Clear Channel “Ignoring Ratings”

Long-time Cleveland radio exec and consultant John Gorman says Clear Channel doesn’t have a clue:

What does Clear Channel radio have to do with the Detroit automobile manufacturers in the ’70s? More than you could imagine.

Since the beginning of the radio industry, success was measured by ratings. Survey results determine what a station charged for advertising by its audience share, listening patterns and demographics. A ratings drop translates to a management overhaul, a format change or both.

[Clear Channel CEO John] Hogan now claims that ratings have nothing to do with a station’s revenue and that market share does not automatically equal more profits. “One of the things long important to and characteristic about radio has been market share,” said Hogan in a recent statement. “But while we want to be focused on competing against other radio stations, we want to be even more focused on profitability than market share now.”

The obvious comparison is the automotive industry in the ’70s, best chronicled by author David Halberstam’s The Reckoning. In it, he says, “The public was not the people who bought the car, the public was the people who bought the stock.” Substitute the word car for radio. Detroit automakers were convinced that no one would ever buy a car that was labeled Made In Japan.

Clear Channel corporate CEO Lowry Mays probably didn’t read Halberstam’s book. Earlier this year, he told Fortune Magazine, “We’re not in the business of providing news and information. We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers’ products.”

Detroit automakers assumed that its customers were trapped. They could use cheaper materials and cut corners to produce inferior products without affecting sales. The automakers also shortened their products’ planned obsolescence. Build a car that will fall apart in two years so it could be traded in for a new one.

Clear Channel views radio listeners as a captive audience. In their world, since the majority of radio listening is done while commuting, people have no choice but to listen to their product – good or bad. Their hubris blinds them to the fact many vehicles are equipped with CD players and cell phones and satellite radio and Internet radio via Wi-Fi, all offering significant alternatives to their insipid fare.

Author Max Frankel said, “What look like efforts to achieve monopoly power are actually concessions to weakness.” That sounds like Clear Channel’s mission statement gone awry. Hogan’s right to reign in Owens but wrong to assume that the poison will be out of the radio division’s bloodstream by ignoring ratings.

Besides witnessing [Clear Channel senior VP of programming] Tom Owens’ final slurp at the Clear Channel trough, we’ll get the added attraction of hearing radio making itself obsolete. Stay tuned. [Cleveland Free Times]

In the medium and long-term, you have to give people a quality product or they will go elsewhere.