America’s largest radio broadcast company has been accused of muscling the music and radio businesses for some time. Clear Channel’s hardball business practices have finally gotten the attention of Washington regulators and legislators, but can the beltway get the bully of the radio industry to back down? Bob talks to Salon.com senior writer Eric Boehlert.
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Thelonius (beginning)
Artist: Thelonius Monk
Transcript
Clear Channel
April 6, 2002
BOB GARFIELD: If remote local news comes from anywhere, it is the Telecommunications Act of 1996 which removed most limits on radio station ownership. The biggest beneficiary was Clear Channel which owned around 30 stations in 1996 and since has amassed more than 12 hundred to become the nation's biggest broadcaster. It's also the main player in the live entertainment industry owning roughly 130 venues around the country. Add to that the over 700,000 outdoor advertising displays it owns around the world and you have what some people call synergy and others call dangerous monopoly. In the past few years, charges of anti-competitive practices have fallen mainly on deaf ears at the FCC and elsewhere in deregulatory-minded Washington, but last month for the first time in decades the FCC rejected Clear Channel's proposed purchase of a radio station in Virginia. According to Eric Boehlert of Salon.com, that won't stop Clear Channel from behaving like a big bully.
ERIC BOEHLERT: They have changed the radio business beyond recognition. Consolidation has caused tens and thousands of layoffs. The head programmer used to be a shock jock, and that seeps through the company. It's a very curious combination, the -- an incredible consolidation which was bound to unleash a lot of ill will, married with this company that sort of wore its frat house mentality morning pig show with pride and so you put those two together, and they've made a lot of enemies in the radio business.
BOB GARFIELD: Well give me an example please of how the corporate culture is informed by the shock jock mentality.
ERIC BOEHLERT:Oh-- just really being hardnosed when they don't have to be; pushing people around when they don't have to be. And it's not just the radio business now, cause as you mentioned they're in the concert business, so now the allegation is they push artists around. They push record companies around. Do it our way or you won't be on the radio. Go with our promoters or we're going to make life miserable. And the record business is in such dire straits these days -- I mean sales continue to decline -- the last thing people need is to be, you know, locked out of radio stations or kept off the air. So everyone is very nervous about stepping on toes, and, and they don't want to upset Clear Channel.
BOB GARFIELD: How does the dominance of the radio station industry, by Clear Channel or anyone else, affect listeners?
ERIC BOEHLERT:Well it affects what they hear on the radio. I mean Clear Channel is pretty up front that they play less new music, for instance, and they, they sort of wear that as a badge of honor, because in the past, you know, mom and pop broadcasters, they weren't professional enough, and they're playing too much new music and they weren't really what's called "testing the music" trying to find out what listeners like. So you know their play lists were too hodge podge, whereas Clear Channel does a massive amount of testing, and they also rather than employing disk jockeys in every market, you know, if they have a disk jockey in Akron on an adult contemporary station, they'll through sort of ingenious technology be able to insert that into 20 other or 30 adult contemporary stations across the country and then make it sound local. There'll be local ads. There'll be local mentions. But then you know they can fire the other 29 disk jockeys and just pay the one.
BOB GARFIELD:What you describe in your stories, the vertical integration -- because they own the radio stations, they're syndicators that sell programming to radio stations and so forth --the predatory practices that your unnamed sources are describing - gouging advertisers -the use of distribution clout as a bludgeon against competitors -- it all seems to be textbook anti-trust behavior along the old Standard Oil lines. But even if the FCC for ideological reasons is regulation-averse, how can the Justice Department not be licking its chops at this target?
ERIC BOEHLERT: Well, people tell me that the problem is the Justice Department and other regulatory bodies, they don't really understand the music business. They don't understand the overlap in the power that a concert promoter wields when they own radio stations. Also the music business in Washington -- you know, it's on the wrong side of every issue. The only time they really get attention is when they're criticized for R-rated lyrics and last year the FTC took 'em for task for price gouging; the last people that are going to come to their aid are Congressmen.
BOB GARFIELD:So what you're saying is if Clear Channel is monopolistic, the first victims are the record industry and there's not a whole lot of sympathy for the record industry in Washington.
