Clear Channel Rules the World

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

"If they can do it, more power to them," Martin continues. "The main issue I have is that we can spend time nurturing a band, and then they want to go to the next step, or the management tells them to go with someone bigger, and we can't compete" the next time a band comes to town, he says. The effect is that Clear Channel will set a guarantee that other bookers can't match. Places like First Avenue and the Cabooze consider these $10,000 shows to be their bread and butter, but Clear Channel just sees them as brand-building.

The same thing happens on a national level. Prominent musicians like Neil Young and Steve Miller have started to speak out about the Clear Channel squeeze. And Don Henley has testified before Congress, insisting that through its radio and booking operations, the company has engaged in monopolistic practices.

In describing Clear Channel's power over the marketplace, Macalester's Steinman draws a parallel. "They've reached a point that's similar to the prohibition on movie studios owning local theaters," Steinman notes. "You can't deal directly with GM to buy a car. You have to have local dealers. Or you don't have people buying gas directly from oil companies. Historically, we have said that we don't want people at one end of the production process controlling how that product gets to people locally."

The first piece of anti-monopoly legislation, the Sherman Act, was passed in 1890, essentially guaranteeing that the federal government could regulate industry to ensure that there was no collusion or dominance of one company in any given sector. The act was the impetus for Theodore Roosevelt's trust-busting campaigns that reshaped the economy at the turn of the 20th century. In 1911, the Sherman Act was used to bust up the monopoly of Standard Oil.

In our lifetimes, the most compelling antitrust suits have involved communications. The Microsoft suit of the late 1990s, which rested on the idea of the company "bundling" its internet browser with the computers it manufactured, was merely a slap on the wrist when all was said and done. But the antitrust suit brought against AT&T and the system of "Baby Bells," which was hatched by fledgling telephone company and future rival MCI in the mid-1970s, ended the phone company as we knew it.

In Deal of the Century: The Breakup of AT&T, Steve Coll documents the case regulators made for "divestiture" of the phone system in 1984. In that suit, there was "something called the 'essential services' doctrine in antitrust law," Coll wrote in 1986. "If one company--say, AT&T--owned exclusive facilities that were essential to the business of another company--say, MCI--then the first company was required to give access to the second company." That principle of law, coupled with the fact that AT&T controlled the consumer "product" from start to end--the land lines, the switching stations, the local service, the long-distance service, even the telephones--was the unraveling of the company's monopoly.

These were essentially the grounds on which Nobody In Particular Presents took on the radio giant in August 2001. "Clear Channel has engaged in a vast array of anti-competitive, predatory, and exclusionary practices in the course of acquiring, maintaining, and extending its monopoly power," NIPP's complaint, filed in federal district court, began.

For starters, testimony and a trail of internal Clear Channel e-mails built a strong case that Clear Channel had, in effect, boycotted airplay on its Denver stations for artists and labels who had booked shows with other promoters in the Denver area. In 1999 and 2000, Clear Channel allegedly shut the door on Reprise Records, which had booked shows with NIPP. An e-mail from Michael O'Connor, the director of radio operations in the market, was particularly damning. "We are out of business with your label," court records say O'Connor wrote to label reps. "You can all fuck yourselves as far as I'm concerned."

NIPP cited other such examples for the court, including a period of time when a Clear Channel station had played a single by Puddle of Mudd more than 20 times a week for 3 months. After the band played an NIPP show, the promoter claimed, the station played the single only 11 times, and by the following week, wasn't playing it at all.

Aside from radio spins, NIPP further alleged that bands suffered from lack of promotion on Clear Channel stations if they were playing a non-Clear Channel show. Judge Edward Nottingham, in his 72-page opinion, allowed that NIPP had provided sufficient evidence to refer many of its claims to trial. Nottingham noted the number of "alter egos" Clear Channel uses in the music business, most specifically SFX, and concluded that, though the company argued they were separate entities, a jury might find them to be one and the same. "When the parent controls, directs, or encourages the subsidiary's anti-competitive conduct, the parent engages in sufficient independent conduct to be held directly liable as a single enterprise with the subsidiary under the Sherman Act," the judge wrote last April.

Judge Nottingham added that "a market share of 70 percent demonstrates monopoly power," and noted that Clear Channel controlled 73 percent of the rock radio advertising market. Further, the court concluded that Clear Channel may have denied advertising to NIPP and may have engaged in "anti-competitive conduct." He allowed that there was evidence that
Clear Channel had denied NIPP the use of essential services--its radio stations. "Taken as a whole," Nottingham wrote, "the court concludes that NIPP has demonstrated sufficient evidence of attempted monopolization that a reasonable jury could find in favor of NIPP."

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