Carbonite CEO admits dropping Limbaugh hurt growth more than expected
Carbonite famously dropped Rush Limbaugh on a Saturday Night at the height of the Sandra Fluke controversy. Carbonite became the poster child for the Rush boycott movement organized by Media Matters, which coordinated the effort with so-called independent groups.
At the time I examined Carbonite’s SEC filings, and how Carbonite had built its business model based on high growth driven, in significant part, by the promotion of Carbonite by Limbaugh. I predicted that Carbonite had shot itself in the foot, and put political correctness before the interests of its shareholders.
Since that time the Stop Rush effort has imploded, with backstabbing and accusations among the participants. Limbaugh has had better numbers than ever, and the hype surrounding Mike Huckabee as a Limbaugh replacement has gone flat.
Yet what became of Carbonite?
On August 1 Carbonite released its 2d Quarter 2012 results, the first full quarter after dropping Limbaugh in March. The results shocked Wall Street, as Carbonite did not meet its growth targets, causing multiple analysts to drop the target price. The stock dropped 15% in a day. (h/t reader W)
Most important, in a conference call held on August 1, the CEO David Friend admitted that dropping Limbaugh damaged Carbonite’s growth, and is likely to do so for at least one or two more quarters.
The full audio is available here. The key passage is embedded below. (Transcription mine, official transcript not available yet)
(3:10) CEO Friend: ”There were four factor that contributed to this slower growth. First, in March we stopped working with one of our top producing radio endorsers. While we recently contracted with three new radio personalities, it takes 3-6 months to ramp up new radio hosts so we probably won’t see the full effect of this for another quarter or two.”
(24:15) Q: “I guess I’m a little surprised that you were caught by surprise by the radio host change ’cause I know we’ve talked and I guess my impression was that it wouldn’t be that impactful but I guess it was quite impactful.
CEO Friend: “Yeah, I’d say it turned out to be a bigger issue than we had anticipated. Because you know at the time there was a lot of noise, I mean we had a huge spike in web traffic around that time just because of all the interest in the whole subject. And it took close to a month for that to sort of die down. And meanwhile our metrics were, we really couldn’t see what was going because there was so much noise around the website that we had no idea what the ultimate impact was going to be. It turned out to be a bigger hole in our revenue than we had thought when we initially did this. However, I don’t think there was any, I’m not regretful of the decision, I think things would have been worse had we not done that.
(added) The analyst asking the question indicates that Friend previously had indicated in private conversations that there would not be a substantial impact. This demonstrates how Friend misjudged the situation. Additionally, Friend says the “metrics” could not be known for a month after dropping Limbaugh and that Carbonite had no way of judging the impact. Yet I don’t recall any statements from Carbonite reflecting the disarray in its ability to measure its own business model.
The last statement by Friend, that the damage would have been worse had Carbonite not dropped Limbaugh is laughable. Friend has been caught doing serious damage to shareholders based on a political decision which was taken precipitously on a Saturday night. It’s too convenient now to say things would have been worse, when Friend completely misjudged the impact of dropping Limbaugh.
Update: Carbonite shareholders have another reason to worry. Friend has just started a potentialy competitive online storage company with a recently departed executive.
HuffPo picked up on this post, and emphasizes Friend’s claim that things would have been worse. Interesting that some HuffPo commenters are not buying that line.
+145-4
Comments
The “it could have been worse” line is either to cover his ass or implies he truly believes that it is a good thing to deliberately hurt revenues in the name of political correctness.
Of course, this is another application of the guilt by association fallacy, as if advertisers condone everything the hosts of the programs they advertise on believe in.
The boycott attempt is meant to cause a chilling effect on speech in the private sector (no government involved). I would rather see people fight Rush with good arguments instead of pointless political tactics.
I dropped them. I’ve recommended them to clients, but stopped.
You mean that all of the socialists didn’t flock to Carbonite to replace the conservatives who left? WOW! I am shocked. It’s like finding out that gambling has been going on in Rick’s Cafe Americain.
http://www.youtube.com/watch?v=SjbPi00k_ME
The “it could have been worse” excuse is laughable.
I mean look at the folks in the Occupy movement: Gimme, gimme, gimme…free stuff, I deserve my fair share (of what you’ve earned), I demand you forgive my debts (but keep paying yours, Mr. Businessman), etc.
Half the population pays no income tax…guess which side of the political spectrum most of that group is on. Sure there are some wealthy folks on the left…they are predominantly in the Senate and the House.
