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S. HRG. 108–979 

MEDIA OWNERSHIP (RADIO CONSOLIDATION) 

HEARING 

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED EIGHTH CONGRESS 

FIRST SESSION 

JULY 8, 2003 

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

( 

(II) 

SENATE 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 H. SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina, 

Ranking 

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 R. 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 July 8, 2003 ................................................................................. 1 

Statement of Senator Boxer .................................................................................... 38 

Statement of Senator Dorgan ................................................................................. 34 

Statement of Senator Lautenberg .......................................................................... 5 

Article, dated March 25, 2003 from The New York Times entitled ‘‘Channels of Influence’’ by Paul Krugman ........................................................... 28 

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

Statement of Senator Smith ................................................................................... 37 

Statement of Senator Sununu ................................................................................ 31 

WITNESSES

Dickey, Jr., Lewis W., Chief Executive Officer, Cumulus Media Inc. ................. 5 

Prepared statement .......................................................................................... 7 

Kolobielski, Alex, President And Chief Executive Officer, First Media Radio, 

LLC ........................................................................................................................ 20 

Prepared statement .......................................................................................... 22 

Mandel, Jon, Co-Chief Executive Officer, MediaCom, Grey Global Group, 

Inc. ......................................................................................................................... 11 

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

Menendez, Hon. Robert, Member, U.S. House of Representatives from New 

Jersey .................................................................................................................... 2 

Renshaw, Simon, Manager, On Behalf of the Recording Artists’ Coalition ........ 14 

Prepared statement .......................................................................................... 17 

APPENDIX

Hollings, Hon. Ernest F., U.S. Senator from South Carolina, prepared statement ...................................................................................................................... 53 

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared statement ........... 53 

(1) 

MEDIA OWNERSHIP (RADIO CONSOLIDATION) 

TUESDAY, JULY 8, 2003 

U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. 

The Committee met, pursuant to notice, at 9:50 a.m. in room SR– 

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

presiding. 

OPENING STATEMENT OF HON. JOHN MCCAIN, 

U.S. SENATOR FROM ARIZONA 

The CHAIRMAN. We will now move to the second part of our hearing in just a moment, as we allow family members and others to 

depart and congratulate their loved ones. 

[Pause.] 

Today the Committee continues its series of hearings examining 

media by returning to the topic that started it all, radio. That first 

hearing on the increased concentration of ownership in the broadcast radio industry was the miner’s canary to many on this Committee, myself included. It alerted us to the growing consolidation 

and vertical integration in media. 

Prior to enactment of the Telecommunications Act of 1996, a 

party was not allowed to own more than 40 radio stations nationwide. Since the removal of the national cap, the industry has experienced significant consolidation. The 1996 Act also increased the 

number of stations that a party is allowed to own in a particular 

local market. In its recent order, the Federal Communications 

Commission determined numerical limits on local radio ownerships 

are, ‘‘necessary in the public interest to protect competition in local 

radio markets.’’ 

However, the FCC found its existing methodology of defining 

local markets based on the station owner’s signal contour to be, 

‘‘flawed as a means to protect competition in local radio markets.’’ 

As a result, the FCC will now use an advertising metric provided 

by Arbitron, a market research company, as the basis for determining market definitions rather than engineering data. 

I look forward to hearing our witnesses’ opinions as to whether 

this new methodology best reins in excessive concentration in local 

markets or if another approach would be better to achieve that 

goal. 

At a hearing in June, all five FCC Commissioners testified that 

there has been, in at least some local radio markets, too much consolidation. Last month the Committee passed an amendment that 

would force parties that exceed the local radio ownership cap under 

2 

the FCC’s new market definition to divest themselves of any stations that take them above the cap. Yesterday the National Association of Black-Owned Broadcasters announced its support for this 

amendment. 

This is the Committee’s first hearing on media ownership since 

the FCC’s new rules were released last Wednesday. I look forward 

to hearing the witnesses’ views regarding these new rules, as well 

as the impact of consolidation in the broadcast radio industry on 

artists and local media buyers. I welcome the witnesses and thank 

them for appearing today. 

Late last night we received word that Congressman Menendez 

would like to make some remarks to the Committee this morning 

and obviously we are glad to accommodate our colleagues from the 

House as well as other members of this body who are not members 

of the Committee. Mr. Menendez, Congressman Menendez, you are 

welcome here today and please proceed. 

STATEMENT OF HON. ROBERT MENENDEZ, MEMBER, 

U.S. HOUSE OF REPRESENTATIVES FROM NEW JERSEY 

Mr. MENENDEZ. Thank you, Senator. I want to thank you and 

Senator Hollings and all the other distinguished Members of the 

Committee for the invitation, the opportunity to testify on consolidation in general, but I would specifically within that context like 

to refer to consolidation of Spanish language media and its impact 

on the Latino community. Highlighted in my remarks is the crucially important related issue of the proposed merger between 

Univision and Hispanic Broadcasting Corporation, a merger that is 

presently before the FCC. 

Prior to the Commission’s recent loosening of media ownership 

limits, I, along with other, about 90 other members of the House 

Democratic Caucus, sent a letter to Chairman Powell opposing the 

relaxing of ownership rules in a media landscape that is already 

heavily concentrated. 

Perhaps nowhere is the impact of ownership concentration more 

evident than in the radio industry. In 1996, the two largest radio 

companies owned 115 radio stations. Today these two companies 

own 1,451 radio stations. Furthermore, the top 25 radio ownership 

groups control 25 percent of the Nation’s commercial stations and 

take in 59 percent of all advertising revenues. 

Ownership is even more consolidated in the Spanish language 

media market, with three companies currently controlling the majority of the Spanish language radio market and only two entities 

controlling the majority of Hispanic TV audience shares. 

The proposed merger would unite Univision, the Nation’s largest 

Spanish language television company, with a continuing and significant interest in the number three Spanish language radio company, Entravision, and the Hispanic Broadcasting Corporation, the 

Nation’s largest Spanish language radio company. If the Commission approves the merger, the new entity would control: the largest 

Spanish language radio in the country, with more than 40 percent 

of the revenue; the largest Spanish language TV, with approximately 80 percent of the audience and 70 percent of the revenue; 

the largest Spanish language website among U.S. Hispanics; and 

the largest Spanish language cable network. 

3 

These are national statistics, but it is at the local level that the 

full brunt of the monopoly would be felt. For example, if the merger 

is approved Univision will control 69 percent of the Spanish broadcasting advertising market in Phoenix. 84 percent of its holdings 

in Entravision, the third largest Latin radio chain in the country, 

are included in the merger. 

This deal would create unacceptable market power in Spanish 

language media in this country. Univision’s own competitor in 

radio, the Spanish Broadcasting System, the second largest Spanish language radio company with only 16 radio stations nationally 

and, notably, the only one owned and operated by Hispanics, will 

find it difficult to compete with the merged entity. 

The same would be true for Telemundo, the second largest Spanish language TV company, which has never been able to obtain 

more than 15 percent of the national Spanish television market 

share, with Univision currently controlling 80 percent of this market. 

Under the tenets of this merger, virtually all Latinos would see 

and hear their news and entertainment from a single source, 

Univision. And perhaps not coincidentally, the single source would 

be owned by a non-Hispanic. 

Now, Mr. Chairman, I know that you know very well from your 

home state and from the U.S. Census Bureau of the incredible 

growth in our community, 38.8 million, the largest minority in the 

country, 10 percent increase in 2 years. Approximately 25 percent 

of that audience has little or no ability to speak English and receives all of their news and information solely through Spanish language sources. Approximately 50 percent of that number live in 

Spanish-dominant households, in which the inhabitants need or 

prefer to speak and receive media messages in Spanish. 

Based on these findings, the Congressional Hispanic Caucus recently issued its Principles on Broadcast Ownership Rules, which 

states that: ‘‘The commission should establish a clear policy on the 

separation between Spanish language and English language media 

markets. The current lack of specific rules on whether these are 

different markets has created challenges for antitrust policy enforcers and curtailed the ability of many minority broadcasting outlets 

to enter the U.S. media market.’’ 

Additionally, several letters have gone to the FCC from Members 

of Congress, consumer groups, and unions on the necessity of conducting a series of public proceedings to determine whether or not 

Spanish language media constitutes a separate market. Unfortunately, Chairman Powell has rather curtly dismissed them all. 

So despite appeals from leaders in the Hispanic community and 

elected officials from around the country and significant evidence 

to the contrary, the commission appears to be headed toward an erroneous finding that Spanish language media does not comprise a 

separate market. Such an erroneous finding would create great 

harm to competition and diversity, precisely the values the commission is supposed to protect. 

While Univision proclaims to oppose the separation between 

Spanish language and English language media markets to Federal 

regulators, in its pitches to Wall Street investors and advertisers 

it literally endorses such a separation by bragging about Spanish 

4 

language TV’s superior ability to reach Hispanics over mainstream 

outlets. Mario Rodriguez, Univision’s President of Entertainment, 

recently told Television Week that, quote: ‘‘Hispanics choose Spanish language television over general market TV every hour of every 

day of the year.’’ 

It’s also important to note that the threat of stifling competition 

in viewpoints is more onerous in the Hispanic markets because it 

has fewer media outlets. In contrast to the thousands of television 

and radio outlets in English, the Spanish market has only about 

145 television stations and 630 radio stations nationwide. However, 

even multiple media outlets mean nothing if they are controlled by 

the same entity and echo the same voice. 

It’s also a matter of urgent public concern for all Americans that 

FCC endorsement of this merger would offer a precedent for monopoly control over the editorial content in the native language of 

any linguistic minority recognized under the Voting Rights Act, 

whether Latino, Native American, Native Alaskan, or Asian, to any 

person, no matter what his or her political persuasion would be. 

Monopolies of any kind are not good for commerce and media monopolies are not healthy for our democracy. 

Finally, Mr. Chairman, the FCC has the merger poised, it seems 

to so many of us, for approval right now as a follow up to its wildly 

unpopular media concentration decision. Not surprisingly, there 

are many reports that suggest that Chairman Powell wishes to 

push this decision through as quickly as possible. 

To accomplish this under the FCC’s public interest standard for 

review of license transfers, this Commission will have to make a 

finding that the Spanish language market is not, is not, a separate 

one from the greater media market. 

[Mr. Menendez then spoke in Spanish.] 

What I said, very simply, is: If you did not quite understand 

what I just finished saying, you understand why the Spanish language market is a separate market. It is because, unlike NBC, 

CBS, ABC, Fox, or anyone else, their audience is those who are 

Spanish-dominant or who simply are unilingual insofar as they 

only speak Spanish, and that is the audience that is captivated by 

the smaller number of outlets, by the smaller opportunities. 

So it is sociologically, economically, and practically ludicrous, and 

even though the Commission has other overwhelming evidence before it that a separate market exists, the order has gone down to 

the Commission’s media bureau to justify this finding. 

So it is notable that, in spite of the many opposition filings made 

in the last several weeks against the merger, Univision has not 

seen fit to answer a single one. It seems to be acting as a boy who, 

as they say, is assured of his dinner. 

So, Mr. Chairman, Members of the Committee, I appeal to all of 

you for this fastest growing part of our Nation’s population, who 

has less media outlets than any other group and who clearly has— 

Univision does a great job. I will admit, it does a great job in providing information, but it cannot be the only one to provide that 

information. The Hispanic community, as Americans as a whole, 

needs to have competition, competition for their minds, competition 

for their dollars. 

5 

If we consider the market power that this would bestow in the 

hands of a single source, I think it goes against all that is important to us. Finally, it would be unconscionable to allow it to do so 

without substantial and pervasive conditions against the threat it 

poses to competition, diversity, and democracy. 

I appreciate the opportunity to address the Committee, Mr. 

Chairman. 

The CHAIRMAN. Thank you very much, Congressman Menendez. 

We are always pleased to hear from you and we thank you for your 

advocacy. We thank you again. We know you have a very busy 

schedule. You are always welcome back here. 

Mr. MENENDEZ. Thank you, Senator. 

The CHAIRMAN. Thank you. Are there any questions for Mr. 

Menendez? 

STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM NEW JERSEY 

Senator LAUTENBERG. Mr. Chairman, before Congressman 

Menendez leaves, I want to say that I regret that I was unable to 

greet you publicly before your departure is upon us. Bob Menendez 

is a good friend of mine, but, more importantly, he is a spokesman 

for his constituents, for Hispanic Americans, and in large measure 

is one of those most responsible for the actions taken in the Democratic House membership—a very important position, third highest 

position in the Democratic House delegation. 

So I wanted to say that I welcome Bob Menendez. I want to tell 

him something, that I occasionally watch Spanish television. It 

does not do a lot for my language ability, but it does do a lot to 

tell me about what is of interest to an important constituency, 

what is important to my neighbors, many of them, who speak 

Spanish fluently and regularly. So I wanted to say that I am 

pleased to hear your testimony and look forward to working with 

you, Bob, and I am pleased that you are here this morning. 

Thank you, Mr. Chairman. 

Mr. MENENDEZ. Thank you, Senator. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you again, Congressman Menendez. 

Now we will move to our panel of witnesses. Mr. Lewis W. 

Dickey, Jr., the Chairman, President, and CEO of Cumulus Media 

Incorporated; Mr. Jon Mandel, Co-Chief Executive Officer, 

MediaCom; Mr. Simon Renshaw, Manager of The Firm; and Mr. 

Alex Kolobielski, President and CEO of First Media Radio, please 

come forward. 

Mr. Dickey, if you will sit on the far—yes, where you are is just 

fine. Please be seated and we will begin with you, Mr. Dickey. Welcome. 

STATEMENT OF LEWIS W. DICKEY, JR., CHIEF EXECUTIVE 

OFFICER, CUMULUS MEDIA INC. 

Mr. DICKEY. Good morning. Mr. Chairman, my name is Lew 

Dickey. I am the Chairman and CEO of Cumulus Media. I appreciate the opportunity to appear before the Committee today. This 

morning I would like to base my remarks around the following 

three ideas: first, contrary to much of the self-serving rhetoric, deregulation and the resultant consolidation of the radio industry has 

6 

revitalized and perhaps saved an industry that I and many fellow 

Americans alike view as a national treasure. 

Second, the recent FCC decision to move away from a contourbased market definition which has been in effect for 11 years and 

guided several thousand individual transactions, all approved one 

by one, in favor of an Arbitron-based market definition, will only 

serve to create more anomalies than it will cure. Though it may not 

be politically expedient, a much simpler, consistent, and more effective remedy was proposed and should be adopted. 

Third, the inability to transfer existing clusters formed in good 

faith under the existing rules at the time will prevent future competitors from emerging that will check and ultimately curb the 

growing power of the unambiguous industry leader, Clear Channel. 

Preserving the status quo simply strengthens and entrenches the 

incumbent, which I believe is the unfortunate and unintended consequence of this rulemaking decision. 

Now, as a second generation broadcaster—and my father is seated behind me—I grew up in Toledo, Ohio, understanding the responsibility that comes with being a licensee. I was taught that we 

as broadcasters had an obligation to serve our communities. 

Like most broadcasters, we witnessed firsthand the economic difficulties facing our extremely fragmented industry in the late 

eighties and early nineties. There were simply too many radio stations competing for a very small amount of the advertising dollar 

spent on all media. The FCC recognized that radio broadcasters 

needed the efficiencies of scale if they were to survive and improve 

program service and gave broadcasters a modicum of relief in 1991. 

Congress completed this regulatory relief in 1996 and the market 

forces were set in motion. 

For example, in building our company from scratch I have completed over 130 separate acquisitions. Our focus is on midsized and 

smaller markets, and I can tell you firsthand about the sad state 

our industry was in in America’s heartland. A great many of the 

stations we acquired were either losing money or were only profitable because the owners had severely cut back investment in programming and the technical facilities. 

For instance, we had to spend tens of millions of dollars to bring 

these facilities up to FCC code to ensure that they would provide 

reliable and full coverage for their communities. In addition, many 

of the stations were either automated or received programming via 

satellite, with skeleton programming staffs to save money. And in 

many cases there was no local news staff whatsoever. 

Today things are much different under Cumulus. We have 270 

stations in 55 cities, and of our 2,800 employees 1,455, or more 

than half of them, are in programming. We now have 65 full-time 

news people in addition to the local, regional, and national news 

that we carry through the Associated Press in addition to other 

major networks. 

The economies of scale afforded by our clusters enable us to offer 

listeners niche formats, like jazz, blues, black gospel, alternative 

rock, classic country, and all-sports, that certainly could not be selfsustainable outside of a cluster of multiple stations. 

We also have effectively used our platform of stations to benefit 

their respective communities. For example, last year we raised $7.5 

7 

million for charity, including $2.5 million alone for the Saint Jude’s 

Children’s Hospital. In addition to fundraising, on June 6 of this 

year, we opened up simultaneously 43 different playgrounds in different cities across the country for underprivileged children. 

We take our responsibilities as licensees seriously and feel very 

strongly that we have changed local radio in our communities for 

the better as a result of consolidation. At Cumulus we take a great 

deal of pride in the way we serve our communities, treat our 2,800 

employees, and provide a return for our shareholders. In many 

ways, Mr. Chairman, we are the Jet Blue for the radio industry. 

I am concerned, however, about our continued viability if our 

hands are tied as we do battle each day with the industry’s dominant force. Their tremendous scale gives them an undeniable advantage in the competition for capital, talent, and advertising dollars. Any action that impedes our ability to grow will only strengthen the industry leader as a greater share of advertising dollars increasingly shift toward the larger platforms. 

This long-term trend cannot be overestimated and as such I do 

not believe that we should have to compete under a new set of 

ground rules that clearly favor an incumbent whose platform is already dominant and becoming stronger every day. 

Thank you. 

[The prepared statement of Mr. Dickey follows:] 

PREPARED STATEMENT OF LEWIS W. DICKEY, JR., CHIEF EXECUTIVE OFFICER, CUMULUS MEDIA INC. 

I. Introduction 

My name is Lew Dickey. I am the CEO of Cumulus Media Inc., a publicly-traded 

company that is the second-largest radio company in terms of number of stations 

with more than 250 located around the country. 

The radio industry is now at a critical crossroad, and, as a second generation and 

life-long radio broadcaster, I appreciate the opportunity to come before this Committee to discuss the very important issues that underlie that crossroad because the 

resolution of those issues will have a profound impact on radio and the service it 

provides to the listening public. 

To a large extent, the crossroad in radio reflects a fundamental gap between perception and reality: 

• Public spokesmen decry the evils of consolidation but ignore the substantial 

benefits that consolidation has brought to the listening public. 

• Fingers are pointed at the alleged misdeeds of Clear Channel—by far the largest radio company with 1,200 stations—and assumptions are incorrectly made 

that every radio company engages in the same practices. 

• Critics point to an FCC rule on market definition that permits some anomalies—such as Clear Channel’s ownership of many stations in the relatively 

small market of Minot, North Dakota—and wrongly assume that the FCC rule 

allows excessive consolidation in every market. 

