KMZT questions competitor’s agreement

Describing the arrangement as the proverbial camel’s nose under the tent, the owner of commercial classical station KMZT-FM (105.1) has petitioned the FCC to stop a partnership between classical rival KUSC-FM (91.5) and Clear Channel Communications, the nation’s largest radio chain.

In July, KUSC-FM announced it was using the sales staff of a Clear Channel subsidiary to solicit underwriting sponsors for the public station, owned by USC. KUSC President Brenda Barnes said Clear Channel’s expertise would generate more revenue for the station, while freeing KUSC personnel to focus on other duties.

But last week, Mt. Wilson FM Broadcasters, which owns KMZT, or “K-Mozart,” asked the Federal Communications Commission to clarify its rules about joint sales agreements -- deals in which stations owned by different companies work together to sell advertising.

Noncommercial stations aren’t currently covered under those rules. Mt. Wilson maintains that Clear Channel’s sales partnership with KUSC effectively gives the company another station above the maximum of eight it is allowed to own in the Los Angeles market.

If the situation is left alone, according to Mt. Wilson’s petition, “the loser will be the public interest -- those who believe in preserving competition.”

The petition goes on to say that advertisers -- swayed by the economy of scale represented by Clear Channel’s eight local stations -- would be persuaded to underwrite the company’s partner, KUSC, rather than buy advertising from its competitor, KMZT.

“This is one of those things where no good deed goes unpunished,” countered Charlie Rahilly, senior vice president of Clear Channel’s West Coast operations. He said the partnership brings scant cash to his company, but was an attempt to show it was being a good corporate citizen and champion of local broadcast diversity.

“Clearly, maintaining and helping fund classical music on the radio adds to diversity,” he said.

Rahilly also noted that the arrangement was KUSC’s idea, and he insisted that it’s nothing like the joint advertising sales agreements covered under FCC rules. In addition, the company arm that sells advertising for Clear Channel’s radio stations isn’t working for KUSC; instead, it’s the division that sells time on traffic reports that is soliciting underwriters for the public station. “This is a little bit of an apples and oranges situation,” he said.

But Mt. Wilson owner Saul Levine, one of the few remaining independent broadcasters in the country, views it differently: “800-pound gorilla attacks L.A.’s mom & pop station,” a description found in his fliers outlining the dispute.

Levine sees the partnership between Clear Channel and KUSC as just another chapter in a conflict he’s had with the larger company for nearly a year. He also owns adult standards station KSUR-AM (1260), “K-Surf,” which mixes modern singers, such as Diana Krall, with stalwarts of the genre, such as Frank Sinatra and Ella Fitzgerald. Levine premiered that station in May 2001, and when Clear Channel launched its own standards station last December, KLAC-AM (570), which also mixes old and new artists, he said the corporate behemoth was trying to muscle him out of the format.

Rahilly, on the other hand, points out that KLAC had aired standards until August 2000 -- though not the updated offering it now plays. Then the company switched the station to talk, until changing back again in December.

“There’s nothing personal,” Rahilly said. “We compete very aggressively and very fairly in the media business. There’s absolutely no agenda against Saul.”

But Levine said Clear Channel’s KUSC deal is an end-run attack on K-Surf, as it threatens the revenue stream for KMZT, which he uses to subsidize KSUR.

“If they want to represent KUSC, that’s fine. Just give up another station. Give up KIIS,” he suggested with a chuckle.

Clear Channel’s KIIS-FM (102.7) was the second-highest-billing station in the country last year, selling $60.5 million worth of advertising, according to the trade journal Radio & Records.

Mt. Wilson, in its petition, argued that if the KUSC-Clear Channel partnership is allowed to stand, it paves the way for the company’s 1,200 stations to join with the nation’s 1,000 noncommercial outlets and use underwriting agreements as another way to get at Clear Channel competitors.

Levine said he expects the FCC to rule on the petition within six months.