Bill Seeks Limits on Radio Giants

Saying recent radio industry consolidation has reduced the diversity of music played on the air and hiked concert prices for consumers, Sen. Russell Feingold (D-Wis.) proposed new restrictions Thursday on radio giants such as Clear Channel Communications Inc.

Feingold’s bill is a sweeping attempt to prevent large radio companies from using their size and power to hurt smaller station owners and from bullying artists to play at radio-station-sponsored concerts. The bill also would toughen payola laws by preventing record companies from using third-party promoters to pay stations for airplay. And it would give the Federal Communications Commission the power to revoke radio licenses of companies that abuse their power.

The bill is certain to draw stiff opposition in Washington, where federal regulators appointed by President Bush and some key members of Congress are pushing to relax regulations on broadcasters, rather than toughen them.

Feingold said his bill, the Competition in Radio and Concert Industries Act, would close loopholes left by the 1996 Telecommunications Act, which removed the national ownership limit for radio stations and opened the floodgates for consolidation.

“We have to repair the damage that has been done by the unprecedented consolidation in this industry,” Feingold said.

Though prospects for passage of the bill this year are slim given the large number of issues before Congress, Feingold’s measure deals with many of the complaints raised by consumer groups about consolidation in the radio business.

Feingold said he had no plans to reinstate a national radio ownership cap, but his bill would give the FCC new powers to block future acquisitions by companies that already reach more than 60% of the national audience. His measure also would prevent the FCC from increasing the number of radio stations a company may own in the same market. In large markets, the current limit is eight stations.

San Antonio-based Clear Channel has been one of the biggest beneficiaries of the 1996 act. The company has grown from a single station 30 years ago to 1,200 radio stations today.

“We do not believe it is in the best interest of any of our constituencies to have the government legislate private business practices to the degree that Sen. Feingold proposes,” said Clear Channel President Mark P. Mays.

Clear Channel’s stock fell to a 52-week low during the day and despite a late rally fell $4.55, or 13%, to $31.20 on the New York Stock Exchange.

Mays said that consolidation in the radio industry--in which the top 10 station owners generate 44% of the industry’s revenue--still is less than in other industries, such as movies and cable TV.

But Feingold noted that the top four radio companies, including Clear Channel, control as much as 96% of some local markets.

In Los Angeles, the top four companies control 70% of the stations.

Critics say companies such as Clear Channel have grown too powerful by also gaining control over concert venues, billboard advertising and promotion businesses. According to Feingold, such concentration has contributed to a 60% increase in concert ticket prices since 1996, far greater than the rate of inflation.

Musicians also have said that Clear Channel is demanding unfair terms--such as forcing artists to perform for free at promotions or pressuring them to use Clear Channel’s concert-promotion services--in exchange for playing their songs on its radio stations.

But Mays blamed rising ticket prices on musical artists, who are “demanding more money to perform than ever before.”

He also denied that broadcasters were demanding “pay-for-play” fees from record companies, blaming the practice on the five major record conglomerates, which pay third-party promoters to promote their songs to radio stations.

“Instead of disciplining themselves to break this pattern, they are asking Congress to do it for them,” Mays said.

Feingold’s bill also takes aim at efforts to circumvent federal rules that prevent companies from owning more than eight radio stations in a market. Some radio giants have signed marketing agreements with local stations that give them control over playlists and advertising, even though they don’t own the station.

Under Feingold’s bill, such agreements would be counted under the local ownership rule. His measure also would prevent the FCC from increasing the eight-station cap.

Analysts say lawmakers facing November reelection will have little appetite to take on the broadcasting industry this year. But artists groups and record labels are hopeful that the bill will tee up the issue for action next year.