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MEDIA OWNERSHIP

HEARING

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JANUARY 30, 2003

Printed for the use of the Committee on Commerce, Science, and Transportation

(

(II)

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK LAUTENBERG, New Jersey 

JEANNE BUMPUS, Republican Staff Director and General Counsel 

ROBERT W. CHAMBERLIN, Republican Chief Counsel 

KEVIN D. KAYES, Democratic Staff Director and Chief Counsel 

GREGG ELIAS, Democratic General Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on January 30, 2003 ......................................................................... 1

Statement of Senator Brownback ........................................................................... 17

Statement of Senator Burns ................................................................................... 12

Prepared statement .......................................................................................... 13

Statement of Senator Dorgan ................................................................................. 14

Statement of Senator Ensign .................................................................................. 15

Statement of Senator Hollings ............................................................................... 11

Prepared statement .......................................................................................... 11

Statement of Senator Hutchison ............................................................................ 70

Statement of Senator Lott ...................................................................................... 64

Statement of Senator McCain ................................................................................. 1

Prepared statement .......................................................................................... 1

Statement of Senator Smith ................................................................................... 82

Statement of Senator Wyden .................................................................................. 16

Article from The Wall Street Journal, dated February 25, 2002, entitled, 

From a Distance: A Giant Radio Chain is Perfecting the Art of Seeming 

Local ............................................................................................................... 73

WITNESSES

Berman, Hon. Howard L., U.S. Representative from California ......................... 7

Feingold, Hon. Russell D., U.S. Senator from Wisconsin ..................................... 2

Prepared statement .......................................................................................... 5

Fritts, Edward O., President and CEO, National Association of Broadcasters .. 24

Prepared statement .......................................................................................... 26

Henley, Don, Recording Artists’ Coalition ............................................................. 33

Prepared statement .......................................................................................... 36

Mays, Lowry L., Chairman and CEO, Clear Channel Communications, Inc. .... 18

Prepared statement .......................................................................................... 20

Short, Jr., Robert, President, Short Broadcasting Co., Inc. ................................. 38

Prepared statement .......................................................................................... 40

Toomey, Jenny, Executive Director, Future of Music Coalition .......................... 47

Prepared statement .......................................................................................... 49

Prepared statement of Thomas F. Lee, President, American Federation 

of Musicians ................................................................................................... 56

(1)

MEDIA OWNERSHIP 

THURSDAY, JANUARY 30, 2003

U.S. SENATE, 

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:36 a.m. in room SR–

253, Russell Senate Office Building, Hon. John McCain,

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. JOHN MCCAIN,

U.S. SENATOR FROM ARIZONA 

The CHAIRMAN. I tell the Members of the Committee we are 

waiting for three more Members to show up. In the meantime, perhaps in the interest of time, we could have Senator Feingold and 

Congressman Berman begin their opening statements. I may have 

to interrupt you. In fact, I hope I have to interrupt you, but please 

begin with your opening statement. Welcome Senator Feingold, 

Congressman Berman. Please proceed. 

[The prepared statement of Senator McCain follows:]

PREPARED STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM ARIZONA

Today, the Committee begins a series of hearings examining media ownership. 

Later this year, the Federal Communications Commission will act on a proceeding 

that addresses a number of different media ownership issues. These decisions will 

have a significant impact on the American media landscape. 

I have always been a firm believer in free market principles. I continue to believe 

that anachronistic government regulations that do not reflect today’s multimedia 

marketplace should be thoroughly reviewed by the FCC and repealed or modified 

wherever appropriate. Given the tremendous impact media can have in the everyday lives and thinking of Americans, however, we must approach these issues 

thoughtfully and it is important that the Committee hold hearings to better understand them. 

Today we will examine media ownership in the radio industry. After enactment 

of the Telecommunications Act of 1996, the radio industry saw unprecedented consolidation. Several station owners began to purchase stations across the United 

States and the largest owner, Clear Channel Communications, has grown from 60 

stations in 1996 to over 1,200 stations today. Many critics have voiced their concerns about radio consolidation and have alleged that some companies have been engaging in anticompetitive behavior. 

For instance, some have claimed that Clear Channel’s vertical integration with its 

entertainment division has hurt independent concert promoters and artists. Some 

artists suggest that their refusal to use Clear Channel’s promotion services has led 

to their music not being played on Clear Channel stations. I am concerned about 

these allegations and I look forward to hearing from the witnesses on these specific 

issues. 

Finally, I believe that, wherever possible, we should look to market-based approaches to ensure there is diversity in media ownership. Later today, I will re-introduce the ‘‘The Telecommunications Ownership Diversification Act.’’ The bill provides a tax deferral and other market-based incentives designed to ensure that our 

2

tax laws do not disadvantage small businesses that may be owned by women and 

minorities who can help to further viewpoint diversity in media. I hope that other 

Members of the Committee will join me on this important legislation.

STATEMENT OF HON. RUSSELL D. FEINGOLD,

U.S. SENATOR FROM WISCONSIN 

Senator FEINGOLD. Thank you very much, Mr. Chairman, for 

holding this hearing and my thanks also to the ranking Member, 

Senator Hollings, for holding this hearing to examine the effects of 

radio station ownership consolidation. I appreciated the conversations I have had with both of you about this, and this is a very 

early time in the session to be able to bring up this issue, so I am 

grateful. 

I also want to thank Senator Dorgan for his leadership on this 

issue. If Congress had heeded Senator Dorgan’s warnings about the 

effects of consolidation on many of our communities, perhaps we 

would not have to be here today. 

Before I begin, I would ask, Mr. Chairman, that my full statement be allowed to be printed in the record. 

The CHAIRMAN. Without objection. 

Senator FEINGOLD. Let me start by saying that like I am sure all 

of you, I love radio. It brought baseball play by play and Bob Dylan 

songs into my life, along with many other enriching influences. And 

I am sure everyone in this room has his or her own version of that 

sentence because radio has always been and continues to be, despite competition from assorted new technologies, nothing less than 

the soundtrack of American life. Whatever our different experiences, we are all beneficiaries of radio’s basic, uncomplicated and 

utterly vital principle: radio is a public medium that must serve 

the public good. 

Over the last year, Mr. Chairman, I have learned that the rapid 

consolidation in ownership of the radio and concert industry has 

made it difficult for individuals, artists, and organizations to find 

outlets to express their creativity and promote diversity. To be honest with you, Mr. Chairman, I find that a groundswell of anger is 

building in Wisconsin and across the country about these changes. 

People are actually angry about this. I know this, of course, because when people are angry, they tend to call up their Senators. 

I received the first contact about this more than a year ago. 

Owners of a local concert promotion company said that they were 

being pushed out of business by the anticompetitive practices of a 

large radio station and promotion company. 

Then I heard independently from a local radio station owner. He 

said that his station had, without warning and without compensation, lost syndicated programming, after investing lots of years and 

a big chunk of money into building an audience for that program, 

to a station across town, a station recently bought by a large radio 

station ownership group. 

Both of these small local businesses that I just mentioned cited 

the same company, the Clear Channel Corporation. 

Now, I first asked the Administration to look into anticompetitive 

activities and allegations that Clear Channel and other companies 

were trying to evade the already minimal local ownership limits, 

and I did not hear back for quite a while. 

3

I did, however, get an earful from many others, especially after 

I spoke to a reporter from the Chicago Tribune. In the interview, 

I simply expressed my concerns about these issues. I also mentioned that I was looking at possible legislation. And the response 

to this was overwhelming and fervent. Songwriters, artists, promoters, managers, consumer groups, religious organizations, 

unions, and radio station owners all called or wrote right away asking, what can I do to support your efforts? 

Mr. Chairman, this legislation is not just about entertainment. 

More broadly, neither is this issue. I am here not just because I 

want to preserve radio as an entertainment. I am also here because 

we must preserve radio as a medium for democracy. 

There will likely be a number of conflicting views expressed 

about the levels and effects of radio ownership consolidation during 

the hearing today. After all, market power can be measured in a 

number of different ways. Some may argue that owning 1,000 stations is only a fraction of the total number of stations in the United 

States. While this statement is true, I think it is important to view 

any ownership numbers in recent historical perspective. 

When the 1996 Telecom Act became law, there were approximately 5,100 owners of radio stations. Today, Mr. Chairman, there 

are only about 3,800 owners, a reduction of 25 percent. 

Minority ownership has also decreased. The number of AfricanAmerican owners of radio stations has fallen by 14 percent. 

Prior to 1996, one company could not own more than 20 AM stations and 20 FM stations. Now two companies—two companies, Mr. 

Chairman—control 42 percent of the content that reaches listeners 

and 45 percent of industry revenue. The concentration of ownership 

is perhaps most startling when we look at radio station ownership 

in local markets. Four radio station companies control nearly 80 

percent of the New York market. Three of the same four companies 

own nearly 60 percent of the market share in Chicago. In my home 

State of Wisconsin, four companies own 86 percent of the market 

share in our largest Milwaukee radio market. 

At the same time that national and local markets have been consolidated, I have heard really countless stories of how some of the 

large radio station ownership groups also wield increasing power 

through their ownership of a growing number of businesses related 

to the music industry. 

Take Clear Channel as an example. This corporation owns more 

than 1,200 radio companies, Mr. Chairman, more than 700,000 billboards and control venues across the United States, and it also 

owns the largest concert promotion company in the United States. 

During the last year and a half, I have also heard countless allegations about actually leveraging this cross-ownership in an anticompetitive manner. I have heard from small businesses in Wisconsin, local promoters and local radio stations who talk about 

large radio and promotion companies tying in radio and promotion 

services to push them out of business. These local businesses are 

happy to compete in a free marketplace, but when a company uses 

their cross-ownership, especially using a public medium like radio, 

in an anticompetitive manner, it is simply unacceptable. 

Some will argue that there are consumer benefits. For example, 

they will often say that since 1996, there have been more formats 

4

or types of radio stations in almost every market, but what they 

will not tell you is that since many of these formats are owned by 

the same out-of-state companies, that they play the same songs 

and they share the same news, which actually reduces consumer 

choices. 

There are other disturbing ways in which the concentration of 

ownership is changing what we hear on the radio. Singers, musicians, and managers have talked with my staff and with me about 

some of the new and very daunting challenges they face when trying to get their songs played on the airwaves. These people are 

very concerned that playlists are no longer based on quality, subjective as that is, but are sold to the highest bidder instead. They 

told me how in the past if you could not get a deejay to play your 

song in Cleveland, perhaps you could try in Pittsburgh, and if the 

song was a hit in Pittsburgh, the Cleveland deejay would probably 

hear about it. Now I am told, Mr. Chairman, that does not happen 

anymore. It really cannot. The same companies own the stations in 

both markets. If they do not want to play a song, they do not, anywhere. Opportunities for artists to try their music somewhere else 

just do not exist. 

I have also been hearing about a new shakedown system. The 

large radio stations allegedly require huge payments through independent promoters before they will put a song on the air. If you 

do not have the money to play in this system, you are shut out. 

Is this pay-for-play? If it is not, I would like to know what is. 

Consider also how the rise in ticket prices coincided with the passage of the 1996 Telecom Act. More precisely, consider that ticket 

prices went through the roof. Before the act was passed, ticket 

prices were increasing at a rate that was slightly higher than the 

Consumer Price Index. Since the Act became law, ticket prices 

have increased at a rate that is almost 50 percentage points higher 

than the Consumer Price Index. 

Mr. Chairman, because of these concerns, I have reintroduced 

legislation, the Competition in the Radio and Concert Industries 

Act, which would address the levels of concentration, curb some of 

the anticompetitive practices, and end the alleged new payola system. The legislation prohibits those who own radio stations and 

concert promotion services or venues from leveraging their crossownership to hinder competition in the industry. For example, if an 

owner of a radio station and a promotion service hinders access to 

the airwaves of a rival promoter or artist, then the owner would 

be subject to penalties. 

My legislation will also help to curb further concentration that 

leads to these anticompetitive practices. It would strengthen the 

FCC merger review process by requiring the FCC to scrutinize the 

mergers of any radio station ownership group that reaches more 

than 60 percent of the Nation’s listeners. 

The legislation would also curb consolidation on the local level by 

preventing any upward revision of the limitation on multiple ownership of radio stations in local markets. 

And finally, the bill would also prohibit the alleged new payola 

system where the big radio corporations are said to leverage their 

market power to require payments from artists in exchange for 

playing their songs. 

5

Mr. Chairman, these are not radical notions. All my legislation 

says is let us first get a handle on consolidation and crack down 

on alleged anticompetitive practices. Second, let us modernize our 

payola laws to make sure all forms of payola are banned. 

I hope that a lot of you will join me in cosponsoring this legislation, but I also hope that this hearing will flesh out other issues 

that are leading to many of the concerns that I have been hearing. 

Americans should be able to hear new and different voices, and 

those voices deserve a place on the publicly owned airwaves. Radio 

is one of the most vibrant mediums we have for the exchange of 

ideas and for artistic expression. This public medium has long 

served the public good, and we must ensure that it continues to do 

so. If we do not act now, Mr. Chairman, further concentration of 

the industry will guarantee that the range of voices we listen for 

when we turn on the radio, the voices of democracy that make 

radio unique will continue to fade away. 

So thank you so much, Mr. Chairman, for holding this hearing, 

and I look forward to working with you, the ranking Member, and 

all the other Members of the Committee. 

[The prepared statement of Senator Feingold follows:]

PREPARED STATEMENT OF HON. RUSSELL D. FEINGOLD, U.S. SENATOR FROM WISCONSIN

Thank you Mr. Chairman and ranking Member Hollings for holding this hearing 

to examine the effects of radio station ownership consolidation. I also want to thank 

Senator Dorgan for his leadership on this issue. If Congress had heeded Senator 

Dorgan’s warnings about the effects of consolidation on many of our communities, 

perhaps we wouldn’t be here today. 

I’ll start by saying that I love radio. It brought baseball play-by-play and Bob 

Dylan songs into my life, along with countless other enriching influences. I’m sure 

everyone in this room has his or her own version of that sentence, because radio 

always has been—and continues to be, despite competition from assorted new technologies—nothing less than the soundtrack of American life. Whatever our different 

experiences, we are all the beneficiaries of radio’s basic, uncomplicated and utterly 

vital principle: Radio is a public medium that must serve the public good. 

But, over the last year, I have learned that the rapid consolidation in ownership 

of the radio and concert industry has made it difficult for individuals, artists, and 

organizations to find outlets to express their creativity and promote diversity. 

A groundswell of anger is building in Wisconsin and across the country about 

these changes. People are actually angry about this. I know, of course, because when 

people are angry they call their senators. 

I received my first contact about this more than a year ago. Owners of a local 

concert promotion company said they were being pushed out of business by the anticompetitive practices of a large radio station and promotion company. Then I heard 

from a local radio station owner. He said his station had, without warning and without compensation, lost syndicated programming—after investing a lot of years and 

a big chunk of money into building an audience for that programming—to a station 

across town, a station recently bought by a large radio station ownership group. 

Both of these small, local businesses cited the same company—the Clear Channel 

Corporation. 

I first asked the Administration to look into anti-competitive activities and allegations that Clear Channel and other companies were trying to evade the already 

minimal local ownership limits. I didn’t hear back for quite a while. 

I did, however, get an earful from many others, especially after I spoke to a reporter from the Chicago Tribune. In the interview I expressed my concerns about 

these issues. I also mentioned that I was looking at possible legislation. The response to this was overwhelming and fervent. Songwriters, artists, promoters, managers, consumer groups, religious organizations, unions and radio station owners all 

called or wrote, asking ‘‘What can I do to support your efforts?’’

This legislation is not just about entertainment. More broadly, neither is this 

issue. I am here not just because I want to preserve radio as entertainment. I am 

here because we must preserve radio as a medium for democracy. 

6

There will likely be a number of conflicting views expressed about both the levels 

and effects of radio ownership consolidation during this hearing today. After all the 

market power can be measured in a number of different ways. Some may argue that 

owning a thousand stations is only a fraction of the total number of stations in the 

United States. While this statement is true, I think it is important to view any ownership numbers in recent historical perspective. 

When the 1996 Telecommunications Act became law there were approximately 

5,100 owners of radio stations. Today, there are only about 3,800 owners, a reduction of about 25 percent. Minority ownership has also decreased—the number of African-American owners of radio stations has fallen by 14 percent. Prior to 1996, one 

company couldn’t own more than 20 AM stations and 20 FM stations. Now two companies control 42 percent of the content that reaches listeners and 45 percent of industry revenues. 

The concentration of ownership is perhaps most startling when we look at radio 

station ownership in local markets. 

Four radio station companies control nearly 80 percent of the New York market. 

Three of these same four companies own nearly 60 percent of the market share in 

Chicago. In my home state of Wisconsin, four companies own 86 percent of the market share in the Milwaukee radio market. 

At the same time that national and local markets have been consolidated, I have 

heard countless stories of how some of the large radio station ownership groups also 

wield increasing power through their ownership of a growing number of businesses 

related to the music industry. 

Take Clear Channel as an example. This corporation owns more than 1,200 radio 

companies, more than 700,000 billboards, and controls numerous venues across the 

United States. It also owns the largest concert promotion company in the United 

States. 

During the last year and a half, I have heard countless allegations about 

leveraging its cross ownership in an anti-competitive manner. I have heard from 

small businesses in Wisconsin—local promoters and local radio stations—who talk 

about large radio and promotion companies tying in radio and promotion services 

to push them out of business. 

These local businesses are happy to compete in a free marketplace, but when a 

company uses their cross ownership—especially using a public medium like radio—

in an anti-competitive manner, it is simply unacceptable. 

Some will likely argue that consolidation benefits consumers. For example, they 

will often say that since 1996, there have been more formats, or type of radio stations, in almost every market. But what they won’t tell you is that since many of 

these same ‘‘formats’’ are owned by the same out-of-state companies that play the 

same songs and share the same news—which actually reduces consumer choices. 

There are other disturbing ways in which the concentration of ownership is 

changing what we hear on the radio. Singers, musicians and managers have talked 

with my staff and with me about some new and very daunting challenges they face 

when trying to get their songs onto the airwaves. These people are very concerned 

that playlists are no longer based on quality—subjective as that is—but are sold to 

the highest bidder instead. They told me how, in the past, if you couldn’t get a DJ 

in Cleveland to play your song, you could try to find one in Pittsburgh who would. 

And if the song was a hit in Pittsburgh, the Cleveland DJ would hear about it. 

I am told that doesn’t happen any more. It can’t. The same companies own stations in both markets. If they don’t want to play a song, they don’t—anywhere. Opportunities for artists to try their music ‘‘somewhere else’’ just don’t exist. 

I have been hearing about a shakedown system, where large radio stations allegedly require huge payments through independent promoters before they’ll put a 

song on the air. If you don’t have the money to play in this system, you are shut 

out. Is this ‘‘pay-for-play’’? If it isn’t, I’d like to know what is. 

Consider also how the rise in ticket prices coincided with the passage of the 1996 

Telecom Act. More precisely, consider that ticket prices went through the roof. 

Before the Act was passed, ticket prices were increasing at a rate that was slightly higher than the Consumer Price Index. Since the Act became law, ticket prices 

have increased at a rate that’s almost 50 percentage points higher than the Consumer Price Index. From 1996–2001, concert ticket prices rose by more than 61 percent, while the Consumer Price Index increased by just 13 percent. 

There are a number of factors behind this rise in ticket prices. But the fact is that 

the largest radio station ownership group also is involved in over 60 percent of the 

concert industry, in terms of revenue, certainly begs the question—has consolidation 

within the radio and concert industry led to increased ticket prices? 

7

Because of these concerns, I have re-introduced legislation, the Competition in the 

Radio and Concert Industries Act, which would address the levels of concentration, 

curb some of the anti-competitive practices, and end the alleged new payola system. 

My legislation prohibits those who own radio stations and concert promotion services or venues from leveraging their cross-ownership to hinder competition in the 

industry. For example, if an owner of a radio station and a promotion service 

hinders access to the airwaves of a rival promoter or artist, then the owner would 

be subject to penalties. 

My legislation will also help to curb further concentration that leads to these anticompetitive practices. 

It would strengthen the FCC merger review process by requiring the FCC to scrutinize the mergers of any radio station ownership group that reaches more than 60 

percent of the Nation. 

My legislation would also curb consolidation on the local level by preventing any 

upward revision of the limitation on multiple ownership of radio stations in local 

markets. 

The bill would also prohibit the alleged new payola system, where the big radio 

corporations are said to leverage their market power to require payments from artists in exchange for playing their songs. 

These are not radical notions. All my legislation says is that first, let’s get a handle on consolidation and crack down on alleged anti-competitive practices. Second, 

let’s modernize our payola laws to make sure all forms of payola are banned. 

I hope many of you will join me in cosponsoring this legislation, but I also hope 

that this hearing will flush out other issues that are leading to many of the concerns 

I have been hearing. 

Americans should be able to hear new and different voices, and those voices deserve a place on the publicly-owned airwaves. Radio is one of the most vibrant mediums we have for the exchange of ideas and for artistic expression. 

This public medium has long served the public good, and we must ensure that 

it continues to do so. If we don’t act now, further concentration in the industry will 

guarantee that the range of voices we listen for when we turn on the radio, the 

voices of democracy that make radio unique, will continue to fade away. 

Again, Mr. Chairman, thank you for holding this hearing and I look forward to 

working with you and the other Members of this Committee.

The CHAIRMAN. Thank you very much, Senator Feingold. 

[Recess.] 

The CHAIRMAN. And now Congressman Berman thank you for 

appearing. It is nice to see you again. 

STATEMENT OF HON. HOWARD L. BERMAN,

U.S. REPRESENTATIVE FROM CALIFORNIA 

Mr. BERMAN. Thank you, Mr. Chairman and Ranking Member 

Hollings and distinguished Committee Members. I appreciate very 

much your decision to hold this hearing on consolidation in the 

radio industry. 

I am deeply concerned that radio industry consolidation and related activities related to that consolidation are hurting songwriters, musicians, recording artists, concert promoters, radio listeners, and the music community as a whole. I believe the negative 

effects of radio industry consolidation merit serious Congressional 

scrutiny and should spur investigations by the Department of Justice and the Federal Communications Commission. 

Nearly a year ago, I wrote the DOJ and the FCC on this issue. 

I encouraged them to fully investigate the allegations I relayed 

and, if they found violations of law, to prosecute. 

The public reaction to my letter was utterly unexpected and totally overwhelming. Independent broadcasters, concert promoters, 

venue owners, radio deejays, musicians, bands agents, managers, 

theatrical producers, actors’ representatives, and recording industry executives inundated me with calls, e-mails, and letters. VirVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
8

tually all decried the evils of consolidation in the radio and concert 

industries. Many focused on the conduct of Clear Channel in particular. The breadth of their allegations was astounding and went 

far beyond the issues I had addressed in my January 2002 letter. 

Clear Channel representatives also contacted me and I met with 

Lowry and Mark Mays here in D.C. They denied the allegations of 

wrongdoing. Admitting to being hard-nosed businessmen, they explained the many complaints as the sour grapes of their failed competitors. And I am glad they are here today because I think they 

should have a chance to both hear and respond to some of the allegations that have been made to me. 

While many of these allegations are derived from firsthand accounts, you will have to use your own judgment about whether 

they warrant an investigation. But here are the most serious. 

Clear Channel denies or threatens to deny radio airplay to recording artists if they use companies other than Clear Channel Entertainment to promote their concerts, if they refuse to give local 

Clear Channel stations free concert tickets, or if they refuse to do 

interviews and free drop-by performances for Clear Channel stations. 

Clear Channel Entertainment refuses to let artists play venues 

it owns unless the artists agree to let Clear Channel Entertainment be the nationwide tour promoter or agree to use Clear Channel Entertainment venues in other markets. 

Clear Channel Entertainment uses predatory pricing to offer recording artists or events deals that independent concert and event 

promoters cannot offer. 

Clear Channel parks or warehouses radio and TV stations in certain markets in what seems like a violation of legal ownership 

caps. 

By threatening to boycott them, Clear Channel Entertainment 

signs exclusive deals with venues and thus ensures that competing 

concert promoters cannot use these venues. 

Clear Channel has removed Clear Channel-owned programming 

such as Rush Limbaugh from independent stations and then given 

competing Clear Channel-owned stations exclusive rights to carry 

this programming in a clear attempt to drive competing broadcasters out of business. 

And radio stations generally demand payment from record companies—Senator Feingold made reference to this—usually through 

middlemen known as independent music promoters in order to play 

the music of artists signed by those record companies. 

Regardless of their legality, these alleged activities may negatively affect consumers, musicians, independent broadcasters, and 

concert promoters. We as policy makers must decide whether these 

effects are likely and, if so, whether we should do something to 

counteract them. 

As you will hear from Jenny Toomey later, there is substantial 

evidence that the radio industry consolidation has reduced music 

programming diversity. Music programming homogeneity has particular implications for musicians and songwriters. Musicians rely 

on radio airplay to drive both CD sales and concert attendance 

which comprise their main source of revenue. Similarly, songwriters depend on airplay of their musical composition for performVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00012 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
9

ance royalties and to drive CD sales for which they receive mechanical royalties. To the extent that different radio stations share 

the same playlists, songwriters and musicians who are not on these 

narrower playlists thus suffer. 

The allegations concerning payola also have a variety of troubling implications. At its core, payola constitutes blackmail of musicians, songwriters, and record companies. If they fail to pay, they 

may be denied access to a public resource essential to their survival. Payola has long had a disproportionate effect on those little 

known or independent artists who lack the resources to either pay 

for play or to engage in major marketing campaigns. 

But as the radio industry has consolidated, the payola rates have 

evidently risen to the point where even the big guys cannot afford 

them. The proof is that the major record labels, independents, and 

several artist groups recently put aside their intramural squabbling and jointly called on the FCC and Congress to address payola. 

If, through its control of the airwaves and concert venues in certain markets, Clear Channel is forcing recording artists to sign 

with Clear Channel Entertainment in other markets, these tying 

arrangements could clearly have anticompetitive effects on independent concert promoters. While I personally believe that consolidation within an industry is not necessarily an evil, independent 

concert promoters should at least be given a level playing field on 

which to compete. 

While I believe the allegations and negative effects outlined 

above and additional ones that I detail in my written statement 

merit a full investigation, it does not appear that the agencies of 

jurisdiction will conduct one. The reaction of the DOJ has been 

most disappointing. 

In a meeting with my staff and in a written response to me 3 

months after I sent my letter, the DOJ encouraged me to forward 

any evidence of anticompetitive conduct in the concert promotion or 

radio industries. DOJ indicated it would initiate an investigation if 

it found such evidence credible. 

As a result, I encouraged all those who had contacted me with 

firsthand evidence to, in turn, contact the DOJ. To those who expressed skepticism, I asserted that DOJ would do its job by vigorously investigating allegations of antitrust violations and other illegal conduct. 

It is now one year later, and as far as I can tell, the DOJ has 

done nothing. And I do mean nothing. According to many of the 

folks I told to contact the DOJ, the DOJ has never responded to 

their overtures and never followed up as promised after an initial 

call. My staff has attempted to follow up with DOJ several times, 

but their calls have not been returned either. 

Some may say, I told you so. Since the day I sent my letter, 

many claimed that the Administration would not allow the DOJ to 

actively pursue antitrust investigations, but I do not think this is 

a sufficient explanation. The ongoing investigation of the Press 

Play and MusicNet ventures indicates the Bush DOJ is interested 

in probably pursuing a lengthy investigation of a somewhat speculative antitrust concern. If it has such grave antitrust concerns 

about new entities in the as-yet infinitesimally small market for 

10

legal online music, why is it not willing to pursue allegations of actual anticompetitive behavior in the radio and concert industries? 

I do not know the answer to this question, but judging by the responsiveness of the DOJ to date, I do not expect to get a response 

even if I ask. 

Anyway, that is why I am here, and I think this is an issue that 

Congress has to deal with and I am very grateful that you are beginning that process with this hearing. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Feingold and 

Congressman Berman. We thank you for coming, and we appreciate your comments. They have been very helpful to the Committee. Thank you very much. 

Today the Committee begins a series of hearings examining 

media ownership. Later this year, the Federal Communications 

Commission will act on a proceeding that addresses a number of 

different media ownership issues. These decisions will have a significant impact on the American media landscape. 

I have always been a firm believer in free market principles, and 

I continue to believe that anachronistic Government regulations 

that do not reflect today’s multi-media marketplace should be thoroughly reviewed by the FCC and repealed or modified wherever appropriate. Given the tremendous impact media can have in the everyday lives and thinking of Americans, however, we must approach these issues thoughtfully, and it is important that the Committee hold hearings to better understand them. 

Today we will examine the media ownership in the radio industry. After enactment of the Telecommunications Act of 1996, the 

radio industry saw unprecedented consolidation. Several station 

owners began to purchase stations across the United States, and 

the largest owner, Clear Channel Communications, has grown from 

60 stations in 1996 to over 1,200 stations today. Many critics have 

voiced their concerns about radio consolidation and have alleged 

that some companies have been engaging in anticompetitive behavior. 

For instance, some have claimed that Clear Channel’s vertical integration with its entertainment division has hurt independent 

concert promoters and artists. Some artists suggest that their refusal to use Clear Channel’s promotion services has led to their 

music not being played on Clear Channel stations. I am concerned 

about these allegations and I look forward to hearing from the witnesses on these specific issues. 

Finally, I believe that, wherever possible, we should look to market-based approaches to ensure there is diversity in media ownership. Later today I will reintroduce the Telecommunications Ownership Diversification Act. The bill provides a tax deferral and 

other market-based incentives designed to ensure that our tax laws 

do not disadvantage small businesses that may be owned by 

women and minorities who can help to further viewpoint diversity 

in media. I hope that other Members of the Committee will examine this legislation and possibly join in its partnership. 

I want to thank the witnesses for coming today. 

Senator Hollings. 

11

STATEMENT OF HON. ERNEST F. HOLLINGS,

U.S. SENATOR FROM SOUTH CAROLINA 

Senator HOLLINGS. Mr. Chairman, I will just file my statement 

with one comment, and that is, from the testimony of the distinguished Congressman and Senator Feingold, I think the Committee 

ought to bring the Department of Justice up here before we move 

on any legislation. It has always been my opinion that these antitrust provisions forbid exactly what they have attested to. And 

similarly, with respect to payola, we definitely passed a law with 

respect to payola some years back, and it ought to be enforced. 

Thank you. 

[The prepared statement of Senator Hollings follows:]

PREPARED STATEMENT OF HON. ERNEST F. HOLLINGS,

U.S. SENATOR FROM SOUTH CAROLINA

Thank you, Mr. Chairman. I appreciate your leadership in scheduling this, the 

first in a series of hearings on media consolidation. These discussions come at a critical time in the history of American media. In many quarters, the core values of 

competition, diversity, and localism that have long served as fundamental pillars of 

our democracy, are today under attack. 

They are under attack by an industry that appears unsatisfied with the tremendous consolidation that has already taken place; by the courts, who seem to ignore 

Supreme Court precedent about the government’s strong interest in preserving a 

‘‘multiplicity of information sources’’; and, most importantly, by FCC Commissioners 

who seem intent on relaxing or eliminating many of the existing ownership rules 

without regard to the tremendous consolidation that has already occurred. 

Likewise, it is fitting we begin with radio—where a tidal wave of mergers over 

the last six years has left both consumers and the medium with visible scars. 

Since 1934, when radio broadcasts were the only broadcasts on the public airwaves, the FCC has been charged with ensuring that use of the public airwaves is 

consistent with the ‘‘public interest, convenience, and necessity.’’ Historically, this 

obligation has required the Commission to go beyond the bounds of traditional antitrust analysis in order to promote the diversity of owners and viewpoints; to ensure 

public access to multiple sources of information; and to meet the needs of local communities that are the true ‘‘owners’’ of the airwaves. 

This attention to diversity and localism has served America well by expanding 

economic opportunity and energizing civic discourse. Indeed, it is the preservation 

of diversity and localism that promotes competition and choices for advertisers; that 

creates opportunities for small companies, minorities, and women; that allows innovative programming to find an outlet; and that ensures that the interests of each 

community is served by the license of this public asset. 

Consequently, soon after the 1934 Act’s inception, this public interest responsibility led the FCC to create sensible restrictions on the number of radio stations 

that a single party could own, both nationally and on the local level. 

Unfortunately, the compromise required to ensure passage of the Telecommunications Act of 1996 eliminated the FCC’s national ownership cap for radio and 

changed the local limit, which now permits a single licensee to own up to 8 stations 

in some markets. Predictably, radio broadcasters went into in a feeding frenzy. 

In the first year after the 1996 Act, more than 2,100 radio stations changed 

hands. Today, according to one recent study, the top ten radio group owners control 

67 percent of industry revenue and 65 percent of radio listeners. At the top of the 

heap is Clear Channel, which has grown in six short years from a small cluster of 

39 stations with $495 million in revenues into a nationwide radio conglomerate with 

1,211 stations, earning $3.2 billion in revenues. As a result, Clear Channel now 

reaches more listeners in the U.S. than its second, third, fourth, and fifth competitors combined. 

And beyond the impact that such consolidation has had within the radio industry, 

there are troubling allegations that Clear Channel unfairly uses its control over sizable portions of the airwaves, its approximately 135 concert venues, and its over 

700,000 outdoor billboards to engage in anti-competitive practices that harm independent promoters, music artists and consumers. 

In sum, while investors on Wall Street have profited handsomely from these 

mergers, consumers on Main Street have suffered. Radio consolidation has contribVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00015 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
12

uted to a 34 percent decline in the number of owners, a 90 percent rise in the cost 

of advertising rates, a rise in indecent broadcasts, and the replacement of local news 

and community programming with remote ‘‘voice tracking’’ and syndicated hollering 

that ill-serves the public interest. 

If ever there were a cautionary tale, this is it.

The CHAIRMAN. Senator Burns. 

