For anyone interested in the changing face of media, conglomerate Clear Channel (NYSE:CCU) is among the interesting companies to watch right now. With hopeful signs in its latest quarterly report, should investors start tuning in?

Clear Channel, which is probably best known for its radio stations, missed analysts' expectations by a penny when it reported second-quarter profit of $197.5 million, or $0.39 per share. Profit fell 11%; before discontinued operations, profit fell 7% year over year. However, Clear Channel's revenues increased a tidy 7%, to $1.9 billion.

If you're wondering exactly what signs of life I'm citing in a down quarter, consider this interesting nugget: Clear Channel bucked the industry trend, with radio revenues up 6% to $983.5 million. Outdoor advertising also fared well, with revenues up 9% to $748 million.

An upswing in radio revenues will surely surprise some of us (personally, I've been bearish on traditional radio for quite some time). Meanwhile, the rest of the industry is still struggling to reenergize radio -- one case in point is CBS Corp.'s (NYSE:CBS) recent quarter, where radio revenues fell 8%.

Traditional radio has faced serious competition from several disruptive influences, especially the satellite radio companies XM Satellite Radio (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI). Add into the mix Internet radio and the tons of options out there when it comes to music recommendation engines, as well as the wild popularity of Apple's (NASDAQ:AAPL) iPod and iTunes; and traditional radio, with its limited musical variety and heavy advertising model, has had quite a fight on its hands.

In response, Clear Channel has been trying to move into fast forward, giving its services a more futuristic strategy. It's trying virally distributed video and other new innovations like podcasts, as well as a very important strategy -- making advertising more palatable for its listeners through its "Less is More" initiative, which consists of shorter commercial breaks and less frequent interruptions of radio content.

In some of the old-fashioned industries challenged by changes in the way that people consume media, there's a good argument that an investor can excel in investing in a beleaguered industry by identifying the leaders best positioned to fight back. It might be tempting to wonder if Clear Channel is such a company, given the fact that it is working to innovate in light of the competition.

On the other hand, I find the traditional radio industry a little too risky for my tastes, and with the kind of rivals companies like Clear Channel face, it's going to have to shell out cash to innovate and spur future growth. Furthermore, a quick glance at Clear Channel's balance sheet reveals a whopping $7.9 billion in debt, far outpacing its cash reserve of $104.7 million. For now, I'd say Clear Channel is more compelling as a company to watch than to invest in.

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Alyce Lomax does not own shares of any of the companies mentioned.