This week, the largest radio company in the world changed its name. In doing so, it began a process to remake an image steeped in traditional radio and somewhat tarnished by longtime criticism over programming and practices.  The company has adopted a new name in favor of an image that is more in line with the future of radio. 

Clear Channel Media and Entertainment – formerly Clear Channel Radio – is now iHeartMedia, so inspired by its digital online offering iHeartRadio.


How it got to this point is very interesting.

Roots in Old School Radio

Clear Channel radio was founded in 1972 with the purchase of one San Antonio radio station. Then in 1975 the company founder, Lowery Mays, purchased his second station – the 50,000 watt clear channel station WOAI in San Antonio. In radio, a “clear channel” station is one permitted by law to broadcast on an assigned frequency from the F.C.C. without interference from other stations on that same frequency. To effect this, many radio stations across the U.S. who shared a frequency during the day with a clear channel station somewhere else were forced to sign off either at sunset or at a designated time. This allowed the clear channel stations to dominate at night and be heard often up to thousands of miles away. As an example, years ago I worked at a radio station in Columbus, Ohio that shared a frequency with WCBS-AM in New York (880). My station had to sign off at sunset – as did many others – to protect WCBS-AM’s nighttime broadcast.

So, at one time,  “clear channel” radio stations were the “Crown Jewels” of traditional radio. They were the most powerful, most prestigious, with the most valuable license. The name “Clear Channel Radio” was no accident. It was a proud display of radio prowess.

Laws Change, a Company Grows

But, as Clear Channel grew, a lot changed. By the 1990s, legislation was passed which freed up radio operators to buy more radio stations than ever before. Clear Channel gobbled up properties and grew into the top player in the country. The value of traditional radio properties was in a heyday during the mid 1980s into the late 1990s. So, the price Clear Channel paid was at a premium. What’s the old expression when it comes to the stock market?  Buy low, sell high? That probably applies to anything of value.  Only, sometimes  you don’t know how valuable something will or won’t be over time. Sometimes you assume to much. Sometimes circumstances just change. When Clear Channel was in the middle of its buying spree, there was little indication of the huge changes about to manifest.

Technology Changes, a Company is Challenged

Besides buying pricey stations, other events were converging with Clear Channel’s growth. Namely, technology. By the late 1990s, the Internet was exploding and the idea of audio “streaming” was surfacing. The development of methods to compress audio files and move them faster began with MP3s and RealAudio and got better and better. By the mid 2000s, streaming audio was quickly moving from hobbyists and radio wannabes to a full-fledged race by the big companies to leverage the new medium. In December, 2005 Arbitron reported that there were 7 million listeners to Internet streaming between Yahoo Music, the AOL Radio Network, MSN Radio, WindowsMedia.com, Live365.com, and what was then Clear Channel Online Music and Radio.

Today, about 160 million people in the U.S. listen at least once-a-month.

Even with the paltry 7 million back then, it was becoming apparent that something was going on and smart players began to hedge their bets. Add in the development of custom portals like Pandora, Wi-Fi, faster broadband, smartphones, radio apps, and the like and it was inevitable that listening habits were going to change or at least be modified.

iHeartRadio is Born

Clear Channel started its digital life slowly but then began to pick up a lot of speed when it brought out the iHeartRadio app in 2008. During these growth years the company has been able to use its traditional radio stations to promote its digital offering which has allowed the service to grow exponentially. While iHeartRadio was maturing, the company itself was slowly changing on the inside from traditional radio people to those who had a redefined vision for the future, like current CEO Bob Pittman.

So, Clear Channel has begun to shift in the way it presents or leverages its content from traditional radio to Internet radio. At the moment, they both matter. In the future, traditional radio stations probably a lot less. Stations are expensive to run but Internet radio is a bargain in comparison. Internet radio requires less infrastructure, fewer people, and has to deal with less legal regulations than traditional radio. From a business point-of-view, that’s very inviting.

Old Radio vs. the New Media

The only problem now for iHeartMedia are those pesky 850 radio stations which were purchased at a premium. The recession of 2008 hurt revenue. Competing media like satellite radio and other streaming players suck away ad dollars. The pie is smaller for IHeartMedia and the bottom line is still costly. And then there’s the massive debt the company still owes for the deal that took it private.

Just this week, CBS Radio announced it's considering selling off about one-third of its radio properties. I suspect eventually iHeartMedia will also have to unburden itself from the albatross of brick and mortar that hangs around its head, too.

Clear Channel has left the building - and eventually, iHeartMedia will leave the rest of them.