Clear Channel
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Group 3: Case Study 2 – Clear Channel
Chantel Wilmot, Krissinda Richards, Mildred Smith, Ryan Hedges
BUSI 690 – B07
Liberty University
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Executive Summary
Clear Channel is a publicly held company that began with one radio station in 1972 and is
currently one of America's top ten international media conglomerates, with gross revenues of
$8.4 billion in 2002. While the company's size does not make it unique, Clear Channel is not the
only media firm to experience dramatic growth because of deregulation - it is notable in that, for
many, it exemplifies a number of the detrimental effects that media ownership concentration can
have on workers and society as a whole. Having rocketed to the level of media titans such as
Viacom, Disney and NBC in a mere six years, Clear Channel has radically altered established
methods of doing business in the industries in which it is dominant (Figuera, et al., 2004, p.1).
Clear Channel Existing Mission Statement
The current vision of Clear Channel is to disrupt the media landscape by captivating
audiences in any venue (www.clearchanneloutdoors.com). Clear Channel’s current mission
statement is to deliver superior customer results by championing Innovation and Insights that
create smarter out-of-home advertising using our exceptional teams and assets
(www.clearchanneloutdoors.com). Clear Channel Objectives
Clear Channel’s goal is to be a responsible member of the communities we serve by
taking a proactive role in making our neighborhoods better places to live. The do this by
donating millions of dollars’ worth of public service advertising (PSA) to nonprofit and
governmental organizations for their use in communicating information that positively affects the
lives of those within our communities. Clear Channel believe addressing the challenges, big and
small, that affect people’s daily lives is critical for influencing greater societal change. Their
support extends to both local and national organizations as they improve health and public safety,
ensure a sustainable environment and promote arts, education and cultural diversity. Clear
Channel’s collaboration works to inspire citizens to make a difference within their own
communities (www.clearchanneloutdoors.com).
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Clear Channel Strategies
Clear Channel - New Mission Statement
Clear Channel Existing Business Model
SWOT ANALYSIS
The goal of any SWOT analysis is to identify the key internal and external factors that
will impact the overall success of a company. The internal factors can be viewed as strengths or
weaknesses depending on what impact they may have on the company and the external factors
include opportunities or threats that are the results from the external environment. This SWOT
analysis on Clear Channel Communications now known as iHeart Radio.
Internal Factors
Strengths
Clear Channel Outdoor holdings is a global company with a strong outdoor advertising
presence which includes a variety of services like advertising on billboards, street furniture,
transit vehicles., digital displays, airport dosplays, mall displays and wallscapes. The company
owns about 108,000 display structures in America. “In FY2012, America’s outdoor advertising
business generated 69% of its revenues from billboards, followed by transit displays (17%),
other displays (10%) and street furniture displays (4%)” (CC Media Holdings, Inc. SWOT
Analysis, 2014., p. 4-5). Likewise, with its international market located in Asia, Australia,
Europe, and Latin America the company has approximately 650,000 displays throughout these
countries. The international business obtained 46% of its revenue steam from street furniture,
26% from bill boards, 20% from other, and 8% from transit. Both markets combined created
46.7% of the company’s revenue in 2012. With more and more companies moving over to the
digital world for advertising from local and international market places Clear channel
strategically to boost their top line and increase profits (CC Media Holdings, Inc. SWOT
Analysis, 2014).
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The company has a wide reach when it comes to radio broadcasting with some 840
domestic radio stations in 150 markets in the United States. The company is constantly looking
for ways to expand their portfolio for its listeners with high-definition radio, streaming audio, as
well as mobile and other distribution channels. This wide reach allows Clear Channel to meet the
needs of a large consumer base, thus maintaining a competitive advantage in the market as well
as increasing its revenue generating capabilities. Over the years Clear Channel has made
significant strides in strategically investing in digital media. One noteworthy investment was in
the iHeartRadio which became the company’s digital radio platform. This investment allowed for
Clear channel to offer the iHeartRadio mobile application on smartphones and tablets as well as
in vehicle entertainment and navigation systems. The company’s strategic plan to invest in digital
media was a significant decision and gives them a strong presence in the market as well as
providing additional sources of revenue (CC Media Holdings, Inc. SWOT Analysis, 2014).
