Martin+strategy+report

TO: Proximity Music Team FROM: James Martin SUBJECT: Clear Channel strategy analysis DATE: Jan 11, 2009

Clear Channel was a corporate behemoth in the 1990s with its dominance of FM radio in major markets across the country and its profitable live performance divisions. However with the supremacy of FM radio on the decline and the movement of Gen Y to less accessible new formats the future for Clear Channel is uncertain at best.


 * Profile**


 * Clear Channel began as The San Antonio Broadcasting Company in San Antonio, Texas with the purchase of an FM radio station in 1972. By 1984 it owned and operated six AM and FM radio stations and in 1988 it acquired its first television network **. When the FCC began deregulating radio ownership rules in 1992, Clear Channel went on a buying spree and by 1995 it owned 43 radio stations and 16 television stations in 32 markets nationwide. It was one of the most successful stocks of the 1990’s and in 2006 it was purchased by a private equity group for $18.7 billion. It is now owned by CC Media Holdings, Inc. and is operated as three separate segments:

· //Radio Broadcasting// which owned and operated 894 domestic radio stations as of December 31, 2008 and 140 stations in New Zealand and Australia; · //Americas Outdoor Advertising//, and; · //International Outdoor Advertising// which combined form the worlds largest outdoor advertiser with over 800,000 out-of-home displays; (Company history -, 2008)

When Clear Channel was purchased three years ago its stock was valued at $36, at the close of business on Friday CC Media Holdings, Inc., was trading at $4 (Reuters 2009).


 * Competitive Landscape**

The primary forces driving competition for Clear Channel’s radio broadcasting division are its competitors and the availability of new technology that is allowing listeners more options than just broadcast radio.

With the advent of the global economic downturn Clear Channel, as well as its closest competitors (CBS, Citadel, Entercom, and Cumulus), have all experienced dramatic loses over the past two years. Although a recent report by Nielsen shows that nearly 80% of Americans still listen to the radio and that 51% of audio listened to everyday is via broadcast radio format, broadcast radio companies are still watching their stocks plummet.

In a market where consumer choice drives the competitive landscape, new mediums for music consumption such as satellite radio, personal mp3 devices, cd’s, streaming audio from the internet, as well as other sources are marginalizing the once dominant broadcast radio format.


 * Clear Channel’s Strategy**

The radio broadcast market is driven by advertising revenues, and “expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns” (CC Media Holdings, 2009). In order to remain competitive Clear Channel relies on two factors. First, its exclusive syndication rights with popular radio personalities such as Rush Limbaugh, Sean Hannity, Steve Harvey, Ryan Seacrest and Jeff Foxworthy allow it access to reliable niche demographics. Second, its expansion into diversified content choices such as internet radio and mobile phone applications allows it to keep up with the dynamically evolving market climate.


 * Implications for Gen Y**

For Clear Channel to again become profitable it must prove to advertisers that it has access to key demographics, most importantly Gen Y. Although it is now expanding into new broadcast markets it is well behind the pack in doing so. Combined with the negative connotations that Clear Channel obtained in the 1990’s during the peak of its success, the forecast for its future is dim. //CC Media Holdings, Inc. Form 10-k//. (2009, February 27). Retrieved from http://www.clearchannel.com/Investors/Documents/320.pdf //Company history - overview//. (2008). Retrieved from http://www.clearchanneloutdoor.com/corporate/history.htm //Reuters - cc media holdings, inc.//. (2009, January 11). Retrieved from http://www.reuters.com/finance/stocks/overview?symbol=CCMO.PK
 * References **