[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.
Regards
Craig
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"
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 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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