Thursday, May 30, 2002

Not So Clear: If you like irony (doesn't everybody?) you'll get a kick out of this Washington Post article on radio behemoth Clear Channel. If you don't know, Clear Channel is the outfit that owns well over a thousand radio stations nationwide and has them all reduced to formulaic formats that often have as few as 20 songs in rotation at any time. In this article they brag that every decision they make is given the thumbs up or thumbs down based on whether they will increase market share and profits.
As regional vice president of Clear Channel's eight big Washington area stations (and 18 smaller stations arrayed from Ocean City to Frederick to Winchester, Va.), Zier has little room for experimentation or "WKRP"-like wackiness. "Every issue we discuss, every decision we make," he says in his Rockville office, "comes down to a simple test: Will it increase ratings or revenue? If it doesn't, let's move on."
The results of these decisions have effectively eviscerated any creativity or originality. Every station sounds like the next. All playlists and formats sound the same. No chances are taken, you get prepackaged blandness instead of anything interesting or stimulating. Now, I am absolutely in favor in companies making profits and making decisions that will make them more profitable. So is Clear Channel and they rightly don't deny that's what they are about. But then we have this:
The company lost money every quarter last year, piling up an annual loss of $1.1 billion. Clear Channel also is shouldering $8 billion in debt -- the legacy of its deal-a-minute expansion spree. With a long advertising slump afoot, the company's stock is selling at about half its peak price of two years ago.

The other day, Clear Channel reported that it lost $16.9 billion during the first three months of 2002, mostly as a result of writing off devalued assets.
and this:
Clear Channel's most popular station in the most recent Arbitron rankings, WASH-FM, rose no higher than sixth among listeners ages 25 to 54, the most coveted group among radio advertisers. And not all of Zier's recent moves have paid off. When he converted the faltering "Jam'n Oldies" '70s station to Top-40 Hot 99.5 early last year, the station's revenue fell to $11.3 million in 2001 from $17 million the year before, BIAfn says.
You really have to wonder whether instead of asking themselves if an idea will be profitable, they should ask themselves if they have even the smallest clue what constitutes a profitable idea.

This reminds me of the auto industry in the late 70s and early 80s when they were so sure they knew their customers and knew exactly what to produce to maximize their profit and the Japanese ate their lunch. It wasn't that they were blindly pursuing profit, it was that they thought they knew how to blindly pursue profit when if fact they didn't.