Ad Strategy Boosts Clear Channel’s Profit

Clear Channel Communications Inc. on Wednesday posted a higher profit as its radio division outpaced the industry in revenue growth after it cut back commercial airtime, which boosted ratings and pricing.

Clear Channel, the nation’s No. 1 radio operator, bet last year that if it shortened advertising spots, its audience and ad rates would improve. The policy led radio revenue to fall 7% in last year’s first quarter, but this year’s first quarter showed a 5% increase.

Clear Channel, which owns and operates 1,200 stations, posted a first-quarter profit of $96.8 million, or 19 cents a share, compared with $47.9 million, or 9 cents, a year earlier.

Excluding gains from the sale of some stations and the swap of some billboard assets, the company posted a profit of 14 cents a share, compared with the average analyst estimate of 13 cents, according to Reuters Estimates.

Overall revenue rose 4% to $1.5 billion, in line with the average analyst estimate, but the 5% increase in radio revenue topped some forecasts and was the unit’s first increase since San Antonio-based Clear Channel initiated its “Less Is More” policy.

Clear Channel’s radio revenue also outperformed the industry overall. On Monday, the Radio Advertising Bureau said industrywide first-quarter ad sales fell 1%.

The new advertising strategy comes amid multiple challenges. Satellite radio and digital music players threaten to cut into traditional radio’s listenership. And Internet media companies are offering more local search and advertising.

Company executives said advertisers were embracing shorter ads and said early indications of second-quarter radio revenue showed an increase of 3.4% over the year-earlier period.

Clear Channel shares rose 28 cents to $29.36.