A federal judge in Denver has ruled that there is evidence that the nation’s biggest radio broadcaster and concert promoter abused its clout by threatening to keep artists off the air unless they performed at its shows.
U.S. District Judge Edward W. Nottingham this week ordered Clear Channel Communications Inc. to stand trial in August and defend its business practices after finding there was reason to believe that “Clear Channel intends to manipulate artists’ promotion decisions and interfere with competitors by withholding airplay.”
The ruling came in a lawsuit filed in August 2001 by Denver concert promoter Nobody in Particular Presents. The suit accuses Clear Channel of violating state and federal antitrust laws.
San Antonio-based Clear Channel, which owns about 1,200 stations, including eight in Denver, has denied the allegations and asked Nottingham to dismiss the case.
The judge last Friday tossed out part of the smaller promoter’s claims that Clear Channel illegally monopolized the market for rock concert tickets. But Nottingham ruled that it could proceed with its allegations that the conglomerate attempted to create a monopoly. He set a trial date for Aug. 2.
Much of the evidence in the case remains under seal. But in his 125-page decision, Nottingham cited excerpts from several depositions and e-mails that allegedly show that Clear Channel executives tied airplay on Clear Channel stations to artists’ appearances at Clear Channel concerts.
In one instance, an executive with Roadrunner Records, Jason Martin, testified in a deposition that a Clear Channel executive in charge of FM stations in Denver, Michael O’Connor, threatened in 2000 to yank the record label’s acts off the air when he learned that they were touring with Nobody in Particular Presents. O’Conner declined to comment Thursday.
Another Roadrunner executive then e-mailed managers for artists involved in the flap, the judge said in his decision, and advised them to avoid using Nobody in Particular Presents or risk losing airplay.
In another deposition, a manager for rock singer Lennon testified that her label, Arista Records, demanded that she cancel a concert booked with Nobody in Particular Presents to avoid losing airplay on one of Clear Channel’s Denver stations, KBPI. Airplay data submitted by the plaintiff indicate that Clear Channel stations had reduced the airtime given to songs by another Arista rock act, Adema, after the band signed a concert deal with the same concert promoter.
Arista label representatives didn’t return phone calls Thursday.
According to documents referred to in the ruling, an executive with Elektra Records, Margie Weatherly, asked Clear Channel’s O’Connor why one of the label’s rock acts, Vast, had seen the number of plays, or “spins,” dropped to six a week from 23.
O’Connor responded by asking whether the band planned to book a Christmas show with Clear Channel’s live-event unit: If “you will investigate these issues, I would love to have a conversation with you about ‘where you stand.’ ”
The next day, Weatherly assured O’Connor that the band’s booking with the company was being finalized, adding, “Now let’s see some spins, baby!” After the booking was confirmed, the number of plays per week for the band rose to 20, according to the ruling.
Andrew Levin, Clear Channel’s executive vice president for law and government affairs, cautioned that the ruling was only “the beginning of a long process of finding the truth.”
“That’s what a trial is for,” he said. “You’re only seeing part of the picture and there are material facts in dispute. We look forward to our day in court when we will clearly demonstrate that these allegations are unfounded.”
Jesse Morreale, a co-owner of Nobody in Particular Presents, said the evidence illustrated Clear Channel’s “predatory behavior, the way they’ve used their control over the content of the radio stations to injure us as a competitor. Despite their denial of the behavior, it’s great that the evidence is out there so people can see it wasn’t us crying wolf.”
Broadcasters have long seen concerts as a potentially lucrative business, and one they could easily promote on the air. And artists’ managers and agents contend that dozens of stations across the country pressure bands to perform for free or at a reduced price at concerts that are designed to bolster the stations’ ratings and advertising revenue.
The evidence in the Colorado case raises questions about possible “payola” violations. Federal law prohibits broadcasters from accepting money or anything of value -- including a rock concert -- in exchange for airplay, unless that payment is disclosed to listeners.
“For those who need to be convinced,” said consumer advocate Andrew Jay Schwartzman, head of the Washington-based Media Access Project, “this ought to be convincing.”
U.S. Sen. Russell D. Feingold (D-Wis.), who last year tried to pass legislation outlawing the use of airplay as leverage in concert negotiations, said he was “concerned about the heavy-handed tactics of Clear Channel Communications.... I will be very interested to see how this trial turns out.”
In Washington, the Justice Department has said that it is investigating allegations that Clear Channel violated antitrust laws by slashing airplay for artists that didn’t sign on with Clear Channel’s concert unit. A second probe focuses on Clear Channel’s dominance of the San Diego radio market. An agency official described the inquiries as “ongoing” Thursday.
For his part, Clear Channel co-founder and Chairman Lowry Mays has been unequivocal that the company’s activities are aboveboard.
When he testified before a Senate committee hearing last year on the state of the industry, he didn’t wait for questions about Clear Channel’s tactics.
“Let me say clearly, and for the record, that Clear Channel does not use the threat of reduced airplay to force musicians to tour with us, or retaliate against competing concert promoters by failing to promote their shows on the air,” Mays began his comments. “Anyone who would make such allegations simply doesn’t understand our business.”