STATEMENT OF HON. CONRAD BURNS,

U.S. SENATOR FROM MONTANA 

Senator BURNS. Thank you, Mr. Chairman. Thank you for the 

hearing today. I also will file my full statement. 

I do want to bring out a point, though, that sort of addresses the 

concerns of both Congressman Berman and Senator Feingold. I am 

wondering if they have given the same attention to the situation 

where we find grocery stores who sell shelf space in their stores to 

one company to display their articles or their food products or 

whatever. That is a practice that is going on across this country 

too, and I think that needs to be looked at about as much as what 

we hear of here. 

Also, I got to bring before the Committee a recent Arbitron study. 

Now, I come out of radio. I am sort of familiar with radio. Of 

course, my years were in farm broadcast, which is sort of a niche 

in the market, that I enjoyed very much. I would have gone into 

hard news, but I could not read and that is noted here on this 

Committee just about every time we meet. 

[Laughter.] 

The CHAIRMAN. It is not a requirement of Committee membership. 

[Laughter.] 

Senator BURNS. It is not a requirement? 

I always liked the idea that I am probably one of the very few 

that did not have a college degree in this group, and I got intimidated by the people who had letters in back of their names when 

I arrived in this town. So I come up with my own letters. I put 

N.D.B.A., no degree but boss anyway. 

[Laughter.] 

Senator BURNS. I like that idea. 

We are all familiar with the Arbitron surveys and we all lived 

by them when we were in the radio business. But I was caught the 

other day by a note that 74 percent of the consumers believe radio 

does a good job, a very good job, in providing the type of programming that they want to hear. I am sure that they would be less satisfied with what they get on television or the recording industry, 

but nonetheless radio seems to be doing a very good job this time. 

And yes, maybe we have some concentration in some areas that 

are troubling to some of us, but we have antitrust laws, as Senator 

Hollings pointed out, that should be looked at. 

But radio has come a long way in the last 5 or 6 years in improving their own financial viability. There was a time when you might 

have owned a license that was not worth very much and it was just 

a short time ago. 

So I would say that the 1996 Telco Act has actually worked, and 

I do not want that reopened or bothered at the present time. We 

have the laws in place. Enforcement of those laws may be a little 

13

bit lax in some areas, but it is not because the policy is not maybe 

at the right proportion right now as we find it in the industry. 

So I am happy about this hearing. I am happy about the information that will come out of it. I think probably there are always 

complaints from competitors and those complaints will always be 

there in a free market system. But I would suggest that we did 

good work in that 1996 Act as far as the AM/FM radio broadcast 

industry was concerned. And I thank you, Mr. Chairman, for holding the hearing. 

[The prepared statement of Senator Burns follows:]

PREPARED STATEMENT OF HON. CONRAD BURNS, U.S. SENATOR FROM MONTANA

Mr. Chairman, thank you for calling for this hearing in what I understand is to 

be the first in a line of hearings on media ownership. Today’s focus will be on the 

state of competition in the radio marketplace. 

As many of you know, I have a fondness for radio stemming from my days when 

I was a farm broadcaster in both radio and television. Given my interest in agriculture and Montana, I decided to launch my own radio network based on the issue 

of agriculture, and in 1975, I founded four radio stations that I named the Northern 

Ag Network. 

Those four stations grew to serve a total of 31 radio and television stations across 

Montana and Wyoming continuing to focus on agriculture. There is no question in 

my mind, with my own personal history, that the state of radio itself today is much 

more sound financially and much more diverse in programming choices. 

I note a recent Arbitron study that shows 74 percent of consumers believe radio 

does a good or very good job providing the type of programming they want to hear. 

I am sure the same public would be less satisfied with what they get on television, 

cable or with the recording industry. 

The radio industry has certainly rebounded from some difficult times in the nottoo-distant past. In fact, in the early 1990s, half of all the Nation’s radio stations 

in America were losing money. So what happened that has made the radio industry 

significantly more financially stable and even more robust today, especially when 

one considers the economic downturn over the last three years? The answer is simple: the 1996 Telecommunications Act. 

The Telecom Act and the wave of sensible deregulation it ushered in has brought 

a breath of fresh air and fiscal sense to the radio market. The deregulation of radio 

ownership allowed private businesses to enjoy financial efficiencies. 

By allowing radio owners to expand their holdings in local markets and on a national scale, radio companies could make more efficient use of capital to deliver a 

better product. 

The revolution in radio technology that has erupted beginning in the late 1990s 

can be directly attributable to the Telecom Act. In fact, today’s radio stations look 

nothing like the ones I helped create more than 27 years ago. The ability to expand 

in local markets has also allowed radio owners to expand into different formats. In 

the past, when one could only own a couple of stations in a local market, the temptation was to go after the largest single audience no matter what, which typically 

was the pop music audience in most markets. You would then get three or four owners that would be playing the same kind of programming hoping to attract that largest audience group possible. 

I would also like to address the current ban on newspaper/broadcast cross-ownership. The FCC’s newspaper/broadcast cross-ownership rule is clearly outdated and 

unnecessary in light of the abundance of competitive outlets in today’s media marketplace. The rule was adopted at a time when the media environment was dominated by just three over-the-air networks and their affiliates. In the intervening 

years, explosive growth in the number of traditional media outlets—combined with 

a flood of new entrants, including an extraordinary variety of cable, DBS, and Internet sources—has transformed the marketplace and given consumers a vast array of 

news and information choices. 

Even in a market as small as Miles City, Montana, where Star Printing Company 

has continued to own and operate a ‘‘grandfathered’’ newspaper/AM radio combination since the cross-ownership rule was adopted in 1975, there are plenty of alternative outlets to ensure adequate viewpoint diversity. In fact, the number of competitors in the market has grown steadily since 1975. Today, there are five separately owned television stations in the Designated Market Area, five radio stations 

14

in Miles City alone (four of which are under separate ownership), numerous radio 

stations in neighboring communities, a competing daily newspaper in Billings, and 

a cable television franchise offering at least thirty channels. 

As a result of the explosive growth in the media marketplace over the last quarter 

century, the FCC, Congress, and the courts have eliminated or substantially relaxed 

all of the Commission’s other media ownership restrictions. However, newspaper 

publishers have been forced to stand on the sidelines as their competitors have pursued acquisition opportunities and entered into more efficient and cost-effective operating agreements. Repeal of this discriminatory restriction is necessary in order 

to place newspapers and broadcasters on an even playing field with their multichannel, multi-media competitors. In addition, I believe that eliminating the ban 

will advance the public interest by enhancing the quality and quantity of news and 

other informational services available at the local level. 

I look forward to the testimony of the witnesses on these and other key issues 

before the Committee today. 

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. 

Senator Dorgan. 

STATEMENT OF HON. BYRON L. DORGAN,

U.S. SENATOR FROM NORTH DAKOTA 

Senator DORGAN. Mr. Chairman, thank you very much. I am 

going to have to step away for a few minutes, but I intend to come 

back for the bulk of the hearing today. This is, I think, an important hearing. 

I have some disagreement perhaps with my friend from Montana. I think since 1996 we have had galloping concentration in 

radio and television. Frankly, I think we ought to raise a lot of 

questions about it. Free markets are very important, but free markets are less free when you have concentration, I believe. 

Let me make a couple of points. 

I do not think big is necessarily bad or small is necessarily beautiful. But I do think what makes the market system work is robust, 

aggressive competition, and I do think that in most cases concentration, left unchecked, clogs the arteries of competition and 

clogs the arteries of the marketplace. 

Attached to licenses that we provide for broadcast is the requirement to serve local interests, localism. That is something I am very 

concerned about. 

I want to mention one thing. In 1996 when we took the limits 

off radio ownership and relaxed the limits on television station 

ownership, the only vote that occurred was a vote that I forced on 

the Senate about 4 o’clock one afternoon to try to restore the limits 

on television station ownership back to the 25 percent level. I actually won that vote; I think by 3 or 4 votes at 4:30 in the afternoon. 

And then we had a reconsideration of the vote about 3 hours 

later following dinner, and several of my colleagues had an epiphany over dinner, I guess. I believe our colleague, Senator Dole, was 

on the other side, and I was surprised to have beaten him actually, 

but I only beat him for 3 hours because after dinner we had a second vote, and I lost by three or four votes. I have no idea what was 

served that evening. 

[Laughter.] 

Senator DORGAN. But whatever it was, it was very effective for 

my colleague’s position because I lost. 

15

But I raised the points then, in 1996, because I was concerned 

about where I thought this was headed. And, I am concerned today. 

Again, let me say, I do not think big is necessarily always bad. You 

cannot build a 757 airplane in a garage in Regent, North Dakota. 

You need economies of scale and so on. But with respect to broadcast, I am very concerned about where we are headed in television 

and radio and the substantial concentration that has occurred since 

1996. 

The question is, where does it end? Is it if someone wants to buy 

3,000 stations, if someone wants to capture most of the television 

market in most of the metropolitan areas? Where does it end? 

Where are the practical limits? 

And those are the public policy questions we should address, and 

I am very appreciative, Senator McCain, that you have called this 

hearing. I think we should be thoughtful about it and move 

through it. A number of questions have been raised this morning 

that are very interesting to me, and I do not have the foggiest idea 

what the answers are. But I know we are going to have people testifying today and we can ask those questions of them. So I appreciate the hearing, Senator McCain. 

The CHAIRMAN. Thank you very much. 

Senator Ensign. 

STATEMENT OF HON. JOHN ENSIGN,

U.S. SENATOR FROM NEVADA 

Senator ENSIGN. I think we can agree that diversity in radio 

markets is important. Our constituents want and need access to diverse, quality programming. Over the past 10 years, 1,283 new 

radio stations were licensed by the FCC. That is about 25 new 

radio stations per state. In my home town of Las Vegas, almost 

every frequency on the FM band is occupied with the choice of 

country, rock, rap, R&B, alternative, easy listening, instrumental, 

classical, talk radio, or sports programming; not to mention Hispanic radio stations in Las Vegas. While I may not always be able 

to hear my favorite song while listening, there is certainly diversity 

in programming. I am confident that any music fan would be able 

to find something to listen to in our local markets. 

Recently there has been much discussion regarding ownership of 

such radio stations; specifically, whether such ownership is beneficial for our constituents’ ability to access quality diverse programming. I believe that we got it right in 1996 by substantially deregulating restrictions on radio ownership. 

While diversity in the market is vital, think back to where we 

were technologically in the early 1990s. Those of us who had seen 

the Internet saw only a text-based browser. Neither Internet nor 

satellite radio had yet come to market. Legitimate online music 

services such as Press Play, where you can purchase tracks from 

CDs in a digital format for a nominal fee, had not yet been invented. Digital radio was not even on the horizon. Indeed, radio 

technology has advanced significantly over the last decade and 

music fans are winning. 

I was pleased that Chairman Powell is taking a close look at 

these outdated, antiquated ownership restrictions. I urge both 

Chairman Powell and the FCC to continue on the path toward 

16

unleashing market forces, thereby allowing the market to determine the winners and losers, not bureaucrats in Washington, D.C. 

While I understand the concerns of some of our witnesses regarding concentration in radio markets, I would like to remind them of 

antitrust laws already on the books that prohibit anticompetitive 

behavior in free markets or collusion among businesses. 

I would also like to point out that since the 1996 Act, when ownership restrictions were further deregulated, 720 new stations were 

added to the airwaves, further increasing diversity of programming 

on the airwaves. Moreover, since I have been elected to the Senate, 

I have not heard from a single Nevadan complaining about the access to quality, diverse radio programming, perhaps because we 

have better radio programming than we did just a few years ago. 

Just a couple of comments on a personal level, Mr. Chairman. I 

read the testimony of Don Henley, who is one of my favorite artists, and I hate to be on the other side of an issue than one of my 

favorite artists. However, when he was talking in his testimony 

about how on certain radio stations in years past, a listener would 

hear a lot of different types of formats or a lot of different types 

of music on a single radio station. That increased and challenged 

the musicians and artists to broaden what they were producing. As 

a listener, it used to drive me crazy when I wanted to listen to a 

certain type of music and a radio station aired other types of 

music. 

I love the fact that today you can listen to exactly what you want 

to listen to. If you want to listen to country music—I am big country music fan. I love to listen to it. When I want to listen to that, 

I want to listen to that. When I want to listen to alternative rock, 

I listen to alternative rock. When I want to listen to sports, I listen 

to sports, and so on. I think that, for the consumer, the choices are 

greater than ever, and we have to recognize the role that choice 

plays in the radio marketplace today. 

Thank you, Mr. Chairman, for holding this hearing. 

The CHAIRMAN. Senator Wyden. 

STATEMENT OF HON. RON WYDEN,

U.S. SENATOR FROM OREGON 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Chairman and colleagues, since 1996, when Congress lifted 

the radio ownership caps, radio concentration shot up virtually immediately. I have been told that there have been about 10,000 

radio transactions worth about $100 billion. It just seems to me 

that there is an important lesson to be learned here, and that is, 

that media consolidation races ahead if you let it. 

I think this is a very important hearing, Mr. Chairman, because 

it seems to me that we are now faced with the prospect that the 

Federal Communications Commission wishes to repeat an experiment that the evidence suggests has created as many problems as 

it has solved. I think we ought to be very reluctant to repeat the 

experiment that Congress gave the green light to in 1996 in other 

areas of the media. 

I want to note that one of the FCC commissioners, Mr. Adelstein, 

when he appeared recently, said that radio was in his view the caVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
17

nary in the coal mine. I think Congress ought to take a careful look 

at what the canary has to tell us. 

And I will tell you that I am very reluctant to allow this train 

of consolidation that is going forward down at the Federal Communications Commission to go forward unchecked because I think it 

would allow the repeat of an experiment that was begun by the 

Congress in 1996 which has caused problems for competition, 

which has caused problems for localism, and Congress should be 

reluctant to allow it to continue. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Brownback. 

STATEMENT OF HON. SAM BROWNBACK,

U.S. SENATOR FROM KANSAS 

Senator BROWNBACK. Thank you, Mr. Chairman, for holding the 

hearing. 

I will just note a couple of things, some of which has been noted 

already, but I want to also take off on another area. 

In the over-the-air radio market, while ownership of stations has 

consolidated, consumers have access to more diverse programming 

than ever before. In addition, many consumers also have access to 

radio streamed over the Internet by webcasters and news satellite 

services. I think those would need to be looked at all together. 

Terrestrial radio is, of course, perfectly harmonious with consumers’ interest where price is concerned because it is free. 

Webcasting in its infancy has also provided many consumers with 

free access to music. And I am going to be paying close attention 

to see how webcasting royalties impact this nascent market for opportunities and for consumers. As with all new technologies and 

services, the price of satellite radio will continue to drop, making 

it ever more affordable for consumers. 

Now, the point of the hearing, regulatory legislation that seeks 

to create competitive advantages in certain areas instead of permitting market forces to function naturally in combination with antitrust laws, which I think are a very important aspect of this, are 

uniquely situated to address radio consolidation concerns on a factintensive, market-by-market basis. 

This is not the kind of competition policy this Committee should 

support where we go in and re-regulate. We have spent the last 7 

years dealing with just such an artificial policy in other segments 

of the telecom space, and I will not support exporting such a policy 

to other segments of the economy where we seek to regulate that 

economy. 

Recently the recording companies created a coalition with others 

in an effort to advance webcasting royalty legislation that ultimately could have driven many small webcasters out of business. 

It is my understanding that some people that are testifying here 

today supported this bill as a way of forcing an increase in the royalties charged by BMI and ASCAP. 

Webcasting, whether provided through wireline Internet connections or especially wireless Internet connections when such capability developed, is exactly the kind of distribution outlet that could 

be invaluable for publicizing new and unknown artists, increasing 

artists’ direct access to the public without middlemen, and further 

18

increasing competition in the radio industry generally. So if that is 

the area that we are interested in, if that is the particular problem, 

I think the answer is one that we should look at more in the area 

of webcasting. 

Mr. Chairman, thank you very much for holding this hearing. I 

think it is an important subject, and I look forward to the testimony. I am going to have to slip out myself. I hope I will be able 

to get back for some of it. 

The CHAIRMAN. Thank you, Senator Brownback. 

Our next panel is Mr. Lowry L. Mays, Chairman and CEO of 

Clear Channel Communications. Would you all please come forward. Mr. Edward Fritts, President and CEO of the National Association of Broadcasters; Mr. Don Henley, singer and songwriter; 

Mr. Robert Short, President, Short Broadcasting; and Ms. Jenny 

Toomey, Executive Director of Future of Music Coalition. 

As our witnesses are coming forward, I am entertained by the 

continued suggestion that we go to the Department of Justice when 

we have a Federal Communications Commission that was set up 

and funded with hundreds of millions of dollars to regulate the industry. That any problem could be handled by the Department of 

Justice is entertaining. I hope that that same approach will be 

used to other matters that concern Members of the Committee. 

Mr. Mays, we will begin with you, sir. Welcome before the Committee. 

STATEMENT OF LOWRY L. MAYS, CHAIRMAN AND CEO, CLEAR 

CHANNEL COMMUNICATIONS, INC. 

Mr. MAYS. Good morning, Chairman McCain—Senator Hollings 

I am sorry has left—and Members of the Committee. It is my 

pleasure and privilege to appear before you today. I welcome this 

opportunity to discuss the radio business with you because it has 

been a passion of mine for over 30 years. 

Far from being a cautionary tale of the dangers of deregulation, 

radio has a great story to tell. The industry is healthier and more 

robust today than ever before. That would not be true if radio stations like ours across the country were not pleasing their listeners 

each and every day. 

Radio has changed in many ways since Richard Nixon and 

George McGovern faced off in 1972. That was the year I bought my 

first radio station in San Antonio, Texas. I knew very little about 

the business then but I understood the core principle that makes 

any radio station a success: you must be locally focused and delight 

and inform the listener every hour of every day. 

While radio may have changed in many ways over the past 30 

years, the key lesson I learned then still applies today. That means 

Clear Channel must continue to serve our local communities in the 

very best way that we can. 

Remember back to the early 1990s for a moment. The competition from cable, broadcast television, and hundreds of new FM stations forced literally half of the Nation’s radio stations into the red, 

and many others were operating close to it. In 1989 and 1990 

alone, AM stations’ profits plummeted 50 percent and FM profits 

by a third. Stations often had to cut back on news and other local 

programming to survive. 

19

All of that began to change with deregulation. With the ability 

to own more stations both locally and nationally, stations could cut 

costs and compete more effectively for media advertising dollars. 

Owners could reinvest more in their stations, improving their facilities, increasing the quantity and quality of their programming, 

and hiring better on-air talent. 

Study after study has demonstrated that there are now more formats available to listeners to choose from in local markets across 

the Nation. 

In addition, more stations today are owned by minorities than in 

1996, the year that Congress passed the Telecommunications Act. 

Clear Channel is committed to encouraging diversity in media ownership. In connection with our acquisition of AM/FM a few years 

ago, we sold more than $1.5 billion in radio properties to minority 

buyers. We also committed $15 million to the Quetzal/Chase Fund 

which invests in minority-owned media. And, Mr. Chairman, we 

strongly support your bill to provide tax incentives to increase 

media ownership by small business. We have done all of this not 

because it is a benefit to Clear Channel, because we think it is the 

right thing to do. 

Still, some say that deregulation has gone too far, that the industry is too consolidated. Let us stop for a moment and put those 

numbers in perspective. 

Radio is by far the least consolidated of any of the media and entertainment industries. The 10 largest radio operators account for 

only 44 percent of the industry’s advertising revenues. The top 10, 

44 percent. Compare that to the top five record companies. They 

control 84 percent; cable companies, 89 percent; movie studios, 99 

percent. 

Even though the number sounds large, Clear Channel’s 1,200 

radio stations represent only 9 percent of all of the stations in this 

country. That means that over 90 percent of the Nation’s radio stations are owned by nearly 4,000 companies other than Clear Channel. 

Some object, however, whatever the radio percentages are, that 

Clear Channel has too much power in the music industry and 

power over musicians. We heard some of that this morning. The 

fact is that major artists wield monopoly power of their own. If we 

cannot meet their terms, they will simply go to another local, regional, or national competitor. 

Finally, I would like to take the opportunity to dispel the myth 

that Clear Channel, or any other concert promoter for that matter, 

is responsible for the steep rise in concert ticket prices. That presumes we actually set the price of the ticket, which we do not. The 

reality is that the artists not only set the price of the ticket, but 

then they set large guarantees which have been affecting small 

concert promoters. The artists are demanding more and more 

money from touring because their album sales are decreasing. It is 

not unusual for Clear Channel, or any other promoter for that matter, to receive only 5 to less than 10 percent of the door. 

Let me conclude by going back to the beginning. We succeed 

when our radio stations serve the needs and interests of their local 

communities. I am pleased that according to recent surveys, we are 

20

doing just that. While I am pleased with these surveys, I think we 

can always do better. 

I look forward, Mr. Chairman, to joining the dialogue that we are 

beginning here today. Thank you. 

[The prepared statement of Mr. Mays follows:]

PREPARED STATEMENT OF LOWRY L. MAYS, CHAIRMAN AND CEO, CLEAR CHANNEL

COMMUNICATIONS, INC. 

Good morning Chairman McCain, Senator Hollings, and Members of the Committee, it is my pleasure and privilege to appear before you today. My name is 

Lowry Mays, and I am the Chairman and CEO of Clear Channel Communications. 

I want to thank you for inviting me to discuss the radio business with you, because 

it has been my passion for over thirty years. 

Radio: A Great Story 

Far from being a ‘‘cautionary tale’’ of the dangers of deregulation, radio has a 

great story to tell. The industry is healthier and more robust today than ever before. 

And that just wouldn’t be true if radio stations across the country weren’t pleasing 

listeners each and every day. In fact, according to a recent survey, the industry is 

doing just that. Nearly 3 out of 4 listeners believe radio does a good or very good 

job providing the music, news and information they want to hear. And 60 percent 

said they believe radio is getting even better. 

Radio has changed in many ways since Richard Nixon and George McGovern 

faced off in 1972, and Don McLean’s American Pie was number one on the charts. 

That was also the year Clear Channel bought its first radio station in San Antonio, 

Texas. I knew very little about the business then, but I did understand the core 

principle that makes any radio station a success. You must delight the listener, 

every hour of every day. 

That’s why, in 1975, we made our radio station the first all news format in San 

Antonio. Listeners were drawn to the local news, weather, and sports we offered. 

And when we broadcast live from local places of business, listeners would flock to 

see our on-air talent in person and learn more about the merchant’s goods and services. Everyone benefited, and it was great radio. 

Benefits of Deregulation 

Radio is, without a doubt, healthier today as a result of deregulation, and the 

public clearly benefits as a result. Recall for a moment the financial health of radio 

in the early 1990s, before the passage of the Telecommunications Act of 1996. Competition from cable and broadcast television and hundreds of newly authorized FM 

stations had forced half of the Nation’s radio stations into the red. Many others 

were operating close to it. 

In 1989 and 1990 alone, AM station profits plummeted 50 percent, and FM station profits dropped by one-third. Investment capital dried up, causing facilities 

modernization to grind to a halt, and stations owners who wanted to sell couldn’t 

find buyers. Radio stations struggled to compete with televisions and newspapers, 

and found it increasingly difficult—if not impossible—to survive periodic downturns 

in the local economy. Many radio stations resorted to cutting their news budgets or 

other local programming. Some eliminated local news departments altogether. 

All of that began to change with deregulation. With the ability to own more stations, both locally and nationally, radio companies could create economies of scale 

and benefit from the substantial cost savings that result. An owner of multiple stations in a market could diversify formats and, for the first time since the advent 

of television, compete successfully in the total market for media advertising dollars. 

From 1975 to 1995, for example, radio labored with only about 7 percent of the 

total advertising pie. Since deregulation, there has been growth in that share, with 

radio finally moving above 8 percent in 1999 and continuing to increase in 2000. 

Radio operators can reinvest those savings in their stations, improving technical facilities, increasing the quantity and quality of local programming, and hiring more 

and better on-air talent. 

In Syracuse, New York, for example, Clear Channel saves approximately $200,000 

a year by operating its stations as a unit instead of as standalone properties. We 

have reinvested much of that savings in the stations, upgrading the WSYR transmitter, acquiring a booster for WPHR, and installing state-of-the-art studio equipment. We increased local news programming on WSYR by one hour a day, and 

produce the area’s only local listener call-in show. WWHT now provides local news, 

but did not before Clear Channel entered the market. 

21

Deregulation has been good for radio in other significant ways. Today, more stations are owned by minority-owned businesses than in 1996 when the Telecommunications Act was passed. Clear Channel is committed to encouraging diverse media 

ownership, and I am proud to say that we have been able to make significant contributions toward that worthy goal. In connection with our acquisition of AM/FM a 

few years ago, we sold more than $1.5 billion in radio properties to minority buyers. 

That represented one-third of all the stations we had to divest to obtain regulatory 

approval of the transaction. In addition, we have committed $15 million to the Quetzal/Chase Fund, which invests in minority-owned media. And, Mr. Chairman, we 

strongly support your bill to provide tax incentives to increase media ownership by 

small businesses and new entrants. We have done all of this not because of any direct benefit to Clear Channel, but because it is the right thing to do. 

Deregulation has benefited listeners as well as owners. Study after study, by academics and market analysts, demonstrate that consolidation has led to increases in 

the diversity of formats available to listeners in local markets, large and small. One 

recent study by Bear Stearns found that the number of core formats has risen 7 

percent since 1996. It’s easy to see why this is true. Owners with several stations 

are better able to diversify their programming to serve the variety of demographics 

that are present in the market. That is just what we did in Syracuse, which did 

not have an urban formatted station when we entered the market. By drawing upon 

our resources, we were able to target this underserved audience and turn WPHR–

FM into a successful urban formatted station. 

Deregulation: The Bigger Picture 

Despite these benefits of deregulation, which are in evidence in local markets of 

all sizes, some say that deregulation has gone too far. They say the industry is too 

consolidated. And they contend that Clear Channel, as the Nation’s largest operator, 

has too much market power. Let’s stop for a moment and put the numbers in perspective. Let’s generate some light to accompany the heat. 

Radio is by far the least consolidated segment of the media and entertainment 

industry. The ten largest radio operators account for only 48 percent of the industry’s advertising revenues. Compare that to the recording industry, where the top 

five record companies control 84 percent of all album sales. 

It’s also interesting to note that in cable television, the ten largest companies account for 89 percent of the revenues. For movie studios it’s a whopping 99 percent. 

And, though the number sounds large, Clear Channel’s 1,200 radio stations represent only 9 percent of all the stations in the country. That means that over 90 

percent of the Nation’s radio stations are owned by companies other than Clear 

Channel. 

When these numbers are evaluated objectively, it quickly becomes apparent that 

radio does not pose a media concentration threat. In fact, the drafters of the 1996 

Act made certain of that by limiting any individual company to a maximum of eight 

stations per market, and only then in markets containing 45 or more radio stations. 

Serving Local Listeners 

While radio may have changed in many ways over my three decades in the business, the key lessons I learned from that first San Antonio radio station still apply 

today. Stations must serve the needs and interests of their local communities, listeners and advertisers alike. Radio is inherently a local medium and always will be. 

That means Clear Channel—along with nearly 4,000 other owners of radio stations 

in the U.S.—must continually strive to serve our local communities in the best ways 

we can. 

Some have suggested, however, that the commitment to local listeners has been 

lost as a result of deregulation—lost in a mad dash of consolidation. Let me assure 

you nothing could be further from the truth. Listeners want to hear a variety of 

music, news, local affairs and other entertainment programming that appeals to 

their individual tastes. And in today’s multimedia world, those listeners are very 

discerning. If they don’t like what they hear, they will turn the dial, burn a CD, 

or download an .mp3 recording that is more to their taste. It’s that simple, and that 

risky to our financial health. 

That’s why Clear Channel will always be in tune with what local listeners want 

to hear. One tired song, a commercial that lasts too long, or a failure to provide 

timely news, weather or traffic, and the listener is gone. After all, radio is the only 

business I know of where you can lose a customer with the push of a button at 60 

miles per hour. 

We may have grown from that single AM station in San Antonio into the largest 

radio operator in the country, but we haven’t outgrown our commitment to localism 

and diversity. Contrary to what some would suggest, our radio play lists are not put 

22

together at headquarters, hundreds or even thousands of miles away from the communities in which they are played. Far from it. Our play lists are developed by local 

station managers, program directors, and on-air talent, and are based on extensive 

audience research, listener feedback, and our employees’ knowledge of local tastes 

and culture. 

While we make sure that our radio stations have access to the highest quality 

news and information sources, we do not dictate the quantity or content of news and 

information from our San Antonio headquarters. Our local managers decide how to 

use the tools we give them to meet the needs of their audience. The result is that 

over 80 percent of what airs on Clear Channel stations is produced locally. 

We simply couldn’t operate any other way. The preferences of listeners vary from 

market to market, and we must respond to those differences if we are to succeed. 

That is why a song like ‘‘Screaming Infidelities’’ by Dashboard Confessional received 

hundreds of spins on our Dallas station last year, but just a handful in Indianapolis 

and here in Washington, D.C. Standardized play lists just don’t exist at Clear Channel. 

Committed to Our Local Communities 

But we don’t just serve our communities by playing the music our listeners want 

to hear. Clear Channel stations around the country are deeply involved in supporting and promoting a wide variety of local civic and charitable events. Consider 

just one market—Syracuse, New York—where Clear Channel stations routinely help 

the community whenever the need arises. For example, last year the State of New 

York cited the Blodgett Library, located in one of the poorest neighborhoods in the 

country, as a safety hazard. Clear Channel raised over $80,000 in a radiothon to 

help create the ‘‘Dream Center,’’ a state-of-the-art library and dynamic learning center at a local elementary school. 

Our local news/talk station in Syracuse, WSYR, produced a ten-part series on 

child abuse and raised money to help create the McMahon/Ryan Child Advocacy 

Site. The station also raised $35,000 for the Child Abuse Referral and Evaluation 

program at University Hospital, and published a guide to help prevent child abuse. 

The National Association of Broadcasters awarded WSYR its ‘‘Service to America’’ 

award for this series. 

These are just two small examples of the countless number of contributions Clear 

Channel radio stations make every day to the communities we serve in over 300 

U.S. markets. From radiothons to 10K races, our stations help raise money for important charities like breast cancer research, child literacy, and AIDS research, to 

name a few. 

Radio and the Concert Business: Effect on the Artist 

I’ve heard some say that Clear Channel has too much power in the music industry. They say that the combination of our radio stations and our involvement in the 

live entertainment business, through concert promotion and ownership of concert 

venues, gives us unprecedented clout. They claim we can leverage those businesses 

to intimidate artists, force out competing concert promoters, and drive up ticket 

prices. 

Well, I don’t know if any of these critics have had the privilege of negotiating a 

concert deal with Cher. Well, we have—and I can assure you she is not intimidated 

by us one bit. And the same goes for Madonna, Paul McCartney, and the Rolling 

Stones. The artists themselves wield monopoly power. After all, there is only one 

Cher. 

The truth is that major artists dictate nearly every aspect of their tours—increasingly large performance fees, choice of venues, tiered ticket pricing, percentage of 

merchandising, even the color of the roses and brand of bottled water in their dressing rooms. If we can’t meet their terms, they won’t think twice about signing with 

any one of the local, regional and national concert promoters that compete with us. 

And when we do sign to promote a tour, we are often not the exclusive promoter. 

Many artists split promotion of their tour between Clear Channel and other national or local competitors. 

Speaking of our radio stations, 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. Anyone who would make such allegations simply doesn’t understand our business. The fact is live entertainment accounts for less than 7 percent 

of Clear Channel’s revenue. Radio is the bread and butter of our business, and we 

simply wouldn’t risk the ratings of any station by refusing to play or promote a popular artist who isn’t touring with us, or by overplaying a less popular artist who 

is. 

23

To cite just one example, Britney Spears actually received 73 percent more airplay 

on Clear Channel radio stations in 2002, when she was touring with a competing 

promoter Concerts West, than she got in 2001 when she was touring with us. Why? 

Because Britney Spears was one of America’s most popular music artists in 2002, 

and our radio stations hardly could ignore her songs and still meet the needs of our 

listeners. Remember, if we are not playing what people want to hear, they will 

quickly vote against us by pressing another button on their radio. It couldn’t be 

easier—or more risky to our financial health. 

Even when the artist is lesser known, we cannot, and would not, take advantage 

of any perceived change in the negotiating dynamic. It is not in our interest to do 

so. It happens that Clear Channel Entertainment depends on small and mid-size 

venues for a substantial portion of its revenue, and so we have a vested interest 

in booking the up and coming artists that frequent these smaller stages. In fact, in 

2001 Clear Channel hosted over 3,100 acts, of which nearly 70 percent were staged 

at clubs and other smaller venues. Of all these acts, two-thirds were not affiliated 

with a major record label, and almost one-quarter were not signed to any label at 

all. Like our radio stations, Clear Channel Entertainment is absolutely committed 

to promoting new artists and their music. 

Developing New Artists 

Our commitment to local audiences involves introducing them to new artists and 

their music. Make no mistake: new artists and music are the lifeblood of many of 

our radio stations, whether they play country, adult contemporary, rock or hip-hop. 

Unfortunately, the five major record companies increasingly are failing to take the 

risks necessary to sign, produce, and promote talented newcomers. Sadly, the result 

is less new albums each year than listeners (and radio stations) would like. But 

there is one thing you can count on: if the public wants to hear a new song, Clear 

Channel will strive to be first to put it on the air. 

That’s why Clear Channel has taken great pains to develop new artists on our 

own. In September 2001, we began an Internet pilot program called the Artist and 

Repertoire Network, which is dedicated to providing music industry professionals 

with information about high quality, unsigned artists from around the globe who 

have great potential to succeed. The ‘‘A&R Network’’ (located at 

www.anrnetwork.com) provides information such as the type of deal an act is seeking, its biography and discography, tour information, and more. I am proud to say 

that in just one year since its inception, the A&R Network has played a key role 

in helping thirteen new artists sign major and/or independent label record deals. 

