Clear Channel Posts Small Gain in Profit
Clear Channel Communications Inc. posted a 1% rise in quarterly profits to $254 million, with radio continuing to drag down strong results at other parts of the company
The company's results were in line with analyst expectations, but underscored the difficulty of drawing radio advertising out of its long slump, even as outdoor advertising grew sharply. Revenue in radio, the company's largest business, grew 3%, compared to 12% for outdoor and 9% for entertainment.
Overall, the company's revenue grew 7% to $2.46 billion, up from $2.32 billion a year earlier. The company earned 41 cents a share, about the same on a per-share basis as the year before.
The company is considering eliminating earnings guidance starting next year, saying that providing the market with growth estimates caused short-term fluctuations in the stock price, which has lost about a third of its value this year. But Mark Mays, president and acting chief executive, said he still believed the company would generate earnings growth in the 20% range this year.
Clear Channel has tried hard to halt the decline. This week it said it was boosting its dividend to 50 cents a share for the full year from 40 cents a share, and would buy back an additional $1 billion in stock, on top of the $934 million it has purchased since March 30.
It also announced initiatives to boost radio advertising revenue, particularly cutting by one-fifth the number of available advertising spots in hopes of raising the price for what remains.
In a conference call with investors Friday, Clear Channel executives said they also planned to charge premiums for advertisements that ran first and last in groups of ads, and change the way they reward the sales force to reflect value rather than volume of sales. They said they would encourage advertisers to move to 30-second spots from the current 60-second norm, which they believe would hold listeners' attention better.
Despite a strengthening overall advertising environment, radio has remained stuck in a rut, not just at Clear Channel but at most radio companies. For example, Viacom Inc.'s Infinity Broadcasting unit, the nation's second-largest radio operator after Clear Channel, recently said radio revenue rose just 2%.
Mark Mays, president and acting chief executive, said events such as the Olympics and the election were drawing more advertisers to television over radio. And advertisers who were priced out of television tended to turn to outdoor rather than radio.
Sectors that ran strong in outdoor last quarter, like automotive advertising, ran weak in radio. He expected the situation to improve later in the year, with September radio advertising looking beefier. In outdoor, poster advertising outperformed other sectors, except overseas, where street furniture, such as bus benches, and billboards drove growth. The U.K. and Australia led international markets.
Lowry Mays, the company's founder, is now out of the hospital, after being readmitted last month. Earlier this year, Mr. Mays underwent brain surgery and stepped down as CEO until he recovers.
Write to Sarah McBride at email@example.com.
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