ERIC BOEHLERT: Not a whole lot of sympathy for the record industry. The reason there is action in Washington now is that some Congressmen have been hearing from other broadcasters, from artists' managers, from record company executives. In January I'm -- Congressman Howard Berman [sp?] from California wrote to FCC Chairman Michael Powell and Attorney General John Ashcroft; asked them to look into Clear Channel for vertical integration; whether they do threaten to keep artists off the radio who don't cooperate with the concert promoting; this allegation of so-called "parking" or warehousing radio stations where Clear Channel owns too many stations but does it through front or shell companies. And the allegation is that in some markets Clear Channel is running the stations; they're, they're selling ads; they're programming the station; they're paying the employees. But in theory they're independently owned and operated.
BOB GARFIELD:All right. The FCC has denied Clear Channel one proposed purchase of WUMX in Charlottesville, Virginia putatively out of the concern that if the deal went through, Clear Channel and one other competitor would dominate the marketplace. There would be no third main player. Does that presage stricter regulation and attention on Clear Channel or do you think it was just window dressing in order to deflect criticism that has been leveled against the FCC?
ERIC BOEHLERT: Well the people I talk to in the radio business certainly don't think it's foreshadowing any stricter regulation. In fact the FCC will probably continue to loosen ownership limits. But there is a sense that that denial of that station purchase was an attempt to at least put up a road block and say we're still sort of the sheriff in town even though people in the radio business feel like the sheriff left town a long time ago.
BOB GARFIELD:Now you say of yourself a decade ago the radio industry was really in a bad way. The stations weren't profitable and now along comes Clear Channel and it is a very profitable company and it has found value in these diamonds in the rough. If the goal was to let the free market do what the free market does, hasn't deregulation at least from that perspective been a rousing success?
ERIC BOEHLERT: I don't know if the point of Telecommunications Act was to make lots of radio station owners wealthy. There's almost no one in the business probably outside of Clear Channel that would argue that radio is in better condition now than it was 5 or 6 years ago.
BOB GARFIELD: Eric, if commercial radio has come into such a sorry state of affairs, where oh where is a radio listener to turn?
ERIC BOEHLERT: Well-- they could turn to 3 places. They can turn to public radio. They can turn to-- [BOTH SPEAK AT ONCE]
BOB GARFIELD: Thank you very much! Eric Boehlert is a senior writer at Salon.com. [MUSIC]
April 6, 2002
BOB GARFIELD: If remote local news comes from anywhere, it is the Telecommunications Act of 1996 which removed most limits on radio station ownership. The biggest beneficiary was Clear Channel which owned around 30 stations in 1996 and since has amassed more than 12 hundred to become the nation's biggest broadcaster. It's also the main player in the live entertainment industry owning roughly 130 venues around the country. Add to that the over 700,000 outdoor advertising displays it owns around the world and you have what some people call synergy and others call dangerous monopoly. In the past few years, charges of anti-competitive practices have fallen mainly on deaf ears at the FCC and elsewhere in deregulatory-minded Washington, but last month for the first time in decades the FCC rejected Clear Channel's proposed purchase of a radio station in Virginia. According to Eric Boehlert of Salon.com, that won't stop Clear Channel from behaving like a big bully.
ERIC BOEHLERT: They have changed the radio business beyond recognition. Consolidation has caused tens and thousands of layoffs. The head programmer used to be a shock jock, and that seeps through the company. It's a very curious combination, the -- an incredible consolidation which was bound to unleash a lot of ill will, married with this company that sort of wore its frat house mentality morning pig show with pride and so you put those two together, and they've made a lot of enemies in the radio business.
BOB GARFIELD: Well give me an example please of how the corporate culture is informed by the shock jock mentality.
ERIC BOEHLERT:Oh-- just really being hardnosed when they don't have to be; pushing people around when they don't have to be. And it's not just the radio business now, cause as you mentioned they're in the concert business, so now the allegation is they push artists around. They push record companies around. Do it our way or you won't be on the radio. Go with our promoters or we're going to make life miserable. And the record business is in such dire straits these days -- I mean sales continue to decline -- the last thing people need is to be, you know, locked out of radio stations or kept off the air. So everyone is very nervous about stepping on toes, and, and they don't want to upset Clear Channel.