Then, on September 26, 2002, we launched another artist development initiative, 

a not-for-profit, Internet-based forum for performers, industry professionals, and 

fans called the New Music Network (located at 

www.clearchannelnewmusicnetwork.com). This website allows unsigned bands to 

upload their songs in .mp3 format to the Internet. It is a free way for these artists 

to reach new audiences, promote their music, and network with recording industry 

executives. Again, I am proud to say that, even at this early stage, the New Music 

Network is a phenomenal success. After just four months, we have already registered more than 1,000 promising new musicians in genres as diverse as blues, 

classical, folk, funk, punk, tejano, and gospel. 

Our passion for discovering and developing new artists doesn’t stop there. At 

nearly 60 radio stations in 40 markets across the country, Clear Channel’s local 

managers are devoting airtime to showcase up and coming talent in their local communities. In Detroit, for example, our WJLB–FM plays new music by local artists 

every night for an hour beginning at 9:05 p.m. Any original music that listeners request can and does end up on the station’s regular play lists. 

And right here in Washington, D.C., every Sunday night WWDC–FM produces the 

‘‘DC 101 New Music Mart.’’ This hour-long program, which has been on the air for 

eight years, features new music, including releases from smaller labels, which our 

local managers select by hand. And if the music is popular, it can make all the difference for a new band. For example, Carbonleaf, an unsigned band out of Richmond, Virginia, saw its music move from the Sunday night show to DC 101’s socalled ‘‘power rotation,’’ which includes the station’s most heavily-played songs. 

Clear Channel’s new music programs can have a national effect as well. Stu 

Sobol, of Spivak Sobol Entertainment, gives the DC program credit for breaking the 

new band The Calling, whose album went on to become multi-platinum. Our radio 

stations sponsor local new music programs in a host of diverse markets from Anchorage, Alaska to Medford, Oregon to Sioux City, Iowa. 

24

Rising Ticket Prices 

A common misperception is that Clear Channel is responsible for the steep rise 

in concert ticket prices over the past ten years. That presumes that Clear Channel, 

or any concert promoter, actually controls the price of the ticket. Unfortunately, that 

is not the case. I say unfortunately because if ticket prices were controlled by us, 

we’d set them low in the hope of getting more people through the door. That’s because our company makes very little income from ticket sales—rather, our revenue 

comes primarily from ancillary services at the shows, such as parking, concessions, 

and sponsorships. In fact, it is not uncommon for us, or any promoter, to receive 

just 5–10 percent of the ‘‘door,’’ with the rest going to the artist. 

The reality is that artists not only establish the ticket price, and do so for all tiers 

(including the so-called ‘‘golden circle’’), but also demand a set performance fee or 

‘‘guarantee’’ from the promoter. And artists are demanding more money from touring than ever before, presumably due to a marked decrease in album sales. In fact, 

of the top twenty touring artists in 2002, 62 percent of their income came from concerts. Compare that to the 22 percent of their income that came from album sales. 

[It is interesting to note, by the way, that the Seattle Times, in an article dated 

November 3, 2002, wrote that the escalation of concert ticket prices began ‘‘in 1994 

when the long-feuding Eagles reunited for their ‘‘Hell Freezes Over’’ tour. That outing launched a tiered system, in which the best seats—commonly dubbed ‘golden circle’ seats—cost more. Ticket prices topped $100 for the first time.’’] 

Working Together to Improve Radio 

Let me conclude by going back to the beginning. Clear Channel succeeds when 

our radio stations serve the needs and interests of their local communities. And I 

am pleased that, according to recent surveys, we are doing just that. In one survey, 

74 percent of respondents said radio does a good or very good job of playing the 

kinds of music they like. Seventy percent said radio does a good or very good job 

of providing the kinds of news and information they want. And almost 60 percent 

said radio is getting better lately. Yes, I’m pleased by these responses, but I’m not 

satisfied. There is always more that we can do to improve radio. I look forward, Mr. 

Chairman, to joining the dialogue that you are beginning here today.

The CHAIRMAN. Thank you very much, Mr. Mays. 

Mr. Fritts. 

STATEMENT OF EDWARD O. FRITTS, PRESIDENT AND CEO,

NATIONAL ASSOCIATION OF BROADCASTERS 

Mr. FRITTS. Thank you, Mr. Chairman. I am Eddie Fritts, President and CEO of the National Association of Broadcasters. NAB 

represents America’s free over-the-air radio and television stations, 

and today there are nearly 4,000 separate owners of the some 

13,000 local radio stations that serve America’s listeners. I am 

pleased to testify on their behalf. 

While the industry continues to change, one thing has remained 

constant, radio’s commitment to serving local communities. This attribute distinguishes us from all competitors. From online music to 

satellite radio, local service to the community is that which separates us from the competition. 

Radio broadcasters are proud of their commitment to localism. A 

recent NAB study found that in 2001 alone, radio stations contributed $7 billion worth of public service to their communities. That 

number includes the value of public service announcements, as well 

as monies raised for charities, disaster relief, and for the needy. 

While this is an impressive figure, it does not tell the whole 

story. Radio’s local connection allows it to offer services that cannot 

be measured in just dollars and cents. Take, for instance, the 

Amber Alert program. Over 40 abducted children have been returned to their families largely due to radio, and the Amber program, which I note that Senator Hutchison has been a prime sponVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
25

sor of, has recently passed the Senate with our support. I do not 

think one can put a price tag on the return of an abducted child. 

Radio underscored its value also in helping solve the D.C. sniper 

case. After hearing the vehicle description and the tag number on 

the radio, a listener called authorities resulting in the immediate 

arrest of the suspects. 

And no dollar figure can account for radio’s work following the 

events of 9/11. Stations across the country raised donations for rescue equipment for victims, organized blood drives, and overall reassured and informed Americans during that dark hour. 

These, of course, are just a few examples and I could go on. 

Today the industry has rebounded financially, but just 10 years 

ago—just 10 years ago—60 percent of all radio stations were losing 

money. Many had to go off the air depriving communities of local 

service upon which they had come to rely. It was that state of affairs that the Congress and the FCC revised radio ownership rules. 

NAB believes the limits implemented through the 1996 Telecommunications Act enabled radio to better serve local audiences 

across the country, as well as strengthening the industry economically. 

As radio deregulation has moved forward, radio’s critics have 

tended to overstate the effects of industry trends. Compared to 

other industry choices, radio is perhaps the least consolidated sector. Take, for instance, the Hollywood movie studios, the record 

companies, direct broadcast satellite, cable systems, newspapers, 

even the Internet. All have more of their revenue share concentrated among the top 10 owners than does radio. 

Of course, radio’s diversity is not measured by revenue shares. 

Radio broadcasters recognize the importance of diversity. Chairman McCain’s proposal, which he announced today, will have great 

support from the NAB because it will help foster diversity through 

tax deferrals. We look forward to working with the Chairman and 

this Committee and the Senate in moving this legislation forward. 

Already today, radio formats mirror the diversities we have in 

our American society. Spanish language formats have increased by 

over 80 percent in the last decade. Other ethnicities are well represented on the dial. From Persian to Polish to Chinese to Haitian, 

the list goes on in specialty programming. 

Radio also remains the most trusted source for music. According 

to Arbitron, two-thirds of Americans say radio is where they first 

heard new music. Ninety-five percent of Americans listen to the 

radio every week. Our listeners have good reason for tuning in, for 

last year alone radio debuted 3,000 new songs of some 550 new artists. 

In sum, Mr. Chairman, the Telecommunications Act has been a 

success for our listeners, and what is good for our listeners is good 

for our industry. It was a goal of Congress, when formulating the 

Act, to keep radio a viable, vibrant and local medium. That objective, we believe, has been met. Radio today is more financially stable. Radio’s programming is as diverse as its audience, and today, 

radio remains the ultimate local community medium. We look forward to continuing that proud tradition into the future. I appreciate the fact that we were able to testify at this hearing, and I 

look forward to answering your questions. Thank you. 

26

1FCC Report and Order. MM Docket No. 91–140. Released April 10, 1992. 7 FCC Rcd 2759. 

2 Id. at 2760. 3FCC Memorandum Opinion and Order. MM Docket No. 91–140. Released September 4, 1992. 

7 FCC Rcd 6387. 4See Senate Congressional Record, June 15, 1995, S. 8424. 

[The prepared statement of Mr. Fritts follows:]

PREPARED STATEMENT OF EDWARD O. FRITTS, PRESIDENT AND CEO, NATIONAL

ASSOCIATION OF BROADCASTERS

Introduction 

This testimony represents the views of the National Association of Broadcasters 

(NAB) on the current state of the radio industry. The testimony examines how regulatory changes implemented by the FCC in 1992 and by Congress in 1996 have advantaged both the industry’s financial health and its ability to serve listeners. We 

then examine the current state of programming diversity in the industry, refuting 

critics’ charges that consolidation has resulted in homogenized programming and 

had a deleterious effect upon radio’s connection with local community. Finally, this 

testimony comments on recent Congressional proposals to re-regulate the industry, 

paying special heed to the ‘‘The Competition in Radio and Concert Industries Act’’ 

(S. 2691), which was introduced by Senator Russ Feingold in June of 2002. 

Deregulatory Actions of the 1990s Have Improved Both Radio’s Economic 

Health and Its Ability to Serve Listeners 

1992: The Commission Moves to Deregulate Radio Ownership 

Prior to the deregulatory gains of the 1990s, radio was encumbered with anachronistic ownership limitations that restricted the industry’s ability to effectively compete with other mediums. 

When the Commission issued its 1992 ruling liberalizing ownership regulations, 

the industry was in serious decline. Radio’s share of the local advertising market 

was flat throughout the 1980s even as the respective shares of directly competitive 

media, most notably cable, increased. In fact, radio’s share of the local advertising 

share, remained at 12 percent from 1980 to 1990.1

Small market radio stations were particularly hard hit. More than half of all stations, primarily those with less than $1 million in sales, were losing money. Most 

disconcerting, the FCC has found that almost 300 stations had ceased transmitting 

(due largely to financial pressures).2

It was with these concerns in mind that the Commission adopted new ownership 

regulations in 1992. The new regulations modestly increased the number of radio 

stations that could be owned by a single licensee both nationally and in local markets, depending upon market size.3

1996: Congress Further Deregulates Radio 

In formulating the 1996 Act, Congress updated ownership regulations again. 

While debating the 1996 Act, it was a primary concern of Congress that radio remain an economically viable medium in an environment with a host of new mediums competing for the same limited pool of advertising dollars. For instance, in support of the 1996 Act’s radio ownership provisions, Senator Conrad Burns stated, 

‘‘For the longest time we have viewed radio as competing only with 

itself... Radio goes head-on with other forms of mass media for the audience and 

for those advertising dollars. We need to start acknowledging this important distinction and give radio the tools it needs to compete with all other information providers.’’ 4 As will be evidenced below, the Telecommunications Act has met this Congressional objective as radio continues to prosper in the face of new competitors. 

Under the 1996 Act, radio owners are now allowed to own as many stations as 

they like nationally. The Act also developed prudent regulations for local ownership 

based upon market size. Under the provisions of the 1996 Act, stations may own 

as many as 8 commercial stations in a market with 45 commercial stations; markets 

with between 30 and 44 stations have a cap of 7 commercial stations for a single 

owner; markets with 15 to 29 stations are limited to owning 6 stations in the market; and in radio markets with fewer than 14 stations, a party may own up to 5 

commercial stations (but not more than half of the stations in that market). In addition to these guidelines, the Act regulates how many of these commonly owned stations may be in the same band. 

27

5See, e.g., Report and Order in MM Docket Nos. 91–221 and 87–88, 14 Rcd 12903 (1999) (in 

loosening the television duopoly rule, the FCC discussed the ‘‘significant efficiencies inherent in 

joint ownership and operation of television station in the same market,’’ and how ‘‘[t]hese efficiencies can contribute to programming and other benefits.’’). 6 R.B Ekelund, Jr., G.S. Ford, and T. Koutsky, Market Power in Radio Markets: An Empirical 

Analysis of Local and National Concentration, 43 J. Law & Econ. 157 (2000). 7 BIA Research, Inc., Radio State of the Industry, 1997. 8 BIAfn, Inc. State of the Radio Industry: Radio Revenues; Is the Bloom Back? Page 14. 9 Robert Cohen, Insider’s Report Presentation on Advertising Expenditures, December 2002, 

Universal McCann, page 4 10 Radio Industry Review 2002: Trends in Ownership, Format and Finance. George Williams 

and Scott Roberts. FCC Media Bureau staff research paper. Page 3. 

The Congressionally enumerated regulations for radio ownership have improved 

local radio from both an industry economic perspective and from the perspective of 

listeners. 

Numerous private and governmental studies (including FCC studies 5) have well 

documented the economic as well as public interest benefits flowing from joint ownership of media entities in a market. Radio stations are no exception. Many of radio 

stations’ costs are fixed and can be significantly reduced through common ownership. For instance, commonly owned radio stations in single markets may share a 

single general manager, management personnel and clerical staff. Commonly owned 

stations may also avail themselves of ‘‘[B]ulk discounts on services and supplies, 

shared operating facilities, advertising and promotional expenses, and combined 

technical facilities.’’ 6

Even before the full market effects of the 1996 Act were felt, several observers 

documented the financial advantages of in-market radio ownership concentration. 

As early as 1997, a study by BIA Research, Inc. found, ‘‘The average station involved in a duopoly combination in the Top 50 markets generated revenue of over 

$4.6 million. For the average non-duopoly station [also in Top 50 markets]... revenues were under $2.6 million.’’ 7

The significant cost savings and enhanced profitability stemming from consolidation have rescued the radio industry from economic failure. Even during 2001, a 

devastating year for all advertising supported mediums, radio’s share of the entire 

mass media advertising revenue pie remained strong, ranking third with a seventh 

of all spending among other advertising mediums such as newspaper and television.8 Moreover, early projections indicate that local radio advertising revenues 

will continue to grow by as much as 5 percent during 2003.9

State of the Dial: In Addition to Remaining Economically Vibrant, the 

Radio Industry Has Become More Diverse Since Consolidation 

While the deregulatory gains made by the Commission in 1992 and by Congress 

in 1996 have, as expected, resulted in ownership concentration, NAB strongly disputes that these trends have negatively impacted diversity on the dial. In fact, radio 

continues adapting to represent America’s evolving demographics and changing musical tastes. 

As an initial matter, before demonstrating the positive causal connection between 

in-market concentration and enhanced programming diversity, NAB must stress 

that recent consolidation trends in the radio industry may be less dramatic than is 

commonly assumed. A recent NAB study found that a large number of commercial 

radio stations remain ‘‘standalones,’’ or are part of local duopolies, in their respective markets. The study found that nationally, as of November 2001, 1,510 stations 

(or 23.6 percent of the 6,403 commercial stations operating in Arbitron markets at 

the time) are the only stations owned within their respective market by stations’ 

owners; an additional 1,064 stations (16.6 percent) are part of duopolies within their 

respective markets. Thus, while there has been a decline in ‘‘standalone’’ and duopoly stations, it remains the case that a large number of stations in Arbitron markets 

are ‘‘independent voices’’ in their markets. This large number of stand-alone and duopoly stations also provide a path to entry for new radio broadcasters. 

Examining the industry from the perspective of revenue share reinforces the point 

that the industry is less consolidated than critics commonly assume. A Wachovia Securities analysis (Attachment A *) of the top ten owners in ten media sectors found 

radio to be the least consolidated, with the top ten owners controlling only 44 percent of revenue share. By way of comparison, in the movie studio, Direct Broadcast 

Satellite and Theme Park industries, the top ten owners controlled over 90 percent 

of industry revenue share. For cable MSOs and outdoor advertisers, over 80 percent 

of revenue is concentrated among the top ten players. Moreover, 3,400 separate entities control radio stations in the United States.10 While there has of course been 

28

11Format Diversity: More or Less. Bear Stearns. November 4, 2002. 12 Ibid. 13Quarterly Journal of Economics. 66. 1952. 14Steven Berry and Joel Waldfogel, Merger, Station Entry, and Programming Variety in 

Radio Broadcasting, National Bureau of Economic Research, Working Paper 7080 at 25–26 

(April 1999). 15 Id. at 25 (emphasis added). 16 Has Format Diversity Continued to Increase? BIA Financial Network, June 5, 2002. 17 Ibid. at 5 and 7. This larger increase in the number of specific programming formats is particularly significant, as it shows that stations have continued to adopt new and different subformats that an aggregated measure of formats using general format categories does not capture. 18 Id. at 5–6. The smallest Arbitron markets (rank 101 and higher) receive, on average, 9.5 

general and 12.3 specific programming formats. The largest markets (rank 1–10) receive, on average, 17.0 general and 38.6 specific programming formats. 19 Id at 9. 20 1992 Radio Ownership Order, 7 FCC Rcd at 2757. 

consolidation in the industry since 1996—that was the intended effect of the 1996 

Act—NAB submits that critics of deregulation have vastly overstated the effects of 

recent ownership trends. 

Furthermore, listeners’ choices continue to grow. Thirty years ago, there were but 

a handful of radio formats on the dial. Today, listeners may choose from over 250 

discrete formats.11 Moreover, the available data would indicate a correlation between deregulation and expansion in the number of available formats. For instance, 

an analysis of available ‘‘core’’ formats (the most common classifications) found that 

format diversity increased by 7 percent between fall of 1996 (prior to passage of the 

Act) and the fall of 2001.12

The link between in-market ownership concentration and enhanced programming 

choice was originally postulated by economist Peter Steiner in his 1952 seminal 

work, ‘‘Program Patterns and Preferences, and the Workability of Competition in 

Radio Broadcasting.’’ 13 Steiner argues that multiple ownership of stations in a market by a single entity acts as a natural disincentive towards duplicative programming. After all, station owners would not want their commonly owned stations competing for the same audience share. As a result, greater ownership concentration 

within a market encourages owners to experiment with different formats to attract 

different and untapped listening bases. 

A series of more recent studies have validated Steiner’s theory. A 1999 study concluded that, ‘‘[b]etween 1993 and 1997 ownership concentration and programming 

variety available in local radio markets both increased substantially,’’ consequently 

‘‘suggest[ing] that the increased concentration has been good for listeners.’’ 14 The 

same study found that ‘‘increased concentration caused an increase in available programming variety.’’ 15

Most recently, BIA Financial Networks issued a study 16 on the state of format 

diversity demonstrating that the number of programming formats in Arbitron markets has continued to increase and that a causal link exists between increased ownership concentration and increased programming diversity. (The full BIA Study is 

attached as Attachment B *). Specifically, the study finds that, since 1998, the average number of general programming formats offered in all Arbitron surveyed markets has increased by 8 percent, and the average number of specific programming 

by 11.1 percent.17 This study therefore clearly shows that diversity of radio programming has continued to rise in markets of all sizes.18

Interestingly, the BIA Financial Networks study also found that the above analysis actually understates the level of programming diversity because it fails to take 

into account ‘‘out of market’’ listening. On average, the study finds, less than threequarters (71.1 percent) of the listening within a market is attributable to commercial radio stations listed by Arbitron as being ‘‘home’’ to that market. The effect of 

‘‘out of market’’ listening is most pronounced in smaller markets where this ‘‘distant’’ listening is most common.19

On multiple occasions, the FCC itself has recognized the relationship between 

concentration and format diversity. When liberalizing inter-market ownership regulations in 1992, the Commission envisioned that consolidated ownership would promote ‘‘program service diversity and the development of new broadcast services.’’ 20

In short, not only is there a preponderance of evidence to back the assertion that 

greater levels of ownership concentration promote programming diversity rather 

than hinder it, but there is also empirical evidence that this theory has played out 

in reality since the deregulatory moves by the Commission in 1992 and by Congress 

in 1996. Additionally, industry growth has further contributed to diversity. The 

29

21 Radio Today: How America Listens to Radio, Arbitron Study, 2001. 22Knowledge Networks/SRI Home Technology Monitor Ownership Report, Spring 2002. 23 XM reaches 360,000 subscribers. XM Satellite Radio Press Release. January 8, 2003. 24Sirius Announces Third Quarter Financial and Operating Results. Sirius Satellite Radio 

Press Release. November 14, 2002. 25http://svartifoss2.fcc.gov/cgi-bin/ws.exe/prod/cdbs/pubacc/prod/stallist.pl. 26M Street Directory. 2002. 27See All Languages, All the Time, and All Over the Suburban Dial. New York Times, July 

21, 2001. 21. 28See Iranian Anger on AM Dial: Persian station KIRN serves as a forum for immigrants 

upset by Dec. 16 detentions. Los Angeles Times. December 29, 2002. Part 2; Page 1. 29Media Base 2002. http://www.mediabase.com/Note: Airplay defined as at least 50 plays. 30FCC, George Williams, Keith Brown and Pete Alexander, Radio Market Structure and 

Music Diversity at 17–18 (September 2002). 31 Internet 9: The Media and Entertainment World of Online Consumers. Arbitron/Edison 

Media. July, 2002. 

number of FM stations has tripled in the last 30 years and, in 2001 alone, 73 new 

FM stations went on-air.21

Finally, in addition to the range of choices terrestrial radio affords listeners (that 

is largely resultant of ownership deregulation), technological innovation has further 

broadened consumers’ options with several newly arrived competitors that were not 

even considered when the Telecommunications Act was formulated. Internet-only 

radio continues to blossom as a competitor to traditional radio. Estimates suggest 

that more than half of all American households are online.22 As more Americans 

become Internet savvy, this new outlet will only grow in importance. The 2001 and 

2002 launches of XM and Sirius satellite radio, each transmitting over 100 channels 

of niche radio programming, provide consumers with yet more options. With over 

1 million listeners expected to be subscribing to XM alone by year-end 2003,23 and 

Sirius having over 16,000 subscribers as of October 2002,24 satellite radio clearly 

provides another vigorous competitor. Additionally, according to the FCC’s website, 

there are 70 Low Power FM stations currently licensed.25 The FCC’s continued roll 

out of this service will further expand listening alternatives. In short, technology 

will only serve to enrich listeners’ already diverse range of choices in the years 

ahead. 

The Enhanced Diversity Resulting From the Telecommunications Act

Benefits the Listening Public 

Listeners have benefited from expanded diversity in a number of ways. In recent 

years, radio has closely mirrored America’s evolving demography. The past decade, 

for instance, has seen an 82 percent increase in Spanish language formatted stations.26 Other ethnicities are well represented on the dial. Today, listeners may experience Korean language stations, Farsi language radio, Chinese radio programming, Polish-American programming, Arab language formats, Vietnamese and Russian language programming, and Haitian targeted programming. Moreover, these 

stations are not located exclusively in major markets; as the American suburbs diversify demographically, suburban American radio has responded with programming 

targeted to these new audiences.27 These ethnically targeted stations play an irreplaceable role in America’s ethnic communities. In reference to KIRN–AM 670, a 

Farsi language station in Los Angeles, one listener said, ‘‘The station is a kind of 

town hall. It became a clearinghouse of information... 670 has become a meeting 

place for the Iranian community.’’ 28

Terrestrial radio also continues to be American’s dominant source for emerging 

trends in popular music. In 2002 alone, over 3,000 new songs debuted on local radio 

and over 550 new artists received airplay.29 A recent FCC study of ‘‘playlist’’ diversity on radio stations found that, while song diversity overall remained stable between 1996 and 2001, the playlists for stations with the same general formats competing in the same local market ‘‘have diverged, so that listeners in local radio markets may have experienced increasing song diversity.’’ 30

Accordingly, listeners trust radio as their primary source for music. Arbitron has 

found that over two-thirds of listeners said that radio is where they turn first to 

hear new artists.31 A December survey by the Washington polling firm the Mellman 

Group found that 77 percent of consumers believe their favorite local radio stations 

provide the music that they like either all of the time, most of the time or some 

of the time. Only 13 percent of radio listeners believe that local stations rarely or 

never carry music that they like. (The Mellman Group’s Analysis is attached as Attachment C *.) 

The Mellman survey also found that consumer satisfaction with the medium is 

not limited to music. Seventy-eight percent of respondents to the survey felt that 

radio played a ‘‘very important’’ or ‘‘somewhat important’’ role in providing valuable 

30

32 Ibid at 3. 33MediaBase, 2002. 34 A National Report on Local Broadcasters’ Community Service. June 2002. 35 40 Markets to Broadcast HD Radio in Early 2003. Ibiquity Digital Radio Press Release. January 10, 2003. 

news and information. Consumers also rate radio highly in comparison to other mediums. The Arbitron study found that consumers (aged 12 and higher) rated only 

the ubiquitous television as more essential to their lives.32

It should not be surprising that consumers rely so heavily upon radio for music, 

news and community information despite the arrival of other information and entertainment outlets (e.g., broadcast, cable and satellite television and, more recently, 

the Internet and satellite radio). Arguably, radio is perhaps the medium most re- sponsive to consumers’ changing tastes. Stations spend millions of dollars every year 

researching consumer preferences and with station revenues linked directly to regularly issued ratings reports, radio acts in the best tradition of the free market, providing consumers with the programming they want, when they want it. 

Equally important to radio’s strong retention of consumer loyalty, is that radio, 

even in the twenty-first century, remains first and foremost a local, community-oriented medium. This remains true even after consolidation. Radio stations, regardless of their ownership status, continue to tailor their programming and news to 

local audiences’ preferences and needs. In 2002, for instance, radio aired over 11,000 

sporting events targeted to local communities. Local interests also largely determine 

music selected for airplay. The song ‘‘Screaming Infidelities’’ by Dashboard Confessional, for instance, had hundreds of plays in Dallas, Texas during 2002, but only 

a handful in Washington, D.C.33

Perhaps more importantly, radio stations use their strong local connection to improve the communities in which they operate. Through the airing of Public Service 

Announcements (PSAs), by acting as a forum for discussion of community issues, 

by raising money to address local (and for that matter national) problems and in 

countless other ways, radio stations endeavor to serve their communities. The recent 

successes of the AMBER Plan system, which uses the Emergency Alert System to 

assist law enforcement in the recovery of abducted children, speaks to the unique 

role radio plays in serving communities. 

Radio broadcasters’ community service efforts add up quickly. A 2002 study by the 

National Association of Broadcasters found that during a single year (2001), local 

radio contributed $7 billion dollars worth of public service. This dollar amount represented the value of PSAs contributed by broadcasters as well as monies raised for 

charities, disaster relief, and needy individuals.34

Clearly, the radio industry has a bright future as it continues to serve local needs 

and interests. This service will be augmented as the industry rolls-out HD (highdefinition) radioTM which will offer listeners CD-quality sound on FM, and FM-quality sound on AM, all for free. Over 40 markets are expected to be broadcasting in 

the IBOC digital format by the end of 2003 35 and broadcasters look forward to harnessing this technology to better serve American consumers. 

The ‘‘Competition in Radio and Concert Industries Act’’ Would Not Further 

the Causes of Diversity or Competition but Could Engender Severe

Unintended Consequences 

For the many reasons explained above, the National Association of Broadcasters 

believes that the Congressionally enumerated ownership regulations contained in 

the Telecommunications Act of 1996 have positively impacted the radio industry’s 

economic health and its ability to better serve local communities. As such, NAB is 

skeptical that the recently introduced ‘‘Competition in Radio and Concert Industries 

Act’’ would affect any positive change. NAB believes the bill could potentially have 

several severe unintended consequences. 

Several aspects of the bill are duplicative of existing safeguards and would simply 

create unnecessary work for already burdened regulators. Section 3 of the bill prohibits radio stations, concert promoters, and concert venue operators from engaging 

in allegedly anticompetitive conduct. The bill instructs the FCC to revoke the license 

of any radio station that uses its cross-ownership of radio stations, promotion services or venues to discriminate against concert promoters, content providers, or other 

stations. 

These provisions are unnecessary in light of the existing regulatory framework. 

The Federal Trade Commission and the Department of Justice are already equipped 

to identify and address anticompetitive conduct. Under current statute, the FTC and 

DOJ have the authority to remedy anticompetitive behavior through preliminary or 

permanent injunctive relief. Since passage of the 1996 Act, the DOJ has diligently 

31

36The Antitrust Division of the Department of Justice has actively regulated the radio industry to address competitive concerns. For example, the Antitrust Division forced Sinclair Broadcasting to restructure a transaction to exclude a radio station that raised antitrust concerns; 

challenged the merger between Jacor and Citicasters, leading to an agreement to divest a station; challenged the proposed acquisition of three stations by American Radio Systems from the 

Lincoln Group, leading to the divestiture of three stations; challenged the $4.9 billion acquisition 

of Infinity Broadcasting by Westinghouse, requiring the divestiture of stations; challenged the 

proposed acquisition of three stations by Gulfstar Communications, which led the parties to 

abandon the deal; challenged Chancellor’s acquisition of four stations, resulting in abandonment 

of the deal and Chancellor terminating a local marketing agreement under which Chancellor 

had been operating the stations in anticipation of the acquisition; challenged the $1.6 billion 

acquisition of American Radio Systems by CBS, requiring CBS to divest seven stations; and 

challenged the $2.1 billion acquisition of SFX Broadcasting by Capstar Broadcasting Partners, 

Inc., requiring Capstar to divest 11 radio stations. 1999 Antitrust Division, United States Department of Justice, Annual Report. This is but a small sampling of the active involvement of 

the Department of Justice in regulating competitive concerns in the radio industry since the 

passage of the 1996 Act. 37See NAB’s FCC Comments on MM Docket Nos. 01–317 and 00–244. March 27, 2002. Page 

48. 

reviewed allegations of consumer harm caused by consolidation in the radio industry, often requiring divestiture of stations.36

Section 7 of the bill is also redundant in light of current law. The Section requires 

the Commission to modify ‘‘pay-for-play’’ or payola regulations. Under the overbroad 

language, a licensee would be prohibited from garnering consideration, directly or 

indirectly, from record companies, artists or concert promoters. Moreover, the language could be construed to prohibit broadcasters from accepting advertising from 

record companies. 

NAB believes that the payola laws enacted in 1960 remain effective today and 

that no Congressional intervention is required. The system of independent promoters is largely of the record companies’ creation and the record companies should 

be responsible for ending the practice should they feel unfairly burdened by it. 

Moreover, NAB submits that the radio industry is in compliance with current statute and, if there were indeed violations of the law, evidence of those violations 

would most certainly have been presented to the FCC or Department of Justice. No 

such complaints have been made and NAB questions the wisdom of passing duplicative legislation to remedy non-existent problems. 

While Sections 3 and 7 of the bill are largely duplicative of current law, other provisions in the bill are more onerous. NAB is strongly opposed to sections of the bill 

that would impose new ownership regulations. Section 4(b) of the bill directs the 

FCC to amend its regulations to prohibit any transfer when the applicant would 

control stations with more than 35 percent of the audience or advertising revenue 

in a local market. By doing so, the bill could potentially lock into place permanent 

competitive imbalances. In markets where one entity already commands over 35 

percent of audience share (presumably these entities would be grandfathered as the 

legislation contains no provisions for divestiture), other station owners would be permanently disadvantaged as the bill would prohibit these new competitors from 

growing their advertising or audience share beyond the newly established 35 percent threshold. As such, the ‘‘early consolidator’’ that is grandfathered in behind the 

35 percent cap would retain a permanent in-market advantage. 

Already, the FCC’s policy of ‘‘flagging’’ for further scrutiny any proposed radio 

transactions that would result in a single radio group controlling 50 percent or more 

of the advertising revenues, or two radio groups accounting for 70 percent or more 

of the advertising revenues in that market, has contributed to competitive imbalances.37 Section 4(b) of the bill would go well beyond the FCC’s ‘‘50/70’’ test and reproduce this unhappy phenomenon in countless other markets. 

Additionally, by requiring the Commission to conduct a hearing on any transfer 

application that, if granted, would result in the applicant having a national audience reach in excess of 60 percent (Section 4 (a)(1)), the legislation would arbitrarily 

target a new requirement at one company. Only one company, Clear Channel Communications, is even remotely close to approaching a 60 percent national audience 

share. 

Regardless of the dangerous precedent involved in crafting new regulations aimed 

at penalizing a single entity, the provision would unfairly burden any company to 

which the new regulation would apply. By designating for hearing any ‘‘application 

for the grant, transfer, assignment, or renewal of a license’’ that would result in a 

company exceeding 60 percent national audience share, the bill would mandate 

hearings for routine license renewals, for transactions involving the purchase of single stations, and even for the construction of new stations. 

32

38 In FCC filings in February 2001, March 2002, and January 2003, NAB strongly advised the 

Commission against changing the way in which it defines radio markets, and particularly advised the Commission not to adopt Arbitron’s market definitions. The current methodology for 

defining radio markets was in effect in 1996 and was unchanged by Congress when it revised 

the radio ownership rules. Further, while the widely varied nature of radio stations inevitably 

means that any market definition will result in some anomalies, the number of perceived anomalies with the FCC’s existing method is quite small and there is no evidence that any alternative 

would result in fewer. The large amount of out-of-market listening described above also suggests 

that the current definitions, based on predicted contours, is actually conservative and there may 

be more competing stations than the current definition recognizes. 

Moreover, setting an arbitrary threshold (such as 60 percent) seems unwise given 

the dynamic nature of media markets. As new mediums such as satellite radio and 

online music come to full gestation, regulators will need more latitude, not less, in 

regulating radio ownership and how radio competes with other media. 

NAB also opposes section 5 of the bill, which would require the Commission to 

review the ‘‘advisability of its continuing to utilize privately-controlled audience 

measurement systems to determine the local markets of radio stations.’’ In fact, at 

this time, the FCC does not utilize Arbitron or any privately controlled services to 

determine markets for purposes of its radio ownership rules. Currently, the Commission relies on overlapping station contours to determine geographic markets, although it has sought comment on the subject as part of its ongoing rulemaking.38

In sum, ‘‘The Competition in Radio and Concert Industries Act’’ imposes a number 

of new, unneeded and cumbersome regulations upon radio licensees. NAB believes 

that any problems the bill seeks to remedy are already adequately addressed in current law. Implementation of the bill would unnecessarily burden the FCC with duties it is ill equipped to fulfill, unfairly penalize broadcasters and engender several 

unintended, severe, and anticompetitive consequences. 

