FOR CLEAR CHANNEL TV BOSS, THE FUTURE IS NOW

Clear Channel Television CEO Don Perry understands that if TV broadcasting is going to grow and prosper, it will have to take full advantage of the Web and other “digital extensions” like mobile phones and multicasting. And he knows it will have to become more local.

So Perry has been taking action at his TV station group, which has 40 stations in 25 markets, mostly in mid-size and small ones, and annual revenue of around $350 million. (Actual revenue for the group is buried in “other” in the financial reports of parent Clear Channel Communications, a San Antonio-based company dominated by radio and outdoor advertising.)

With Perry supplying the incentive and the in-house Inergize Digital Media the know-how, Clear Channel stations are aggressively chasing Web dollars. Already, they account for 10% of the group’s revenue and that percentage is growing fast.

A few Clear Channel stations have already created local digital multicast channels. To encourage others, Perry is taking a bold step next month, launching a 24/7 multicast channel—Variety TV. The channel will be filled with national programming, but stations will be able to preempt the national material with local content just as quickly as a the economies of their markets allow until the channel becomes purely local.

In this edited interview with TVNewsCheck, Perry discusses his new-media initiatives and tells why “plain old broadcasting” is not good enough for Clear Channel anymore.

Clear Channel has had a fairly aggressive approach to the Web, even going so far as to create your own in-house Web development company, Inergize Digital Media. What’s the thinking behind it all?

When I arrived at Clear Channel four and a half years ago, we didn’t really have much going on with the Web at that time. I think we had a couple of markets that were with Gary Gannaway and WorldNow, but I was very interested in the idea of starting our own thing and that’s probably the smartest thing that [Clear Channel Television Chairman] Bill Moll and I did.
 
It has allowed us to monitor what’s working and what isn’t and, as much as anything, to be able to build our own success. You know, most broadcasters end up doing things that build up somebody else’s success. We’ve built the success of the networks, we’ve built the success of the syndicators, we’ve built the success of Nielsen and we’ve built the success of other vendors.
 
But if you had stuck with WorldNow, you would have had a national footprint. You don’t get that if you do it yourself.
 
That’s true. But what’s interesting is that today it’s much more about local than it is about national. Doing it ourselves has allowed us to really develop a much stronger, more robust relationship with our local viewers in our markets. We have phenomenal numbers in terms of unique users and page views per month, and the great thing is that as we become more successful, we’re not making Gary Gannaway or Internet Broadcasting more successful. We’re making Clear Channel more successful.
 
Can you tell me what your Web revenue is today, and how quickly you expect it to grow?
 
Well, the way we account for that is to say that it’s either pure direct off-the-Web revenue or leveraged revenue, which is additional spot revenue that would only have happened because of a tie-in with the Web.
 
Altogether, it’s approaching 10% of our business right now and we’re expecting to see growth in the area of 20% to 30% per year for the next five years.
 
And at the end of those five years, what percentage of your total revenue will be Web-related?
 
It’s really more than just the Web. We’re referring to it more now as digital extensions because it will also include cellular phone business and other forms of broadband. I’d be surprised if it wasn’t at least a third of our business. That’s pretty big. That’s pretty amazing in five years.
 
The networks have been running around for the last year looking for alternatives to broadcasting for distributing their primetime shows. Do you fear that someday the TV station may not be the number-one window for primetime shows?
 
I do have that fear and I think that that is a possibility. But, so far, I don’t think that there’s anything that the networks have done over the past year in terms of streaming before a show is on, streaming after the show is on, VOD after the show is on, or any of those models, that has actually hurt over-the-air viewing.
 
Has it helped?
 
In some cases, it definitely has. I think that it has become a viral way of promoting particular shows and getting the word out to the younger generations who are not necessarily going to be motivated by the same kind of traditional marketing that TV stations and networks have used in the past.
 
It seems that Clear Channel is taking an entrepreneurial approach to the new media. As you look around the industry, at all the other stations and groups, do you think that others get it? I’m sort of surprised sometimes at how slow the broadcast groups are in exploiting these opportunities.
 
I’m surprised too. Now there are certain groups that I look at and I think that they’re fabulous at what they’re doing. I think the NBC O & O group is one of them. They’re way ahead of the curve. The other networks are also doing a good job, but they have the resources, they have the scale, to be more aggressive.
 
Among the medium-sized groups like us, I see varying degrees of buy-in and understanding, and willingness to risk.
 
You are using some of your digital channels to broadcast CW and MNT.  What else are you doing with your multicasting channels?
 
Well, we have a couple of NBC stations where we do NBC Weather Plus and it’s a pretty good idea. We’re using it right now in San Antonio and Mobile, but probably the biggest thing I could point to is what we’re about to launch, probably within the next four weeks. We’re going be launching a new multicast channel that we put together ourselves. It’s called VTV or Variety TV. It’s a full 24/7 channel.
 
What’s the programming?
 
It will be in blocks based on days. We have gone to the smaller producers like Byron Allen and said, “Look, we are going to build something starting at the bottom in eight or 10 stations and see what’s there.” We’ve gotten people to go along with us.
 
