The Golden Age Is Over, but Not the Golden Paydays

The old-school media industry faces the customized, digitalized future, and it's not a pretty prospect for many of its denizens. Still, even though the golden ages of traditional television and radio may have ended a long time ago, this industry's chief executives are often showered with golden compensation regardless of modern reality.

Old-fashioned perks for old-school vets
The SEC-filing miners at recently caught quite a perk at CC Media Holdings (OTC BB: CCMO.PK), the parent company of Clear Channel's broadcasting and advertising units. CC Media Holdings trades on the Pink Sheets, a dangerous place where you might find good stuff if you're willing to do a lot of dumpster diving (and due diligence). Regardless, CC Media makes sure its chief executive gets around in high style.

How could there be higher style than this? CEO Robert Pittman will get paid $3 million to take flight in his private jet that he's leasing to the company. Incidentally, it's fine if he uses the plane for both business and personal travel use.

Maybe it's not too surprising that Pittman happens to be an old-school media veteran. He did a stint as chief operating officer at AOL Time Warner prior to the parting of ways of AOL and Time Warner, and has also served as CEO at companies like Viacom's (NYS: VIA) MTV Networks (he was a co-founder of MTV) and Six Flags (NYS: SIX) .)

This incident is even more interesting because the corporate jet perk in its many outrageous forms can actually signal worse events to come. Last summer, GMI, the leading independent provider of global corporate governance and ESG ratings and research, found that companies with corporate jet perks also had an increased likelihood of adopting riskier policies.

Tough industry, great CEO pay
Crazy executive pay and perks aren't anything new in the media space (which is probably part of the problem). When The Wall Street Journal ranked the highest paid chief executives of 2010, many media company chief executives came in at the very top.

Viacom's Philippe Dauman was the very highest listed, having made $84.3 million (double his compensation the year before). CBS (NYS: CBS) CEO Leslie Moonves earned the No. 3 slot, collecting $53.9 million, including a whopping $27.5 million bonus for "a remarkable year under his leadership." The CEOs of Time Warner and Walt Disney (NYS: DIS) also made the top 10.

You'd think rich pay packages like these would be doled out at new-school, super-high-growth companies, as old-school media companies face disruptive influences from all sides, so the high levels of pay seem out of line considering the real threats on the competitive landscape.

In Clear Channel's case, the future prospects don't look bright at all. Companies like Sirius XM (NAS: SIRI) and Pandora (NYS: P) offer up serious competition in the space. (Longtime Fool Rick Munarriz recently suggested that Clear Channel's iHeartRadio service could prove to be a contender, though.)

In testament to the foreboding competitive landscape, CC Media Holdings hasn't reported an annual profit since 2007. Analysts don't even expect this stinker to turn an annual profit until 2013. It carries more than $20 billion in debt on its balance sheet. And yet, the CEO is paid $3 million to use his own jet?

Media frenzy (in pay)
Thankfully, I doubt CC Media is on too many investors' radars; it's very thinly traded. Still, CC Media's treatment of its chief executive seems to reflect something about rich pay and perks in one industry, which is apparently more about show business than real business.

CC Media is a case study of how things should not be done at individual companies in industries that are past their prime, reflecting how important pay for true performance really is. If you're going to own shares of a company that's paying its top dog top dollar, you'd better make sure the operational performance is tops, too.

If you're thinking of investing in old-school media stocks, take a hard look at each individual company's CEO pay versus actual sales growth and profitability before you make the commitment. Otherwise, you could be funding the Hollywood jet set with little investment return.

Check back atFool.comevery Wednesday and Friday for Alyce Lomax's columns on environmental, social, and governance issues.

At the time thisarticle was published Alyce Lomaxdoes not own shares of any of the companies mentioned.Motley Fool newsletter serviceshave recommended buying shares of Walt Disney. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.