How Clear Channel Skirts Radio Caps in San Diego Outland (10-5-02)

Here's a similar one I found elsewhere:

http://online.wsj.com/article_email/0%2C%2CSB1033679730526400593%2C00.html

This has been brought up many times by e-mail, and two websites above have written about how the Clear Channel firm in the San Diego Outland, America's Behindest City, can skirt the Federal ownership caps here.

Theoritically, it is possible for one firm to have a Local Marketing Agreement with every radio station in the market that's owned by a competetor or a foreign broadcaster such as those from Mexico, and the Department of Justice cannot do a thing about it because the Federal Government does not regulate the business practices of Mexican radio stations.

Federal regulations prohibit any broadcaster from owning more than eight radio stations in a single market, which seems to be known in the davesfunstuff inner circle as the "Eight is Enough" ownership rule, but in Clear Channel San Diego's case, not even the entire current cast of "The Sopranos" and "Sex in the City" combined would bypass the number of radio stations Clear Channel owns or runs in the San Diego Outland, but given the tie to these two shows, they might as well be the equlivant of the radio mafia.

Sure, many broadcasters in the past such as Noble Broadcasting, which ran Mighty 690, which became XTRA Gold 690 and then XTRA Sports, and 91X, and Radio Moderna, which ran the old XHRM and the late Flush 92.5 (it really was a bad imitation of the X), had been programming and marketing the radio stations for many years before Jacor took over the stations in 1995 and 1998 respectively. Clear Channel swallowed up Jacor and have seemed to become the New Jacor after the merger as it engulfed even more radio stations, eventually massing up over 1200 stations.

Here along the San Diego Outland Mexican border, CC has used the same rules to grab LMAs to Z90 and "Boob" 99.3, which were previously managed (but not owned) by Califormula in 2002.

By cutting deals to take over programming of five Mexican stations, including two in May, Clear Channel has grabbed nearly 50% of the San Diego market's radio advertising dollars, according to estimates from research firm BIA Financial. The Federal Communications Commission exempts foreign-owned stations from being counted toward the maximum of eight.

Altogether, the exemption and other loopholes have allowed Clear Channel to take control of 13 stations beaming signals into San Diego. The San Antonio-based company--the nation's biggest radio broadcaster--has more market share here than in any other top-20 market, according to BIA.

But CC would have controlled the other two Califormula stations, XLNC and XLTN, if it were not for Mexico's own four-station ownership limitation. You see, XTRA Communications, owns XTRA-AM and XTRA-FM, plus the recently acquired Z90 and 99.3. It cannot buy any more stations, but other Mexican owners can.

Clear Channel acquired control of the Mexican stations through a so-called exclusive sales agreement, in which the company pays a fee to the license holder in exchange for the right to sell airtime for and program the station.

Clear Channel beams programming via satellite to radio facilities in the Tijuana area. From there, the shows are broadcast back across the border to listeners in San Diego.

The antennas for the Mexican stations tower over an impoverished Tijuana neighborhood just five miles south of the border.

But the bulk of these stations broadcast from a sleek, glass office building in northern San Diego where Clear Channel houses its U.S. license stations at 9660 Granite Ridge Road in San Diego just north of Qualcomm Stadium. Later on, some of our undercover spies will infiltrate the building and see what's really inside that big fat radio building.

For listeners, discerning between Clear Channel's Mexican stations and its stations on this side of the border is difficult.

One promotes itself as San Diego's "hit music channel" and plays the latest offerings from Shakira and Justin Timberlake.

Another is "your home for hip hop and R&B," thumping out Jay-Z and Nelly. Another station, which advertises itself as "My '80s, My '90s, My Music," plays softer hits by such acts as Michelle Branch.

Can anyone tell the difference between Z90, 933, and 94.1 anymore? I can't. They all sound alike to me. This ain't diversity.

For the most part, the only clue that radio here is different comes just once an hour, during government-mandated station identification breaks.

On the hip-hop outlet known locally as Z90, for example, a young Latina voice breaks in between songs by Sean Combs and Jay-Z to say "XHTZ, Tijuana, Baja California, Mexico."

In addition, the Mexican licensed stations must air speeches by Mexican President Vicente Fox and must devote time each week to Mexican public affairs programming.

Clear Channel Communications Inc. also controls KSDO, owned by Chase Radio Partners, which is often among the lowest rated stations in the Outland, and that gives the company here one of the largest radio strongholds ever assembled by one company in a U.S. city.

Clear Channel boasts more than 40% of the listening audience here. It controls three of the five stations with the highest ratings. And it says it collects about 55% of all revenue from radio in San Diego.

Clear Channel in San Diego claims that it has increased the diversity of radio programming in the city when in fact it really did the opposite, thanks to its predessor in part, Jacor Communications. The only way it boosted the overall audience listenership is to buy LMAs to the other radio stations and sell the excess American-owned stations to Spanish broadcasters such as HBC who elimiated CC's competetion by taking their newly-acquired stations Spanish.