• Pressed by Congress to do something about the few anomalies that generate almost all of the publicity, the FCC adopts a solution—the use of Arbitron-created 

markets—that the FCC rejected more than 10 years ago because it would not 

adequately reflect the actual options available to radio listeners. 

• Anxious to protect the public against the alleged dangers of a single large company—Clear Channel—the FCC has shot an arrow that strikes at the heart of 

smaller broadcasters whose practices have served—and could continue to 

serve—the listening public well. 

The flaws of the FCC’s new market definition can be appreciated best by understanding the evolution of the radio industry in the last ten years or so. 

Radio historically has been an extremely fragmented industry. Prior to 1992, no 

single operator could own more than 20 of the more than 10,000 stations in the 

United States. Following the gulf war in 1991, the industry fell on hard times and 

8 

more than half of the radio stations were losing money. There were simply too many 

stations in each market chasing a very small share of the advertising dollars spent 

on all media. There were in fact reports that 90 percent of the industry’s profit was 

garnered by about 10 percent of the owners. 

Radio owners—and the listening public they served—needed relief if free over-theair radio was to survive. Responding to this grave situation, the FCC permitted 

broadcasters to own up to 2 FM’s and 2 AM’s in each market with a maximum of 

20 AM stations and 20 FM stations nationwide. It was a bold attempt to provide 

relief to a seriously troubled industry, and it revolved around a simple but critical 

concept—consolidation. The FCC recognized even then that radio broadcasters needed the efficiencies of scale if they were to survive and hopefully improve program 

service. 

In order to implement its new ownership rule, the FCC labored long and hard to 

develop a market definition that would provide the most uniform and objective 

method of determining compliance. It considered many options—including the use 

of Arbitron-based market definitions—and ultimately decided in favor of the contour-based approach. Over the next four years, hundreds (if not thousands) of transactions were completed and billions of dollars of capital were invested as the radio 

industry completed its first wave of consolidation and produced the very efficiencies 

that the FCC had sought. As the industry attracted new capital, stations that had 

gone dark were revived by entrepreneurs who were banking on a new business 

model that enabled broadcasters to leverage fixed costs against multiple stations in 

a single market. In short, the FCC’s action in 1992 proved to be a desperately needed regulatory relief package for a struggling and still very fragmented industry. 

Despite progress, there were many areas—especially in medium and smaller markets—where the FCC’s expanded ownership rules had little or no impact. Then, 

in1996, Congress passed sweeping reform legislation that further relaxed the caps 

on local ownership and removed the national cap on the number of stations a single 

company could own. Radio broadcasters could now own up to eight (8) stations in 

the largest markets and no more than half of the stations in the smallest markets. 

The expanded ownership opportunities under the 1996 Act relied on the same contour-overlap methodology that the FCC had adopted in 1992. And why not? There 

was no reason to believe that the methodology was ill-conceived. And so the Telecommunications Act of 1996 transformed radio in the smaller markets from a basically ’’mom and pop’’ industry into a business that could now attract the large 

amounts of capital and investment needed to provide the improved program service 

that Congress no doubt sought. 

II. The Results of Industry Consolidation 

Armed with both public and private capital, entrepreneurs have invested tens of 

billions of dollars and completed thousands of transactions since 1996 to begin to 

consolidate one of the country’s most fragmented industries. Several large companies were created as a result of this consolidation, but even today, over seven years 

later, only five companies own more than 100 radio stations out of more than 12,000 

that are now on the air. They are Clear Channel, Cumulus, Citadel, Infinity and 

Entercom. 

Clear Channel was by far the most aggressive of the consolidators, acquiring more 

than 1,200 stations, or almost 1,000 more than my company, Cumulus, which owns 

the second largest number of stations. On the revenue front the disparity is equally 

as great. With over $3.5 billion of radio revenue, Clear Channel has almost a billion 

and a half dollar lead over the next largest competitor, Infinity, and a $3 billion 

lead over the number three player in revenue, which is Cox. In short, Clear Channel 

is in a class by itself in terms of revenue and number of stations. 

As the proverbial 800-pound gorilla, Clear Channel has become the lighting rod 

for opponents of radio consolidation. While some of this criticism maybe deserved, 

much of it is not. For example, concerns have been raised that ownership of so many 

radio stations by one company has homogenized program fare and turned radio 

service by all stations—whether or not owned by Clear Channel—into a McDonald’s 

version of broadcasting. The truth is otherwise. There is more format diversity today 

than ever before, and there are more choices on the dial today than ever before. Our 

experience at Cumulus is illustrative. I have built our company—which focuses on 

midsize and smaller markets—from scratch through 130 acquisitions which now 

provides a format diversity in most markets that never previously existed. 

Like many other radio companies, Cumulus has been able to utilize the expanded 

ownership caps of the 1996 Act to develop market clusters that operate with greater 

economic efficiency and are able to pour much-needed money and resources into developing quality local programming with live disc jockeys and upgraded equipment. 

Critics today ignore the achievements of companies like ours and speak of those 

9 

‘‘mom and pop’’ operations with great nostalgia on the assumption that those small 

operations provided reliable and responsive local service. Again, the truth was often 

otherwise. Many of the stations we acquired were automated juke boxes which had 

few local programs and instead relied on programming from syndicators via satellite 

or bare-bones automation systems. Oftentimes, these stations were operated as little 

more than sales organizations with little or no programming staff and with substandard transmission facilities that were in need of significant capital investment 

just to bring them into compliance with FCC rules. 

Notwithstanding the benefits achieved under existing rules, the FCC voted a 

month ago to adopt new radio market definition which had the unstated objective 

of tempering the dominance of Clear Channel and the stated objective of preventing 

a repeat of the now famous Minot anomaly. I believe that the new rules regarding 

radio ownership and market definition have missed on both counts and should be 

withdrawn or modified. 

III. Grandfathering of Current Clusters and Pending Applications 

The FCC’s new market definition means that some radio broadcasters will have 

market clusters that exceed the new limitation. The FCC is grandfathering everyone’s current clusters, but requiring compliance upon transfer of radio properties. 

For Clear Channel, this is a most welcome development because it is probably not 

a seller and is in the ninth inning of consolidation. As a result, the presumed primary target of the FCC action is relatively unaffected. Clear Channel will, therefore, 

be allowed to continue to dominate an industry with unprecedented scale and will 

inevitably grow stronger with each passing day under the new rules as its competitors remain fragmented. 

This is bad news for those of us who have to compete against Clear Channel. We 

cannot hope to compete effectively against Clear Channel’s mammoth organization 

unless we can grow. Preserving the status quo simply strengthens and emboldens 

the incumbent and that, in my judgment, is the unintended consequence of the 

FCC’s new rulemaking decision. The point should not be lost amidst all the hysteria 

over consolidation: Clear Channel will be that much stronger five years from today 

if the ground rules of consolidation are changed in midstream and impede further 

growth by its competitors. 

To a large extent, this result is almost preordained by the FCC’s refusal to grandfather a noncompliant market cluster if it is sold to someone other than a small 

business (which is unlikely to have the resources to buy a cluster in a market of 

any meaningful size). First is the question of fairness—telling Cumulus and other 

radio companies that they cannot buy or sell intact a group of radio stations that 

were acquired in reliance on pre-existing rules. Second, there is the impact on needed growth for companies who want to compete with Clear Channel and other large 

radio companies. The inability of smaller companies to sell their clusters intact will 

cause them to hold on to their clusters rather than break them up and suffer the 

financial loss that could ensue. There will thus be fewer stations available for sale. 

The net result will be a slower pace of growth for Clear Channel’s competitors—all 

of which will help preserve Clear Channel’s competitive advantage of scale. 

Conversely, the question could logically be asked, why not force all clusters to be 

brought into compliance and thereby level the playing field. The answer is obvious. 

This approach will hurt the smaller broadcasters and create hundreds of ‘‘orphan’’ 

stations, many of which will inevitably go dark—prompting an ironic reversion to 

the pre-duopoly situation of the early 90s where few radio companies could boast 

of profits. Due to the relative size of the competitors, requiring divestitures to bring 

a group into compliance will have a much greater adverse impact on Cumulus, Citadel, Regent, Saga or Next Media than it will on Clear Channel,. because we, like 

many other broadcasters, derive the majority of our collective revenue from markets 

outside the top 50, which are the markets most likely to be affected. 

There is a similar inequity in the FCC’s refusal to grandfather applications that 

were filed before the new rules were adopted. There are apparently hundreds of applications that are currently pending before the FCC that reflect deals constructed 

on the basis of the pre-existing rules. The practical ramifications of the situation 

should not be lost in the FCC’s urge to change the definition of a radio market: before that change was adopted on June 2, many companies large and small invested 

substantial time and limited resources to fashion deals that would comply with the 

prior rules. 

As a legal matter, the FCC cannot apply the new rules to those pending applications, because the new rules are not yet effective and probably will not become effective until some time in August at the earliest. The FCC has therefore decided to 

defer action on non-compliant pending applications until the new rules do become 

effective. Parties to those pending applications can file amendments to show that 

10 

their pre-existing deal complies with the new rules, but, in the absence of an 

amendment which shows compliance, the FCC apparently proposes to suspend the 

processing of the application until the new rules do become effective. For Cumulus, 

this means that many pending applications—including some that were filed many 

months before June 2—are simply locked away in the FCC’s files until the new 

rules can be retroactively applied. The FCC has explained that retroactive approach 

by the need for consistency, but the FCC decision fails to cite any harm that will 

befall the public interest if those pending applications were processed under the preexisting rules—which are still in effect today. 

IV. Radio Market Definition 

The FCC’s decision to use Arbitron to define markets is also seriously flawed. At 

the outset, it is important to remember that the FCC rejected this very same approach in 1992 in favor of the contour-based market definition. Some 8,000 transactions later, the FCC now wants to change the rules to prevent a recurrence of the 

Minot anomalies. Instead of using the objective-based contour overlap methodology, 

the FCC is now telling radio broadcasters to rely on definitions formulated by a 

commercial enterprise whose overwhelming source of revenue is from the radio 

broadcasters themselves. 

This approach is inherently rife with conflicts and will be susceptible to manipulation similar to gerrymandering. For example, Arbitron could reduce the market in 

Macon, Georgia (where Cumulus operates stations) to expand the market in Atlanta 

because it would benefit large Arbitron customers like Clear Channel and Infinity 

in Atlanta. That result would obviously hurt Cumulus and the other independents 

in Macon. 

This hypothetical is not designed to impugn the motives or actions of Arbitron. 

But we should not lose sight of the most critical fact here: Arbitron is a private vendor understandably interested in maximizing its profit, and that kind of company 

should not be endowed with the power to be the official arbiter of radio market definitions and thus the ultimate regulator of industry consolidation. 

The difficulties with the FCC’s new approach are compounded by Arbitron’s failure to include 40 percent of the country’s stations in rated markets. That means 

that the FCC now needs to devise yet another methodology for defining a market 

in the smaller markets. That situation also creates the potential for manipulation 

by broadcasters who may try to influence Arbitron’s decision to rate an unrated 

market or to discontinue the service in a rated market when it suits the radio companies’ expansion needs. This scenario may actually increase the amount of concentration in a market under the new rules—hardly a consequence intended by the 

FCC. 

In an effort to combat manipulation of Arbitron data, the new FCC rules state 

that a broadcaster cannot rely on any changes in Arbitron markets until those 

changes have been in effect for two years. To be sure, that reservation will preclude 

broadcasters from immediately exploiting any inappropriate changes in the Arbitron 

definition; but that 2-year reservation will allow the exploitation after two years. 

And beyond that, the 2-year reservation will preclude a broadcaster—and the FCC 

itself—from immediately using Arbitron changes that do reflect legitimate changes 

in the radio marketplace. In short, the use of Arbitron can produce anomalies in 

both the short run and the long run. 

It is indeed ironic that the FCC was looking for an ‘‘intellectually honest’’ solution 

to the Minot problem and, in its zeal to do something that would mollify the critics, 

jettisoned a rule that had produced relatively few anomalies in exchange for a new 

methodology which is subject to manipulation, draws a distinction between rated 

and unrated markets, and could actually lead to greater concentration in some instances, and all while unfairly restricting broadcasters ability to compete against 

the industry’s dominant powerhouse. In short, the FCC’s new market definition will 

surely produce far more anomalies over time than it will cure, and the new rules 

regarding grandfathering and transferability will only serve to embolden a company 

whose market power the FCC presumably wanted to curb. 

If the objective is to remedy the anomalous situations like Minot, it can be done 

under the existing contour-overlap methodology with a simple qualification based 

upon the proximity of the transmitters to the defined market. The NAB proposed 

a test that no station could be deemed to be in the market under the contour-overlap methodology if the station’s transmitter was more than fifty-eight (58) miles 

from the ‘‘market perimeter.’’ We then could have preserved and refined a market 

definition methodology under which over 8,000 transactions have occurred and 

under which local markets have already largely been consolidated. This final test 

would have the added benefits of consistency for ALL stations (both rated and 

unrated) and not being subject to manipulation. 

11 

V. Conclusion 

In deciding whether to keep the existing rule or in fashioning a new rule, it must 

be remembered that the radio industry is a diverse industry with dozens of different 

companies who each have unique cultures and operating strategies. This Committee 

should not assume that all broadcasters behave similarly or that consolidation will 

only produce one way of operating a cluster. For example, at Cumulus, we believe 

in being live and local and have eschewed the practice of piping in talent from another market and pretending that they are right there in the local studio. That is 

a tactic that is used against us, and sometimes it works and sometimes it doesn’t. 

But that does not affect our programming decisions. We believe that, in the long 

run, we will take share from companies who aren’t predominately local because 

radio is truly a local medium, and we feel very strongly that a local and personal 

touch is critical to good public service and to our financial health. 

Therefore, I caution the Committee not to use some broadcasters’ programming 

policies as the sole basis to define beneficial public policy for an entire industry. I 

would also ask the Committee not to tie our hands as we work to continue to grow 

so that we remain viable and continue to compete across the street from Clear 

Channel. Any action that impedes that growth will only serve to strengthen the industry leader as a greater share of advertising dollars increasingly shifts towards 

larger platforms. That will inevitably enhance Clear Channel’s ability to lock up the 

best talent and the biggest promotions—all of which will increasingly make it a 

more formidable competitor for audience share as well. That last point cannot be 

emphasized too strongly. Clear Channel will become a more powerful market force 

under the new rules. If the Committee is interested in fair competition and better 

public service, the FCC’s new definition for rated radio markets should be changed. 

The CHAIRMAN. Thank you very much. 

Mr. Mandel. 

STATEMENT OF JON MANDEL, CO-CHIEF EXECUTIVE OFFICER, 

MEDIACOM, GREY GLOBAL GROUP, INC. 

Mr. MANDEL. Good morning. I am here today to try to help you 

through some of the morass of twisted claims made by those with 

vested economic interests in the broadcast industry. Why would an 

advertising agency be willing to do this? Why would we have joined 

with others in filing at the FCC as the Coalition for Program Diversity? Some of our agency counterparts have told us to just keep 

quiet because the media companies could hurt our business if we 

aggravate them. And because our clients pass on commission basis, 

we make more money if advertising costs skyrocket. 

However, I am concerned about the future of not just the advertising industry, but the broadcast industry as well. I am shocked 

that some would have you and others in this town make decisions 

based on half-truths and misconceptions. Let mE clear up some 

facts and misstatements that have been made at the Commission 

and to this Committee. Because we are focusing on radio today, I 

will use radio examples. 

There is a belief that radio consolidation saved the radio industry 

from demise. But as Michael Bergner, a station broker, said in 

Business Week about the years since 1987: ‘‘Even if you knew nothing about the business, you would have had to go out of your way 

to lose money.’’ 

It was stated in this chamber that Clear Channel only owns 10 

percent of the radio stations in this country. True, but misleading. 

The industry source ‘‘Who Owns What,’’ which is owned by Clear 

Channel, credits the company with having 32 percent of the national audience to radio. In the markets that Clear Channel is in, 

the percentage would be much higher. 

12 

Clear Channel has implied that this is because they are excellent 

programmers. Yes, in Washington they improved one station from 

number 35 on its ranking to number 20. In New York, they own 

the top four stations, which is the same rank when they bought 

them in 1999. 

In San Diego, Clear Channel owns the top six stations—no improvement since they bought them in 2000. In San Diego, by the 

way, they also own three other stations and sell the advertising 

time at another six, and they also own one of the two radio rep 

firms that also sell the ad time for their competitors. 

The same lack of station-building story holds in New Orleans 

and Minneapolis. In Austin and Atlanta, they lost rank. Is this 

good radio management or good banking? 

In the interest of free market, regulators and Congress have deregulated, which has instead caused a constrained market that has 

cost advertisers and the economy. The issue is both horizontal and 

vertical in nature. That is because the consolidated companies own 

multiple stations in multiple markets and program them in-house. 

Advertisers and local economies suffer. 

As a Clear Channel program director was quoted in Inside Radio: 

‘‘Clear Channel stations only buy syndicated programming from 

us—keep the money inside the family.’’ For instance, the Weather 

Channel had a syndicated radio package that Clear Channel would 

not run because it was, quote unquote, ‘‘note appropriate in our 

markets.’’ How many jobs were lost when the Gulf Coast or Arizona 

tourism offices could not be as effective in running advertising in 

Washington saying, it’s snowing where you are, but it’s nice here? 

When Clear Channel decided it was in fact appropriate because 

they took over national ad sales on the show, how much more did 

advertisers pay? 

Mike Savage is cleared on independent stations and is quite successful. It has been reported that Clear Channel is trying to get 

him to break his contract by promising upgraded clearances. How 

many advertisers will lose an outlet when those independent radio 

stations are no longer a viable outlet? How many advertisers will 

be blocked on a national basis from running product advertising or 

issue advertising that Clear Channel disagrees with? 

The consolidation in radio has caused large cost increases over 

what straight supply and demand would have caused in a free market. In Atlanta, costs are 155 percent higher than supply and demand, which is a consolidation tax of over $144 million a year. New 

York radio is overcharged by 30 percent, $156 million a year. San 

Diego is also 30 percent. Mossy Auto Group, which is a San Diego 

car dealer, overpaid by $600,000, that means maybe they do not 

mind because the prices are so high that smaller auto dealers have 

trouble advertising. 

The people and businesses of Austin are overcharged by 95 percent. I would sure hate to walk into El Arroyo Restaurant if that 

fact gets out of this room. 

In New Orleans, the consolidation tax is only 7 percent because 

there are 10 non-consolidated stations as an alternative to the 3 

big owners. Ray Brant and Bone Brothers are car dealers in New 

Orleans. They overpaid by $85,000 last year. Did they eat it or 

charge Louisianans more for their cars? 