BOB GARFIELD: How does the dominance of the radio station industry, by Clear Channel or anyone else, affect listeners?
ERIC BOEHLERT:Well it affects what they hear on the radio. I mean Clear Channel is pretty up front that they play less new music, for instance, and they, they sort of wear that as a badge of honor, because in the past, you know, mom and pop broadcasters, they weren't professional enough, and they're playing too much new music and they weren't really what's called "testing the music" trying to find out what listeners like. So you know their play lists were too hodge podge, whereas Clear Channel does a massive amount of testing, and they also rather than employing disk jockeys in every market, you know, if they have a disk jockey in Akron on an adult contemporary station, they'll through sort of ingenious technology be able to insert that into 20 other or 30 adult contemporary stations across the country and then make it sound local. There'll be local ads. There'll be local mentions. But then you know they can fire the other 29 disk jockeys and just pay the one.
BOB GARFIELD:What you describe in your stories, the vertical integration -- because they own the radio stations, they're syndicators that sell programming to radio stations and so forth --the predatory practices that your unnamed sources are describing - gouging advertisers -the use of distribution clout as a bludgeon against competitors -- it all seems to be textbook anti-trust behavior along the old Standard Oil lines. But even if the FCC for ideological reasons is regulation-averse, how can the Justice Department not be licking its chops at this target?
ERIC BOEHLERT: Well, people tell me that the problem is the Justice Department and other regulatory bodies, they don't really understand the music business. They don't understand the overlap in the power that a concert promoter wields when they own radio stations. Also the music business in Washington -- you know, it's on the wrong side of every issue. The only time they really get attention is when they're criticized for R-rated lyrics and last year the FTC took 'em for task for price gouging; the last people that are going to come to their aid are Congressmen.
BOB GARFIELD:So what you're saying is if Clear Channel is monopolistic, the first victims are the record industry and there's not a whole lot of sympathy for the record industry in Washington.
ERIC BOEHLERT: Not a whole lot of sympathy for the record industry. The reason there is action in Washington now is that some Congressmen have been hearing from other broadcasters, from artists' managers, from record company executives. In January I'm -- Congressman Howard Berman [sp?] from California wrote to FCC Chairman Michael Powell and Attorney General John Ashcroft; asked them to look into Clear Channel for vertical integration; whether they do threaten to keep artists off the radio who don't cooperate with the concert promoting; this allegation of so-called "parking" or warehousing radio stations where Clear Channel owns too many stations but does it through front or shell companies. And the allegation is that in some markets Clear Channel is running the stations; they're, they're selling ads; they're programming the station; they're paying the employees. But in theory they're independently owned and operated.
BOB GARFIELD:All right. The FCC has denied Clear Channel one proposed purchase of WUMX in Charlottesville, Virginia putatively out of the concern that if the deal went through, Clear Channel and one other competitor would dominate the marketplace. There would be no third main player. Does that presage stricter regulation and attention on Clear Channel or do you think it was just window dressing in order to deflect criticism that has been leveled against the FCC?
ERIC BOEHLERT: Well the people I talk to in the radio business certainly don't think it's foreshadowing any stricter regulation. In fact the FCC will probably continue to loosen ownership limits. But there is a sense that that denial of that station purchase was an attempt to at least put up a road block and say we're still sort of the sheriff in town even though people in the radio business feel like the sheriff left town a long time ago.
BOB GARFIELD:Now you say of yourself a decade ago the radio industry was really in a bad way. The stations weren't profitable and now along comes Clear Channel and it is a very profitable company and it has found value in these diamonds in the rough. If the goal was to let the free market do what the free market does, hasn't deregulation at least from that perspective been a rousing success?
ERIC BOEHLERT: I don't know if the point of Telecommunications Act was to make lots of radio station owners wealthy. There's almost no one in the business probably outside of Clear Channel that would argue that radio is in better condition now than it was 5 or 6 years ago.
BOB GARFIELD: Eric, if commercial radio has come into such a sorry state of affairs, where oh where is a radio listener to turn?
ERIC BOEHLERT: Well-- they could turn to 3 places. They can turn to public radio. They can turn to-- [BOTH SPEAK AT ONCE]
BOB GARFIELD: Thank you very much! Eric Boehlert is a senior writer at Salon.com. [MUSIC]