Clear Channel Posts Loss of $4.67 Billion

The red ink continued flowing in the nation’s radio industry Friday when giant Clear Channel Communications Inc. reported that it lost $4.67 billion in the final quarter of 2004.

The San Antonio-based company’s results came one day after rival Viacom Inc., which owns Infinity Broadcasting, posted an $18.4-billion quarterly loss. Radio companies are struggling to adjust to a more competitive media environment in which they face rivals such as satellite radio, the Internet and digital music players such as Apple Computer Inc.’s iPod.

Clear Channel’s $8.15-a-share loss, contrasted with net income of $187.2 million, or 30 cents a share, a year earlier, stemmed largely from a $4.88-billion noncash charge to devalue some of its assets. The move was prompted by a tightening of some accounting rules last year.

Those assets included some of the more than 1,200 radio station licenses it received from the Federal Communications Commission.

Until last year, companies could take into account such things as the customer base, brand value and other intangibles when calculating the value of a broadcast license, said Julie Hill, senior vice president of finance at Clear Channel. In September, however, an accounting industry task force said such factors must be excluded, a decision that forced Clear Channel and other companies to dramatically lower asset values.

Clear Channel’s overall radio business was soft, hurt by declines in retail, automotive and telecommunications advertising.

Overall, quarterly revenue rose 1% to $2.31 billion, thanks in part to a 12% increase in billboard and other outdoor advertising. Without the charge, Clear Channel would have earned $214.3 million, or 37 cents a share, in the fourth quarter. For the year, Clear Channel lost $4 billion on revenue of $9.4 billion.

Clear Channel is taking steps to bolster its bottom line with an unorthodox campaign to promote higher-margin 30-second commercials over traditional 60-second ads. The plan, dubbed Less-Is-More, is aimed at cutting commercial clutter by offering 30-second ads for 75% of the price of a 60-second ad.

Many analysts applauded the move.

“Less-Is-More will really help them reduce inventory; I am pretty optimistic about the outlook for radio this year,” said Jake Balzar, a senior equities analyst at Guzman & Co. in Coral Gables, Fla.

Not surprisingly, some advertisers resisted the move. But executives say the market is improving, with Clear Channel selling more 30-second spots in February than January.

“There’s no question we’re taking a short-term hit to develop a 30-second marketplace,” Clear Channel Chief Executive Mark Mays said during a conference call with reporters.

Last year station owners were unable to get advertisers to pay premium prices for airtime, although some chains, such as Clear Channel, saw improved demand from smaller, local advertisers. Clear Channel shares fell $1.16 to $32.75 on the New York Stock Exchange.