Skip to Content View Previous Reports



The economics of radio appear to be undergoing some change, and it can be traced to change among radio consumers.

In early 2005, both Viacom Inc. and Clear Channel Communications announced dramatic write-downs in their radio holdings.1 On February 24, Viacom posted an $18.4 billion loss, the bulk of which — $10.4 billion was attributed to its radio holdings. A week later, Clear Channel announced a $4.9 billion write-off. This followed a $17 billion write-off by Clear Channel in 2002 and suggests that these radio stations are perhaps no longer worth what the owners paid for them.2

These write-downs come as several radio ownership groups, Clear Channel, Citadel and Westwood One, found their value being downgraded by investment banks because of slow advertising sales and weak price structures. Clear Channel announced in mid-July 2004 that it would be reducing the number of promotional and commercial time on its stations along with the number of ads played during single commercial breaks. The network planned to reduce promotional time first, cutting back as early as October, with commercial time dropping in January 2005.

As Michele Gershberg reported for Reuters in July, “U.S. radio broadcasters have been grappling with excess advertising time at lower prices after cranking up the level of ad minutes per hour in the late 1990s. The sector has lagged an advertising rebound this year for other media, particularly cable television and the Internet.”3

Add to this picture the growing presence of satellite radio, which is relatively commercial- and promotion-free and we see a situation where changes like those being made at Clear Channel might become a new standard for the industry.

Radio advertising would become more about reducing available airtime and thereby increasing the value of those fewer advertising spots. Such a strategy might also make listeners less prone to turning the dial or simply tuning out.

Economically, over-the-air is finding itself in a fight against technology. An August 30, 2004 article in Barron’s cited Forrester Research Group as saying that music downloading services “will generate more than $200 million in revenue this year, $40 million higher than forecast and up from just $36 million in 2003.”4 In the same article, the Pew Internet & American Life Project indicated that while the practice appears to be on the decline, “some 35 million U.S. adults have downloaded music.”5 And, while some in the industry still brush off any thoughts of satellite radio’s being a real economic threat, it is having a definite impact on the behavior of consumers.

This might be where the trend toward massive media consolidation might actually be negatively impacting the biggest buyers.

Total Revenues, Top Twenty Companies, 2003

Parent Company
Total Company Revenue
($ Millions)
1 Clear Channel Communications
2 Viacom Internatioanal Broadcasting
3 Cox Enterprises Inc.
4 Entercom
5 ABC/Disney
6 Citdel Broadcasting Corp.
7 Radio One Inc.
8 Univision Communications Inc.
9 Cumulus Broadcasting Inc.
10 Emmis Communications
11 Susquehnna Radio Corporation
12 Bonneville International Corp.
13 Salem Communications Corp.
14 Greater Media Inc.
15 Spanish Broadcasting System
16 Jefferson-Pilot Communications Company
17 Saga Communications Inc.
18 Beasley Broadcast Group
19 Entravision Holdings LLC
20 Regent Communications, Inc.

Source: BIAfn Media Access Pro, unpublished data

Consumers frustrated by a lack of variety in programming and a glut of commercials have customizable options at their fingertips, options with the same mobility and flexibility that radio once owned exclusively. While the Walkman of the 1980s limited joggers to a single cassette tape, today’s iPods and Mp3 players let commuters carry thousands of songs in a unit small enough to fit discreetly in a front pocket.

It’s a situation likely to worsen (from the perspective of advertisers) with the advent of a new technology called “podcasting.” Podcasting allows someone to arrange for audio content to be automatically downloaded to an iPod or other devices designed to carry audio MP3 files. Content ranges from the professional (NPR, Air America and the BBC are making content available for pod download) to the work of blogger-style DJs. Podcasting can be thought of as the audio cousin of TiVo, in that it allows listeners to select only the content they want to listen to, and lets them listen to it whenever and wherever they choose. And as research about post-TiVo viewing habits has been demonstrating, when given the option, such content rarely includes the commercials.