13 

Minneapolis has a consolidation tax of 78 percent because there 

are only four large consolidated sellers. In Washington, the Metro 

advertises for more riders and, if like New York, is probably a little 

starved for money, but it was overcharged a quarter of a million 

dollars last year because of radio consolidation. 

In Las Vegas, 30 percent, $14 million; and in Tulsa, Atomic Burrito has to sell a lot more beans or lay a worker off to cover the 

$4,200 per year 12 percent consolidation tax they pay. 

Those are the facts. You can look them up. It is clear that the 

effort to create a free market has done anything but. It is analogous to letting a private citizen maintain the only public free road 

into the market and looking the other way when he puts a private 

toll up. The cost to the economy created by this closed market 

while winking that it is free is of paramount importance to advertisers and the people of the United States who have to pay the 

costs. We believe it should be to you as well. 

You asked about radio. We have done the work and can prove 

the same problems in television. I welcome your questions. 

[The prepared statement of Mr. Mandel follows:] 

PREPARED STATEMENT OF JON MANDEL, CO-CHIEF EXECUTIVE OFFICER, MEDIACOM, 

GREY GLOBAL GROUP, INC. 

Good morning. I am here today to try to help you through some of the morass 

of twisted claims made by those with vested economic interests in the broadcast industry. Why would an advertising agency be willing to do this? Why would we have 

joined with others in filing at the FCC as the Coalition for Program Diversity? Some 

of our agency counterparts have told us to just keep quiet because the media companies could hurt our business if we aggravate them. And, because our clients pay us 

on a commission basis we make more money if advertising costs skyrocket. 

However, I am concerned about the future of not just the advertising industry but 

the broadcast industry as well. I am shocked that some would have you and others 

in this town make decisions based on half-truths and misconceptions. Let me clear 

up some facts and misstatements that have been made at the Commission and to 

this Committee. Because we are focusing on radio today, I will use radio examples. 

There is a belief in Washington that radio consolidation brought on by the 1996 

Act saved the radio industry from demise. But as Michael Bergner, a station broker 

in Florida said in Business Week about the years since 1983, ‘‘Even if you knew 

nothing about the business, you would have had to go out of your way to lose 

money.’’ 

It was stated in this chamber that Clear Channel only owns 10 percent of the 

radio stations in the country. True but misleading. The industry source, Who Owns 

What (which is owned by Clear Channel) credits the company with having 32 percent of the national audience to radio. In the markets that Clear Channel is in, the 

percentage would be much higher. 

Clear Channel has implied that this is because they are excellent programmers 

and improved the stations they bought. Yes, in Washington they improved one station from #35 on its demo ranking to # 20. But in New York they own the top 4 

stations, which is the same rank when they bought them in 1999. 

In San Diego, Clear Channel owns the top 6 stations, which is no improvement 

since they bought the top 6 in 2000. They also own 3 other stations in San Diego 

and sell the advertising time in another 6. And they also own one of the two radio 

rep firms that also sells ad time for competitors. 

The same lack of station building story holds in New Orleans and Minneapolis. 

In Austin and Atlanta they lost rank. Is this good radio management or good banking? 

In the interest of ‘‘free market,’’ regulators and Congress have deregulated which 

has instead caused a constrained market that has cost advertisers and the economy. 

Further, it has so limited the market that no one else can come in. The issue is 

both horizontal and vertical in nature. That is because the consolidated companies 

own multiple stations in multiple markets and program them in-house. Thus, advertisers and local economies suffer. Let me give you some examples. 

14 

As a Clear Channel program director was quoted in Inside Radio before Clear 

Channel bought it and fired the editor, Clear Channel Stations ‘‘only buy syndicated 

programming from us . . . keep the money inside the family.’’ The Weather Channel 

had a syndicated radio package that Clear Channel would not run because it ‘‘was 

not appropriate for our market.’’ How many jobs were lost when the Gulf Coast or 

Arizona tourism offices couldn’t be as effective in running advertising in Washington 

saying ‘‘It’s snowing where you are but it is nice here.’’ 

When Clear Channel decided it was appropriate in their markets because they 

took over national ad sales in the show, how much more did the advertisers pay? 

Mike Savage is cleared on independent stations and is quite successful. Clear 

Channel is trying to get him to break his contract by promising upgraded clearances. How many advertisers will lose an outlet when those independent radio stations are no longer a viable outlet? How much more will those who want Savage’s 

audience have to pay on Clear Channel? How many advertisers will be blocked on 

a national basis from running product advertising or issue advertising that Clear 

Channel disagrees with? 

The consolidation in radio has caused large cost increases over what supply and 

demand would have caused in a free market. In Atlanta costs are 155 percent higher than free market, which is a consolidation tax of $144.5 million per year. New 

York radio is overcharged by 30 percent. $156 million per year. San Diego is also 

30 percent. That means that the Mossy Auto Group overpaid by $600,000. Maybe 

they didn’t mind because the prices are so high the smaller auto dealers have trouble advertising. 

The people and businesses of Austin are overcharged by 95 percent. I would sure 

hate to walk into El Arroyo Restaurant if that fact gets out of this room. 

In New Orleans, the consolidation tax is only 7 percent because there are 10 nonconsolidated stations as an alternative to the 3 big owners. Although that may 

change even for the worst now that Clear Channel traded outdoor assets with 

Viacom so Clear Channel also now owns the only non-broadcast alternative to radio. 

Ray Brandt and Bohn Bros are car dealers in New Orleans. They overpaid by 

$85,000 last year. Did they eat it or charge Louisianans more for their cars? 

Minneapolis pays a consolidation penalty of 78 percent because there are only four 

large consolidated sellers to choose from. In Washington, D.C. the Metro advertises 

for more riders and is probably a little starved for money but it was overcharged 

$250,000 last year because of radio consolidation. 

Las Vegas is 30 percent, $14 million per year. And in Tulsa, Atomic Burrito has 

to sell a lot more beans or lay a worker off to cover the $4,200 per year, 12 percent 

consolidation tax on their radio advertising. 

Those are the facts. You can look them up. It is clear that the effort to create 

a free market has done anything but. It is analogous to letting a private citizen 

maintain the only public free road into the market and looking the other way when 

he puts a private toll up. The costs to the economy created by this closed market 

while winking that it is free is of paramount importance to advertisers and the people of the United States who have to pay the costs. We believe it should be to you 

as well. 

You asked about radio, but we have done the work and can prove the same problems in television. I welcome your questions. 

The CHAIRMAN. Thank you very much, Mr. Mandel. 

Mr. Renshaw, welcome. 

STATEMENT OF SIMON RENSHAW, MANAGER, ON BEHALF OF 

THE RECORDING ARTISTS’ COALITION 

Mr. RENSHAW. Good morning, Mr. Chairman and Members of the 

Committee. My name is Simon Renshaw, I wanted to be here, I 

thank you for the opportunity to speak today on behalf of the Recording Artists’ Coalition. I am a full-time music manager and a 

board member of the Recording Artists’ Coalition. 

The Recording Artists’ Coalition is a nonprofit recording artist 

advocacy group comprised of numerous well-known, featured recording artists, including Tony Bennett, Clint Black, Jimmy Buffet, 

Sheryl Crow, Don Henley, Billy Joel, Stevie Nicks, Bonnie Raitt, 

Bruce Springsteen, and many others. 

15 

The Recording Artists’ Coalition was formed in 1999 in response 

to the effort by the Recording Industry Association of America in 

November 1999 to obtain an amendment to the work-for-hire provisions of the Copyright Act. Since then, the Recording Artists’ Coalition has been involved in numerous legal and political issues affecting recording artists. 

I also want to note that my statements today reflect the viewpoints of other pro-artist groups, such as the American Federation 

of Television and Recording Artists, the American Federation of 

Musicians, the Future of Music Coalition, and the National Academy of Recording Arts and Sciences. 

I have been in the music business for close to 30 years. I started 

in the business in 1974 and I have been a full-time music manager 

since 1986. Over the last 17 years, I have been involved in the careers of musical artists in a wide variety of musical styles and 

genres and of varying levels of success, from new artists to international superstars. 

A major part of the work of the manager is liaising with my clients’ record labels and assisting them with the design and implementation of strategies to create awareness and, hopefully, success 

at radio. My clients include, among others, the Dixie Chicks. 

As you may recall, Don Henley, another founding member of the 

Recording Artists’ Coalition, testified before this Committee last 

January and explained how artists and the public have suffered because of radio industry consolidation and the Telecommunication 

Act of 1996. Before the 1996 Act, artists and record labels worked 

well with the radio industry. Each side needed the other and, while 

each exerted much influence and leverage over the other in the 

daily give and take between them, a delicate balance did emerge. 

The artists had a certain leverage over radio and radio had a certain leverage over artists. The system, while imperfect, still 

worked. 

All of that has now changed. The mad rush to consolidate has 

dramatically tipped the balance in favor of the radio industry. They 

now have unprecedented influence and control over artists and 

record labels. So while the radio industry continues to prosper, the 

recording artist community, already devastated by unchecked 

music piracy and unprecedented record label cutbacks and spiraling operational costs, is bearing an even greater financial and 

creative cost. 

Many in the artist community had hoped that the Internet would 

be able to ameliorate the problem. This has not happened. Radio 

air play is still necessary to introduce new artists to the public and 

to support established artists. Without radio air play, a new act 

has very little chance to succeed. Access to radio is absolutely essential. 

With real competition between radio networks and stations, 

there was always opportunity for young acts to emerge. The emergence of these young artists is the lifeblood of the music industry. 

But with rampant consolidation, it is becoming increasingly difficult for new artists to emerge. 

Unchecked consolidation is at the root of the problem. As networks consolidate, they homogenize play lists and engage in more 

centrally located programming. This harms the artist in numerous 

16 

ways. With centralized programming, there are arguably fewer 

spots for new artists. This gives radio networks enormous leverage 

to make ever-increasing demands on the record label and the recording artist. 

These demands take various forms, ranging from increased financial support of the network, some of which is called ‘‘payola,’’ 

or independent radio promotion, to increased demands on recording 

artists to perform or take part in radio promotions for little or no 

compensation. The implied penalty for not agreeing to paying high 

tribute or to offer gratis services to a radio network is decreased 

or no radio air play. The pressure on artists and the labels to capitulate is real and is at times overwhelming. 

Consolidation and the resulting homogenization of play lists and 

centralized programming has also greatly diminished the artist’s 

reliance on breakout cities. Before consolidation, local DJ’s and program directors retained the power to create local diversified programming. Sometimes a band’s success would be solely due to a 

single DJ or program director compelled to play music that is overlooked elsewhere. 

This was one of the beauties of the pre-1996 system. A band or 

artist could receive an inordinate amount of attention from a single 

radio station. The interest in that city would then—could then have 

an enormous effect because the attention of the lone radio station 

would oftentimes act as a catalyst for other stations in other cities 

to start adding an artist’s song or work to their play lists. This 

would have a cascading effect and all of a sudden a new artist 

would achieve national success that would otherwise have been denied it in today’s radio world. 

One has to wonder whether any of the great musical trends in 

contemporary music would have happened in today’s radio environment. Would the Motown or Stax sounds have ever been heard? 

Would the Beach Boys have exploded out of southern California? 

Would the Grunge sound of Seattle have ever ignited a new generation of music lovers? 

Many of the most important music styles have been the ones that 

developed and matured locally, that were brought to the forefront 

by local radio stations championing their music. 

I am sure many of you are aware of the controversy surrounding 

the Dixie Chicks. This incident received a good amount of press 

coverage. As a result of statements made by members of the Dixie 

Chicks at a concert, two radio networks, Cox and Cumulus, banned 

the Dixie Chicks from their play lists at a chain level, while many 

other stations across the country banned them at a local station 

level and many others did not. In Colorado Springs, Colorado, two 

DJ’s were suspended for violating that ban when they played the 

Dixie Chicks’ records. 

Whether you agree with my clients’ statements or not, I know 

you support the First Amendment. Unfortunately, radio consolidation has provided radio networks with an enormous opportunity to 

undermine free speech by boycotting records while they wage political wars with artists and labels, be that for ratings gains or be 

that for political favor. 

I appreciate that the networks also enjoy the same First Amendment rights as my clients, but we must remember that those who 

17 

crafted the original limitations on ownership feared conglomerates 

exercising this kind of control over political speech. Ownership limits were intended in part as a way to prevent such a monopoly of 

thought and discourse. The public air waves were to be used to promote a marketplace of ideas. A marketplace of ideas, the cornerstone of this democracy, can only be nurtured and sustained within 

a system promoting ownership diversity, not ownership consolidation. 

Even the perception of a radio network using power in this way 

clearly demonstrates the potential danger of a system of unchecked 

consolidation that ultimately undermines artistic freedom, cultural 

enlightenment, and political discourse. What happened to my clients is perhaps the most compelling evidence that radio ownership 

consolidation has a direct negative impact on diversity of programming and political discourse over the public air waves. 

Some in the radio industry have suggested that recent FCC rule 

changes actually restrict radio networks from continuing their 

drive toward consolidation. I am not convinced that this is the case. 

Some serious analysts have concluded that the intricate market 

rule changes do not make it harder to acquire a new station. I am 

attaching to my testimony comments from the Future of Music Coalition setting forth that conclusion. 

My personal view is that the recent FCC rule changes in market 

definition are relatively insignificant. This is not a local market 

problem. This is a national problem. As such, I hope the Committee 

will consider the implementation of new national limits on ownership. Only by placing national limits on ownership and perhaps 

limits that are more reflective of the pre-1996 world will the harm 

caused by radio consolidation tend to diminish and hopefully disappear. 

Thank you. 

[The prepared statement of Mr. Renshaw follows:] 

PREPARED STATEMENT OF SIMON RENSHAW, MANAGER, ON BEHALF OF THE

RECORDING ARTISTS’ COALITION

Mr. Chairman and Members of the Committee, 

My name is Simon Renshaw. I am honored to be here and I thank you for the 

opportunity to speak today on behalf of the Recording Artists’ Coalition (RAC). I am 

a full time music manager and board member of the Recording Artists’ Coalition. 

The Recording Artist Coalition is a non-profit recording artist advocacy group comprised of numerous well-known featured recording artists, including Tony Bennett, 

Clint Black, Jimmy Buffet, Sheryl Crow, Don Henley, Billy Joel, Stevie Nicks, 

Bonnie Raitt, Bruce Springsteen, and Trisha Yearwood. RAC was formed in 1999 

in response to the effort by the Recording Industry Association of America in November 1999 to obtain an amendment to the work-for-hire provisions of the Copyright Act. Since then RAC has been involved in numerous legal and political issues 

affecting recording artists. I also want to note that my statements today reflect the 

viewpoints of other pro-artist groups such as AFTRA, AFM, the Future of Music Coalition, and NARAS. 

I have been in the music business for close to 30 years. I started in the business 

in 1974 and after initially working in live concert production, I have been a full time 

artist manager since 1986. Over the last 17 years I have been involved in the careers of musical artists in a wide variety of musical styles and genres, and of varying levels of success, from new artists to international superstars. A major par of 

the work of the manager is liaising with my clients record labels and assisting them 

with the design and implementation of strategies to create awareness and hopefully 

success at radio. My clients include, among others, the Dixie Chicks. 

18 

As you may recall, Don Henley, another founding member of the Recording Artists’ Coalition, testified before this Committee last January and explained how artists and the public have suffered because of radio industry consolidation and the 

Telecommunications Act of 1996. 

Before the 1996 Telecommunications Act, artists and record labels worked well 

with the radio industry. Each side needed the other, and while each exerted as 

much influence and leverage over the other in the daily give and take between 

them, a delicate balance emerged. The artists had certain leverage over radio, and 

radio had certain leverage over the artists. This system, while imperfect, still 

worked. 

All of that has now changed. The mad rush to consolidate has dramatically tipped 

the balance in favor of the radio industry. They now have unprecedented influence 

and control over the artists and the record labels. So while the radio industry continues to prosper, the recording artist community, already devastated by unchecked 

music piracy, unprecedented record label cutbacks, and spiraling operational costs, 

is bearing an even greater financial and creative cost. 

Many in the artists’ community had hoped that the Internet would be able to 

ameliorate the problem. This has not happened. Radio airplay is still necessary to 

introduce new artists to the public, and to support established artists. Without radio 

airplay a new act has very little chance to succeed. Access to radio is absolutely essential. With real competition between radio networks and stations, there was always opportunity for young acts to emerge. The emergence of these young acts is 

the lifeblood of the music industry. But with rampant consolidation, it is becoming 

increasingly difficult for new acts to emerge. 

Unchecked consolidation is at the root of this problem. As networks consolidate, 

they homogenize playlists and engage in more centrally located programming. This 

harms the artist in numerous ways. With centralized programming, there are arguably fewer spots for new artists. This gives the radio networks enormous leverage 

to make ever increasing demands on the record label and the recording artist. These 

demands take various forms, ranging from increased financial support of the network—some call this payola or independent radio promotion—to increased demands 

on recording artists to perform or take part in radio promotions for little or no compensation. The implied penalty for not agreeing to pay higher tribute or to offer gratis services to the radio network, is decreased or no radio airplay. The pressure on 

artists and the labels to capitulate is real, and at times overwhelming. 

Consolidation, and the resulting homogenization of playlists and centralized programming, has also greatly diminished an artist’s reliance on breakout cities. Before 

consolidation, local DJs and program directors retained the power to create local, 

diversified programming. Sometimes a band’s success would be solely due to a single 

DJ or program director compelled to play music that is overlooked elsewhere. This 

was one of the beauties of the pre-1996 system. A band or act may receive inordinate attention from a lone radio station. The interest in that city in the act may 

be enormous because of the attention of the lone station, and oftentimes this attention would act as a catalyst for stations in other cities to add the song to their 

playlist. This would have a cascading effect, and all of a sudden a new act would 

achieve national success that would have otherwise been denied it in today’s radio 

world. The possibility of an act ‘‘breaking out’’ on a singular station or in a singular 

market has been severely diminished because of consolidation. The power to independently program—once a staple of the radio industry—has been replaced with 

more centralized programming that works against the dynamic of a ‘‘breakout city.’’ 

Thus, many new acts will never achieve success due in part to this new restrictive 

atmosphere. 

In addition to the problems that consolidation and centralized playlists have 

brought to individual artists, one should not overlook the cultural damage this is 

inflicted by these practices. One has to wonder whether any of the great musical 

trends in contemporary music could have happened in today’s radio environment. 

Would the Motown or Stax sounds have ever been heard, would the Beach Boys 

have exploded out of Southern California, would the grunge sounds from Seattle 

ever ignited a new generation of music lovers. Many of the most important musical 

styles have been ones that developed and matured locally and were brought to the 

forefront by local radio stations, championing their local music. 

I have always understood that there was to be an element of social responsibility 

between a radio station and the community that licensed that station the right to 

use the public airwaves. Whether that be by providing a strong local news service, 

fostering debate and dialogue of issues important to the community or promoting 

the arts created by and, or programmed and produced shows, where the only ‘‘local’’ 

aspect is the advertising sales team, are lacking in all of these responsibilities. 

