Thursday, October 06, 2005

Tuning in to Reality

Clear Channel Communications wants Congress to allow more outlets it can own in a market so it can better compete and boost profits. Clear Channel Chief Executive Mark Mays is worried about competition from satellite-delivered subscription radio Clear Channel's solution: broadcast radio operators can own 10 stations instead of eight, in markets where there are at least 60 stations, and up to 12 stations in markets where at least 75 radio outlets operate.

Mays delivered a presentation to the Profress and Freedom Foundation a few days ago, in which we was quoted as saying, "Free radio is struggling. The cost of competing with new technologies and increased listener choice is staggering and profits are radio needs Congress to relax outdated restrictions on our operations. Free radio is not asking for much more room."

That's because there's not much more left for CC:

Despite the fact that Clear Channel owns about 1,200 radio stations, earnings were off 13 percent in the second quarter because of weak advertising revenues.

Wonder why that is?

Clear Channel is the outfit that has been championing :30-second commercials instead of the traditional one-minute unit. Could it be that earnings are down because Clear Channel’s effectiveness is diminished because they’re selling their clients half as much time to get their message across?

Remember, Clear Channel was one of the leaders a few years back in seeing just how many commercials they could cram into a break. When your message was eighth or ninth in a cluster of 8 or 9, how effective was that?

That minor point didn't seem to matter to the radio operating companies at the time—they were raking in the cash, hand over fist. The mantra was "reach and frequency:" you’d reach more people with more frequency of repeats of your message—which to a certain degree remains true. But that methodology was corrupted and abused when stations started imposing ten-minute commercial breaks…

So in an effort to save the number of units in their inventory, and shorten the commercial breaks, Clear Channel’s Eureka! Solution was to sell 30-second commercials instead of :60’s. Now, listeners could sit through ten messages in half the time…and unfortunately for most advertisers, with half as good a result.

Didn’t take long for advertisers to figure out that some Radio buys just weren’t working, and cash allotments for radio broadcasting began to taper off for the big boys, and Clear Channel saw a 13% decline in the last quarter as a result.

So now Clear Channel wants congress to allow Radio owners an even bigger piece of the market pie to better compete against subscription radio like XM and Sirius.

Did it ever occur to Clear Channel and Cox and Infinity to simply become more aggressive, leaner, meaner in their presentation approach?

Did it ever occur to the bean counters who took over the radio business in the 80’s that there were some elements of programming that needed to be heeded, instead of just working the numbers and calculating how many minutes of airtime could be split between content and commercial?

Why do you watch pay per view TV? To avoid the commercial interruptions.
Why do you subscribe to services like Sirius and XM? Because you want what terrestrial radio cannot or will not give you, and that’s quality programming without commercial interruption.

Isn’t it amazing that the industry that perfected the fine art of focus group research has ignored this major, glaring trend??

But that's apparently what's happening, because most major radio operators continue to offer the same, tired M.O., with little regard for audience retention, and now they want more stations to add to their cookie cutter formulas.

The Federal Communications Commission in 2003 refused to adjust ownership restrictions on the radio industry amid fears of losing multiple viewpoints in a market. The agency kept limits that prevent a company from owning more than eight stations in markets with at least 45 outlets.

Mays' argument to win over Congress: satellite radio services offer more than 150 channels in every market, while he can only own a handful of stations in a city.

Perhaps if those stations were allowed to become more creative “channels” to offer audiences, instead of the bland, homogeneity that radio has become, Mays’ ROI would be a little better.

Another factor that's making competition tough for Clear Channel is that the two satellite services, XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. which together have over 7 million customers, offer many of their channels without commercials. 7-million people can’t be that wrong.

Oh, but Clear Channel has reduced advertising to retain listeners, according to Mr. Mays. Unfortunately, it's not just about the spot load. It's all about stewardship.

Consumer advocates and some lawmakers have pressed for tight ownership limits, including Sen. Byron Dorgan, a North Dakota Democrat who has been particularly concerned that Clear Channel was not serving local interests.

"How much bigger does one need to get?" he said in a telephone interview. "We already have too much concentration in ownership."

In the past, Dorgan has pointed to an accident in which a train spilled a dangerous chemical and the local station, owned by Clear Channel, wasn't adequately staffed to warn listeners.

With the recent Rita emergency in Houston being one glaring exception, when was the last time you were able to tune to a local station for live information? I come to work at 4am most mornings. Sometimes in thunderstorms. There is not one channel on the radio dial in my home town where I can turn for current, live, intelligent weather information.

That's shameful.

Radio in general has created its own problems by abdicating local involvement and local programming for the cheaper, slicker way of doing things. Voice tracking overnight…one announcer providing the voicing for multiple stations, all digitally synchronized and orchestrated…and as long as the status quo remains so, no one’s the wiser… until a tornado warning is issued…a train carrying hazardous chemical derails… you get the idea.

Ironically, Mssr. Mays blames the proliferation of content on the Internet from competitors as hurting his business…Again, Radio has lost sight of its fundamental product—to inform and entertain. Radio has only hurt itself by losing sight of that responsibility.

Interestingly, a national radio survey was recently released dealing with the growing of audiences using tight integration of their web sites. The study of nearly 35,000 radio listeners across all formats in major U.S. markets showed that local radio could grow its relationship with audiences if they tie their on-air and online programming and promotions together.
11% of all respondents currently download podcasts.
13% said they would download podcasts from the stations they like if available.
40% confirmed that they are weekly listeners of music from radio stations via streaming.

Instead of embracing and maximizing this shift in public consumption of entertainment, Radio operators would rather whine to congress to change the rules. That would only address the symptoms and not the root cause of the problem: Content.

Real estate is about location location location. Broadcasting is about content…which is why the company I now work for broke from the norm, split from the mainstream, and launched our network.

That may play as a bit self-serving, but it's not mean to.
It's just the way it is...and we're not waiting on Congress to tilt the playing field, either.

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