CEO firm on 'Less Is More' strategy, believes radio's got a lot of life left

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In the early `80s, a fresh-out-of- college John Hogan left his native Chicagoland for the warm weather of Atlanta-and set his sights on a radio job. But the 11th-largest radio market isn't an easy place to break into the business. "One manager said to me, `Look, kid, you're never going to break into radio in a market the size of Atlanta. Go to Columbus or Macon-I really don't think you have a future in this business,"' he recalled.

As the CEO of Clear Channel Radio, Mr. Hogan now oversees the group's 1,200 stations, one of which is headed by that naysayer manager. "I get a chance to remind him of that a few times a year," he said, laughing.

Today Mr. Hogan, who lives on a hobby farm outside San Antonio, where Clear Channel is headquartered, is busy dispelling another myth: that radio is dead.

Last month Wired magazine blasted from its cover: "the end of radio." It joined other foreboding messages that have peppered the media recently. "The demise of radio has been greatly overstated," Mr. Hogan said. "I don't know what the circulation of Wired is but I bet it's half the cume of WLTW." (It's actually less than half. Clear Channel's top-rated New York soft rocker has a cume, or the average number of listeners that tune in over the course of a week, of 2.2 million. Wired's circulation is 585,721.)

BETTING ON IPOD, WEB

To be sure, he's not blind to the competition posed by satellite radio and consumer-empowering technologies, such as iPods. The satellite companies, Mr. Hogan said, have done a brilliant job promoting themselves-"for an industry that's losing close to a billion dollars a year and has fewer subscribers than two of our New York City radio stations, they've managed to capture a lot of positive press."

He is, however, eagerly betting on the Internet and iPods as valuable distribution vehicles for Clear Channel's content; the company last week announced plans to amp up its online ambitions and begin podcasting select non-music content.

Last year, when he went before the Clear Channel board of directors to announce his plan to slash commercial inventory at the company's 1,200 radio stations, pens dropped to the table. "It made for a long meeting," Mr. Hogan said, recalling how the board challenged the assumptions behind the much publicized "Less Is More" initiative-had Mr. Hogan and the rest of the radio executives thought it through? "The heads of the other Clear Channel divisions were in there and they were glad to hear it because it meant they had a free pass for at least a couple of meetings," he said.

Indeed, as first quarter draws to a close, the company may feel a revenue pinch as the market shakes out, adjusting to the largest player in the radio biz taking a bite out of commercial time. First-quarter radio ads were pacing down 5.6%, as opposed to its peers' 3% to 5% rise, according to Standard & Poor's analyst Tuna Amobi. But Mr. Hogan insists the company is committed to the strategy for the long haul. "This isn't a Clear Channel problem," he said. "It's an industry problem and we're in a position to lead the rest of the industry."

Jason Helfstein, an analyst at CIBC World Markets, reports that Mr. Hogan's "Less Is More" could be challenged by an industry that, on average, isn't yet cooperating. In February, he said, the radio industry on average increased units 6%, which will likely have a negative impact on Clear Channel's ability to raise prices. "Clear Channel says we're offering [advertisers] a less-cluttered environment," he said, "and the advertiser says, `What's that worth?' Hopefully in 12 months Clear Channel will be able to see that audience is up."

A year ago, J.P. Morgan reported radio ran an average of 15 minutes of ads an hour. Harris Nesbitt recently released a study of Clear Channel's average commercial time in February: 9.4 minutes. And Mr. Hogan says he's already seeing the early fruits of the initiative, which launched last December, in January's Arbitron ratings having improved over the same month a year ago. That's fuel, he says, to argue that radio is neither dead nor will be for a long time.

"I didn't know what exactly would happen under `Less Is More,'" he said, "but I knew exactly what would happen if we didn't do it-radio would have a significantly higher risk of becoming irrelevant."

Just Asking

Do you own an iPod? I own a bunch of new devices-I try to make sure I stay current on what's out there. I have satellite, I have a couple of iPods.

What's your favorite band? I can't sing or play an instrument, but I love music-I have really wide-ranging tastes. I'm a big Dire Straits fan, also Rascal Flatts, Van Morrison. I can't tell you much about classical, but I have a bunch on my iPod and my stereo at home. And I think I have every Willie Nelson album-including the crappy ones.

What book is on your nightstand?

I've typically got a bunch. I'm reading "DisneyWar" and I'm only a third of the way through but it's striking how much time they spend being petty. I'm also reading "All the Flowers Are Dying" by Lawrence Block. And I have a 10-year-old daughter so I'm reading "Queen Bees and Wannabees," about girls growing up. I come from a big family and have mostly brothers, so this whole little-girl thing is uncharted territory.

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