Clear Channel: the Media Mammoth that Stole the Airwaves by Jeff Perlstein

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Special to CorpWatch
November 14th, 2002

Clear Channel: the Media Mammoth that Stole the Airwaves
by Jeff Perlstein

Can you name a Texas-based multinational company that is facing a Department of Justice investigation, lawsuits for inappropriate business practices, a flurry of criticism in the mainstream press, and a bill in congress to curb its impact on the industry?

Did you say Enron? Try again.

This 800 lb. Texas gorilla has spent $30 billion since 1996 to become the world's largest radio broadcaster, concert promoter, and billboard advertising firm. It's a major player in American television and Spanish-language broadcasting.

Clear Channel Communications of San Antonio may not be a household name yet, but in less than six years it has rocketed to a place alongside NBC and Gannett as one of the largest media companies in the United States. The mega-company has gained a reputation for its ugly hardball tactics. Clear Channel has played a leading role in destroying media diversity in the United States. And yes, it is the same media company that allegedly "blacklisted" certain songs following September 11, including Cat Stevens' Peace Train and John Lennon's Imagine.

"It's not just how big and powerful they are but how they do business, the arm twisting," Mike Jacobs, former independent label owner and manager of Blink 182, told Eric Boehlert who has been covering Clear Channel's shady business practices for Salon.com.

Media Mobster

Before passage of the 1996 Telecommunications Act, a company could not own more than 40 radio stations in the entire country. With the Act's sweeping relaxation of ownership limits, Clear Channel now owns approximately 1225 radio stations in 300 cities and dominates the audience share in 100 of 112 major markets. Its closest competitors -- CBS and ABC, media giants in their own right -- own only one-fifth as many stations.

Accusations abound that Clear Channel illegally uses its dominance in radio to help secure control of the nation's live entertainment business. Several cities, including Denver and Cincinnati, have charged radio station managers with threatening to withdraw certain music from rotation if the artists do not perform at a Clear Channel venue. This tactic, known as "negative synergy," has allegedly been used to pressure record companies into buying radio-advertising spots in cities where they want to book concert venues.

With this anti-competitive tactic of leveraging airplay against concert performances, Clear Channel has firmly solidified its hold in both areas. As a result, Clear Channel now owns, operates, or exclusively books the vast majority of amphitheaters, arenas, and clubs in the country. It also controls the most powerful promoters, who last year sold 27 million concert tickets. That is 23 million more than the closest competitor.

While this may be good for Clear Channel owners and investors, a lot more is at stake here than the buying and selling of stocks.

"Profit maximization has never been the sole point of U.S. communications policy," writes Douglas Gomery in a March 2002 white paper for the Economic Policy Institute.

"Under the Communications Act of 1934, the Federal Communications Commission (FCC) is charged with allocating spectrum space to maximize 'the public interest'...and to encourage a diversity of voices so as to promote a vibrant democracy."

Far from fostering a diversity of voices, Clear Channel's monopolistic practices are accelerating the homogenization of our airwaves. The company syndicates both Rush Limbaugh and Dr. Laura to hundreds of stations nationwide, shuts out independent artists who can't afford to go through high-priced middlemen, and is responsible for taking the practice of voice tracking to new heights (or depths, depending on your perspective). Voice tracking is the practice of creating brief, computer-assisted voice segments that attempt to fool the listener into thinking that a program is locally produced, when in fact the same content is being broadcast to upwards of 75 stations nationwide from a central site. So you have one overworked 'radio personality' recording the phrases, "Hello Topeka!" "Hi Springfield!" "How you feeling Oakland?" all day long.

This consolidation is clearly counter to the Federal Communications Commission's (FCC) mandate to encourage media diversity. Now, however, the long-standing concerns of media activists are being echoed by the mainstream press, the courts regulatory agencies, and even by members of Congress.

Mega-Monopoly

Clear Channel is currently facing antitrust lawsuits from plaintiffs around the country, ranging from an Illinois concert goer concerned with soaring ticket prices to the nation's largest Latino-owned radio company.

Alleging monopolistic behavior, however, is not the same as convincing a judge to move towards a trial. But last summer a small Denver-area concert promoter, called Nobody in Particular Presents, sued the media behemoth for antitrust violations, claiming that it "has used its size and clout to coerce artists... to use Clear Channel to promote their concerts or else risk losing airplay." The judge agreed to hear the case, and ruled that the evidence is "sufficient to make a case of monopolization and attempted monopolization under Section 2 of the Sherman Act."

As a result, the halo of silence surrounding the company's anti-competitive practices may finally be shattered. Plaintiff's lawyers will be able to compel music industry insiders to testify regarding the often-repeated, off-the-record allegations that Clear Channel's radio stations have illegally rewarded or punished artists based on their dealings with the company's concert division.

"The political terrain is really shifting," says Robert McChesney, author and professor of communications at the University of Illinois, Urbana-Champaign. "There's an opportunity for discussion about radio that would have been unthinkable six months or a year ago," he told Randy Dotinga in Wirednews.com.

