Radio just got dropped by Clear Channel Radio: It's now Clear Channel Media and Entertainment.
I suspect the reaction from some will be negative. Some will say Clear Channel doesn't care about radio anymore. Others will say it signals that radio is dead. There will be a thousand opinions about this change, and I do think it is a significant signal.
First, I believe Clear Channel remains deeply committed to radio. Radio currently makes up a majority of the company's revenue, and anyone thinking they don't care any longer is foolish. I had lunch with CEO John Hogan just last week, and I have never seen him more engaged and more excited about the company and all the different initiatives they are touching. He seems truly engaged with the leadership of Bob Pittman and loves that the company is opening new doors in new areas.
This name change signals exactly what can be expected from Bob Pittman, who orchestrated the AOL merger and ran Time Warner -- a global giant with every form of media, including film and music. All my friends have been wondering why Pittman would put his own money into a radio company, with apparently no clear exit strategy to get a return on his investment. As I've said all along, Pittman never goes into an investment without knowing how he is going to get out of it. I think this name change is the first clue.
Clear Channel Radio proved something with the recent iHeartRadio Festival, pulling off what music maven Irving Azoff said was the biggest and best concert he had seen in his lifetime. Clear Channel used the power of radio to drive a lightning bolt of energy into iHeartRadio, which has been on fire since. Why bother? Just look at the market cap of Pandora, and that answers the question. Pandora's current valuation exceeds all publicly traded radio companies combined -- sans profit. If Clear Channel can build iHeartRadio to a similar valuation, it will do incredible things to the financial picture for Clear Channel.
And now, of course, Clear Channel is moving into the massive couponing world to compete against Groupon and Living Social, which have giant valuations and revenues -- but don't have the advantage of a local sales team and 800-plus radio stations to drive success. This leverage of radio, to drive other businesses, is the future of Clear Channel.
I think the Clear Channel we see today will look very different a year from now. Think about the conditions of the marketplace. We still have not resolved the music licensing issue, and people like me have been saying all along that no airplay will kill the music labels -- and radio should use that leverage and launch our own labels. Why not Clear Channel Media and Entertainment? Pittman already had many major artists working for him at Time Warner. He has the leverage of airplay. I think a label is the next logical step. Maybe that too will be a collaboration with Cumulus Media. Radio can drive airplay and sales. Online listening can not only drive it, but drive clickthroughs for a percentage of the sale.
Why not Clear Channel Films? Film companies buy radio to drive attendance. It's logical. Then why not own Web brands, like Huffington or Drudge. Pittman invested in and sold Daily Candy for $200 million. Online brands can be driven by radio and can be used as product placement in films. One media fuels the other.
If you're thinking this name change signals the death of radio, you're wrong. This is the chance radio needs to become an inflection point to drive other media. These are the moves all radio companies should be making in their own unique way. Your job really isn't to create radio and sell ads. Your job is to create loyal audiences and help move product. Change your perspective, and you end up changing how you look at your purpose.
At Radio Ink Forecast in December, WBEB/Philadelphia owner Jerry Lee acknowledged Bob Pittman as the best thing that could happen for radio. I agree. No other leadership in our industry has been able to gel the big media play for radio and to get away from this radio mindset. Though Pittman loves radio, his childhood sweetheart, he knows that we have to get beyond the limits we've placed on ourselves.
Bravo, Clear Channel Media and Entertainment.