It may go down as one of the worst media decisions since Wall Street rejected David Sarnoff’s appeal for investing in radio back in the 1920s.  As one of the smart money boys told the NBC president, “Who would pay for a message sent to no one in particular?”  Who indeed.

Almost a century later, the President of Cumulus Radio seemed poised to top that banker, by getting rid of Rush Limbaugh.  According to Politico, the New York Daily News and other outlets, Mr. Dickey has been complaining (again) that Rush’s rant against Sandra Fluke cost his stations at least $5 million in advertising revenue last year.  That has renewed speculation that the Cumulus chief won’t renew his stations’ contract with Limbaugh that expires at the end of this year.

Naturally, some media types have begun whispering about how this would “hurt” Rush.  After all, Cumulus owns 40 stations that carry his show, in some of the nation’s biggest media markets.  That means the nation’s #1 talk host would lose such affiliates as WABC in New York; WLS (Chicago), WBAP (Dallas) and WJR (Detroit), to name a few.

As someone who slaved in the radio salt mines before having the good sense to make the military career, it’s important to separate the wheat from the chaff.  Best as I can tell, here’s what’s really going on in the Rush/Cumulus controversy.

First, I’ll assume that Lew Dickey isn’t completely stupid (though the jury’s still out on that one).  But he clearly wants a better deal.  By that, we mean he would like to keep Rush’s show on his stations, but pay a lower syndication fee and keep more of the advertising revenue generated by the program.  As we’ve noted before, the Rush Limbaugh Show is not only the gold standard for syndicated talk, it’s also a cash cow.  A 60-second network commercial (carried on all Rush affiliates) goes for a reported $16,000.  If you want a “live read” by the host, be prepared to pay even more.  And Rush and his syndicator, Premier Networks (owned by Clear Channel) keep half of the advertising revenue generated by every hour of his program.

Rush commands that kind of deal because his program delivers.  Critics claim that Limbaugh’s heyday is long past, but he still attracts millions of listeners every week.  And at the local level, he can help a station reverse its fortunes.  In recent years, Clear Channel put Rush on struggling FM stations in New Orleans, Raleigh and Pittsburgh.  The stations in the Crescent City and Raleigh doubled their listenership in less than a year; in fact, Rush’s New Orleans outlet (WRNO) now beats the legendary WWL-AM head-to-head, though WWL has more listeners when you add in their FM simulcast.

Truth be told, Lew Dickey is trying to blame Rush for his stable of under-performing stations.  Despite the bad economy, Limbaugh’s powerhouse Los Angeles affiliate, KFI-AM is one of the top-billing stations in the country, selling almost twice as much advertising time ($46 million a year) as WABC.  In fact, you won’t find a single Cumulus property on the list, a fact not lost on Mr. Dickey.  He recently conducted a mini-purge at WMAL in Washington, apparently because that station wasn’t meeting performance expectations.  Even WABC, home to such hosts as Don Imus, Sean Hannity and Mark Levin (in addition to Limbaugh) bills about $13 million less a year than all-sports station WFAN, despite the fact that WABC has more listeners.  Rush is right: not even his “magic” can compensate for a laggard sales department.

And what if Dickey can’t get a better deal?  He has Mike Huckabee warming up in the bullpen.  Cumulus signed the former Arkansas governor to a lucrative deal last year, at least by their standards.  His program currently airs opposite Rush in many markets; so far, his ratings have been under-whelming, to say the least.  But, since Cumulus owns the Huckabee show, they won’t have to split advertising revenue with an “outside” host and his syndicator.  Dickey may believe he can get a better return with that option, even if it means fewer listeners.

It’s one hell of a gamble, to say the least.  Without Rush, ratings on WABC, WLS and other Cumulus stations will crater, and may never recover.  That means lower audience levels for the afternoon drive period (which follows Rush in many markets); smaller cumulative audiences and of course, reduced ad revenues.

Conventional wisdom says that Rush’s program will move to WOR-AM in New York when his contract with Cumulus ends in December.  WOR once ruled the airwaves in the Big Apple, but now attracts about half the audience of WABC.  The addition of the Limbaugh would definitely boost WOR’s fortunes, and there are hints that other Premier personalities (such as Sean Hannity) may follow suit.  However, don’t rule out a more radical move by the folks at Clear Channel.  The radio giant has FM stations in New York, Chicago, Dallas, Detroit–and other cities–that could easily flip to a talk format, following their successful model in other cities.

Commercial radio is a Darwinian business in every sense of that term.  It’s not a place for the faint-of-heart or executives who make idiotic decisions. Ninety years from now, Lew Dickey may be remembered as a visionary who foresaw the decline of conservative talk radio and its superstar hosts.  But I tend to believe that Dickey will wind up in the same category as that Wall Street investor of years ago, who made the wrong call and missed a gravy train.  Except in this case, Mr. Dickey is actually driving the train and for whatever reason, seems determined to run it off the tracks.