Weakness
Clear channel has high debt ratio and has obtain an enormous amount of debt because of
its service obligations.
The company reported long term debt of $20,365.3 million and $19,938.5 million in the
FY2012 and FY2011, respectively. The debt incurred by the company is significantly high
compared to its shareholder's deficit of $7,995.1 million and $7,471.9 million in FY2012 and
FY2011, respectively (CC Media Holdings, Inc. SWOT Analysis, 2014, p. 6).
In 2012 it was reported that the company incurred interest in the amount of 1,549 million and in
2011 $1,466.2 million because of their enormous debt. When there is high debt it will naturally
incur high interest payments that are normally fixed in nature. This makes the company
vulnerable in hostile industry and economic conditions and it also decreases the cash flow that
would be available for capital expenditures, marketing, and other general corporate activities.
Clear Channel lack scale against its major competitors like CBS who is large in scale with a
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broad operations base and revenue stream. In 2012 Clear Channel reportedly generated $6,246.9
million in revenue while CBS reported $14,089 million that is a difference of $7842.1 million.
The lack of scale limits the company’s capability of expanding operations and maintain its
competitiveness (CC Media Holdings, Inc. SWOT Analysis, 2014).
External
Opportunities
Outdoor advertising is expected to grow significantly in the next few years. According to
industry evaluations the compounded annual growth rate (CAGR) will be 5% between 2012 and
2017 to have an approximate value of $42.8 billion by the end of 2017. The estimated out of
home advertising is anticipated to grow as well with a value of $8 billion in 2012 and expected to
grow at a 5% CAGR from 2013-2017 reaching up to $10 billion by 2017. Clear channel is a
major player in the outdoor advertising industry, so they are well positioned took take advantage
of the rapid growth in the market and increasing their profit margin. Another opportunity would
be the rapid pace that online advertising is growing. CAGR being at 12 % between 2013 and
2016 and this is not including smart devise or tablet advertising. That would take the CAGR up
to 30% between 2013 and 2020. The Company already operates an online radio business that
produces revenue through online advertising and is one of the leading streaming companies in
the industry. The company would be wise to continue to find ways to develop and implement
additional pathways of events through its radio, television and digital platforms (CC Media
Holdings, Inc. SWOT Analysis, 2014).
Threats
The broadcasting and outdoor advertising industries is highly competitive. Clear channel
is on constant competition to gain the trust and loyalty of its customers from other advertising
entities like radio stations, but newspapers, magazines, television, direct mail, smart phones,
satellite radio and internet-based media. The company also faces threat by new technologies on
the radio broadcasting side that other companies may be utilizing that have a further reach than
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what Clear Channel has. Not to mention the pressures of trying to keep up with larger companies
like CBS and Lamar Advertising. These pressures can hurt adversely impact the company’s
profitability, productivity and market share.
Clear Channel operates in a highly regulated industry that is governed by US federal laws
and other federal agencies, including the Federal Communications Commission (FCC).
Radiobroadcasting is subject to the authority of the FCC under the Communications Act, which
authorizes the operation of radio broadcast stations to be licensed by the FCC. The
Communication Act gives the FCC all power to issue, renew, revoke, modify licenses, assign
frequency bands and execute consequences for abuse of the set regulations.
Another threat is the reliance of contract renewals for its street furniture and transit
businesses that are controlled by governing bodies. The contract are not automatically renewed
there is an intense bidding process to win a new contract or the renewal of an old one. The
normal contract period is from 3 to 20 years. Gaining and maintain these contracts is crucial for
the success of the company because the American outdoor sector allots for 21% of the revenue
stream and the international market sector generates about 54% of the revenue. Contract
renewals will also allow for the company to continue offering products to its customers at fair
prices (CC Media Holdings, Inc. SWOT Analysis, 2014).