Diversity is at an all time low in San Diego's Outland area. Nowhere in San Diego radio can we listen to classical music 24 hours a day on a strong FM stick, funny and off the wall music, global electronic dance, intelligent folk, real country, and easy listening music. Diversity under Clear Channel is as meaningful as a Matire D at McDonald's; they don't mean a thing to them.

The public won in the old days (more often in Los Angeles than San Diego in the 80's and early 90's). There were format changes often every year when that station sank to the bottom and a new station came on the scene to steal some of the top-rated station's share away. People flocked to whatever stations were hip and happening at the time, usually the ones that played some sort of new music while stale sounding radio stations went by the wayside, which is why we don't hear classical, folk, or easy listening music on local radio anymore.

Nowadays, every station CC runs sounds very much like another. 92.5 and 95.7 play disco songs, Z90 and 933 play hip hop. 101.5 and 105.3 play Zeppelin. 91X and 94.1 play Coldplay. 92.5, 933 and 94.1 play Madonna. 91x and 105.3 play hard rock.

This is diversity? Nowadays, under Clear Channel's dominace, the listeners are the losers as mediocre stations stay on years after they have peaked and gone by the wayside. Their playlists are not as distinct as they claim to be. Don't be fooled.

By managing Mexican radio stations that reach San Diego, Clear Channel is able to exceed the federal ownership cap of eight stations in the largest cities. The problem is that Clear Channel is programming by target audience, rather by musical taste, which leaves many music fans swallowed by the cracks. Look at what they're programming...

Station      Programming             Target Audience  Musical Taste
Z90          Contemporary hits       Ages 12-34       pop R&B
91X          Alternative rock             18-44       pop rock
Magic 92.5   Oldies                       25-54       pop/oldies
Channel 93.3 Contemporary hits/pop        12-34       pop
My 94.1      Adult contemporary           25-54       pop A/C
Kool 95.7    Oldies                       25-54       pop/oldies
Bob 99.3     Country                 Women 25-49      pop country
101 KGB      Classic rock            Men 25-49        rock/oldies
Rock 105.3   Mainstream rock         Men 18-44        rock
KOGO 600     News/talk                   25-54        n.a.
XTRA 690     Sports                  Men 25-49        n.a.
KSDO 1130    News/talk                   25-54        n.a.
KPOP 1360    Pop Standards               35-64        pop/oldies

Target audiences they're missing by musical taste...
Classical
Real Country (the kind men like)
Euro Dance
Comedy/Novelty/Off the Wall Music
Synth Rock
World Beat Jazz
Real Alternative

Too bad Clear Channel can't do radio right. Look at what the listeners
they're missing out on.

The goal of the change was to strengthen radio companies, many of which were weak or failing before the law shifted. Stronger broadcasters were thought more likely to offer quality programming and compete better against other media. But gaps in the legislation have allowed big companies to grab even greater control than expected in certain markets. Where's the quality programming we were promised in 1996? It's not on Clear Channel radio.

In addition, the 1996 law allows companies to manage a U.S. station's advertising without that counting toward the ownership cap. American General Media Corp., based in Bakersfield, Calif., sells ads for stations it doesn't own in Santa Fe, N.M., and San Luis Obispo and Santa Maria in California. It has hit its ownership limit in each of those cities.

Clear Channel follows the same pattern in some other U.S. markets where it owns as many stations as it can. In Jacksonville, Fla., the company owns seven stations and sells ads on four more. Likewise, in Salt Lake City, it owns seven stations and sells ads on four additional ones.

The smaller competitors in the SD Outland, such as Infinity and Jefferson-Pilot, are fuming over the massive influence CC has exerted in the area.

Smaller radio companies protest that the media conglomerate has not only sidestepped federal law by taking over the Mexican stations, but that it is using its size to muscle advertisers. Critics say Clear Channel is throwing its weight around with advertisers in dozens of other markets where it has concentrated power.

Clear Channel's tactics have drawn a handful of complaints to the Federal Communications Commission, which enforces the ownership limits. Jefferson-Pilot Corp., the No. 2 radio operator in San Diego, with four stations, has filed a petition criticizing Clear Channel's control of its Mexican frequencies and arguing that the foreign-station exemption has created "an anomalous and absurd result, which permits the very market dominance Congress sought to preclude" with ownership caps. Jefferson-Pilot, which is based in Greensboro, N.C., has tried unsuccessfully to take over the operations of a Mexican station but doesn't control any foreign stations. It has asked the FCC to reconsider how it accounts for foreign signals. The FCC hasn't acted on the complaints against Clear Channel.

Jefferson-Pilot has asked the FCC to revise its rules and count any station that places a signal into a U.S. radio market and directs significant programming and sales efforts there.

The problem with that approach is that the FCC cannot do a thing about it. CC's Mexican LMA is legit whether we like it or not, and most people in the Outland don't care about it one way or another.

