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Clear Channel's "Less is More" may affect news nets as well

Since our write-up yesterday about CC Radio's "Less is More" strategy (8/25 RBR Daily Epaper #166), we've been hearing a bit more from folks in the industry-off the record, of course.

"Less is More" is going to also have an impact on ABC News and Westwood One's CBS Radio News, CNN Radio News, NBC Radio News and CNBC Business Radio. In addition, we hear CC Radio is serving 90-day cancellations across the board with networks and syndicators-especially with inventory-only-for-comp deals.

ABC News runs 123-128 minutes per week on Clear Channel stations (already reduced from previous), plus there are comp budgets involved. Will ABC cut back their minutes to save these affiliations?

Said a source at ABC: "We have a contract with CC Radio that extends well into next year. They're negotiating with everybody and I'm sure there's going to be inventory reductions in some places and in other places they're going to lose product. Not from just us, but from other vendors. We have reduced our reliance on Clear Channel over the years. So if they pull, we can still survive. We can go to somebody else across the street. We're dealing with them on a whole wide variety of fronts. For the most part, it's going fairly well. I guess the best way to put the ABC-Clear Channel relationship is you could call it an 'uneasy alliance.' Because unlike Infinity and Clear Channel, who are at war, we're kind of more like Switzerland. We do some stuff for them-Rush is on our major market stations; we have Jim Rome on in New York and Chicago; they love Hannity on their stations because he keeps Rush's audience on their O&Os. So we've got a lot of moving parts together and we'll probably figure something out."

CC Radio CEO John Hogan tells RBR his staff's goal is to work together with vendors in bringing forth the Less is Better strategy: "Clear Channel's local managers and programmers are making plans to initiate the Less is More plan at their stations. As part of that effort they are evaluating all programming choices and options, including those provided by networks and/or syndicators and they will be making the best decisions for their market and stations on a local basis as they have in the past. We have many long and mutually beneficial relationships with third party providers and it is my hope that they will support the initiative to improve Radio for listeners and advertisers. And work with us to make Less is More the success it should be. We're focused on doing great Radio with less clutter and commercial content and I know the networks and syndicators share the same goal and believe they'll work to accommodate Clear Channel stations in the Less is More world we're moving to."

A reduction of inventory from ABC News Radio and ABC Radio Networks is a real possibility to meet some of Clear Channel's needs, from what we hear. As far as giving less comp in return, it's still too early to know. A specific date is set to discuss that.

In addition, the ABC source said, "There's a lot of negotiating going on right now. They are pulling 90-day cancellations across the board with people. They're doing it with Infinity, they're doing it with their own network. It's a cluster-$%#@ in terms of the way they're doing this. But, they're shaking the trees and seeing what's going to happen. At the end of the day, you've got product that you need to keep your station good, so you've got to figure out how to make a deal."

Says Jones MediaAmerica CEO/Jones Radio Networks President Bob Hampton: "We don't really know how all of this is going to shake out, but certainly there is going to be less inventory available at their stations. I think it certainly will have implications for everybody in the business, including themselves. It seems as though from some of the earlier indications that we got, they were going more for :60's spots and now it looks like they're wanting more :30 second spots instead. I'm sure if you're syndicating a program to them and you no longer get clearance, it will be upsetting for a lot of people."

The prevailing opinion among the boutique programmers is since past CC Radio CEO Randy Michaels moved much of the CC station barter inventory over to Premiere anyway, it won't necessarily be a "bloodbath" for them after this is all said and done.

RBR observation:

Network radio has tripled over the past few years with a lot of the boutique syndicators that have cropped up-much of which are based on inventory. A lot of that inventory comes from Clear Channel stations. What you're going to see is a contraction in the network radio marketplace that's going to weed out a lot of these people who have not been doing it with product, but with comp. Because when they're doing it just with comp, those are ten-cent dollars. That's the easiest low-hanging fruit for a station to cut. The days of people doing straight comp deals for spots may be numbered. So the net of this is going into the upfront, there will be less inventory to buy for next year. If demand stays constant from last year, it may outstrip supply in 2005. Will the reduction of inventory affect some of the nets' RADAR-rated status? Probably not. The rating is an AQH. They will just have less units to sell.

In the event that CC Radio puts out a preemptive cancellation on ABC News, for example, before the contract is up or when it's up next year, would ABC retaliate and cancel programs that Premiere has on ABC O&Os? We think so, with Rush, Dr. Laura, Glenn Beck, Jim Rome, etc. For now, though, the relationship is mutually beneficial as mentioned above. Any reduction on Disney stations without Rush Limbaugh's approval, with the possibility of risking the Disney flagship O&O stations, would have severe consequences on the CC-Rush relationship.

Also, from what we hear, the way this is coming down is CC is not giving the local station operators a lot of leeway, even guidelines on how to deal with it. Said a source: "If you talk with some of the station operators at Clear Channel, there's not a lot of happy campers. Not because of the inventory reduction, I think you find people thinking that's not such a bad idea. But it's how it's being implemented-from the top down, as opposed to the bottom up."