Boston Consulting Group (BCG) Matrix
Enter in division names below
Clear
Channel’s
Division
Revenues
Top Firm in
Industry
Division
Revenues
Division
Market
Growth Rate
Relative
Market
Share
Position
Outdoor Advertising
2,808,000,00
0
3,559,000,000
-0.02
0.79
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The Boston Consulting Group Matrix is a great tool for management when determining
the strategy of their respective firms. The Clear Channel case provided pertinent information on
the outdoor advertising industry. This information detailed Clear Channel’s outdoor advertising
division revenues as well as the financials for competitors in the industry. Clear Channel’s main
competitor is JCDecaux, as alluded to throughout the Clear Channel case. The BCG matrix
provides a comparison of their revenues, along with a glimpse of the division market growth
rate. The growth rate for the outdoor advertising division declined from 2014 to 2015. The
growth rate is a vital piece of information for managers who want to determine which industry
has the most potential. The final column depicts the market share that Clear Channel’s outdoor
advertising division holds. Competitive Forces Analysis
The competition in the communications industry is relatively high. This case examines a
variety of methods for communicating. Clear Channel uses its outdoor advertising division as
the main driver behind their finances. They also have a radio business with a recent focus on
expanding the internet business. Through researching this industry, there is a large market with a
few main companies holding most of the market share.
Entry barriers are relatively high in this industry, with a large cost to starting up, there are
little to no new entries in the communications business. Additionally, the market share is held by
a few large companies who own the majority of billboards and radio stations. The overhead
alone makes it difficult for entrepreneurs to be successful. They must be able to get advertisers
right away, which is extremely difficult, in order to make a profit.
The power of suppliers in this industry is relatively high. Radio and advertising
companies rely on their supporters and the advertising space they can sell. Because of this
relationship, suppliers hold a great amount of control and sway. Additionally, the case mentions
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the stockholders as having authority as well. There have been countless suits against Clear
Channel for its’ methods in handling investors and shareholders.
The customers in this industry have relatively high bargaining power. This is due to the
number of firms easily accessible to customers. There must also be a large demand for the
festivals that iHeart puts on. In terms of the industry, customers drive the response to advertising
and can determine whether the method of advertising is successful.
This industry has a high threat of substitute products. With podcasts being more common
and accessible, customers can also purchase CDs or books to listen to. For this industry to be
successful, they must stay on the cutting edge of technology and provide programs or
advertisements that are relevant to customers and ensure they stay loyal.
Competitive Profile Matrix (CPM)
In this matrix, the twelve critical success factors of the outdoor advertising industry were
listed and weighted. Then using information from the case, SWOT analysis, and company
websites the ratings were determined. A rating of one is a strong weakness and a rating of four is
a strong strength, no two companies could have the same ratings. The CPM annotates that
JCDecaux has a more competitive outdoor advertising profile. This is due to its’ market share
and control of the international market.
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Financial Statements/Ratios
Clear Channel has shown a slight decrease in revenue over the last three years. Likewise,
the company has experienced decreases in gross profit, and sales; however, Clear Channel had a
subtle increase in operating expenses in 2017 as compared to 2016.
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At the end of the 2017 fiscal year, December 31, 2017, Clear Channel had $144 million of cash on
their balance sheet. This is a slight decrease of -0.73% from the 2016 year. The company’s total assets at
the end of the 2017 year equaled $974 million. The company’s total assets equaled $4.67 billion, while
ons
Net
Income
Depreciation
and
amortization
zation
of
debt
discount
Investment/asset
impairment
charges
Invesments
losses
erred
income
taxes
at
compensation
ange
in
ng
capital
nts
rece
e
Prepaid
expense
ccounts
payable
ccrued
liabilities
Interest
payable
ng
capital
items
Net
Investments
Investments
in
property,
plant,
and
equipment
-0.06
uisitions,
net
-
les/Maturities
of
investments
-
ng
ites
-2.67
Net
‘or
ing
0.25
Inancing
Debt
issu
76.67
Debt
repayment
0.00
Dividend
paid
-
financing
activities
-0.77
Net
-1.76
ect
of
exchange
rate
0.56
Net
change
in
227
-2.77
at
nning
of
pe
-0.41
ate
peri
413
1.22
rating
ow
299
-0.14
expenditure
-231)
-
-0.
Free
cash
flow
ar
81
-0.31
USD
in
Million
except per
share
data
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their liabilities equaled $6.67 billion. Overall, Clear Channel’s balance sheet shows small decreases in
comparison to the 2016 fiscal year; estimated -0.16% overall decrease.
