding to their station portfolio an AM/FM in Tulsa as well as WOAI-AM, a “clear channel” facility in San Antonio. “We were very proud of the fact that we owned a 'clear channel' station, so we decided to change our name from San Antonio Broadcasting to Clear Channel Communications,” Mays says. “While we thought that still might be a limiting name, it certainly wasn't as limiting as San Antonio Broadcasting.”

One month after purchasing WOAI, the station's red ink turned black and became the only profitable property Clear Channel owned at the time. “From that point, it started generating the cash flow to accomplish the kind of expansion that we wanted to achieve,” says Mays. “As opportunities came along, we were able to take advantage of them, and we did that throughout the history of the company.”

That history, of course, is the stuff of which industry legends are made. It's also the stuff that led Radio Ink's editorial board unanimously to select Clear Channel Communications Chairman Lowry Mays as the 2005 recipient of our annual Lifetime Leadership Award. No one better represents the dedication, commitment and stewardship that define the concept of leadership, and no one in the radio industry this year deserves this recognition more than Mays.

Radio Ink recently had the pleasure of sitting down with Mays for a candid discussion that touched on corporate history, consolidation, community service and the future of the radio industry.

INK: Let's begin with your health. How is the rehabilitation process going, and when do you expect to be back on your feet fulltime again?
I do my physical therapy every day before I go into the office, and I do get into the office every day. My therapy is walking and trying to be assisted on a treadmill. I also do some exercises designed to get my left leg and left side working again. I can walk with a cane for quite an extended period of time, so it's coming along. I get a little bit better every day. Mentally, I was always completely recovered, so I don't have to worry about any speech defects or mental problems at all. I'm 100 percent there, and it won't be long before I can throw my wheelchair away. I'm thinking about having a ceremony at a railroad track near my home here.

When you bought your first station back in the early '70s, did you envision building the world's largest radio broadcasting company?
Oh, no. Not in my wildest dreams. A lot of things came together to give us the opportunity to grow cross-industry and certainly to consolidate the radio business. Certainly, we wanted to grow the company from the very beginning. Way back when the ownership rules first looked as if they were going to change, we saw a chance to go public and put ourselves in a position to access the capital markets. As opportunities came along, we were able to take advantage of them, and we did that throughout the history of the company. We were always in a position to take advantage of opportunities that presented growth to the company. Had we not been ahead of the curve back in those early days, doing the public financing and being very conservative with our acquisitions, I don't think it would have turned out the way it did.

After the company went public, Clear Channel's stock was considered one of the darlings on Wall Street. In fact, The Wall Street Journal ranked your stock as the 8th-best-performing stock 1985-95. What were you doing right during that time?
The fact is that the public financing and our early acquisitions set the stage to provide the cash flow that was needed to fund the rapid growth of the company. The key to our being able to accomplish what we did was that we were always looking ahead and had a plan to take advantage of those opportunities. The fact that we had good stations in good markets made it possible for us to continue to expand without getting ourselves over-leveraged.

Unlike so many other radio companies in the early '90s.
Exactly. In 1990 and '91, the radio business was not in good shape. It was over-leveraged, companies were buying things they couldn't pay for and people were selling their stations. In fact, in 1990 or '91 we went to the public market just to stack up cash for the opportunity to buy stations that we felt were going to come on the market. It was really the high-leveraged times that forced radio companies to reduce their leverage, and to do that, they had to sell their stations.

When the Telecommunications Act was proposed in the early '90s, what opportunities did you see in its passage?
I lobbied very aggressively for expansion of ownership. It really was very simple: The only reason for ownership restrictions was that, back in the very early days of radio, Hearst started accumulating radio stations. People started saying, “Oh, my God, now Hearst is going to control public opinion of the airwaves as well as the newspapers, so we have to put a limit of seven on it.” So I would talk to the commissioners and say, “Now, let me see - if I own one station in every market in the United States, could I control public opinion?” They would say, “Of course not.” And I would say, “That's the reason you need to relax the rules.” That's what finally happened in 1996 - people recognized that the old rules were silly. Of course, we didn't get total deregulation, but we certainly got enough to change the face of the radio industry.

Over the next four years, no one was more aggressive in mergers and acquisitions than you. Was there ever a point when you sat back and thought, “Whoa - this is getting out of hand”?
Certainly, we had this feeling around the company of “If it ain't fun, don't do it.” And let me say that it got to a point where it was less fun because it was so large that we had to be right on top of things all the time. Of course, during that time, we also decided to get involved in the outdoor advertising business, because we thought it was complementary to the radio business. It was an unconsolidated, free-cash-flow business, just like radio. So we started to consolidate that business as well.

During consolidation, Clear Channel became the poster child for everything that was “wrong” with radio. How discouraging was this to you, having built the company with what had to be good intentions?
It's like somebody telling you your baby's not pretty. A period there was stressful, but we just kept our heads down because we knew we were doing the right thing. All the criticism for being too big or anti-competitive didn't matter to us as long as we performed for our audiences and our customers.

Of course, some individuals within the radio industry have been critical of Clear Channel's recent attempts to reduce clutter and change the way airtime is sold. Have you been surprised by this?
Our company put its head on the chopping block with the Less Is More initiative because we felt that we could deliver shorter commercials, get out of the rut and possibly do a better job in certain circumstances for our customers. Cutting our spot loads and focusing on that customer and selling his products are what will make the industry better. I used to say years ago that we're not in the business of selling radio spots; we're in the business of selling our customers' products.

In that regard, is business as good today as it has been over the years?
Radio really does work, and that fact is what has built our company and the industry over the years, going back to 1922. Sure, we're having a little more competition today, but no business is easy. I'm convinced that this industry is one that will live on, regardless of the naysayers. It may get tougher, but when I first came into this business, it wasn't easy. In fact, it's never really been an easy business. For the most part, it has been an innovative and creative business that you have to make sure works for your customer. I don't think an iPod is the same thing as good radio, so I'm still very optimistic about the future of our business. I'm sure the 40 men and women you'll be highlighting in this issue of Radio Ink feel the same way as I do, or they wouldn't be involved in this business. The truth is, there are many easier things to get involved in.

Most people in the radio industry know Lowry Mays, the chairman of Clear Channel. What should they know about your civic contributions in the greater San Antonio community?
I have to say it's really a family effort, not just my own. My wife, Peggy, is as active as I am in the community, if not more so. We're involved in health care, education and the arts, none of which particularly stand out above the others. One exception is that I just finished being chairman of the board of regents of Texas A&M University, which named its business school The Mays School. That would be one of highest-profile things that I've been involved in. But we have always been involved in the community: I was president of the United Way 30 years ago, so it's not something that suddenly started. Our family has been involved in these things, and as Peggy and I have four children [Mark, Randall, Kathryn and Linda] and 16 grandchildren, there are going to be lots of Mayses around for lots of generations. We have a significant family foundation that will be a legacy from the two of us. It will continue over the generations to provide to the community some of the things that we're providing now. And when I say community, I include not only San Antonio, but also something larger than that.

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