Executive Of The Year: Clear Channel’s John Hogan (01/03/05)
At The Top Of The Leader Board
By Reed Bunzel, Editor-in-Chief
That collective sigh of relief heard as the ball dropped in Times Square may have come from radio broadcasters, who were more than happy to say “good-bye” to 2004.
In a year fraught with wardrobe malfunctions, indecency fines, a sluggish advertising market, stagnant revenues and steep Wall Street downgrades, the radio industry posted modest, low-single-digit growth. Despite predictions last winter that the U.S. economy (and with it the overall advertising marketplace) was poised to rebound, radio’s revenue and quarterly earnings were embarrassingly weak. As a result, financial analysts slammed the entire sector, while satellite radio — with its low subscriber numbers and mounting debt — became the darlings of the new media.
Within this lackluster environment, one might think that identifying the Executive of the Year could be a challenging task. And well it might have been, if Radio Ink was in the habit of only considering revenue, cash flow, and EBITDA when making this annual selection. But in a year when solid numbers were sadly lacking, it became evident that true industry leadership can be found if you look past the traditional matrices that quantify financial performance.
That brings us to Clear Channel’s John Hogan. As head of the largest radio group in the world, Hogan is charged with the daunting task of ensuring that the company’s massive engine is firing on all 1,200+ cylinders. Advertisers expect it, Madison Avenue and Wall Street expect it, and Clear Channel shareholders (not to mention certain members of the Mays family) expect it. But quality leadership is much more than simply driving dollars to the bottom line; it also is the ability to identify solutions to lingering problems, and implement them without nickel-and-diming the risks. It’s the courage to be creative and innovative when the tried-and-true (and sometimes false) ways of doing things no longer work. It’s the confidence to remain committed to a plan even when your harshest critics — and even some of your supporters — question your sanity.
John Hogan possesses all these characteristics. When faced with a rising tide of outrage over indecent broadcasting, he led Clear Channel to develop and implement its company-wide “Responsible Broadcasting” initiative. When research showed that the company’s stations were airing too many commercials and other clutter, Hogan spearheaded Clear Channel’s controversial “Less Is More” plan. When that same research showed that there were too many bad commercials cluttering the airwaves, Hogan launched the new Creative Services Group. And when it became clear that digital is the wave of the future, Hogan announced that Clear Channel would be making a major push to convert all of its stations to HD Radio. By the way, he did all of this in the span of one year.
Certainly, critics inside and outside the radio industry point cynical fingers at Clear Channel and proclaim the company the “evil of all media.” But within the framework and context of today’s radio industry, there is no single individual who represents the basic tenets of leadership more than Clear Channel Radio’s John Hogan. Congratulations to him for the leadership and industry efforts that earned his selection as Radio Executive of the Year. » 26
INK: For several years, we’ve been in a stutter-step economy that seems to start, sputter, then start again. How optimistic are you that we’re finally seeing some solid economic growth?
HOGAN: I am relatively confident, and I say this with cautious optimism, that we have the opportunity for real, sustained growth in the radio industry in 2005. The overall economy has had growth, the GDP is up over the last six quarters, and the hesitations that some advertisers might have had relative to the election and to the overall state of the economy have gone away or are less scary. We have the opportunity to see some real growth in 2005.
What indicators suggest things will be different this year?
The only thing worse than being in a tough economic environment is being in a tough economic environment and not having any strategy or plan of what you might do to affect it. What is decidedly different for us as we look at 2005 is that some genuinely innovative, creative, exciting things are going on at our radio stations. Our Hispanic initiative has given us real cause for feeling great, we’ve continued to have a lot of success on the urban front, and we’ve had some new things, such as signing Donald Trump, which was a really big deal for us. Coupled with the Less Is More initiative, our new Creative Services Group, and the reorganization of our national sales development resources, we have some exciting things going on. While it would be premature to say, “It’s going to be a great year,” all our people are focused on the fact that they have some great new things to program.
You have a lot riding on the Less Is More initiative.
