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Radio Rumble

Mark Andresen

The media mega-conglomerate Clear Channel has always been combative. But the bigger the company gets (at present, the firm owns approximately 1,200 stations nationwide, including eight of the most powerful signals in Denver), the more eager it seems to play rough.

The San Antonio, Texas, giant was blasted in two recent Salon.com pieces penned by journalist Eric Boehlert: "Radio's Big Bully," an April 30 assault that excoriated the firm for its "dirty tricks and crappy programming" (duh!), and "Tough Company," a May 30 sequel that focused on "employee suits alleging everything from broken contracts to sexual harassment." Boehlert and Chuck Philips of the Los Angeles Times have also reported on the murky relationships between record labels and independent promotion outfits they hire to get songs played on radio stations, which critics say smacks of payola. Along the way, the writers uncovered information suggesting that Clear Channel wants to purchase some promotion concerns -- a move that would allow the company to receive big bucks from labels for playing tunes on its own stations. Such transactions would seem to violate anti-trust regulations, but there's no guarantee of that. Remember, we're living in George W. Bush's America now. Or is it Dick Cheney's?

None of the aforementioned articles dealt directly with Clear Channel's Denver properties -- KOA, KHOW, KTLK, KISS-FM, KBCO, KTCL, KBPI and the Fox. But all of these stations are affected by the decisions of those piloting the mother ship, as is made obvious by two ongoing heavyweight fights. The first scrap pits Clear Channel against Arbitron, which establishes ratings for broadcasters nationwide; the second involves clashes over fees for Internet radio.

Although the Clear Channel-Arbitron quarrel has received scant attention in the media, it's been brewing since the first of the year, when Clear Channel allowed its contracts with Arbitron in 130 markets, including Denver, to expire. (Like virtually every other sizable radio player, Clear Channel paid the ratings company to provide it with ratings and demographic information.) Talks continued during the first quarter of 2001, a period that coincided with the development of plans for Arbitron to spin off from its parent, Ceridian Corporation. But these discussions apparently went nowhere, because on March 30, when Arbitron CEO Stephen B. Morris was slated to mark his enterprise's initial listing on the New York Stock Exchange by ringing the exchange's closing bell, Clear Channel sent a letter declaring that it had no intention of using Arbitron surveys for the markets in question. This screw-you gesture spooked potential Arbitron investors, and for good reason. After all, according to Daily Variety, Clear Channel stations account for 22 percent of Arbitron's total revenue, and the end of those 130 contracts would result in a loss of around 6.8 percent of its gross.

Despite this nastiness, Clear Channel and Arbitron are still in business together (stations in several markets hold Arbitron contracts that don't peter out until 2005), and they haven't given up on resolving their differences. But neither side is sharing many details. Notes Arbitron spokesman Thom Mocarsky, "We have no comment other than to say that negotiations are continuing."

Randy Palmer, San Antonio-based vice president of investor relations for Clear Channel, isn't much more loquacious, but he offers a few clues. When asked if the disagreement revolves around money, Palmer concedes that "price always comes into play. But it was also a matter of some of the services they provide to us. We wanted more services with our particular contract." As for when the situation could be resolved, Palmer says, "That might take a while" -- and he doesn't entirely reject a rumor that Clear Channel may dump Arbitron entirely and start its own rival ratings compiler: "There's been some speculation about that, but I can't really comment on it."

Thus far, the Denver stations haven't had to do without Arbitron info; the contract sported a six-month grace period. But that's set to run out at the end of June, and since ratings are what stations use to determine advertising rates, headaches could start as soon as August, when Arbitron's next ratings book is due. Lee Larsen, vice president and general manager for Clear Channel-Denver, downplays the possible impact, stating, quite accurately, that Arbitron will continue to collect data on his stations that will filter back from ad agencies even if Clear Channel isn't paying for it. However, the Denver stations would be put at a bargaining disadvantage in the long run. "Arbitron isn't just ratings," Larsen says. "They have a big menu of things to choose from -- computer reports and additional demographic data that can be very useful."

Does Clear Channel believe its long-term interests are best served by destroying Arbitron and replacing it with a ratings operation more to its liking? Larsen has no opinion on that, but, he says, there are "all kinds of alternatives" to Arbitron. "With the amount of money we're paying, we could start our own independent ratings company."

 

Of course, exercising this option might lead to a considerable credibility gap. As one radio insider points out, asking Clear Channel to monitor its own ratings is tantamount to trusting a baseball player to keep tabs on his own batting average. Perhaps that's why Larsen says, "The best alternative is a negotiated solution."

The same can be said of the present deadlock concerning Web streaming, which has prevented computer types from being able to access Clear Channel stations via the Internet since early April. Those who do try see the following message: "Due to continuing uncertainty over rights issues related to the streaming of radio broadcast programming over the Internet, including issues regarding demands for additional fees for the streaming of recorded music and radio commercials, we and our advertisers are forced to temporarily disable our streaming. We apologize for the inconvenience of this interruption. We are working with both our advertisers and the Recording Industry Association of America [RIAA] to find a solution to those problems as quickly as possible so that we can resume streaming."

