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A Quarter and a Year of Rough Times

Though it 'performed well compared to (its) sector,' radio revenue at Clear Channel is a concern

Radio revenue at Clear Channel was down 7% last year and 13% in the fourth quarter compared to a year earlier, according to financial numbers out this week. For the year, the company said radio brought in $3.29 billion.

Parent holding company CC Media Holdings meanwhile reported a loss of $5 billion in the fourth quarter, reflecting an impairment charge stemming from a decline in the value of its radio licenses and other assets.

The company this week also appointed a new senior VP who will be responsible for radio ‘revenue management.’ He comes to the company out of the hotel and travel businesses.

CEO Mark Mays said that although CC Media Holdings revenues were down in 2008, “Our radio and outdoor businesses performed well compared to their sectors. These are challenging times which have taken their toll on many of our advertisers. However, macroeconomic conditions will continue to present a stark reality where disciplined focus on working with our advertising partners, cost containment and the flexibility to adjust to change are essential.” He said the company is “so appreciative of the tremendous efforts expended by our employees to meet the demands of these difficult times.”

In radio, the company said, 2008 revenue declined by $264.7 million, with approximately 43% of the decline occurring during the fourth quarter. “Local revenues were down $205.6 million in 2008 compared to 2007. National revenues declined as well. Both local and national revenues were down as a result of overall weakness in advertising.” (These numbers were presented on a combined basis of pre- and post-merger periods for 2008 to allow results to be compared to 2007.)

Clear Channel said that for the year, total radio minutes sold and average minute rate both declined.

While revenue was down, operating expenses in radio dropped only slightly in the year, by approximately $11.1 million. “The decline was attributable to a decrease in programming expenses in the company’s radio markets, a decrease in expenses from reduced marketing and promotional expenses and a decline in commission expenses associated with the revenue decline. Partially offsetting the decline was an increase in severance of approximately $32.6 million, an increase in bad debt expense of approximately $17.3 million and an increase in programming expenses associated with the company’s national syndication business. The increase in programming expenses in the company’s national syndication business was mostly related to contract talent payments.”