No synergy for Clear Channel
After radio/billboard oligopoly Clear Channel acquired SFX Entertainment in 2000, the thought was that the company would use its dominance of the airwaves to promote concerts ever more profitably, the type of synergy between media that seemed unbeatable. Clear Channel, the bad boy of music industry, seemed like a juggernaut.
As a Wall Street Journal article notes ("Clear Channel To Dismantle Media Empire", 4/29/05)
Clear Channel figured its radio stations and billboards could shill upcoming concerts, and performers would gravitate to its venues for the extra marketing. The radio stations would push concert offerings in each market, and the concert and sports arenas could promote the radio stations.
But Clear Channel, faced with seriously declining growth and profits, decided to drop the concert group, spinning it off as an independent company. In the opinion of the WSJ article, it came from consumer resentment:
Clear Channel didn't get the anticipated boost. Instead, its empire opened Clear Channel up to charges of monopolization and went on to become a public-relations disaster. Music fans -- already angry at the radio consolidation they believed had sucked the personality out of local stations and put too much control in the hands of a few big chains -- now latched onto the fact that the nation's largest radio owner now was also the nation's largest concert promoter. Rising concert ticket prices, to pay for larger artist guarantees, added to their disdain.
But Clear Channel has problems that the resentment of a few knowledgeable fans can't account for. Radio ad revenues were down as well. This may have as much to do with the problems of the music industry as a whole, and the emerging availability of alternatives like digital radio and digital music players like the iPod that have lessened interest and participation in the mainstream music industry. That, in turn, affects concerts as there are fewer blockbuster names that can fill big venues and command outrageous ticket prices.
The whole episode points out the dangers of the belief in synergy between media, already well proven by the problems of Time-Warner, Sony, and Viacom. It also illustrates the practice of picking up and discarding units when they do not live up to revenue expectations. Clear Channel will concentrate on enhancing revenue from its more profitable radio and billboard operations.