19 

I am sure many of you are aware of the controversy surrounding the Dixie Chicks. 

This incident received a good amount of press coverage. As a result of statements 

made by a member of the Dixie Chicks at a concert, two radio networks, Cox and 

Cumulus, banned the Dixie Chicks from their playlists at a chain level, while many 

other stations across the country banned them at a local/station level, and many did 

not. In Colorado Springs, Colorado, two DJs were suspended for violating that ban 

when they played Dixie Chicks records. 

Whether you agree with my client’s statements or not, I know you support the 

First Amendment. Unfortunately, radio consolidation has provided radio networks 

with enormous opportunity to undermine free speech by boycotting records while 

they wage political wars with artists and labels. I appreciate that the networks also 

enjoy the same First Amendment rights as my clients. But we must remember that 

those who crafted the original limitations on ownership feared conglomerates exercising this kind of control over political speech. Ownership limits were intended, in 

part, as a way to prevent such a monopoly of thought and discourse. The public airwaves were to be used to promote a marketplace of ideas. A marketplace of ideas, 

the cornerstone of this democracy, can only be nurtured and sustained within a system promoting ownership diversity, not ownership consolidation. Even the perception of a radio network using power in this way, clearly demonstrates the potential 

danger of a system of unchecked consolidation that ultimately undermines artistic 

freedom and cultural enlightenment. What happened to my clients is perhaps the 

most compelling evidence that radio ownership consolidation has a direct negative 

impact on diversity of programming and political discourse over the public airwaves. 

Some in the radio industry have suggested that the recent FCC rule changes actually restrict radio networks from continuing their drive toward consolidation. I am 

not convinced that is the case. Some serious analysts have concluded that the intricate market rule changes do not make it harder to acquire new stations. I am attaching to my testimony comments from the Future of Music Coalition setting forth 

their conclusions. 

My personal view is that the recent FCC rule changes in market definition are 

relatively insignificant. This is not a local market problem. This is a national problem. As such, I hope the Committee will consider implementation of new ‘‘national’’ 

limits on ownership. Only by placing national limits on ownership, and perhaps limits that are more reflective of the pre-1996 world, will the harm caused by radio 

consolidation tend to diminish and hopefully disappear. 

I hope the Committee will also explore the harm caused by radio networks owning 

affiliated live promotion companies, venues, agencies, public relations companies, 

and management companies. As my colleague Don Henley stated ‘‘This institutionalized conflict of interest places the artist in a vastly uncompetitive and weak position. What happens when an artist refuses to perform in a venue owned by the radio 

station or network? Will the artist records be played on the station or will the company reduce or eliminate radio airplay? Most artists cannot afford to find out.’’ 

The music industry and the radio industry must strive to create a healthier and 

more balanced relationship. Otherwise, the music industry, and particularly, the recording artists, will continue to suffer. I hope this Committee will help restore that 

balance. This can only be accomplished by stopping and perhaps even reversing the 

trend toward unchecked radio consolidation. 

I thank you again for this opportunity to discuss these important issues with the 

Committee. Thank you for your time. 

ATTACHMENT

FMC’s Comments on the Radio Market Definition 

As part of the changes to its media ownership rules announced on June 2, the 

FCC has altered its method for defining radio markets. According to a preliminary 

analysis being conducted by the Future of Music Coalition, the effect of the redefinition of radio markets is inconclusive. In some markets, the effective local ownership 

cap will be lower, but in other markets the effective local ownership cap will increase. 

The FCC claims that by moving from contour to Arbitron measurements it is closing a loophole that radio companies have used to sidestep market ownership caps. 

This is true but it is only half the story. Based on the FCC’s June 2 rulemaking, 

now commercial and non-commercial stations are counted to determine a market’s 

size, whereas before only commercial stations were counted. By including non-commercial stations in the market count the FCC is measuring the same markets in 

a way that, in many cases, now increases the number of stations in each market. 

Thus in most markets the ceiling for setting ownership caps will rise. This will very 

20 

likely open the door to more ‘‘legal’’ purchases by those same large radio conglomerates that had previously employed the loophole that the FCC just eliminated. 

Another concern is the status of markets where owners have exceeded the legal 

cap according to Arbitron definitions. Unless radio owners are forced to divest the 

stations owned in excess of the current caps, the recent policy change will not redress any of the harms of radio consolidation in dozens of markets. 

The FCC eliminated the contour measurement to protect citizens from corporations that were using this loophole to get around the local market caps that were 

established with the 1996 Telecommunications Act. We applaud the FCC for protecting the public in this way and support this new standard. We do not, however, 

support the new market calculation that includes non-commercial stations. This second adjustment might eliminate the benefits the public would sustain from the institution of the first. 

It is clear that more research is required to understand exactly what the FCC’s 

policy change for radio will bring. It is the FCC’s responsibility to bring forth actual 

numbers to prove that these changes reduce media concentration, not increase it. 

Recording Artists’ Coalition 

Bryan Adams Don Henley No Doubt 

Christina Aguilera The Estate of Woody Herman The Offspring 

Gregg Allman Hootie & The Blowfish Ozomatli 

Beck Bruce Hornsby Patti Page 

Bee Gees Janis lan Pearl Jam 

Clint Black Enrique Iglesias Michael Penn 

Ruben Blades Jimmie’s Chicken Shack Tom Petty 

Michelle Branch Billy Joel Puddle of Mudd 

Kathleen Brennan Elton John Bonnie Raitt 

Jonatha Brooke Tom Jones REM 

Jackson Browne Wynonna Judd Kenny Rogers 

Lindsey Buckingham Jurassic 5 Roy Rogers 

Jimmy Buffett Toby Keith Linda Ronstadt 

Solomon Burke Kenna Joe Sample 

Mary Chapin Carpenter Carole King David Sanborn 

Lester Chambers Denny Laine Boz Scaggs 

Eric Clapton Frankie Laine Timothy B. Schmit 

Chris Cornell Linkin Park Seal 

David Crosby Lisa Loeb Shea Seger 

Crosby Stills & Nash Jeff Lynne Social Distortion 

Sheryl Crow Madonna Ronnie Spector 

Dave Matthews Band Aimee Mann Bruce Springsteen 

Neil Diamond Tony Martin Staind 

Dixie Chicks matchbox twenty Static-X 

Howie Dorough (Backstreet Boys) Brian May Sting 

Fred Durst Martina McBride Stone Temple Pilots 

John Fogerty Reba McEntire Donna Summer 

Glenn Frey Tim McGraw Matthew Sweet 

Godsmack John Mellencamp Steven Tyler 

The Estate of Benny Goodman Joni Mitchell Tom Waits 

Robert Goulet Sam Moore Joe Walsh 

Nanci Griffith Alanis Morissette Roger Waters 

Hanson Randy Newman Dar Williams 

Emmylou Harris Nickelback Trisha Yearwood 

Sophie B. Hawkins Stevie Nicks Dwight Yoakam 

The CHAIRMAN. Thank you very much, Mr. Renshaw. 

Mr. Kolobielski. 

STATEMENT OF ALEX KOLOBIELSKI, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, FIRST MEDIA RADIO, LLC 

Mr. KOLOBIELSKI. Thank you, Chairman. Good morning. My 

name is Alex Kolobielski. I am President and CEO of First Media 

Radio—— 

The CHAIRMAN. I apologize for the mispronunciation of your 

name. I apologize. 

Mr. KOLOBIELSKI. I am President and CEO of First Media Radio. 

It is a privately held radio company and I’ve spent a lifetime in 

small market radio. Since 2000, First Media has acquired 13 FM 

and AM small market radio stations in several mid-Atlantic states. 

21 

We have acquisitions pending in North Carolina and Virginia. All 

but three of our radio stations are in unranked, non-Arbitron markets. 

The FCC’s decision to change the definition of radio markets and 

its proposal to extend those changes to unranked markets will have 

disastrous effects on small market operators such as ourselves. 

Small market radio is unique. The biggest problems we face are attracting good staff and adequate capital. 

Experienced employees avoid small markets, seeking more lucrative jobs in large cities. We must recruit from other fields and then 

we must offer extensive training. We are constantly at risk of having our stars recruited by large market stations. Small market operators also have difficulty attracting capital. Our sales volume and 

investor returns are usually more modest than those from large 

chains or markets. 

At the same time, small market radio plays a very important role 

in society. We are truly the voices of our local communities and are 

dedicated to serving local needs. On average, 75 percent of our programming is locally originated. Over 90 percent of our advertisers 

are local firms. We go door to door, store to store. 

Providing quality, locally originated radio programming is expensive. We must employ on-air talent for most shifts, and our advertising rates are a fraction of those in larger markets. Yet our fixed 

costs are the same as in large markets. 

A contour-based approach to defining markets is fair for all stations, no matter what the market size. It consistently measures 

station signal reach and the confines of advertising markets. Moreover, contours are seldom changed and only after extensive FCC review. With a contour-based approach, competitors can rest assured 

that changes will occur infrequently, as part of an FCC-regulated 

process. 

The FCC’s decision to adopt an Arbitron markets definition in all 

ranked markets will make the legality of existing station clusters 

vulnerable to changes in Arbitron methodology, which do not take 

place in an open public forum. Moreover, Arbitron subscribers may 

designate whether they are to be listed in one Arbitron market or 

another. While the FCC’s new rule says an owner must wait 2 

years before it can rely on the benefit of such changes, the FCC 

proposal does not consider the detrimental unintended consequences of such changes on other market operators who may unexpectedly find the number of stations in their market reduced, 

throwing them into noncompliance. 

For non-Arbitron markets, the FCC has proposed to abandon the 

contour-based approach and substitute definitions based on political or cellular market boundaries that bear no relationship to 

radio signal strength or advertising markets, putting small market 

radio operators at risk for unintended consequences. In these 

smaller markets, the FCC has said it will temporarily continue to 

utilize contours to define markets, adopting protections to avoid 

anomalies like those in Minot, North Dakota. 

The FCC’s new market definition and its proposed change for 

non-Arbitron markets will drastically disrupt the radio industry. 

New entrants must have the opportunity to develop efficient clusters of stations under the same rules previously used to build 

22 

mega-companies. Large mega-owners can spread the risk of a 

major change across markets. Small owners cannot. 

We suggest the following: First, at least in small, non-Arbitron 

markets, allow radio operators to continue to define markets based 

on contour overlaps. If some change is necessary, make permanent 

the interim policy the FCC has proposed for small unranked markets. That approach involves continued use of contours, but with 

adjustments that address alleged problems with the contour system. The FCC excludes certain stations a buyer proposes to buy 

from the total number of stations counted in defining a market. 

In addition, to address the Minot problem, the FCC excludes 

from the market count any station that has a transmitter site more 

than 58 miles from the area of proposed common ownership, more 

accurately depicting the market. 

Second, do not apply any new modified market definition approach to pending deals filed before June 2 that were negotiated 

based on the old rules. Retroactive application is particularly tough 

on small companies. 

Finally, grandfather all nonconforming clusters. For small companies, there should be unlimited opportunities to grow and transfer their clusters intact. Any other approach would create uncertainty, instability, and lower station values. 

Thank you for your time. I am available for any questions you 

may have about small market radio. 

[The prepared statement of Mr. Kolobielski follows:] 

PREPARED STATEMENT OF ALEX KOLOBIELSKI, PRESIDENT AND CHIEF EXECUTIVE

OFFICER, FIRST MEDIA RADIO, LLC 

My name is Alex Kolobielski, and I am the President and CEO of First Media 

Radio, LLC (‘‘First Media’’), a privately held radio broadcasting company 

headquartered on Maryland’s Eastern Shore. I have worked in broadcast programming, news, production, sales, and station management in small market radio all 

my professional life. 

Since January 2000, First Media Radio has acquired 13 FM and AM small market 

radio stations in Maryland, Pennsylvania, West Virginia, and North Carolina. In addition, we have radio station acquisitions pending in North Carolina and Virginia. 

With the exception of three of our stations, all First Media’s radio stations are located in unranked, non-Arbitron markets. (A listing of all of First Media Radio, 

LLC’s radio stations is attached.) 

Given my small market radio background, I never in a million years would have 

dreamed that I would be called upon to appear before Congress to discuss the Federal Communications Commission’s (‘‘FCC’s’’) regulation of radio ownership. But I 

feel so strongly that the FCC’s recent decision to alter the definition of radio markets and possibly extend those changes to very small radio markets will have such 

disastrous effects on small market radio operators like First Media that I jumped 

at this opportunity. 

Small market radio, which is generally the province of smaller companies and ignored by the large radio consolidators, is unique. The biggest problems faced by 

small market operators are attracting good staff to operate profitably and adequate 

capital to grow. Experienced radio employees usually shy away from small markets, 

seeking more lucrative opportunities in larger cities. We generally have to recruit 

our staff from other fields and then train them extensively in the details of radio 

sales and operations. Once our ‘‘stars’’ develop, we are constantly at risk of having 

them recruited by stations in larger markets. Small market operators also find it 

difficult to attract capital since the volume of sales and the ultimate pay-offs for investors are usually more modest than those available from stations in large chains 

or larger markets. 

At the same time, small market radio plays a very important role in our society. 

Small stations in small markets are truly the voices of our local communities. First 

Media, like many of our counterparts, is dedicated to serving local needs. On averVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\88772.TXT JACKIE
23 

age, 75 percent of the programming we present every day on our stations is locally 

originated. Over 90 percent of our advertising is drawn from businesses in the communities we serve. All of our stations have an ‘‘open mike’’ policy, and we encourage 

and air viewpoints from our listeners. 

Providing such quality, locally originated radio programming is expensive. We 

must employ on-air talent for all our locally originated shifts. On the sales side, we 

have between four and six local sales reps per market cluster. The advertising rates 

our markets will bear are a fraction of those in nearby large markets even though 

our fixed costs for electricity, equipment, and software are the same as those faced 

by stations in the larger markets. For instance, the stations in our closest cluster 

to the Nation’s Capitol, Easton, Maryland, find that for a:60 spot they can charge 

no more than 5 percent of the rate charged by the Top 20 stations located in Washington, D.C. 

As you know, since 1992, the FCC has been defining radio markets by reference 

to radio station contours. This definition was introduced at the time the FCC liberalized its local radio ownership rules to allow one entity to own more than one AM 

and one FM station per market. When Congress expanded the local radio caps in 

1996, the FCC retained this contour-based approach to define which stations constitute a market for purposes of applying the new caps. 

A contour-based approach to defining markets is fair for all stations, no matter 

what the market size. It consistently measures the strength and reach of a particular station’s signal and the confines of its advertising market. Moreover, contours may only be changed after an extensive FCC process involving the submission, 

review, and then grant of construction permit applications. This process usually 

takes at least six months before a radio owner receives FCC permission to modify 

its facilities. The physical construction usually takes many more months. Thus, with 

a contour-based approach, other competitors in a market usually have ample warning before changes occur, and they can also rest assured that changes will only take 

place as part of an FCC supervised and regulated process. 

The FCC has now decided to define radio markets in Arbitron ranked markets 

based on Arbitron’s market definitions. This approach will make the legality of existing station clusters vulnerable to changes in Arbitron methodology, which unlike 

the FCC’s construction permit process, do not take place in an open public forum. 

Moreover, stations subscribing to Arbitron may designate whether they are to be 

listed in one Arbitron market or another. While the FCC’s new proposal says a 

group owner must wait two years before it can rely on the benefit of any such 

change to expand the number of stations it may own, the FCC proposal does not 

consider the detrimental and unintended consequences such changes may have on 

other station clusters in the market. Those stations may easily find the number of 

stations in their market reduced and themselves thrown into noncompliance 

through no fault of their own. 

For smaller communities in non-Arbitron markets, the FCC has also proposed to 

abandon the contour-based approach. Instead, the FCC has launched a rulemaking 

to substitute definitions based on political boundaries, or even cellular market 

boundaries, neither of which bear any relationship to radio broadcast signal 

strength or the advertising markets stations’ serve. Such a system would put small 

market radio operators at risk for unintended consequences over which they have 

no control. On an interim basis, in these smaller markets, the FCC has said it will 

continue to utilize contours to define markets but has put in place several protections to avoid the anomalies that occurred in some of the political ‘‘hot potato’’ situations, like Minot and Pine Bluff that have been discussed extensively in the trade 

press. 

The FCC’s new market definition and its proposed change for non-Arbitron markets will drastically disrupt the radio industry, particularly since the changes are 

being put in place at a time when, unlike 1992, the FCC is not liberalizing the local 

radio caps. The industry has adapted to the current radio market definition, and 

entities such as First Media, that entered the market since 1996, have based their 

competitive strategies on the existing approach. These new entrants and other growing companies must have the opportunity to develop efficient clusters of stations 

under the same rules that have been used to build the existing mega-companies. 

Small market and small company players, in particular, will be disproportionately 

harmed by any change in market definition. Large, mega-owners can spread the risk 

of a major change across one or more of their markets. Small owners seeking to 

compete with them cannot. The loss of a single station or a small company’s inability to transfer intact even a single cluster could have devastating effects. 

So, if Congress were to send any kind of signal to the FCC or adopt legislation 

in this area, what is it that small market players, like First Media, would want? 

24 

1 Unless shown below, the First Media stations are located outside of Arbitron markets. 

• First, at least in small markets outside of ranked Arbitron markets, allow radio 

operators to continue to define markets based on contour overlaps just as we 

do today. (While I am testifying principally about small market concerns, as a 

matter of policy, we think the FCC should have kept the contour-based approach in all markets.) 

• If Congress disagrees and believes some changes to the contour-based approach 

are necessary, we think it should make permanent the interim policy the FCC 

has proposed for small, unranked markets. That approach involves continued 

use of contours but with adjustments that address what have been seen as some 

of the more troublesome aspects of the contour-based system. Under these adjustments, the FCC, to address the Pine Bluff problem, will exclude certain stations a buyer proposes to buy from the total number of stations that it counts 

in defining a market. In addition, to address the large signal anomaly, the 

Minot problem, the FCC will exclude from the count of stations in a market any 

station that has a transmitter site more than 92 kilometers or 58 miles from 

the area of common ownership of the stations being acquired, an approach that 

accurately depicts stations’ true markets. 

• Second, do not apply any new modified market definition approach to pending 

applications that were filed before June 2, 2003. Those deals were structured 

and negotiated based on the rules that applied before June 2. To apply the new 

standards, as the FCC has decided to do, to pending deals would be unfair to 

all parties. Such retroactive application of new rules is particularly tough on 

small companies that cannot spread the disadvantages that may result over numerous properties. 

• Finally, grandfather all non-conforming clusters. At least for smaller companies, 

there should be unlimited opportunities for them to bring in new investors, 

grow, or go public and at the same time be able to transfer their station clusters 

intact. Any other approach would create uncertainty and instability and lower 

station values. 

