Clear Channel Rules the World

How a small chain of once-struggling radio stations grew into a giant of the media/entertainment complex

But there are many other 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.

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