Clear Channel's Big Radio Ways Are Getting a Lot of Static

By | May 30, 2002 at 12:00 AM

Bennett Zier has a fine idea for a new radio format. His eyes light up as he tells you about it. “We play Sinatra, Sammy Davis Jr., Dean Martin, Bobby Darin,” he says. “The great thing about it is what we call it. You ready?” He pauses. “Vegas Radio! Is that great or what?”

Zier can imagine the whole scene – the deejays, the jingles, the ironic retro-swinger patter. It’s his music, the kind he plays in his car. He’s in love with this idea, and with his natural salesman’s charm, he’s making you love it, too.

So why doesn’t Zier, the biggest executive at the biggest radio company in the Washington area, make it happen? He’s in charge of eight stations, from soft-rock WASH-FM to hard-rock DC-101, from Top-40 Hot 99.5 to oldies station Big 100.3. Stations switch formats all the time. Surely, “Vegas Radio” could find a home somewhere on all that air. Surely…

Zier’s eyes lose their sparkle. It’s not that simple, he says. He’s the first to tell you: At Big Radio these days, it doesn’t quite work that way.

Radio used to be a simpler business. Back when, small companies – mom and pops, almost literally – dominated the field. There were a few big companies in the game, but until 1996 no single broadcaster could own more than 40 stations nationwide, or more than four in one city.

Radio was most assuredly “local” – usually undercapitalized, sometimes idiosyncratic, typically owned by people who lived in and presumably cared about the community. For decades, the federal government liked it that way; under vaguely defined notions like “serving the public interest” and “preserving diverse voices,” official Washington kept radio small and decentralized.

Much of that changed with an act of Congress. The passage of the Telecommunications Act of 1996 swept aside many of the old ownership limits, and ignited the business like a firecracker. Small owners started selling, and larger companies began feverishly merging. Six years later, radio is a big business, with publicly traded companies now dominating ownership of the nation’s 11,400 commercial stations.

The biggest of the big is Clear Channel Communications Inc., based in San Antonio but on the air everywhere. Thanks to a succession of mergers involving nearly 70 companies in the past six years, Clear Channel has grown from just 30 stations to more than 1,220 – more than one of every 10 in the nation. It’s also the nation’s largest concert promoter and one of the largest billboard companies.

Even that understates Clear Channel’s reach. In some cities, the company’s radio stations attract as much as half the audience and advertising dollars (in the Washington area, its market share hovers around 30 percent). If a pending deal to buy a competitor in Charlottesville is approved, Clear Channel would control more than 90 percent of that city’s radio market, according to analyst Mark Fratrik of BIAfn Inc.

But if Clear Channel is a colossus, it’s a colossus under the gun.

The company lost money every quarter last year, piling up an annual loss of $1.1 billion. Clear Channel also is shouldering $8 billion in debt – the legacy of its deal-a-minute expansion spree. With a long advertising slump afoot, the company’s stock is selling at about half its peak price of two years ago.

The other day, Clear Channel reported that it lost $16.9 billion during the first three months of 2002, mostly as a result of writing off devalued assets.

These cold financial facts form the vise squeezing managers like Bennett Zier. They also provide strong clues about why Clear Channel’s stations sound the way they do.

If nothing else, they tell you why you probably won’t hear Vegas Radio anytime soon.

As regional vice president of Clear Channel’s eight big Washington area stations (and 18 smaller stations arrayed from Ocean City to Frederick to Winchester, Va.), Zier has little room for experimentation or “WKRP”-like wackiness. “Every issue we discuss, every decision we make,” he says in his Rockville office, “comes down to a simple test: Will it increase ratings or revenue? If it doesn’t, let’s move on.”

As such, Zier, 45, is guided by two basic imperatives: keep the ads rolling in and the costs in line. That means Clear Channel’s stations are lean, no-frills machines. You won’t hear much on the five FM stations other than mass-appeal music. Even live human beings are out of the question during late-night and pre-dawn hours, when the stations fill the air with cheapertaped or “automated” programs (the practice could expand to other parts of the day, suggests one insider).

You’re also likely to hear a lot of commercials. During peak periods, Clear Channel’s stations carry anywhere from 16 to 20 minutes of ads per hour. One rival station has seized on this as a marketing opportunity; Z104-FM, owned by Bonneville International of Salt Lake City, runs radio and TV commercials that promise “Fewer Commercials. More Music. Guaranteed.”

On the AM side, Clear Channel’s three area stations – WRC, WTEM and WTNT – rely heavily on syndicated fare heard across the country, such as Don Imus’s morning program. Some companies even pay Clear Channel to run their programs, in effect making them program-length commercials. The daily three-hour “Money Talk” program on WRC (1260) is one such “brokered” show. If you wanted your own daily radio show, Clear Channel would sell you the time for about $1,200 an hour.

Zier and Clear Channel, meanwhile, have no formal news department. The Clear Channel group buys news reports from other sources, such as CNN Radio, producing none of its own. Thus, when the Pentagon was attacked on Sept. 11, the stations didn’t have the personnel to cover the emergency in their own back yard. They had to resort to simulcasting the audio portion of WRC-TV’s coverage; Clear Channel has a business relationship with Channel 4.

