Last week Clear Channel made personnel cuts at many of its smaller and medium market stations across the country. The cuts were primarily centered on programming personnel as the company unveils a new strategy of focusing on more nationally and regionally syndicated content - a strategy that took another step forward the morning after the layoffs, when the company announced several new executive appointments.
A company spokesperson explained the company's new strategy "leverages Clear Channel Radio's unmatched resources to serve our local listeners, advertisers and communities better" and "allows stations to take advantage of content from the most entertaining personalities in the country." And while there are clearly bottom-line benefits to these changes, the company's new strategy may have more to do with a long-term goal of competing with other mediums for advertising dollars, one of the expected benefits of the 1996 Telecommunications Act, than the short-term effects.
When President Clinton signed the 1996 legislation that relaxed station ownership rules, industry lobbyists claimed it would now be possible for radio to compete more effectively for advertising dollars on a national level against television networks and newspaper conglomerates. But in the subsequent 15 years the industry has been unable to significantly grow its overall share of the dollars spent on advertising, hovering more or less continuously at just over 7 percent. And with $131 billion spent on advertising in 2010, if Clear Channel's new strategy led to just a 1-percent increase, it would equate to $1.31 billion in new revenues for the industry.
There are many possible explanations why radio hasn't been able to increase its share of overall ad revenue. Competition from new interactive media is one possibility while another is simply the industry's deeply ingrained habit of focusing on taking share of the available dollars from other radio stations instead of viewing other media as the real competition.
But if Clear Channel's new strategy works, it could turn out that radio's inability to grow its revenue share has more to do with a lack of consistent programming. A big part of what makes network television so powerful is the national reach the programming delivers for advertisers, something radio has never been able to match in an easy-to-access form.
It is much easier for a brand trying to reach a specific national audience to buy commercials in network television shows that air in nearly every city in America than it is to buy spots on radio stations across the country that all deliver the same audience. That's because not only will many of the radio stations be owned by different companies, but each one will have its own local programming style, making it difficult to deliver a consistent audience. With Clear Channel's new strategy of using a centralized, national system for radio programming that could change: Advertisers will conceivably be able to buy programming that is consistent across multiple markets reaching the target audience they want.
Of course, if Clear Channel's new strategy proves successful and brings new advertising dollars to radio from other mediums, it could become the standard operating model for the industry. Other radio companies could begin placing an emphasis on national and regional programming of their own and the sound of radio could change quite radically. And radio's traditional position as the strongest local medium could change into one with a more nationalized perspective.
No one can predict exactly what this would mean long-term for the medium. Certainly Clear Channels initial cuts had a large human cost with one source estimating an average of five people were cut per cluster across 100 markets. If other radio companies follow suit it will more than likely lead to widespread workforce reductions leaving a lot of radio's creative people on the outside looking in.
But it could also result in radio listeners having access, for better or worse, to content that is more highly polished than what is currently available on their local radio stations.