Clear Channel did add that the reduction of advertising and promotional minutes would have its greatest impact on music-formatted stations. According to Reuters, “News, talk and information formats will have a slightly higher threshold than music stations of several more minutes for ad time.”6

Why is it that Britney will be getting more time, while news still contends with the ad glut?

It might have to do with the steady audiences for stations formatted as news or talk. Compared with other traditional radio formats, like rock and classical, that are experiencing decline, the size of the audiences for news and talk has remained relatively unchanged. Moreover, comparing data from Arbitron’s Radio Today reports from 1998 and 2004, the time spent listening for the broader news/talk/information category has significantly increased.

Time Spent Listening to News/Talk/Information
1998 vs. 2004
Design Your Own Chart
Source: Arbitron “Radio Today” reports, 1998 and 2004

Comparing data taken for last year’s State of the News Media report to new data from BIA Financial Network, all but one of the top five owners (based on number of stations owned) saw an increase in revenues generated by stations who selected news as their primary format.

Revenues from News Stations for Top Companies
1995 to 2003
Design Your Own Chart
Source: BIAfn Media Access Pro, unpublished data
* Top-five companies by number of stations whose holdings include news format stations.
Revenues of Top Companies, 2003
News stations vs. other stations
Design Your Own Chart
Source: BIAfn Media Access Pro, unpublished data
* Top five companies by number of stations whose holdings include news format stations.

This was not the result of a big increase in stations with news as a primary format. In fact, with the exception of Cumulus, the number of news station holdings by members of the top five ownership groups has remained fairly static.

Number of Stations Owned by Top Companies, 2004
News vs. all
Design Your Own Chart
Source: BIAfn Media Access Pro, unpublished data
To five companies by number of stations whose holdings include news format stations

Cumulus added nine stations to its news holdings and increased news station revenue by some $10 million. Clear Channel’s news stations increased revenue by about $67 million even as the number of stations decreased from 135 to 133. Infinity saw an increase of $80 million while adding only one to its collection of news stations.

It will be interesting to see whether this is the start of a significant trend for new radio profitability or just a blip brought about by a public increasingly interested in national and world news and political events (the Iraq War, the war on terrorism, the U.S. Presidential elections). Clear Channel’s revenue from news stations has increased steadily for the nine years the Project has collected data. With the exception of 2001, Infinity’s news-formatted stations have grown in a succession of solid leaps.

Clear Channel and Infinity also share some very clear market strength. Of Clear Channel’s 133 news stations, more than 20 are in the top 50 markets. Nearly 50 have a market rank in the top 100 markets. Twenty of Infinity’s 21 news-formatted stations have a market rank of 49 or better.

But focusing only on stations whose primary format is news is not telling the full story of the economics of news radio. Unfortunately, there may be no way of telling the complete story. The piece of the economic pie made up by news stations is only a sliver; the revenue generated by news reports on music and other non-news stations is not only smaller but virtually impossible to determine.

Looking at the eight years of data gathered by the Project, the majority of news directors surveyed as part of the RTNDA/Ball State University News Director surveys have been unable to say whether news on their stations is making a profit, though the number has dropped steadily since its height in 2001.

Radio News Profitability
Survey of news directors, 1996 to 2003
Design Your Own Chart
Source: RTNDA/Ball State University Newsroom Surveys

And the number of those who say radio news is making a profit seems to be falling just as those who indicate that it is showing a loss is climbing.


1. Sallie Hofmeister, “Radio drives huge loss at Viacom,” Los Angeles Times, February 25, 2005.

2. L.A. Lorek, “Clear Channel Communications downplays write-off,” San Antonio Express-News, March 1, 2005.

3. Michele Gershberg, “Clear Channel cuts commercials to gain ad dollars,” Reuters, July 19, 2004

4. Sandra Ward, “Losing the Signal,” Barron’s, August 30, 2004

5. Sandra Ward, “Losing the Signal,” Barron’s, August 30, 2004

6. “Clear Channel Radio cuts commercials to gain ad dollars,” Reuters, July 18, 2004.