Broadcasters Support ‘‘The Telecommunications Ownership Diversification 

Act’’

While the NAB must oppose Senator Feingold’s bill, we recognize that radio’s 

greatest strengths have always been its connection to local community and the diversity of its owners and, therefore, its programming. That is why NAB has commended Chairman McCain for introducing the ‘‘Telecommunications Ownership Diversification Act of 2002’’ (S. 3112). Through use of the tax code, this legislation 

would foster ownership diversity and encourage minority acquisition of radio as well 

as other telecommunications outlets. NAB encourages the Committee and Congress 

to further explore such innovative approaches in the future. 

Conclusion 

Since the first station went on the air in the 1920s, American radio has been defined by its dedication to localism and community. As technology has offered new 

competitors, the government has granted radio the flexibility to more effectively 

compete for advertising dollars. These deregulatory gains, implemented first in 1992 

by the Commission and furthered by Congress in 1996, have allowed the industry 

to flourish financially. Additionally, recent ownership trends involving greater concentration within local markets have acted as a natural incentive towards greater 

programming diversity. 

Clearly, the steps taken by the Commission and Congress have provided radio 

with the necessary tools to compete with other outlets in the information age. As 

such, NAB opposes the ‘‘Competition in Radio and Concert Industries Act’’ which 

would, in many cases, duplicate current law and in other cases engender several severe unintended consequences. NAB urges Congress to retain the prudent ownership regulations instated through the Telecommunications Act of 1996 in order to 

advance the financial health of the industry, promote diversity on the airwaves, and 

allow radio to continue providing local communities with the service upon which 

they have come to rely. 

* The Attachments referred to (in this prepared statement) have been retained in 

Committee files.

The CHAIRMAN. Thank you very much. 

Mr. Henley, welcome. 

33

STATEMENT OF DON HENLEY, RECORDING ARTISTS’ 

COALITION 

Mr. HENLEY. Thank you, sir. I am honored to be here and I 

thank you and all the other Members of the Committee for letting 

me speak today on behalf of the Recording Artists’ Coalition. 

Before I begin my testimony, I feel compelled to speak to a statement that was made a little bit earlier by Senator Brownback. I 

very much feel it is important that I address some of the comments 

he made not only in this room, but in a press release from his office 

that came out this morning. So if I may, I would like to address 

that and then I will begin my testimony. 

Senator Brownback’s news release said ‘‘It is my understanding 

that the Future of Music Coalition and Mr. Henley are here today 

to address how consolidation is preventing artists’ access to the airwaves and the public. 

Recently the artist community banded together with recording 

companies in an effort to advance webcasting royalty legislation 

that ultimately could have driven many small webcasters out of 

business. It is my understanding that artists supported this bill as 

a way of forcing an increase in the royalties charged by BMI and 

ASCAP.’’

And I would like to state for the record that nothing could be further from the truth. In fact, we pushed for a small webcaster bill 

from day one when the Copyright Office released its rates. We were 

on the radio the very next day condoning that and saying that we 

were all for it. 

First of all, the small webcaster bill kept people in the business, 

and for the very first time, artists were paid a performance royalty 

for webcasting. We are not traditionally paid. Because of the power 

of Mr. Fritts’ lobby here in Washington, we are not traditionally 

paid a performance royalty for terrestrial broadcasts. We are the 

only country in the free world that does not pay an artist a performance royalty when a singer sings on the radio, and we are penalized for that around the world. 

So we worked closely with Senator Leahy and Senator Hatch, 

and we were totally in favor of a viable small webcaster bill for 

people who have businesses and who pay all their royalties. So I 

just wanted to clear that up. Thank you for letting me do that. 

It is often said that radio airplay determines whether a recording 

artist will succeed or fail, and even with the ascendancy of the 

Internet and webcasting, radio airplay is still the most important 

factor in an artist’s career. And this is especially true for new and 

younger artists. Getting on the radio, in one way or another, is the 

holy grail of our business. And in a perfect world, merit would determine which records get played on the radio, but this is far from 

a perfect world. 

When I started in this business some 35 years ago, radio, and especially FM radio, offered a wide variety of stations, each presenting an interesting array of musical genres. A listener could 

tune into a single FM station and hear rock music, rhythm and 

blues, folk music, soul music, pop music, and everything in between. The breadth of music on the airwaves was varied and exciting, and genres were not compartmentalized and put into little 

boxes. Listeners were encouraged to explore different styles and to 

34

stretch the boundaries of their tastes. The idea was not to fragment 

society into what is now called demographics, but rather to bring 

people together. The benefit to the public and to our culture and 

to our economy was enormous. Artists could spread their wings and 

reach audiences never reached before and create self-sustaining careers on an unprecedented scale. 

But slowly the radio world and, along with it, the music industry 

changed. As local and independent radio stations were purchased 

by larger corporations, radio playlists started to contract and become much more uniform. In an effort to gain more control over the 

music industry, radio conglomerates started to narrow their 

playlists and to centralize the radio programming function that had 

traditionally been done independently by each individual station. 

Radio consolidation made it increasingly more difficult for an artist 

to get radio airplay. Radio network programmers became more 

powerful and demanding. And not only did they erode the vitality 

of American music, they placed themselves in a singularly powerful 

position to extract additional concessions from the labels and the 

artists. 

Payola is not new. It has been around for a very long time, going 

back at least to the 1950s. It has always been here. But today, as 

a result of this unprecedented consolidation, record labels must 

now hire independent promoters on an even grander scale to help 

convince radio networks and stations to play certain records. Millions and millions of dollars are spent annually on what is called 

‘‘independent radio promotion.’’ The unspoken rule is that some 

form of special promotional or marketing consideration must be 

provided by the independent promoters to the radio station. The 

more consideration, the better chance a record has of being represented by the independent promoter and then getting airplay. So 

we all accept, with great sadness, the fact that merit plays only a 

small part in the equation, if it plays any part at all. A recording 

artist has a much better chance of getting on the radio if the promotional budget for a record is large than if the record is good. And 

then, adding insult to injury, the promotional fees paid to the independent promoters are recouped either in whole or in part against 

the artist’s royalties. So essentially, the artist is still paying for 

radio airplay and paying more than ever. 

The 1996 Telecommunications Act strengthened the conglomerates’ position tenfold when it loosened the restrictions even further. The consideration sought for radio airplay increased because 

there was less competition among radio stations and networks. The 

more powerful the radio network, the greater the pressure on artists and labels to spend independent promotion money. These days, 

many radio stations are now demanding exclusive promotional concerts from certain artists who are on their way up the ladder of 

success. And this is just another form of payola. When these up 

and coming artists refuse to do these promotional concerts, there 

can be negative repercussions, as evidenced in some of the materials that I have provided or will be providing to the Committee 

staff. 

In recent years, the problem has escalated unimaginably because 

some of the same conglomerates that are buying radio stations at 

an unprecedented pace have also embarked on a buying spree of 

35

venues, agencies, and concert promotion companies. So, the company determining whether or not a record is played on the air may 

be the very same company that owns the venue and books the tour. 

There was an incident not too long ago involving my manager 

and one of the other artists that he manages and Clear Channel 

Entertainment. This artist was asked to do a promotional concert 

for Clear Channel Entertainment. She had done a couple of these 

things before. She declined in this instance for a very good reason. 

She was in the studio trying to finish an album on deadline. The 

record label was breathing down her neck and she declined to play 

this promotional concert. 

My manager received a phone call from a gentleman named Michael Martin, who is a San Francisco programmer for Clear Channel, requesting this appearance by the artist. Also on the phone 

was an independent promotion man. My manager was told, after 

he declined the artist’s participation, that Michael Martin programmed all 40 rhythm stations owned by Clear Channel. And to 

make a long story short, the artist’s next single was basically boycotted. 

I have an exchange of letters that some of you have seen. Clear 

Channel, of course, denies this. My manager would be glad to 

speak to any of you about this incident. 

So, this institutionalized conflict of interest places the artist in 

a vastly uncompetitive and weak position. What happens when an 

artist refuses to perform in venues that are owned by the radio network or chooses not to go on tour with a promotion company not 

owned by the same company that owns the radio network? Will the 

artist’s records be played on that network, or will the company reduce or eliminate radio airplay? Most artists cannot afford to find 

out. 

In fact, I come here today at my own peril. There is a very good 

chance that my records or that records of The Eagles could be reduced in airplay or eliminated altogether. I do not know. 

This unprecedented control over the music industry by the conglomerates is hurting the music business and it is hurting the culture. It is preventing talented new artists from emerging and it is 

generally casting a pall over a business that has already been decimated by peer-to-peer file sharing, a faltering economy and fierce 

competition from other entertainment industries. 

Artists, managers, and record labels are not the only ones speaking out about this. Mr. William Safire, one of the most well-known 

conservative columnists in the country, has strongly condemned 

the unbridled consolidation of the radio industry in a recent New 

York Times editorial. Mr. Safire persuasively makes the case that 

further deregulation will hasten the demise of diversity and competition on the airwaves. 

Because of the 1996 Act and subsequent FCC deregulation, the 

two largest radio chains in 1996 owned 115 stations. Today those 

two own more than 1,400 stations. The top five radio chains used 

to generate only 20 percent of industry revenue. Now, they generate 55 percent of all money spent on local radio. 

Mr. Mays claims that his company owns a very small percentage 

of the total stations in the country. Yet he fails to break down their 

ownership by format. He fails to point out that they are 50 percent 

36

of the pop airplay in the United States of America, which is the 

crucial ‘‘make it or break it’’ format. They are 50 percent. 

The number of station owners has plummeted by a third and, as 

a result, as Mr. Safire says, ‘‘the great cacophony of different 

sounds and voices on the radio is being amalgamated and homogenized.’’

As Mr. Safire also points out, the radio airwaves are loaned by 

the public to the radio station owners. The radio airwaves cannot 

be equated with grocery store shelves. The airwaves belong to the 

public, just as national forests belong to the public, and they are 

supposed to be used to benefit the public as well as to foster economic growth. 

When radio station owners engage in unbridled, unregulated consolidation, clearly the public interest is not served and the industry 

as a whole stagnates. Deregulation in this regard is not pro-business. It is anticompetitive. And like Teddy Roosevelt before him, 

Mr. Safire’s conservative economic religion is founded on the rock 

of competition, and endless consolidation harms competition. Regulation does not always have to be anti-business. 

The problem of radio consolidation will only get worse if the FCC 

is allowed to remove the last limitations on ownership. The Recording Artists’ Coalition not only strongly opposes the proposed FCC 

action, we strongly advocate for a reexamination of the effect of the 

1996 Telecommunications Act, and with that reexamination, propose the implementation of new restrictions on the conglomerates. 

Artists can no longer stand for the exorbitant radio promotion 

costs, nor can we tolerate the overt or covert threats posed by companies owning radio stations and venues and agencies. The public 

interest is only served when the airwaves provide diverse and exciting programming which benefits both our culture and our economy, and this will only be possible when artists are free to compete 

in an open marketplace, not shackled by anticompetitive practices 

of the conglomerates. 

And in conclusion, I want to say this. What is the definition of 

liberty and freedom? What is the definition of a free market? Is it 

being able to own as much as you can own even if it runs counter 

and contrary to the public interest? Historically, the FCC’s definition of the public interest is threefold: diversity, localism, and competition. And we believe that consolidation is undermining this. 

The radio conglomerates have usurped and they have coopted the 

people’s airwaves. And they get them for free. They build multibillion dollar empires on the public airwaves for free. You talk 

about a ‘‘takings’’ issue. To me this is a ‘‘taking.’’

So, Congress must address these issues as quickly as possible because the future of musical creativity and artistic expression in this 

Nation depends upon your action. And I thank you again for this 

opportunity to discuss these important issues. 

[The prepared statement of Mr. Henley follows:]

PREPARED STATEMENT OF DON HENLEY, REPRESENTING THE RECORDING ARTISTS’ 

COALITION

Mr. Chairman and Members of the Committee:

I am honored to be here and I thank you for the opportunity to speak today on 

behalf of recording artists and the Recording Artists’ Coalition (RAC). 

37

It is often said that radio airplay determines whether a recording artist will succeed or fail. Even with the ascendancy of the Internet, radio airplay is still the most 

important factor in an artist’s career, and this is especially true for new and younger artists. Getting on the radio, in one way or another, is the holy grail of our business. In a perfect world, merit would determine which records get played on radio, 

but this is far from a perfect world. 

When I started in this business, radio, especially FM radio, offered a wide variety 

of stations, each presenting an interesting array of musical genres. A listener could 

tune into a single FM station and hear rock music, rhythm and blues music, folk 

music, soul music, pop music and everything in between. The breadth of music on 

the airwaves was varied and exciting and genres were not compartmentalized and 

put into little boxes. Listeners were encouraged to explore different styles and to 

stretch the boundaries of their tastes. The idea was not to fragment society into 

what is now called demographics, but rather to bring people together. The benefit 

to the public, our culture and economy, was enormous. Artists could spread their 

wings, reach audiences never reached before, and create self-sustaining careers on 

an unprecedented scale. 

But slowly the radio world along with the music industry has changed. As local 

and independent radio stations were purchased by larger corporations, radio 

playlists started to contract and become much more uniform. In an effort to gain 

more control over the music industry, radio conglomerates started to narrow 

playlists and centralize the radio programming function that had traditionally been 

done independently by each individual station. Radio consolidation made it increasingly more difficult for an artist to get radio airplay. Radio network programmers 

became more powerful and demanding. And not only did they erode the vitality of 

American music, they placed themselves in a singularly powerful position to extract 

additional concessions from the labels and the artists. 

As a result of this unprecedented consolidation, record labels must now hire independent promoters on an even grander scale to help convince radio networks and 

stations to play certain records. The unspoken rule is that some form of special promotional or marketing consideration must be provided by the independent promoters to the radio station. The more consideration, the better chance a record has 

of being represented by the independent promoter and getting airplay. So, we all 

accept with great sadness the fact that merit plays only a small part in the equation, if it plays any part at all. A recording artist has a much better chance of getting radio airplay if the promotional budget for a record is large, than if the record 

is good. And then adding insult to injury, the promotional fees paid to the independent promoters are recouped either in whole or in part, against the artist’s royalties. So essentially, the artist is still paying for radio airplay—and paying more than 

ever. The 1996 Telecommunications Act strengthened the conglomerates position tenfold when it loosened the restrictions even further. The consideration sought for 

radio airplay increased because there was less competition among radio stations and 

networks—the more powerful the radio network, the greater the pressure on artists 

and labels to spend independent promotion money. These days, many radio stations 

are now demanding exclusive promotional concerts from certain artists who are on 

their way up the ladder of success. When these up and coming artists refuse, there 

can be negative repercussions as evidenced in some of the materials that I have provided—or will be providing—to Committee staff. 

In recent years, the problem has escalated unimaginably because some of the 

same conglomerates that are buying radio stations at an unprecedented pace have 

also embarked on a buying spree of venues, agencies, and concert promotion companies. So, the company determining whether or not a record is played on the air may 

be the same company owning the venue and booking the tour. 

This institutionalized conflict of interest places the artist in a vastly uncompetitive and weak position. What happens when an artist refuses to perform in venues 

that are owned by the radio network, or chooses to go on tour with a promotion company not owned by the same company that owns the radio network? Will the artist’s 

records be played on that network or will the company reduce or eliminate radio 

airplay? Most artists cannot afford to find out. 

This unprecedented control over the music industry by the conglomerates is hurting the music business and the culture. It is preventing talented, new artists from 

emerging and is generally casting a pall over a business that has already been decimated by peer to peer sharing, a faltering economy and fierce competition from 

other entertainment industries. 

Artists, managers and record labels are not the only ones speaking out. William 

Safire, one of the most well-known, conservative columnists in the country, has 

strongly condemned the unbridled consolidation of the radio industry in a recent 

38

New York Times editorial. Mr. Safire persuasively makes the case that further deregulation will hasten the demise of diversity and competition on the airwaves. 

Because of the 1996 Act, and subsequent FCC deregulation, the two largest radio 

chains in 1996 owned 115 stations. Today, those two own more than 1,400. The top 

five radio chains used to generate only 20 percent of industry revenue; now they 

generate 55 percent of all money spent on local radio. The number of station owners 

has plummeted by a third. As a result, ‘‘the great cacophony of different sounds and 

voices on the radio is being amalgamated and homogenized.’’ As Mr. Safire points 

out, the radio airwaves are loaned by the public to the radio station owners for the 

benefit of the public, as well as to foster economic growth. When radio station owners engage in unbridled, unregulated consolidation, clearly the public interest is not 

served, and the industry as a whole stagnates. Deregulation in this regard is not 

pro-business, it is anti-competitive, and like Teddy Roosevelt before him, Mr. 

Safire’s conservative economic religion is founded on the rock of competition and 

endless consolidation harms competition. Regulation does not always have to be 

anti-business. 

The problem of radio consolidation will only get worse if the FCC is allowed to 

remove the last limitations on ownership. The RAC not only strongly opposes the 

proposed FCC action, we strongly advocate for a reexamination of the effect of the 

1996 Telecommunications Act, and with that reexamination, propose the implementation of new restrictions on the conglomerates. Artists can no longer stand for the 

exorbitant radio promotion costs nor can we tolerate the overt or covert threats 

posed by companies owning radio stations, venues and agencies. The public interest 

is only served when the airwaves provide diverse and exciting programming—our 

culture benefits and the economy is strengthened. This will only be possible when 

artists are free to compete in an open marketplace, not shackled by the anti-competitive practices of the conglomerates. Congress must address these issues as 

quickly as possible. The future of musical creativity and artistic expression in this 

Nation depends upon your action. 

I thank you again for this opportunity to discuss these important issues with the 

Committee.

The CHAIRMAN. Thank you very much, Mr. Henley. 

Mr. Short, welcome. 

STATEMENT OF ROBERT SHORT, JR., PRESIDENT, SHORT 

BROADCASTING CO., INC. 

Mr. SHORT. Thank you. Good morning, Mr. Chairman McCain 

and Members of the Committee. My name is Robert Short, Jr., and 

I am the president of Short Broadcasting Company, Incorporated. 

I am also a former member of the board of directors of the National 

Association of Black Owned Broadcasters, Incorporated, NABOB. 

I thank you for inviting me to testify this morning. It is a pleasure to have the opportunity to talk about the negative effects on 

the American public of the excessive consolidation of ownership in 

the broadcast industry since the passage of the Telecommunications Act of 1996. 

Short Broadcasting is a victim of the Telecommunications Act of 

1996. Short Broadcasting sold our only broadcast station WRDS, 

Syracuse, New York in 2000 after a brief five-and-a-half years on 

the air. We were a stand-alone radio station providing a locally 

owned and programmed voice for the African-American community 

of Syracuse. We provided local news and public affairs programming without regard to oversight from any distant corporate parent. WRDS carried news stories that other media ignored. Through 

the public affairs programs that we offered, we allowed individuals 

on our station who were not invited to speak on other stations. We 

hired people with no broadcast experience and we taught them the 

business. 

39

It was not my desire to sell WRDS when we did. We sold because 

we were unable to compete with Clear Channel. Clear Channel had 

and continues to have more than a 50 percent revenue share in the 

Syracuse market. With its ownership of over 1,200 radio stations 

nationwide and 7 radio stations in the Syracuse market, Clear 

Channel was able to exercise market power with advertisers in a 

manner which rendered us unable to compete. In addition, Citadel, 

which now has over 200 radio stations across the country, had 4 

stations in the Syracuse market, and a 25 percent share of the revenue. The market dominance of Clear Channel and Citadel made 

it impossible for WRDS to continue to operate in this market. 

WRDS went on the air in 1995 with an urban format and became 

an instant success with the Syracuse urban community. WRDS offered quality urban programming and lifestyle information that 

had never before been available to the Syracuse urban community. 

WRDS served the urban community on a daily basis and was the 

most effective medium to reach the African-American community in 

Syracuse. For many local business owners, WRDS was the only viable outlet to reach their target demographic at an affordable price. 

Yet, with all of the community success that we experienced, it was 

difficult for WRDS to survive. 

WRDS was very successful in the Arbitron ratings. We ranked 

number 1 or 2 with adults 18 to 34 years old in some day-parts, 

and we usually had the highest time spent listening in the market. 

Nevertheless, WRDS found it very difficult to convert this audience 

rating success into advertising revenue and financial success. 

WRDS was a stand-alone station that was forced to compete 

against media giants with multiple stations in the Syracuse market. 

From the time Clear Channel entered the market in Syracuse, it 

began the process of squeezing Short Broadcasting out of the market. Among the most egregious acts were the following: 

One, in 1996, as soon as Clear Channel came into the market, 

they converted a country station to a format that competed with 

WRDS. 

Number two, Clear Channel used its national advertising dominance to dominate local advertising in Syracuse. 

Three, Clear Channel owns Katz Media, one of only two national 

rep firms. This allowed Clear Channel to control national advertising in Syracuse. 

Number four, Clear Channel offered advertisers sales packages 

in which, if they purchased the package, they could receive advertising on stations that competed with WRDS at little or no charge. 

Today WRDS no longer exists. After nearly five-and-a-half years 

of being unable to compete from a revenue and operational standpoint, I was forced to sell WRDS to Galaxy Communications. The 

Syracuse community lost an important source of diversity when 

WRDS was sold. Now the only urban format in Syracuse is WPHR, 

which is owned by Clear Channel, and the African-American community in Syracuse is not as well served by this change. Clear 

Channel, unlike Short Broadcasting, allows disc jockeys to use profanity on the air. Clear Channel, unlike Short Broadcasting, uses 

on-air positioning statements that contain profanity. Additionally, 

much of the rap music that airs on Clear Channel’s urban and top 

40

40 stations also has profanity in it. These lax standards result in 

unsuitable programming for children and teens. It is distasteful 

and degrading to women and self-respecting African-Americans. 

The issue now before Congress is this. Minorities were virtually 

shut out of the ownership in the broadcast industry until 1978 

when, with Congressional approval, the FCC adopted a policy to 

promote minority ownership of broadcast stations. The Telecommunications Act of 1996 in a few short years has eliminated 

many of the gains of the preceding 18 years. Now one company, 

Clear Channel, touts itself as the largest programmer to minority 

audiences. However, it has achieved this position by driving small 

minority and local broadcasters out of the business, and it has driven these small broadcasters out of the business using questionable 

tactics, such as the discounted group sales strategy that it used in 

Syracuse. Congress should not allow one company to dominate the 

radio industry to the exclusion of the small, minority-owned companies, and it should not allow the American people to have their programming dictated to them by a single company. 

I am pleased that Senator Feingold has introduced legislation to 

slow the continued consolidation in the radio industry. I believe the 

legislation is long overdue and I hope that it will be enacted so that 

other small minority broadcasters will not be forced out of the business as I was. The First Amendment guarantees that all Americans should have diversity of viewpoint. We need your help to preserve and guarantee that this right exists for all Americans, not 

just a select few. 

Thank you for giving me this opportunity to appear before you 

today. 

[The prepared statement of Mr. Short follows:]

PREPARED STATEMENT OF ROBERT SHORT, JR., PRESIDENT, SHORT BROADCASTING

CO., INC. 

Good Morning Chairman McCain and Members of the Committee. My name is 

Robert Short, Jr., and I am the President of Short Broadcasting Co., Inc. I am also 

a former member of the Board of Directors of the National Association of Black 

Owned Broadcasters, Inc. (NABOB). I thank you for inviting me to testify this 

morning. It is a pleasure to have the opportunity to talk about the negative effects 

upon the American public resulting from the excessive consolidation of ownership 

in the broadcast industry since the passage of the Telecommunications Act of 1996. 

1. Summary 

Short Broadcasting sold our only broadcast station, WRDS, Syracuse, New York, 

in 2000, after a brief five-and-a-half-years on the air. WRDS is a victim of the Telecommunications Act of 1996. We were a stand-alone radio station providing a locally 

owned and programmed voice for the African-American community of Syracuse. We 

provided local news and public affairs programming without regard to oversight 

from any distant corporate parent. WRDS carried news stories that other media ignored. We allowed individuals on our station in our public affairs programming who 

were not invited to speak on other stations. We hired people with no broadcast experience and taught them the business. 

I understand that the Committee is considering whether consolidation under the 

Telecommunications Act has resulted in excess concentration of ownership in the 

broadcast industry. I also understand the FCC is considering how it can demonstrate to the courts through evidence to be developed by economists and lawyers 

whether there is a need to have any rules limiting broadcast ownership. I know that 

NABOB has addressed these issues in its Comments in the FCC’s rulemaking proceeding examining its ownership rules. NABOB identified several research studies 

that demonstrated that minority ownership of broadcast stations promotes diversity 

of viewpoints. 

41

What I would like to do today is give you a specific example of the diversity of 

viewpoint provided by my station, WRDS in Syracuse, New York, and the market 

forces that forced us to sell. It was not my desire to sell WRDS when we did. We 

sold because we were unable to compete with Clear Channel. Clear Channel had, 

and continues to have, more than a fifty percent revenue share in the Syracuse market. With its ownership of over 1,200 radio stations nationwide, and seven radio stations in the Syracuse market, Clear Channel was able to exercise market power 

with advertisers in a manner with which we were unable to compete. In addition, 

Citadel, which has over 200 radio stations across the country, had four stations in 

the market and a twenty five percent revenue share. The market dominance of 

Clear Channel and Citadel made it impossible for WRDS to continue to operate in 

the market. 

I believe the story of WRDS demonstrates clearly that Congress should limit any 

further consolidation in the radio industry, and should reverse some of the excesses 

that have been created by the Telecommunications Act of 1996. The story of WRDS 

shows that one of the principal reasons Congress should prevent any further consolidation in the radio industry is because the ills of consolidation cannot be measured 

by economists and lawyers. No one retains records of which news stories stations 

cover. No one retains records of who is invited to speak on the public affairs programs of radio stations. However, from the letters, phone calls, and in-person expressions of thanks and congratulations we received during our time on the air, I 

know that we were able to provide a voice in Syracuse that had not been provided 

before our arrival, and has not been provided since our sale. 

2. Background 

Short Broadcasting was formed in May of 1988, when I filed an application at the 

Federal Communications Commission (FCC) for a construction permit to build an 

FM radio station licensed to Phoenix, New York, which is part of the greater Syracuse metropolitan area. I was one of seven original applicants to compete for the 

new station. I was required to participate before the FCC in a costly and time-consuming comparative hearing. In November 1993, the FCC ruled that I was the winning applicant for the new FM channel. In May 1995, I completed the construction 

of the new station and was granted the call sign WRDS. 

WRDS–FM was locally owned and operated, and was the first African-American 

owned radio station in Syracuse history. When WRDS debuted, it was one of only 

three African-American owned commercial FM radio stations in the State of New 

York. The other two African-American owned commercial FM stations in New York 

State at that time were WBLS in New York City and WDKX in Rochester. 

3. The Format 

WRDS had an urban format and became an instant success with the Syracuse 

urban community. WRDS offered quality urban programming and lifestyle information that had never before been available to the Syracuse urban community. WRDS 

provided local entertainment programming daily with a local live air staff, consisting of six air personalities. Our local air personalities reported local news, traffic 

and weather every half hour during morning drive-time, and we provided local traffic and weather during afternoon drive-time. 

We provided public affairs programming throughout the broadcast day. Our air 

personalities would discuss issues of importance to the local community as those 

issues arose during our regular programming. These public affairs discussions 

would range from discussions of current news stories to solicitation of funds for community organizations. These impromptu discussions of public affairs were in addition to the broadcast of programs specifically devoted to public affairs, which we also 

did. 

In addition, WRDS connected African-Americans in Syracuse to African-Americans nationally by providing nationally syndicated shows such as The Tom Joyner 

Morning Show, The Doug Banks Show, On The Air With Russ Parr, and was an 

affiliate of ABC Radio Networks, the American Urban Radio Network, and 

Superadio Network. I was the general manager and program director for WRDS. I exercised ultimate 

control over all programming and music. We did not play songs that were overly 

controversial or had explicit lyrics. In many cases, we refused to play songs that 

were hits across other parts of the Nation, solely because we strongly believed the 

songs would be considered offensive by the majority of our audience. 

4. The Benefits of Diversity 

WRDS brought diversity to the Syracuse airwaves. WRDS served the urban community on a daily basis, and was the most effective medium available to reach African-Americans in Syracuse. Public service announcements were being aired on 

42

WRDS that no other radio or television station carried. For many local business 

owners WRDS was the only viable outlet to reach their target demographic at an 

affordable price. 

With the exception of the years that I was in college, I have lived in Syracuse, 

New York since 1968. I used my long-standing residency to build a strong working 

relationship between WRDS and the Syracuse community. 

WRDS specialized in providing programming designed specifically for the Syracuse urban community. News stories that were unreported or considered minor stories by other mainstream media outlets were often the lead story on the WRDS 

morning news. WRDS preempted regularly scheduled programming to cover issues 

of local concern on a frequent basis. 

It was common practice for WRDS to interview African-American elected officials, 

as well as those who were running for office, during our drive time programs, regardless of whether it was during an election period. When problems such as gun 

violence or bomb threats became commonplace in the inner city schools and neighborhoods, I would personally give editorials or put professional counselors on the air 

to address these issues and offer strategies and solutions to these types of problems. 

WRDS was a business partner with the Syracuse City School District. WRDS frequently publicized issues and activities regarding the public schools. WRDS sponsored numerous Syracuse City School field trips and provided tours of the radio station for elementary students. WRDS offered teenagers and young adults the opportunity to shadow our staff so that they could learn first hand about the job duties 

and responsibilities of a radio broadcaster. WRDS sponsored many other youth oriented events such as a citywide Halloween Party at the Carousel Center, Syracuse’s 

largest mall. I was invited to speak at most of the Syracuse public high schools, as 

well as at middle schools and elementary schools. At Solace Elementary School, I 

was asked to speak numerous times, including at graduation. 

WRDS sponsored an on-air promotion that sent approximately five hundred youth 

to see an NBA exhibition basketball game between the New York Knicks and the 

Cleveland Cavaliers at the Carrier Dome. WRDS also sent an estimated one thousand young children and their parents to an ice hockey game with the Syracuse 

Crunch, a minor league professional hockey team. After the game, all of the children 

were invited to skate on the ice with the Syracuse Crunch players and given a souvenir. 

WRDS promoted on-air and sponsored family and unity days at a county park, 

along with numerous plays, concerts, dance recitals, and comedy shows. WRDS cosponsored events hosted by civic organizations, such as the NAACP and the Urban 

League. In 1999, I was the keynote speaker for the Utica, New York NAACP Annual 

Awards Banquet. 

For three years, I represented WRDS by serving on the board of directors for the 

Urban League of Onondaga County. WRDS worked closely with the Urban League 

and the NAACP to discuss on-air events such as voter registration drives, and attempts to find missing persons, such as in the case of April Gregory, a young woman 

who was missing for a year before being found dead. While I served on the board 

of directors for the Urban League, WRDS also co-sponsored an urban job fair that 

led to African-Americans being hired at area companies. WRDS also teamed up with 

the Urban League to sponsor a family picnic at Kirk Park, which is in the heart 

of the inner city of Syracuse. 

WRDS promoted on-air and sponsored several health fairs in conjunction with the 

Syracuse Community Heath Center and the Veterans Administration Hospital. At 

the health fairs, WRDS worked with corporate partners to provide free immunizations to low-income individuals and free bicycle helmets for children under sixteen 

to increase safety during the summer months. WRDS assisted individuals being 

tested for diabetes, high blood pressure, and gave out information about ways to 

prevent the spread of HIV and AIDS. 

WRDS air personalities regularly promoted on-air and served as masters and mistresses of ceremonies for events such as the Urban League’s Harriet Tubman 

Awards Dinner and nearly every major urban concert or gospel play that came to 

Syracuse. When, Dr. Jennifer Daniels, an African-American and native Syracusan, 

had her medical license suspended by the State of New York, WRDS brought the 

issue before the entire urban community, hosted rallies, and spoke on her behalf. 

WRDS took the position that Dr. Daniels was the only doctor with a private medical 

practice in the heart of the inner city, and argued that the State’s decision to revoke 

her license to practice medicine was unjust, given that all charges stemmed from 

her prescribed treatment to just one patient. We pointed out that she had many 

inner city patients, all of whom were satisfied with her services. WRDS assisted Dr. 

Daniels with her appeal that went before Governor George Pataki. 

43

While operating WRDS, I also served on the board of directors for the Inner City 

Little League. WRDS solicited funds on-air and donated money to the Inner City 

Little League in order to allow the teams to purchase uniforms and equipment, provide insurance for the players and assist with covering the cost to have league umpires. We did this because many of the youngsters came from families that were unable to pay the required league fees. 

We assisted the Inner City Baseball League with letter writing and visits to the 

Syracuse Commissioner of Parks and Recreation, city counsel members, and ultimately the mayor, in order to get an outfield fence and portable toilets installed at 

Homer Wheaton Park, the home field for Inner City Little League. I also coached 

a team in the Inner City League for three years. WRDS has also sponsored the 

Biddy Basketball League at the Syracuse Boys and Girls Club. Each year WRDS 

purchased uniforms or trophies for each player. WRDS would also broadcast live 

from the Syracuse Boys and Girls Club and give away promotional items to the children. WRDS used this opportunity to allow its disc jockeys to talk to the children 

about the importance of abstinence from drugs, sex and violence. We also encouraged the children at the Syracuse Boys and Girls Club not to drop out of school. 

On several occasions, I was invited to speak to students at the Syracuse University Newhouse School of Communications about what will be expected of them upon 

graduation and their entrance into the broadcast industry. I also spoke at Le Moyne 

College, of Syracuse, at an Upward Bound Program about how to prepare yourself 

for college and success. 