Behind this slab of mumbo jumbo are two separate squabbles over simoleons. Last December, Register of Copyrights Marybeth Peters of the U.S. Copyright Office announced that radio stations engaging in Web streaming must pay royalties for the privilege of doing so -- a decision that thrilled the RIAA but incensed radio-industry groups such as the National Association of Broadcasters (NAB), which filed a lawsuit with U.S. District Court in Philadelphia to stop the ruling. Shortly thereafter, members of the American Association of Advertising Agencies (AAAA) asked stations to stop streaming commercials, largely because of an agreement reached the previous fall with the American Federation of Television and Radio Artists that would pay AFTRA types 300 percent of their normal paychecks for radio commercials if the spots were streamed.

Right now, both situations remain in limbo. A three-member arbitration panel is trying to sort out the royalties matter, while the AAAA folks are chewing things over with their counterparts at NAB. But Clear Channel's Palmer doesn't expect any resolutions prior to the fall, after which "we'll decide if streaming makes legal and financial sense for us."

The streaming stoppage certainly isn't hurting Clear Channel's bank balance. In the beginning, Web radio was seen as a potential cash cow because of its global reach, but executives soon learned that local business owners didn't care if someone in Czechoslovakia heard their ads, since such listeners had no way to buy their products. Likewise, attempts to establish stand-alone Internet radio sites have been largely unsuccessful, as the entrepreneurs behind GoGaGaDenver.com learned to their dismay ("Net Losses," January 18). Such disasters help explain why Clear Channel abandoned its promise to turn smooth-jazz practitioner K-High into a Web station after ditching the format last year. The quiet death of K-High's Internet component explains why this year's edition of the JVC Winter Park Jazz Festival, set for July 14 and 15, is being sponsored by talk station KOA, home of such remarkable jazz stars as Rush Limbaugh.

Nevertheless, Clear Channel-Denver's Larsen wishes his stations were streaming, if only because the feature was beloved by "people who work in office buildings that don't get radio very well, or people who want to listen on vacation." But to him, Web sites are worthwhile mainly as promotional tools. "The streaming of the audio is really one of the smallest elements for us," he says. "Its real value is as a visual complement to radio. You can put up pictures of the personalities, and you can give listeners the opportunity to join clubs, participate in polls. That's really where it pays off for us."

In other words, Clear Channel won't be hurt by a little streaming dispute, or anything else. Because no matter what the rebels do, the empire always strikes back.

Ain't that grand? The story of Scott McDonald, the onetime Fox TV exec whose former co-workers accused him of duping them with questionable investments ("Outfoxed," May 10), was among the city's biggest last month -- but since then, it's mostly been quiet. Consumer troubleshooter Tom Martino, who'd been hot to file suit against McDonald and Fox, which he works for as well, has not yet done so because of a couple of personal tragedies: His mother and father both died within a week or so of each other. But an investigation by the Denver District Attorney's Office has been under way for over a month, and DA spokeswoman Lynn Kimbrough confirmed last week that a grand jury is looking into the matter.

 

On June 14, when McDonald was asked about the grand jury, he said he knew nothing about it. McDonald then referred all future questions to his attorney, Robert McAllister, who claimed to be unaware of the grand jury as well but noted, "We are in the midst of putting together a plan for restitution for funds that are lost, and we hope to notify people who were involved within the next week or so." He added, "I don't think there is any real criminality involved -- no intent by Scott to defraud anybody -- and he wants to resolve this issue. There have been people who've wanted to sue in civil court, but so far, they've agreed to hold off until they see his plan."

A lot of folks will be looking at such a proposal closely. Very closely.

Saturday blues: The Rocky Mountain News's readers have had two months to learn to love the paper's new Saturday broadsheet, but they're still resisting. So, insiders say, the News is planning some changes, including eliminating the marquee Insight feature as a separate section and reconfiguring its news hole to more closely mimic its Monday-Friday tabloid -- a good idea under the circumstances. Also on the agenda is a shrinkage of page dimensions to match those of the Denver Post as early as late August.

Denver Newspaper Agency spokesman Jim Nolan won't confirm the timing of this last move but says it should be in place by fall at the latest. As for changes in content at the Saturday News, he refers all questions to News editor and president John Temple, who apparently lost Westword's number several years ago. But expect that any revamped Saturday issue will be thinner than before, an acknowledgement that the weekend day when most people look at a newspaper is Sunday.

It doesn't take much Insight to figure that out.Alternatives: The Denver Post apparently has trouble keeping its Oklahoma City bombing trial jurors straight. Last December 13, the paper ran an article quoting Ruth Meier, a juror who'd died the previous year; as it turned out, a reporter had interviewed an entirely different person with the same name. That same piece also identified Marlene Wichael as a juror when she was actually an alternate, an error pointed out in this space on December 21. But on June 8, just prior to the execution of bomber Timothy McVeigh, a roundup credited to Virginia Culver and Howard Pankratz again called Wichael a juror, not an alternate, and an Ann Schrader report published June 12, the day after McVeigh was put to sleep, called Wichael "one of the jurors who found Timothy McVeigh guilty."

Not that McVeigh is complaining...


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