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

  • From: "Skip Pizzi" <skippiz@xxxxxxxxxxxxxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 20 Jul 2004 10:09:21 -0700

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

Yes, and yes (and to a lesser extent, to Internet radio).

        > Looks like a little competition could be a very good thing.=20

Right; but also, somewhat ironically, a little (well, a lot) of
_consolidation_ goes a long way here, too. To break the inertia and take
this very difficult first step effectively, it really takes an operator
with the size and clout of Clear Channel to set the whole industry in
this unnatural direction (as the article notes near the end). But, of
course, it would never have happened at all without satellite radio's
success, along with an observation of terrestrial radio trends, in which
the only sector experiencing strong growth is non-commercial radio
(i.e., public radio).

It will be interesting, however, to see what effect (in isolation) this
action actually has. My sense is that the commercial overload is only
part of radio's problem, and that the _programming_ content of satellite
and public terrestrial radio is just as much a factor. The appeal of
broader content (stimulated again by the high access to on-line music
sources by younger audiences) on these other services is a powerful
draw, and that U.S. commercial radio with somewhat fewer commercials --
but all else held equal -- will still suffer erosion to alternative

There is a much smaller trend among a very few commercial stations to
reverse the programming direction, as well, with more and varied music,
and DJs actually talking about the music and artists (what a concept!).
But without an operation like Clear Channel endorsing this trend, it is
likely to have only very localized and fragmented traction.
Nevertheless, both these trends are a good start toward revitalizing
U.S. terrestrial radio, and not a moment too soon. Time will tell if
they are adequate, or if it's already too little too late.


-----Original Message-----
From: opendtv-bounce@xxxxxxxxxxxxx [mailto:opendtv-bounce@xxxxxxxxxxxxx]
On Behalf Of Craig Birkmaier
Sent: Tuesday, July 20, 2004 7:54 AM
To: OpenDTV Mail List
Subject: [opendtv] News: A Radio Giant Moves to Limit Commercials

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 By NAT IVES

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"=20
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 commercials."

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 minutes.

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

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.=20
"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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