I appreciate the opportunity to appear before you today, and I am available to answer any questions you may have about small market radio. 

First Media Radio, LLC’s Radio Stations 1

WEMD(AM), Easton, Maryland 

WCEI–FM, Easton, Maryland 

WZWW(FM), Bellefonte, Pennsylvania (#246 State College, PA) 

WLAK(FM), Huntingdon, Pennsylvania 

WIEZ(AM), Lewistown, Pennsylvania 

WMRF–FM, Lewistown, Pennsylvania 

WOWQ(FM), DuBois, Pennsylvania 

WJLS(AM), Beckley, West Virginia (#282 Beckley, WV) 

WJLS–FM, Beckley, West Virginia (#282 Beckley, WV) 

WRMT(AM), Rocky Mount, North Carolina 

WSAY–FM, Rocky Mount, North Carolina 

WDLZ(FM), Murfreesboro, North Carolina 

WWDR(AM), Murfreesboro, North Carolina 

First Media Radio, LLC’s Proposed Acquisitions 

WLGQ(FM), Emporia, Virginia 

WSMY–FM, Alberta, Virginia 

WPTM(FM), Roanoke Rapids, North Carolina 

WCBT(AM), Roanoke Rapids, North Carolina 

WSMY(AM), Weldon, North Carolina 

WZAX(FM), Nashville, North Carolina 

WYTT(FM), Gaston, North Carolina 

WKTC(FM), Pinetops, North Carolina 

The CHAIRMAN. Thank you, Mr. Kolobielski. Thank you for being 

here today and thank you for representing a very important voice 

in America. 

25 

Mr. Dickey, Mr. Renshaw referred to your banning, your network 

banning the Dixie Chicks after comments made by one of the Dixie 

Chicks concerning the war in Iraq. What do you have to say about 

that? 

Mr. DICKEY. Mr. Chairman, first of all, Mr. Renshaw refers to 

radio companies as networks and we are not networks. We are a 

confederation of 270 individual stations in 55 cities. There is nothing network about our operation. We own and operate individual 

radio stations. 

Now, with respect to the Dixie Chicks, some time when the Dixie 

Chicks were over in Europe on their tour, and I believe it was the 

London stop—I am not quite sure—— 

The CHAIRMAN. We are aware of what happened with the Dixie 

Chicks. Please proceed. 

Mr. DICKEY. All right. After the remarks were made, there was 

a groundswell of negative reaction by our listeners against the 

band, and we had never seen anything like it before. Calls were 

coming in to Atlanta from our individual program directors 

throughout the country saying that there was—the ‘‘hue and cry’’ 

from our listeners regarding those remarks was unprecedented 

and, in their words, ‘‘over the top.’’ 

So we had to make a decision as to what we were going to do 

about it and, after conferring with our program directors in the 

field—these are the people who make the decisions on a local 

level—we made the decision that it was not in the best interests 

of our country stations at that point in time to be playing the Dixie 

Chicks’ records. 

Now, I say that, I say that also realizing that at the same time 

our Top 40 radio stations in the same markets, in the same company, continued to play the Dixie Chicks. We did not have the hue 

and cry from our listeners. Much the same way elected officials listen to their constituents, we listen to our listeners. They did not 

complain about the Dixie Chicks, so we continued to play them. 

The CHAIRMAN. But you made a decision from corporate headquarters that was binding on your DJ’s? 

Mr. DICKEY. Well, it was on our program directors. They are the 

ones that make the decisions. 

The CHAIRMAN. On your program directors, who set what the 

program is. 

Mr. DICKEY. Well, Mr. Chairman—— 

The CHAIRMAN. And just prior to that, you say that you are a 

group of independent radio stations. That is a total contradiction, 

Mr. Dickey. 

Mr. DICKEY. Well, I would respectfully disagree, because what we 

have—the purpose of our corporate headquarters is to provide quality control—— 

The CHAIRMAN. Did you or did you not order from corporate 

headquarters that the program managers not play the Dixie 

Chicks’ music? 

Mr. DICKEY. After a groundswell of response—— 

The CHAIRMAN. Why did you not leave it up to the stations themselves, if you are just a confederation of stations? 

Mr. DICKEY. Well, sir, we did at the end of the day. 

26 

The CHAIRMAN. Oh, at the end of the day. But at the beginning 

you ordered the Dixie Chicks’ music not to be played. 

Mr. DICKEY. Well, if I can respond. 

The CHAIRMAN. I am not preventing you from responding, Mr. 

Dickey. 

Mr. DICKEY. All right, sir. The program directors on a local level 

came back to us. We did not initiate this. They came back to us 

and said the hue and cry—— 

The CHAIRMAN. No, but you made the decision. 

Mr. DICKEY. Just to give you an example of how volatile this 

was—— 

The CHAIRMAN. Did you make the decision or not? 

Mr. DICKEY. Yes, we did make the decision, based on their response. 

The CHAIRMAN. Suppose, Mr. Dickey, that I or any member of 

the U.S. Senate said or did something that your program managers 

found incredibly offensive. Would you then make a decision that 

our name—that my name not be mentioned on your news programs 

because there was such a hue and cry? 

Mr. DICKEY. No, sir, we would not. 

The CHAIRMAN. You would not do that? 

Mr. DICKEY. No, that is a different—— 

The CHAIRMAN. Then why would you do that to a group of entertainers? 

Mr. DICKEY. This was a group we were playing five or six of their 

records on the air on our country stations at that time. As I say, 

just to give you an example, when the Dixie Chicks made their 

interview—we invited the Dixie Chicks to come on, on the air, and 

talk to our people and give their side of the story. They did an 

interview with Bob Kingsley. 

ABC radio network and their host Bob Kingsley, ABC radio network called Cumulus to say: Kingsley would like to do an interview 

with the Dixie Chicks after the 20/20 interview and we are not sure 

that we even want to touch this; is this going to hurt Kingsley’s 

reputation in the industry? That is how bad it was at that point. 

We recommended that Kingsley do the interview and then Cumulus aired the interview, which is the Dixie Chicks’ side of the 

story, not once, but twice on all of our 50 country radio stations, 

to get their side of the story out. And after we did, Mr. Chairman, 

the hue and cry was even greater to keep them off the air. 

Then when they returned from Europe and started their tour in 

the U.S., we told the program directors it was up to them and they 

could do whatever they wanted. 

The CHAIRMAN. Why did you not say that to start with, that it 

is up to the program managers themselves? That is the crux of the 

problem, Mr. Dickey. A decision was made at corporate headquarters that was binding on the program managers. That is what 

is wrong here, Mr. Dickey. If the program managers themselves 

had made the decision, it is one thing. But when it comes down 

from corporate headquarters, then that in my view is an incredible, 

incredible act. 

I was more offended or as offended as anyone by the statement 

of the Dixie Chicks, but to restrain their trade, restrain their trade 

because they exercised their right of free speech, to me is remarkVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
27 

able. It is remarkable. And it is an argument, it is a strong argument, about what media concentration has the possibility of doing, 

because if someone else in another format offends you and there is 

a huge hue and cry and you decide to censor those people, my 

friend, the erosion of the First Amendment in the United States of 

America is in progress. 

Mr. Renshaw, do you have anything to say about that? 

Mr. RENSHAW. I appreciate your remarks, Senator. One of the 

things that we had always believed was that there is a degree of 

social responsibility between the radio stations and the public. The 

radio station is, after all, as I understand it a licensee of a public 

asset and is utilizing the publicly owned air waves to conduct business. 

When all of the uproar was going on, the one thing that we had 

reached out to a number of the stations and to a number of the 

radio groups, some of whom were very, very understanding and 

very cooperative, was we explained to them what was going on, we 

explained to them why they were getting so many phone calls, we 

explained what was happening, which was that there was an organized campaign going on to vilify the group in the eyes of the 

media. 

A lot of people, a lot of radio groups, responded very responsibly. 

The CHAIRMAN. Mr. Renshaw, did you receive threats and emails concerning your artists and the people you represent? 

Mr. RENSHAW. Oh, we have had everything from death 

threats—— 

The CHAIRMAN. What about from the broadcasters themselves? 

Mr. RENSHAW. If I may, I will read you an e-mail. This is a—— 

The CHAIRMAN. A broadcaster? 

Mr. RENSHAW. This is an e-mail dated April 22, from a gentleman by the name of Mr. Jay Michaels, who is a Program Director/Music Director with Clear Channel in Tuscaloosa, Alabama. I 

do not actually know Mr. Michaels. I received this e-mail out of the 

blue the day after an artist by the name of Bruce Springsteen published a statement on his website in support of the Dixie Chicks 

and their First Amendment rights. 

I turned on my computer that morning and I was greeted by the 

following e-mail from a Clear Channel program director: ‘‘Maybe 

Bruce didn’t read what they said. Let him say it and watch what 

happens. Jay Michaels, Program Director, Clear Channel.’’ 

This, I could not believe it when I had this. I mean, now I have— 

now I’m being warned by radio as to what will happen if certain 

people speak up about certain things. 

I forwarded that e-mail to Mr. Springsteen and his manager and 

I informed Mr. Michaels that I had received his warning and I had 

passed it on to the people that needed to receive it. 

The CHAIRMAN. My time has expired. We will have another 

round. I would note again, the National Association of BlackOwned Broadcasters support the amendment that was passed here, 

which would force divestiture of those that exceed ownership limits. I am sure the National Association of Broadcasters, a wholly 

owned subsidiary of Clear Channel, will not support that amendment. 

28 

But we will move to Senator Lautenberg, and I will try and adhere to the time and we will have a second round. 

Senator LAUTENBERG. Thank you, Mr. Chairman. First I ask consent, unanimous consent, to insert my opening statement for this 

panel and an article written by Paul Krugman in the New York 

Times dated March 25, 2003. 

The CHAIRMAN. Without objection. 

[The information referred to follows:] 

The New York Times—Published: March 25, 2003 

‘‘CHANNELS OF INFLUENCE’’ 

By PAUL KRUGMAN 

By and large, recent pro-war rallies haven’t drawn nearly as many people as 

antiwar rallies, but they have certainly been vehement. One of the most striking 

took place after Natalie Maines, lead singer for the Dixie Chicks, criticized President Bush: a crowd gathered in Louisiana to watch a 33,000-pound tractor smash 

a collection of Dixie Chicks CD’s, tapes and other paraphernalia. To those familiar 

with 20th-century European history it seemed eerily reminiscent of . . . But as Sinclair Lewis said, it can’t happen here. 

Who has been organizing those pro-war rallies? The answer, it turns out, is that 

they are being promoted by key players in the radio industry—with close links to 

the Bush administration. 

The CD-smashing rally was organized by KRMD, part of Cumulus Media, a radio 

chain that has banned the Dixie Chicks from its playlists. Most of the pro-war demonstrations around the country have, however, been organized by stations owned by 

Clear Channel Communications, a behemoth based in San Antonio that controls 

more than 1,200 stations and increasingly dominates the airwaves. 

The company claims that the demonstrations, which go under the name Rally for 

America, reflect the initiative of individual stations. But this is unlikely: according 

to Eric Boehlert, who has written revelatory articles about Clear Channel in Salon, 

the company is notorious—and widely hated—for its iron-fisted centralized control. 

Until now, complaints about Clear Channel have focused on its business practices. 

Critics say it uses its power to squeeze recording companies and artists and contributes to the growing blandness of broadcast music. But now the company appears 

to be using its clout to help one side in a political dispute that deeply divides the 

Nation. 

Why would a media company insert itself into politics this way? It could, of 

course, simply be a matter of personal conviction on the part of management. But 

there are also good reasons for Clear Channel—which became a giant only in the 

last few years, after the Telecommunications Act of 1996 removed many restrictions 

on media ownership—to curry favor with the ruling party. On one side, Clear Channel is feeling some heat: it is being sued over allegations that it threatens to curtail 

the airplay of artists who don’t tour with its concert division, and there are even 

some politicians who want to roll back the deregulation that made the company’s 

growth possible. On the other side, the Federal Communications Commission is considering further deregulation that would allow Clear Channel to expand even further, particularly into television. 

Or perhaps the quid pro quo is more narrowly focused. Experienced Bushologists 

let out a collective ‘‘Aha!’’ when Clear Channel was revealed to be behind the prowar rallies, because the company’s top management has a history with George W. 

Bush. The vice chairman of Clear Channel is Tom Hicks, whose name may be familiar to readers of this column. When Mr. Bush was governor of Texas, Mr. Hicks was 

chairman of the University of Texas Investment Management Company, called 

Utimco, and Clear Channel’s chairman, Lowry Mays, was on its board. Under Mr. 

Hicks, Utimco placed much of the university’s endowment under the management 

of companies with strong Republican Party or Bush family ties. In 1998 Mr. Hicks 

purchased the Texas Rangers in a deal that made Mr. Bush a multimillionaire. 

There’s something happening here. What it is ain’t exactly clear, but a good guess 

is that we’re now seeing the next stage in the evolution of a new American oligarchy. As Jonathan Chait has written in The New Republic, in the Bush administration ‘‘government and business have melded into one big ‘us.’ ’’ On almost every aspect of domestic policy, business interests rule: ‘‘Scores of midlevel appointees. . .now oversee industries for which they once worked.’’ We should have reVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\88772.TXT JACKIE
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alized that this is a two-way street: if politicians are busy doing favors for businesses that support them, why shouldn’t we expect businesses to reciprocate by 

doing favors for those politicians—by, for example, organizing ‘‘grass roots’’ rallies 

on their behalf? 

What makes it all possible, of course, is the absence of effective watchdogs. In the 

Clinton years the merest hint of impropriety quickly blew up into a huge scandal; 

these days, the scandalmongers are more likely to go after journalists who raise 

questions. Anyway, don’t you know there’s a war on? 

Senator LAUTENBERG. I was interested, Mr. Dickey, in your earlier, your opening statement about how you were able to better 

bring service to localities with this larger group of—I am afraid to 

use the word ‘‘network’’ because you shied away from it so strongly. 

The fact of the matter is that you did talk about, and I think kind 

of proud of the fact, that this larger company which you and your 

family own were able to influence the quality of local programming. 

Well, is you or ain’t you? I mean, do you have control there or 

are they a bunch of free-floating stations that make their own decisions? 

Mr. DICKEY. Senator Lautenberg, the way we program on a local 

level is we conduct extensive market research. So we constantly 

poll our listeners to determine what they are looking for, what 

music they like. Similarly, we test music in all of our markets. If 

a song comes back with 20 percent burn, which means listeners are 

tired of hearing it, one-fifth of the listeners, we pull that off the 

playlist. 

That is not censorship. It is just that we try to deliver to our listeners what they want to hear. And that is conducted on a local 

level. So all of our play lists reflect the local tastes of our local listeners. 

Senator LAUTENBERG. But you did not object to the banning of 

the Dixie Chicks by KRMD, one of your stations. Did you, pursuant 

to the Chairman’s question, did you, your station, help organize the 

smashing by a 33,000 pound tractor, smash a collection of Dixie 

Chicks CDs, tapes, and other paraphernalia, which is alleged in the 

article written by Paul Krugman, that that is the way it was done? 

Did that also come with your knowledge? It was obviously a promotional stunt of sorts. 

Mr. DICKEY. That is correct. No, sir, that did not come with our 

knowledge. That was done—here is the perfect example. That was 

done on a local level by our crew at KRMD in Shreveport, Louisiana, where the hue and cry seemed to be particularly greater 

than in a lot of other of our markets, where the listeners were 

showing up at remote broadcasts where we were selling cars, helping car dealers to sell cars, and throwing the CDs away in front 

of us. 

So one of our program directors in that market came up with the 

clever idea, if this is what our listeners are doing, let us allow them 

to do it all together en masse. So it was a radio promotion to enable them to do that. 

But that was not sanctioned nor was that developed or 

strategized by corporate. It is another example of how these individual markets behave and act on their own. 

Senator LAUTENBERG. Well, since they are under our ownership 

and guidance, I would have thought that you had advance knowlVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00033 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
30 

edge, A; and B, that somebody at headquarters kind of thought this 

was a good idea. Did it pass muster at the home office? 

Mr. DICKEY. No, sir, that particular one did not, Senator. As I 

say, they did that on their own volition and then we heard about 

it. 

You know, one of the things, the nice things about having 55 cities and 270 radio stations is the ability to share ideas and communicate and provide our people with a chance to move from one market to another and give them upward mobility in the industry. The 

level of communication, because we have all of our country PD’s, 

for instance, program directors, on the air—excuse me—on a conference call on a regular basis, they share the ideas and they talk 

about what is going on in their markets and how the listeners are 

responding to these remarks. 

As I say, this was no censorship by Cumulus or something that 

top management felt, because we played them on our Top 40 stations in the very same markets. So we did not censor this group 

nor this band. This was driven by the listeners and we were responding to their hue and cry. 

To Chairman McCain’s question, why did it happen at that time, 

this was unprecedented that we ever did anything like this from 

Atlanta and asked that we put this ban on the group for a short 

time, and it was 30 days. The crisis was so great that ABC was 

even calling us saying: Should we even interview this group? Is 

that going to hurt Bob Kingsley, who is the country commentator? 

Should we even talk to them? 

We asked them to do so and then we aired it on our stations to 

give their side of the story, and our listeners still did not buy it 

and were still very upset. 

Senator LAUTENBERG. At what point do we in this society of ours, 

this free speech, freely speaking society, run the risk of curbing 

that free speech if we cave in to one group or another group? Because the cardinal principle here is do people have a right to express themselves, to express differences? 

We know very well that lots of our people were on the ground 

fighting, the country thought it was the thing to do, and people like 

John McCain did whatever they did bravely, even if they disagreed 

with the policy. The fact of the matter is that our policy is to permit free speech whenever it occurs, and if you cannot stand the 

heat then, as they say, you know, you have got to get out of the 

kitchen. 

I understand the objection of the other members of the panel 

very clearly. I am worried about this amassing of power, and what 

I did not quite get in your commentary was you were concerned 

about Clear Channel and that is kind of the pot calling the kettle 

black. I mean, you want more opportunity, but you do not want 

them to have more opportunity, if I understood it. 

Mr. DICKEY. ‘‘Them’’ meaning Clear Channel? 

Senator LAUTENBERG. Yes. 

Mr. DICKEY. Well, Clear Channel has 1,000 more radio stations 

roughly than we do and about $3.2 billion more revenue than we 

do. So we are a very, very small potato compared to that company. 

What we were saying is that the new FCC rules changed the 

ground rules that have enabled them to assemble that great platVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00034 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
31 

form that they operate and we would like to be able to continue to 

do so to compete against that scale, in order to compete for capital 

and talent. 

Senator LAUTENBERG. Well, what do you think Mr. Kolobielski’s 

view is relative to Cumulus? You think they are a pretty good-sized 

company? 

Mr. KOLOBIELSKI. Yes, Cumulus is a good-sized company, Senator. 

