Description of United Breweries Co Inc's Business Segments
Radio Broadcasting
Radio Stations
We currently own equity interests in various international radio broadcasting
companies, which we account for under the equity method of accounting. Our radio
stations employ various formats for their programming. A station's format can
be important in determining the size and characteristics of its listening audience.
Advertisers often tailor their advertisements to appeal to selected population
or demographic segments.
Radio Networks
The network syndicates talk programming including such talent as Rush Limbaugh,
Bob and Tom, John Boy and Billy, Glen Beck and Jim Rome, and music programming
including such talent as Rick Dees and Casey Kasem. We also operated several
news and agricultural radio networks serving Georgia, Ohio, Oklahoma, Texas,
Iowa, Kentucky, Virginia, Alabama, Tennessee, Florida and Pennsylvania.
Most of our radio broadcasting revenue is generated from the sale of local
and national advertising. Additional revenue is generated from network compensation
and event payments, barter and other miscellaneous transactions. Advertising
rates charged by a radio station are based primarily on the station's ability
to attract audiences having certain demographic characteristics in the market
area that advertisers want to reach, as well as the number of stations and other
advertising media competing in the market and the relative demand for radio
in any given market.
Advertising rates generally are the highest during morning and evening drive-time
hours. Depending on the format of a particular station, there are certain numbers
of advertisements that are broadcast each hour. We determine the number of advertisements
broadcast hourly that can maximize available revenue dollars without jeopardizing
listening levels. Although the number of advertisements broadcast during a given
time period may vary, the total number of advertisements broadcast on a particular
station generally does not vary significantly from year to year.
Our radio broadcasting results are dependent on a number of factors, including
the general strength of the economy, ability to provide popular programming,
relative efficiency of radio broadcasting compared to other advertising media,
signal strength, technological capabilities and governmental regulations and
policies.
Outdoor Advertising
As of December'31, 2003, we owned or operated a total of 787,575 advertising
display faces. We currently provide outdoor advertising services concentrated
in over 40 domestic markets and over 63 foreign countries. Our display faces
include billboards of various sizes, wallscapes, transit displays and street
furniture displays. Additionally, we currently own equity interests in various
outdoor advertising companies, which we account for under the equity method
of accounting.
Revenue is generated from both local and national sales. Local advertisers
tend to have smaller advertising budgets and require greater assistance from
our production and creative personnel to design and produce advertising copy.
In local sales, we often expend more sales efforts on educating customers regarding
the benefits of outdoor media and helping potential clients develop an advertising
strategy using outdoor advertising. While price and availability are important
competitive factors, service and customer relationships are also critical components
of local sales.
Advertising rates are based on a particular display's exposure, or number of
'impressions' delivered, in relation to the demographics of the particular market
and its location within that market. The number of 'impressions' delivered by
a display is measured by the number of vehicles or pedestrians passing the site
during a defined period and is weighted to give effect to such factors as its
proximity to other displays, the speed and viewing angle of approaching traffic,
the national average of adults riding in vehicles and whether the display is
illuminated. Independent auditing companies verify the number of impressions
delivered by a display.
Our billboards consist of various sized panels on which advertising copy is
displayed. Bulletin and poster advertising copy is either printed with computer-generated
graphics on a single sheet of vinyl that is 'wrapped' around an outdoor advertising
structure or placed on lithographed or silk-screened paper sheets supplied by
the advertiser that are pasted and applied like wallpaper to the face of the
display. Billboards are generally mounted on structures we own and are located
on sites that are either owned or leased by us or on a site for which we have
acquired a permanent easement. Lease contracts are negotiated with both public
and private landlords.
Wallscapes are essentially billboards painted on vinyl surfaces or directly
on the sides of buildings. Because of their greater impact and higher cost,
larger billboards are usually located on major highways and freeways. Some of
our billboards are illuminated, and located at busy traffic interchanges to
offer maximum visual impact to vehicular audiences. Wallscapes are located on
major freeways, commuter and tourist routes and in downtown business districts.
