Clear Channel: Less Of A 'Radio' Company Than Pandora Or Sirius XM?

Includes: IHRT, P, SIRI
by: SA Editor Rocco Pendola

On Monday, fellow Seeking Alpha contributor Cameron Kaine published what I consider one of his better articles to date. In It's Not Radio, It's Sirius XM, Kaine made a solid suggestion for the satellite radio company:

It needs to first re-brand itself and drop the words “satellite” and “radio” from its name – two antiquated ideas that are (frankly) no longer sexy.

On the surface, Kaine makes an excellent point. From a pure marketing standpoint, it makes perfect sense for Sirius XM to pull an HBO and present itself as something other than radio. One problem immediately presents itself - can the company credibly follow through on the notion that it's truly different? Or would the suggested image refresh amount to little more than a hollow marketing ploy?

Of course, the answer to this question wallows in subjectivity. It also gets skewed by the vocal opinions of Sirius XM's gaggle of ardent longs and beyond-satiated subscribers. Because that debate merely opens the road for the same bullish and bearish talking points regarding content, it makes little sense to even take it up.

There is, however, another core, less debatable problem with Sirius XM going the hip, cool route and claiming it's not radio.

Sirius XM focuses, almost solely, on the actual physical radio as its primary mode of delivery, whether in the car or at the retail level. It does very little - actually nothing - to detach itself from that reality, even cosmetically. There's nothing more "antiquated" or un-sexy than rolling out satellite radio 2.0 as a clunky receiver at big boxes like Best Buy (NYSE:BBY). While Sirius XM neglects online and mobile at the expense of the physical radio, competitors such as Clear Channel (CCMO.PK) continue to move aggressively away from the old way of doing things.

Go play with the iHeart Radio platform and tell me if the word radio comes to mind, from content and delivery perspectives. Listen to a Clear Channel station and see how many times an on-air personality or other "big voice" basically asks you to turn off your radio in favor of the iHeart app. Almost shockingly, Clear Channel, a terrestrial radio company clearly tied to physical properties, appears to be doing a better job than not only Sirius XM, but the web radio pioneer, Pandora (NYSE:P), of setting itself up as something other than what we know as "radio."

In many ways, it comes down to a battle of perceptions. Clear Channel CEO Bob Pittman has done an incredible job, over a very short period of time, positioning his company as a multi-platform, diversified entertainment and information company. Pittman does not market Clear Channel as a radio company. Instead he brands it as providing all types of content to all types of audiences via all types of devices. Again, neither Sirius XM or Pandora have come close to setting up that distinction in hearts and minds. For the record, I am not saying Clear Channel is there yet. Rather, I think Pittman continues to do a better job of taking his company down that path than most in the audio entertainment space.

Two years ago, I never thought I would look at Clear Channel and consider them more cutting edge than both Sirius XM and Pandora. In fact, Pittman, for all intents and purposes, is already doing some version of what Kaine thinks Sirius XM should do. I think his company is better equipped to pull of some hybrid of "It's Not Radio."

Breaking out of the "radio" mold does not seem to be part of Sirius XM's culture at this point. And Pandora shows no signs of morphing into something other than what it is today. It's too busy ramping up its sales force. At this juncture, any drastic strategical shift, or add-on, might hurt Sirius XM or Pandora more than it helps.

That said, you can't stand still in this space. But, more than that, you can't marry yourself to one business model or strategy for too long, while the competition shifts the landscape. Just ask Research in Motion (RIMM) about that. Pittman said it well with regard to Clear Channel's recent groundbreaking partnership with Cumulus Media (NASDAQ:CMLS):

(The deal represents) one more data point that proves radio is not laggard, that we do see the future, and that we're moving toward it in a smart and fast way.

Maybe it's less about shedding the name radio and more about being the one that constantly redefines what it is. Pandora owned that tag for a while, but Clear Channel is making incredible strides.

It's just too bad that Clear Channel stock remains such a horrible choice for the retail investor. When he first joined the company, Pittman made a major investment in Clear Channel. But he's a high roller. In a Seeking Alpha interview, Pittman told me that he put his own money on the line because he loves the opportunity for the considerable rewards that comes along with a leveraged and risky investment that he believes is ultimately worth more than Clear Channel's "debt and the current equity." That might be fine for him, but it's certainly not an endorsement to go running head-first into thinly-traded CCMO.PK no matter how impressive the company's execution or trajectory looks.

Disclosure: I am long P.