WRDS also co-promoted on-air Black College Fairs with local African-American 

sororities. WRDS assisted fraternities such as Kappa Alpha Psi and Omega Psi Phi 

with scholarship fundraisers. WRDS co-sponsored organizations such as Fire Fighters of Color United in Syracuse with scholarship drives. 

5. The Disadvantages Created by Consolidation 

Yet, with all of the community success that we experienced, it was difficult for 

WRDS to survive. Because of all of our hard work to serve the community and develop a connection with the community, WRDS was very successful in the Arbitron 

ratings. Initially, we usually received approximately about a 3.5 to 4.0 audience 

share, which would rank us approximately 10th out of the 19 stations Arbitron listed in the market. In our last year of operation, we managed to obtain a 5.1 share. 

In addition, we ranked number 1 or 2 with adults 18–34 years old in some dayparts, and we usually had the highest time-spent-listening in the market. Nevertheless, WRDS found it very difficult to convert this audience rating success into advertising revenue and financial success. 

WRDS was a stand-alone station that was forced to compete against media giants 

with multiple stations in the Syracuse market. Clear Channel Communications is 

one of the giants that competed directly against WRDS. Clear Channel had two stations in the Syracuse market that competed for the WRDS audience. These stations 

were, WWHT, a top forty pop/rhythmic channel that played many of today’s young 

urban artists, and WHCD, now WPHR, which was an urban/smooth jazz station. 

WHCD played many of the adult urban artists with a blend of contemporary jazz. 

As a stand-alone operator, WRDS was always at a huge disadvantage. WRDS 

could only offer advertisers one audience, and even then, it was fragmented by age 

groups. WRDS was day-parted to reach different age groups during specific times 

of the day. This was done in order to serve the entire urban community. In the 

mornings and middays, WRDS targeted adults, and during the afternoons and evenings, it targeted young adults and teenagers. 

WRDS’s group owner competitors, particularly Clear Channel, Citadel, and Radio 

Corporation (now Galaxy), were able to deliver a specific age demographic all of the 

time by targeting a station to each of their desired target audiences, which was 

often the same age group as that targeted by WRDS. This allowed WRDS’s competition the opportunity to combine the ratings from each of their stations, and then 

show advertisers how many more listeners they attracted than WRDS. 

It is reported that Clear Channel captured more than fifty percent of all radio advertising dollars in Syracuse, and that Citadel brought in at least twenty-five percent. Radio Corporation captured an estimated thirteen percent of the radio ad revenue. Buckley Broadcasting took in an estimated nine percent of the market. This 

left only a very small amount of ad revenue for the remaining broadcasters, including Short Broadcasting, Salt City (also African-American owned), Crawford Broadcasting, and CRAM Broadcasting. 

6. Lack of Access to Station Representation Firms 

Radio stations receive their advertising revenue from national, regional and local 

advertisers. In order to reach national and regional advertisers, radio stations hire 

44

station representation firms, which have offices in the major advertising markets 

around the country, such as New York City, Los Angeles and Chicago. The rep firms 

act as the sales agent for the stations in these distant cities to obtain advertising 

from advertising agencies and national advertisers with offices in these cities. Without a national rep firm, it is virtually impossible for a radio station in Syracuse, 

or any market, to obtain national advertising. 

As a stand-alone operator in Syracuse, it was impossible for WRDS to obtain representation from a national rep firm. There are only two major national rep firms, 

Interep and Katz. Katz is owned by Clear Channel and, not surprisingly, treats representation of Clear Channel owned stations as its primary business. While Katz 

represents other non-Clear Channel owned stations, many broadcasters question 

whether Katz’s other clients receive representation equal to that provided to the 

Clear Channel owned stations. However, this was never a direct problem for WRDS, 

because, as a standalone station, WDRS was rejected by both Katz and Interep in 

favor of representation of stations owned by group owners, Clear Channel and Citadel. Interep and Katz would enter into non-compete agreements, preventing them 

from also representing independents such as Short Broadcasting. 

7. Advertising Woes and Promotional Gimmicks 

As noted above, usually the larger fortune five hundred companies spend most of 

their advertising budgets working through national advertising agencies and national rep firms, such as Interep or Katz, to place their buys. With such a system 

in place, the small independent broadcaster rarely gets significant national ad revenue. Unfortunately, WRDS faced this same problem at both the national and local 

levels. Locally, most of the ad agencies took an approach similar to that taken by 

the national ad agencies. The local ad agencies regularly placed ads for the biggest 

local advertisers on Clear Channel and Citadel stations because they offered a large 

package of stations. 

My sales staff heard that Clear Channel would offer sales packages to advertisers 

that priced their urban radio station far below what WRDS was charging for advertising. It appears to me that such a practice should be prohibited by the antitrust 

laws. Unfortunately, Short Broadcasting was not in a financial position to take on 

Clear Channel, so we were never able to follow-up on these reports. Instead, we attempted to survive on small advertisers. Rarely, did WRDS receive advertising from 

the large local ad agencies. 

In addition to the difficulties that WRDS experienced attracting major national 

and local advertisers, it was faced with the challenge of offering competitive on air 

promotions. Clear Channel and the other large broadcasting companies offered listeners chances to win large sums of money. In some cases, the prize advertised in 

the Syracuse market was up to $1,000,000. These types of contests are deceptive 

and often misleading. Generally, big prize contests are tied into a national promotional campaign, with many listeners believing that the contest is local. These 

tactics often influence listeners and the ratings, because a contestant must listen 

to the station with the big prize for the clues and the signal in order to win. This 

hurts independently owned and operated stations such as WRDS, which cannot offer 

similar big prizes. 

8. Denial of Access to Capital 

As the owner of WRDS, I experienced many difficulties attracting capital from 

local and national banks, venture capital firms and private investors. It was very 

difficult to attract capital from these sources, because operating a stand-alone station was a high-risk investment. Most investors wanted to invest in broadcast companies that owned a significant share of both market revenue and audience. This 

prevented WRDS from being able to expand like its competition. 

9. Joint Sales Agreements 

Many of the services that we wanted to add, such as a local talk show, expanded 

news coverage, etc., could not be added because the capital was not available to do 

so. At one point, Short Broadcasting entered into Joint Sales Agreements with Salt 

City Communications and Radio Corporation in an effort to counter the stranglehold 

Clear Channel and Citadel held on the market. Under both Joint Sales Agreements, 

WRDS maintained control over its programming, but allowed Salt City Communications and Radio Corporation to sell WRDS’s commercial time rate and agreed upon 

commission rate. 

Arbitron requires each station in a Joint Sales Agreement to subscribe to its service if at least one station is an Arbitron subscriber. Because Radio Corporation was 

a subscriber, WRDS was required to subscribe to Arbitron. This created an additional annual expense of $55,000 for a period of two years. The net impact of this 

added expense exceeded the total volume of sales brought in by Radio Corporation 

45

and Salt City combined. This set WRDS further back financially than it was when 

it entered into the Joint Sales Agreements. 

Because of the lack of success of the Joint Sales Agreements, Short Broadcasting 

was not able to pay Arbitron. Arbitron threatened to force the sale of WRDS if necessary, to recover the money owed to them. WRDS was forced to borrow money from 

Radio Corporation in order to pay Arbitron. This created a problem with the structure of the Joint Sales Agreement between Short Broadcasting and Radio Corporation. Consequently, because of the debt owed to Radio Corporation, WRDS was 

forced to let Radio Corporation keep all revenue it generated from the sale of 

airtime on WRDS until the loan we took out with Radio Corporation to pay off 

Arbitron was fully repaid. This meant many months passed during which WRDS received no commission from any sales made by Radio Corporation for WRDS. This 

strategy proved to be a major setback for WRDS and eventually led to the termination of the Joint Sales Agreements. 

10. No Room for Stand-Alones to Make any Mistakes 

I learned at this point that the greatest reality facing the small independent 

stand-alone operator is that mistakes can result in having to get out of the business. 

If the stand-alone operator loses a substantial sum in any given year, that company 

may be forced to sell the station to avoid experiencing bankruptcy both on the business and personal side. This is especially so if the stand-alone operator does not 

have a line of credit or access to capital. On the other hand, major companies who 

are publicly traded are able to absorb tremendous losses and slowdowns in the economy and remain in business. When this happens, there is very little that the standalone operator can do to recover. 

11. WRDS is Gone 

Today, WRDS no longer exists. After nearly five and a half years of being unable 

to compete from a revenue and operational standpoint, I was forced to sell WRDS 

to Radio Corporation, now renamed Galaxy Communications. Interestingly, Galaxy, 

a company that owned six stations in the Syracuse market, felt it needed to purchase WRDS in order for it to compete against Clear Channel and Citadel. 

Since purchasing WDRS, Galaxy has changed its call letters to WZUN and has 

changed its format three times in an unsuccessful effort to capture a sizeable audience. In fact, the WZUN ratings are now among the lowest in the market, significantly lower than when it was WRDS. Now, Galaxy has nine stations in the Syracuse market, none of which caters to the urban community. In addition, none of the 

four stations owned by Citadel cater to the urban community, and Buckley Broadcasting has two stations in this market and neither of its stations caters to the 

urban community. 

Clear Channel Communications has seven stations in the Syracuse market, one 

of which, WPHR, has an urban format. With Clear Channel’s recent purchase of a 

television station in Syracuse, the FCC has ruled that Clear Channel has exceeded 

the ownership limits in the Syracuse market and must divest either one of its radio 

stations or its Syracuse television station. If Clear Channel divests WPHR, there is 

a possibility that the new owner would change its format and leave the Syracuse 

community without an urban station, once again. 

12. Short Broadcasting Co., Inc. vs. Clear Channel Communications 

When WRDS was African-American owned and urban formatted, it better served 

the Syracuse community than Clear Channel is currently doing with WPHR. WRDS 

was much more than a station that simply played hit music. Clear Channel, unlike 

Short Broadcasting, allows its disc jockey to use profanity on the air. Clear Channel, 

unlike Short Broadcasting uses on air positioning statements that contain profanity. 

Additionally, much of the rap music that airs on Clear Channel’s urban and top 

forty stations has profanity in it. These lax standards result in unsuitable programming for children and teens. It is distasteful and degrading to women and self-respecting African-Americans. 

In addition, radio in Syracuse is quickly becoming a high tech jukebox with piped 

in syndicated programs that displace local broadcast professionals. Many of these 

stations appear to be heavily cluttered with frequent and lengthy clusters of commercials. I believe these factors are being driven by more stringent demands from 

corporate management and stockholders to generate higher profits and possibly due 

to heavy debt service obligations with the banks and investors. Certainly, the public 

at large is not the beneficiary of canned music programming combined with a bombardment of commercials. The broadcasters desire to cut costs and increase profit 

margin is coming greatly at the public’s expense. 

46

13. Conclusion 

The Telecommunications Act of 1996 was a terrible change in the law that has 

resulted in taking the control of the airwaves out of the hands of local residents, 

and placing control into the hands of a few national media giants. Short Broadcasting, and many other minority owned companies have attempted over the years 

to serve the minority community. NABOB cited the FCC’s own study which concluded that there is ‘‘empirical evidence of a link between race or ethnicity of broadcast station owners and contribution to diversity of news and public affairs programming across the broadcast spectrum.’’ The study focused on news and public affairs 

programming, rather than entertainment programming, because it is news and public affairs programming which is most important to promotion of the Commission’s 

diversity goals. The study provided empirical evidence that minority owned stations: 

(1) tailored their coverage of national news stories to address minority concerns, (2) 

covered major news stories their competitors did not cover. Minority owned stations 

pay special attention in public affairs programming to events or issues of greater 

concern to ethnic or racial minority audiences. Minority owned stations place greater effort into live coverage of government meetings, and into coverage of issues concerning women, particularly health issues, and to broadcasts in languages other 

than English. Minority owned stations staff their public affairs programming with 

minority employees, and use call-in formats, which enhance audience participation. 

Minority owned stations participate in minority-related events in their communities. 

Approximately 11 percent of Americans report that radio is their primary source 

for news. This is about 24 million Americans. The primary source of news for 24 

million Americans should not be in the hands of a small group of companies. Diversity in ownership will bring more local programming back to the airwaves. Diversity 

of ownership will create healthy business competition among broadcasters that will 

benefit the public at large. 

The Telecommunications Act of 1996 caused nearly half of the country’s 12,000 

radio stations to change hands by the end of 1998 and led to many African-Americans and other minorities being forced out of the broadcasting industry. Aside from 

the current loss of service to the public this loss of African-American owners reflects, it also has negative implications for the future of minorities in new technologies. The companies that are leading the way in new technologies are primarily 

the companies currently in technology businesses. The loss of minority owned companies in the current technologies means that these companies will not be in place 

to lead the way into the new technologies. 

The facts are clear and indisputable. The majority of all radio audiences receive 

programming provided by a handful of companies. In addition, the majority of all 

radio ad revenue is controlled by a few companies. Greed, control and power, have 

landed in the hands of a select few broadcasters at the expense of the American 

public. 

The issue now before the Congress is this. Minorities were virtually shut out of 

ownership of the broadcast industry until 1978, when, with Congressional approval, 

the FCC adopted a policy to promote minority ownership of broadcast stations. The 

Telecommunications Act of 1996, in a few short years, has eliminated many of the 

gains of the preceding eighteen years. Now, one company, Clear Channel, touts 

itself as the largest programmer to minority audiences. However, it has done this 

by driving small, minority and local broadcasters out of the industry. And, it has 

driven these small broadcasters out of the business using questionable tactics, such 

as the discounted group sales strategies it used in Syracuse. Congress should not 

allow one company to dominate the radio industry to the exclusion of small, minority owned companies, and it should not allow the American people to have their programming dictated to them by a single company. 

I am pleased to see that Senator Feingold has introduced legislation to slow the 

continued consolidation in the radio industry. I believe the legislation is long overdue, and I hope that it will be enacted so that other small and minority broadcasters will not be forced out of the business as I was. The First Amendment guarantees all Americans diversity of viewpoint. We need your help to preserve and 

guarantee that this right exists for all Americans, not just a select few. 

Thank you for the opportunity to appear before you today.

The CHAIRMAN. Thank you very much, Mr. Short. 

Ms. Toomey, welcome. 

47

STATEMENT OF JENNY TOOMEY, EXECUTIVE DIRECTOR, 

FUTURE OF MUSIC COALITION 

Ms. TOOMEY. Thank you very much. 

I, too, must respectfully disagree with Senator Brownback. There 

are at least three documents on the Future of Music website that 

are current with the webcasting conflict which explain clearly that 

we are granted licenses which would protect the rights of small 

webcasters. And one of our board members is also an active 

webcaster. So we would not do what Senator Brownback alleges. 

Good morning. On behalf of the Future of Music Coalition, I 

want to thank you for the honor of testifying today. This hearing 

is much needed and we applaud you for holding it. 

My name is Jenny Toomey. I am a rocker, a businesswoman, and 

an activist. I speak to you today as a working artist and the Executive Director of the Future of Music Coalition, which is a nonprofit 

think tank that pursues initiatives to benefit citizens and musicians. 

Most working musicians are not superstars. Rather, they are 

independent and local. For the past 3 years, FMC has worked with 

musicians and citizens groups on issues from webcasting to health 

care, but one issue unites our entire constituency and that is access 

to commercial radio. 

Given these concerns, last February we began an 8-month research project to examine the problem. In the study we asked the 

basic questions. How has ownership of commercial radio changed 

and does the radio still serve the essential regulatory principles of 

localism, competition, and diversity? 

The radio study is over 150 pages, and we have entered it in the 

record today and filed it as public comment with the FCC. And it 

is available on our website at www.futureofmusic.org for all to see. 

The lead authors of the study, Kristin Thomson and Peter DiCola, 

are here to clarify any questions you might have. And I cannot 

summarize this in 5 minutes, so I am going to confine my comments to three themes that must alter the focus of future debate 

on radio concentration. 

First, the broadcast industry defends the radical restructuring of 

the radio by pointing at the other entertainment industries and 

saying, ‘‘hey, we are not as bad as those guys.’’ But they are not 

those guys. Radio is not private property. It is a public resource 

regulated by the government on behalf of citizens. For decades it 

was based on a model of local ownership. In 1996, the national cap 

was 40 stations per conglomerate. So it is distressing that in only 

6 years, Clear Channel owns 1,240 and five other groups each own 

over 100 stations. At the same time, we have also lost 1,700 radio 

station owners since 1996. 

But the more distressing numbers are those of local concentration. In New York City, 79 percent of revenue is controlled by four 

companies. In Washington, D.C., 79 percent. In New Orleans, 90 

percent. In Austin, 92 percent. In virtually every local market of 

the country, four companies or fewer control 70 percent of the market. In many cases these owners are not locally based. This means 

we have less competition since deregulation, not more. 

Second, the broadcast industry claims that deregulation has 

brought us more formats and thus more diversity. But formats are 

48

a poor measure of diversity. Measuring music diversity by counting 

the number of radio formats is like measuring the variety of food 

in your pantry by counting the number of cans without looking at 

what is inside them. 

We found substantial overlap between supposedly distinct formats. In the most extreme case, in the week of August 2, 2002, the 

national charts for two distinct formats overlapped at a 76 percent 

level, which means that 38 of the 50 songs on both formats were 

the same. 

Third, the broadcast industry claims that fewer owners in a market leads to more diversity. They say that radio companies will 

avoid competing against themselves in a single format. 

On the surface, this makes sense. Why would a company that 

owns seven stations in a market want to compete with themselves? 

But this misses the fundamental logic of the value of a station 

group. The primary goals of a radio group are: one, to attract the 

largest number of listeners in the most attractive demographics; 

and two, to ensure that if a listener changes the station, they will 

change to another station owned by the parent company. 

The economic incentive is not to provide diversity of programming. Rather, radio companies seek to assemble overlapping and 

economically lucrative audiences that will generate the most revenue. On the expense side, the incentive for radio companies is to 

centralize operations using more syndicated programming and 

apply new technologies like voice tracking to cut costs. 

For example, in Denver, Colorado, Clear Channel owns seven 

stations. Instead of offering blues, classical, jazz, folk, bluegrass, 

zydeco, or other formats, this is what they program: talk, news/

talk, rock, classic rock, modern rock, contemporary hit radio, and 

adult alternative. 

We know that radio companies spend enormous resources to 

draw the largest possible audience in preferred demographics. But 

is that really how we define the public interest? 

We have heard concern about radio consolidation expressed by 

musicians, unions, record labels, consumer and religious groups, 

small broadcasters, industry employees, and elected officials. There 

has been concern about the loss of local voices, concern that stations are burying public service announcements in off hours, allegations of pay-for-play, concern about increased advertising time, concern that public officials have fewer outlets to reach citizens, allegations that talk shows will not allow questions from callers who 

sound old because it alienates young listeners, concern that community-based low power radio licenses were scaled back because of 

a powerful broadcast lobby, and concern that musicians who publicly criticize the industry might be blackballed. 

But the burden of proof should fall on the broadcast industry 

who pushed for these changes and now they must explain how 

these changes serve localism, competition, and diversity. 

I want to thank Chairman McCain and the Committee. Mr. 

Chairman, we can do better. I hope today’s hearing inspires citizens around the country to contact Members of this Committee and 

explain that our communities need access to the radio. There are 

hundreds of thousands of musicians in this country, and while they 

may not all have a hit record in them, each of them has a vote. 

49

And while they disagree about many things, they agree that something is tragically wrong with what has happened to radio and they 

agree it has to change. 

Thank you again for inviting me to testify today. I look forward 

to answering your questions. 

[The prepared statements of Ms. Toomey and Mr. Lee follow:]

PREPARED STATEMENT OF JENNY TOOMEY, EXECUTIVE DIRECTOR, FUTURE OF MUSIC

COALITION

Good morning. On behalf of the Future of Music Coalition, it is my honor to testify this morning on the critical issue of how radio consolidation is affecting musicians and citizens. This is a timely hearing, and we applaud you for holding it. We 

also applaud the participation of the other witnesses, as we firmly believe that the 

public deserves an open, honest discussion about these issues, especially in an environment where further deregulation is under consideration at the FCC. 

First, I will provide a quick background about myself and the Future of Music 

Coalition. Second, I will outline some of the conclusions of our recently released 

study on the impact of radio consolidation on musicians and citizens. Finally, I will 

talk about the importance of radio as a medium, and what we can do to make it 

better. 

About Jenny Toomey and the Future of Music Coalition 

My name is Jenny Toomey. I am a musician, entrepreneur and activist. I have 

released seven albums and toured extensively across the United States and Europe. 

For eight years, I co-ran an independent record label called Simple Machines. I 

know first hand both the difficulties that independent artists face in getting their 

music played on commercial radio and the opportunities that are presented by noncommercial radio stations that—thankfully—have been very supportive over the 

years. 

I speak to you today both as a working artist and as Executive Director of the 

Future of Music Coalition, a not-for-profit think tank I co-founded three years ago 

with Michael Bracy, Walter McDonough and Brian Zisk. The Future of Music Coalition examines issues at the intersection of music, technology, law, economics and 

policy, in search of policies, technologies and business models that can benefit musicians and music fans. The FMC is built on the idea that the music industry is broken at a very basic level, as the very artists who create the works that are the hallmark of our culture struggle against structural impediments that make it difficult 

to achieve economic survival. It is our hope that increased awareness and engagement among artists, combined with thoughtful implementation of new technologies, 

will lead to new structures in a digital future that won’t replicate the failures of 

our terrestrial present. 

The Importance of Understanding the Effects of Radio Deregulation 

As our organization began working on a wide range of issues—major label contract reform, healthcare for artists, webcasting royalties, peer-to-peer file trading—

one issue continued to rise to the top: commercial radio. Everywhere we turned, 

there seemed to be another article, another letter to the editor, another emerging 

artist complaining about what was happening with radio in his or her specific community. 

Radio is, of course, a critical hub of communications, entertainment and information in our society. The technology is ubiquitous—nearly all Americans own a radio. 

Historically, radio has been the most effective means of making new music available 

to local audiences, as program directors and disc jockeys kept the pulse of the industry in search of the next new act or the next new sound. When you read interviews 

with great musicians, they often reflect on the inspiration they found in their youth 

as radio connected them with sounds and words from across the world. 

For many others, radio is primarily a business, where corporations seek to maximize profits by offering targeted programming intended to reach specific audience 

demographics preferred by advertisers. In this model, the argument goes, the public 

is served because broadcasters research what their targeted audience wants to hear, 

then deliver programming designed to maximize listener share. 

We argue, however, that this is not the reason that radio has become such an important part of American culture. Rather, radio has worked over time because of the 

fundamental regulatory priorities of localism, diversity and competition. Certainly, 

we believe the strongest demonstrations of localism and diversity are found in noncommercial radio, where a wide range of musical genres and public affairs programs 

50

flourish. We encourage the Congress to pursue strategies that maximize the potential of non-commercial radio regardless of this discussion of consolidation of ownership. 

In November 2002, the Future of Music Coalition released a study entitled ‘‘Radio 

Deregulation: Has it Served Citizens and Musicians?’’ The lead authors of the study, 

FMC board members Kristin Thomson and Peter DiCola, are both here today. We 

would like to enter the study into the record along with our testimony. The study 

is also available on our website at http://www.futureofmusic.org, and was entered 

as a public comment in the FCC’s media ownership proceeding. 

Background: The Goals of Deregulation 

Radio is a public resource managed on citizens’ behalf by the Federal Government. This was established back in 1934 when Congress passed the Communications Act. This Act both created the Federal Communications Commission (FCC) 

and laid the ground rules for the regulation of radio. The Act also determined that 

the spectrum would be managed according to a ‘‘trusteeship’’ model. Broadcasters 

received fixed-term, renewable licenses that gave them exclusive use of a slice of the 

spectrum for free. In exchange, broadcasters were required to serve the ‘‘public interest, convenience and necessity.’’ Though they laid their trust in the mechanics 

of the marketplace, legislators did not turn the entire spectrum over to commercial 

broadcasters. The 1934 Act included some key provisions that were designed to foster localism and encourage diversity in programming. 

Although changes were made to limits on ownership and FCC regulatory control 

in years hence, the Communications Act of 1934 remained essentially intact until 

it was thoroughly overhauled in1996 with the signing of the Telecommunications 

Act. But even before President Clinton signed the Telecommunications Act into law 

in February 1996, numerous predictions were made regarding its effect on the radio 

industry: 

Fewer Owners 

First, industry analysts predicted that the number of individual radio station 

owners would decrease. Those in the industry with enough capital would begin to 

snatch up valuable but under-performing stations in many markets—big and small. 

Greater Financial Benefits for Radio 

Second, station owners—given the ability to purchase more stations both locally 

and nationally—would benefit from economies of scale. Radio runs on many fixed 

costs; equipment, operations and staffing costs are the same whether broadcasting 

to one person or 1 million. Owners knew that if they could control more than one 

station in a market, they could consolidate operations and reduce fixed expenses. 

Lower costs would mean increased profit potential. This would, in turn, make for 

more financially sound radio stations which would be able to compete more effectively against new media competitors: cable TV and the Internet. 

More Diversity 

Third, there was a prediction based on a theory posited by a 1950s economist 

named Peter Steiner that increased ownership consolidation on the local level would 

lead to a subsequent increase in the number of radio format choices available to the 

listening public. According to Steiner’s theory, a single owner with multiple stations 

in a local market wouldn’t want to compete against himself. Instead, he would program each station differently to meet the tastes of a variety of listeners. 

The Results of the Telecommunications Act 

These were the predictions made prior to the passage of the Telecommunications 

Act, and clearly part of the argument made by broadcasters and their representatives on the importance of deregulation to the health of their industry. But what 

really happened? Enough time has lapsed to evaluate early predictions and note actual outcomes for the radio industry, musicians and citizens. Let’s revisit these assumptions: 

More Stations, Fewer Owners 

Well, one prediction certainly came true: the 1996 Act opened the floodgates for 

ownership consolidation to occur. Deregulation has allowed a few large radio companies to swallow many of the small ones. Ten parent companies now dominate the 

radio spectrum, radio listenership and radio revenues, controlling two-thirds of both 

listeners and revenue nationwide.

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Source data: Media Access Pro, BIA Financial Networks, data as of May 16, 2002.

You can see from the revenue pie chart that ten firms control 67 percent of industry revenue. The rest of the industry—a total of 4,600 owners—controls just 33 percent. 

One gets much the same picture from the numbers on listenership. The same Top 

10 firms control 65 percent of radio listeners:

Top 10 Parents, Listeners and Listener Share, Winter 2002

Listener rank Parent company Arbitron listeners 

(in millions) 

Nationwide share 

of listeners

(in percent) 

1 Clear Channel 103.4 27.0

2 Viacom 59.1 15.4

3 Cox 13.2 3.5

4 Entercom 13.1 3.4

5 ABC Radio 12.6 3.3

6 Radio One 11.3 2.9

7 Emmis 10.6 2.8

8 Citadel 10.5 2.7

9 Hispanic Brdcstg. 8.7 2.3

10 Cumulus 7.2 1.9

Source data: Media Access Pro, BIA Financial Networks, data as of May 16, 2002. The statistic for listeners 

is known in the radio industry as ‘‘Metro Cume Listeners.’’ Generally speaking, the BIA database has metro 

cume listener figures only for stations in the Top 289 Arbitron-rated markets. Many stations with religious 

formats do not appear to report listenership or revenue figures to BIA. 

An industry is an oligopoly in our terminology if the four largest companies control more than 50 percent market share. As you can see from the charts, the top 

four companies in radio control 52 percent of the revenue, making the radio industry an oligopoly. This means that we have less competition than before deregulation, 

not more. Oligopolistic control and socially beneficial competition are opposites. In 

general oligopolies can raise prices above competitive levels, restrict quantities of 

goods offered to the public, and—as we’ll see in the radio industry—reduce the quality of what’s offered to the public. 

Two parent companies in particular—Clear Channel and Viacom—together control 42 percent of listeners and 45 percent of industry revenues. Clear Channel has 

grown from 40 stations to 1,240 stations—30 times more than Congressional regulation previously allowed. No potential competitor owns even one-quarter the number 


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1See the following articles for more information about voice-tracking, loss of localism, and regional-based programming: Anna Mathews, ‘‘Think Your DJ is Local? Think Again.’’ Wall Street 

of Clear Channel stations. With over 100 million listeners, Clear Channel reaches 

over one-third of the U.S. population. These two firms tower over the radio industry, 

and even over the other consolidators. Both own businesses in other media and advertising-based industries, such as network television, cable television, concert 

venues, and billboards. 

Radio at the Local Level 

Even bleaker is the picture at the local level, where oligopolies control almost 

every geographic market. In smaller markets, consolidation is more extreme where 

the largest four firms in most small markets control 90 percent of market share or 

more. These companies are sometimes regional or national station groups and not 

locally owned. 

This next chart shows the extent of consolidation in these market size categories. 

Each market size category is broken down by the extent of consolidation in its markets. Let’s take an example. Among the markets ranked 101–289, 40 percent of the 

markets have four companies controlling 100 percent of the market share. Twentyfour percent of the markets have four companies controlling 95 to 100 percent. 

Eighteen percent of the markets have four companies controlling 90 to 95 percent, 

and so on. Clearly consolidation is most extensive in the smallest markets.

Source data: Media Access Pro, BIA Financial Networks, data as of May 16, 2002.

But the larger point is that consolidation is extensive in all sizes of local markets. 

In 98 percent of all local markets, the top four companies control a 70 percent market share or greater. Such large shares for the biggest companies indicate that very 

strong oligopolies exist locally. 

Benefits From Economies of Scale Aren’t for Everyone 

What about those benefits of economies of scale? They’ve certainly borne out for 

some, but not for everyone. Only the few radio station owners with enough capital 

to buy additional stations have benefited from deregulation. Station owners have 

consolidated their operations on a local level, frequently running a number of stations out of a single building, sharing a single advertising staff, technicians and onair talent. In some cases, radio station groups have further reduced costs by eliminating the local component almost entirely. These group owners are benefiting from 

economies of scale, but what are the drawbacks? Local DJs and program directors 

are being replaced by regional directors or even by voice-tracked or syndicated programming, explaining a marked decrease in the number of people employed in the 

radio industry. Listeners are losing as well. With an emphasis on cost cutting and 

an effort to move decision-making out of the hands of local station staff, much of 

radio has become bland and formulaic.1


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Journal, February 25, 2002. Randy Dotinga, ‘‘Good Morning [Your Town Here],’’ Wired.com, August 6, 2002. http://www.wired.com/news/business/0,1367,54037,00.html. Denny Lee, ‘‘Disc 

Jockeys Are Resisting Taking the Local Out of Local Radio,’’ New York Times, August 25, 2002. 

Eric Boehlert, ‘‘Radio’s Big Bully,’’ Salon.com, April 30, 2001, http://www.salon.com/ent/feature/2001/04/30/clearlchannel/index.html. Greg Kot, ‘‘Rocking Radio’s World,’’ Chicago Tribune, April 14, 2002. Jeff Leeds, ‘‘Clear Channel: An Empire Built on Deregulation,’’ Los Angeles 

Times, February 25, 2002. Todd Spencer, ‘‘Radio Killed the Radio Star,’’ Salon.com, October 1, 

2002 http://www.salon.com/tech/feature/2002/10/01/nab/print.html. Dale Smith, ‘‘Hello Honolulu and Amarillo, my Austin Secret is... I’m Your DJ,’’ Austin American-Statesman, July 22, 

1999. 2Source data: Media Access Pro, BIA Financial Networks, data as of May 16, 2002. 

3For an analysis of format variety 1996—2002 please see ‘‘Radio Deregulation: Has it Served 

Citizens and Musicians?’’ Chapter 3 pp. 44–48. 

Less Regulation Has Not Led to Greater Market Competition 

The economic argument for the need for increased competition in the radio industry is specious. Prior to 1996, radio was among the least concentrated and most economically competitive of the media industries. In 1990, no company owned more 

than 14 of the 10,000 stations nationwide, with no more than two in a single local 

market. But we found that local markets have consolidated to the point now that 

just four major radio groups control about 50 percent of the total listener audience 

and revenue. Clearly, deregulation has reduced competition within the radio industry. 

More Diversity? 

Finally, we raise questions about Steiner’s theory that an owner would not want 

to compete against himself and would, therefore, operate stations with different programming. Our analysis of the data finds otherwise. Radio companies regularly operate two or more stations with the same format in the same geographic market. 

Using stations’ self-reported formats, we found 561 instances of format redundancy 

nationwide—a parent company operating two or more stations in the same market, 

with the same format—involving 1,190 stations in Arbitron-rated markets, as of 

May 2002.2 This amounts to massive missed opportunities for format variety, which 

might in turn enhance programming diversity. 

Format Variety versus Format Diversity 

In addition, we need to be clear about the difference between format variety and 

format diversity. Often, the radio industry measures diversity in programming by 

counting the number of formats available in each local market. In our report we 

show, in accordance with other studies, that format variety counted this way increased for a while after deregulation. But we also find that format variety has become stagnant over the last two years.3

Regardless, format variety is a flawed measure that doesn’t capture the more relevant concept of programming diversity. A format is just a label—it doesn’t necessarily describe the contents or imply that the contents are different than anything 

else. Increased format variety does not ensure increased programming diversity. 

We tested this theory by analyzing data from charts in Radio and Records and 

Billboard’s Airplay Monitor. Using radio playlist data, Radio and Records magazine 

computes weekly charts for 13 categories of music formats. We took these charts 

from one week in August 2002—which show the top 30, 40, or 50 songs played on 

a given format—and calculated the number of overlapping songs between formats.

54

The charts revealed considerable format homogeneity—playlist overlap between 

supposedly distinct formats. Note that the formats are grouped in clusters. First, 

there’s the pop cluster. It features seven overlapping formats. For example, Urban 

and CHR/Rhythmic overlap at a 76 percent level. Thirty-eight of their top 50 songs 

are the same. Then, there’s the rock cluster. Rock, Alternative, and Album-Oriented 

Rock overlap considerably, between 36 percent and 58 percent depending on which 

pair among those three you consider. Only Country, Christian, and Smooth Jazz 

stand alone. 

