Clear Channel CEO Bob Pittman on iHeartRadio vs. Pandora, Miley Cyrus Twerking and Today's MTV (Q&A)
This issue first appeared in the Sept. 27 issue of The Hollywood Reporter magazine.
It's not every day that the CEO of a leading entertainment company turns off his smartphone, puts away the iPad and flies himself to get lost in the Nevada desert for a weekend. But that's precisely what Clear Channel's Bob Pittman did on a recent Friday as he left his office at New York's 75 Rockefeller Plaza and piloted his own Falcon 900 jet to Burning Man -- for the 10th straight year.
"I find Burning Man to be so innovative," he says. "One of the problems of aging if you're a creative person is that you tend to narrow your world. It opens my eyes to possibilities."
Indeed, Pittman, 59, seems to contradict many commonly held stereotypes of a typical media executive. He hails from Mississippi, where a taste of broadcasting came by way of his first job at a 250-watt AM station. His gig since 2011, running the 850-station-strong Clear Channel -- which counts Los Angeles' KIIS-FM, outdoor advertising and live events in its portfolio -- has him back for the fifth time in the same Midtown building that was his address as CEO of MTV (1979-87), COO of AOL Time Warner (2000-02) and with the private equity firm Pilot Group, which Pittman co-founded in 2003.
Also unexpected: that the twice-married father of three, running a reputedly conservative company (talk-show hosts Rush Limbaugh and Glenn Beck are syndicated by Clear Channel) with annual revenue of $6.33 billion (up 3 percent in 2012), is now down with electronic dance music.
Then again, perhaps Pittman's eclectic experiences make him the right fit for Clear Channel's diverse range of offerings, including its top priority, iHeartRadio. Since 2008, the audio service and app, which allows its more than 30 million users to listen to any Clear Channel station in the country, has seen a successful push into nonterrestrial areas at a time when traditional radio is being threatened by the likes of Pandora, Spotify and iTunes.
Counting only a sixth of Pandora's 200 million users, iHeartRadio hopes to make up ground with its third annual, two-day iHeartRadio Music Festival in Las Vegas, which will feature Katy Perry, Justin Timberlake and Paul McCartney, among others, and stream via the Clear Channel app. A broadcast version for The CW is planned for Oct. 1. The veteran exec spoke with THR about tuning in and dropping out.
There's a perception that Clear Channel is an old-media company, and because of that its growth is hindered in the digital age. Response?
People define an old-media company as, "Your users are leaving you." Our users are not leaving us: Our terrestrial broadcasting has as many listeners as it's ever had -- actually more, when you count iHeartRadio and digital sites. To me, rather than thinking about digital, radio and outdoor as old or new, the challenge is being able to keep pace with the users. Look at newspapers: The few that actually kept up with their audience and went digital early, like The New York Times and The Wall Street Journal, have done a very good job of it. Some did not. One thing we're not doing is clinging to past formulas. We have 6 million iHeartRadio fans on Facebook -- that's more than Pandora or Spotify. You might say they're new-media companies and we're not, but we're ahead of them on their home turf. That's an indication of how fast we are moving.
During the 1980s, you worked for the late Steve Ross, who graduated from running funeral homes and parking lots to Warner Communications. What wisdom did he hand down?
He used to say: "You'll never be fired for making a mistake. At this company, you'll be fired for not making a mistake, because it tells me you're not trying anything new. That's the lifeblood of our success." And I really believe that. So many people won't try something because they're afraid it may not work. Who cares? Keep trying. Steve was a brilliant entrepreneur. He was like a dad to me.
How has music industry consolidation -- from six major labels to three, for example -- affected your business?
The indies are in a more powerful position than ever, and that makes it interesting. It's how you get Mumford & Sons on the radio. Whoever thought there would be banjos on [New York hits station] Z100? The Lumineers, same thing -- a major label never would have picked that [to hit]. Taylor Swift comes off an indie label. Scott Borchetta at Big Machine built Taylor, who did the first iHeartRadio listening party. We used our billboards to point to the album release and made it a mega-event, and Red was the first million-selling physical album in years.