Clear Channel says the complaints are without merit and that all of its operations, including the San Diego stations, pass regulatory muster. The company's acquisitions are all approved by the FCC, and larger deals have been cleared by the Justice Department's antitrust division, as well. "We're a bigger company; we're a bigger target for people," says Clear Channel President Mark Mays. "There's no question that our success is rubbing some of our competitors wrong."

Clear Channel's big move into San Diego came in 1999, when it bought Jacor Communications Inc., which had been amassing stations there for four years. Last year, Clear Channel put most of its stations into a glass-plated office building in north San Diego, which features 33 studios and a small stage for live performances.

Clear Channel can throw its weight around in San Diego in a variety of ways. It can secure sole sponsorship of choice concerts and exclusive in-house appearances by sought-after artists. For the last several years, the company has essentially locked up radio promotion of San Diego's popular "Street Scene," an annual outdoor music festival. In return for heavy coverage on Clear Channel's family of stations, the festival's organizers have promised not to work with stations that compete against any of Clear Channel's formats -- which means virtually everyone.

The festival must get Clear Channel's permission to grant the company's competitors free tickets or any exposure at the event, according to Tim Hackett, whose company oversees marketing and public relations for Street Scene. The only exceptions made to that rule are for certain public and Spanish-language stations, he says.

One station, Viacom Inc.'s classic-rock KPLN, was so determined to give away tickets to Street Scene several years ago that it went out and bought them. The festival organizers "had to politely say, 'This is an exclusive deal with Clear Channel,' " and ask KPLN to stop the giveaway, says Mr. Hackett. Festival organizers and KPLN don't dispute this account.

Advertisers in San Diego say that Clear Channel has the muscle to seek exclusive or near-exclusive deals that keep ad buyers from appearing on other stations. "They want all seven courses of the meal," says Bob Gavin, president of Gavin & Gavin Advertising Inc., a local firm. "They don't want all six courses and then have you go across the street for dessert."

Late last year, when Mr. Gavin was placing ads valued at about $400,000 for a hair-salon chain, he says he considered Clear Channel, as well as Viacom's KPLN and Jefferson-Pilot's KSON, a country station. To grab a bigger share of the $400,000, Clear Channel offered a bonus, Mr. Gavin says: a contest for a trip to Las Vegas in which contestants had to mail in a postcard obtained from one of the hair salons. Clear Channel also threw in free promotions of the contest on several of its stations valued at a total of $40,000. Mr. Gavin says he took the deal and avoided KPLN. He did buy a few spots on the Jefferson-Pilot country station because Clear Channel didn't yet own one. These days, he says he would probably go exclusively with Clear Channel -- since it now operates its own country station -- but he hasn't done so yet.

Clear Channel has tremendous leverage with advertisers trying to reach certain audiences. Those targeting English-speaking teen radio listeners have few other options in San Diego. Clear Channel owns the city's leading pop station, its top hip-hop station and its most popular rock and alternative-rock stations. "You are forced to have to deal with Clear Channel" to reach teenagers, says John Masters, president of Solomon Friedman Entertainment Inc., a San Diego-based ad agency that frequently places local movie ads. Mr. Masters says Clear Channel hasn't taken advantage of its dominance to push up its rates, but he fears that will happen in the future.

Clear Channel's Mr. Glickenhaus says that "it wouldn't be prudent" for his company to "take advantage of an advertiser," because that would alienate a potential source of revenue. The company estimates that radio provides only 9% of San Diego's total advertising market, as measured by revenue, and says that ad buyers can always go to television stations and newspapers.

Clear Channel's rock and sports stations give it a particularly strong grip on male listeners, and the company seeks to be paid for that strength, advertisers say. Tina Greenler, a radio-ad buyer with Zenith Media, says she was surprised recently when Clear Channel gave her different rates for batches of Lexus ads that would run for similar amounts of time at the same time of day. The only difference was that one batch aimed primarily at men, while the other targeted adults generally. Clear Channel demanded about 25% more per ratings point for men, compared with the all-adult batch, she says. Ms. Greenler, whose employer is a joint venture of Publicis Groupe SA and Cordiant Communications Group PLC, says that in other markets, she always has received the same rate on a per-listener basis, regardless of demographic characteristics.

Clear Channel has "this dominance, and they have the opportunity to do whatever they want," she says. In the end, she says she had no choice but to buy the male-focused ads from Clear Channel, although she used competitors for the spots aimed at both genders.

Clear Channel's Mr. Glickenhaus says the different rates in this instance -- and ad rates generally -- reflect nothing more than "supply-and-demand pricing." He adds, "We don't force people to use us."

And we close this article from our old pal Bryan Jones from a radio messageboard:

you guys, it's radio.....NOT life and death....
all this music can be found/ heard on the web....
what will you miss?
use this to CHANGE music!
don't go back to the X, f*ck them, they blow!
experiment!
use music differently!
do something new, buy a 15 gig mp3 player, and hit "random all"!
beats any radio station i ever heard!

http://www.edigital-store.com/treo15.html

embrace change!

opb
_________________
"but please don't listen to me, I've already been poisoned by this industry..."
- XTC's "Funk, Pop, & Roll"
Back to top