Ad agency media buyers said last week that Clear Channel's new clout, together with its position in 153 rated markets, could give it an ability to swing national ad deals never before possible. The executives were divided, however, on how much that ability would actually affect the radio marketplace.
"I don't know if they will not deal or they will be competitive, but if they are competitive and [an advertiser] has a limited budget, I could see all the money going to [Clear Channel]," said Tara Aviel, VP-director of spot broadcast, West region, Carat USA, Los Angeles. "We will have to wait and see how it plays out."
Sean Cunningham, exec VP-media director for Ammirati Puris Lintas, New York, noted that unwired networks are already in place for national radio advertising.
"It will have the effect of marginally more deals," he said. "First there has to be the presumption that bundles speak to a vibrant need."
TOP 12 MARKETS LEADER
Clear Channel's acquisition, the largest ever in radio, gives the company major positions in every one of the nation's top 12 markets, and more than a 25% share of ad dollars in all but one of the top 10, according to BIA Research, which tracks ad revenue by station. It will have 15.2% in Boston alone.
In addition to radio, the merged company will own 19 TV stations, 425,000 outdoor locations and TV and radio rep firm Katz Media.
Nothing will be certain until next year, when it becomes clear which stations will have to be sold off to meet federal requirements and whether the company will then trade for stations in other markets, causing further consolidation.
In announcing the deal to buy what was formerly Chancellor Media, Clear Channel said it expected to have to sell 125 of the 955 stations the combined company would own.
The Justice Department could require additional divestitures.
COMBINING IN 30 MARKETS
Clear Channel and AMFM are in 30 markets where they would be combining stations, and appear certain to have to sell stations in Cincinnati, Cleveland, Houston, Los Angeles, Orlando, Phoenix and San Diego, among others.
The deal also could pose some potential issues in media repping. Interep represents Clear Channel's stations; Katz Media is one of Interep's biggest rivals.
Industry analysts see the possibility of additional national ad sales as one main benefit of the combination, with Clear Channel gaining more clout in dealing with advertisers; another benefit comes from joint sales of broadcast time and outdoor space.
"It gives them an even greater national footprint, and by having such a larger footprint, they are more likely to attract national advertisers," said Geoffrey Jones, an analyst with Donaldson, Lufkin & Jenrette. "They can put demographic packages together in an efficient way."
Mr. Jones said the move also gives Clear Channel more markets in which it can use its outdoor boards to bolster cross-media deals.
A CHANCE TO RAISE RATES
"Consolidation is rationalizing the market," he said, adding that the prospect of controlling more of a market may offer an opportunity to raise ad rates.
Media buyers expressed concern they might be losing some negotiating power.
"It'll eventually lead to national buys. But how are they going to get the national buys?" said Page Thompson, president of Optimum Media, New York, the media unit of DDB Worldwide. "The true power of radio is localization.
"If you can make a national buy with all the benefits of localization, [and not be forced] to buy certain radio formats and media that don't fit our target, great. . . . But I don't see that happening yet."
Allen Banks, exec VP-media director, North America, Saatchi & Saatchi, New York, said he expects the merged media company will be able to put together all sorts of opportunities. But the key will be watching what happens to price.
"Because of all the dot-com money, it's hard to track the effect consolidation is having on prices. [Clear Channel] could use the demand to mask what happened," he said.
Mr. Banks expressed some skepticism that Clear Channel would be able to offer national buys alone, also noting much of radio is a local buy and the combinations wouldn't happen everywhere.
"I've got to believe there would be plenty of holes," he said.
Ms. Aviel said she is worried.
"The deal is huge. It is scary," she said. "The fewer owners there are, the less negotiating room we have."