The Voice of America
Clear Channel, the San Antonio-based radio behemoth, has been blamed for everything from politicizing the airwaves to destroying musical diversity, but has the company everybody loves to hate gotten a bum rap?
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But with its manic buying binge, Clear Channel's management acquired a hard, unforgiving—many would say ruthless—edge. This was at least in part because of the management culture of several of its larger purchases: AM/FM Inc., of Dallas, then the nation's largest radio company, and Kentucky-based Jacor Communications, the nation's second-largest radio group. Both were hyperaggressive, hyperacquisitive firms that had been on their own buying binges. Both had killer-shark managers. Jacor in particular was a rough-and-tumble competitor. And when Jacor chairman Randy Michaels took over Clear Channel's radio operations, Jacor's culture became Clear Channel's. No more smiley faces. Instead, there were regional managers who would tell local station general managers or sales managers that if they didn't make their numbers that week, they would be fired. In the years that followed the first wave of consolidation, Clear Channel became notorious for a mean-spirited, micromanaging, tough-guy culture. According to Steve Hicks, the chairman of Capstar Partners, which owned more than three hundred stations now owned by Clear Channel, "Jacor was a take-no-prisoners culture. It was never win-win with them. It was win-lose. You had to lose." It also enforced such bare-bones frugality that it is still widely referred to as Cheap Channel. Says one former sales account executive who left the company: "They put all of our stations together, and we were all relegated to one printer. So I had to buy my own printer and my own ink cartridges."
WHAT WAS HAPPENING, IN FACT, was that Clear Channel was struggling mightily to digest its new empire, trying to weld literally dozens of company cultures together. "You have to remember that they were attempting to do something that had never been done before," says Hicks. "They were in completely uncharted waters." The Mayses and their management team did have many success stories, quickly turning money-losing and debt-ridden stations into moneymakers, which helped drive up their stock price. Wall Street applauded them as deft turnaround artists. But sometimes their management style backfired. They lost hundreds of talented employees, both through firing and voluntary departure, and they ran some old, valuable radio properties into the ground. At KHFI-FM, in Austin, long one of the top two or three stations in the city, Clear Channel has failed resoundingly to hold its share of the market. According to former employees, when Clear Channel was challenged by two well-funded local competitors, it refused to spend the money needed to defend its turf. "Clear Channel just let us slide," says Mary Kaye Stuart, a former sales executive. "You don't just sit there and take it. You don't let them kick you around. You advertise. You promote. You do what you have to do. But they didn't." The result: KHFI is now the twelfth-ranked station in Austin, with roughly a 3 percent share of the market. KEAN, in Abilene, which Clear Channel acquired in 2000, once boasted a 40 percent market share. Now, a few years after its acquisition, it struggles to hold a second-place share, in the 11 percent range.
With Clear Channel's 1999 purchase of SFX (which it renamed Clear Channel Entertainment), the country's largest concert promoter, this hard-edged radio culture was now superimposed on yet another tough, old-school business. The world of talent buying, booking, and concert promotion has never been for the faint of heart. And it is here where many of the complaints about Clear Channel's anticompetitive behavior have originated. The basic allegation is that Clear Channel radio stations threaten to withhold promotion or airplay from a musician unless the musician lets Clear Channel Entertainment book the show. Two examples from the Dallas area illustrate how this often works. In 2001 an outdoor concert called Taste of Dallas was being booked by the Professional Musicians of Dallas-Fort Worth, a union that often does such bookings. Festivals like this depend on radio support, promotion, and sponsorship. But when the festival's executive director approached Clear Channel's stations, she was told that they would not promote the concert unless she bought her headliner talent through Clear Channel. Illegal? Probably not—the world of antitrust law is an ill-defined place. Hardball? Without a doubt. Last year blues singer-guitarist Susan Tedeschi, who had been booked by the same group to play a Fort Worth festival, canceled her agreement after a Clear Channel station pressured her to play another festival, in Addison, that it was promoting. "This underscores the consequences of combining talent buyers and broadcasting," says union president Ray Hair, who was involved in both transactions. "Clear Channel muscled Tedeschi's booker and manager to dump our date." The union made such a stink about it that Tedeschi ended up not playing either concert.
Deals like that were especially bad for Clear Channel's image, as was the $80,000 fine levied by Florida's attorney general for running national radio contests that listeners were led to believe were local. These things drew attention and seemed to confirm the notion that the company was a predatory giant, that owning both the biggest concert promoter and the biggest radio company gave it too much concentrated power over musicians. At last year's congressional hearings, the company's leveraging of its twin empires of concert and radio drew more complaints than any other type of offense. And it is likely that this is what prompted the Justice Department's investigation. If Clear Channel is ever forced to divest something, odds are that it will be its concert arm, Clear Channel Entertainment. Either way, Clear Channel has become a company nobody wants to mess with.
IT HAS ALSO BECOME THE SUBJECT of a huge body of myth, the thrust of which is that Clear Channel is filling the airwaves with both indecency and right-wing politics while threatening to end localism in the American radio business. The generally accepted notion is that the company is the Antichrist, but when you closely examine charges against it, the majority of them are either not true, address practices that nearly every other company in the radio business has adopted (most of which, though lamentable, are the direct and predictable result of deregulation), or involve business tactics that were in place long before Clear Channel amassed its empire.
Take the most frequent charge: that by controlling the playlists at its far-flung stations in some three hundred radio markets from its San Antonio headquarters, it is responsible in large part for the droning sameness of radio music in America. While it is hard to argue against the idea that "oldies," "urban," "alternative rock," "country," or "hot adult contemporary" formats sound similar from Boise to Beaumont (and overlap quite a bit too), this is not a product of Clear Channel centralization. Contrary to what critics like musician Don Henley have suggested, almost all of Clear Channel's programming and operating decisions are made at the local level. The company's competitors, including Emmis, work this way too. Song lists are researched regionally and selected station by station. Except for a few brief attempts to use national programming directors for its "KISS" branded stations, decisions about what to play are, by corporate policy, made locally.
In 2003 Clear Channel researchers made more than two million phone calls to listeners. They held focus groups and produced some 10,000 local audience reports. They—and their competitors—know exactly what people want to hear. Critics may want to hear more Pete Yorn and Patty Griffin on contemporary-hits stations; listeners say they want Linkin Park, 50 Cent, and OutKast. That is why the playlists are so small and also why they sound so similar across the country. Simply put, if stations do not play what people want to hear, people turn them off. Rush Limbaugh, with 20 million listeners, is a pure product of the free market. Musicians complain, ever more loudly and with good reason, about their lack of access to the airwaves. The decline in the number of independent radio stations means that regional hits are less and less likely. And the intensive use of market research by Clear Channel and everybody else means that program directors are less and less willing to take chances. This may be undesirable in a country that values musical diversity, but it is an industry trend that is at least thirty years old. The only thing new about it is that everybody in the business is doing it.
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