FCC could pull licenses from those who muscle out rivals

NEW YORK — Sen. Russell Feingold (D-Wis.) trained his legislative guns Thursday on the rapidly consolidating radio and concert promotion industries, unveiling a bill designed to kick-start competition in those markets and curb the power of sector giants like industry leader Clear Channel Communications.

The Competition in Radio and Concert Industries Act seeks to address a host of problems that Feingold said have arisen as part of the unprecedented growth in market concentration the last six years.

Among them are market dominance, high barriers to entry for independent players, high ticket prices for concertgoers and a “shakedown” system in radio promotion whereby radio congloms extract large sums from record labels for playing their music.

Bill would give the Federal Communications Commission a mandate to pull the license of radio stations that use “cross-ownership of promotion services or venues” to muscle artists or industry rivals out of the market. More broadly, it would direct the FCC to keep a close eye on market concentration and put a cap at current levels on local-market ownership rules, preventing future expansion.

Legislation also calls for stricter interpretation of federal “payola” regulations to eliminate a station’s ability to be influenced by payments from record labels or independent promoters without on-air disclosure of the arrangement.

Feingold wants the FCC to issue an annual report on radio and concert industry compliance with the new rules, soliciting input from independent sources and the public.

Feingold placed much of the blame for the problem on overzealous deregulation — particularly in the Telecommunications Act of 1996, which effectively abolished strict caps on radio station ownership. The act paved the way for the creation of behemoths like Clear Channel, which owns 1,400 stations and more than 130 concert venues nationwide.

Telecom act assailed

The ’96 act “opened the floodgates for concentration in the radio and concert industry, and that’s exactly why we are here today,” Feingold said while announcing the bill in Washington. “We need to repair the damage that has been done through this anti-competitive behavior.”

Lending support to Feingold at the press conference were reps from the American Federation of Television and Radio Artists, the National Assn. of Black-Owned Broadcasters and the Future of Music Coalition.

Industry reaction to the bill was mixed. The Recording Industry Assn. of America, which reps the labels, applauded Feingold’s effort, particularly in the area of radio promotion.

Feingold “takes the necessary first step toward ensuring diversity of programming on radio stations by preventing abuse of independent promotion through unprecedented increased radio ownership consolidation,” said RIAA chair and chief exec Hilary Rosen. “This radio promotion system needs reforming, and this bill provides the road map to getting there.”

But Clear Channel — whom Feingold cited as the main impetus behind the bill — was far more ambivalent. Company said it invited closer scrutiny of the industry if it would result in better services for consumers, but at the same time sought to defend its practices.

In a lengthy statement responding to the bill, the company argued that many other media sectors — including film, cable TV and even recorded music — are more concentrated than radio in terms of the share of revenue that the top companies command.

Clear Channel also said the 1996 Telecom Act brought about a badly needed drive toward modernization in the radio business, creating economies of scale and driving new technologies that benefit consumers.

“The fact is that listeners vote on radio stations, their formats and their playlists every day,” said prexy and operating chief Mark P. Mays. “The most successful radio companies are simply those that do the best job of serving listeners.”

B’casters play defense

Trade org the National Assn. of Broadcasters also had a bone to pick with Feingold, arguing that radio programming has actually gotten more diverse since the passage of the 1996 act and that local radio stations generated $7 billion in public service last year.

News of the bill’s introduction sent investors scrambling for the exit on Wall Street on Thursday.

Clear Channel stock, which was also dogged by rumors (emphatically denied by the company) that it was under investigation by the Securities & Exchange Commission, sank nearly 13% to $31.20.

Meanwhile, second-place rival Cumulus Media, which holds nearly 260 stations, slipped 15%. Shares of media conglom Viacom, which owns No. 3 radio operator Infinity Broadcasting, sank by a more modest 2.6% to $41.67.

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