iHeartMedia 2001 Annual Report Download - page 6

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6
We derive revenues from our venue operations primarily from ticket sales, rental income,
corporate sponsorships and advertising, concessions, and merchandise. A venue operator typically
receives, for each event it hosts, a fixed fee or percentage of ticket sales for use of the venue, as well as
fees representing a percentage of total concession sales from the vendors and total merchandise sales
from the performer or tour producer. We typically receive 100% of sponsorship and advertising revenues
and a rebate of a portion of ticketing surcharges.
Corporate sponsorship includes the naming of venues such as the Verizon Wireless Amphitheater
and the Ford Theater for the Performing Arts. We also designate providers of concessions and "official"
event or tour sponsors such as credit card companies, phone companies and film manufacturers, among
others. Sponsorship arrangements can provide significant additional revenues at negligible incremental
cost. We believe that the national venue network we have assembled will likely attract a larger number
of major corporate sponsors and enable us to sell national sponsorship rights at a premium over local or
regional sponsorship rights. We also believe that our relationships with advertisers will enable us to
better utilize available advertising space, and that the aggregation of our audiences nationwide will create
the opportunity for advertisers to access a nationwide market.
Our outdoor venues are primarily used in the summer months and do not generate substantial
revenue in the late fall, winter and early spring. The theatrical presenting season generally runs from
September through May. The sports marketing businesses primarily earn revenue ratably over the year,
whereas the motor sports business operates primarily in the winter and event management revenue is
earned as the events occur.
Other
Television
As of December 31, 2001, we owned, programmed or sold airtime for 19 television stations. Our
television stations are affiliated with various television networks, including ABC, CBS, NBC, FOX,
UPN, PAX and WB. Television revenue is generated primarily from the sale of local and national
advertising, as well as from fees received from the affiliate television networks. Advertising rates
depend primarily on the quantitative and qualitative characteristics of the audience we can deliver to the
advertiser. Local advertising is sold by our sales personnel, while national advertising is sold by national
sales representatives.
The primary sources of programming for our ABC, NBC, CBS and FOX affiliated television
stations are their respective networks, which produce and distribute programming in exchange for each
station’s commitment to air the programming at specified times and for commercial announcement time
during the programming. We supply the majority of programming to our UPN, PAX and WB affiliates
by selecting and purchasing syndicated television programs. We compete with other television stations
within each market for these broadcast rights.
The second source of programming is the production of local news programming on the ABC,
CBS, NBC and FOX affiliate stations in Jacksonville, Florida; Harrisburg, Pennsylvania; Memphis,
Tennessee; Mobile, Alabama; Cincinnati, Ohio; Albany, New York; San Antonio, Texas; and Salt Lake
City, Utah. Local news programming traditionally has appealed to a target audience of adults 25 to 54
years of age. Because these viewers generally have increased buying power relative to viewers in other
demographic groups, they are one of the most sought-after target audiences for advertisers. With such
programming, these stations are able to attract advertisers to which they otherwise would not have
access.