Clear Channel to Reduce Radio Ads

Clear Channel Communications Inc., the largest U.S. radio broadcaster, said Monday that it planned to reduce the number of advertisements aired on its more than 1,200 radio stations in an attempt to boost prices.

The San Antonio-based company will play fewer commercial minutes per hour on its stations and will limit the length of commercials starting in January. The limits will vary according to a station’s format and time, the company said.

Airing fewer ads may result in a short-term decline in revenue at the company, though the move ultimately may benefit Clear Channel and other broadcasters by boosting prices, Merrill Lynch analyst Laraine Mancini said. Sales in the radio industry have been hurt since 2002 by an oversupply of ad time.

“Radio just has not seen its recovery,” Oppenheimer & Co. analyst Peter Mirsky said in an interview. “There’s too much clutter, a perception that radio has been commoditized.”

Other radio broadcasters can be expected to follow Clear Channel’s lead as a means of increasing prices and attracting more advertisers, Mirsky said.

Radio prices are discounted relative to other media, John Hogan, chief executive of Clear Channel Radio, said.

“We’re taking this step to close the gap,” he said.

Clear Channel shares fell 51 cents to $34.31 on the New York Stock Exchange. The shares had dropped 26% this year through Friday.