Radio's big bully

The Wall Street Journal recently toasted Michaels as the never-grow-up "Peter Pan" of radio. An anonymous straw poll among radio and record pros, though, would probably reveal more who now see Michaels as Captain Hook. (He and other top Clear Channel executives declined to be interviewed for this story.)

Michaels has become the symbol of Clear Channel's dominance of an entire, multibillion-dollar media industry. What's made that adjustment so difficult for some is Clear Channel's litigious, cost-cutting, arrogant style of business.

And it's an attitude Michaels sets from the top.

Ever since Clear Channel's AMFM acquisition was completed, a simmering discontent has been brewing, prompted by some particularly heavy-handed moves on Clear Channel's part. "They were on their best behavior before AMFM, but now they're getting nasty," says Robert Unmacht, former editor and publisher of the M Street Journal, which tracks the radio business.

For instance, Clear Channel owns Premiere Radio Networks, which syndicates popular talk shows like those of Rush Limbaugh and Laura Schlessinger to hundreds of stations across the country.

Earlier this year Clear Channel sent out letters to non-Clear Channel stations that used Premiere features, informing them that their popular talk shows, including Limbaugh's and Schlessinger's, would be summarily yanked and moved immediately to Clear Channel competitors across town.

(Other large radio-owning conglomerates own syndicated shows as well, but as yet none have been wielding the programming in such a blatantly domineering way.)

"We spent hundreds of thousands of dollars over the past 12 years promoting the Rush Limbaugh show locally and we're paid back with a letter telling us it's being moved to our direct competitor," laments Glenn Gardner of talk station WTDY and rock outlet WJJO, both in Madison, Wis.

"We weren't even given a chance to bid and hang onto the show. Clearly what they're trying to do is squeeze everybody else out. We contacted [Wisconsin Sen.] Russ Feingold and told him this really needed to be looked at."

An even more recent example of Clear Channel's hardball style: On the very day radio-ratings company Arbitron went public with a Wall Street offering this month, Clear Channel decided to announce to Arbitron -- and its investors -- that the behemoth would not be renewing its contracts for the company's ratings surveys in 130 markets that were then under negotiation. The announcement represents a huge hit that could cost Arbitron tens of millions of dollars in lost revenues annually -- not to mention dampen the company's newly public stock.

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Over the past few years, there has been no shortage of industry players who would rail about Clear Channel and argue that the company was "ruining radio in so many different ways."

Off the record, that is.

"People in this business don't know who they're going to be working for next week. So a lot of them are just plain afraid to speak out," says Gardner. "It's a conspiracy of silence. It's really bizarre."

That silence is now being broken.

"They're definitely bullies, no question about that," says Ed Levine, chairman of Galaxy Communications, whose stations compete with Clear Channel in several upstate New York markets. "They've truly become the evil empire. Like everything else, Clear Channel has gone too far, gotten too greedy and too powerful. As a broadcaster who grew up in the business I don't believe their overall net effect for radio has been positive."

Marv Nyren, the marketing manager for four Phoenix stations of Emmis Communications, the nation's sixth-largest station owner, echoes that idea: "Most don't believe what they've done is good for the industry. They're all about quantity, not quality. They've taken the value out of radio and turned it into a commodity."

Clear Channel does have its share of supporters. "Ultimately these are people who will do what's right for the industry," insists Larry Roberts, president of Fisher Regional Radio Group.

Adds one Clear Channel programmer: "It's an aggressive company with foresight. They want to be the pioneers. The industry is going through fundamental change right now and some people are threatened by that."

It's not just the sheer number of stations that upsets so many people. Thanks to laissez-faire regulators in Washington, Clear Channel quickly has put together a stunning piece of vertical integration in big-money pop culture. Last year, the company spent $4.4 billion to purchase SFX Entertainment, the nation's dominant concert venue owner and touring promoter. Clear Channel also owns a radio research company, a format consultancy, regional radio news networks, an airplay monitoring system, syndicated programming, radio trade magazines like the Album Network, 19 television stations and 700,000 outdoor billboards worldwide. With so many resources at hand, the company has all but cut off its business with outside vendors.

"Clear Channel's not looking to be part of an industry, but rather a world unto themselves, and a lot of people resent that," says Unmacht.

Record company executives are particularly resentful about how Clear Channel stations leverage their playlists to make sure its SFX concert-promotion division lands certain tours.

Since concert fans listen to the radio a lot, there has long been a symbiotic relationship between concert venues and local radio stations. Ceaseless radio promotion helps sell concert tickets; and association with the hottest concert tours gives the stations concert tickets to give away and valuable P.R. identification with the best shows in town.

Next Page: "They're taking food off people's tables, and that's when you get into trouble"

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