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Appendix A
SWOT Analysis Matrix
Strengths
Weaknesses
Internal
•
Strong outdoor
advertising presence
•
Wide reaching customer
base
•
Intentional investments
in digital media
•
Brand quality for
customer satisfaction
•
High debt ratio
•
Inability to grow at a rapid
compared to its competitors
•
Gross margins and operating
costs
•
Energy costs
•
Declining cash flow
•
Government regulations
Opportunities
Threats
External
•
Increased market demand
for Outdoor advertising
•
Optimistic viewpoint for
utilizing online
advertising
•
Growth in the economy
•
Customer preference
changing
•
Increased pressure from
competition
•
Regulations and law changes
could impact financial
performance
•
Reliance on contracts getting
renewed with street furniture
and transit display
O
ON
DHT
BR
WN
BR
oO
OA
nN
DN
FLW
N
R
Oo
strong
outdoor
advertising
business
liable
distribution
network
ey
have
cash
flow
readily
available
to
allow
for
new
projects
eger
and
aquisitons
in
digital
media
roduct innovation
Quality
customer
satisfaction
h
success
rates
in
entering
new
markets
Strong
brand
recognition
yal
customers
International
presence
w
growth
in
research
and
development
(R&D)
investment
h
debt
ratio
declining
market
share
h
costs
to
replace
existing
experts
gross
margins
and
operating
costs
declinng
per
unit
reveue
for
Cc
Radio
energy
costs
declinig
cash
flow
0
0
‘otal
IFE
Score
BR
Wi
wlalpow
BP
PLS
BR
CIO
RFR
RR
IN]
ROR
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Appendix B
Internal Factor Matrix (IFE)
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Appendix C
External Factor Matrix (EFE)
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Appendix D
SWOT Bivariate Matrix
Clear Channel
Strength-S
•
Strong outdoor advertising
presence
•
Wide reaching customer base
•
Intentional investments in
digital media
•
Brand quality for customer
satisfaction
•
Product Innovation
Weaknesses-W
•
High debt ratio
•
Inability to grow
at a rapid pace
compared to its
competitors
•
Operating costs
•
Energy costs
•
Declining cash
flow
Opportunities-O
SO Strategies
WO Strategies
•
Increased market
demand for
Outdoor advertising
•
Optimistic
viewpoint for
utilizing online
advertising
•
Growth in the
economy
•
Customer
preference
changing
•
Implement a unique selling
plan by doing market research
to find an opportunity that
none of the competition is
utilizing
•
Continue to use online
advertising and keep ads fresh
and inviting that will draw the
attention of the consumer
•
Understanding what the
customer wants a reacting
quickly leaving no room for
competitors
•
Debt
restructuring
•
Adopting the
less is more
strategy
(knowing the
market and what
customers want
makes a
difference,
focused attention
•
Research and
streamline some
expenses to
reduce operating
costs
Threats-T
ST Strategies
WT Strategies
•
Increased pressure
from competition
•
Changing
government
Regulations that
could impact
financial
performance
•
Reliance on
•
Establish a team that will
focus on researching
competitors strategies and see
how the company can build
from it
•
Ensure the stays current on
changing laws to maintain
compliance
•
Set prices at a level that
•
Build quality
relationships
with companies
who will stay
loyal
•
Strengthen
research and
development
(R&D)
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contracts getting
ensures the business will
renewed with street
remain profitable and
furniture and transit
maintain customer loyalty
display
•
Competitive pricing
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References
Clear Channel Outdoors (2018). https://company.clearchanneloutdoor.com/our-story/
CC Media Holdings, Inc. SWOT Analysis. (2014). Clear Channel Communications, Inc. SWOT
Analysis, 1–9. Retrieved from http://ezproxy.liberty.edu/login?
url=http://search.ebscohost.com/login.aspx?
direct=true&db=bth&AN=94485157&site=ehost-live&scope=site
Figuera, M., Richardson, D., Whitefield, P. (2004) The Clear Picture of Clear Channel
Communications, Inc., Digital Commons, ILR Cornel.Edu, Page 1-83.
https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?
referer=https://www.google.com/&httpsredir=1&article=1100&context=articles
