[opendtv] News: A Radio Giant Moves to Limit Commercials

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 20 Jul 2004 07:53:49 -0400

Could this be a reaction to satellite radio? The iPod?

Looks like a little competition could be a very good thing.


A Radio Giant Moves to Limit Commercials

Published: July 19, 2004

Clear Channel Radio plans to announce today that it will begin 
limiting the number of commercials its more than 1,200 stations can 
play, in a move that analysts say may ripple through the industry 
even before it takes effect on Jan. 1.

  John E. Hogan, chief executive at Clear Channel Radio, which is 
based in San Antonio, said the sprawl of commercials throughout radio 
was causing clear harm. "If you have listened to the radio at all, 
you know that there is an amazing amount of commercial and 
promotional inventory," he said. "So much so that we have run the 
risk of diluting our product."

Reaching for the tuner as soon as a D.J. says "Don't touch that dial" 
is almost instinctual for many listeners, a fact that radio 
executives could accept when revenue was soaring, like it last did 
during the dot-com boom.

But revenue since then has expanded with something like the speed of 
a sloth, with combined national and local ad spending growing 4 
percent in the first five months of the year, compared with the same 
period a year earlier, and rising 2 percent in all of 2003, according 
to the Radio Advertising Bureau.

  The slow growth comes despite a long-term run-up in the number of 
minutes in each hour devoted to commercials, said Laraine Mancini, a 
broadcasting analyst at  Merrill Lynch. "Radio wanted to take every 
dollar that was getting thrown at them," she said. "And you didn't 
have to produce more to do it; just take a song off and add 

Solid figures on radio commercials are hard to come by because of the 
difficulty in monitoring thousands of stations across the country, 
but Ms. Mancini and others offered rough estimates. Where 10 to 12 
minutes of advertising each hour was perhaps the norm a decade ago, 
some talk-radio stations now broadcast more than 20 minutes of ads an 
hour, they said. Many music stations probably play more than 15 

The expanding volume of commercials has bred frustration among 
advertisers and radio audiences, Ms. Mancini said. "People don't want 
to spend a quarter of their time listening to the radio listening to 
ads," she said.

The proportion of people who turn on the radio at least once a week 
remains high. It was 94.2 percent last winter, compared with 95.8 
percent 10 years earlier, according to data on the top 100 markets 
compiled by  Arbitron.

But the average time that people actually listen each week has slid 
downward during the same period, to 19 hours and 30 minutes from 22 
hours and 30 minutes.

Mr. Hogan of Clear Channel Radio, which is a unit of Clear Channel 
Communications, said the company's new ceilings on ads, while 
national in scope, would vary according to format and time of day.

For example, during the morning drive, Clear Channel's country-music 
stations will broadcast no more than 12 minutes of commercials an 
hour, take no more than 4 minutes for any single commercial break and 
pack no more than six commercials into a break.

Such stations have been playing 18 minutes to 24 minutes of ads 
during the morning drive, Mr. Hogan said. "This is a way for us to go 
to advertisers and say we've heard you. We're going to give you a 
better environment," he added. Enforcement efforts will rely on 
proprietary technology that will monitor what Clear Channel stations 
broadcast, he said.

Joseph W. Lenski, executive vice president at Edison Media Research, 
said the new Clear Channel limits might create pressure for others to 
do something similar.

  "Since they are the 800-pound gorilla, when they make a public stand 
on this, I think other groups in the industry will have to take 
notice," Mr. Lenski said. "It's a lot like when one airline cuts 
prices, the other airlines have to match."

But Joel Hollander, president and chief operating officer at the 
Infinity Broadcasting unit of Viacom Inc., said the Clear Channel 
model would not fit Infinity stations. "We leave decisions of 
inventory in the hands of station managers," he said.

Mr. Hollander said, however, that Infinity had placed new limits on 
certain stations since his arrival last summer. At KILT-FM, a 
country-music station in Houston, for example, commercial time was 
reduced to 12 minutes each hour from about 15 minutes or 16 minutes. 
"We've seen positive results," he said, citing higher ad prices and 
stronger ratings.

Another competitor, the  Emmis Communications Corporation, could not 
be reached by deadline, but it described its view during a June 30 
conference call on its first-quarter earnings. "We have acknowledged 
over the last two or three years that we think spot loads, whether 
you look at Emmis radio, or other groups, are pretty much at their 
absolute max," said Rick Cummings, president at the radio division.

Guy Zapoleon, president at Zapoleon Media Strategies, called the 
Clear Channel move well-timed given threats like satellite radio and 
proliferating sources of music and information.
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