Clear Channel Radio, the largest U.S. radio station chain, will significantly reduce commercial time sold on its stations to stem pricing weakness and convince marketers of the value of radio advertising.
John Hogan, chief executive officer of Clear Channel Radio, owned by Clear Channel Communications Inc, , said by next year the company's more than 1200 stations across the country would cut commercial and promotional time and limit the number of ads aired during each break.
"Radio is still discounted relative to other media," Hogan said. "We're taking this step to close that gap and make radio more competitive ... effective and valuable."
Promotional time will be reduced as of October 1, while new limits on commercial time would take effect no later than January 1, he said. Hogan said he hoped the new strategy will have a positive effect on revenue in 2005.
"Listeners would like more content and advertisers would like a better environment" for their commercials to stand out, Hogan told Reuters. "This is the right thing to do for the long term that will revitalize and rejuvenate the radio industry."
U.S. radio broadcasters have been grappling with excess advertising time at lower prices after cranking up the level of ad minutes per hour in the late 1990s. The sector has lagged an advertising rebound this year for other media, particularly cable television and the Internet.
Last month, a number of investment banks downgraded leading radio owners such as Clear Channel Communications, Westwood One Inc. and Citadel Broadcasting Corp. , saying no end was in sight for slow sales and weak prices.
San Antonio, Texas-based Clear Channel Radio also is preparing a program to develop more entertaining and effective radio spots with advertisers, Hogan said. Details are to be announced at a later date.
"Not only are there too many commercials, there tend to be too many bad commercials," he said.
Hogan said the reduced time would vary from type of station, but would amount to at least several minutes fewer commercials per hour. Advertisers will be able to place their ad first or last during a commercial break, a strategy for which Clear Channel hopes to reap a premium, he said.
On country music stations, for example, peak morning broadcasts would be limited to 12 minutes of ad time per hour, and fewer minutes than that during other day-parts, he said. Commercial breaks will be no longer than four minutes, or six ads, on such stations, he said.
News, talk and information formats will have a slightly higher threshold than music stations of several more minutes for ad time.
