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May 23, 2003
Blacklisting, Voicetracking, and Payola: Clear Channel and the Effects of Media Consolidation
    by William Baue

Shareowner activists ask Clear Channel to ban blacklisting, while musicians and other activists oppose FCC plans to deregulate media industries.

"There goes the last DJ/ Who plays what he wants to play/ And says what he wants to say/ There goes your freedom of choice/ There goes the last human voice."

So sings rocker Tom Petty on his latest CD, The Last DJ, which rails against corporate control of the radio industry. Clear Channel Communications (ticker: CCU) is an industry giant that has come to exemplify such control. Before the Telecommunications Act of 1996 deregulated the radio industry, Clear Channel owned the legal limit of 40 radio stations nationwide; it now owns some 1,240 stations. Consequently, Clear Channel is bearing the brunt of criticism over the consolidation of broadcasting power into increasingly few corporate hands.

In late April, Trillium Asset Management, a socially responsible investment firm, sent a letter to Clear Channel raising concerns about Clear Channel stations blacklisting artists based on their political viewpoints. For example, Clear Channel country station KAJA in San Antonio, where Clear Channel is headquartered, banned the Dixie Chicks after lead singer Natalie Maines criticized President George Bush for ignoring public opposition to the war in Iraq. This ban set off a frenzy of Dixie Chicks blacklisting nationwide at stations owned by Clear Channel and Cumulus Media (CMLS), among others.

"We are a decentralized operating company," wrote Clear Channel President and COO Mark Mays in response. "There are NO blacklist [sic] at our company."

Trillium's letter asked the company to adopt a strong corporate policy against blacklisting, a measure that would have prevented KAJA program director Keith Montgomery from instituting the ban in the first place.
The letter also applauded Clear Channel for its mid-April decision to end so-called "pay for play" deals with independent promoters. The promoters were essentially paying radio stations to broadcast the songs of artists the promoters represented.

However, Jenny Toomey, executive director of the Future of Music Coalition (FMC), says the pay for play practice, also known as payola, will not necessarily end. FMC is a non-profit organization that pursues initiatives that can benefit citizens and musicians.

"The problem isn't that payola is happening, because it's happened forever," Ms. Toomey told "Not that payola is a good thing, but the problem is concentration."

She points to FMC's November 2002 report entitled Radio Deregulation: Has It Served Citizens and Musicians?, which documents the problems of radio consolidation. For example, Clear Channel's president contended in a February field hearing conducted by the Federal Communications Commission (FCC) that "consolidation has led to increases in the diversity of formats available to listeners in local markets, large and small." The FMC report deconstructs this claim.

"Increased format variety does not ensure increased programming diversity," the report states.

In fact, although there are now more formats than in 1996, FMC research revealed that playlists in supposedly distinct formats overlap as much as 76 percent.

At an earlier hearing on media ownership in the radio industry convened by the Senate Commerce, Science, and Transportation Committee, Clear Channel CEO Lowry Mays defended the companies' use of voicetracking. Voicetracking presents announcements recorded at distant locations as if they were locally produced. Senator Ron Wyden (D-OR) condemned the practice as deceptive and called for Congress to require voicetracking disclosure.

The stakes could not be higher in this argument over whether radio consolidation benefits the public (as the FCC is directed by the Communications Act of 1934 to ensure) or not. On June 2, FCC chair Michael Powell is convening the only public meeting to address his proposals to further deregulate a broad spectrum of media industries, a move that would undoubtedly lead to greater consolidation.

Mr. Petty joined more than 4,000 other musicians in signing a letter urging Mr. Powell to "grant Congress and the public a full opportunity to review any proposed changes of media ownership rules before they are enacted." The letter cites empirical evidence documenting how consolidation has not benefited the public and how regulation is necessary to maintain the kind of competition that breeds democratic diversity of expression.


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