Clear Channel Raises Its Rates (Don't Laugh)

The Less Is More people have done it again.

The latest twist from Albert Einstein Hogan is: advertisers making less, get to pay Clear Channel more.

Here's what one of my Clear Channel Repeater Reporters said in a recent email:

"Don't know if you know this but - CC raised spot rates in THIS economy - it was mandatory. Now, I am well aware this company was the cause of eroding spot rates all over the country (and why smaller companies hated us so much - they had to do the same to compete), but I'd like to know when they're going to stop treating every group/market in a one-size-fits-all way".

Well, I can answer the part about when are they going to stop treating every group/market in a one-size fits all way.


That's the Clear Channel plan -- one size fits all. Ryan Seacrest everywhere. One rate. One policy. One giant abortion.

And eventually one bankruptcy.

I am told that the 15% increase in rates edict from San Antonio is company-wide and, if it indeed is, then a lot of local clusters that were outperforming their goals probably will not continue to do so.

I guess Clear Channel Seer and Soothsayer John Slogan Hogan doesn't know that we're having a recession.

And if he does know it, then maybe no one every told him that in struggling economies, advertisers also struggle -- and therefore they are forced to advertise less to save money when they really need to advertise more to attract customers.

Imagine working in sales for this outfit -- doing the best you can to keep the revenue flowing and all of a sudden you have to stick your loyal clients with a 15% rate hike when they need it the least.

I'm told the rate increase was rolled out over a month ago.


Even if the ratings went up at every Clear Channel station on the face of the earth, there is a recession going on.

What's laughable about the increase is that all during consolidation Clear Channel has been the bargain basement of radio ad rates. I can remember a time as early as 2002 when some of their stations were fax blasting prospects and clients with cheap spots.

In fact, all of radio should be chided here.

For the decades when radio was a popular growth industry, executives were reluctant to increase the rates for fear of losing business. Now, Clear Channel gets the silly notion that because it can't pay the interest on their loans, pass the burden along to the very people who are helping them pump out critically needed cash flow.

Can you think of anyone so "stoopid" (to borrow a Philly phrase) that they would raise rates in the midst of a recession?


Sirius XM.

In fact, Mel's people did Clear Channel one better by passing along a $2 a month increase to its subscribers ostensibly to help pay for increased royalty fees. The only problem is, that $2 a month is way more than the pennies on the dollar Sirius XM needs to pay SoundExchange.

The rest of the money is what we call -- a rate hike!

What Chutzpah!

Any wonder why Sirius XM is losing subscribers -- why even the new car buyer freebie subscrptions are no longer a slam dunk to turn into a one-year firm renewal.

Why radio is fleecing advertisers and listeners while they are in fact hurting from our economic decline.

Here's the right way to do it:

1. Roll back prices when your customers are hurting.

2. Okay, I apologize for #1 -- I know that offends people who are running media companies that are saddled with debt, but think about it -- if radio didn't go wild with its charge card to put together their station clusters, they'd likely be earning lots of free cash flow even now to more than get them through. Radio is one of those rare businesses that you can't screw up.

3. Okay, forget #2 -- consolidators and former consolidators (like Mel) can screw it up -- after all, their eyes were bigger than their wallets so someone has to bail them out. And since the government is not going to do it, their customers have to.

4. Sorry, looks like you'll have to also forget #3 above as the government is actually considering bailing out some minority broadcasters who are in jeopardy of going under. After all, the entire economy would fail if a radio group went under -- now, wouldn't it?

5. Sell "Double or Nothing" -- maintain current rates, double the schedule and help your sponsors get back on their feet. It's temporary, of course. But it's kind of like Cash for Clunkers. Isn't it amazing how many people have rushed to trade in their clunkers to take on more personal debt just because they could get a credit now? This is good psychology. Imagine if automakers consulted Hogan and decided to pass a 15% price hike along to their buyers -- now that would really have the effect of jump starting car buying again, wouldn't it?

Maybe no one told Clear Channel that they've lost their testosterone.

Maybe Mel still thinks he is running Viacom.

Maybe our leaders have decided to just say no to the recession and raise prices anyway.

Radio is a good enough value to be of great help to hurting retailers and local companies. In fact, the recession is an opportunity to show companies how valuable radio really is. You know, all those local personalities selling their products.

Unless of course, your stations are running national programming, voice tracked music shows and otherwise non remarkable radio.

At which point, you can forget it once again.

I have picked up on reports that show advertisers and prospects are turned off on radio in spite of the recession. In other words, they are unimpressed with what's actually going out on-the-air.

It's nice to know someone still cares.

This has been a sore point because "leaders" like Fagreed Suleman at Citadel, Slogan Hogan at Clear Channel and Lew Tricky Dickey at Cumulus are doing programming on the cheap.

But advertisers know -- they have ears. They can tell their favorite top-rated morning show is gone.

CBS sets the example for radio right now with WCBS-FM -- a radio station that is beloved and highly rated in New York City. It also makes a ton of money.

It has been for over 20 years back in the days when the brilliant program director Joe McCoy laid the groundwork for what has been reborn today.

One of CBS Radio President Dan Mason's first actions when he took over was to return the oldies/classic hits station to the air after the two-year ill-fated "Jack" format.

WCBS-FM is a real radio station.

With personalities that gel together -- that listeners like.

The music is great but it's not like their fans don't have copies of these songs or even iPods loaded with them.

What listeners want is company -- people they like, in a format that is entertaining. As much as we don't want to get this in our heads, the music has become almost secondary because there are so many other places were listeners can hear music.

Hell, I listen to CBS-FM from Scottsdale whenever I want to remind myself that radio can be all that and more. And keep in mind CBS is doing WCBS-FM on a limited budget. If times were better, look out.

And with all radio groups looking to outsmart the People Meter by doing wall to wall music, CBS-FM has the ultimate answer to the People Meter -- do a full, well-balanced personality-type radio station that listeners can't turn off. Any attempt by CBS to silence or cutback on the personality would simply blow up in their ratings and I think they know that.

Look at what listeners say about CBS-FM:

“I wake up each and every morning and immediately put on CBS-FM 101.1. … It is such a pleasant program and a nice way to get my day going. I would be lost with[out] them. Mr. G and Dan are wonderful together. They have a special friendship and it shows on the program. …We were lost for two years without [CBS-FM]. A loyal listener.”

Read more comments from an series here.

Or how they do it, here.

So you can see what radio is misreading is what their jocks, program directors, managers and others actually know -- listeners crave company, they crave personality.

And what are we doing as an industry?

Cutting live, local personality-type radio.

And on top of that, the largest radio group is raising their ad rates 15%.

Wonder why radio is hastening its own demise?

Look no further than the inept CEOs of the three largest radio groups.

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