Update 4: Clear Channel Chooses Fox for News Deal
12.06.2004, 05:18 PM
Clear Channel Communications Inc., the nation's largest radio station operator, has selected Fox News Radio to provide national news for most of its news and talk stations in deal expected to nearly double Fox's radio presence.
No terms of the five-year cash deal were disclosed Monday. But Fox, a unit of News Corp., said if all options in the agreement are exercised, its radio service could have more than 500 affiliates by the middle of next year.
The deal helps Fox News compete with more-established radio news providers, including ABC Radio and CBS Radio. Fox News will air on many of Clear Channel's most prominent news and talk stations, including those in Los Angeles, Phoenix, Atlanta and San Diego.
Fox currently provides one-minute newscasts to 275 stations. Starting next year, it will provide more than 100 Clear Channel stations with a 5-minute newscast at the top of each hour, a nightly news broadcast and serve as San Antonio-based Clear Channel's primary source on breaking national news.
In return, Fox News Radio will have access to news produced by local reporters for Clear Channel stations. Fox also expects to hire more news anchors, studios and staff, but it said it was too early to be more specific.
"This deal positions Fox News to become a significant player in the radio industry and is another example of our commitment to the medium," said Roger Ailes, Fox News chairman and chief executive.
John Hogan, chief executive of Clear Channel Radio, said in a statement that local stations would get higher quality national news.
Clear Channel, which operates 1,200 stations, did not immediately return a phone call seeking additional comment.
Analysts said that ABC Radio, which is owned by The Walt Disney Co., stood to lose the most because of the Fox-Clear Channel deal. ABC Radio did not immediately return a message seeking comment.
Experts also speculated that Fox might have won the deal by taking cash instead of barter. Often in the radio industry, providers such as Fox get advertising spots that they can resell.
Clear Channel has been reducing advertising time in an effort to boost rates and probably wanted to keep its dwindling but perhaps more valuable inventory of ad spots, they said.
"Cash makes sense" for Clear Channel, said David Bank, an analyst with RBC Capital Markets. "Rather than give away inventory that is getting more scarce, (Clear Channel) preferred to pay cash."
James C. Goss, an analyst with Barrington Research, said Clear Channel wants to keep cutting advertising and Fox wants to grow as a news source. "They're both accomplishing what they want," he said.
Clear Channel shares rose 48 cents, or 1.4 percent, to close at $33.63 on the New York Stock Exchange - toward the low end of their 52-week trading range of $29.96 to $47.76.
Shares of News Corp. slipped 8 cents, or 0.4 percent, to $18.09 on the NYSE. The stock has traded between $17.16 and $39.74 in the past 52 weeks.