Biggest radio mogul bending rules to get bigger?
By Brad Kava, (May 8, 2001) San Jose

Back in August, the world's largest radio corporation, Clear Channel Communications, made headlines when it sold 40 of its stations to minority owners -- a move then-chairman of the FCC, William Kennard, called "the most significant one-time increase in minority ownership in history."

But what didn't get reported was that two weeks later, after a wave of positive press about one of the most controversial and expensive media transactions ever, Clear Channel bought back the rights to at least six of the stations' ad revenues, and in essence, a good deal of control of the supposedly minority-run stations.

One of the stations sold to San Antonio's Chase Radio Partners, an African-American-owned business, is simply rebroadcasting one of Clear Channel's San Jose stations.

The goal of diversity appears to be just talk -- although corporate Clear Channel officials say they are within the law. But the FCC, which approved the sales, has done no follow-up and did not know that Clear Channel had bought back the ad revenue rights or is simulcasting KSJO-FM on Walnut Creek's KFJO.

The business transaction sheds more light on Clear Channel a San Antonio company that is raising hackles among media watchers who worry that it is monopolizing segments of the radio and concert industry.

Clear Channel is the largest U.S. radio owner, with 1,200 of the country's 10,549 stations -- many in the most lucrative markets. It also is the largest concert promoter, earning $830 million a year and owning, among others, San Francisco's Bill Graham Presents. It also owns 700,000 billboards across the country. The company earned $5.3 billion last year.

In the words of's Eric Boehlert, the company has become "radio's big bully."

Boehlert and others are getting glimpses of a company that is gobbling competitors and thrashing through markets with all the subtlety of Godzilla.

The clearest example of what's going on involves Walnut Creek's KFJO-FM (92.7), which is being programmed by San Jose's KSJO-FM.

When Clear Channel was waiting for FCC and Department of Justice approval to buy Dallas-based AMFM's 400 stations in a $24 billion deal, it agreed to sell about 100 of the stations it already owned, because it was over the eight-station limit in many markets. (A company also isn't allowed to own more than five AMs or five FMs in any market.)

The limits are an attempt by the government to ensure diversity of owners and of programming.

KFJO-FM was sold to college professor and African-American broadcaster Anthony Chase's Chase Radio Partners. (It also bought KCNL-FM, which broadcasts out of the same studios as Clear Channel's KSJO-FM and KUFX-FM.)

But anyone who thought that the minority company would have a voice on the Bay Area airwaves can forget it. KFJO simulcasts San Jose's KSJO-FM, a shock-jock dominated rock station that has often drawn ire from minority groups for insensitive remarks and from all sorts of listeners for off-color remarks.

KSJO'S one local African-American on-air personality is a former convenience store worker who is the butt of jokes during the morning show.

FCC regulations allow stations to share sales staffs, but programming is supposed to be separate -- or the station should be counted as being owned by the station producing the programming.

The regulations require that if more than 15 percent of the station's content is programmed by Clear Channel, then it counts as a Clear Channel station, putting the company over its limit of five San Francisco FMs. (It owns KYLD-FM, KMEL-FM, KKSF-FM, KISQ-FM, KIOI-FM, KABL-AM, KNEW-AM in that market and KSJO-FM and KUFX-FM in San Jose.)

Calls to KFJO's Walnut Creek office are forwarded to KSJO's switchboard. Trying to get on KFJO's Web site lands you at KSJO's.

Clear Channel local manager John Sutherland said his company "is operating within all regulatory guidelines," but wouldn't elaborate. "I don't want to make any other comment," he said.

Pam Taylor, a Clear Channel spokeswoman, said: "I spoke with Dave Crowl, the senior vice president who oversees the San Jose market. He said that Clear Channel's operations in San Jose have been scrutinized and approved by the FCC."

Chase owner Anthony Chase and his partner, Van Archer III, declined to return several phone calls. In addition, several requests for an interview were made through Sutherland.

This is just one of many deals being scrutinized by media watchers.

Clear Channel, started in 1972 by investment banker L. Lowry Mays with the purchase of KEEZ-FM in San Antonio for $125,000, has grown in leaps and bounds over the past few years as Congress has deregulated ownership rules.

Mays talks often about synergy among his units, seeking ways to maximize ad revenue from radio, billboard and concert advertising.

Some of that can be chilling for competitors. For example, an e-mail sent to jazz performer Dave Koz's manager by KKSF-FM program director Paul Goldstein asked Koz to play for Clear Channel's Mountain Winery, rather than competitor Villa Montalvo.

"The relationship we enjoy with SFX and the Mountain Winery is an exciting one through which joint promotions maximize ticket sales," wrote Goldstein.

Other station managers and promoters fear that owning radio and concert venues gives the company a leg up with performers and an unfair advantage over competing concert promoters.

Koz's music is a staple on KKSF. Koz, however, chose to play for the non-profit competitor, Villa Montalvo.

"We were encouraging him to go to a Clear Channel venue, but we weren't strong-arming him," says KKSF-FM program director Paul Goldstein. "If we are able to help out a sister company, we are going to do that. But we aren't saying that if it doesn't go that way, we won't support it."

Clear Channel's growth in both industries will be watched keenly as Democrats and Republicans debate future deregulation. FCC Chairman Michael Powell, son of Secretary of State Colin Powell, favors further loosening of government controls, while FCC Democrats are seeking to tighten the size of radio markets to increase the diversity of owners and voices.

Consolidation has been good for radio station owners but less so for listeners.

To save money, Clear Channel has cut down on local programming, quietly syndicating national broadcasters, such as KSJO's evening host "Mikey" Esparza, who does his show on "Voice Tracks" from Texas but makes it appear that he is in San Jose.

Former MTV VJ Martha Quinn is about to start a similar mid-morning show on KIOI on May 21.

On one hand, you get a national talent. On the other, you lose local voices.

"Consolidation has been bad for the country and the industry," says Andy Schwartzman of the Media Access Project, in Washington D.C. "There is a certain 'how greedy can you get' mood. For radio, I think it's too late."

ON A LIGHTER NOTE: KFOG-FM's (97.7/104.5) KABOOM fireworks concert, with Blues Traveler, Old 97s and Mother Hips, is 4 to 10 p.m. Saturday at Piers 30-32 in San Francisco. The same night Radio Alice (97.3) has its first festival of the three-minute films from listeners' camcorders at Bimbo's.

Contact Brad Kava at or (408) 920-5040. Fax (408) 271-3786.