Spanish Broadcasting Suit Alleges Antitrust Actions

Spanish Broadcasting System Inc. on Wednesday sued its bigger rivals--Clear Channel Communications and Hispanic Broadcasting Corp.--accusing the two Texas companies of antitrust behavior designed to squeeze it out of the Spanish-language radio market.

Spanish Broadcasting filed its suit in U.S. District Court in Miami on the same day that Los Angeles-based Univision Communications Inc. announced that it was buying Hispanic Broadcasting in a $3.5-billion stock deal. Clear Channel, the nation’s largest radio network, owns 26% of Hispanic Broadcasting. If the deal goes through, Clear Channel, based in San Antonio, will own 7% of Univision.

The suit filed by Spanish Broadcasting, a Miami-based company with 15 Spanish-language radio stations, includes multiple allegations of corporate bullying by Clear Channel.

The 20-page lawsuit alleges that, in an attempt to thwart Spanish Broadcasting’s 1999 initial public stock offering, Clear Channel and Hispanic Broadcasting executives told Lehman Bros. investment bankers that Spanish Broadcasting Chief Executive Raul Alarcon Jr. was a “drug user and/or drug trafficker.”

Tensions between the two Spanish-language radio companies heightened after a failed bid by Clear Channel to acquire Spanish Broadcasting in 1996, the suit says.

Clear Channel Chief Financial Officer Randall T. Mays allegedly told Spanish Broadcasting that if it didn’t accept Clear Channel’s offer, the company “will ultimately buy [Spanish Broadcasting] on the Bankruptcy Court steps.”

Clear Channel also waged bidding wars for stations that Spanish Broadcasting wanted to buy to inflate the price, the suit contends.

Clear Channel and Hispanic Broadcasting, based in Dallas, are accused in the suit of using their clout to pressure other Wall Street firms to abandon plans to participate in Spanish Broadcasting’s IPO or to provide analyst coverage of the company.

The lawsuit claimed that in one instance a Clear Channel executive allegedly threatened investment banking firm Deutsche Bank Alex. Brown Inc. with the loss of $30 million in fees from Clear Channel and Hispanic Broadcasting if the firm participated in its rival’s IPO.

Clear Channel vehemently denied the charges. “Clear Channel Communications has always operated its businesses--and continues to operate them--fairly, honestly, legally and with the highest standards of ethics,” the company said in a statement.

Hispanic Broadcasting, through a spokeswoman, said the firm hadn’t seen the suit but considered the allegations “baseless.” Lehman Bros. declined to comment.

Spanish Broadcasting said it hired attorney David Boies to handle its antitrust case. Boies represented former Vice President Al Gore in his challenge of the 2000 presidential election results in Florida. Boies also worked on behalf of the federal government in its landmark antitrust case against Microsoft Corp.

Spanish Broadcasting’s shares closed at $11.51, down 99 cents, on Nasdaq.

Clear Channel’s shares closed at $45.89, down $3.91, on the New York Stock Exchange.

Hispanic Broadcasting’s stock closed at $26, up $1.55, also on the NYSE.