With Q4 radio revenues down from a year earlier at Clear Channel, it is obvious that they were once again down from the final quarter of 2004, before the company fully implemented the Less is More initiative to reduce commercial minutes, encourage advertisers to use shorter spots and, theoretically, boost rates. Three years of financial reports later, it’s pretty clear that things didn’t work out as planned.
If you’re keeping score, here’s how the years have played out in terms of revenues for Clear Channel Radio.
Yes, Clear Channel has sold 160 smaller market stations and has another 73 under contract for sale under its plan to divest a total of 448 stations. But given the size of the markets involved, they don’t come close to accounting for more than 300 million in lost revenues. If there is any good news in the figures, it is that 2007 was up ever so slightly from 2006.
Folks at Clear Channel don’t talk much about Less is More any more. The Wall Street Journal recently quoted Clear Channel Radio CEO John Hogan telling a roomful of radio buyers that it was "yesterday’s news" and had served its purpose. Some advertisers are making greater use of :30s and there is interest in ten-second inventory beyond traffic reports. Flexibility is probably the way to go as radio stations everywhere work to find the right mix of entertainment content and advertising. Even more importantly, it’s about shoe leather – putting enough salespeople on the street and giving them training and support to bring new advertisers to radio. That applies at the national level, where the two big rep firms and RAB claim to have serious, long-range efforts underway, and at the local level. Account executives with client lists so long that they spend all day, every day just dealing on the phone with existing advertisers can’t possibly bring in any new business. Reducing the cost of sales by cutting sales staffs and commission rates was the stupidest thing that any radio company could have done. Yet, it was done, and the entire industry is paying the price. Good salespeople pay for themselves. Heck, when you’re grossly understaffed, even mediocre sales people are a step in the right direction.
Once the private equity buyout of Clear Channel goes to closing next month, we hope the new owners will have the foresight to start rebuilding the business by rebuilding the sales force. Yes, there will be a humongous debt load to deal with, but the cost cutting has already been done – and to excess. Servicing that debt in the future is going to require some investment in the present.