You recently announced revenue-sharing deals with Warner Music Group, Big Machine and Fleetwood Mac. All are collecting portions of Clear Channel's primary income source: advertising. What's the logic behind them?
The idea is that there's a value in having a structured, as opposed to an ad hoc, relationship between us and the music companies. One of the big goals is to build a robust digital marketplace. Everyone's trying to figure it out: What's the structure? How should we relate to each other? What do you bring to the marriage? Warner Music wants to sell more records, break more artists, make their mid-level artists iconic, take their iconic artists to new levels of success. We wind up being their No. 1 promotional partner in that. The better we do, the better they do.
Clear Channel has been criticized for centralized programming, where one DJ airs on multiple territories …
That's a sort of misnomer. We use our assets that we paid for to maximize quality. Ultimately, that's what it was about, but everybody goes on a jihad, like, "You're changing the old world!" The proof is in the pudding: Ratings are up in every market where we've taken that strategy. Ryan Seacrest is on 100 stations. He does a fabulous job with his morning show in L.A., which is on middays on Z100. It's hard to find 850 superstars. We're looking for 'em.
In the U.S., unlike the rest of the world, terrestrial radio broadcasters pay royalties only to publishers, which hold songwriting copyrights, and not performers. Do you ever see that changing?
The radio industry thinks that if we do that, it should be a business decision, not a government decision. The value of promotion on the radio is unique. The one thing the music business doesn't have is a meaningful advertising budget [because] radio performs that service in exchange for the music. We're not of the opinion the government will change it.
And on the digital front? Satellite radio is being pummeled by lawsuits demanding payment.
With music rights, everyone's struggling to find the right deal. Sometimes tempers flare and people get sideways with each other. And artists are always looking to maximize their return from creative endeavors. But no matter what is going on today, we'll eventually figure it out.
When Pandora touts a 7 percent share of the radio market, does that gnaw at you?
First, they have numbers that no one can replicate from public data, and they have yet to tell people how they get to their numbers, which imply that Pandora is taking audience from radio. But it's not. Now, will people listen to their smartphone instead of their radio one day? Maybe. Right now they're not. Pandora, like iTunes, is not radio, it's a playlist -- yet Pandora claims they're one of the biggest stations in every market. I don't think they can make the minimum-listenership cutoff for Arbitron. They're not even in the ball game. I always say Pandora is a great feature, but I'm not sure it's a freestanding business. … We had AOL Instant Messenger when I was at AOL -- hugely popular, but it was not a freestanding business. Pandora has done very well in terms of usage -- they were the first there and got embedded on a lot of devices, but I don’t think they’re making money. So that’s the big question mark.
You were at AOL during its merger with Time Warner, which has gone down as one of the biggest corporate fiascos in modern times. How do you see that legacy now?
I look back on my time there very fondly. We were the golden years of the internet. When I started at AOL, we had 4 or 5 million dollars in ad revenue and 6 million subscribers. When I left, it had $2 billion [in revenues] and 35 million users -- we were half of the internet in the U.S., so it was very heady times. … We muddled through the merger, which came in the midst of an ad recession, during the year of 9/11 and involved two very different corporate cutlures. … You couldn’t put together a litany of more things that could go wrong in one time on one sheet of paper than the AOL-Time Warner merger. Getting out of there was a breath of fresh air. I took a year and did nothing but travel and actually got to sleep at night.
At last year's iHeartRadio concert, Green Day's Billie Joe Armstrong had a minor meltdown onstage after complaining of a too-short set. What did you learn from that incident?
An old lesson: that something like that can generate a ton of publicity. It's too bad he was swearing all the time because nobody could take that as a sound bite.
You programmed MTV in its nascent years. What are your thoughts on the current state of the network?
Reality shows have been very successful for MTV. We did a bit of that when I was there, and it's gone on that path, but it could have gone on 10 other paths. I remember a strategic discussion we had: Should we get old with these viewers or constantly turn this audience over and remain the voice of young America? We decided not to be your older brother's MTV. It's important that MTV evolve. It's like a shark. It can't stop.
With that in mind, what did you make of Miley Cyrus' twerking performance at this year's VMAs?
I didn't see it. I am saving my eyes to see her at the iHeartRadio Music Festival. (Laughs.)