On Monday Clear Channel Communications, which owns about 850 stations, will announce that it will run ads for SweetJack, the daily-deals program owned by Cumulus Media. In turn, Cumulus, the second-biggest operator with 570 stations, will become part of iHeartRadio, Clear Channel’s streaming app and all-purpose online radio brand. The financial terms were not disclosed.
The deal will help Cumulus quickly expand its nascent discount service to hundreds of cities and compete with the dominant daily-deal players, Groupon and LivingSocial. SweetJack, which sells promotions to local merchants and advertises the deals on the air and online, opened in April, shortly after Cumulus agreed to pay $2.5 billion to acquire the Citadel Broadcasting Corporation.
Cumulus has introduced SweetJack in 16 cities and signed up one million users, the company said. By teaming with Clear Channel, Cumulus plans to take the service to 120 markets by the end of next year.
SweetJack will have its own sales forces in local markets, and the companies plan to share profits from the service, said Lewis W. Dickey Jr., Cumulus’s chief executive.
Clear Channel also stands to significantly expand iHeartRadio, which collects streams from 800 of its stations along with programming from broadcasters like Univision and the New York public radio station WNYC. It also offers a Pandora-like personalized music service; the company said the app had been downloaded 44 million times by users.
Over the last decade, as traditional radio companies have faced new forms of competition from satellite radio and streaming services like Pandora, the Web has become an important vehicle for the broadcasters to expand their reach.
Robert W. Pittman, Clear Channel’s chief executive, said in an interview on Sunday that the deal represented “one more data point that proves radio is not a laggard, that we do see the future, and that we’re moving toward it in a smart and fast way.”
The daily deals market is worth $1.97 billion in sales, according to BIA/Kelsey, a market research company.
But it is unclear how many players the market can support. With the success of Groupon, numerous companies have introduced similar programs, including other broadcasters like Cox Radio. Many have had limited success, and Groupon itself has stumbled; its stock has fallen about 27 percent since the company went public a month ago.
Mr. Dickey said that the wide reach of radio could give an advantage to SweetJack that no other company had, and that between Cumulus’s own expansion and the deal with Clear Channel, the program could reach as much as 90 percent of the United States market. And he believes that fans of daily deals will be interested in more than one service.
“What has happened in the daily deal space is that heavy users tend to have multiple sites they will look at on a daily basis,” Mr. Dickey said in an interview. “We found this an excellent opportunity for radio to enter that space and compete for the long tail of advertising.”
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