Clear Channel Q3 Profit Tumbles

26 October 2005

The 'less is more' advertising policy recently adopted by US commercial radio giant Clear Channel Communications' continues to play havoc with profits.

Third quarter figures show Clear Channel's net income fell to $205.5 million (€171m; £116m) compared with $261.2m for the same period in 2004, a drop of 21%. Sales rose 1.1% to $2.68 billion, from $2.65bn a year earlier.

The media titan, which operates 1,200 radio stations in the USA, is doggedly pursuing a strategy of cutting the number of 60-second ad spots to attract more listeners, while charging more for the remaining airtime.

It says radio revenue dropped 4.3% to $919.2m, which it blames on the cuts in available advertising time. Ceo Mark Mays maintains, however, that the radio unit is getting better prices for its remaining spots, while market share among listeners in the top thirty markets rose 4%.

But analyst David Miller beleives the broadcaster's timing is wrong: "Right now the environment just isn't strong enough for 'less is more' to have its intended effects."

Sales at Clear Channel's entertainment unit rose around 1% to $983.5m, while outdoor advertising revenue increased 11% to $668m.

Data sourced from Wall Street Journal Online; additional content by WARC staff