I would say that we would have a lot riding on this if we didn’t do it. If you look at where the radio industry has been for the last couple of years, you can see that the economic circumstances have been less than favorable. But it would be hard to ignore the fact that radio fundamentally has not responded to some of the technological and social changes that have occurred outside our industry. Advertisers have vastly different expectations today, and we realized that if our company and our industry are to expect different results, we need to do something different. We had to accept the fact that any sort of change meant potentially changing some fundamental practices. That was a big challenge, and we spent a lot of time researching our audiences and our advertisers. We had extensive internal discussions with some of the very bright people inside the company about what we might or might not do, and eventually developed what became the Less Is More plan.
It brought out both skeptics and optimists.
Of course it did. It was a very different approach, and it got a lot of attention. It was interpreted a lot of different ways, and it affected a lot of different people. We discovered that, just like advertising, we encountered a frequency issue. We’ve had to describe Less Is More and talk people through it a number of times. By the same token, it has given us an entrée, particularly with advertisers, that we’ve never had before. We’re talking to more people — and people in bigger, more important positions — than at any time in the 20-plus years that I’ve been in the industry. That has been a very positive and somewhat surprising result for us.
Were you surprised at the degree of enthusiasm the plan has generated on Madison Avenue?
Almost without exception, there has been overwhelming support for the Less is More initiative. Advertisers and agencies acknowledge that radio has gone past the point of appropriateness and effectiveness in terms of its commercial and promotional interruption. What we’re doing with Less Is More is to improve the experience for listeners and to improve the environment for advertisers. That’s a powerful and very positive combination. Conceptually, it has been incredibly well accepted, not just by advertisers and agencies, but also by competitors. Many leaders in the radio industry stepped up and applauded us for it, and that was heartening. We’ve seen a couple of common, consistent concerns, primarily what spot lengths are available and what it’s going to cost.
There’s been a lot of talk that Clear Channel is doing away with 60-second commercials. What spot lengths are available?
We are still very much in the 60-second commercial game for those advertisers who want and need a 60-second commercial. But we’re also offering additional choices in the form of 30s and 15s, and once people get the options, they like that.
Once they see different ways of buying it, many are intrigued. Over the last couple of months, we have seen an ever-increasing tide of advertisers who are taking advantage of Less Is More. We have people who are converting to shorter-length commercials; we have people who are buying the premium positions, whether it’s the first in pod 30 or the island 60; and we have people who are taking advantage of our Creative Services Group, asking us for assistance in creating better commercials.
Of course, we are a ways from announcing victory, but we are much further ahead of where I thought we would be at this point in the interest in and acceptance of Less Is More.
How significantly will you have to change your pricing structure in order to maintain — if not grow — your revenues under this new strategy?
We can’t change the pricing structure. The pricing structure is determined by the demand in the market. If people don’t believe in our product, if they don’t believe in our radio stations, if they’re not willing to pay for the spots, we have no pricing power. If it were as easy as just raising rates, we would have done it without Less Is More. Our challenge is to sell the value and the results we deliver to advertisers. What’s interesting in one of the big changes with Less Is More is that we’re talking to advertisers about solutions, about creative ideas, about different ways of using our radio stations.
What about those advertisers who, like many people, prefer things the way they are?
Certainly, not all of them agree with this plan, and not all of them are supportive of it. A number of them probably do not or will not buy 30-second or 15-second commercials — and that’s okay. Most of the spots we have are 60-second spots. But it is really exciting to see a lot of advertisers step up and do some things differently — buy combinations of 60s, 30s and 15s; to buy book-ended 30s; to buy a 30 at the front and a 15 at the back — and to work on creating more innovative and more effective commercials.
How important is it for the rest of the industry to get on board?
It depends on whom you want it to be important for. It isn’t important for us — our success with Less Is More is not predicated on whether the rest of the industry adopts it — but I have been heartened by the fact that most of the major groups have very publicly supported this, and most of them are looking at their own situations to figure out what they can do a little differently. It took us six or seven months to go from concept to implementation, and our implementation sparked a lot of people to look at what they might do. I expect that we’ll see other groups do what they think is right for them, but I think it will all center around making our radio stations sound better and getting a better result for advertisers.