This high level of homogeneity shows that simply counting format names will 

overstate programming diversity. Adding a CHR/Rhythmic station to a market that 

already has an Urban station adds format variety. But it doesn’t add any programming diversity. Thus, the radio industry has measured itself—and encouraged policy 

makers to measure it—with an inadequate statistic. If the FCC or the NAB are sincerely trying to measure ‘‘diversity’’ the quantity of formats is a flawed measure. 

That’s like counting the number of jars on a shelf without taking the time to look 

inside. 

Format Oligopolies 

In addition, viewing each format as its own product market, every format category 

charted by Radio and Records is controlled by an oligopoly. 

We studied format oligopolies by considering the radio stations nationwide within 

each format as a separate market. We simply tallied the listener share and revenue 


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share within each format nationwide. As you can see from this chart, every format 

is controlled by four companies with a 50 percent market share or greater.

Format Consolidation in the 13 Radio and Records-based Categories, by Listener Share 

‘‘R & R’’ Category Listeners

(in millions) Top 4 firms, by listeners Top 4 share(in percent) 

AC 38.5 Clear Channel, Viacom, Bonneville, Entercom 56.3

CHR Pop 37.3 Clear Channel, Viacom, Entercom, Citadel 69.8

Country 33.9 Clear Channel, Viacom, Citadel, Cox 52.6

Rock 28.8 Clear Channel, Viacom, Citadel, ABC Radio 52.3

Hot AC 19.3 Clear Channel, Viacom, ABC Radio, Entercom 57.9

Alternative 17.8 Viacom, Clear Channel, Emmis, Citadel 60.5

Urban 15.5 Radio One, Clear Channel, Inner City, Viacom 64.9

CHR Rhythmic 14.4 Clear Channel, Viacom, Emmis, Cox 71.8

Urban AC 13.1 Clear Channel, Radio One, Emmis, Cox 67.1

Active Rock 9.2 Clear Channel, Viacom, Entercom, Greater Media 65.5

Smooth Jazz 6.1 Clear Channel, Viacom, Radio One, ABC Radio 69.7

AAA 3.6 Viacom, Clear Channel, Susquehanna, Entercom 53.8

Christian Contemp. 2.7 Salem, Crista Ministries, Crawford, Clear Channel 68.9

Source data: Radio and Records website, www.radioandrecords.com, and Media Access Pro, BIA Financial Networks, data as of May 16, 

2002. 

The format oligopolies reinforce the homogeneity of the product offered to listeners. They also result in a small number of gatekeepers deciding which musicians 

have their music played on the air. Importantly, these format oligopolies include 

many of the same companies. For instance, Clear Channel is one of the top four 

firms in each of these 13 formats. Viacom is one of the top four firms in 11 of these 

formats. 

In fact, only 15 companies populate this chart of format oligopolies. These 15 gatekeepers determine to a very large extent what programming will reach the airwaves. And this just looks at music. Four companies own a 67 percent share of 

News format listeners nationwide. Consolidation has not resulted in a greater number of viewpoints represented on the air; instead, it has reduced the diversity of 

viewpoints considerably. 

This final point may be the most critical one as we face an FCC that is poised 

to deregulate media even further in the next few months. It is time to put to bed 

the commonly held yet fundamentally flawed notion that consolidation promotes diversity as that radio station owners who own two stations within a marketplace will 

not be tempted to program both stations with similar formats. 

In sum, consolidation has resulted in a small number of dominant companies, not 

competition; it has resulted in extensive local oligopolies, not localism; it has resulted in format homogeneity, not diversity in programming; and it has resulted in 

small number of gatekeepers for music and news, not a diversity of viewpoints. 

Clearly something has gone wrong. From the perspective of citizens and musicians, 

deregulation has failed to achieve its goals. Radio needs a new direction to restore 

its status as a live, local, diversely owned and diversely programmed medium. 

Where Do We Go From Here? 

Over the past year, we have heard concern about radio consolidation expressed 

by musicians, unions, record labels, consumer groups, religious groups, small broadcasters, current and former industry employees and elected officials. Concern about 

the loss of local voices. Concern about business practices like ‘‘pay for play’’ that appear to make eligibility for radio play contingent on an artist or label coming forward with huge ‘‘promotional’’ fees. Concern that the local stations that used to provide a platform for public service announcements now turn them away. Concern 

about the seemingly incessant advertising. Concern that small stations that have 

programmed an eclectic mix are changing formats or selling out because they can’t 

compete. Concern that elected officials have fewer outlets available to communicate 

directly with voters. Concern that talk radio stations won’t allow questions from 

callers who ‘‘sound old’’ because it will send the signal that their station is targeted 

for older consumers. Concern that parents can’t listen to the radio with their kids 

in the car because the content has become so overtly sexual. Concern that alternate 

models to commercial radio, like community-based Low Power FM, are scaled back 

because of the power of the broadcast lobby. And concern that musicians who speak 

publicly about troubling business practices will be in essence signing the death warrant for their careers. 

56

4 ‘‘12+ Radio Listening At 27-Year Low’’ Radio and Records website, September 4, 2002. 

In the end, we come back to this point: radio is a public resource. It belongs to 

the citizens of the United States. It is not simply a tool for corporations who are 

interested in maximizing profits. 

We do not question that broadcast conglomerates spend enormous resources in attempts to draw the largest possible audience in the specific demographics that their 

stations are targeting. But is that really how we define serving the public interest? 

Huge ratings? 

We need to return to the traditional priorities of localism, diversity and competition. Can local artists have a legitimate chance to get on commercial radio in their 

hometown? Is there not only diversity of format, but also diversity of ownership and, 

dare we say, diversity of programming targeting populations who may not fall into 

the most attractive marketing demographics? And is there a competitive environment that allows for the kinds of small, independent stations that tend to focus on 

local content and genres of music that are rarely seen from the conglomerates? 

We have been joined by our colleagues in the music community to raise these 

questions. In particular, we are greatly appreciative of the support and cooperation 

of AFTRA—the union that represents on-air talent—the AFM, the Recording Academy, Just Plain Folks, the Artists Empowerment Coalition and the Recording Artists Coalition. On many of these issues, we even agree with the RIAA. But the onus 

of proof should not fall simply on the complainers. The broadcast industry pushed 

for these changes, and now they should be able to step forward to fully explain their 

impact on localism, competition and diversity. To this date, their participation in 

public discourse regarding the present and future of the radio industry has been 

sadly lacking. 

In the end, it is clear that the broadcast conglomerates have one primary mission—maximizing shareholder value. They maximize value by utilizing the latest research techniques in an effort to build the largest possible audiences in their targeted demographics. Their mantra is that they give the people what they want. 

They play the hits. 

But do they give the people what they want? According to Duncan’s Radio Report, radio listenership is at a 27 year low.4 And not one but two companies are now selling a satellite radio service based on the notion that consumers are so 

disenfranchised with radio today that they would pay $10 a month to subscribe to 

their service. And what if you don’t fit into the demographics they pursue—what 

if you are old, or poor? 

Has the restructuring of the radio industry been a success? This is the crux of 

the great disconnect. On one side, artists, record labels, consumer groups, religious 

organizations, community groups, unions, elected officials and music fans say ‘‘no.’’ 

On the other, broadcasters say ‘‘yes.’’ But you can’t even say all broadcasters, since 

it seems that an increasing number of those left are expressing concern about their 

ability to compete in this consolidated marketplace. 

Radio is too precious to let this happen. It is universal, and it is cheap. It is part 

of our culture. And communities are begging for the opportunity to better utilize it 

for noncommercial means. Thanks in great deal to the efforts of Chairman McCain, 

roughly 1,000 rural community groups, schools and churches are launching Low 

Power Radio Stations in their neighborhoods or towns. The FCC was stripped of its 

ability to place these stations in urban areas pending further signal tests, and hundreds of urban groups are eagerly awaiting their shot. 

Mr. Chairman, the problem is not radio, it’s what has happened to radio. We 

can—we must—do better. I hope that today’s hearing serves as an inspiration for 

citizens around the country to contact you, Members of this Committee and other 

Members of Congress to inform them of how they would like to see radio better utilized in their community. 

Thank you again for inviting me to testify today. 

PREPARED STATEMENT OF THOMAS F. LEE, PRESIDENT, AMERICAN FEDERATION OF

MUSICIANS OF THE UNITED STATES AND CANADA

On behalf of over 110,000 members of the American Federation of Musicians of 

the United States and Canada, I would like to thank Chairman McCain and the 

Committee for focusing on the issues that have arisen out of the increasing consolidation of radio ownership in this country. This hearing is an important milestone 

for musicians, artists, consumers and citizens who are adversely affected by consolidation in radio ownership. I also would like to thank Senator Russ Feingold (and 

his original co-sponsor, Senator Zell Miller) for introducing the Competition in Radio 

57

and Concert Industries Act in the 107th Congress, and reintroducing it in the 108th 

Congress. The AFM believes that enactment of Senator Feingold’s legislation will 

help to ameliorate the problems our members have seen and experienced. 

The American Federation of Musicians is an international labor organization composed of over 250 affiliated local unions across the United States and Canada. It 

represents professional musicians across the full spectrum of industries and genres. 

AFM members perform live musical engagements in every size and type of venue 

and consisting of every kind of music, from classical to hip-hop, from major symphony orchestra concerts to Broadway and traveling theater to local lounges and 

bars—and everything in-between. Our members also record music for the recording, 

motion picture, television, radio and jingles industries. Our members include successful celebrities, struggling young artists, and performers at every economic level. 

And, of course, our members also are residents of their local communities—and 

music consumers who buy tickets, attend concerts and listen to the radio. 

Senator Feingold has said that when he introduced his legislation last summer, 

he saw a groundswell of interest among artists, consumers and local promoters. 

From my vantage point as the International President of the AFM, I can affirm the 

existence of tremendous grassroots concerns about radio, as well as support for radio 

reform. I hear these concerns when I talk to local union leaders and AFM members 

across the country. The unfortunate fact is that radio deregulation has not fostered 

innovation, competition or programming diversity. Instead, it has reduced the number of radio station owners across the Nation and in each geographical market. And, 

it has enabled those stations to flood the airwaves with the same few ‘‘hit’’ songs 

that are well-funded and heavily marketed. What gets left off the airwaves is everything else—music that is varied, innovative, independent, less well-funded or local. 

There is almost no place left on the radio dial for jazz musicians, symphony orchestra musicians, local acts, and the wide range of diverse music that falls outside the 

‘‘boxes’’ established by centralized playlists. This hurts our members artistically and 

economically—and it also hurts the American public by depriving it of rich and varied musical offerings. The development of new forms of de facto payola systems 

raises the financial bar to radio airplay so high that even established artists suffer 

economically and many new artists have little hope of ever reaching a radio audience. Again, both creators and ‘‘consumers’’ of music suffer as a result. 

Our members also are harmed by the fact that large radio ownership groups have 

the ability to lock up huge portions of the live music business when they also own 

concert promoters and live performance venues. AFM members have experienced a 

variety of horror stories across the country—including bands that are pressured to 

play only in venues or to hire only promoters that are connected with the radio station group from which they hope to get, and desperately need, airplay, and local musicians who see higher theater ticket prices and diminished competition (and thus 

diminished live theater performance work) when the same entity has ownership 

stakes in the theaters in town, the shows that will come to town, and the radio stations whose promotion is necessary for a successful run. 

It is extremely difficult for individual musicians in need of radio audiences to 

speak out on these issues. But their organizations—including their labor unions, the 

AFM and AFTRA, as well as other organizations including the Future of Music Coalition, the Recording Academy, the Music Managers Forum, the Recording Artists 

Coalition, Just Plain Folks, the Nashville Songwriters Association International and 

other music industry organizations joined together on May 24, 2002 to issue an 

analysis of the problem in a ‘‘Joint Statement on Current Issues in Radio.’’ In addition, the Future of Music Coalition’s important study of radio deregulation does a 

superb job of documenting what struggling musicians have seen over the last several years. 

Much about the contemporary radio industry is bad for recording musicians and 

live-engagement musicians. It also is bad for American society, and, moreover, consumers don’t like it and want it to end. Musicians and consumers deserve a radio 

industry that serves the public better. The AFM looks forward to working with our 

fellow artist and other music industry groups, and with this Congress, to bring 

about positive change.

The CHAIRMAN. Thank you, Ms. Toomey. 

Mr. Fritts, in your written testimony you state that NAB believes 

that the payola laws in 1960 remain effective today and that no 

Congressional intervention is needed. The system of independent 

promoters is largely the record companies’ creation and the record 

58

companies should be responsible for ending the practice. That is 

your written testimony. 

Do your member companies take cash and/or gifts in exchange 

for airplay? 

Mr. FRITTS. Not that I am aware of. All of them would be subject 

to severe FCC sanctions if they did. 

The CHAIRMAN. So they do not. 

Mr. FRITTS. They do not as far as I am aware. 

The CHAIRMAN. In your written testimony, you state that deregulation has allowed radio stations to maintain financial stability 

while giving it the ability to ‘‘prosper in the face of new competitors.’’ Yet, the NAB opposes the relaxation of other media ownership regulations such as the 35 percent national television station 

ownership cap. Is that not some kind of a contradiction there? 

Mr. FRITTS. Well, I appreciate your asking that question, Mr. 

Chairman. Indeed, we do oppose the increase of the 35 percent cap. 

As you will recall, the 1996 Act increased the cap for network ownership of local stations from 25 percent to 35 percent. There are 

currently 1,300 television stations. There are currently 13,000 

radio stations. And while they are both regulated by the FCC, they 

clearly are two different mediums. And as a result, broadcasters 

have taken a look at the horizontal and vertical concentration by 

the networks and concluded that 35 percent is an appropriate level 

for network ownership. 

The CHAIRMAN. I am very interested in your statement that your 

Members do not take cash or gifts in exchange for airplay. 

Mr. Mays, does Clear Channel have any plans to obtain more 

radio stations? 

Mr. MAYS. We do not have any stations pending at this time. 

The CHAIRMAN. Do you have any plans to obtain more radio stations? 

Mr. MAYS. I would suggest to you that if we felt that there 

was——

The CHAIRMAN. Do you have any plans to obtain more radio stations? I would like to ask the question for the third time. 

Mr. MAYS. If we can serve the local community better and we see 

an opportunity, yes. 

The CHAIRMAN. Do you believe there is any limit to the number 

of radio stations that a company should be permitted to own? 

Mr. MAYS. I think the 1996 Telecom Act established those limits 

by limiting the number of stations in each local market. 

The CHAIRMAN. I will repeat my question again, and I have not 

got a lot of time and I would like you to try to answer the question 

directly. Do you believe there is any limit to the number of radio 

stations that a company should be permitted to own? 

Mr. MAYS. I do not think there should be a limit within the 

Telecom Act of 1996. 

The CHAIRMAN. Have you ever instructed Clear Channel employees to use the threat of withholding air time from artists to negotiate exclusive promotional concerts or any other concession from 

artists? 

Mr. MAYS. No, sir. We never have. Let me explain why we do not 

do that. Radio is our principal business. The concert promotion 

business is less than 7 percent of our income. Our business is in 

59

serving what our audiences want to hear in all of our different 

markets. We see ourselves as an aggregation of a number of small 

businesses throughout this country that serve those local communities and play what our audience wants to hear and inform them 

with news and information. And as long as our audience wants to 

hear Mr. Henley’s music, he has no threat of retribution from what 

he said, even though he said, Mr. Chairman, some things that were 

very untrue. 

And for the record, I would like to say that two companies do not 

control 52 percent. As I said, the top 10 control 44 percent. We 

have nowhere near 82 percent of the pop market that he suggested. 

And I hope that he files our letter within this record which states 

that the San Francisco matter was absolutely false. Whether that 

was colored by his manager being a principal in one of our major 

competitors, I do not know, but what he said was false. 

The CHAIRMAN. Thank you. 

To your knowledge, has any other member of Clear Channel senior management given this instruction to Clear Channel employees? 

Mr. MAYS. No, sir. 

The CHAIRMAN. Does Clear Channel have a policy to refuse to 

play songs from artists who are not on a Clear Channel tour or use 

non-Clear Channel venues? 

Mr. MAYS. No, sir, we do not. I will give an example of one such 

incident. When the manager of Britney Spears alleged that we had 

less airplay during the tour that she did with a competitor, Concerts West, who I think Mr. Henley tours with, we did an exhaustive research study and found that her airplay went up 73 percent 

when she was touring with Concerts West than when she was touring with Clear Channel the year before. 

The CHAIRMAN. Does Clear Channel accept payments or gifts 

from independent promoters in exchange for radio airplay? 

Mr. MAYS. Absolutely not, Mr. Chairman. We have a zero tolerance to pay-for-play. 

The CHAIRMAN. Does Clear Channel require its employees to sign 

affidavits or to otherwise certify that they will not accept cash and/

or gifts in exchange for airplay? 

Mr. MAYS. Every single air talent, every single program manager 

in our company, which numbers maybe 5,000 people, every year 

sign an affidavit that forbids them to accept any pay for play. 

The CHAIRMAN. The Los Angeles Times recently wrote—and I 

quote—‘‘Clear Channel Communications has figured out a way 

around the rules that has left its smaller competitors fuming. By 

cutting deals to take over programming of five Mexican stations, 

Clear Channel has grabbed 50 percent of the San Diego’s market 

radio advertising dollars. Since the FCC exempts foreign-owned 

stations from being counted toward the maximum number of eight, 

loopholes have allowed Clear Channel to take control of 13 stations 

in San Diego. While it may be within the letter of the law, many 

would probably argue that this was not the intent of the law.’’

Is this true? And if so, are there other markets that Clear Channel engages in misbehavior? 

Mr. MAYS. Mr. Chairman, let me say that Clear Channel is in 

partnership with and is the largest broadcaster in Mexico, so we 

60

have great ties to the Mexican broadcasting market. It is true that 

we own eight stations in San Diego. We also program another five 

in Mexico. And I think those 13 stations represent 13 of the 36 to 

40 that are in that San Diego market. 

We think that encourages additional benefits to the community 

simply because whether it is the Mexican side of the border or the 

English-speaking side of the border, the diversity of formats that 

we have provided the San Diego market benefits that community. 

The CHAIRMAN. But it is clearly in violation of the intent of the 

law if you have 13 stations when 8 was the maximum. 

Does Clear Channel use voice tracking? 

Mr. MAYS. Yes, we do in a small way. I think it is some 15 percent or less of our programming. We export some of our larger market talent to some small markets basically because the smaller 

markets cannot afford it. Most of that is done overnight or on the 

weekends. It is not a significant part of our programming. 

The CHAIRMAN. Do you allow non-Clear Channel radio stations 

to advertise on the 770,000 billboards owned by Clear Channel? 

Mr. MAYS. I am sorry, Mr. Chairman? 

The CHAIRMAN. Do you allow non-Clear Channel radio stations 

to advertise on the 770,000 billboards owned by Clear Channel? 

Mr. MAYS. Yes, sir. They are very, very good customers of ours 

in all of our markets. 

The CHAIRMAN. Mr. Short, did you and your station ever encounter any anticompetitive behavior from larger stations in your market? 

Mr. SHORT. None that we could actually prove as hard evidence. 

The CHAIRMAN. Thank you. 

Senator Dorgan. 

Senator DORGAN. Thank you, Mr. Chairman. 

I do not have the foggiest idea where to start with these questions. This is the most interesting set of testimony we have received. 

Mr. Fritts, let me start with you, if I might. Was Mr. Short a 

member of the National Association of Broadcasters at one point? 

Mr. FRITTS. I do not know. Were you? 

[Laughter.] 

Mr. SHORT. No. 

Senator DORGAN. Shoot. I was going to ask how you reconcile 

this if you have two members saying what Mr. Mays and Mr. Short 

said. 

Let me go to the point you made, Mr. Short. You talked about 

the methods by which national accounts would advertise, and I do 

not quite remember the terminology, but they bundled advertising 

packages and promotional packages? 

Mr. SHORT. Yes. For instance, if you own seven stations in the 

market and the competitor owns one, even if the competitor is 

doing well, you can offset all of that success by going to the advertisers and saying, so what if he has 5 or 10 percent of the market 

share. Add up the seven stations that we have and you get 35 percent. Therefore, you have over one-third of the market, and you do 

not need this guy at all. Just do business with us. 

Senator DORGAN. So they are saying with this package you can 

get the same reach with our stations——

61

Mr. SHORT. Absolutely. 

And then going further, they take similarities in format. For instance, let us say I am an urban format, and they are a top 40. 

They will say, well, some of the same songs are being played on 

our station Bob is playing. So you are really not getting anything 

unique by doing business with Bob. Come do business with us on 

that station that plays a similar format as Bob, we will even give 

you a discount, if necessary, to get you to do business with us. 

Senator DORGAN. Mr. Mays, let me ask you about localism just 

a moment. I mentioned to you when we talked last in Minot, North 

Dakota, there was a train carrying anhydrous ammonia that derailed at 1:39 in the morning, sending a cloud of anhydrous ammonia over nearly the entire City of Minot. A pretty dangerous situation early in the morning in Minot, North Dakota. Much to 

everybody’s surprise, the emergency alert system that the authorities were supposed to use to put emergency information on the air 

immediately malfunctioned. I do not quite know why that happened, but it did. 

So they attempted to call the radio stations and they could not 

get anybody there. Apparently they were playing piped-in music 

from somewhere else. There was one person there who would not 

answer the phone I guess because he was a maintenance person. 

But in any event, the point is this. When you have large broadcasting enterprises and you pump in homogenized programming 

from central locations—and I know that happens around the country—and you do not have people working the boards like you used 

to have, is that not troubling in terms of localism and service to 

community and so on? 

Mr. MAYS. Senator, let me say that the stations were manned 

that evening and let me explain to you what happened. There was 

a switch from the emergency broadcasting system to the emergency 

alert system. Our air staff person there on that station said that 

apparently they called the wrong number, the hot line, and they 

did not understand the technology of how to interact with the EAS 

system. Every station across our whole company has that technology that allows the police department, the fire department to 

immediately go into those stations, including the one in Minot, to 

broadcast emergencies. 

And what I am told happened that night was that listeners started calling. The lines got jammed. The sales people and the administration that were not at the station at 2:00 a.m. in the morning, 

although there were people there, came to the station to help answer the questions. 

In addition to that, we had our Minneapolis engineers come and 

do individual seminars and instructions with the Minot police department, fire department on how to access the technology that 

they could not access for some reason that evening. 

So I think that was an anomaly and I am sorry that that happened, but the station was staffed. 

Senator DORGAN. Would you provide for the record for this hearing what you just described from your perspective? 

Let me just also say in the old days I suspect those engineers 

would have been Minot engineers rather than Minneapolis engiVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00065 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
62

neers coming in later. I am very concerned about this issue of localism. 

Mr. MAYS. We have a very strong staff of engineers in Minot. 

Senator DORGAN. Let me put a chart up and ask several of you 

for your comments. This chart is actually a chart that shows concentration. It shows five very large companies and it shows their 

holdings in broadcasting and other areas. You cannot read it, 

but——

[Laughter.] 

Senator DORGAN. Well, yes, that is the point. 

[Laughter.] 

Senator DORGAN. But it is pretty obvious. I do not have room. If 

I were going to put all these names on a chart that you could read, 

it would consume most of the room. But most of these are companies that have accumulated a substantial amount of broadcasting 

properties and we have very substantial concentration in the hands 

of just a few. The question I think this Committee asks is, what 

does that do to competition? What does it do to localism? What 

does it do to diversity? 

Mr. Mays, you have heard some very serious charges leveled 

today by other members of the panel with respect to your company, 

how large it is and its practices. I would hope that you will submit 

for the record—and I expect you will—specific responses to each 

and all of the charges. 

Let me ask the question that I was thinking about as these 

charges were made. Do you have specific procedures, written procedures, in your company that respond to the questions have been 

raised, the allegations that have been made about conflicts of interest and promotional deals that seem untoward to me? Are you confident that you have in place specific procedures to prevent that? 

Are you confident that what they are saying has never happened? 

Mr. MAYS. Well, I am not going to say anything never happened, 

but yes, and we will provide that for the record, policies and procedures. But just the simple fact of how we run our business and how 

we localize our business, we would never tie airplay into performances or into concert tours. It just does not make sense that we 

would penalize the major part of our business and risk the ratings 

that would have a dramatic effect on our revenues to enhance some 

promotion or some tour. 

You speak of competition, and this chart which you cannot see 

now because——

Senator DORGAN. I did see the chart earlier. 

Mr. MAYS. I am sorry? 

Senator DORGAN. I saw that chart earlier. It was up. 

Mr. MAYS. It is basically who we compete with right here in this 

Washington market. There are 56 radio stations here with some 30 

to 35 different formats. We do own 8 of those 56. But those are not 

our only competitors for audience. There are six or seven cable 

companies that offer hundreds of channels of programming. There 

are 9 daily newspapers and 20 weekly newspapers in this market. 

There is satellite radio that offers 200 channels of radio stations 

into this market. The cable companies that I talked about have 50 

channels each of audio in their cable services. 

63

So the competition is robust. I heard that it should be, and we 

think it is robust and we compete as hard as we can. But certainly 

our eight radio stations within this large media pie here in Washington is not a concentration of power or a consolidation that affects competition. 

Senator DORGAN. If I might ask one more question, Mr. Chairman. I asked last week, when it was alleged that there were many 

voices, whether it was many voices from one ventriloquist or a few 

ventriloquists. 

I guess the question the Chairman asked at the start of this is 

very important. How much further? If we have another hearing 5 

years from now, will we see the largest radio group owning 3,000 

stations, 2,000 stations? What will we see with respect to television? Will we see similar galloping concentration that already existed? Where do you think this stops, and where do you think there 

ought to be legitimate concern about those of us who care about 

free markets and the market system and competition? 

Mr. MAYS. Well, as I mentioned to the Chairman, I think that 

certainly there are limits that are within the 1996 bill, and I think 

that is certainly a restriction that prevents us from owning any 

more than 8 of those 56 radio stations here in Washington. 

But I would like to——

Senator DORGAN. Except, Mr. Mays, if I might just interrupt just 

for a moment to say that in Minot, North Dakota, you own all six 

commercial radio stations. So what has happened, of course, in 

some circumstances, the FCC, through its own incompetence and 

definitional exercises has allowed you, at least in my state, to own 

all the commercial stations in one city, just to give you an example. 

Mr. MAYS. Well, and that is because of the definition of market 

rule, which we are making comments with the FCC which is looking at that. And I believe Minot is considered part of the Bismarck 

as well as other surrounding cities around Minot, and it is a definition of market. 

But I think it is a perfect case for deregulation because when we 

bought those stations from the previous owner, there were three 

formats in Minot. There were two country stations. There were two 

adult contemporary stations. There was a news talk station and a 

station that simulcast one of the country stations. Today there is 

a classic rock station. There is a country station. There is a hit station. There is an adult contemporary station. There is an oldies station, and there is a news talk station. Much, much more diversity 

in Minot than prior to deregulation. 

Senator DORGAN. I have questions for other panel members, but 

I will wait until the second round. 

Mr. MAYS. Could I also, Senator, touch on one other thing that 

you alluded to in consolidation? Mr. Short said that he could not 

compete as a ‘‘stand-alone’’ station, so he sold his station for millions of dollars to another party. Since that format in that community was denied the urban format, principally because the owner 

which he sold it to changed the format, we established a format 

that would appeal to that audience. 

In Philadelphia, where we have a number of stations as well, 

there is a broadcaster that owns one station in Philadelphia. That 

is all he owns. It is the number one station in Philadelphia. He is 

64

very, very profitable, much more profitable than we are. So I think 

throughout this country, all of those who own one station, if they 

do it right, can make money. 

The CHAIRMAN. Mr. Short, you deserve the opportunity to respond to that. 

Mr. SHORT. Absolutely. I look at it this way. I would call it you 

have a lot of audacity. You put someone out of business using tactics that are basically strong-arm tactics, and then after you put 

them out of business, you rebuild what they built, and then you 

say, look what a great thing we did and look what a great service 

we provide to the community. The great service was already being 

provided. There were no complaints. You can check the FCC’s 

records. There is nobody saying we have got to get Mr. Short out 

of there other than maybe Mr. Clear Channel or maybe Mr. Citadel 

so that we can own everything that Mr. Short was getting. 

The CHAIRMAN. Senator Lott. 

STATEMENT OF HON. TRENT LOTT,

U.S. SENATOR FROM MISSISSIPPI 

Senator LOTT. Well, thank you very much, Mr. Chairman. Obviously, this has been an interesting hearing and I think an important one as we try to make sure we understand how the 1996 Act 

is being carried out and the impact that it is having in all of our 

media and that does have to include radio. 

I am sorry I did not hear all of the witnesses’ testimony. I have 

tried to glance over it quickly while I have been listening to some 

of the questions. 

Over the years I have been concerned about radio broadcasting 

because it is such an important part of America and our media outlets. It means a great deal in terms of entertainment, obviously, 

the way we get news, and we want to make sure that our policies 

encourage a strong and healthy radio ownership, as well as the 

other segments of the media. 

That is one of the reasons why in the 1996 Act I thought we 

should pay particular attention to the radio broadcast industry and 

see if we could do some things that would help the industry which 

was struggling at the time. It was weak, I think, economically. I 

must say I was hearing a lot of complaints from the people at the 

local level and the people who were trying to make the radio stations a success. 

My chief concern in evaluating media ownership is always to 

make certain that local communities are being properly served and 

they are not being adversely affected. Certainly I take a look at 

what is happening in my own state. 

I think as a result of the Act, the industry is stronger than it 

was. It has actually been revived. Is it a perfect revolution or improvement? No, but I think it is healthier today than it was just 

a few years ago, and I want to make sure that we do not stop that 

strengthening and turn the tables back. 

It sounds to me like what I have heard the time I have been here 

and from the testimony I have read that part of the problem here 

is not really about levels of competition. It is this other issue of 

how the concerts are handled. I think that may be what prompted 

the legislation that has been offered today or by Senator Feingold 

65

and the Congressman that testified and what has contributed a lot 

to this hearing itself. So I think maybe these two should be treated 

separately. If there are concerns over here in the other area, then 

let us take a look at that. 

With regard to ownership rules, I should note—I presume others 

have noted—the FCC is reviewing this right now. I do not know 

when they would make any recommendations or if they would act, 

but they are looking at their ongoing, comprehensive media ownership proceedings, and I think we would be precipitous at this time 

if we moved out and started to advance some legislation that would 

preempt that. 

Let me just ask two or three questions of the witnesses then. 

Mr. Fritts, is there a distinction in your mind in your position 

at NAB between ownership consolidation in the radio industry and 

other media and entertainment industries? In my mind there is, 

but I would like to hear how you would describe that. 

Mr. FRITTS. Certainly, Senator, I would agree with you that 

there is indeed, just by virtue of sheer numbers. There are 13,000 

radio stations, 1,300 television stations. There are almost 4,000 

separate owners. I think what the overview, if you will, or the 

35,000-foot review of what is taking place here today is really the 

question, has the 1996 Act worked? And we believe it has. It has 

provided more diversity. It has provided more diverse formats. It 

has continued to allow radio to be strong at the local level. I think 

that is the strength of broadcasting today. 

There are now 200 new competitors in the sky coming to every 

single market in the United States through direct satellite radio. 

So if local broadcasters are not local, we will soon be out of business. So the important thing for us to do is to be local, to serve the 

local community. 

And I think that is reflected by the surveys that show that 95 

percent of the American public listens to radio every single week. 

That is an extraordinarily high number, and 75 percent indicate 

that they believe that radio is doing a good job. So we are very 

pleased with those numbers. We would like for them to be slightly 

higher, obviously, but we believe the 1996 Act has worked and 

worked well. 

Senator LOTT. Well, we specifically permitted unlimited national 

ownership of radio stations by a single company in that Act, but 

there was a sliding scale of limits for individual markets. I presume you all talked a little bit about that in my absence. I think 

that is a critical point to make, though, is it not? 

Mr. FRITTS. And those limits remain today. What the FCC is 

doing—and I think all of us recognize that this hearing is certainly 

appropriate because the FCC every 2 years is required by the statute which you enacted, the Congress enacted, to review the bidding, if you will, to look at the landscape and to see what the ownership limits should be and is it working well. And they are in that 

process right now. Presuming that they make some modifications 

in this biennial report, there will be another biennial report 2 years 

from now where they will review the same thing. I am sure that 

if the system warrants it, that Members of Congress will hear 

about it and will ask the FCC or certainly provide comments to the 

FCC along these lines. 

66

Senator LOTT. Mr. Mays, just again from glancing over the testimony, I kind of have the impression it has been inferred that since 

you do have these 1,200 radio stations that maybe you have not 

been meeting the need for public service activities or programs that 

would benefit the communities, that you do address the local needs. 

How do you respond to that? 

Mr. MAYS. Well, as Mr. Fritts said, Senator, our local involvement with the community is the lifeblood of our radio stations. As 

I said earlier when you were out of the room, we consider ourselves 

an aggregation of a few hundred small businesses that serve their 

local community. And if we do not do extensive research in every 

market like we do and determine what the audience wants to hear, 

whether it is music genre or news and information and weather 

and public service work, we are absolutely not going to be able to 

sustain our business. 

You brought up an interesting point about the music tie to our 

company. Let me address that, if you will, just for a moment, as 

far as what we think the record companies are insufficient at and 

that is producing new music. So we have taken a number of our 

stations that concentrate on new artists only. In addition to this 

because of those five record companies not producing enough new 

artists, we provided a website where new artists could uplink their 

music and then we could draw it down and play on our radio stations, and we play new music on—I think 70 or so of our stations 

have new music only programs. Right here in D.C. on DC101. In 

Detroit every night at 9 o’clock they play only new music. 

