Clear Channel Q3 Revenues Up

Clear Channel Communications Inc., the largest U.S. radio station chain, on Friday posted higher operating earnings and said a new strategy to trim advertising airtime showed early signs of success.

Clear Channel Communications Inc., the largest U.S. radio station chain, on Friday posted higher operating earnings and said a new strategy to trim advertising airtime showed early signs of success.

Shares of Clear Channel rose 2%, despite a decline in third-quarter radio ad revenue on weak sales to automotive and telecommunications customers.

Clear Channel's plan is to reduce its advertising inventory, which will help stabilize or raise prices. Clear Channel said that in the second quarter, about 29% of its available inventory generated no revenue.

Executives told analysts on a conference call that its new "less is more" strategy was paying off in Philadelphia, one of its earliest test markets for a strategy it hopes will revive the radio industry.

Some analysts were skeptical. " 'Less is more' is a tough sell to advertisers," Peter Mirsky of Oppenheimer & Co. said. "It's going to be painful to implement."

Clear Channel also cut its full-year earnings forecast and said the radio ad market continues to be challenging.

Third-quarter earnings totaled $261.2 million, or 44 cents a share. A year earlier, excluding one-time items, earnings were $236.8 million, or 38 cents a share.

Revenue rose 4% to $2.6 billion from $2.5 billion.

Analysts had expected a profit of 43 cents a share and revenue of $2.61 billion, according to Reuters Estimates.

Net earnings in the 2003 quarter, after special items, were $636 million, or $1.03 a share.

Clear Channel, which owns more than 1,200 radio stations in the United States, is hoping its strategy to cut the amount of advertising air time minutes to stem pricing weakness will reverberate across the industry.

At the same time, the company is encouraging advertisers to create shorter, more interesting spots.

"If you ... look at it as a concept of changing the entire radio industry, everybody's falling in line, it will enhance the long-term growth rate of radio," Clear Channel president/CEO Mark Mays said on a conference call with analysts.

Executives said advertiser reaction to the new plans had exceeded their expectations and they have seen an increase in the number of 30-seconds and 15-seconds ads that have been purchased for fourth quarter.

The new strategy will begin in earnest in January, a seasonally slow time of the year. Viacom Inc.'s Infinity radio division, which on Thursday reported revenue slipping 4 percent in the quarter, also said it has cut advertising air time it sells in some markets to some success.

Clear Channel said radio advertising revenue fell by $3.6 million to $960.1 million in the third quarter. National advertising suffered from the sluggish automotive and telecommunications sectors, but this was largely offset by strength in local advertising, it said.

The company cut its forecast for full-year earnings per share, excluding special items, to a rise in the mid-to-high-teens on a percentage basis. It previously forecast a rise in the high teens to low twenties.

Shares of Clear Channel rose 66 cents to $33.76 in afternoon trading on the New York Stock Exchange.


--Reuters
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