What led to Clear Channel’s realization of the need for Less Is More?
The catalyst for this emerged when we did research with listeners, and we heard two messages: There were too many commercials, and there were too many bad commercials. We know it’s not just as simple as reducing the number of commercial minutes that are available; it’s also working with advertisers to provide the best resources so they can have the most effective commercials.
The “too many commercials” aspect is addressed by the Less Is More plan. How do you address the “too many bad commercials” element?
We’ve made a big investment in this Creative Services Group, led by a guy named Jim Cook, who is one of our very best-kept secrets. He is an incredibly talented individual who has worked for the company for a number of years. His areas of expertise are station imaging, promotion and commercial production. Since September, he has hired several individuals, including Rob Summers and Bob Case; and we continue to populate it with proven, capable, talented, creative folks. We’ve enlisted the services of people such as Jack Trout and Dick Orkin, and we expect to have others as we move through time.
What are you expecting from this new creative team?
First, to educate, train, and prepare our employees to interact better with advertisers. We need to understand their expectations and their messages, and then convert them into effective commercial copy. They’ll also work directly with advertisers to provide creative services where it makes sense. We’re not in competition with agencies, but we do see ourselves as a complement for an advertiser to some of the other resources out there.
What’s your timeline for getting this off the ground?
We are actually early. We began to put it together in September, and on December 15 we had our first training session out in L.A. More than 300 employees came in for training, and we had a very robust agenda with all kinds of insights, tools, direction and interaction. This year, we’ll do this sort of thing five or six times all around the country so we can train as many of our folks as we can. We’re also constructing a virtual site, where our commercial-services people around the country will have a common resource. They can exchange ideas, success stories, and resources; they can access talent, expertise, and insight from around the rest of the country for their individual markets.
Is Clear Channel still radio’s whipping boy, guilty of instituting everything that’s wrong with the industry, or has some of that criticism abated?
It has absolutely improved, and in many cases, it has just evaporated. I will tell you that we are the largest radio group in the country, and we are the most scrutinized radio group in the country. But we’re also an industry that is at a fundamental point of challenge in its tenure, so a lot of factors are at work. When I first got this job, there were a lot of negative perceptions about Clear Channel, both internally and externally. We have worked very hard to address those perceptions.
I am very proud that a core group of committed and passionate, hard-working senior managers has worked to create a culture that would be attractive to the best people in our industry. If you were to somehow measure how people inside the company feel today, as opposed to six weeks, six months, a year or two years ago, you would see that we are moving in a very positive direction.
Not everyone agrees with what we do at Clear Channel, but I think everyone feels much more committed to where the company is going. They feel much better about their roles and their opportunities inside the company, and that has helped with external perceptions.
How critical is it for the radio industry to make a broad-based commitment to convert from analog to digital audio?
If we are to remain compelling, if we are to remain competitive, we need to be in the digital business. We’ll have 60 stations rolled out by the end of 2004. Our jumping into this in a very aggressive way has given people an opportunity to take another look at Clear Channel. Whether it’s a special interest group or the press or the financial community, when they see the facts, they can separate the reality from the myth. We’ve worked really hard within the industry, with other radio groups, to address issues of common importance so we can find common solutions. We are significantly ahead of where we were two years ago, and it’s a real comment about the people who are working for Clear Channel. They have expended great energy to get our story out there to let people know what we are really about, and that has created a favorable impression.
Earlier this year, Clear Channel incurred an expensive FCC fine for broadcast indecency. Until the Super Bowl incident, had broadcasters crept closer to the “indecency line” to see how far they could go?
