When a freight train derailed in Minot, N.D, last year, releasing toxic fumes into the air, radio station KCJB-AM didn't answer when police phoned to request public alerts.
Critics of media consolidation say no one responded because the station — one of six outlets in Minot owned by Clear Channel Communications — was running on computers after the company consolidated local operations and slashed personnel. But Andrew Levin, senior vice president for government affairs at Clear Channel, says personnel were on hand and blamed Minot police for not knowing how to operate emergency equipment that automatically prompts on-air alerts.
Tiny Minot, it turns out, was the wrong place for Clear Channel to have such problems because North Dakota Democrat Byron Dorgan sits on the powerful Senate panel that oversees the radio industry. The lawmaker wasn't pleased and is now seeking to clamp down on the looser ownership rules passed by the Federal Communications Commission (FCC) on June 2. He often cites the Minot case as a reason why he opposes further deregulation of television, newspapers and other mass media.
To its critics, Clear Channel provides a sobering lesson on the pitfalls of media mergers. Bolstered by the 1996 Telecommunications Act's deregulation of radio, it grew from 40 stations in 1996 to 1,220 today to become the dominant industry player, with 103 million listeners nationwide and revenue of $3.2 billion annually. It is also the world's largest concert promoter and one of the nation's largest display-advertising companies, with about 770,000 billboards. Coupled with its nearest competitor, Viacom-owned Infinity Broadcasting, the companies control 42 percent of the U.S. radio market and command 45 percent of the revenue.
Detractors say Clear Channel's homogenized playlists make radio sound the same from coast to coast and that its use of “voice-tracking” — programming local radio stations with deejays and announcers in distant cities — undermines localism. “Only about 9 percent of all our programming is voice-tracked,” Levin says, adding that the practice enables small communities to enjoy otherwise unaffordable talent. “We think that folks like it.”
Noting that Clear Channel owns less than 12 percent of U.S. radio stations, CEO John Hogan said, “I don't see any way possible to conclude that this is a consolidated industry or that Clear Channel has any real dominance inside that industry.” Prior to 1996, he noted, up to 60 percent of radio stations were losing money, and many were in danger of going dark. He said Clear Channel should be heralded as an American success story and that the company helped rejuvenate radio.
Clear Channel says it has increased format diversity in many markets, such as Los Angeles, where it owns stations ranging from nostalgia to Spanish hip-hop. But the watchdog Future of Music Coalition (FMC) found hundreds of redundant radio formats nationwide with songs overlapping up to 76 percent of the time. Some stations altered format names without changing playlists.
“Just because it's a [distinct] format doesn't mean that it's diverse,” says FMC Executive Director Jenny Toomey. “The public realizes radio has homogenized since the '96 Act passed.”
“Radio consolidation has contributed to a 34 percent decline in the number of owners, a 90 percent rise in the cost of advertising, a rise in indecent broadcasts and the replacement of local news and community programming with voice-tracking and syndicated hollering that ill-serves the public interest,” railed Sen. Ernest Hollings, D-S.C., at a January hearing.
Eric Boehlert, a Salon journalist who writes extensively about radio, told National Public Radio, “You can't have a hit without being on Clear Channel stations. You can't have a career without being on Clear Channel stations. So all of a sudden you have a company that is essentially dictating what gets heard on the radio.” That was unheard of before the '96 act, he said.
Don Henley, one of several musicians who accuse Clear Channel of heavy-handed, monopolistic practices, told lawmakers this year: “Artists can no longer stand for the exorbitant radio-promotion costs, nor can we tolerate the overt or covert threats posed by companies owning radio stations, venues and [advertising] agencies.”
A just-released report from the watchdog Center for Public Integrity finds that small and medium-sized radio markets have higher levels of radio concentration than large ones. Clear Channel, the report finds, is the main owner in 20 of the top 25 most-concentrated markets.
Fueling the controversy surrounding the San Antonio, Texas-based company are its close ties to Republicans. CEO Lowry Mays is a friend of President Bush and contributes heavily to GOP causes. Tom Hicks, a Clear Channel board member, purchased the Texas Rangers baseball team from Bush and his associates. The company has made a star of conservative radio host Rush Limbaugh, whose show airs on 180 Clear Channel talk-radio channels. Others are concerned that Clear Channel could unduly influence a combined Hispanic Broadcasting Corp. (HBC) and Univision Communications, which recently won FCC approval to merge. Clear Channel is HBC's largest shareholder.
Meanwhile, Rep. Howard Berman, D-Calif., worries that Clear Channel has “punished” Britney Spears and other artists who bypassed its concert-promotion service by burying radio ads for their concerts and denying airplay to their songs. Competitors allege that Clear Channel secretly purchases radio stations — using front groups and shell companies — and “warehouses” them if there is public opposition to the company's expansion in the hope that regulatory limits will later be lifted.
In September, the watchdog Alliance for Better Campaigns accused Clear Channel and Infinity of limiting the sale of radio ads to candidates in California's gubernatorial recall election. The alliance suggested the companies may be withholding ad space for more lucrative commercial clients.
Clear Channel has strongly denied all of these charges, saying it is the target of criticism because it's the market leader.
The National Association of Broadcasters (NAB) emphasizes there are nearly 4,000 separate owners of 13,000 local radio stations in the U.S. today. “The Hollywood movie studios, the record companies, direct-broadcast satellite, cable systems, newspapers — even the Internet — all have more of their revenue share concentrated among the top 10 owners than does radio,” NAB President and CEO Eddie Fritts told lawmakers this year. “Spanish-language formats have increased by over 80 percent in the last decade, and other ethnicities are well represented on the dial.”
To some, Clear Channel is a harbinger of television's future. “We're already going that way under the old rules,” complains Democratic FCC Commissioner Michael Copps, who already sees signs of the “Clear Channelization” of TV. “I don't think anybody in the Congress really anticipated the extent of consolidation that has ensued from the 1996 act.”
But even Copps sees upsides to concentration, such as the “economies and efficiencies” that have allowed some stations to operate more profitably and avoid going under, depriving listeners of service. Nevertheless, he opposes the FCC's new media-ownership policies.
Clear Channel is now in Washington's crosshairs. Although the FCC loosened ownership rules for newspapers and television stations on June 2, it limited the number of radio stations that operators can own in certain markets. The FCC wanted to grandfather in existing non-compliant stations, but Sen. John McCain, R-Ariz., offered legislation to force the divestiture of such properties, including roughly 100 Clear Channel stations.
Meanwhile, the Justice Department is investigating whether Clear Channel requires musicians to sign with its concert-promotion division to get airplay, and whether it wields too much power in Southern California.