Uncertain times for Clear Channel cluster: chain faces challenge of reducing ad spots.

With this month's ousting of one of L.A.'s best known local radio executives, the eight Clear Channel stations in Los Angeles find themselves looking to build revenue amid a corporate strategy to trim advertising.

The stations are one of the best performing local clusters for Clear Channel Communications Inc. but so far local advertisers have not responded well to a strategy to limit ad clutter by buying more 30-second spots.

"Clear Channel is doing well from an advertising standpoint because their 60s are sold out but their 30s aren't," said Zach Rosenberg, executive vice president and general manager of the Los Angeles office of Horizon Media Inc., a media buying firm. "A lot of agencies are reluctant to pay the premium on the 30s."

Clear Channel executives maintained that Roy Laughlin's departure--which was the company's decision--is not related to any specific disagreements about the Los Angeles market.

"It reached a point where Roy and we all thought the most productive way for us to deploy his talents was in another capacity within the company," said Charlie Rahilly, Clear Channel's senior vice president in charge of the Southern California region.

Laughlin was ousted earlier this month as co-vice president in charge of Clear Channel's local stations and general manager of the market's fourth-ranked station, KIIS-FM (102.7). He was well known for the annual Wango Tango concert and other off-air promotions.

Both Laughlin and his bosses at Clear Channel declined to discuss the specific reasons for his departure. Although Laughlin noted, "I didn't quit, that's for sure." He now has a consulting arrangement with the stations.

In the past year, Clear Channel's Los Angeles cluster--the company's largest--has inched upward in overall listenership and local revenue share. But the national picture is not as strong and the company has said it wants more from its local markets.

Meeting expectations

Laughlin will not be replaced, Rahilly said. The other co-vice president in the Los Angeles market, Greg Ashlock, will take over Laughlin's duties.

The Los Angeles cluster, which includes market leader KFI- AM (640) as well as KIIS-FM and six other stations, accounts for more than 10 percent of Clear Channel's national revenue, company officials said.

Clear Channel commands the largest share of radio revenues in Los Angeles, ahead of Viacom Inc.'s Infinity Broadcasting, the second-largest broadcaster in Los Angeles and nationwide. Clear Channel's share of radio revenue in Los Angeles grew to 28.8 percent in 2004 from 28.3 percent a year earlier, according to BIA Financial Network, which tracks media revenues.

Infinity's share of market revenue also grew slightly in 2004 to 24.8 percent from 24.2 percent a year earlier, according to BIA.

Arbitron ratings for the largest stations, including KISS and KFI, have been inching upward. The stations bring in more than $300 million in revenue annually, Ashlock said, although Clear Channel does not provide profit figures for individual markets.

Last December, Clear Channel phased in a national strategy to reduce advertising "clutter" by pushing more advertisers toward 30-second spots rather than 60-second spots, reducing overall advertising volume. That strategy, dubbed Less is More, likely will depress Clear Channel's profitability in 2005, according to Friedman, Billings, Ramsey and Co. Inc.

The firm said the Less is More approach likely will boost ratings for Clear Channel stations in the long term but would result in short-term losses in ad revenue.

Rosenberg said its unclear when and if the strategy may catch on in Los Angeles, given the additional per-second premium for the 30-second ads. Clear Channel executives refuse to disclose the cost of its ads, but say they remain committed to the Less is More model.

Bad fit?

Laughlin, a native Louisianan known for his iconoclastic style and promotional acumen, was named as co-vice president of the market in 2001.

"Roy was one of the most creative thinkers in radio, particularly from a selling standpoint," said Mary Beth Garber, president of the Southern California Broadcasters Association. "He was always coming up with new ways for radio stations to reach out to listeners and also bring in advertisers to help them connect with their listeners.

Laughlin's departure will create a hole in Clear Channel's efforts to promote its stations off-air through concerts, booths at events and sponsorships, according to observers of the local radio market.

"Anytime you have someone with that level of creativity and talent who leaves, it's going to be difficult to replace that," said Dave Van Dyke, president of Bridge Ratings LLC, a Glendale company that tracks radio audiences.

Given his record, some in the industry speculate that Laughlin's unconventional style might have been incompatible with the buttoned-up corporate style at Clear Channel, which is based in San Antonio.

Rahilly and Ashlock denied that, and Laughlin also disagreed--to a point.

"I like to think that I reflect the Los Angeles market--the frenetic-ness of it, the ethnic makeup, the multiple data points," he said in an interview. "That's very much different from the other markets where Clear Channel operates. That Hollywood model sometimes rubs people the wrong way."

Making Money

Three Clear Channel stations are rating winners.

Rank    Station     Format

 1 *    KFI-AM      talk
 4      KIIS-FM/    contemporary hits
        KVVS-FM
 6      KOST-FM     adult contemporary
15      KHHT-FM     urban adult contemporary
18      KYSR-FM     hot adult contemporary
20      KBIG-FM     hot adult contemporary
30      KLAC-AM     sports
39      KGGI-FM     contemporary hits/rhythmic

* Source: Arbitron Inc. rating, winter 2005 quarter