I don’t think it’s accurate to say that broadcasters have done that. There was a relatively small number of personalities who had become overly dependent on pushing the limits. Our company has 1,200-plus radio stations, and what was a huge story involved six shows at only six of these stations. Generally speaking, broadcasters — whether it’s Clear Channel or other broadcasters — are committed to giving listeners what they want. They’re committed to trying to do the right thing, and that certainly was the motivation for us. We take very seriously the responsibility that comes with being a licensee and its implied public trust, and we made the decision to do something that was not necessarily universally popular.
Several months ago, Radio Ink published a guest commentary from a former editor that was highly critical of radio’s coverage of the hurricanes in Florida. Would you like to set the record straight, once and for all?
I wrote a letter to Radio Ink and stated my case. Organizations such as The Washington Post, ABC News, FEMA, and local groups, as well as hundreds of listeners had a completely different impression than what was stated in that commentary.
I literally had goose bumps hearing the accounts of what our broadcasters did, of how many of them risked their lives, how many of them put aside their personal concerns and made sure they did what a good broadcaster will do — stay connected. It’s unfortunate that those efforts were in any way miscast. I can’t be more proud of the number of times I heard people say, “Thank God for Clear Channel,” and of the number of e-mails I received 1,200 miles away, complimenting specific individuals for having saved lives. Their actions speak for themselves.
Is Clear Channel — and radio in general — doing all it could and should to provide local coverage of events and issues that are important to the people in the markets they serve?
The hurricane coverage in Florida is a pretty good example of what a great job radio stations do when there is incredible devastation and widespread destruction. The radio stations in the Clear Channel family by and large were either not off the air or off for only very short periods of time before they were able to go back and stay committed.
On the technical side, we’re doing some really good things. We have 500-plus local news reporters around the country, and some of the finest News/Talk information stations in America today: KFI, KTRH, KFYI, WLW, WFLA — the list goes on. It never ceases to amaze me how frequently people will talk about having heard it on the radio. Whatever the story might be, radio has provided a great connection for them. That to me is the magic that makes this business so seductive — the incredible connection that good radio gets with a listener. Our people work their butts off to make sure that connection and that magic happens every day.
How much trial and error has been involved with producing a management structure that effectively operates more than 1,200 radio stations on a daily basis?
It has been unprecedented. Not long ago, a big job in radio was working with 40 radio stations. I can remember a former company, where we did a bunch of acquisitions and we owned 100 radio stations. We thought, “Wow! Who would have thought we’d get this far?”
While it’s hard to say that I prepared for this specifically, in some ways I think I prepared for it my whole career. Sure, the number of stations is bigger, but the premise is still exactly the same: You have the opportunity to connect with listeners in a really special way.
You need great people to do it, you need great technical capabilities to make sure you can do it consistently, and you need great marketing people to make sure that the word gets out. You also need great sellers to make sure you can convert that audience into results for advertisers. It’s just on a much bigger scale, and that has its own challenges. Generally speaking, while the scale is different, it’s still about finding good people, giving them the opportunity to do great work, and then recognizing the great work and continuing to challenge folks to surpass their previous performance.
Have there ever been times that you feel intimidated by the responsibility you have to all your advertisers, listeners, employees and shareholders?
I have not felt intimidated, nor have I have been fearful. I have more than a little bit of respect for the opportunity that I have. We have an incredible group of people inside this company, and my only regret is that it’s not as likely that I will get to spend as much time with them as I used to — and I miss that.
Just as it’s an unprecedented responsibility, there also are unprecedented resources. For any programming challenge that we might come up against, we have four or five great people whom we can access somewhere in the company. The same is true in every area of the radio business. We have great engineers. We have great financial people. We have great sellers and sales managers, great marketing people, great programmers and production people. That gives me a lot of confidence. I would be kidding you if I said that there haven’t been times that I haven’t been humbled by the responsibilities and the opportunity, but I have not been intimidated.
How would you describe your management style, and how has it evolved as you’ve taken on more responsibility — and more stations — over the years?
