Clear Channel Media Bends the Rules


ONE of the world’s largest corporate media companies has drawn fire from critics. The de facto owners of South African dailies Cape Times and Star newspapers, Clear Channel Communications, the holding company of Clear Channel Independent is raising hell in Iraq, and has even been accused of cosying up to George W Bush and the Religious Right. Here’s an extract from a recent expose, published in the City Pages

THERE are many facets of Clear Channel’s corporate personality. The company continues to branch out, forging a presence in everything from theater to photography exhibits to halftime shows at sporting events. And it has a syndication arm that produces the Rush Limbaugh and Dr. Laura Schlessinger programs.

In fact, there is a political bent to the company that has been quite conservative. After 9/11, for example, a widely circulated memo contained a list of suggested songs that station managers might want to consider too sensitive for listeners, including “Imagine” and “Peace Train.” (During the controversy that followed, the company claimed that the list reflected the opinions of the executives who compiled it and did not constitute an official company blacklist.) After the U.S. invasion of Iraq, a number of Clear Channel stations sponsored “Support the Troops” rallies that critics called naked pro-war endorsements of the Bush administration. Additionally, the company, which does not have its own news division, recently dropped its affiliation with ABC News Radio and partnered with Fox News to air hourly updates on some stations.

The company’s founder, L. Lowry Mays, is a close friend of the Bush family and has maintained professional and political ties with both Bush the elder and the son. When George W. was the governor of Texas, Mays was appointed to the state’s technology council in 1996; he later contributed $51,000 to Bush’s reelection campaign in 1998. Between 2000 and 2002, entities associated with Clear Channel–through PACs, soft money, and individual contributions–forked over $1 million to political campaigns, with 75 percent going to Republican candidates.

“You’re dealing with a super-large tastemaker who can make or break people more than any other company in any industry,” says Mick Spence, a Minneapolis entertainment lawyer. “‘Tastemaker’ has a positive connotation most of the time, but in this case, it’s all determined on marketability of any product. That’s what Clear Channel does.”

“We’re a big company, and you have the good and the bad,” counters Dan Seeman, the vice president and general manager for Clear Channel Radio Minneapolis-St. Paul. “It’s frustrating, because a lot of the perception is myth.” Still, he allows, “We have a lot of resources, and we take advantage of those resources.”

The company’s critics are legion, including a number of high-profile media personalities. In early 2004, Howard Stern, the self-proclaimed King of All Media, was dropped from six Clear Channel stations on the grounds of profane language. Stern countered that the real reason he was dropped is that he turned against George W. Bush just as the presidential campaign was kicking into high gear. Stern, who was once a Bush supporter, repeatedly railed against the president for the war in Iraq, and against FCC chairman Michael Powell, a Bush appointee who had levied hundreds of thousands of dollars in fines against stations that carried Stern.

In November, post-election, Stern appeared on the David Letterman show, ostensibly to promote his impending move off the airwaves and onto satellite radio. But instead, Stern repeatedly talked about the threat to the First Amendment in the current era, one in which he says he cannot do or say things on the air that he did 20 years ago.

“I’m doing this because of Clear Channel,” Stern told Letterman about moving to satellite. “There’s nowhere else to do my radio program.”

Clear Channel started humbly enough, when Texas A&M alum Mays bought KEEZ-FM in San Antonio in 1972. Mays, an ex-Air Force officer who was deeply entrenched in Texas Republican circles as an investment banker, ponied up $125,000 to buy the station.

His co-investor was a local used-car salesman by the name of B.J. “Red” McCombs. In 1975, the pair bought WOAI-AM, one of the old-school 50,000-watt behemoths of the AM dial, a station whose signal could be heard at night hundreds or even thousands of miles away–a “clear channel” station by virtue of its exclusive control of the frequency on which it broadcast.

In 1958, McCombs opened his first car dealership in San Antonio and saw it rack up the sixth-highest sales in the country in its very first year. He bought and sold several sports franchises, and along the way emerged as a major player in Texas oil and real estate. Among his friends is President George Bush I.

Each time a McCombs business move paid dividends, he and Mays went on a shopping spree. The pair accrued a broadcasting mini-empire by snatching up financially fumbling stations and turning them into moneymakers. They did this mostly by changing the formats to religious or all-news programming. In 1988, the duo bought its first television station; at the time, they also owned six AM stations and six FM stations in seven cities.

In 1992 the FCC relaxed ownership regulations. Soon after, the FCC increased the number of television stations a media company could own. By the mid-1990s, Clear Channel Communications owned 43 radio and 16 TV stations.

Then came the Telecommunications Act of 1996. On its face, the bill was supposed to loosen regulations regarding access to telephone lines. Additionally, the new law was to open up restrictions on who could provide digital television services.

Tucked into the bill, however, was a provision that would further expand the number of radio stations a broadcast company could own in one market, and essentially do away with any limits on ownership nationwide. It allowed for a broadcaster to own as many as eight stations on either the AM or FM frequencies in a single market.

There was resistance on Capitol Hill, but broadcast conglomerates argued that more media concentration would actually improve the variety of radio programming. For instance, they claimed, if ABC Radio owned one “classic rock” station in a market, and ABC or, say, Infinity Broadcasting (two prominent rivals at the time), bought the other locally owned classic rock station in the market, there would be little reason for two classic rock stations. “Diversity” became the industry’s buzzword for promoting the bill.

The industry had the ear of President Bill Clinton, who was seeking reelection that year. Clinton professed to be impressed by the arguments the broadcasters made, and was almost certainly impressed by the coin they contributed to his reelection campaign. The president pushed Congress to pass the measure, which he signed in February 1996.

What followed was an unprecedented wave of large corporations merging with large corporations. AOL fused with Time Warner. Viacom became one with Infinity Broadcasting, and then with CBS. ABC merged with Walt Disney. And so on.

