By
Seth Jayson
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More Articles
July 20, 2004
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Clear Channel (NYSE: CCU ) , the communications giant that brings you radio ads and billboards galore, recently announced that it would require its radio stations to run less advertising. The changes would begin in January of next year.
What? Cuts in the company's No. 1 source of revenue? Before you zip over to millisecondstocktrade.com and hit the sell button, hear me out. This is an idea that just may be crazy enough to work.
I am pretty much lost, as a consumer, to any of Clear Channel's advertisers. I cannot stand the short-attention-span theater that is contemporary radio. If I spent more time in a car, I would definitely pay Sirius Satellite Radio (Nasdaq: SIRI ) or XM Satellite Radio (Nasdaq: XMSR ) to free me from commercial clutter.
By putting a ceiling on the number of commercial minutes allowed and reducing the number of interruptions, Clear Channel hopes to keep listeners happy, and that should make advertisers happy. And that is something that needs to happen.
Despite good-looking results last quarter, Clear Channel is clearly in need of a boost in radio advertising. That segment has been lagging the firm's leading revenue growers, outdoor ads and live entertainment, by at least 10%. It's not enough to point to similar advertising woes at conglomerates such as the Tribune Company (NYSE: TRB ) , when Gannett (NYSE: GCI ) , New York Times (NYSE: NYT ) , and E.W. Scripps (NYSE: SSP ) are posting ad gains in the low double digits.
The next quarter's numbers come out late this week, and I'm guessing we will see a similarly anemic radio ad performance. But if Clear Channel continues piling up free cash flow and can energize its ad revenue with this new program, it should be remain stock that rewards long-term holders.
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Fool contributor Seth Jayson has no position in any firm mentioned. View his Fool profile here.
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