AOL, CBS Team Up For Radio, Advertising

By Cecilia Kang
Washington Post Staff Writer
Saturday, March 8, 2008

AOL's Internet radio division and CBS Radio yesterday announced a content and advertising partnership that will allow AOL's listeners to access CBS content, including University of Maryland basketball games through CBS-owned WJFK-FM (106.7).

The deal will end AOL Radio's partnership with XM Satellite Radio, as of May 1. XM offers 20 of its commercial-free channels through AOL Radio to lure listeners to subscribe to XM's service. Seven of the top 10 radio channels on AOL Radio as of yesterday were XM stations.

The AOL-CBS agreement will combine AOL Radio's 200 Internet radio programs with CBS Radio's 150 terrestrial radio stations from all over the country, including WTGB-FM (94.7) and WJFK.

CBS Radio will take over advertising sales for AOL Radio, which is run from AOL's former headquarters in Dulles. The two companies will split revenue from ad sales. Other terms of the deal were not disclosed.

In response to the AOL-CBS deal, XM announced a free 14-day trial for its Internet-based radio service, which will include 80 of its 170 satellite channels. It also reduced its six-month subscription price to its XM Internet radio site by half, to $2.99, through May.

"XM's presence on AOL Radio was a valuable way to introduce consumers to our service free of charge," and the company will continue to offer free trial services on its own Web site, said Vernon L. Irvin, executive vice president and chief marketing officer of XM.

XM is awaiting regulatory decisions on its proposed merger with Sirius Satellite Radio, which was announced in February 2007. Both companies continue to add subscribers, but neither is profitable, and analysts say both will suffer if the merger is not approved.

AOL's Internet radio has an audience that listens to about 1.2 million streams a week, but AOL has had difficulty translating those listeners into revenue growth. With CBS Radio's advertising sales force, AOL hopes to sell more local ads.

AOL Radio "has not been as lucrative to AOL because we don't have the local market sales force, and in the radio business, most of the money comes from local," said Fred McIntyre, senior vice president of AOL Radio. As much as two-thirds of all advertising revenue comes from local ads, he said, and AOL Radio's content is mostly music aimed at a national audience.

Mark R. Fratrik, vice president of media consultant BIA Financial, said the AOL deal solves problems for CBS, which is trying to stay relevant as more people get music, news and other entertainment from the Web.

"Radio has been challenged for the last few years and has been looking for new revenue. This gives CBS a much broader audience, particularly young people," Fratrik said.

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