Smaller billboards are concentrated on city streets targeting pedestrian traffic.
Transit advertising incorporates all advertising on or in transit systems,
including the interiors and exteriors of buses, trains, trams and taxis, and
advertising at rail stations and airports. Transit advertising posters include
vinyl sheets, which are applied directly to transit vehicles or to billboards
and panels mounted in station or airport locations. Transit advertising contracts
are negotiated with public transit authorities and private transit operators,
typically on a revenue-share basis with a minimum fixed rental guarantee.
Street furniture panels are developed and marketed under our global Clear Channel
Adshel brand. Street furniture panels include bus shelters, free standing units,
pillars and columns. The most numerous are bus shelters, which are back illuminated
and reach vehicular and pedestrian audiences. Street furniture is growing in
popularity with local authorities, especially internationally and in the larger
domestic markets. Bus shelters are usually constructed, owned and maintained
by the outdoor service provider. Many of our bus shelter contracts include revenue-sharing
arrangements with a municipality or transit authority. Large street furniture
contracts are usually won in a competitive tender and last between 10 and 20'
years. Tenders are won on the basis of revenues and community-related products
offered to municipalities, including bus shelters, public toilets and information
kiosks.
Live Entertainment
As a promoter, we typically book talent or tours, sell tickets and advertise
the event to attract ticket buyers. For the event, we either provide our controlled
venue or we rent a venue, arrange for production services, and sell sponsorships.
When we provide our owned venue, we generally receive a percentage of revenues
from concessions, merchandising, parking and premium box seats.
As a producer, we generally develop event content, hire artistic talent, schedule
performances in select venues, promote tours and sell sponsorships. We do not
have control over the actual ticket price charged to the consumer. We derive
revenue from a percentage of the promoters' ticket sales. We also derive revenues
from guarantees and from profit sharing agreements related to co-promotion,
merchandising, sponsorships and concessions.
We derive revenues from our venue operations primarily from ticket sales, rental
income, corporate sponsorships, concessions, and merchandise. A venue operator
typically receives, for each event it hosts, a fixed fee or all of the 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 generally receive 100% of sponsorship revenues and a portion
of the ticket handling charges.
Corporate sponsorship includes the naming rights of venues. We also designate
providers of concessions and 'official' event or tour sponsors such as credit
card companies, phone companies and beverage companies, among others. Sponsorship
arrangements can provide significant additional revenues. We believe that the
national venue network we have assembled will likely attract 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 entertainment 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.
Our motor sports business operates primarily in the winter.
Other
Television
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. Advertising rates depend primarily
on the quantitative and qualitative characteristics of the audience we can deliver
to the advertiser. Our sales personnel sell local advertising, while national
sales representatives sell national advertising.
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.
We also provide local news programming for the certain 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 that would not otherwise use
them.
Media Representation
We own the Katz Media Group, a full-service media representation firm that sells
national spot advertising time for clients in the radio and television industries
throughout the United States. Katz Media represents over 2,700 radio stations
and 390 television stations.
Katz Media generates revenues primarily through contractual commissions realized
from the sale of national spot advertising airtime. National spot advertising
is commercial airtime sold to advertisers on behalf of radio and television
stations. Katz Media represents its media clients pursuant to media representation
contracts, which typically have terms of up to ten years in length.
Sports Representation
We operate in the sports representation business. Our full-service sports marketing
and management operations specialize in the representation of professional athletes,
integrated event management and marketing consulting services. Among our clients
are many professional athletes, including Michael Jordan (basketball), Tracy
McGrady (basketball), Barry Zito (baseball), Mike Messina (baseball), Greg Norman
(golf), Andre Agassi (tennis), Andy Roddick (tennis)'and Jerry Rice (football).
Our sports representation business generates revenue primarily through the
negotiation of professional sports contracts and endorsement contracts for clients.
The amount of endorsement and other revenues that our clients generate is a
function of, among other things, the clients' professional performances and
public appeal. The sports marketing businesses primarily earn revenue ratably
over the year.
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