Prompted by that event, Zier is considering some changes. “We’re looking at building a news department,” he declares. But more than eight months after the fact, the eight stations still employ only three news people, the same number they had before Sept. 11.

All this leads to a common criticism of Clear Channel: that the company has slowly but methodically bled its stations of any kind of distinctive personality, that in the drive to hold down expenses the stations are losing their local identity.

“A Clear Channel station in Washington sounds like a Clear Channel station in Chicago or New York City,” asserts Mark O’Brien, who was program director at WASH-FM and DC-101 before joining Z104-FM as vice president and general manager. “They’re all pretty homogenous and not really very local. That’s a cheaper way of doing business. The jury’s still out on whether that’s a successful way of doing it.”

You will, of course, get an argument about this from the affable Zier.

“You don’t build great radio stations if you don’t build a great local presence,” he says, rattling off a variety of station-sponsored community events, contests and fundraisers. “It’s a key element. The philosophy here is, find a parade and get in front of it. If there’s no parade, start one.”

Testing, Testing…

The funny thing about Big Radio is how small it really is up close.

Clear Channel’s regional headquarters is on two floors of a generic modern office building, above a Brazilian restaurant on Rockville Pike. There’s no looming broadcast tower out front, and no signs offer a hint to passersby that this is the home of some of their favorite stations.

Inside, a visitor can breeze past all five of Clear Channel’s FM outlets in a couple of minutes; the stations broadcast from a warren of small studios on the fourth and sixth floors.

Over here you’ll find Mark Kaye and Kris Gamble doing their raunchy “Hot Morning Mess” on Hot 99.5. Over there are morning men Dave Adler on WBIG and Scott Brady on WASH-FM. Friendly, folksy Gary Murphy and Jessica Cash are chatting on country station WMZQ (they’ll soon be moving to WBIG). Downstairs, it’s Elliott Segal and friends on DC-101’s “Elliott in the Morning” show (the company’s three AM stations have their own building in Silver Spring).

In the cubicles surrounding the deejays, staffers sell ads, develop promotional spots, maintain the stations’ Web sites and handle the mail for all five outlets. Zier oversees it all from a fine, though hardly baronial, corner office that looks out on the Doubletree Hotel and Ethan Allen furniture store across the pike.

The technological heart of it all is Clear Channel’s master control room. A spotless, windowless, humanless computer farm, the place looks like Mission Control, minus the technicians. From here, the stations’ signals are passed from the building to transmission towers scattered throughout the region.

This tidy little radio beehive illustrates one of the primary business motives behind merger mania: centralization. By consolidating functions, five stations can be run almost as cheaply as one.

There’s no need for each station to have its own engineers, receptionists and sales people when these positions can be shared by the group. It takes just 200 full-time employees to keep Clear Channel’s local stations on the air around the clock. As Zier points out, “Everyone here has at least two or three jobs.”

In fact, Jeff Wyatt, Hot 99.5’s program director, doubles as program director of WMZQ, which means he’s responsible for the music, deejays and commercials that run on a Top-40 station and a country station. That’s a typical Clear Channel arrangement. The eight stations are programmed by just four people.

It’s an exhausting, nonstop job. “I think back to the day when you throw your feet up on the desk for 20 minutes and talk about the kids and family,” Wyatt says during a brief, hurried interview. “You have to plan for that now. Your time is incredibly valuable. Unless you have a life, all you do is work.”

Not that he’s complaining, exactly. “It’s good that we can put the best people in the most beneficial positions,” Wyatt says. “That allows us to achieve more with what we’ve got.”

Clear Channel’s close-to-the-bone operating style has had ripple effects on the entire radio market. A rival station manager who asked not to be identified says the company’s cost-cutting has helped bring down every station’s costs. “When you have twice as many people looking for half as many jobs,” he says, “it reduces the price pressure on your [personnel] expenses.”

But this same manager also worries: “You have to balance that against the harm it does to the emotional well-being of the people in your organization.”

Fortunately for Wyatt and his fellow Clear Channel programmers, they don’t have to spend long hours auditioning CDs to figure out what to put on the air. There’s research for that. Little of what’s on Clear Channel’s stations is left to whim or chance. Each week the program directors review national sales data and Billboard’s charts. Focus groups are regularly assembled and phone polls are taken. Is a tune familiar enough? Do people like it? Are they tired of it? Each track is assigned a “burn” score, a measure of how “burned out” the target audience has become; when the score passes a certain level, the tune disappears.

The company tests what listeners might see, too. The other day, Mark Lapidus, the stations’ regional marketing manager, showed Zier the final mock-up of a billboard promoting G. Gordon Liddy’s syndicated talk show, which is carried on WTNT-AM. The billboard shows Liddy’s face. Zier and Lapidus were unsure whether Liddy’s target audience – men between the ages of 30 and 50 – would recognize him. So Liddy’s mug was tested among male shoppers at a local mall. Result: 29 of 35 respondents recognized Liddy; his face stayed in the ad.

