Clear Channel ends deal with promoters
Radio giant denies claims of payola

By Anne C. Mulkern,
Denver Post Washington Bureau, April 10, 2003

WASHINGTON - Reacting to intense criticism from lawmakers, radio behemoth Clear Channel Communications said Wednesday that it's ending its controversial policy of selling market data to promoters that represent music labels.

Earlier this year, several powerful senators questioned whether the longstanding practice amounted to illegal payola in exchange for airtime. Clear Channel, which owns eight Denver radio stations, denied it is doing anything wrong but said it saw the need to deal with the negative perception.

"We now recognize that these relationships may appear to be something they're not," said Clear Channel president and chief operating officer Mark Mays. "We have zero tolerance for 'pay for play' but want to avoid even the suggestion that such a practice takes place within our company."

People in the industry said promoters spend about $100 million annually to tout music from the labels they represent, with Clear Channel taking about one-fourth of that. Clear Channel said the total is much less, equal to one-fifth of 1 percent of annual revenues. Critics contend that practice has led to limited station playlists and the squeezing out of artists not represented by the top three labels.

Consumer activists and critics of the company said Clear Channel acted to try to stem legislation that might be even more restrictive. A public relations firm that specialized in crisis management issued the company's press release.

The decision comes as the Federal Communications Commission prepares to vote on whether to relax rules governing ownership by media companies. The FCC is reviewing six media ownership rules, including one that bars TV, newspaper and radio companies from owning each other in the same market. The FCC ruling is expected by June 2.

Some have pointed to the effects of consolidation in radio as an example of what will happen if television and newspaper companies are allowed to merge. Rules for radio ownership were relaxed in 1996. San Antonio-based Clear Channel, now the nation's largest radio owner, ballooned from 40 stations to 1,225. It also operates the nation's largest concert promoter and owns a company with 770,000 billboards.

"(Clear Channel's) announcement also underscores the need for the FCC ... to conduct a thorough, public examination of the radio industry before moving forward on proposals to allow further concentration in the industry," said Sen. Russ Feingold, D-Wis., one of those who has criticized the radio giant. Clear Channel in its announcement said it was reacting to concerns from Feingold and Sens. John McCain, R-Ariz., Orrin Hatch, R-Utah.

Those who've challenged Clear Channel said Wednesday that its announcement won't change anything because it still wields overwhelming market power.

"Not all compensation to the record stations is direct cash," said Jesse Morreale, a partner with Denver-based independent promoter Nobody In Particular Presents. NIPP sued Clear Channel in August 2001, charging that its group of Denver radio stations favored music from artists represented by the company's concert promotion arm while denying airplay to performers who use NIPP. The suit also accuses Clear Channel stations of blocking artists using NIPP from publicizing their concerts on the air.

Morreale said he feared Clear Channel would add emphasis to its concert promotion arm to try to recoup the money it's losing from independent promoters.

Clear Channel in its announcement said it planned to explore new opportunities for record labels and musicians to promote their recordings and concerts. That could mean, for example, more giveaways of tickets and trips to concerts, Clear Channel spokesman Andy Levin said.

The company said it would stop working with independent promoters when contracts expire this summer. Levin said the company was not planning to find ways to recoup the lost revenue.

Mountain West Music 2002