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Clear Channel challenged

Pay-for-play, antitrust allegations draw attention 1/27/2002 07:00:00 PM Eastern

Rep. Howard Berman (D-Calif.) is calling on Justice and the FCC to investigate the business practices of Clear Channel, he wrote last week to Attorney General John Ashcroft and FCC Chairman Michael Powell.

"To the extent your respective agencies have jurisdiction to do so," Berman wrote, "I believe you should investigate and fully prosecute any violations of the antitrust laws or FCC regulations in the above-referenced circumstances." His letter outlines those circumstances, including Clear Channel's reported practice of not playing recording artists who do not use Clear Channel's concert-promotion service and of requiring record companies to pay for airplay. "These allegations, if true, have obvious, negative implications for consumers," he wrote.

He also is concerned about reports that Clear Channel uses third-party companies to buy and hold radio stations for it while it waits for the FCC's regulatory regime to change. "I believe you should fully investigate these 'warehousing' and 'parking' allegations, and if true should prosecute any violations of law," he wrote. "These acts may be illegal in and of themselves, and are likely to exacerbate the negative effects ... that consolidation has had on recording artists, copyright owners, advertisers and consumers."

Attorney Arthur Belendiuk, of Washington law firm Smithwick & Belendiuk, filed several petitions at the FCC providing evidence that Clear Channel has third-party companies buy stations for Clear Channel.

Clear Channel dismissed the allegations. "We are satisfied and excited about the ways we have grown our businesses. Our company competes aggressively, fairly and totally within the law," said Director of Public Relations Rebecca Allmon. "If there is an investigation, we are confident this will continue to be proven true."

Record companies welcomed an investigation. "There is no question," said Recording Industry Association of America President Hilary Rosen, "that radio consolidation and radio promotion have raised questions about access to the airwaves."

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