Radio Consolidation Under Fire

More than six years since Congress passed the 1996 Telecommunication Act allowing corporations to own vastly greater numbers of radio stations, the issue of consolidation in the industry has become a point of debate. From the rise of concert ticket prices, to the perceived lack of diversity of programming, critics say deregulation is destroying radio. At the same time, companies like Clear Channel say they are committed to local programming, and insist their operations are within the letter of the law.

A bill put forth by Sen. Russell Feingold (D-WI) aims undo what he sees as the harm done to the radio dial in the past six years. The Competition in Radio and Concert Industries Act would give the government more regulatory oversight over mergers, and would outlaw the practice that has arisen whereby record companies give radio stations money through a third party for each record they add. Feingold says it amounts to nothing more than a “shakedown,” where large radio stations allegedly require huge payments through independent promoters before they'll put a song on the air. “If you don't have the money to play in this system, you are shut out,” he said during a hearing on radio consolidation held Thursday in Washington. Feingold also took aim at Clear Channel, the biggest radio owner, for its related live concert business. He blames Clear Channel’s consolidation of the concert promotion business with the 61% price increase in concert tickets in the past six years, and said the Justice Department should investigate.



“We think Senator Feingold is wrong. Dead wrong,” responded Clear Channel CEO Lowry Mays. “The legislation is built on the faulty premise that the concert business and radio business need to be fixed. They don’t. They are healthier than ever, delivering more and better service to consumers,” Mays told the Senate panel. Although Clear Channel owns 1,200 radio stations, Mays said that accounts for just 9% of all the stations in the U.S., making radio the least consolidated segment of media. Conceding that Clear Channel often pre-records, or “voice tracks” air talent, Mays however insisted that its stations are committed to serving their local audiences, saying they are no “homogenized, McDonalds” that plays the same formats in every city. For instance, Mays said current songs such as Santana’s “The Game of Love” or Toby Keith’s “Who’s Your Daddy?” are getting much more airplay in some markets than others.

Yet artists say diversity is quickly fading under the corporate programmer. “Getting on radio one way or the other is the Holy Grail,” said singer Don Henley, a member of the Recording Artist Coalition. Henley complained that many radio stations are demanding free promotional concerts from artists who are on their way up the ladder of success, something musicians see as “just another form of payola.” Other artists are afraid to cross Clear Channel, in particular, since its vast empire of radio and concert halls could severely impact an artist’s career. “Artists can no longer stand for the exorbitant radio promotion costs nor can we tolerate the overt or covert threats posed by companies that own radio stations and venues and agencies,” said Henley.

Mays denied Henley’s allegations, arguing radio airplay is based on audience feedback and almost continual research and ratings. He said Britney Spears received 73% more airplay on Clear Channel radio stations when she toured with a competing concert firm, for example. He said they would even play Henley’s music, despite his testimony, joking, “As long as our audience want to hear Mr. Henley's music, he has no threat of retribution.” Mays also blamed the artists themselves for rising ticket prices, saying many are demanding higher fees to make up for declining record sales.

Feingold’s bill was introduced for the second time this week. Last year, it failed to be acted upon; but the Washington environment is different in 2003. The Federal Communications Commission is presently conducted a wholesale review of its media ownership rules, while many on Capitol Hill seem to be losing their taste for media consolidation. Chief among them is Commerce Committee chairman Sen. John McCain (R-AZ), who took a tough, prosecutor-like stand with the Clear Channel executive throughout Thursday’s hearing. In one exchange, McCain repeatedly asked Mays if Clear Channel planned to buy additional radio stations. After Mays evaded the question twice, McCain interrupted, “Do you have any plans to obtain more radio stations? I’d like to ask the question for the third time.” Responded Mays, “If we can serve the local community better and we see an opportunity, yes.”

Sen. Byron (D-ND), one of just a handful of senators to oppose the Telecom Act’s passage in 1996, says he is not surprised to see “galloping concentration” in radio and television. “In most cases, concentration if less unchecked clog the arteries of competition.”

Yet with a Republican Congress firmly entrenched for the next two years, it seems unlikely much will be done to re-regulate the radio industry. “Times have changed, and I think we have to allow the radio industry to reflect the demands of the time and be able to make a profit,” said Sen. Trent Lott (R-MS), a former radio newscaster. At the very least, Lott says Congress should allow the FCC to finish its review of media rules, a process that be completed by summer, assuming no court battles ensue.

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