For all the press these huge alliances garnered, there was a ripple effect among smaller owners as well. As the industry became deregulated, a mergers-and-acquisitions boom commenced in the industry. One of the first local harbingers of this effect came in 1992, when Colfax Communications, a south Minneapolis company headed by a WCCO radio general manager, bought WCTS-FM (100.3), which had been a Christian station, for $10 million. Then Colfax, with the help of investors who had made their cash off of the Craftsman tool company, purchased KQQL-FM (107.9), an oldies station.

In 1995, KDWB-FM (101.3), long considered one of the most influential top 40 stations not on either coast, was bought by Dallas-based Chancellor Communications for $22 million, a local record, and by the end of the year the company owned KTCZ-FM (97.1), KEEY-FM (102.1), and KFAN-AM (1130). The following year, Colfax bought nine more stations in Phoenix, Milwaukee, and Boise. Two months later, in August 1996, Colfax sold all 12 of its stations to Chancellor for $365 million. Suddenly Chancellor owned seven stations in the Twin Cities.

But the mergers didn’t stop, and local radio listeners could be forgiven for losing track of who exactly was programming the music coming out of their car stereos. In 1997, Chancellor Broadcasting merged with another Texas-based broadcaster, Evergreen Media, and was christened Chancellor Media Group. The company owned 103 stations in 21 major markets. (The Twin Cities market is the 15th-largest in the U.S.) By the end of that year, Chancellor had formed a new national network called AMFM Radio.

During this age of consolidation, it became evident that nobody did mergers and acquisitions better than Clear Channel. Though the company had operated below big-media radar in its early years, its deep pockets and deal-spotting acumen left the company in a position to make major purchases at will. Clear Channel was taken public in 1984, and during the 1990s, its stock went from $4.60 a share in 1993 to $95 a share in 2000. (Mays’s sons, Randall and Mark, have taken major roles in the company’s management over time; Mark Mays is currently the CEO and president of Clear Channel, Randall the CFO and executive vice president.)

In 1996, Clear Channel bought 49 radio stations. The next year, it bought 70. In 1998, it bought Jacor Communications and its 206 radio stations to the tune of $6.5 billion. Clear Channel bought AMFM in October 1999. That acquisition, for $24 billion, netted Mays and Clear Channel 830 more stations. (To assuage the rumblings of antitrust regulators, Clear Channel quickly sold off an additional 100-plus stations for $4.2 billion.) The next closest radio competitor was Cumulus, which had a relatively paltry 230 stations at the time.

After years spent amassing its radio empire, Clear Channel began to move vertically in its acquisitions, buying up companies elsewhere in the media/entertainment supply chain. The real watershed came in 2000, when Clear Channel bought a promotions company called SFX. SFX had become a corporate raider in the booking business, buying such longstanding promotions companies as Bill Graham Presents. By 2000, SFX was staging more than 26,000 events annually. Clear Channel bought SFX for $4.4 billion, and folded it into Clear Channel Entertainment. Suddenly Clear Channel was booking thousands of concerts a year.

In addition to the radio and television stations, the concert venues and outdoor advertising, there are such holdings as Clear Channel Satellite, based in Colorado, providing a variety of satellite transmission services; Clear Channel Wireless, a high-speed internet service based in Cincinnati; Inside Radio, an industry trade publication; and Katz Media Group, an ad firm in New York City that works with 2,100 radio stations, 350 television stations, and 1,700 cable operators.

And the list goes on. Clear Channel owns Motor Sports Group, promoter of more than 600 car and cycle racing events a year. There’s Premiere Radio Networks, which distributes Rush Limbaugh and other shows to 7,800 radio stations; Prophet Systems, a company that makes the technology that allows DJs to “voicetrack,” or record radio shows in one city for several stations in other cities; and SFX Sports Group, a talent management and marketing agency that represents 500 professional athletes, including Michael Jordan and Andre Agassi. Another spin-off of Clear Channel produces the television shows Smallville and Arli$$. The company also has a stake in XM Satellite radio. And Clear Channel owns the touring rights to the Broadway productions of The Lion King, Hairspray, and a chunk of The Producers. In fact, the company owns prominent theaters both on Broadway and in Chicago.

Needless to say, it’s a corporate portfolio that goes far beyond owning an unprecedented number of radio stations. As the e-mail signature line used by many local Clear Channel employees puts it, “What other markets or what other media can I help you with today?”

As Clear Channel grew, so did resentment toward what was deemed by many an evil empire. Pop music aficionados have long decried the homogenization of radio at the hands of the company, which, they say, uses market research to formulate repetitious, lowest-common-denominator playlists around the country. (Clear Channel Radio CEO John Hogan retorted in 2003 that the company had 6,700 playlists–a sentiment Seeman echoes. “All of our research and testing for all of our stations is done locally,” he says.)

The complaints of the company’s competitors and critics were exhaustively documented in a series of stories written by Eric Boehlert of Salon.com in 2001. Boehlert wrote of Clear Channel’s alleged “pay for play” practices, recounted accusations that bands who booked shows with other concert promoters saw their airplay diminish on CC stations across the country, and compiled other charges of generally bad behavior. “Welcome to the world of Clear Channel,” Boehlert wrote, “radio’s big bully.”

Like any conglomerate, Clear Channel has sought to make its size pay off by reducing management ranks on the road to consolidation. As it snatched up multiple stations in one market, the company would merge operations, resulting in many lost jobs. According to a report published by Cornell University a year ago that was commissioned by the AFL-CIO, “Clear Channel’s cost-cutting practices” led to 1,500 to 4,500 jobs lost over four years.

FOR REST OF THE STORY CHECK OUT CITY PAGES

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