The CHAIRMAN. Very good-sized. If you had a chance to buy Clear 

Channel, I bet you would do it. 

Thank you very much, Mr. Chairman. 

The CHAIRMAN. Senator Sununu. 

STATEMENT OF HON. JOHN SUNUNU, 

U.S. SENATOR FROM NEW HAMPSHIRE 

Senator SUNUNU. Thank you, Mr. Chairman. 

I would like to pick up on that point because as I listened to the 

testimony of both Mr. Kolobielski, who has the best voice of any 

witness we have ever had testify, and Mr. Dickey, both talked 

about unintended consequences. I think that is a very important 

phenomenon here, that as the FCC looks to change its regulations, 

any time we look to change regulations, we must be mindful of 

what we are attempting to achieve and what the unintended consequences may be. 

In trying to address that, you listed a number of recommendations: allowing those smaller markets to use the contour as opposed 

to Arbitron. I think you pointed out one of the weaknesses that I 

see, what little I know about the Arbitron methodology, is one of 

the subscribers can actually petition to move from one area to another. That is obviously somewhat arbitrary and driven by people 

with a vested interest. That is a concern to me. 

You listed a number of recommendations. My question is really 

for Mr. Dickey regarding those recommendations or those ideas or 

recommendations that you would support and that you feel would 

limit the unintended consequences of this new regulation. 

Mr. DICKEY. Well, Senator Sununu, what we are advocating is 

that there are no changes. We are advocating, with the exception 

of that 58-mile contour that cures the anomalies, the infamous 

Minot and the Pine Bluff—so in other words, 8,000 or so transactions have been consummated under the old rules that date back 

to 1991 to consolidate the industry, with only a few anomalies to 

show for it. 

So we think the industry has consolidated pretty efficiently, save 

a few anomalies, and that would cure it. 

Senator SUNUNU. So your preference would be to maintain the 

market definitions using contour? 

Mr. DICKEY. Yes, sir, with that filter, with the 58 miles. 

Senator SUNUNU. And would that be your preference as well, Mr. 

Kolobielski? 

Mr. KOLOBIELSKI. Yes, with contours and with the 58-mile exclusion. 

Mr. DICKEY. We are in agreement on that. 

32 

Senator SUNUNU. I never thought I would hear quite so much 

about Minot, North Dakota. I never thought that it would be such 

a power in the world of media. It absolutely is. 

But barring that reversion to contours, you would support the 

recommendations that you made? 

Mr. KOLOBIELSKI. Yes, Senator. 

Senator SUNUNU. Do you have any objections to the recommendations that he made? 

Mr. DICKEY. No, sir. We are on board with it exactly. 

Senator SUNUNU. Thank you. 

Mr. Dickey, do you view the decision that was made by Cumulus 

and by the program directors in your country stations not to air the 

Dixie Chicks’ music as a political decision or a business decision? 

Mr. DICKEY. Purely as a business decision. 

Senator SUNUNU. And at the end of the day, how many stations 

kept their music off the air? 

Mr. DICKEY. Well, we have about 50 country radio stations and 

they were all off the air for about a month, and then when the tour 

resumed, I think it came back into South Carolina—— 

Senator SUNUNU. All 50 country stations participated at some 

level? 

Mr. DICKEY. At some level they did. And then when they had the 

option of going back on, in other words when there was no restriction on it, about a third of them elected to stay off of it because 

they continued to poll their listeners with websites and telephone 

calls and the listeners were vehemently opposed to them. 

Senator SUNUNU. Mr. Renshaw, do you think that program directors ever have the right to select the music that they play or to select their programming based on the quality of the songs, the actions, activities, or public statements of the entertainers? 

Mr. RENSHAW. Absolutely, I do, yes. I mean, I think a program 

director has, obviously has the right to listen to music and to look 

at an artist and to establish whether the music and the artist and 

what is going on with that is appropriate. 

Senator SUNUNU. I guess, to what degree was that not exactly 

what was done? Whether this was a bad business decision, a dumb 

move, bad PR, that may or may not be the case, but to what extent 

is that not what these program directors or this company, big or 

small, was doing? 

Mr. RENSHAW. What happened, what happened I think with the 

Dixie Chicks was a little bit different from that. This was, this 

clearly entered into the realm of an issue of politics and free 

speech. This was not a situation where it was, you know, a group 

of people behaving badly, getting into trouble. No. This was they 

had unwittingly entered into the world of politics. 

What was happening at the local radio station level was the 

radio stations were targeted by a group of right wing political 

Internet lobbies who—and we showed this to the radio stations— 

who went out and manipulated the polls and the websites. 

Senator SUNUNU. Let me just be clear. I do not care what their 

ideology was, right, left. It makes no difference to me. I am just 

trying to get at the issue of whether or not it is or is not right for 

any program director to make this decision based on someone’s acVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00036 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
33 

tions or public statements or, obviously, the political content of 

their music. 

Now, originally you said yes, but then you seemed to say but not 

in this case. Which is it? 

Mr. RENSHAW. Personally, I do not believe that radio programmers should be in the business of political censorship. I do believe 

that they should be in the business of encouraging and promoting 

political discourse, but I do not think that is the same as political 

censorship. I think in this case there was a great deal of political 

censorship occurring. 

Senator SUNUNU. So you do not think that program directors 

should have the right to limit the play based on the activities or 

public statements or political message of the music that the entertainer has created? 

Mr. RENSHAW. I do not believe that they should be in the political censorship business. 

Senator SUNUNU. I do not think—I am belaboring this point because it is an important one. Either they have the right to make 

that decision or they do not. And obviously, if they do not then we 

are arguing about a First Amendment right to have your new 

record played, whether you are the Dixie Chicks or Marilyn Manson or any other group. 

Mr. RENSHAW. Right. As I said, I believe that they have the right 

to make the decisions about whether they do play something or 

they do not play something. But I think that what we were seeing 

that was going on at the time was people were making decisions 

in a politically censuring mode. It did not have anything to do with 

the music. 

At the time what they were doing was they were banning a 

record that was a song about a soldier who had gone off and lost 

his life in Vietnam. It was the number one record in the country 

at the time, that could not be more pro-troops, more supportive of 

the American military, and that song was pulled overnight. It was 

not pulled for any other reason than as an act of political censorship. 

Senator SUNUNU. Mr. Dickey, did you pull a specific song or did 

you pull all the music? 

Mr. DICKEY. No, we pulled the Dixie Chicks from our country 

stations only, as I said. They still remained on the air on our Top 

40 stations. 

Senator SUNUNU. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. You know what is remarkable. In all due respect, 

Senator Sununu, it was not the programmers that made the decision. The decision was made by Mr. Dickey at their headquarters. 

If the programmers or program managers themselves had made 

the decision, that in itself is one thing. But for a 30-day moratorium to be imposed at corporate headquarters, I do not think there 

has ever been anything quite like that, at least not in the years 

that I have been a Member of this Committee. 

Mr. DICKEY. Mr. Chairman. 

The CHAIRMAN. Go ahead, please, Senator Dorgan. 

Senator SUNUNU. I think that was Mr. Dickey. 

34 

Mr. DICKEY. I think that mischaracterizes it. As I mentioned, 

this was a collaborative decisionmaking process from all of our program directors. 

The CHAIRMAN. A collaborative decision process? Was the decision made at corporate headquarters for a 30-day moratorium or 

not? 

Mr. DICKEY. Yes, sir, after the vote from the program directors 

to do so. Everybody fell in line. This was a unanimous, overwhelming decision. 

Senator BOXER. ‘‘Everybody fell in line.’’ 

The CHAIRMAN. ‘‘Fell in line,’’ I understand. 

Senator Dorgan. 

STATEMENT OF HON. BYRON L. DORGAN, 

U.S. SENATOR FROM NORTH DAKOTA 

Senator DORGAN. Mr. Chairman—— 

The CHAIRMAN. I am sure we are belaboring this issue. There are 

a lot broader issues here. But this is really quite something. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, having worked for a fairly large 

corporation at one point in my life, I can tell you that once a decision is made everyone falls in line. That is the point of working for 

the company. 

But let me ask this question, and it is a hypothetical question. 

Assume for a moment, unlikely as it would seem, that my friend 

Senator Sununu said something that was incomprehensibly offensive, just incomprehensibly offensive. Could you, could you, as a 

corporate entity decide, say we do not want Mr. Sununu on our stations for the next 30 days? We find what he said incomprehensibly 

offensive and we have decided he is not going to be on our stations 

in the next 30 days; could you make that decision? 

Mr. DICKEY. Senator, I think you just saw that happen with the 

Opie and Anthony Show in New York City when they made the reference to something very vulgar in St. Patrick’s Cathedral. So I 

think that—— 

Senator DORGAN. The answer is yes? 

Mr. DICKEY. No, sir. You asked me a question about Cumulus. 

The answer would be no. As I said to Mr. Chairman McCain that 

this had never happened before, this was a groundswell based on 

our listeners. 

Senator DORGAN. I understand that. 

Mr. DICKEY. It is important to take that on board. 

Senator DORGAN. Let us assume there is a groundswell, let us 

assume there is a groundswell of your listeners. And you have used 

the word ‘‘hue and cry’’ five times this morning. Let us say there 

is a hue and cry as well, that what my friend Senator Sununu did 

was incomprehensibly offensive, and you, by God, just do not want 

him on our stations for the next 30 days. What would prevent you 

from making those decisions? 

Mr. DICKEY. As a recording artist? I am not sure I understand 

the analogy. As a recording artist, if he was—— 

Senator DORGAN. No, I am just saying that you do not want him 

interviewed on your stations for the next 30 days. You found what 

35 

he did offensive. What would prevent you from making that decision? 

Mr. DICKEY. We would not make that decision. If we found him 

offensive we would have him on the air because it would create 

controversy, discourse, and dialogue, and it would be healthy. 

Senator DORGAN. And why was the same not true, for example, 

of a singing group that you found offensive? 

Mr. DICKEY. Because our listeners asked us to pull the group. 

Senator DORGAN. And if your listeners asked you to pull references and interviews for Senator Sununu, would you at that 

point decide that your listeners were correct and you as the company are going to make that decision? 

Mr. DICKEY. I do not think the analogy holds. 

Senator DORGAN. Why do you not think that? 

Mr. DICKEY. Because he is not a recording star. 

Senator DORGAN. So then I understand it. Your corporate policy 

applies only to recording stars; is that correct? 

Mr. DICKEY. No, we do not have a corporate policy on this issue. 

Senator DORGAN. All right, let me ask it a different way. You 

support localism, I assume, because one of the basis for owning a 

radio station is you have to support localism, competition, and diversity. Let me ask how this squares with the issue of localism 

when in fact, instead of letting your local program directors at the 

stations make the decision, you had apparently a vote and then you 

made a corporate decision that, we are going to keep these artists 

off the air for 30 days. 

I ask this question, not because it has anything to do with the 

artists; it has to do with the company and why you might do in the 

future, not with respect just to entertainers, but others. So why, if 

you believe in localism, why would you not have simply let the 

local stations make the judgment? 

Mr. DICKEY. Well, in essence we did, Senator Dorgan. There was 

not a—there was not a decision to keep them off the air for 30 

days. We monitored this situation on a daily basis with all of our 

program directors. 

This is where I think everybody is misunderstanding. This was 

a collaborative effort that went on every day with all of our program directors across the country as they got feedback in various 

polls via telephone, websites, and in talking with their listeners on 

the request lines, to ask, and so we can serve our communities and 

deliver what they are looking for. 

They did not want to hear the Dixie Chicks and we simply responded to their needs on a local level. It just so happened that 

this was a unanimous feeling across the country. However, in our 

Top 40 stations we did not have that unanimous backlash against 

the group and we never took them off the air. So there was no censorship and there was no corporate edict to try and silence or hush 

a group or their political position. It simply is not true. 

Senator DORGAN. Mr. Dickey, you should be in politics. Did you 

listen to that answer you just gave me? You essentially said that, 

we did not make a decision, but then we polled the program directors and did make a decision. Now I do not understand what you 

are saying to me. 

36 

Again, this goes to the question of what if you decide or what if 

Clear Channel or what if someone else decides that this advertising 

is offensive, this statement by a political person is offensive, this 

entertainer is offensive, and all of a sudden we have decided just 

by corporate fiat, by a corporate decision, that this group or that 

group or this body of thought is no longer welcome on 600 stations, 

200 stations, or 2,000 stations if someone acquires them. 

That is the reason you are being asked these questions. I do not 

know Cumulus from anything, but, you know, I think—— 

The CHAIRMAN. Cox also did the same thing. 

Senator DORGAN. And the reason you are being asked the questions this morning is concern that we have about substantial accumulation of corporate power in broadcasting and then the decisionmaking based on that to decide what people will hear or see. 

I think my colleague Senator Sununu asked a very important 

question: Do you have the right to decide someone is a bad artist, 

you do not want to play? Of course you have that right, absolutely. 

You have substantial opportunity to make these judgments. But 

the Chairman asked the question originally, and I was interested 

in asking the same question: When you make a corporate decision 

that someone said something offensive, an entertainer in this case, 

and you are going to keep them off the air for 30 days as a corporate decision, I will tell you, that sends some ominous signals to 

people, at least in decisionmaking capabilities, and around the 

country, I would think. 

You say you are almost a mom and pop, you have a couple hundred stations. You are right, Clear Channel has over 1,200 stations. 

They want more, you want more, Mr. Kolobielski wants more. 

Did I get that right? 

Mr. KOLOBIELSKI. Yes, sir. 

Senator DORGAN. Good. And so we are grappling with this question about concentration in the media. One piece of concentration 

in the media has to do with what the American people will see, 

hear, and read in the future and how that will be transmitted to 

them. I will tell you, it just sends a chill down my spine to hear. 

It could have been an offensive remark by somebody with whom I 

have substantial disagreement or with someone whom I disagree, 

or with whom I agree, but I am worried about a corporate decision 

that says, let us do this, let us sanction, censor, this person. 

Let me ask you one final question if I may. I know my time is 

up. Because I want to talk about Minot and one company owning 

six stations in a market where there are only six commercial stations with the exception of one religious station. I have raised that 

issue many times. It has now become a description of what was 

wrong with the FCC rule. 

But let me ask this question: Mr. Dickey, if you had it to do over 

again, would you decide to let all of your local radio stations make 

judgments about what they want to make judgments about about 

a controversial entertainer, or would you still make a corporate decision? In other words, do you think it was a mistake? 

Mr. DICKEY. If we had it to do over again, we would have allowed 

that decision to be made by each of the individual program directors and the result would have been exactly the same. But if we 

had it to do over again, to avoid this we would have done that. 

37 

The CHAIRMAN. Mr. Mandel, you wanted to make a comment. 

Mr. MANDEL. I know it is not nearly as glamorous because it is 

commercial speech, but I will point out that we have had many examples where we have had some of these giant companies refuse 

to sell us advertising for a given product category on a nationwide 

basis, irregardless of the local community interest. 

We have a major consolidated media company that charges by 

definition a 50 percent premium for anything that they feel competes in any way with any of their divisions, whether they are competitive or not, and in fact has extended that reach down into the 

Comcast Cable that they are not associated with. On networks that 

they run on Comcast Cable, this media company has the right to 

refuse advertising on a local basis, even though it is not their system. 

It is not hard to imagine that, with a billion dollars spent on 

issue advertising, that it is not a far leap to see something coming 

down corporately. 

Senator DORGAN. Mr. Chairman, that is the reason—— 

The CHAIRMAN. For example, Comcast refused to run Quest advertising. 

Go ahead. 

Senator DORGAN. Mr. Chairman, that is the reason I raised the 

point, not just about entertainment, but about political discourse, 

about advertising, about a range of information that would reach 

the American people through broadcasting, and the question of who 

controls that and who makes those decisions. I think it is a very 

important issue for the Committee. 

The CHAIRMAN. Senator Smith. 

STATEMENT OF HON. GORDON H. SMITH, 

U.S. SENATOR FROM OREGON 

Senator SMITH. Thank you, Mr. Chairman. 

It just seems to me that when people get into politics, even if 

they are entertainers, it has consequences. Any statement you 

make can irritate half the people any time you make them. I think 

of Dr. Laura Schlesinger. She is an Orthodox Jewish woman who 

made comments about homosexual lifestyles and she lost her television program over that. She made a decision politically to speak 

and it had a business consequence to her. I think that is what Mr. 

Dickey is saying. I know it has a consequence. 

But I think it would be wrong to characterize this as just coming 

from the right. It happens from the left all the time. And I think 

entertainers increasingly after this Iraq conflict are now recognizing that their involvement in politics does have a political fallout in terms of business to them. 

So I just wanted to make that point. This has been going on for 

a long time, and it is called freedom. Freedom is a two-way street, 

and I think that that is what we saw in the case of Dr. Schlesinger, 

that is what we see now in the case of the Dixie Chicks, and that 

will continue. 

But that was not the line of questioning I wanted to make. I 

wanted to ask, Mr. Kolobielski, because I missed your testimony, 

I believe it is your contention that small market stations should be 

38 

treated differently than large market stations under the FCC ownership rules. Is that correct? 

Mr. KOLOBIELSKI. Yes, Senator. A perfect example has been the 

last half-hour of discussion. As you have been discussing the Dixie 

Chicks, it is our major concern in small market radio that we are 

getting the Dixie Laundromat in Rocky Mount, North Carolina, on 

the air right now, and that the Dixie Girl Scouts are getting their 

announcement on, and that we are telling people about the Dixie 

Bypass when that is going to be closed. That is our lifeblood. 

Senator SMITH. Is it your contention that the FCC should do 

more to protect small radio stations than they are doing now? 

Mr. KOLOBIELSKI. I do not know if the word ‘‘protection’’ is correct, but in my opinion the FCC, what is necessary for small market broadcasters is to come to some finality on the rules issue, and 

that right now we are in flux because we believe that the interim 

rules that the FCC proposed on June 2, are absolutely fine with 

First Media Radio. I went over that with Senator Sununu and we 

certainly believe in the contour measurement, we believe in the 58- 

mile exclusivity perimeter, and we feel that some finality in the 

rules will enable us to go forward as small market radio broadcasters, continue to grow our companies and let our employees 

flourish. 

Senator SMITH. Do you believe it is unfair, that the FCC’s decision not to allow unlimited grandfathering of noncompliant clusters 

hurts small market radio operators? Is that what you are saying? 

Mr. KOLOBIELSKI. It is unfair. These broadcasters built their 

companies by the rules, many of them legendary small market 

radio broadcasters. They built their companies by the rules in the 

nineties and to have them divested because of a regulation that 

might come on later is absolutely unfair to the hard work they did 

over the past decade. 

Senator SMITH. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Boxer. 

STATEMENT OF HON. BARBARA BOXER, 

U.S. SENATOR FROM CALIFORNIA 

Senator BOXER. Thank you, Mr. Chairman. 