Irregular Regulators

Despite a clear history of promoting consolidation, the Department of Justice and the FCC, the federal regulatory agencies charged with safeguarding the public interest in business and media respectively, are finally showing a spark of interest in holding Clear Channel accountable. While the Justice Department is spearheading its own "top secret" investigation of Clear Channel, the FCC has been mostly dragging its heels, with three notable exceptions:

* After receiving numerous complaints from across the country, the FCC has announced it is investigating the claims by an advertiser in Chillicothe, Ohio, that Clear Channel is circumventing existing ownership limits by operating stations through shell companies in a practice known as "parking" or "warehousing" stations. Clear Channel has sold off stations to alleged front companies, which allow Clear Channel to continue operating the properties while also providing an easy way to buy back the stations, should the FCC slacken ownership limits in the future.

* In Charlottesville, Virginia, the FCC has preliminarily denied a station transfer to Clear Channel and has scheduled a formal hearing to examine the situation. Big deal? Yes, because the FCC has not taken such an action since 1969 -- which, more than anything else, speaks to the FCC's lack of policy enforcement over the last thirty years and is one of the reasons why we have arrived at the current situation.

* In Monterey, California the FCC has held up another Clear Channel transfer request at the urging of Congressman Sam Farr (D-Calif.).

Congress Catches on to "Shady Practices"

Fortunately, Farr is not alone in expressing concern over Clear Channel's shady business practices. He is joined by a handful of other vocal members of Congress, including Senator Russ Feingold of Wisconsin, who has proposed a bill to deal with the issue. Known for his work on campaign finance reform, Feingold launched the Competition in Radio and Concert Industries Act last June, saying: "We need to repair the damage that has been done through this anti-competitive behavior..."

Without naming names, the Act takes direct aim at some of Clear Channel's business practices, such as the warehousing of stations for future purchase, "negative synergy" with concert promotions, and pay-to-play schemes between station owners and record companies. Consumer groups, minority-owned radio companies, labor unions, and independent artists have all thrown their support behind the Feingold bill.

And not a moment too soon. The growing momentum to hold Clear Channel accountable for its excesses comes as the FCC -- chaired by Michael Powell, son of Secretary of State Colin Powell -- announced that it will review the last remaining protections on media diversity.

If Powell's FCC follows his previous positions, this ruling could sweep away the very last remaining protections related to media ownership. Powell has publicly stated that he has "no idea what is meant by the public interest" and prefers to let the market resolve such thorny questions.

FCC's Proposed Rules on Ownership

On September 12 the FCC announced a proposed Rulemaking on Ownership. Dubbed the Omnibus Ownership Ruling by consumer advocates, it could be the final nail in the coffin of media diversity and the public interest. Under Powell's direction, and with a huge push from mega-media's deep-pocketed lobbyists, the Omnibus Ruling lumps together a number of disparate proposals bound by the same core principle of eliminating the last public interest protections in media ownership.

Proposals include a call to end the ban on newspaper-TV cross-ownership in the same city, eliminate the rule limiting companies to eight radio stations in one listening area, and end the limit on national television broadcast ownership of 35% of the potential national audience.

The Omnibus Ruling has newspaper moguls salivating at the possibility of amplifying reach through radio and TV without seriously investing in increased or better reporting -- they will broadcast their print stories. Radio giants are poised to swallow up the last remaining independent stations and smaller holdings. Cable companies and the networks are eager to merge so they can further downsize staff, increase audience, and maximize their already huge profits.

The Campaign

Clear Channel epitomizes the disastrous consequences of hyper-consolidation that resulted from the 1996 Telecom Act; a disaster that activists say would further accelerate if the FCC implements the Omnibus ruling. They also see the Ruling as an opportunity to spot light the need for democratizing the media.

The current rumblings in Washington, D.C. regarding Clear Channel are the direct result of many years of citizen agitation and organizing from the grassroots that continue to grow.

Unionists and their allies have rallied in Seattle, Cleveland, and other cities. Community coalitions that hold Clear Channel accountable for the negative effects of over consolidation have emerged in Detroit and San Francisco. Letter writing campaigns have urged elected officials to reign in the company and make policy changes to protect the public interest.

Several websites and hundreds of listserves have been providing information about Clear Channel's excesses and communities' resistance -- most notably clearchannelsucks.org and stopclearchannel.com

What's been sorely lacking is strategic coordination of these efforts to amplify their impact and link up with broader media-policy initiatives. A dynamic national coalition launched just such a campaign at the recent Reclaim the Media Conference, in Seattle during the weekend of September 12-15, 2002. Nationally recognized organizations such as FAIR, the Democratic Media Legal Project, Media Alliance, and Prometheus Radio Project began mapping out steps to mobilize public pressure around Clear Channel, the Feingold bill, the Omnibus Ruling, and beyond.

To get involved with the national campaign to defeat the Omnibus Ownership Ruling and reign in the corporate media giants such as Clear Channel, please visit media-alliance.org. For more ideas see What You Can do About Clear Channel.