When it was introduced by Clear Channel Communications in 2008, the iHeartRadio app had a humble job as an online outlet for the radio giant’s 800-plus stations.
Now iHeartRadio has become such a central part of Clear Channel’s efforts to remake itself as a multiplatform media company that “iHeart”has become the new identity of the entire operation. On Tuesday, Clear Channel – by far the largest operator of radio stations in the United States – renamed itself iHeartMedia, in recognition of what Robert W. Pittman, the company’s chief executive, says is how thoroughly the iHeartRadio franchise has become incorporated into virtually everything Clear Channel does.
For Clear Channel, the rebranding is also an effort to reshape perceptions of the company for the digital age, when radio’s dominance is being challenged by digital newcomers like Pandora and Spotify. The company began in the 1970s and was taken over as part of a $17. 9 billion private equity deal that was completed at the peak of the market in 2008 – and which saddled the company with a mountain of debt. As Clear Channel’s all-purpose audio brand, the iHeartRadio name is attached to a new awards show and multiple live events around the country. Those events include the annual iHeartRadio Music Festival, which returns to Las Vegas for a fourth time on Friday and Saturday, with performances by Taylor Swift, Coldplay, One Direction, Iggy Azalea and many other pop acts eager to curry favor with the country’s most powerful broadcaster.
Across the country, listeners to Clear Channel’s various radio stations, like the popular Top 40 outlets Z100 in New York (WHTZ, 100.3 FM) and KIIS in Los Angeles (102.7 FM), can scarcely listen to an hour of music without having disc jockeys exhort them to try the app and interact with them on “iHeart” – themed websites and social-media channels – making iHeartRadio a valuable national brand in what is largely a local radio business.
“To capture all these concepts and still call it the legacy name,” Mr. Pittman said in an interview, “really is a disservice to what we are and what people here have built. So we’ve taken our biggest national brand, our newest brand, our most digital brand, and made that the name of the company.”
According to Clear Channel, more than 50 million people have registered for the iHeartRadio app. And the larger iHeartRadio Network, which includes the broadcast station websites, is visited by 97 million people each month. (For comparison, more than 250 million people have registered for Pandora, with at least 76 million people listening to it each month.) Yet online listening – and the advertising revenue it brings – is still small compared with traditional broadcast radio.
Clear Channel says it reaches 245 million people in the United States each month through its various platforms, but according to Mr. Pittman, less than 5 percent of the listening to the company’s programming is digital. In an interview with The Associated Press in June, Mr. Pittman said that iHeartRadio accounted for “hundreds of millions” of dollars – a fraction of the $3.1 billion in revenue that Clear Channel’s Media and Entertainment division, which includes both broadcast and online audio, made in 2013. Any significant growth in radio, however, is likely to come from the digital side. According to the research firm eMarketer, revenue from broadcast radio will remain essentially flat through 2018, at about $15.6 billion, while digital sales will gain more than 160 percent during that time, to $5.3 billion. For Clear Channel, revenue growth is essential to managing the $20 billion in debt still left from its private-equity buyout.
No matter the name, some analysts doubt that Clear Channel’s digital businesses can ever rival its broadcast powerhouses in size. “It’s more about not leaving money on the table, realizing that if they don’t build a digital radio network that can bring in a couple hundred million, then that’s a wasted opportunity,” said Paul Verna, a senior analyst with eMarketer, when asked about Clear Channel’s business and the rise of the iHeartRadio brand. “On the flip side of that,” he continued, “I don’t think there is an opportunity to scale that up to the billions or create a whole new paradigm that supersedes their other business.” Clear Channel’s businesses are organized through a complex structure of holding companies, almost all of which will be renamed with versions of the iHeart brand. CC Media Holdings, for example, the overall corporation, will be renamed iHeartMedia Inc., and Clear Channel Communications, its major subsidiary, will become iHeartCommunications. Only the company’s billboard and outdoor-advertising division, which is publicly traded, will retain the Clear Channel name, as Clear Channel Outdoor Holdings.
A change to the company’s name may be a largely skin-deep reinvention; whether called Clear Channel or iHeartMedia, it still faces powerful competition from Pandora and other outlets, as well as a heavy debt burden. But Mr. Pittman – who was one of the founders of MTV and went on to become a top executive at AOL and the merged AOL Time Warner – said a name change could also have practical effects.
“When you align your brands with the way people really know you, it helps,”he said. “Today, when we walk into an agency and say: -Hey, we’re here from Clear Channel. We want to talk about some innovative new marketing, ‘they say, – You guys have been around forever.’ “But when we walk in and say we’re iHeartRadio,” he continued, “they say, – I love what you’re doing. Let’s talk.'”Source link