I am going to continue the line of questioning about punishing 

Americans who perhaps disagree with corporate headquarters or 

the listeners as expressed in a moment, because I think it is so important and is very much related to how much power an individual 

network has to reach Americans. I am sure that it has come out, 

but again I think it is worthy of more probing. 

Americans were punished in the fifties and in Hollywood it was 

called ‘‘blacklisting.’’ That may seem to be the way we do things in 

America, but I would hope not. I would hope not. I think it was 

one of the darkest chapters, because when people are blacklisted 

they are finished, they are through. 

When I heard about what had happened to the Dixie Chicks, I 

was literally stunned. Now, you said you were stunned, too. You 

said: My goodness, there was this hue and this cry over what had 

happened. Well, in this country every single day there is a hue and 

cry over something, because this is America and there is a hue and 

39 

cry every day. I mean, you should hear the hue and cry every time 

I give a speech about pro-choice. You should hear the hue and cry 

every time I give a speech about why I do not think Americans 

should have the right to carry Uzis or assault weapons. There is 

a hue and a cry. 

That is what this country is about, a hue and a cry. It is a beautiful sound of freedom. And of all the places that should not be 

crushing it, it is the radio business, for God sakes. 

You know, I just wonder about, Mr. Dickey, your sense of history. 

I am sure you know, because you are obviously a very bright man, 

a very articulate man, that one of the first things communist dictators do when they take over is strip out all the works of art that 

they do not agree with, take the books out of the libraries, get rid 

of them. Recording artists that talk about freedom in their music, 

they are out. And the Nazis, what is the first thing they did? Mr. 

Chairman, they burned books. And guess what, the people loved it. 

They were whipped up. 

When I heard that albums—there are no more albums; I am dating myself—CDs of the Dixie Chicks were destroyed, that is what 

I thought of. Do you not think, make that connection at all, Mr. 

Dickey? 

Mr. DICKEY. Senator Boxer, I think it was unfortunate, what 

happened and what the listeners, how they chose to vent their frustrations with that group. But Cumulus has no political agenda, as 

evidenced by the fact that we continued to play their music on our 

Top 40 stations. We are merely responding to our local constituents 

and what their feelings are toward a particular group. 

I would not expect or ask you to ask us to play, as we test our 

music on a local level, to find the records that are the most offensive to our audience and play them. 

Senator BOXER. OK, OK. I think that you are not understanding 

the bigger picture, so let me try another way, because I am going 

to pick up on what Senator Dorgan said, using Senator Sununu as 

an example. I will use as example a Presidential candidate. Let us 

take it out of this election. Let us take a future election. There is 

a war going on, it is a hot war, and a Presidential candidate is running on a peace platform: I want to end this war. 

And your listeners in your country stations just really disagree, 

and they say: Do not put—I do not want to hear them on the news, 

I do not want to hear anything about it. Listeners demand it. What 

would you do? 

Mr. DICKEY. That would be unprecedented. We would obviously 

cover the news stories. We owe that to our local constituents, to 

cover the news, both sides of it, and that is what we would do. 

Senator BOXER. Even if they said, we do not want to hear this 

candidate because we think he or she is quite offensive? It is unprecedented. 

Mr. DICKEY. It is unprecedented. From a business standpoint, 

controversy, as you may or may not know, actually sells well. So 

it would actually be good business to put somebody like that on the 

air, to cover those issues. 

Senator BOXER. But it was not good business for you to play the 

Dixie Chicks, right? And it was good business for you to allow one 

40 

of your stations to join in and lead the fight of rolling over CDs, 

destroying, destroying something of value? 

You know something, Mr. Dickey? I do not think you get it, and 

I do not think you make the connection. What you have done, you 

motivated a lot of us to take a look at this consolidation issue. So 

you have hurt yourself in terms of what you want, because it is a 

frightening thought. And for you to say everyone fell in line, that 

is a dead giveaway. And Senator Dorgan is right because—I will 

not go with an expression I know about, but the fact of the matter 

is the one at the top sets how people feel, because you are going 

to be much happier with your folks if they agree with you or they 

don’t. 

Well, I assume you agree with freedom of speech; is that correct? 

Mr. DICKEY. Yes, Senator Boxer, we do. 

Senator BOXER. I assume you agree that individuals should have 

the right to express their views? 

Mr. DICKEY. Absolutely. 

Senator BOXER. Good. Even if you disagree with them? 

Mr. DICKEY. Absolutely. 

Senator BOXER. Even if your listeners disagree with them, they 

have a right to say what they want, right? 

Mr. DICKEY. And our listeners have the right to vote, just as they 

do for an elected official. 

Senator BOXER. They do not have to buy their CDs, right? 

Mr. DICKEY. Obviously. 

Senator BOXER. Clearly. 

Mr. DICKEY. And they do not have to listen to their music. And 

where country stations—remember, most of our markets where we 

have country stations, we generally have another country station 

across the street competing with us. 

Senator BOXER. Do you think what you did sent any type of a 

chilling message to people, that they ought to shut up and not express their views one way or the other? 

Mr. DICKEY. I would hope not. 

Senator BOXER. Let me conclude on this. I think it does send a 

chilling message, and I think you are fooling yourself or you are 

not looking at what you did. 

So let me say this. Every single day in this country there is a 

hue and a cry. I am telling you this because I am trying to get you 

to think about the future. When Rush Limbaugh calls women 

members of the Senate ‘‘femi-Nazis,’’ it is a hue and cry among certain people who take great offense at that. But you know what, it 

is part of the—he has a right to say it. 

And—who wrote that book, ‘‘Rush Limbaugh Is a Big Fat’’ whatever? He has a right to say that. 

Senator DORGAN. Al Franken. 

Senator BOXER. Thank you. Al Franken. He said ‘‘Rush 

Limbaugh Is a Big Fat Idiot.’’ He has a right to say that, and people have a hue and cry: How could you call this man such a thing? 

And how could you call women Senators ‘‘femi-Nazis’’? Hey, that is 

America. 

I think it would have been far better if you used this as an opportunity to have people just talk it out, talk it out, talk it out. 

Think about that for the future, because I will tell you what you 

41 

have done now is given me tremendous pause about radio consolidation and media consolidation. 

Mr. DICKEY. Senator Boxer, to your point, what we did do during 

that 30 days was we, as I say, we aired the Bob Kingsley interview 

with the Dixie Chicks twice. We promoted it very heavily, and we 

had the request lines and the listener lines open. We had a great 

deal of dialogue and discourse on our radio stations throughout 

that 30 days. We did not push this into a corner and simply ignore 

it. So we were all over this. 

They did not want to hear the music, so we pulled the music, 

similar to what we would do in a music test when it does not test 

well. But we talked about it, we talked about it aggressively, and 

there was a great deal of dialogue and discourse throughout that 

time period, and there still is today on our radio stations regarding 

this band. 

Senator BOXER. And that CDs were rolled over by a tractor is not 

a good message about America when our soldiers are out there 

right now fighting for the right for the people of Iraq to say what 

they want to say about whomever they want to say it. I hope you 

will think about it. I think what is anti-American here is sometimes confused. 

Mr. RENSHAW. Senator, to your point, one of the most chilling 

episodes of this whole affair was shortly after we were in London 

we were in Germany doing a couple of concerts and some television 

shows. We were in Munich and I was at a venue with the group 

and all of a sudden the German promoter came up to me and he 

said, listen, he said: Thomas Gottschalk’s here; he wants to see the 

girls; it is really important. 

Thomas Gottschalk is a German television personality somewhat 

akin to a Johnny Carson. I mean, the guy is larger than life, a 

very, very important media personality in Germany. He spends a 

lot of time in America. The Dixie Chicks are by no means as popular in Germany as they are in the states, so I was a little amazed 

that out of the blue we would have this huge television personality 

arrive at a concert, demand to meet the Dixie Chicks. Being I had 

seen his show a few times, I absolutely knew who he was, so I took 

him back and introduced him to the girls. And he had literally just 

got off a plane from America. He had been in the states for a couple of weeks. He got off a plane from America, he picked up a local 

newspaper, he saw the Dixie Chicks were playing in Munich, and 

he had to come over to talk to them. 

He came over and wanted to meet with them and spent half an 

hour and sat with them and talked to them to express his support 

for them and for their rights of freedom of speech. He said something that put a chill in the room. He said, you know, I have just 

come back from America and I have just seen what they are doing 

to you in America, and I am reading about these people are throwing CDs away and they are crushing CDs. 

He said, let me tell you something. He said, you know, in Germany our media would never allow that to happen again. He said, 

the last time we did that was 70 years ago. He said, we have never 

forgotten it and we will never forget it, and it will never happen 

in this country again. 

42 

That was a truly chilling moment in all of this. There was someone who speaks to your historical references and it struck a very 

large note. 

The CHAIRMAN. Let me just be clear about my concern about 

this. If a local station, an independent station or a local station, 

made a decision as to what should be aired, who it should be, what 

it is, that is something that I think is what localism is all about, 

which is what we are trying to get. 

When a corporate decision is made concerning a large number of 

stations, not only including yours, Mr. Dickey, but also Cox, that 

they will not play a performer’s record because of their political expression, then that is something, it is very, very serious and brings 

us back to this issue of media concentration, because if there had 

been a thousand stations, Mr. Dickey, or 200 individual stations 

and those individual stations had made that decision on their own, 

it would have been one thing. But when the corporate headquarters 

got involved, then it was entirely something else, because then it 

was not a local decision, it was a corporate and national decision. 

Mr. Mandel, your statement about Clear Channel owning one of 

the radio rep firms that sells ad time to competitors concerns me. 

Let me just—and I would like you to elaborate, but let me just 

mention. In our hearing with Clear Channel it was clear that they 

promote concerts, they sell tickets, they had a form of payola going, 

which they then abandoned when there was going to be a hearing 

about it in another Committee, and also repeated allegations as to 

the playing of artists on Clear Channel being related to them taking part in concerts and the promotion for those concerts. 

So would you comment a little bit about that, including your 

statement that one of the radio rep firms sells ad time to competitors? 

Mr. MANDEL. What they do is, they sell ad time for competitors. 

So they have—they know their own pricing. The way Clear Channel is set up, historically at radio companies, television companies, 

the sales manager reports to the program director because he 

needs higher ratings to sell more. The sales managers at Clear 

Channel report to a sales manager for the entire market, so they 

can what is politely referred to as ‘‘jam the stations’’ into media 

buys that are not appropriate. 

In addition to that, they rep through joint sales agreements several other stations in the markets they own radio stations. To be 

honest with you, we had a hard time going back to the information 

that we found in June because—I am sorry, in May—because some 

time in the mid-May to end of June period, their website, somehow 

all the JSA’s they had disappeared from their website. 

The CHAIRMAN. What is a ‘‘JSA’’? 

Mr. MANDEL. Joint sales agreement. You are my competitor, you 

have a radio station; I sell my time and I sell your time together. 

Further, the rep firm is—there are two major rep firms. A rep 

firm is, for instance, if First Media wanted to get some national advertising, they cannot afford to have somebody in New York to 

come call on me or my counterparts, so they have advertising sales 

rep firms. There are two big ones. Clear Channel owns one of the 

big ones. So if you wanted to go, if First Media wanted to go and 

43 

sell to me, they have to—50 percent of their choice is to have essentially a competitor sell their media time. 

So they know everybody’s pricing. They essentially set the pricing where they want it, not where the market will bear, and the 

smaller guys do not have a choice in that, the independents. 

The CHAIRMAN. Mr. Renshaw, can you comment on the allegations that were made concerning the concerts, promotions, playing 

of artists on Clear Channel, etcetera? 

Mr. RENSHAW. I work on a daily basis with Clear Channel. A 

number of my clients are promoted by Clear Channel in their concert division. We have a close working relationship with a number 

of the Clear Channel radio formats in terms of soliciting and obtaining air play. 

I personally have never been put in a position by Clear Channel 

where I have been threatened or cajoled into: you either provide an 

artist to do this or you are not going to get that. That has never 

happened. There has never been anything as overt as that. 

However, it is clear that if you have a strong working relationship with them and if you scratch their back, they will scratch your 

back. I mean, these are unwritten rules. These are understood. 

I think the interesting thing that I have seen now that is coming 

out of all of these discussions is, earlier on there were some things 

being talked about with payola and independent promotion, and all 

of a sudden everyone said, well, that has got to stop and that is 

going to come to an end right now. Yet, I have recently concluded 

recording agreements for three artists, two established artists and 

one new artist, where we have been doing their recording agreements, and in all three recording agreements the provisions still 

exist for the record companies to recoup independent promotion 

money. So the independent promotion money is still out there, it 

is still getting paid to radio stations in some shape, size, fashion, 

or form. 

With respect to Clear Channel—— 

The CHAIRMAN. It is a form of payola. 

Mr. RENSHAW. Which is a form of payola, absolutely. I mean, it 

is absolutely still continuing. Despite what everyone says, it is still 

going on. 

People are now taking greater efforts and are going to greater 

pains to disguise it. I am no longer involved in conversations with 

people about how much money is going to who, that is going to 

where, to get what. Those conversations are now very much handled within the record companies and are kept very privy within 

those circles. 

I think that, with all due respect, I feel that Clear Channel 

sometimes gets a bad rap. They are the biggest without a doubt, 

you know, but I have a very good working relationship with them. 

In the case of the Dixie Chicks, there was a situation where it 

would have been—one would have thought when one reads and 

hears everything about Clear Channel that they would have been 

the very first people to turn around and issue some sort of ban. 

In fact, exactly the opposite was true. They went out and were 

very proactive at a local level with all of their stations in trying 

to make sure that people did act on a local basis and did take into 

44 

consideration what the local market was demanding. But there was 

nothing done at a corporate level with them. 

Do they exert pressure? Yes, they do exert pressure. And they 

have a lot of leverage on the artists that they did not use to have. 

It is not a healthy situation. As I said, our belief is that the best 

thing that could happen is if the radio consolidation process could 

in fact be rolled back as opposed to rolled forward, to pre-1996 levels. 

I spent the last weekend, because I knew I was coming here, I 

spent some time over the weekend and called friends of mine at 

radio stations and at record companies, guys that are music directors and program directors and radio executives that are in charge 

of radio promotion strategies and relations with radio chains and 

with individual radio stations. 

I called about ten people over the weekend, all of whom have 

been in this business a very long time, and I asked them all the 

same two questions. I said, since 1996, is it a better world in radio 

now than it was then or is it worse? Without a single exception, 

every single person said: No, it is worse. 

I asked the guys at the record companies, I said, would you say 

that it is harder now than it ever was to expose a new artist’s 

music on the air, and would you say that it is more expensive now 

than it ever was to expose a new artist’s music on the air? And to 

both of those, both of those questions, the answer was absolutely 

yes with every single person I asked. 

So in my business, in the music industry, in the business of representing artists and trying to promote new and young talent, consolidation has not been—forget the controversy of the Dixie Chicks, 

but consolidation in terms of building and developing new careers, 

consolidation has been very bad for our business and continues to 

be bad and is getting worse. 

The CHAIRMAN. Recently, the Chicago Tribune wrote, ‘‘Play lists 

around the country continue to shrink, with only about 20 songs 

a week played with any regularity, most from the best-funded 

major labels. Some of the same records are being played in the 

same formats from Miami to Seattle.’’ 

Senator Sununu. 

Senator SUNUNU. Thank you very much, Mr. Chairman, and 

thank you for putting together this hearing. It has been a very impressive hearing, and I want to thank the witnesses for their testimony. 

These are tough issues. They do affect the question of free speech 

and political speech, changes in the media industry that have an 

enormous impact on your own livelihoods, but of course also on the 

people you represent, Mr. Renshaw. I appreciate in particular what 

I think has been a substantive, balanced perspective of how this 

consolidation has affected, for good or for bad, an important industry and one that I think the American people have a very personal 

feel for. We all love these entertainers. We all have our favorite 

artists. We all have our particular memories that are driven by our 

perceptions of the entertainment industry or those entertainers 

that we have enjoyed for years. 

I think it is important that the Members of this Committee have 

an understanding of how these changes in both technology and regVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00048 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
45 

ulations affect all of these different players. So I want to thank the 

witnesses for their substantive testimony. 

Mr. Chairman, you have I think highlighted one of the big concerns for me in talking about the way that this decision was made. 

In a way, whether it is made at the local level or at the corporate 

level, the question in my mind is whether it is being done to intimidate or discourage people from speaking out or whether it is being 

done because it is a business decision. 

The problem that I see when these choices are made in a consolidated way or at a corporate level, as, Mr. Chairman, you have described, it becomes very, very difficult to tell the difference. 

I think that that is when we run the risk as businessmen or entertainers or politicians, that is when we run the risk of sending 

the wrong signal and the wrong message, is when it is not clear 

whether this is being done to stifle an individual’s ability or to stifle the choices that they might make to speak their mind, or 

whether it is simply being done because it is good, thoughtful business. We would want that line to be clear in all cases. 

Thank you again. 

The CHAIRMAN. Thank you, Senator Sununu. 

Senator Dorgan. 

Senator DORGAN. Mr. Chairman, I should say that my hypothetical was unthinkable when I talked about Mr. Sununu, Senator 

Sununu, saying something that was incomprehensibly offensive. 

Senator SUNUNU. I was anxiously awaiting a specific statement 

that might be ascribed to me. 

Senator DORGAN. No. I just wanted to make the disclaimer. It 

was totally hypothetical and almost unthinkable. 

Let me go to the other issues, because I think they are also important. There are circumstances—for example, Clear Channel has 

a station in North Dakota that I am very familiar with. They have 

a vibrant newsroom, they by and large run that station locally. 

There are circumstances where I think that someone from the outside has purchased a local station and has kept localism intact. 

So I do not think in every circumstance big is bad or small is 

beautiful. But I do think that we need to continue to pursue the 

question Senator Sununu and I have talked about from time to 

time, the issue of localism, diversity, and competition. The question 

is how is localism served? Because the air waves belong to the 

American people and we license their use for free, with some caveats, and one of those caveats is that it serves local interests. 

I would like to ask, I think, Mr. Dickey. You have—I mean, you 

are quite correct that you are much smaller than Cumulus—than 

Clear Channel, rather. You have 200 stations roughly and they 

have 1,200 stations. Mr. Kolobielski, you have how many stations? 

Mr. KOLOBIELSKI. 13, sir. 

Senator DORGAN. 13. I want to know, at what point is there a 

limit on consolidation, if there is a limit in your judgment, and how 

does one retain the requirement and actually practice the requirement of localism and diversity when you purchase more and more 

stations? And perhaps I will give you a shot at it first, Mr. Dickey. 

Mr. DICKEY. Senator Dorgan, I think it starts with the philosophy at the top. I think that it is incorrect to perhaps use one 

broadcaster as a proxy for all others. I do not think everybody apVerDate Nov 24 2008 10:57 Jul 23, 2014 Jkt 075679 PO 00000 Frm 00049 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\88772.TXT JACKIE
46 

proaches it the same way, any more than they do in this business 

as well. So I think that from our perspective we are a live and local 

organization. We have, as I mentioned, over half of our personnel 

is on the program side. 