At the risk of embarrassing myself, I would say I have certainly matured as a manager and become more flexible. When I first had the opportunity to move from managing a radio station in Atlanta to helping with a number of radio stations on a regional basis, I was pretty sure I knew everything there was to know. I was also challenged because we were moving really fast and there was a lot to get done in a very short period of time. My style back then was not very multi-faceted. It was a little bit of “my way or the highway,” and unfortunately, it took me a little while to figure that out. Eventually, I learned that there are many different kinds of people, stations and circumstances, as well as a variety of styles and responses.
How would you distinguish the characteristics of a great leader vs. a great manager?
The separation between those two would really be reflected in the willingness of people to follow an individual. You can’t declare yourself a leader, and you can’t mandate leadership. You have to earn it, and you become a leader only if people will follow you. Good leaders get people to believe in the direction or the vision or the decision, while great leaders execute it with passion and enthusiasm and persistence. It’s such a precious characteristic. For me, it’s been fascinating to see the great leaders we have in our company. We operate in 250 markets, and every one of them has a market manager, a director of programming, and/or a director of sales; it has been an incredible opportunity to see how other people manage. I continue to learn every day what makes a great leader.
Do Wall Street and the rest of the financial community have as good an understanding of the radio industry as it should? Do they place too much emphasis on pacings and forward-looking guidance, and not enough on other business fundamentals?
There are some very smart people on Wall Street, and one thing that makes them so smart is that they’re always looking for information and data to help them formulate their opinions. I have a lot of respect for the folks who cover this industry or our company and their willingness to learn as much as they can. Clearly, I believe there was an over-emphasis on a metric that was not valuable. Those forward pacings were given way more importance than was merited, and they tended to be a distraction for us in the industry. I want Clear Channel to take a long-term view of our success and our position. We’re not in it for this quarter or next year — we’re in it for the next two, five, 10, 20 years — so we operate to some degree with that focus, and we try to communicate that to the financial community.
Is radio in danger of losing the ears of Generation X or Y? If so, how can we get them back?
I can’t speak for other companies, but Clear Channel has been very focused in the distribution systems out there and the changes that are occurring in the technology end of it. Whatever that distribution system is, whether it’s tall towers in big fields or some other form of communication — Internet, cellular, or something like that — we are absolutely committed to being a leader in the radio business. It’s just that the radio business has expanded to include Internet radio and satellite radio, and it will include cellular radio. We have to make sure we stay nimble enough to understand and take advantage of these new technologies. I’m very pleased with the efforts we have made. One of our initiatives this year is a research and development entity, with a group of people whose only job is to focus on ways that we can distribute our content in meaningful ways. We just announced a huge and significant new hire in Evan Harrison, who was running AOL; he is now charged with the responsibility of making Clear Channel Radio a leader in the Internet space.
Where do you see the most significant competition for radio coming from over the next decade?
Technology is changing so quickly that we have to be alert to all of the opportunities that are out there. People focus today on satellite radio, and that’s really shortsighted. Satellite will probably be the beta recorder of our industry. It will be surpassed by other technology. Whether that technology is Internet, cellular or some other form to be developed, nobody really knows. That’s why we have an eye on all of it. That’s why we have a real commitment to make sure that we’re investing the resources to understand and exploit it as it develops.
What do you foresee as radio’s greatest challenge over the next 10 years?
Our greatest challenge is to be better self-promoters. Radio has undergone a barrage of negative press, and where we’re challenged is in making sure that people know we have this incredible power to reach 90+ percent of the American population in a very personal way every week, that there are more than 750 million devices to receive our programming, and they are ubiquitous: in cars, homes, offices, bathrooms, walkmans — everywhere.
Yet we seem to have been positioned as somehow inadequate. People know radio works, yet we have not done as good a job as we can in getting it to be more widely understood and accepted.
We need to give those outside the industry some insight into the incredible people we have and the incredible ability we have to deliver results.
Group-wide, what are you expecting for the first quarter of 2005, as well as the full year?
We know how prickly the SEC is, so I can only tell you that we’re very optimistic about the first quarter. With all the initiatives we have put into place, and all the enthusiasm our people have brought to make radio better and to do a better job for advertisers, we’re optimistic that we’ll be able to perform in 2005.
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