We have 1,000 bands. This uplink has only been there for 4 or 

5 months. We have 1,000 bands up until 2 weeks ago of new artists 

sending their music up so we could download it, and every other 

radio station in the world could download it. Within the past 2 

weeks, we have 1,000 more bands, and we are only promoting this 

because we are trying to roll it out slowly on our radio stations in 

20 markets. Basically what they say is new artists, we are going 

to play you, upload your music to the website. And it has moved 

to 2,000 new artists in the past 6 months. 

Senator LOTT. Let me apologize. The red light is on here. But I 

would like just a couple of brief questions, if the Chairman would 

allow me a little latitude. 

The CHAIRMAN. Yes. Just let me add for the record. Mr. Fritts 

mentioned there are 4,000 owners. One owner gets 27 percent of 

the revenue. I think that completes the picture a little bit more accurately. 

Senator LOTT. Mr. Short, I take it that you feel like we have lost 

some of the local focus and the public service programming and 

that sort of thing, and maybe you have already touched on it. I 

apologize to ask you to repeat, but it directly relates to the question 

I just asked Mr. Mays. Do you feel like we are losing some focus 

there? 

Mr. SHORT. Yes, I do feel that. I am a Syracusean. I have been 

in Syracuse since 1968. I grew up in a town that hardly played any 

R&B on the radio. That is what got me into the radio business. I 

was so frustrated that there was no diversity. I kept asking why 

do we not have a—at that time it was called a soul station. It just 

dawned on me no one is going to do it, so I did it. 

67

All right. Now you got a guy who has been there for 30-plus 

years. I know people if I walk in the grocery store, the church, or 

the schools. They will hand you an announcement saying, can you 

get this on radio? I need to come by and see you, Mr. Short. Call 

Bob up. He will get this on the radio for you. And it is almost small 

town radio, even though a lot of Syracuseans do not like to think 

of themselves as small town, but it really is small town. 

And now you have a situation where everything is programmed 

and regimented. A program director from Texas says, no, we play 

18 songs per hour. Who is Willy? We do not have time for Joe. 

What is this? How much money does he have? What kind of a 

schedule is he willing to pay? Well, maybe it is the NAACP. Maybe 

it is the Urban League. Maybe it is the little Boy Scout troop or 

something. 

And it takes someone that is sensitive to that community that 

says, okay, I know this guy, I know the family. Sure I would like 

to sell him a $5,000 schedule or a $20,000 schedule. But he is not 

Coca-Cola. He is not McDonald’s. He is Joe. Let him come on the 

air. We will make something work. We will bring him in, sit him 

in the studio, and we will talk about the issues for that particular 

situation. So that is an element that I think is completely gone, especially in Syracuse. 

And he talked about voice tracking. I would question that 15 percent voice tracking. I think if you could just simultaneously listen 

to every station in the country that they program, you will hear 

that same voice all over. I mean, this guy is in Texas. He is in Syracuse. He is in Alabama. I do not know who the guy is, but it is 

the same voice. So I find it hard to believe that he is doing 15 percent of his time in Syracuse and he has got——

Senator LOTT. He must have a great voice is all I can say. 

Mr. SHORT. Yes. It is the voice, the voice of the station. 

Senator LOTT. Well, I understand what you are saying. I do think 

times have changed, though. One of the first jobs I ever had was 

with the local radio station, WPMP–WPMO Pascagoula, Moss 

Point. 

The CHAIRMAN. Great place. 

[Laughter.] 

Senator LOTT. Yes. You get a whole different voice. My mother 

did the logs. In fact, I think the first woman’s voice I ever heard 

on radio was my mother’s voice, and she was working before mothers worked quite that much. 

And it was different. Those days you had a local furniture store 

open. They went down and did a simulcast right there at the local 

radio station, and they would interview people as they walked by 

and tell what the price of the living room suit was. 

I think people now are looking for something a little different. 

That was nice, but I am not sure that that is what the market 

needs or what the people want now. I am looking now and I think 

most of my neighbors are—frankly I want heavy news. I want all 

news. I listen every morning to an all news station here in Washington, D.C., and when I listen to music, I listen to a station out 

of New Orleans. I listen to WWL, a powerful station out of New 

Orleans, even though I live 90 miles away. Times have changed 

and I think we have to allow the radio industry to reflect the deVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00071 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
68

mands of the times and, by the way, be able to make a profit so 

they can stay in business. 

Let me ask Mr. Henley a question, if I could. 

The CHAIRMAN. I think Mr. Short wanted——

Senator LOTT. Oh, you want to add another comment? 

Mr. SHORT. Yes, I do. 

Your implication is that times have changed for the better. It is 

a presumption. First of all, they have never in Syracuse, since they 

have changed to urban, gotten the ratings that I had with my back 

woods’ approach of just bringing Willy on. They have got all the research. They have got the voice. They have got all the connections. 

They subscribe to Arbitron. They have got billboards all over the 

place. They have got everything that supposedly makes you a new 

millennium professional radio station. But they do not know the 

format, not in Syracuse. They may understand what Billboard says 

on the top 40 and somebody says that DMX or Ja Rule or whoever 

is a good artist—play them 72 times. Do not ask me any questions. 

Whereas I am answering the phone. Sometimes it is because I 

do not have a huge staff, so you get lucky and you get the general 

manager to answer the phone, and it is some guy who is saying, 

hey, you played a record. It goes something like this, and he starts 

singing it. And you say, I know that record. Hey, can you get that 

on for me? And you know what? When you do that, you are the 

greatest station. You know why? Because you cannot get that done 

over here. You have got to go through on levels of management, 

and it is considered unprofessional. 

But, hey, what is the difference in that and a regular call-in sophisticated talk show? You said the number is 1–800-whatever. 

Call Rush Limbaugh. The listener is participating. So I really question that particularly since they cannot achieve the ratings that we 

have had. 

Senator LOTT. I apologize to all of you and I thank you all for 

being here. This is extremely interesting. It is an important subject. 

Mr. Henley, I made an observation at the beginning and maybe 

you addressed this. But is this really about ownership caps and 

limits of competition, or is this about the problem with concerts 

and how that is handled? 

Mr. HENLEY. Well, I think it is about both, Senator. I think they 

are both very real problems. In 1996 there were 5,133 owners of 

radio stations. And today, for the contemporary hit radio format, 

which is again the ‘‘make it break it’’ format, only four radio companies, Clear Channel, Viacom, Cox and Citadel, control access to 

69 percent of that format’s 51 million listeners nationwide. And for 

the country music format, the same four firms control access to 53 

percent of that format’s 34 million listeners. 

Now, I remember back when I first got in the business, professionally that is, back in the late 1960s, early 1970s, there was a 

thing called the seven-and-seven rule. No one company could own 

more than seven radio stations and seven TV stations. Period. And 

then somewhere along in the 1980s—I believe it was during the 

Reagan administration—those rules were relaxed to allow each 

company to own two radio stations in a given market but no more 

than 40 radio stations total. But after the 1996 Telecom Act, this 

69

thing has just jumped exponentially. I do not see the wisdom in letting it go that far. 

And from an artist’s point of view, I think it has really harmed 

music. I think it has really made it very difficult, again because of 

the millions of dollars it costs to get a record on the radio. And I 

know that there is payola because I get billed for it. My record 

company bills me back for the independent promotion monies that 

they have to give to the independent promoter. And they have 

worked out a very sophisticated system to skirt the current payola 

laws, a very sophisticated system where the money is paid to a 

middleman. And what happens after that is very privileged information. But I know that these things exist. 

So Mr. Mays alleged in his testimony that they are really in the 

radio business, that the concert business is not really that big a 

deal for them. But I want you to understand that before another 

company called Concerts West was formed in which I am a minority—a small minority shareholder—and I will probably never see a 

dividend. We formed Concerts West in order to provide a viable alternative to the Clear Channel monopoly. We wanted to give artists 

a choice and have another place to go to promote their concerts. Before we formed Concerts West, Clear Channel Entertainment, according to Poll Star’s reported concerts—Poll Star is an entity that 

reports on all the concerts and the revenues that happen in the industry. According to Poll Star, Clear Channel Entertainment had 

a 95 percent market share of all reported concerts. So they are in 

the concert business big time. 

Mr. FRITTS. Mr. Chairman, I really have to respond to what Mr. 

Henley said about payola at this point in time. The record industry 

is controlled by five record companies. His beef is with the record 

companies. His beef is not really with the broadcasters. 

The CHAIRMAN. I guess he could speak for himself. 

Mr. FRITTS. Fine, but I wanted to——

The CHAIRMAN. Thank you. 

[Laughter.] 

Mr. HENLEY. My beef is with both. 

The CHAIRMAN. Mr. Mays, this is an equal opportunity Committee. You have heard some comments by both Mr. Short and Mr. 

Henley, and before we move to Senator Wyden, we would be glad 

to have your response if you would like to. 

Mr. MAYS. Well, I think I have covered most of the points. 

In all due respect, Mr. Chairman, we have about 20 percent of 

the radio revenues rather than 27 percent. 

The CHAIRMAN. Only how much? 

Mr. MAYS. I am sorry? 

The CHAIRMAN. Only 20? Excuse me. 

Mr. MAYS. I understand we are a big company, sir. 

Let me also say that we are here again only sustainable as it relates to the community service that we deliver. In Syracuse in our 

urban format, we have an African-American program director that 

picks every single thing that goes on the air. We make absolutely 

no Syracuse decisions in San Antonio. We make no Phoenix decision in San Antonio. We certainly make no New Orleans decisions 

in San Antonio. And that African-American has a feel for the market, just like Mr. Short does, and he is intertwined with that AfriVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00073 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
70

can-American community, just like Mr. Short was. And we feel that 

he is doing a great job. 

As it relates to the tour business, as I said, it is less than 7 percent of our income. 

The CHAIRMAN. Which is how much? 

Mr. MAYS. I am sorry? 

The CHAIRMAN. Seven percent of your income is how much? $5 

million, $10 million, $50 million? 

Mr. MAYS. Maybe $100 million or so. 

The CHAIRMAN. Go ahead, please. 

Mr. MAYS. Our radio income is substantially higher than that. I 

am not arguing that we are not a big company, and I am happy 

that Senator Dorgan said he did not feel that big was necessarily 

bad. 

But I think that if you put things in perspective, that we would 

never, never jeopardize our radio local roots to play or not play an 

artist because he is or is not touring with us. As I mentioned, the 

Britney Spears situation is absolutely to that point, where when 

she toured with Mr. Henley’s company, she got 73 percent more 

airplay on Clear Channel radio stations than she did when she 

toured with Clear Channel Entertainment. And that is true with 

every artist because we are not going to jeopardize our principal 

business and ignore what our audience wants to hear for the benefit of a concert artist. We are just not going to do that, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Mays, and as a father of teenage 

children, I will not comment on whether you should be airing 

Britney Spears or not. 

[Laughter.] 

The CHAIRMAN. And I apologize to my colleagues, but I think it 

is important, when serious comments are made, that other witnesses be allowed to respond to those comments so that we can get 

a full story. 

Senator WYDEN.

Senator HUTCHISON. Mr. Chairman, could I just say I am going 

to have to leave. 

The CHAIRMAN. I am sorry, Senator Hutchison. I apologize. 

Senator HUTCHISON. No, no. I agree that it is good to have the 

ebb and flow. I have certainly learned a lot from the hearings. I 

will have to go before I can ask any questions. 

The CHAIRMAN. Could we indulge Senator Hutchison to make at 

least a brief comment, Senator Wyden? 

Senator WYDEN. Sure. 

STATEMENT OF HON. KAY BAILEY HUTCHISON,

U.S. SENATOR FROM TEXAS 

Senator HUTCHISON. I did not intend to do that. 

But let me just say that I do have two constituents here who are 

saying exactly the opposite things. And I would like to know more 

about the payola. Mr. Mays says there just isn’t any. Mr. Fritts 

agrees with that. Mr. Henley and other artists say it is absolutely 

there. It appears to me that there is some sophisticated way that 

an artist is required to pay money to be on a major station. 

71

My question is, how does this occur, and should we be looking 

at the laws on payola maybe separate from any issue of ownership? 

And my second question would be, how does a new artist get into 

the market? Now, Mr. Mays says that there are a lot of just new 

market programs which appears to make sense. So I would ask Mr. 

Henley why doesn’t a new market program that is pretty widely 

dispersed make a difference. 

And then I would ask Mr. Mays how can you say there is no payola when artists have to pay. 

Those would be my two questions, and if you would prefer those 

to be for the record——

The CHAIRMAN. If Senator Wyden does not mind, I would like to 

have a response to those questions. 

Senator HUTCHISON. Thank you. 

The CHAIRMAN. Please. Who do you want to answer first? Mr. 

Henley or——

Senator HUTCHISON. Let me just ask first Mr. Mays. It just 

seems to me that there is some form of payola. Maybe it is not 

called payola. Maybe it does not violate present laws. But if an artist has to pay to be on the air in a major station, I think that there 

is a problem. I would ask that question of Mr. Mays first. 

Mr. MAYS. And I would be happy to address that, Senator 

Hutchison. I understand the record companies have come to Senator Feingold and to possibly people on this panel with a plea to 

save them from themselves. In other words, they write the checks 

to these independent promoters, and they do not like to do that, 

but they are not willing to stop doing that because they are afraid 

I guess some other record company will continue to do it. 

We have, as I said, a zero tolerance to pay for play. Absolutely 

a zero tolerance for pay-for-play. We have our 5,000 disc jockeys 

sign affidavits every single year. We have our program directors in 

every single market sign affidavits every year that they will not accept any pay for play or they will be fired. 

Independent promoters do interact with the corporate office in 

terms of actually buying our research and information, and they 

pay us for that. We do research every night in every single market, 

and that is valuable information to them because of what it means 

the audience wants to hear. 

As far as the new artists are concerned—and I think you were 

here when I talked about our uplink, but something you might be 

interested in—I was at a meeting in New Orleans night before last, 

and I asked our manager of our Austin radio station KVET why 

he has been so wildly successful. And he said, well, gee, we have 

two country stations in that market. One is an up-tempo country 

station and his is one that plays new artists, the Texas, kind of the 

Willy Nelson, Waylon Jennings genre of music. 

The CHAIRMAN. What you are saying, Mr. Mays, is that there is 

no payola. In response to her question, there is no payola. 

Mr. MAYS. Absolutely none. 

The CHAIRMAN. Thank you. 

Mr. Henley. 

Senator HUTCHISON. Mr. Henley. 

Mr. HENLEY. Thank you. 

72

The new payola practices take two primary forms. Radio consolidation has created the first type. Radio station group owners establish an exclusive arrangement with an independent promoter who 

then guarantees a fixed annual monthly sum of money to the radio 

station group or the individual station. In fact, some stations rely 

solely on that as a majority of their budget for the year in some 

cases. In exchange for this payment, the radio station group agrees 

to give the independent promoter first notice of new songs added 

to the playlists each week. And there is some implication in there. 

Stations in the group also tend to play mostly records that have 

been ‘‘suggested’’ by the independent promoter, by the way. And as 

a result of the standardization of this practice, record companies 

and artists generally must pay the radio station through independent promoters if they want to be considered for airplay on 

those stations. 

I mean, the record companies do not like this either, and I wish 

they would stop doing it, but until all of them stop doing it, none 

of them are going to stop doing it because if one guy breaks ranks, 

then he gets an unfair advantage. However, none of the independent promoters and none of the radio stations are sending the 

checks back. So I have got a beef with both the record companies 

and the independent promoters and the radio stations. I have got 

a beef with all of them. 

The second payola practice occurs after the music labels hire an 

independent promoter to legitimately promote their records to a 

specific station for a fee. And reportedly, certain independent promoters use the label’s money to pay the stations for playing the 

songs on the air. I do not have any proof of that. I have never been 

involved in it, but I know that I get billed back by my record company for a certain amount of independent promotion. 

Furthermore, this new form of independent promotion which are 

these concerts that the artists are asked to do for radio stations is 

simply another form of payola. Now, Mr. Mays has characterized 

these concerts as charity concerts and interaction with the local 

community. The radio stations ask an artist to come and play a 

concert, and they give a relatively meager sum to a local charity, 

but somebody should ask Mr. Mays and other radio conglomerate 

owners how much they make a year on these concerts where artists 

are forced to play for free. 

The CHAIRMAN. Go ahead. 

Mr. MAYS. I would be happy to address that, Senator. And thank 

you for bringing that up, Mr. Henley. 

Yes, we do ask and we have hundreds of people coming to events 

like Wango Tango in Dodgers Stadium. 76,000 people are into the 

Meadowlands at what we call Zootopia where we ask a whole range 

of artists to come for all day long, most of which are new artists, 

but those that complain about going are those who do not get to 

go because there are only so many that we can have within that 

venue during those many hours. So the ones that go love it because 

they get exposure to thousands of people in the Meadowlands Stadium or Dodgers Stadium, and the new artists love it because they 

are on what we call the side bands and they love to do it for the 

exposure and what money we pay them. But we have never had 

a complaint from those that gain the exposure and the promotion 

73

on the radio. We are sorry we cannot put all of the artists there 

that would like to, but we just cannot. 

Mr. HENLEY. I am sorry. My point was that some of the money 

from those concerts goes to the radio station and not all of it goes 

to charity. That was the point I was trying to make. 

If I might just comment on the new music program. Mr. Mays 

said they have a program that comes on at 9 o’clock at night. I 

would bet that that program only lasts for an hour, and I would 

bet that it goes one night a week. 

Mr. MAYS. In Detroit, it goes every night a week. 

Mr. HENLEY. Okay, in Detroit. 

Senator HUTCHISON. Thank you very much, Mr. Chairman. I 

really appreciate the indulgence. Thank you, Mr. Wyden. 

The CHAIRMAN. Thank you. 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Mays, the Wall Street Journal ran a front page article not 

too long ago, and in the headline it said, perfecting the art of seeming local. And it essentially is about your company. You have described in discussions with several of my colleagues that your view 

is that it does not go on very often. You do not have these virtual 

radio stations where the deejays are located out of town, but the 

program looks, of course, like it is appearing locally. And that is 

certainly not what the Wall Street Journal is talking about in its 

front page article. 

In fact, Mr. Chairman, I would like to ask unanimous consent 

that this article be made a part of the record. 

The CHAIRMAN. Yes. 

[The information referred to follows:]

The Wall Street Journal, February 25, 2002 

FROM A DISTANCE: A GIANT RADIO CHAIN IS PERFECTING THE ART OF SEEMING

LOCAL

By Anna Wilde Mathews 

On Feb. 15, disc jockey ‘‘Cabana Boy Geoff’’ Alan offered up a special treat for 

listeners of KISS FM in Boise, Idaho: an interview with pop duo Evan and Jaron 

Lowenstein. ‘‘In the studio with Evan and Jaron,’’ Mr. Alan began. ‘‘How’re you guys 

doing?’’

The artists reported that they had just come from skiing at nearby Sun Valley, 

then praised the local scene. ‘‘Boise’s always a nice place to stop by on the way out,’’ 

Evan Lowenstein said, adding that the city ‘‘is actually far more beautiful than I 

expected it to be. It’s actually really nice, so happy to be here.’’ Mr. Alan chimed 

in: ‘‘Yeah, we’ve got some good people here.’’ Later, he asked Boise fans to e-mail 

or call the station with questions for the performers. 

But even the most ardent fan never got through to the brothers that day. The 

singers had actually done the interview in San Diego a few weeks earlier. Mr. Alan 

himself has never been to Boise, though he offers a flurry of local touches on the 

show he hosts each weekday from 10 a.m. to 3 p.m. on the city’s leading pop station. 

This may be the future of radio. The Boise station’s owner, industry giant Clear 

Channel Communications Inc., is using technology and its enormous reach to transform one of the most local forms of media into a national business. In fact, Boise’s 

KISS 103.3—its actual call letters are KSAS–FM—is one of 47 Clear Channel stations using the ‘‘KISS’’ name around the country. It’s part of an effort to create a 

national KISS brand in which stations share not just logos and promotional bits but 

also draw from the same pool of on-air talent. Via a practice called ‘‘voice-tracking,’’ 

Clear Channel pipes popular out-of-town personalities from bigger markets to smaller ones, customizing their programs to make it sound as if the DJs are actually local 

residents. 

74

‘‘We can produce higher-quality programming at a lower cost in markets where 

we could never afford the talent,’’ says Randy Michaels, the chief executive of the 

company’s radio unit. ‘‘That’s a huge benefit to the audience.’’

It’s also a huge benefit to Clear Channel, which can boast of a national reach and 

economies of scale to advertisers and shareholders. The voice-tracking system allows 

a smaller station in Boise to typically pay around $4,000 to $6,000 a year for a 

weekday on-air personality, while a local DJ in a market of Boise’s size would have 

to be paid salary and benefits that might run five times as much. That’s why Clear 

Channel is developing multiple identities for a battalion of DJs like the 29-year-old 

Mr. Alan, who is based at KHTS–FM in San Diego, but also does ‘‘local’’ shows in 

Boise, Medford, Ore., and Santa Barbara, Calif. Mr. Alan does research to offer up 

news items and other details unique to each city. 

The new sound of radio is tied to big changes in the industry brought on by a 

1996 law that got rid of the nationwide ownership cap of 40 stations. The law also 

allowed companies to own as many as eight stations in the largest markets, double 

the previous limit. The shift sent broadcasters into a frenzy of deal-making, as stations rapidly changed hands. A fragmented business once made up mainly of momand-pop operators evolved quickly into one dominated by large publicly traded companies that controlled stations around the country. 

No one took advantage of the new law more aggressively, or successfully, than 

Clear Channel. The company started out with one FM station in San Antonio. A 

relatively little-known firm before 1996, it rapidly grew into by far the biggest player on the airwaves. Today, it operates more than 1,200 U.S. stations, compared with 

186 stations owned by its biggest publicly traded rival, Viacom Inc. Privately held 

Citadel Communications Corp. has 205 stations, mostly in midsize markets. Clear 

Channel has combined its radio clout with a growing array of other media assets, 

including the nation’s leading concert-promotion company and a major outdoor-advertising operation. 

Now Clear Channel is moving to exploit its size by linking up its different businesses and wooing major advertisers with the promise that it can deliver nearly any 

combination of geography, demographics and radio format. Part of that effort is the 

move to create national brands such as KISS, which can become familiar touchstones for big national advertisers and, eventually, listeners. While voice-tracking 

is not a new practice in radio, Clear Channel is pushing the concept on a far 

grander scale than ever before, extending well beyond the 47 KISS stations to encompass most of its empire. 

Mr. Michaels compares his model to McDonald’s Corp.’s franchise system. ‘‘A 

McDonald’s manager may get his arms around the local community, but there are 

certain elements of the product that are constant,’’ he says. ‘‘You may in some parts 

of the country get pizza and in some parts of the country get chicken, but the Big 

Mac is the Big Mac. How we apply those principles to radio we’re still figuring out.’’

Indeed, as Clear Channel has moved to take advantage of its reach, it has run 

up against traditional ways of doing things in radio. To create a national brand 

based on a Federal trademark, for instance, it has had to mount legal challenges 

in several markets, chasing off stations that had been using versions of the KISS 

name locally. (The U.S. station that actually has the call letters KISS–FM is an 

album-rock station based in Clear Channel’s corporate hometown of San Antonio, 

owned by rival Cox Radio Inc.) Clear Channel is facing objections from union locals 

representing on-air talent, which likely stand to lose jobs as the company phases 

in more virtual programming. 

The company also drew an investigation by the Florida Attorney General’s office 

into whether it was portraying national call-in contests to listeners as local. Clear 

Channel admitted no wrongdoing, but in 2000 it paid the state an $80,000 contribution to the Consumer Frauds Trust Fund and agreed not to ‘‘make any representation or omission that would cause a reasonable person to believe’’ that contests involving numerous stations around the country were actually limited to local listeners. 

Mr. Michaels argues that much of the static his company hears, particularly from 

competitors, is simply a battle against progress. He compares it with another point 

in radio’s history: when the industry began phasing out live orchestras and in-studio 

sound-effects experts in favor of recorded music. ‘‘The guy making buggy whips and 

installing horse shoes should have gotten into making tires,’’ he says. Change, he 

says, is ‘‘inevitable. All we can do is exploit it.’’

Nothing better illustrates Clear Channel’s efforts to do that than its drive to develop the KISS brand. It’s derived from Clear Channel pop powerhouse KIIS–FM 

in Los Angeles. The wider rollout was begun by Mr. Michaels’ Jacor Communications Inc. before Clear Channel bought it in 1999. It kicked off by introducing the 

75

KISS format in Cincinnati, among other cities. Each had its own frequency and call 

letters, usually something as close as possible to KISS. 

At the same time, radio technology was changing rapidly. In the mid-1990s, stations began buying software and hardware that allowed them to run their on-air 

programming with computers that contained entire catalogues of digital songs. 

Using such systems, DJs could also digitally record voice bits and drop them into 

a preformulated schedule of songs and commercials. Stations had long been able to 

prerecord some materials, using tape setups. But now a disc jockey could put together a perfect five-hour shift in less than an hour, using a computerized system 

that lets the DJ hear just the end of one song and the beginning of the next. 

Clear Channel and its predecessor companies began installing the technology in 

all its stations in the late 1990s, and linking them together into a giant high-speed 

digital network to move digital recordings around seamlessly. Gradually, the company started piping major-market DJs into smaller cities. It even did the same with 

some news stations, which used local reporters feeding information to announcers 

in different cities, who would then send back their newscasts digitally to be put on 

the air. 

An early indication of the impact came in Dayton, Ohio, in 1999. Dozens of teenagers showed up at a Clear Channel pop station early one morning looking for the 

Backstreet Boys, after hearing an interview with the band that morning. The teenagers were politely told that the band wasn’t available and given promotional items. 

The interview was actually done earlier in Los Angeles. 

‘‘That’s when we knew this could be huge,’’ says Sean Compton, Clear Channel 

vice president and national program coordinator. 

Boise’s 103.3 was one of the early KISS converts. KARO, as it was called, had 

been playing classic rock. But it was competing in a crowded niche and ratings were 

lagging. So, in early March 2000, Clear Channel decided to switch it to a pop format 

and use the KISS brand. 

It took only about two weeks to create an entirely new station. The logo came 

from a KISS station in Las Vegas, with a Boise artist simply replacing the Las 

Vegas station’s frequency with the local one. Clear Channel pop stations in other 

cities digitally imported their own song catalogues to Boise’s hard drive. A programmer in Dallas helped prepare the first song list. 

Before the format change, the station was using one voice-tracked show from Salt 

Lake City on weekdays, as well as some national programming. After the station 

went KISS on March 13, 2000, it began importing all of its DJs. Weekday mornings 

came from Los Angeles, middays from Cincinnati, afternoons from San Diego and 

evenings from Tampa, Fla. Two of the old rock station’s DJs were laid off. Later, 

one out-of-town KISS DJ moved to Boise to do a live afternoon show. As costs went 

down, ratings went up. 

‘‘You can deliver a better product than a live station,’’ says Hoss Grigg, who was 

an on-air personality under the old format before becoming the program director for 

Boise’s KISS. ‘‘If they get it, they get it, no matter where it comes from.’’

Indeed, Mr. Grigg, who comes from the area and has worked in Boise radio on 

and off for a decade, quickly learned how to operate a virtual station. The station 

hired a Boise State University student, who it dubbed ‘‘Smooch,’’ sending him to 

local KISS events because the real DJs weren’t available. To handle phone calls that 

came in for the out-of-towners, the station first tried to maintain separate voice-mail 

boxes for each. But Mr. Grigg eventually gave up and just set the studio line to ring 

busy unless he or another station employee was actually in the studio. 

Mr. Grigg also devised ways to keep his air talent up to date on events in Boise. 

He created a guide with helpful pronunciation tips (‘‘BOY-see . . . no Z’’) and descriptions of ‘‘Boise Hot Spots,’’ like the Fort Boise skateboard park featuring a 

‘‘sweet bowl.’’ Major thoroughfares, local sports teams and the names of area high 

schools were also included. Mr. Grigg created a special Web site, which he updated 

constantly, to inform his outlying DJs about coming concerts and station promotions. 

But even as he works to keep the station sounding local, Mr. Grigg draws much 

of his station’s identity from around Clear Channel. Many of the contests he runs 

are national. The remixes of big songs to promote KISS come from Chicago, as does 

the voice used on most promotional messages. 

The music selections for Boise’s KISS are made in San Diego by brand manager 

Diana Laird, who also programs other stations as well, including ones in San Diego 

and Santa Barbara. Mr. Grigg advises her on what’s popular with call-in listeners, 

but Ms. Laird says she always takes such requests with ‘‘a grain of salt, considering 

maybe 1 percent’’ of listeners call in. She instead relies on instinct, national tastes 

and research in markets with demographics similar to Boise. She says the Santa 

Barbara station gets far more hip hop and dance music than the mainstream pop 

76

that is heard in Boise. But KISS listeners in Boise and Medford hear identical 

playlists, because their demographics are similar, Ms. Laird says. 

It was Ms. Laird who helped connect ‘‘Cabana Boy Geoff’’ to Boise. Mr. Alan, who 

works long hours as promotions coordinator at KHTS in San Diego as well as being 

an on-air personality, wanted to raise his profile and earn the extra money that 

voice-tracking a few stations can provide. To squeeze it all in, he typically arrives 

at Clear Channel’s meticulously landscaped San Diego office before 7 a.m., not long 

after his 2 a.m. sign-off from a live air shift. A recent day began even earlier with 

a cellphone call from Mr. Grigg, who told him of a Boise-area Olympic hopeful and 

recapped a station-sponsored party the night before at a Boise restaurant. 

Sipping a large cup of coffee, Mr. Alan tried to convince himself it was 10 a.m., 

the time his show would air. With Mr. Grigg’s briefing in mind, he told the Boise 

audience that last night’s event was ‘‘a wild and crazy party,’’ though of course he 

hadn’t attended. ‘‘I personally saw a number of you hook up with people you had 

never hooked up with before.’’ Then came the Evan and Jaron interview. (A spokeswoman for the singers said they couldn’t be reached for comment.) 

Mr. Alan wrapped up his five-hour shift in just an hour, but he returned later 

that afternoon to do a Boise show for the next Monday, when he would be out of 

the office for the President’s Day holiday. This one was harder, since it took place 

three days in advance. Mr. Alan also had to make a convincing on-air handoff to 

a live person—Smooch, the station’s street promoter, who would be doing a live appearance during Mr. Alan’s show. 

Again, a phone call helped. Smooch, whose real name is Troy DeVries, reported 

that he would likely be hanging out at a nightclub called The Big Easy sometime 

that weekend. So, Mr. Alan, who has never met Mr. DeVries in person, riffed a bit: 

‘‘On Saturday night, me and Smooch, we were hanging out at The Big Easy,’’ he 

said, launching into a bit that made fun of Mr. DeVries’s dancing. ‘‘Just thinking 

about it, I’m cracking up.’’ (As it turned out, Mr. DeVries went to the nightclub on 

Friday instead). 

Mr. Alan also used phone calls he had recorded during his live show in San Diego, 

editing out local references to make them usable in Boise. He typically greets Boise 

listeners by using names taken from e-mails he gets from Boise, or sometimes from 

San Diego callers. Then, he puts them in a situation using a real local place drawn 

from his research. Sometimes he does a bit less, though. After greeting ‘‘Dawn,’’ who 

‘‘is stuck at work today,’’ he admitted off the air that she was ‘‘somebody I just made 

up right now.’’

Mr. Alan says his voice-tracked shows sound just as good as his live ones, and 

listeners ‘‘don’t get cheated out.’’ Still, he admits that he was concerned when his 

fiancee told him that if she had a crush on a DJ and found out that he wasn’t really 

in her city, ‘‘she’d be so disappointed, she’d be heartbroken and stuff.’’

Indeed, several Boise KISS listeners said they couldn’t tell that many of the station’s on-air personalities weren’t in town. ‘‘If you can’t tell, it’s not that big a deal,’’ 

says Jennifer Hardy, 24, who has gone to KISS events with her five-year-old son. 

‘‘They are involved with the public.’’ But Hope Brophy, a manager at a local hair 

salon, said that, even though she couldn’t tell the difference, the idea ‘‘irritates 

me. . . . I think if you don’t live here, you don’t understand it.’’

In Boise, KISS’s pop rival, KZMG–M, ‘‘Magic 93.1,’’ is gambling that there is an 

advantage in having more live presence. The station, which is owned by another big 

company, Forstmann Little & Co.’s Citadel, has live DJs on nearly all the time on 

weekdays, except for midnight to 5:30 a.m. KZMG promotes itself as the ‘‘live and 

local’’ station that always takes calls from listeners, but KISS is still ahead in the 

ratings. 

Mr. Michaels, the Clear Channel radio chief, says he’s not aware of the details 

of Mr. Alan’s situation, but that it sounds like ‘‘this would be an example of a personality being a little too creative.’’

Mr. Michaels says that he himself usually can’t tell when a show is voice-tracked 

from another city and when it’s live. ‘‘I don’t think it’s at all wrong or deceptive to 

put together terrific programs that reflect local communities and sometimes use talent who may physically be somewhere else,’’ he says. He compares the radio shows 

to films, which wouldn’t be ‘‘nearly as much fun if the camera kept turning around 

to show you it was just a set. I don’t know that the radio experience would be as 

good if we said every five minutes, ‘By the way, I’m not really here and I taped this 

20 minutes ago.’ But that’s all part of the magic of creating entertainment.’’

Senator WYDEN. This article goes into considerable detail, Mr. 

Mays, in effect on how you deceive the listeners. I will talk briefly 

about a station in Boise. It says they handle the phone calls by setVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00080 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
77

ting up separate voice mail boxes so that people cannot tell the 

deejays are out-of-towners. Then at one point they set up a studio 

line to ring busy, and finally if somebody came in, they would free 

up the line. 

I guess my question to you is—whether you think it is 15 or 20 

percent or whatever is not the important question. To me it is 

going up, number one. And number two, I would just be curious 

about whether your stations disclose this to people locally. I mean, 

do people locally know that the deejays are not from there? 