I can tell you that, as I mentioned in my opening remarks, what 

we inherited, what we acquired, because this company is the byproduct of 130 acquisitions—we basically bought them two at a 

time. What we acquired were stations that were in tremendous disrepair, stations that did not invest the money, because the industry 

structure prior to deregulation—we talk about rolling it back to the 

good old days and the program director might like it because they 

only have to program one station instead of two or three or four 

now and everybody’s multitasking now. 

But the problem is the industry was not profitable back then. 

You had 60 percent of the broadcasters that were losing money and 

it was really headed for very, very tough times. Investment in the 

infrastructure was lacking. As I mentioned, we had to spend tens 

of millions of dollars just to bring these facilities up to FCC code 

so we could cover our service areas and do so in a reliable manner. 

So I think it all emanates from the top and what your philosophy 

is when you are running an organization like this. We believe it is 

good business to be local. We believe it is good business to listen 

to our listeners and we believe it is good business to respond to 

their needs and to service them, as well as our advertisers, and 

that is what we work very hard to do in this company. 

Whether we have 55 business units or 155 business units, that 

does not prevent us from doing that effectively and doing that in 

the right manner. That is what this company is built on and what 

we are trying to achieve. 

Senator DORGAN. Let me ask both of the broadcasters here about 

voice-tracking. Voice-tracking seems to me to be antithetical to localism, because voice-tracking is having someone in a basement in 

Baltimore or their office in their home in Baltimore on the radio 

in Salt Lake City or somewhere implying that they are in Salt 

Lake City, and they are reading off the Internet what the weather 

is and saying: It is sunny outside here in Salt Lake. 

That kind of voice-tracking that I know goes on—I do not know 

who does it. I have seen some articles about it. Is voice-tracking 

antithetical to localism in your judgment, and do either of you do 

voice-tracking? 

Mr. DICKEY. I believe it is antithetical to localism, and I believe 

that if it is done in a deceptive way, where you have somebody that 

is clearly 2, 4, 6, 800 miles away acting like they were in the restaurant last night talking to some patrons, I think that is deceptive 

and we wholeheartedly disagree with that and we feel that that is 

not within the manner in the spirit with which we are charged as 

licensees. We do not participate in that, Senator. 

Senator DORGAN. Some do, is that accurate? At least I have read 

reports of it. 

Mr. DICKEY. I cannot comment on what my competitors do. I 

know that that is not what we do at Cumulus. 

Senator DORGAN. But you think it is antithetical to localism? 

Mr. DICKEY. Yes, sir. 

Senator DORGAN. Mr. Kolobielski? 

47 

Mr. KOLOBIELSKI. I agree, Senator. At our company and I think 

our small broadcasters, small market broadcast competitors, any 

voice-tracking that is done is done inside that particular market. 

For example, in Beckley, West Virginia, where we are, one of the 

smallest Arbitron markets in the United States, number 282 out of 

289, any voice-tracking done by our or our competitors is done right 

there in Beckley. It is talking about Beckley. 

Senator DORGAN. Is it conceivable, with the growth and the concentration of ownership, that a company, for example, could grow 

to 4,000 or 2,000 radio stations, let us say, 4,000 radio stations, 

and decide voice-tracking is by far the most efficient way to handle 

these stations and you have a circumstance where localism is largely destroyed over a large part of the country? 

Is that conceivable that could happen under the current ownership rules that have been announced by the FCC? 

Mr. DICKEY. It is possible, Senator Dorgan, but I do not think it 

is practical and I do not think it would happen, for the simple reason the incremental acquisitions for some of the largest platforms, 

a Clear Channel or an Infinity at this point, really are de minimis. 

They are not material. So for them to go out—and they would have 

to acquire deeply into the unrated markets in order to buildup that 

much more mass. It would not add the revenue nor the cash-flow 

to make it worthwhile and it would just be a lot more management-intensive. 

So, though it is possible, I do not think that it is remotely in the 

cards. 

Mr. RENSHAW. I have actually had some conversations with some 

people in radio recently with a group that has done some voicetracking, and they found that actually it worked against them. 

When they were doing voice-tracking on music programs, the ratings started to go down. The lack of the local edge—it did not work. 

So I know in this one particular instance this group has now 

turned away from voice-tracking, is going back to local on-air talent 

and far more localism, because they found that they were actually 

losing to the local competitor that was staying local in the market. 

They could not compete with that with voice-tracking. 

I think you are always going to have the big satellite syndicated 

shows, you know, the Howard Stern that goes everywhere, the 

Rush Limbaugh that goes everywhere, and those kind of national 

personalities. But I think that from what I have seen anyway is 

that there is a sense that for radio to work and for radio to really 

be competitive in a market there has to be localism. I think a lot 

of the big broadcasting groups are finding that now. 

Senator DORGAN. Mr. Chairman, I think these oversight hearings, of this type especially, are very important. I agree with my 

colleague and I appreciate your having them. I think the witnesses 

have been really interesting witnesses with a different set of offerings to the Committee. So thank you very much. 

I thank the witnesses. 

The CHAIRMAN. Thank you. 

Senator Boxer. 

Senator BOXER. Thanks so much, Mr. Chairman, for this hearing 

and for your leadership of this Committee. Once again I have a 

chance to say that. 

48 

These issues are hard, but very important. I think everything we 

have talked about today really gets us to the question of whether 

it is in the best interests of our fellow citizens to have larger and 

larger networks out there. 

Mr. Renshaw, you I think have been extremely candid with us 

today and you said you have good relations with Clear Channel, 

but there are unwritten—— 

The CHAIRMAN. At least for now. 

Mr. RENSHAW. Yes. Who knows about this afternoon? 

[Laughter.] 

Senator BOXER. Let us hope they continue. But that you had discussed—which we really appreciated, the fact that you spoke to 

others just to sort of get a sense of what is happening, and people 

are saying it is harder and harder to get new artists out there. 

Coming from a state where there is so much of that talent, you 

know, I think that America really loses out when the new voices 

are not heard. Even though a lot of us might not get it, might not 

understand it, it is important. It is the voice of the next generation. 

So I worry. Lots of times—and we have heard this from Rupert 

Murdoch and others in talking about TV in particular: Well, it is 

no problem now because there are so many outlets, and they always say, Internet. 

So I want to ask you a question for the record: Do you see the 

Internet at this time in any way being comparable, as a comparable mechanism to break in a new artist? Do you think in the 

future it might be? What is your take on that? 

Mr. RENSHAW. Currently it is not, and in the future I have great 

doubts about it. I think that, you know, one of the ways that I have 

always thought that radio works is that most people listen to radio 

when they are doing other things. They are in the car, they are 

driving to work, they are driving home; they are in the kitchen, 

they are making dinner. 

The act of the radio listener is a passive thing. The Internet is 

an interactive thing. That is not something that is passive. If you 

want to go and find music on the Internet, you cannot just turn it 

on and hit scan and it starts finding music channels for you and 

you tell it to stop when you find a music channel that you like. 

So no, right now the Internet is, much as people would like to 

say it is, right now it is certainly not a vehicle for introducing new 

talent to a wide mass audience. That is something that really is the 

sole domain of radio. 

Senator BOXER. Thank you. 

Did you want to answer? 

Mr. MANDEL. Yes, I would just like to add to that. We decided 

in the last week of January, the Superbowl week, we did a national 

survey on line on the Internet about people’s usage. It was a statistically correct sample, a couple of thousand people. Now, these are 

the people that have the Internet, they are highly used to the 

Internet. They are people that the FCC would be talking about as 

we will all be like that in 5, 10 years. 

Only 25 percent of those people felt it was easier than ever to 

find news they trust. There was a larger number of people, to bring 

it back to radio, 29 percent felt the quality of radio was decreasing 

and only 10 percent felt it was increasing. We could go—we do not 

49 

have time here to go through all of it, but it was, quite frankly, a 

bit of a damning thing on how effective the Internet is, particularly 

when you consider we are only polling people that had great facility with it. 

I will also point out to you that when MSNBC finally did cover 

the FCC and this Committee’s hearings, they ran an on line poll, 

again people that are very Internet-friendly. When I last checked 

it on June 9, 87 percent of the people had said that the FCC was 

wrong in loosening the rule. So what does that say about the Internet? 

Senator BOXER. I think it is important, Mr. Chairman, as we go 

along to recognize that. 

Just in closing, again thanking everyone for your statements, including Mr. Dickey, who has been obviously having to defend something that he did, which I think it has been useful for us to have 

this conversation. I hope you find it so. I have found it so. 

I think when Senator Sununu says the important thing is are 

you doing something because it is good business versus because you 

want to stop free speech is the question, now, that is a very interesting way to put it, but I would argue that when people were 

blacklisted in the fifties the movie industry will tell you that it was 

for business purposes. So it is very tricky. 

I would also argue that when you lead a rally, encourage people 

to bring CDs of a particular group because of what they said, and 

stand there and roll over these CDs, that I would argue on its face 

that seems way over the line to me. And I think that your company 

ought to take a look at what it did and talk about what you felt 

in a very candid way, what you think fostered American values and 

what you think maybe did not. 

And maybe you can come up with a policy, because you keep saying it was unprecedented. Well, that is our lives. Every day here 

we are hit with unprecedented issues, and you need to think ahead 

as to how you are going to deal with them. 

So I just again want to say thank you so much, and we want to 

really make sure that the American people are not—we always get 

back to this—deprived of a diversity of voices, be it political voices, 

music voices, all voices. 

Thank you. 

The CHAIRMAN. Senator Sununu, do you have any closing comment? 

Senator SUNUNU. No. 

The CHAIRMAN. I want to thank you for your participation in 

these hearings. There is another issue for another day that is a 

part of this problem and that is with this consolidation we have an 

increased—or a decreased participation on the part of minority 

ownership in the media and we are going to have to start looking 

at that aspect of it as well. 

Usually when we have a hearing of this nature which has 

aroused a lot of interest or, shall I say, conversation, I like to let 

the witnesses make a final statement because I know you have 

thought of something during this process. So I would like to begin 

with you, Mr. Dickey, and allow the witnesses to make a closing 

comment along with their opening statement. 

Mr. Dickey. 

50 

Mr. DICKEY. Thank you, Mr. Chairman. I think, to piggyback off 

of what Senator Boxer just said, it really was a very new experience, something that was unprecedented, and I think that a lot of 

our relatively inexperienced troops in the field were certainly 

caught off guard and by surprise, something of this magnitude, and 

they had never seen anything like it before. 

I think as much as anything they were looking for guidance. 

Their gut told them what they should do based on the way they 

program their stations on a daily basis, but I think they were looking for guidance. I think that is where naturally it fell to corporate 

to make that decision. 

As I mentioned, after the fact, when they came back into this 

country, we obviously allowed the PD’s, when things stabilized, to 

make their own decisions, and that is certainly the way we would 

conduct our business going forward. 

With respect to radio and consolidation, as I mentioned in my 

opening statement, Mr. Chairman, I think that consolidation has 

been by and large very good for this industry from our vantage 

point because of the stations that we have acquired and the condition that they were in and what we have been able to bring to the 

table. So I think that it has been on balance very much of a positive for our industry to be able to consolidate, take advantage of 

the efficiencies of scale, to provide more diversity, more localism, 

more programming investment, more technical investment in these 

facilities, and be able to provide a service that all Americans can 

be proud of over the next 10, 20, 30 years. 

Thank you. 

The CHAIRMAN. Thank you, and thank you for being here today. 

Mr. Mandel. 

Mr. MANDEL. I know it is not as glamorous, the numbers part, 

but I would like you all to at some point focus on the extreme costs 

to advertisers and to the local economies, jobs. P.C. Richard, the little local appliance store in New York, what happens to them with 

this consolidation? What happens to national advertisers? It is a 

tremendous drag on our economy. The way the FCC has dealt with 

it will only make it worse. 

Thank you. 

The CHAIRMAN. Mr. Renshaw. 

Mr. RENSHAW. In closing, I would just like to say that one thing 

that all of these things have kind of led me to really look at and 

to think about is the whole concept of radio is entrusted with a 

public asset. It seems to me that what we should all be focusing 

on is the responsibility that goes along with the utilization of that 

asset. 

It seems that sometimes when you—and I am not talking about 

present company or anyone that we are talking of today, but just 

listening to radio and when you hear what is on there, sometimes 

you have to wonder whether the public is being truly well served 

by the state of radio. I mean, just how much serious discourse is 

there? How much attention is there to issues of public importance, 

and how much is discussion being promoted on radio stations? 

Most of the time, to me it seems like in a lot of cases it is fairly 

bland music separated by a lot of really bland advertising. 

51 

The CHAIRMAN. As a father of teenage children, I find it more 

than bland. 

Mr. RENSHAW. And that to me, that to me is shocking. 

In closing, I would just make one observation and that is that in 

everything that I have seen, and including having looked at some 

of the previous televised hearings on this subject, the only group 

of people that I can see that are in favor of more consolidation are 

radio station owners. I do not know. It tells me something. 

Thank you very much. 

The CHAIRMAN. That is a good opening for you, Mr. Kolobielski. 

Mr. KOLOBIELSKI. Thank you, Chairman. I am here to carry the 

plight of the small market broadcasters and to remind you that the 

small market radio business model is different from the large market model. In the large market there is the pie and those radio stations are going after that, quote, ‘‘advertising pie.’’ In the small 

market, we are in the back of the radio station cooking the pie, 

hoping to sell it door to door. It is a completely different business. 

Mr. Renshaw has talked about access to large markets and large 

market radio stations. In the small markets, we have an open door. 

We have access. We want to keep that open door. 

The FCC, if they decide in small markets to define small markets 

by using political boundaries or by cellular area boundaries, is 

going to do a tremendous disservice to small market broadcasters. 

As the FCC proposed in their interim rules, those rules using the 

contour signals and an exclusion that takes care of the anomaly of 

Minot, North Dakota, I find them to be fair, they are clear, they 

are easy to understand, and they are definite. And I encourage you 

to encourage the Federal Communications Commission to adopt 

those interim rules. 

Thank you. 

The CHAIRMAN. Thank you. I want to thank the witnesses. 

This hearing is adjourned. 

[Whereupon, at 11:51 a.m., the hearing was adjourned.] 

(53) 

A P P E N D I X 

PREPARED STATEMENT OF HON. ERNEST F. HOLLINGS, U.S. SENATOR FROM SOUTH CAROLINA

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

to revisit issues concerning radio ownership. This hearing is particularly timely 

given the FCC’s release of its media ownership order last week. As many have said 

previously, the radio industry is the coal miner’s canary—a warning against further 

consolidation in the media marketplace. At our hearing on June 4, all five commissioners agreed that there has been too much concentration allowed in the radio market. Today, we will look at the FCC’s decision on media ownership and specifically 

its determination to change the radio market definition from one based on signal 

contours to a privately-created definition based on geographic markets known as 

‘‘Arbitron Metros’’. 

Since 1996, there has been massive consolidation in the radio market. The number of radio owners has dropped 34 percent and the average revenue share of the 

top two owners in a local market is 74 percent. The result has been downsized local 

staff, elimination of local news and homogenized playlists. Opportunities for local 

and regional artists have been limited and even some popular artists have found 

themselves at odds with powerful radio owner groups. 

In selecting Arbitron Metros for the new radio market definition, the FCC has 

chosen to throw out the contour rule in its entirety in favor of a market definition 

created for the purpose of determining advertising metrics, not radio ownership. 

Moreover, Arbitron generates its revenues from the very radio broadcasters the FCC 

seeks to regulate. While the contour market definition was admittedly flawed, replacing it with a new definition with unknown and potentially unintended consequences may create more problems than it solves. 

In June, Chairman Powell testified that the overall rule changes were ‘‘modest’’ 

and that the radio rules were actually ‘‘tightened.’’ The new rule, however, fails to 

eliminate the existing clusters that were permitted under the old rule, and by counting non-commercial stations in determining the total number of stations in a market, may actually allow further consolidation in some markets. 

Because the FCC determined not to require divestiture of stations that would exceed the ownership limits under the new rule, it may prevent owners from creating 

future anomalies such as the Minot, South Dakota situation—where Clear Channel 

acquired 6 of the 7 commercial stations in Minot, North Dakota, but it will not undo 

any of the excessive consolidation already permitted in local markets. Thus, the 

FCC’s new rule gives little solace to those living in communities where too much 

concentration has occurred with the blessing of the FCC’s ownership rules and its 

merger review process. 

Thankfully, this committee recently sought to correct this injustice through the 

adoption of an amendment offered by Chairman McCain that would require orderly 

divestiture where a single owner would exceed the local ownership limits. 

I look forward to the testimony of the witnesses before us, which I hope will further enlighten the Committee on the propriety of the FCC’s rule changes regarding 

radio and the need for further action to combat the harmful effects of consolidation 

in the radio marketplace. 

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

I want to commend Chairman McCain for continuing the Committee’s series of 

hearings on the critically important issue of media consolidation. Of all media markets, the radio market has seen the greatest consolidation since the passage of the 

Telecommunications Act of 1996. Despite the fact that all five Commissioners 

agreed before this Committee that too much consolidation has been allowed in radio, 

the FCC has done little to stem the tide. As a result, it now falls to Congress to 

ensure that the goals of localism, diversity and competition are preserved. 

54 

Over the last several years, station owners have extended their market dominance 

by acquiring more and more local stations. While there has been a 5 percent rise 

in the number of commercial radio stations between March 1996 and March 2002, 

the number of commercial radio station owners has declined by 34 percent over that 

same period. At the same time, the diversity and the quality of radio content has 

continued to deteriorate. Since the local rules were relaxed and the national ownership cap was eliminated in 1996, the commitment to community based, local news 

has declined; local artists have lost their ability to get air time; and programming 

has become nationalized and generic. 

This rampant consolidation in the radio market has transformed locally based stations, and in many cases have put the commercial interests of a few large corporations in front of the public’s interest in maximizing diverse viewpoints. The pace of 

such consolidation has been staggering. In 1996, the two largest radio station 

groups owned less than 65 stations; in January 2003, the two largest radio station 

groups—Clear Channel and Cumulus—owned 1,469 stations (Clear Channel over 

1,211 and Cumulus with 258). 

On June 2 of this year the FCC adopted new rules regulating the media marketplace. Among the various changes is a change in how radio markets are defined. 

But while the purpose of this rule change was to prevent further consolidation in 

radio markets, the FCC’s new rule grandfathers existing station group owners that 

fail to comply with local ownership limits, and thus, locks in the undesirable effects 

of market concentration. While this Committee has already taken important strides 

to reverse action taken by the FCC, further discussion of these issues is warranted. 

With that before us, I look forward to the testimony of the witnesses. 

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