Point is, which group, Rush listeners or Maddow/Matthews listeners/viewers has the money to spend on online computer storage?
correction: half of filers pay no income tax. 140 million file, about 100 million adults don’t file. The other 75 million are 18 and under.
The Obama strategy is simple, play to 170 that don’t pay income tax, using class warfare to divide them from those that do pay. He’s the pied piper.
I’ll bet that Adam Smith of “Chick-fil-A” fame thought that his employer would applaud his “courage”. That’s probably why he did it and then posted it on youtube. The height of arrogance,
[...] Shock: Carbonite CEO admits dropping Limbaugh hurt growth more than expected [...]
[...] A palette cleanser from Misfit Politics: Cole Streeper goes through the Chick-fil-a drive through anti-Adam Smith style: Adam Smith exercised his right, sure, but he did it in the wrong way, so late last night, as I was driving to Chick-fil-A to squelch a hankering for white meat and spicy breading, I thought I should create a little counter video. Not much, but I tried to inject some positivity into the discussion as a retort to the “stopping hate by being hateful” Left. The following is the video I made, inspired stylistically, emotionally, artistically, and other words that end in –ly by the great Herculean Adam Smith. Enjoy: Via Legal Insurrection: Carbonite Growth Slows After Dropping Rush Limbaugh: [...]
Seems to me several of these advertisers recognized their mistake and crawled back to Limbaugh. He refused their advertising of course. But I wonder if Friend was one of these characters? Would be rich in light of these “could have been worse” statements.
This is really rather unbelievable. If the CEO of Carbonite had NO IDEA of the value and importance of the Limbaugh endorsement and advertising to his bottom line after many YEARS, then he is an idiot and the board should can him to protect the shareholders.
If the CEO knew of the value and importance of the Limbaugh endorsement and advertising to his bottom line after many years, then he is an idiot and the board should can him to protect the shareholders.
His best-case projection is this will decision will dog his bottom line for at least 6 more months. Frankly, I won’t be using Carbonite for the next several years. That gives competitors a great window of opportunity to gain ground on him and it is solely because of his decision.
Frankly, the “overbearing, loud, promiscuous, over-aged college student” crowd is not his biggest demographic. Playing to them is evidently a losing game…
[...] . Audio. legalinsurrection [...]
Wow, The HUFFPO crowd is certainly a vile and ignorant bunch. If you don’t have a strong stomach I suggest you avoid the comments there…
When will they learn there are more of us than there are of them and we spend more money accordingly. Sometimes I think they really believe they are in the majority but then again, Nah. They just want to influence the ignorant. That would be most of us, doncha know.
May Carbonite continue to reap what they have sown!
[...] Rush Limbaugh over the Sandra Fluke controversy? It turns out, it was a pretty bad idea, at least when it comes to the bottom line.Since that time the Stop Rush effort has imploded, with backstabbing and accusations among the [...]
[...] Any first year non-liberal business school student could have predicted this. But as reported at Legal Insurrection, Carbonite’s succumbing to liberal pressure following the Sandra Fluke controversy. Just [...]
Picked up at Breitbart. Let’s see where this goes. Oddly enough, I don’t think Limbaugh will talk too much about this.
[...] Carbonite, an early turncoat from the Rush Limbaugh show, has reported dismal earnings in the last quarter. The CEO attributes it to the boycott of Limbaugh, but justifies the action [...]
[...] via Le·gal In·sur·rec·tion. [...]
[...] The truth was that Carbonite and a few other foolish advertisers were convinced to drop Limbaugh by Media Matters a George Soros operation dedicated to destroying conservative talk radio in general and Rush Limbaugh in particular. Carbonite was played just as the rest of them were played. Now that a full calendar quarter has past, the extent to which Carbonite was played can be more accurately assessed. [...]
[...] them. In fact, writes Cornell Law School Professor William Jacobson, “Carbonite became the poster child for the Rush boycott [...]
[...] The truth was that Carbonite and a few other foolish advertisers were convinced to drop Limbaugh by Media Matters, a George Soros operation dedicated to destroying conservative talk radio in general and Rush Limbaugh in particular. Carbonite was played just as the rest of them were played. Now that a full calendar quarter has past, the extent to which Carbonite was played can be more accurately assessed. [...]
[...] as William Jacobson of the “Legal Insurrection” blog noted, Carbonite’s CEO David Friend conceded on a conference call that dropping Limbaugh deeply hurt [...]