The channel gives our stations a place holder in the space. It gives them an opportunity that they can go out and sell spots. If they don’t have the manpower right now to sell the spots, they can run the PSAs we are going to put in there. We’re going to run this entire thing out of our television operation centers at our station in Tulsa, Oklahoma.
 
We don’t have any barter in the programming so that any one of the shows can be rolled over. So let’s say your doing some things locally, maybe you have a local high school basketball game or a local high school debate, you can preempt anything on Variety TV for the local.
 
The problem with starting a local channel is that maybe in the first six months or a year you may only have eight or ten hours a week of local programming. So when the audience is developing a habit for turning on a particular channel, they might switch to the channel and say, “Well, gee, there’s nothing on right now.”
 
Our feeling was that we wanted to start with a channel that would always be on and then you could role over it whenever you wanted to. So, in the ideal world for me, we would run this network for a year or two, maybe three, and then it would go away. The hope is that within 3 years, we would develop the production capabilities and the wherewithal to have full local channels on that channel at each one of our markets.
 
We are already doing a local channel in Salt Lake City called the Hive. It’s taking our morning show Good Things Utah and all of our newscasts, running some of those on a taped delay basis, and mixing in a lot of programming that we’ve developed with local high schools and local colleges and developing a pure local station. It also involves a partnership with one of our Clear Channel radio stations in the morning. We have some cameras set up in its studio.
 
You have been putting cameras in front of DJs in other places, too.
 
Yeah, another example is our station in Santa Rosa, California. We’re doing a thing with Armstrong and Getty, which is a Clear Channel West Coast morning show out of Sacramento. We run it in Santa Rosa and we’re actually looking at putting it on in Fresno, Bakersfield and Salinas.
 
Let’s talk about the plain old broadcasting business. How’s business right now?
 
Right now we’re looking pretty good and some of that, candidly, is because of political. We have some very strong markets in political—Cincinnati, Harrisburg, Jacksonville. We also have some pretty heated races in upstate New  York right now and then there are a number of West Coast stations that are benefiting from the gubernatorial election.
 
A big part of it is that we are not just going out with broadcasting. We’re trying very hard to go out with broadcasting plus other marketing solutions involved in the Web and other digital extensions.
 
It sounds like there is no plain old broadcasting for you anymore?
 
Well, I don’t think there is. It’s certainly is still the majority of the business, but we can clearly see a bright future coming. We’ve got to have at least two trains going down the track right now. One is the core business and the other is based on these experiments and new ideas.
 
Let’s talk about national spot for a moment. Is there any way to stop it from melting away?
 
The national spot business is going to have to morph in the same way that the local stations and local business is morphing. We have, obviously, a strong relationship with Katz Television—that’s who reps all of our stations—and we talk to them on a regular basis about the kinds of things that we’re trying to do. [Katz is owned by Clear Channel Communications.]
 
I think that [Katz Television President] Jim Beloyianis and his group understand that this is really a direction that we need to go in on a national basis as well. So I think you will see Katz and probably TeleRep and some of the other big reps over the next 12 months or so announcing new initiatives and trying new ideas and figuring out ways of putting new kinds of teams together.
 
We may be farther along on the Web—I think we probably are—than any of the other medium sized groups that are out there. But everybody is getting there as quickly as they can so it becomes an opportunity for Katz to say we really need to risk some money to put together these teams and take advantage of the digital media.
 
I will predict this: if the reps do nothing, they will go away. If they are just relying on the core—the spots and dots, cost per thousand type of commodity business that has brought them to the dance—they’re going to have a big problem.
 
What’s the last station you bought? It’s been a while, hasn’t it?
 
We bought a WB station about a year ago in Salt Lake City from Acme and we have bid on a few other stations, but we were not the winning bidder. We’re happy with the way the business is positioned right now.
 
That station you bought in Salt Lake gave you a duopoly and you have several others. Should I expect your next deal to be another duopoly?
 
That’s the kind of model that makes a lot of sense to us. The next deal will be a duopoly or it will be a station that is close to other things that we own. We’ve been able to take advantage of the duopolies. Like everybody in the business, we got thrown for a loop by the merger of WB and UPN. It was quite a scramble there for a while to figure out where the dust would settle. We’re very happy with the CW and where we have My Network Television. We’re very happy with that so far.
 
Are you really happy with My Network TV?
 
I’m a huge believer in the Fox company and News Corp. I’m taking a longer view here admittedly. I’m certainly not looking at the numbers right now and saying I’m thrilled with a one rating or a point-nine, but I believe very strongly in that group. I know [Fox Television Network President] Ed Wilson and [Fox Networks Group CEO] Tony Vinciquerra. I just think they’re good managers and you’d be hard pressed to bet against them.
 
Any talk of Plan B yet?
 
I’m not hearing anything about it. Not for us.
 
A couple of weeks ago, Broadcasting & Cable ran a story saying that you agreed to pay Time Warner Cable to carry your digital CW channel on its analog tier? Is that true?
 
I’d rather not comment on that other than to say that we are we are partnering with the CW to try to develop a new model of distribution and we are very pleased with having CW on a major cable system in a market the size of Cincinnati on the analog tier.

NEXT TUESDAY IN EXECUTIVE SESSION: Rob Hubbard, president and CEO, Hubbard Television Group