All of this testing is designed to keep Clear Channel’s stations firmly in the mainstream of musical tastes. You’re not likely to be surprised by something you hear played on a Clear Channel station. And that’s the whole point.

“If every program director just played [his] record collection, we’d be in trouble,” Zier says. “There’s an old saying: You don’t get hurt by what you don’t play.”

Vegas Radio? Forget it. Not mainstream enough. Not “young” enough. Despite his personal musical passion for Sinatra and Broadway tunes, Zier knows it would never test. Besides, there was a variation of it on the old WGAY-AM (now WRC-AM) until a year ago. The audience was reasonably large, but fans of the format were deemed too old by advertisers. Reluctantly, Zier killed it, replacing it with “business talk.”

“It’s a fun idea,” Zier says of his brainchild, “but fun ideas can be very dangerous. It can be an inside joke that only you and your co-workers and your Aunt Rose think is funny. Besides, we’re happy with the formats we have.”

Staking Out His Territory

Zier has spent his entire career on the business side of radio, but his heart has always been invested in the programming side.

Like many, he fell in love with the medium as a child. Growing up on Long Island, his early passions were listening to Yankees games on WMCA-AM and Top-40 on WMCA’s rival, WABC-AM (one of whose deejays was Channel 4 sportscaster George Michael, now a friend of Zier’s). Eventually, Zier stopped listening and started talking himself. While getting his accounting degree at Adelphi University, he worked as a deejay, a theater reviewer and a newsman at the college station and a nearby commercial outlet.

His first real job was as an ad salesman for a Long Island radio company. He was good at it. He’d drive up and down Jericho Turnpike, hustling airtime to lumberyards, ceramic-tile stores, restaurants, whatever. One day he spotted a deli with freshly made signs in its window. “How much did you pay for those signs?” he asked the owner. Told $100, Zier replied, “I can put you on the radio for $90.” He got the man’s business.

The ambitious young man was a natural for the big city. Zier spent the next decade with CBS’s radio division, ultimately becoming general manager of one of its stations in Boston.

Zier’s latter career is kind of a parallel tale of consolidation. After moving to Washington to manage WTEM in 1992, Zier has survived and thrived as his stations have been bought and sold. His résumé includes a number of companies that have been submerged by the consolidation wave – Colfax Communications, Evergreen, Greater Media, Chancellor Broadcasting. When Clear Channel bought Chancellor in 1999, Zier landed at the top of the regional powerhouse.

Colleagues and competitors say Zier has one of the toughest jobs in radio, but they don’t underestimate him. “I’ve come to appreciate Bennett as a competitor and as a friend, and I’m comfortable using both those words,” says Jim Robinson, president and general manager of local stations Mix 107.3 and WJZW-FM. “He’s effectively using the resources of Clear Channel Washington to produce a competitive product as efficiently as possible, and to bring in as much money as possible.”

These days, Zier’s management bible is a thick white binder that he keeps in a left-hand drawer of his desk. It’s Clear Channel’s, and Zier’s, master plan. It contains highly detailed data spelling out the company’s “strategic vision” – each station’s revenue goals, cross-promotional schemes, ratings targets, etc.

It all boils down to this, Zier says: Set yourself apart. “Every station has its ‘est’ – the ‘youngest’ station, the ‘danciest’ station, the ‘rocking-est’ station,” Zier says. “You need a clear differentiation between you and your competition. Then you have to emotionally, passionately and vigorously defend your hill.”

In theory, that’s what Clear Channel has been doing. Its stations occupy non-overlapping formats – country, rock, “soft” rock, oldies, etc. With its massive size, the company is “the 800-pound gorilla of this market,” says one industry source. “When you’ve got one of every three [stations] in the market, it’s hard to compete against that.”

But Clear Channel’s conquest is far from certain. Last year was a tough one for all media businesses, but tougher still on Clear Channel; the company’s share of Washington’s $350 million radio ad market fell slightly, from 28.8 percent to 27.7 percent, according to BIAfn’s figures.

Clear Channel’s most popular station in the most recent Arbitron rankings, WASH-FM, rose no higher than sixth among listeners ages 25 to 54, the most coveted group among radio advertisers. And not all of Zier’s recent moves have paid off. When he converted the faltering “Jam’n Oldies” ’70s station to Top-40 Hot 99.5 early last year, the station’s revenue fell to $11.3 million in 2001 from $17 million the year before, BIAfn says.

Zier maintains that Clear Channel is roaring back, that the stations are rebounding with the local economy. He’s buoyant, upbeat, the natural salesman again.

But you wonder: Are revenue targets and expense controls and mainstream formats all there is? Wasn’t radio more… fun back when he was starting out?

Well, he concedes, there’s more pressure now, and the business has certainly changed. But he quickly brightens. “Yes, it’s different,” he says. “But I tell people who say that to get over it. It’s going to change again. Change is good! Change is the future! It’s not supposed to be the way it was. C’mon, get over it!”

Indeed, radio is changing. Arbitron reports that Americans are listening to it less each year. The ratings service estimates that on average people spend 10 percent less time with it now than in 1996.

That, of course, was the year Congress deregulated radio and unleashed companies like Clear Channel. Maybe the decline in listening since then is just a coincidence.

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