Clear Channel: High Def Redefining Radio

by Erik Sass, Mar 31, 2006, 8:31 AM

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Clear Channel Radio's existing digital infrastructure will allow the radio giant to succeed where other broadcasters may fail as HD terrestrial digital radio rolls out, according to Clear Channel President and CFO Randall Mays, who issued the forecast during a public interview with Banc of America analyst Jonathan Jacoby at the New York Palace Hotel on Thursday.

"It's not something where you can absolutely say for everybody it's going to be a win," Mays warned. "I know there are certain people who feel it can be a detriment. But we don't feel that way."

Mays said Clear Channel's extensive digital content creation and distribution platforms will allow it to light up digital multicasts more quickly and cheaply than competitors--meaning that radio's 800-pound gorilla may be about to get even bigger.

"It costs me incrementally very little to program a new digital station," said Mays, because "every piece of content we have is networked on digital servers, so for my programmers to come in and create new digital formats is pretty easy for them to do, and they can do it a very low cost."

By contrast, smaller radio companies that have lagged behind in digital technology, or that lack the sheer scale enjoyed by Clear Channel's 1189 digitally networked stations in terms of content creation, may find the programming requirements of digital multicasts prohibitively expensive--meaning they'll also miss the more lucrative niche market payoff to follow.

"There's no question that there's increased cost associated with programming those stations," Mays said. "There will be excess inventory initially, as the audience builds, but ultimately if we can build a larger audience--we'll be able to monetize it."

Mays also pointed to the "radical changes" implemented by Clear Channel over the last year--most notably its "Less Is More" initiative, pushing 30-second spots to reduce "clutter" in radio airplay--as factors positioning the company for future success generally. According to Mays, "Less Is More" has yielded 20 percent less ad time on Clear Channel stations than competitors', and after initial resistance, advertisers are coming around to Clear Channel's philosophy, Mays asserted.

"Advertisers should pay for a cost per impression, not a cost per second," according to Mays, who later boasted: "It's very clear that advertisers are now starting to differentiate our stations, and getting away from just a straight CPM buy. They understand that if you have a better environment to advertise in, it makes a difference."

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