A media and entertainment analyst issued a note this week saying it would make sense for Google to take minority stake in radio, TV and outdoor advertising giant Clear Channel.
Clear Channel is currently examining whether to sell parts of itself off. The company's 3rd quarter earnings fell almost 10%, but profit and revenue were higher than expected. Several venture capitalist firms are courting the company.
Why would Google want to acquire Clear Channel? The theory is that Google would want to get its hands on the ad inventory on Clear Channel's 1,200 radio stations. Radio is an overwhelmingly local advertising medium. And, thanks to the 1996 Telecommunications Act, companies like Clear Channel can own up to eight different signals in a single market. That means Google, which has been ramping up its ad sales force after its Dmarc acquisition, could ostensibly sell ads not only across multiple markets but deep within those markets as well.
Google is also interested in radio because of the mobile angle. According to Clear Channel, 44% of all radio listening occurs in the car. And Google has been making moves with mobile geo-location services and traffic maps. More radio ad inventory may be a natural complement.
More reasons to buy: Clear Channel also owns the largest network of streaming radio stations (according to them), with 1.6M unique listerners per week growing at 87% per year. Throw in 12M podcast downloads (with 15 second ads) since last August, and you see Clear Channel is more than just terrestrial radio.
Clear Channel has a market cap of $25B. Businessweek's Steve Rosenbush says a club of VC firms could put in a total of $5 or $6B in equity. Could Google be invovled somehow? I have no earthly idea. But I do know that Clear Channel has ad inventory, and Google is all about eonomies of scale.
However. One very strong reason for Google not to get involved with Clear Channel is that they already have access to ad inventory through dMarc. That, and who wants to get involved with the Mays family, each of which gets a seven year compensation package in the event of a sale? My editor thinks the analyst note is a trial balloon floated by buyout firms to up the bid a bit. Nothing like Google to scare you into your pocketbook.
BTW, the analyst note itself is a lesson in how to be non-committal. Take a look at the last paragraph:
"All That Said, Google Might Have Something Completely Different In Mind-Thenext major leg of growth for paid search is local, which has been difficultfor Google to penetrate in scale. Thus far, Google's efforts to sign up localadvertisers has been through partnerships with aggregators and self sign-up.So hiring radio salespeople could simply be Google moving aggressively aheadof competitors to lock-in what might be the most valuable relationships at thelocal level and leverage these relationships across all its products overtime, including: search, radio, display, video and others."Related: Google AdSense for Audio coming | Google makes ad deal with XM Satellite Radio