Mr. MAYS. Let me say, Senator, that I agree with I think what 

you are getting at. Even though that article in the Wall Street 

Journal had many inaccuracies and it was not all correct, the fact 

is that it appears that we were in that one case deceiving our listeners by leading them to believe that that talent was in Boise instead of San Diego. No, we do not attempt nor would we allow by 

company policy, since we heard of that particular incident, to deceive any listener. 

If a voice track is done and if it is done overnight, say, and the 

talent is in Denver and it goes to Fort Collins or whatever, we ensure that every piece of information, the news, weather, sports, is 

done correctly in order that we can have all of the local information 

there for the public. 

Senator WYDEN. That is not what I am asking. 

Mr. MAYS. Now, whether or not they know that that talent is in 

Denver rather than Fort Collins, possibly not. But it is company 

policy not to try to deceive the person by suggesting that the Denver talent that is doing the news in Fort Collins at 2:00 a.m. in the 

morning is actually in Fort Collins. That is against company policy. 

Senator WYDEN. But you are not telling me that you have a policy to disclose to the local listener that the deejays are not there 

locally. Do you have a company policy on that point? 

Mr. MAYS. No, we do not. 

Senator WYDEN. Thank you. 

Question 2 is you said in response to the Chairman with respect 

to ownership limits and cited the 1996 law that you would respect 

those limits. And of course, that is the law and acquisitions continue. I am just curious whether you think as a policy, if three or 

four companies end up owning the majority of radio stations in this 

country, is there any down side in that? 

Mr. MAYS. I would say that as long as those companies—certainly I do not think the other concentrated companies in the entertainment business like the record companies are serving their 

customers and their audiences. But I would say that if those individual radio stations throughout this Nation are aggregations of 

small businesses dedicated to their community and as long as there 

is robust competition with other media, which there is in every 

market, then it really does not matter who the ownership of those 

individual stations are if they are run locally for the benefit of the 

community. So if you had the top 10 owning 80 percent instead of 

44 percent, I do not think that would be bad public policy. 

I think deregulation has been a huge benefit to the diversity and 

to the audiences in all of our markets. If you go to the audiences 

in Medford, Oregon and do a survey—and we would be happy to 

do it for you—of how they enjoy radio and the diversity in that 

78

market, it is going to be very positive. And that is market after 

market because, as I said, we do that because it is our lifeblood to 

keep our customers, your constituents, happy whether those be the 

audience or whether they be the advertisers. 

Senator WYDEN. I have a question for the panel. The reason I 

asked Mr. Mays that question is I think that that is a relevant 

question for radio, but it is a relevant question for the communications business generally. And Mr. Mays just said in his opinion 

there were not any down sides if you had three or four companies 

owning the vast majority of radio stations. 

Well, we are on the eve of the Federal Communications Commission looking at changing the concentration rules generally for a 

whole host of media, and I am very troubled about the prospect 

that in a lot of communities in this country, you are going to have 

one or two people owning virtually everything in sight. They are 

going to own the radio station. They are going to own the newspapers. They are going to own the TV. They are going to own the 

Internet networks. And I find this very troubling, contrary to what 

Mr. Mays has talked about. 

I would just like to go down the row for this panel and say what 

are the lessons radio that the Federal Communications Commission ought to pick up as it deals with media concentration generally because I for one think that this country ought to be pretty 

reluctant to repeat the radio experiment in other areas of communications policy. Why do we not just go down the row and begin 

with you, Ms. Toomey. 

Ms. TOOMEY. Thank you very much, Senator. 

First of all, I want to emphasize that I think we are closer to 

that three and four company ownership than you think. When you 

count the number of stations nationally, it looks like a really big 

number. But when you cut it down to local markets, as I did in my 

testimony, we are looking at four companies owning over 70 percent of listeners nationally in all markets. And then when we get 

to smaller markets, it is more and more. And then we get to the 

case of something like Minot where all of them are owned by one 

company. So I think this is the direction we are moving in, and we 

should begin to look at concentration instead of numbers of owners 

because that is when we can see where the damage is taking place. 

Next, I need to say that radio is different than other forms of 

media, and we need to always keep that in mind because it is the 

easiest and cheapest to produce. It is licensed at a local level, 

which means that it is one of the final media forms that is specifically programmed locally. So if we lose this one, as there are large 

concentrations in all the other media forms, we are just concentrating the problems. And if you looked at that really beautiful 

chart behind there, we already see that happening incredibly. 

And these recent trends also have made it harder and harder for 

grassroots folks to compete, as we have seen from the table, and 

mom and pops sell out. We have less minority ownership. We have 

fewer women running stations. We have less local news and, as our 

study illustrates, fewer musical choices. 

I think the most frightening thing for the Senators would be a 

quote that Congressman Foley said at Future of Music’s summit 

conference just a couple of weeks ago where he said in his own 

79

market there used to be five stations he could go to to get some 

policy news on the air, and now that has been reduced to one. So 

within 6 years, he has lost 80 percent of access to his own local 

radio stations. And that makes a really damning picture for people 

who want to know what our public representatives stand for. 

Senator WYDEN. Mr. Fritts. 

Mr. FRITTS. Thank you, Senator. I had not planned to do this but 

I think because of Ms. Toomey’s comments, I need to, for the 

record, state that there are numerous studies that contravene the 

FMC’s conclusions, including a November 2002 report by Bear 

Stearns, a September 2002 Federal Communications Commission 

white paper, and a July 2002 Arbitron-Edison Media survey. In addition, there was a poll in December conducted by the Mellman 

Group that found very wide listener satisfaction with what was 

taking place in radio. 

Having said that, what I would focus on to your question quite 

frankly is that the NAB has never asked for wholesale deregulation. We have never asked for deregulations like the truckers or 

the airlines or the banks. What we have said is that the FCC has 

appropriate jurisdiction and oversight and that they should and do 

review these limits on a regular basis. Obviously, recently they 

have reported to you and to this panel. 

We believe that the safeguard for you as a Senator and for you 

as Members of Congress is that the FCC, the oversight of jurisdiction for radio and television, has appropriate abilities and safeguards in all of these areas to regulate and to oversee the expansion or the contraction of radio or other markets in this process. 

So we are comfortable that the FCC, with its now five commissioners led by Chairman Powell—and we are comfortable that this 

oversight Committee, as well as one in the House, will continue to 

monitor these progressions and to make sure that the American 

public is well served. 

Senator WYDEN. Mr. Henley. 

Mr. HENLEY. First of all, I think the FCC needs to take another 

look at how it defines a particular market. As was stated before, 

when Minot is included in the same market as Bismarck and those 

two in combination are considered to be one of the largest radio 

markets in the Nation, something is wrong with all due respect to 

Minot and Bismarck. I think the FCC needs to reevaluate and take 

another look at how it defines a market and delineates a market. 

I still have some things I want to say about localism, but in the 

interest of time I am just going to skip it. I want to say one thing. 

There has been a lot of talk today about localism and how radio 

stations are locally programmed to serve the interest of local people. There have been intimations that local program directors actually decide what is played on a local radio station. There has even 

been the implication that deejays have a say in what is played on 

a local radio station. 

I can tell you from experience that all the deejays I have talked 

to are worried about two things primarily. They are worried about 

their severance and they are worried about their noncompete 

clauses. They get nothing whatsoever to say about what is played 

on the radio. 

80

And despite the examples that Mr. Mays has cited about individual programming, if you could compare a cross section of the 

Clear Channel playlists from a cross section of their stations across 

the country in the same format, you would find that that playlist 

is virtually identical from station to station to station, with maybe 

a few aberrations here and there. But the playlists are virtually 

identical. Everybody gets the same McDonald’s hamburger. And if 

you like hamburgers, then you should just eat hamburgers, I guess. 

I just want to read one thing in conclusion. The FCC is charged 

with protecting what the Supreme Court referred to as an uninhibited marketplace of ideas. And I want to read from the seminal 

First Amendment decision which says, ‘‘it is the right of the public 

to receive suitable access to social, political, aesthetic, moral, and 

other ideas and experiences which is crucial here. That right may 

not constitutionally be abridged by either Congress or by the FCC.’’ 

And I think it is being abridged. 

Senator WYDEN. Mr. Short. 

Mr. SHORT. Thank you. 

In response to your question, Senator, I genuinely believe that if 

Clear Channel could press a button and program all radio stations 

at the press of that button, they would just for the sake of getting 

rid of the labor costs, driving up profit margin and making more 

money than they are already making. 

Enough is enough. I mean, there is no limit here. We are seeing 

stations become eliminated and replaced with jukeboxes, sophisticated computers. For some reason, they feel they have to go to 

every city and serve that city as though the city was advertising 

nationally saying, come, serve us, we need your help. So what is 

happening now is you have this audacity that says, we can own as 

many as we want and we can lay off as many people as we so desire because we can control these stations from anywhere. 

Syracuse is a market that Clear Channel is currently basically 

over the limit in terms of ownership. I think they have gotten a 

waiver to allow them time to spin off one of these stations. But I 

question whether or not they really are looking for the time to spin 

one off versus looking for time for that cap to be lifted so that there 

is no need to spin one off and you just keep owning. 

And then what you do is you put all stations in one building. You 

call it economies to scale, if you will. And you have one secretary, 

one telephone expense, one market manager, and you run 9 or 10 

or whatever they let you run—7 legally—and then you run 2 by redefining what is in your market, as Mr. Henley said, and what is 

really outside of the market. For instance, you can put a station 

20, 30 miles out of your city of license and through sophisticated 

technology with repeaters and things like that, you could actually 

hear it where it initially was not intended to reach and then that 

makes it usable in that market. 

So what you are seeing is economies to scale for the benefit of 

profitability more so than the benefit or serving the public needs. 

And I am not saying you should never use automation, but I think 

what the intent is, go buy this station, lay off seven or eight of the 

people, or more, and just replace it with the one program manager. 

Mr. Mays mentioned the gentleman that is doing a good job of 

programming in Syracuse. What about the sales staff that they 

81

brought in? What happened is the sales manager for the urban station is no longer there because there is no need for him. They can 

use their other station sales managers to sell that urban station. 

So they are taking out and not necessarily putting back, but making it appear that whatever they replace it with was needed and 

is of the public interest, which I do not think it is. 

And then on top of that, I think you really risk the danger of not 

really having diversity. You have Mr. Lowry Mays’ viewpoint of the 

world, and I am not sure that everybody is ready for that. 

I do not want to go from the plantation to the ranch just to say, 

well, I have a place to live. I would like to own. And that is the 

issue here. You have Americans who actually believe in the American dream, that if you do certain things, own your business, serve 

the public, stay out of trouble, educate yourself, that there will be 

a reward, not a penalty, not some guy coming in and saying, eliminate all little guys. Or he may not say it exactly that way, but implementing tactics that result in the elimination of independent operators. 

So now you have no diversity. You have answering machines sitting there running busy instead of an individual providing customer service. How many of you have dialed a 1–800 number and 

it is frustrating. You say, where are the people that work at this 

place? We do not want to leave a message and have them get back 

to us. They are not going to get back to us unless you leave a number saying I am willing to buy some commercials, please call me. 

Then someone will get back to you. 

So I think it is a tragedy to have diversity of ownership suffer 

by eliminating these owners, putting Mr. Mays’ opinion of what 

that community should have in that market for the benefit of basically Mr. Mays and his shareholders. It is all bottom line, and if 

you, the lawmakers, allow Clear Channel to own 3,000, you will be 

sitting here 5 years from now, again with Mr. Mays, and he will 

have 3,000 stations probably. 

Senator WYDEN. Mr. Mays, I am sure you want to respond. 

Mr. MAYS. Well, I think I have covered the point that Mr. Short 

has accused us of running some automated jukeboxes around the 

country which could not be further from the truth. Certainly we 

have a sales manager in that station in Syracuse. 

I would just say that it is just common sense that each one of 

our radio stations has to be independently serving their local communities or there would be no reason why we would have your constituents listen to our radio station and like the information and 

the entertainment that they are receiving and our advertisers who 

use that audience to sell products to. It is just inconceivable to me 

why anyone would think that we would tear down that commitment to the local community for every single one of our radio stations and not do the research in every single market to support the 

information, news, and entertainment that we put on each individual radio station. Whether it is in Illinois, Oregon, or Arizona, 

it is all the same. It is a commitment to the local community and 

we are not in business unless we adhere to that. 

We do not run automated answering machines. We have huge 

staffs in every one of our markets. Smaller markets are somewhat 

smaller than here in Washington. 

82

But let me just say that when you are at the maximum limit in 

Washington, D.C. with 8 out of the 56 radio stations and you have 

200 satellite radio stations, 9 daily newspapers, 20 weekly newspapers, 13 television stations, and you are trying to compete to sell 

your customers’ products, which is our business—we are in the 

business of selling our customers’ products and through our audiences, the advertising that we sell, we hope that we do accomplish 

that. It is our absolute commitment to be a public service conduit 

to every single market that we are in, which we do achieve in every 

single market that we are in. 

But to be accused of playing some homogenized McDonald’s format on every one of our stations would be a way to the road to disaster. We just cannot do that, and I do not understand why people 

at this table assume that we can. 

Senator WYDEN. My time is up. I would just say, Mr. Mays, we 

know that you do your homework, that you do research on various 

communities. What concerns me is whether or not the industry is 

going to be straight with the listeners, and that is why I asked 

whether your station had a policy of disclosing when the deejays 

were not there locally. You were candid, which is to your credit, 

that you do not have the policy. That is the kind of thing that I 

want to see in the future because I think the public has got a right 

to know. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Smith, thank you for your patience. 

STATEMENT OF HON. GORDON SMITH,

U.S. SENATOR FROM OREGON 

Senator SMITH. Thank you, Mr. Chairman. I have been in and 

out this morning trying to cover commitments in three different 

committees, but I particularly appreciate your holding this hearing 

because I think it is so interesting and it is an area I am trying 

to get up to speed on. 

But it frankly strikes me that if it was not this industry, we 

could bring the airlines in here and have the same discussion. We 

could bring the banks and the credit unions in here and have the 

same discussion. We could bring the farmers in who complain 

about packer concentration. Then we could bring the packers in to 

complain about retail store competition. This is called the marketplace and it seems to be working. 

This area is new to me and it is fascinating to me. I earned my 

living growing and processing peas. I remember when I first got 

into my business, there was Green Giant and there was Bird’s Eye, 

and they dominated everything. Now they are just labels. They do 

not even produce anymore because some of us figured out how to 

pick up the crumbs falling from their table, and little businesses 

want to become big businesses. 

It does seem to me what I want to focus on, is there anything 

in this system that prevents little guys from becoming big guys like 

Clear? That I think is the real central question we have to ask because right now United is bankrupt and JetBlue and Southwest 

are prospering. They figured out how to undercut those guys to 

provide customers quality service and price. 

83

I just think it is impossible for us as U.S. Senators to figure out 

the intricacies of every industry. What we have to make sure of is 

that the door is open to newcomers, that monopolies do not exist, 

or at least there are the abilities to stop illegal activities which prevent newcomers and new capital from coming in. I guess that is 

really my central question. 

I think the proposal here is that we have ownership caps. My 

question is, how do ownership caps actually translate into getting 

more local people on local stations? I am not sure I understand 

that nexus. 

I also think, Mr. Chairman, one of the benefits of your having 

this hearing is that Mr. Henley, whose music I have loved since I 

was a little boy——

[Laughter.] 

Senator SMITH. Actually we are probably the same age. But he 

has the ability to come here and complain and express the fear that 

he might have retribution. I bet you will not because we are going 

to be watching to make sure you do not. So I thank you for your 

courage to come here. 

I frankly plead with the industry generally to make sure that if 

there are features in how you do your business that look like payola, look like a bribe, that you purge yourself of those things. 

But I guess my question is, is there a proposal here like ownership caps that actually makes sense to help local artists? And what 

is the nexus there? I ask that just for information. 

Ms. TOOMEY. Mr. Chairman, in the interest of fairness, I want 

to address first Mr. Fritts’ attempt to discredit our study. We are 

not a rogue organization. We represent over a dozen artists’ organizations, and we have 40 letters of support for the study with everyone from all the unions, Don Henley’s group, the Arts Empowerment Coalition, Just Plain Folks, everything from very big and 

small organizations, consumer groups, Consumer Union, Consumer 

Federation, Media Access Project, et cetera. All of them have 

looked at our study and said the numbers ring true. 

Now, Mr. Fritts does raise an interesting issue. We cite most of 

the studies that he offered up in comparison to our studies within 

our study because we say these studies tell us half the picture. 

They just do not tell us the next. It is almost as if the detective 

has chased the thief into the drawing room, but then does not look 

in the closet, and what our study does is it goes into the closet and 

says this is where the problems are. 

The problem is, as soon as we put our study out, the NAB said, 

well, you have got the wrong numbers. Now, the reason it has 

taken so long for us to do a study like this is because it is expensive to buy industry data, and it was very important to get a grant 

to do that kind of work. But the fact of the matter is this should 

be public data, and if anything really good can come, if we can understand how these dramatic changes are affecting the landscape, 

what we need to know is publicly what is happening at all of these 

radio stations. 

So one thing that I would suggest maybe come from a hearing 

like this is the idea that we make, as a requirement of a station’s 

license, that they file certain pertinent bits of information that tell 

publicly so citizens groups and musicians and artists can all see 

84

the statistics that it took so long to bring forward. I think if we 

could see them and anticipate what trends are coming down the 

line, we might be able to adjust for them and make sure that the 

full diversity of citizens are being served by the public airwaves. 

Senator SMITH. What you are asking in law is some regulation 

that requires so much local content in what is presented by these 

stations. 

Ms. TOOMEY. Even more basically, just information about the 

stations themselves so that we can know what percentage of marketplace they are controlling, what other connections they have, 

whether they are actually programming stations whose licenses 

they do not own but who they have a relationship with which extends the number of stations they have in a market. 

Senator SMITH. Mr. Fritts, is there anything about ownership 

caps that in your view assures the local producers of music get on 

the air? 

Mr. FRITTS. Well, I am not a very good singer, but if I wanted 

on the air, I would have to get on on the merits, quite frankly. Put 

it this way. If there is a worthy artist, they will make their way 

onto the air. 

I used to own and operate a chain of small town radio stations, 

and I know the system pretty well. Our stations were so small that 

no independent record promoter wanted to come to us. We programmed for the local community just as radio is doing now. 

I think the overview here is that the FCC has in the public 

record documents that Ms. Toomey was talking about, and we 

would be happy to provide a response to the myths that are sometimes alluded to in these studies. 

The problem, I would submit, that Mr. Henley has, is not with 

the radio stations but, indeed, is with the record companies. There 

are only five record companies and they operate as monopolies, and 

they dictate to the artist what the terms and agreements will be. 

And if it is different than that, then I would like to hear it. 

Senator SMITH. So after the food industry and then the banks 

and credit unions, we ought to bring the recording folks in here too. 

Mr. FRITTS. Just one final point. Mr. Mays has not always been 

a large company. He started with one radio station many years ago 

and built his company in the American system. 

Senator SMITH. Is there anything in the system that would prevent a start-up operation—like Mr. Henley may want to start a 

radio station—is there anything that Mr. Mays can do to him to 

prevent him from going into this business if he so chooses? 

Mr. FRITTS. Not that I am aware of. 

Senator SMITH. Mr. Henley. 

Mr. HENLEY. Well, if I was going to get in the radio business, I 

should have done it in the 1970s. 

[Laughter.] 

Mr. HENLEY. But you and I have more in common than just my 

music. I know something about farming and I know something 

about peas because I grew up on a farm in East Texas picking peas 

for my father. And what has happened to the radio industry is exactly what has happened to the agriculture industry. I am a member of the American Farmland Trust, and I know about the decimation of the small family farms in this country. They have virtually 

85

disappeared. Why? Because big agribusiness has taken over the industry, and that is exactly what has happened in the music business. 

You can do all these research models and you can concentrate on 

the business factor, but what is left out of the equation is the impact on the culture. In my humble opinion, research has ruined the 

radio business because of the way they do it. They do call-out research. They do focus groups. They will bring people into a room 

or they will call them up and play 10 seconds of a song to them, 

and they will say, do you like this? They will do even galvanic skin 

response, for Christ’s sake, and see if the heart rate increases. That 

is not the way people listen to music. People have to become acquainted with a song. It has to grow on them, and music does not 

get a chance to do that anymore. 

So in my estimation, research has ruined radio. It is not realistic. 

It does not have a human element or a human factor in it. Everything is built on a business model, and that does not take into account our culture and our feelings as human beings and our emotions and our need for creativity and expression. 

Senator SMITH. Thank you. 

Mr. SHORT. To answer your question, I think it is similar to me 

saying could someone, one individual, start the next Microsoft or 

start the next General Motors or next whatever giant corporation 

that exists? Technically the answer is yes, but realistically how can 

you do it, particularly given that you have a monopoly in place. 

Many of these companies I just mentioned were kind of like the 

first and that was their in. Now that everybody knows how to do 

it, it is unlikely, since everybody knows the secrets, that there is 

going to be the next one anytime soon. 

Clear Channel was basically first. You know, they were in position. When the law changed, they were out of the gate. They did 

whatever they had to do quickly and, maybe to their credit, they 

saw a loophole and they took advantage of it. Now that other people see this loophole, they say, well, let us try to jump through it. 

Well, the knot is a little smaller now and you might get hung trying to go through there. 

There are other reasons. Access to capital is extremely difficult. 

Who is going to lend a small entrepreneur first time out of the gate 

many, many millions of dollars to go up against a giant? I would 

not risk my money with that scenario and most other prudent businessmen or women would not either. 

I think Senator McCain had mentioned earlier, when he started, 

about the legislation for a tax certificate or something of that nature. I think that we do need to look at a tax certificate with some 

provisions for small businesses and particularly for minorities. 

One of the things that happened, if you look at the history of the 

telecommunications acts in the past, from 1934 through 1978, 

hardly any stations were owned by African-Americans. It was not 

because no African-American thought of the idea. Who was going 

to lend you the money? And then who was going to advertise after 

you got it? But they made provisions with the tax certificate that 

allowed a significant growth in minority ownership from 1978 

through 1996. That is probably the greatest growth in terms of AfVerDate 0ct 09 2002 07:25 Feb 01, 2007 Jkt 095894 PO 00000 Frm 00089 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\95894.TXT JACKF PsN: JACKF
86

rican-American and other minority participation in the broadcast 

industry. 

And then came the bolo punch, the knockout punch in 1996. 

While they had all these supposedly great intentions, it for practical purposes was no better than the guys who invented the leisure suit. I mean, it was supposed to be a nice style, but who needs 

it now? Get rid of it. If it is no longer appropriate, if it is no longer 

relevant, make adjustments. 

The 1996 Telecommunications Act was supposed to be an amendment to the 1934 Act, not a replacement so that the new, smart 

lawyers can figure out a way to make one or two or three companies control not only the media but control—look at the elections—

control the public viewpoint. If you own the airwaves, you can basically push whatever agenda that you have personally, and it may 

not necessarily be the agenda that is best for the country. 

So I would say institute a tax certificate, make banks and lending institutions lend money. And if you take away some of these 

stations—Clear Channel has what? I have information that says—

well, correct me. He has got his information. But Clear Channel 

has an estimated revenue of over $3 billion annually. 

Senator SMITH. But if you want to go into Mr. Clear Station’s 

business, can you do that? 

Mr. SHORT. Can I do what? 

Senator SMITH. You may have to have a business model. You 

may have to go get a loan. Can you get into the business? Can you 

get a license? 

Mr. SHORT. Yes, you can. If you are a U.S. citizen, no felony, and 

you have a few bucks in your pocket, yes. Will you survive? 

Senator SMITH. Can you be a JetBlue? I do not know. That is just 

a question I am asking. I want to make sure that we have the 

kinds of regulations that give people ins to it, but in the end we 

cannot guarantee that anybody succeeds. 

The CHAIRMAN. Can you be a family farmer? 

Senator SMITH. That is a great question. I know some family 

farmers that are doing very, very well, and there are some that 

just do not. And I know a lot of food processors very frustrated with 

Wal-Mart because they absolutely dominate the market. But eventually somebody is going to figure out how to do better what WalMart does. 

Mr. SHORT. But it is frustrating. I did that. I was the guy who 

was an accountant. I was the guy who believed the American 

dream that, yes, you could own a radio station. When I had my station—and Jim Winston is behind me sitting here—there probably 

were not 100 African-Americans who owned a station at that time. 

And Mr. Mays talks about more African-Americans owned stations. 

Well, I think there are more African-American-owned stations, but 

the number of African-American owners is down. You have maybe 

Radio One, Inner City, and a few companies like that that have a 

lot. 

So now the chances—if you are an African-American growing up 

in this country, and you say, you know what, this guy over here 

made $3 billion in radio advertisement, I think that is what I want 

to do, I do not want to be a teacher, I do not want to be a scientist, 

I want to be a broadcaster if they have got that kind of money in 

87

broadcasting, how can that person do it with monopolies in place, 

limited access to capital? There seems to be no end in sight. 

Senator SMITH. Monopoly is a legal term of art. 

Mr. SHORT. Oligopoly, monopoly. If it walks like a duck, quacks 

like a duck, it is a duck. 

Senator SMITH. But that is why we have the Sherman antitrust 

law, and I assume that they are going to enforce it. I guess what 

I want to find out, are they enforcing it? 

Mr. SHORT. That is a great question. 

Senator SMITH. Are there things that are going on in this industry that make it impossible for others to compete against monopolies? Maybe there are, maybe there are not. But if they are big 

businesses, they tend to be called monopolies, and I want to make 

sure that little businesses are not impeded from becoming big businesses by some structural impediment. 

Mr. SHORT. Right. The DOJ had said that, I believe, if you exceeded the 40 percent ruling, if you owned more than 40 percent 

of the market, many of these companies that were trying to buy 

more in that market were denied because you were considered to 

have enough market dominance. 

Syracuse is a good example that either the DOJ has kind of 

looked the other way or there are new rules or something, because 

they have greater than 40 percent. And then you go out and you 

combine your strength in radio by purchasing television stations in 

the same market. So it just goes on and on. 

Senator SMITH. Just an editorial comment. 

The CHAIRMAN. I think Mr. Mays is eager. 

Senator SMITH. I think he wants to talk. 

I just want to say big is not always better. Bigness does not always equal most profitable. So sometimes when you get too big, 

you are going to find all kinds of inefficiencies that come from scale 

and they are going to break you down and you are going to get 

some competitors coming in that have figured out how to take you 

down. 

Mr. Mays, is anybody working at taking you down? 

Mr. MAYS. I do not know, but certainly United Airlines might 

have a different view of that. 

Let me say that 20 percent of the industry revenues is not a monopoly. 

The CHAIRMAN. Mr. Mays, on that subject, according to Media 

Access Productions, BIA Financial Networks data, May 16, 2002, 

Clear Channel’s revenue was $3.25 billion, 27.5 percent of the revenue share. Now, if you have different information, I would be glad 

to have it. But BIA Financial Networks is a reliable gauge. That 

was for 2001. But $3.25 billion is a pretty good amount of money. 

And big may be better or worse, but where it is 27.5, I will be glad 

to get whatever information you have. 

Mr. MAYS. I think those industry revenues are wrong, and I 

think——

The CHAIRMAN. So the BIA Financial Networks are wrong. 

Mr. MAYS. Yes. And I think since that was published, they have 

come out and said that those industry revenues are wrong and the 

industry revenues are $16 billion. I am looking at an independent 

88

report here that says Clear Channel does, in fact, have $3.2 billion 

in revenue, and that is 18.7 percent of the industry revenue. 

The CHAIRMAN. What independent organization is that? 

Mr. MAYS. This is a Bear Stearns source, BIA Financial Networks. 

The CHAIRMAN. I do not want to waste the time of the Committee 

but we would be glad to hear your information. I am proceeding on 

the information you got 27.5 percent of the revenues by a reliable 

source. And if you have a reliable source, we would be glad to correct the record. 

Go ahead, please. 

Mr. MAYS. Okay, excuse me. 

I would say it depends, Senator, on what that individual radio 

owner would like to do. I think obviously with almost 4,000 owners, 

that you have a lot of one-owner radio stations. I mentioned earlier 

that Jerry Lee in Philadelphia is the number one station, the most 

profitable station in Philadelphia. He operates one station. It is 

very successful. He does not want to own 2 or 10 or 1,200. 

But there are other companies that have recently entered the 

market. Certainly Radio One, which is basically an African-American-owned company, has grown considerably on a percentage basis 

much faster than we. Spanish Broadcasting, Hispanic Broadcasting, Telemundo. Salem, which is a religious broadcaster has 

been growing their business. I think the answer to your question 

is, yes, the barriers of entry are not overwhelming for a person to 

build a large company within this industry, and I think we are seeing that every day. 

There are 10 percent more minority-owned stations since 1997 to 

2002. 

The CHAIRMAN. Is that an increase in minority owners or minority ownership stations? 

Mr. MAYS. I am not sure, Senator. My data shows——

The CHAIRMAN. I am sure. 

[Laughter.] 

Mr. MAYS. But minority owned companies. The difference is——

The CHAIRMAN. Please proceed. 

Mr. MAYS. Okay. And I am sorry I do not have that data, but 

the data is they are 10 percent owned by minority-owned companies since 1997. 

I would like to also respond to what Mr. Henley——

The CHAIRMAN. Again, could I put that in a different perspective 

since we are dealing with statistics? I think that is from 2.75 percent of the market to about 3. some percent of the market, that 10 

percent increase you are talking about. 

Mr. MAYS. But let me say, Senator, we concentrated our efforts 

in the divestiture required by the Justice Department in our last 

large acquisition, and we sold $1.5 billion worth of radio stations 

to the minority community. And there were a number of different 

owners that we could have sold that $1.5 billion worth of properties 

to. 

And then as I said, we also co-established a fund called the Quetzal/Chase Fund and funded it ourselves with $15 million to provide 

funds for minorities to buy broadcast properties. And we strongly 

89

support your bill and we will be happy to do anything that we can 

to help that get through these halls. 

I would like to also say that Mr. Henley accuses us of doing too 

much research and broadcasting to the mass audiences in our individual markets based on research, and then says that we do not 

play anything except what the record companies tell us to play. I 

mean, it is inconsistent. 

But I would say, again, that our whole focus is serving our local 

communities and nothing can take us away from that, Mr. Chairman. 

And I really do appreciate you having us here today. 

The CHAIRMAN. Well, thank you. 

I just want to point out again it is interesting how we talk about 

statistics. I think it is pretty impressive when you say there has 

been an increase of 10 percent in minority broadcasters. In a little 

different perspective, it was 2.7 percent of all broadcasters in 1991. 

It is now up to 3.8 percent. I understand that minority includes 

Hispanic as well as African-American and other minorities. I do not 

think that that is quite what we had in mind, is it, Mr. Short? 

Mr. SHORT. I would certainly hope that such pathetic numbers 

are what we had in mind. 

The CHAIRMAN. That is why I am introducing the legislation 

today. 

Mr. Fritts, please, go ahead. 

Mr. FRITTS. Mr. Chairman, let me give you a success story. One, 

we agree with you that the numbers for African-American, for Hispanics and other minorities of ownership of stations is under what 

it should be and could be, and we have a number of programs in 

effect that we are helping to alleviate that problem in terms of 

training, in terms of helping secure capital access to the capital 

markets, but more especially, the biggest boost will come when 

your legislation passes. We think that is a very important part of 

that. 

There is a gentleman named Al Vicente. He is a former NAB 

board member. He is an African-American. He is currently buying 

radio stations and has built up a group from about a year-and-ahalf ago until now, somewhere in the neighborhood of 20 radio stations that he is buying and operating himself as local stations in 

various markets. And while that is not enough to move the number 

substantially by itself, it is a start, and it indeed answers Senator 

Smith’s question of is there an opportunity and can it be done. 

I would point out one final point. On a personal basis, my son 

sells advertising for a radio group in competition to Mr. Mays’ 

group in Jackson, Mississippi. While it is tough competition, as a 

salesperson he is doing quite well, thank you, in a tough marketplace and does not have any complaints about what is going on in 

the marketplace. 

So it can be done. He would like to be an owner himself, but unfortunately he does not have access to the capital markets to buy 

where he would like to, but maybe some day. 

The CHAIRMAN. Well, this has been long, and I apologize to the 

witnesses for the length of this hearing. Obviously there is a great 

deal of interest. 

90

We intend, most likely, to have additional hearings, including television, newspaper, other ownership issues. It is topical because 

the FCC may be making some decisions and we hope that we can 

add to their base of knowledge. We had a hearing not long ago 

where we had five FCC commissioners, and there were varying levels of concern amongst those five commissioners about this issue of 

media concentration. So I think we need to continue to look at it. 

I think Senator Smith’s point is well made, that things have a 

tendency to balance out, but I also think in some cases, such as minority ownership—I apologize that I do not know the total percentage of the American population that are minorities, Hispanic, African-American, Asian, et cetera, but I would imagine it is significantly more than 3.8 percent which is the percent of ownership of 

radio stations—of broadcasting. And I think that that is an important factor because that is where people get their news and information and everybody should have the right to get different messages of different kinds. This is really what this is all about. 

We also do not want to stifle artists, especially new and emerging artists, and I am sure, Mr. Mays, that you are sensitive to that 

issue as well. I also understand some have raised questions about 

fewer and fewer numbers of songs that are being played on some 

stations, and that is an area that we did not discuss. But I hope 

that this will spur more of a national debate, more information 

being exchanged, better information both for the Federal Communications Commission, as well as Members of Congress in general, 

in this Committee in particular. 

I thank you for your contribution today. I thank you for being 

here. And speaking as one Member of the Committee, this has been 

a very important and very helpful hearing, and I hope we have 

been fair to all. 

This hearing is adjourned. 

[Whereupon, at 12:41 p.m., the Committee was adjourned.]

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