{second in a series ...
stop corporate welfare for mega-broadcasters!}
Just days ago, Clear Channel admitted to being subpeonaed in Eliot Spitzer's ongoing payola investigation.
As part of a Friday afternoon info dump, Clear Channel dumped all over its investors by admitting to a staggering $4.7 Billion loss for the quarter.
Yes, quarter, not year.
Apparently the bulk of the loss had to do with changes in accounting rules, and no longer being able to artificially inflate the value of intangible assets.
And in terms of their real assets, the outlook is not so good either ... more on the flip-flop!
Clear Channel Communications, the nation's largest radio station owner, posted a fourth-quarter loss of $4.67 billion yesterday after writing down the value of radio licenses.
Shares of Clear Channel, which is based in San Antonio, fell $1.16, or 3.4 percent, to close at $32.75 on the New York Stock Exchange.
Clear Channel's loss reflects the diminishing value of radio as listeners and advertisers turn to media like the Internet and satellite radio. Viacom, the No. 2 radio company in the United States, wrote down its station assets $10.9 billion yesterday. Both companies failed to increase revenue from radio stations in the quarter.
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.
OK, fine.. we all know these big corporations inflate the numbers, this should be a one-time correction going forward.... right???
Maybe not.
These days, Wall Street would rather hear something else. Growth in advertising has slowed, listeners seem to be switching off their radios in favor of iPods, and a new threat is emerging from commercial-free channels offered by satellite radio...
Industry observers say many of the problems reflect the industry's focus on profits and Wall Street, rather than consumers. Specifically, they point to cost-cutting that compromised the quality of programming, and a tendency to put more advertising on the air, alienating listeners with what's known as advertising "clutter."
Well, alright.. point taken, but surely just a couple of tweaks to the business plan and Clear Channel should be on the road to profitibility, right?
uh... never mind.. this from the mouth of Mark Mays, Clear Channel CEO...
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.
To make up for selling less ad time, the company is raising the prices it charges advertisers. Developing the market for shorter radio commercials is expected to cut into revenues in the near term.
The long-term question with the company is whether advertisers will eventually embrace Clear Channel's assertion that "less is more." If shorter commercials don't catch on with advertisers, Clear Channel's revenue declines could last for more than a few quarters.