April 24th, 2003
By Eric
Boehlert
Salon.com
How do you
say Clear Channel in Spanish?
Pending FCC approval, a new consolidated media, music, and radio
powerhouse may soon be born. The $2.4 billion deal between the
Hispanic Broadcasting Corporation, the leader in Spanish-language
radio stations in the U.S., and Univision Communications -- already
the market leader in Spanish-language TV, cable and music -- would
create a new company that controls nearly 70 percent of
Spanish-language advertising revenue in the United States.
The deal is big and contentious, and involves politics, music and
media -- and, to make matters even more interesting, Clear Channel,
the U.S. radio station conglomerate, has a starring role. Clear
Channel is HBC's largest shareholder, and the company has been
accused by opponents of the deal of maneuvering illegally behind the
scenes to exert control over HBC, as well as spreading rumors of
drug use about the CEO of HBC's chief competitor.
Clear Channel and Univision boast many similarities. Neither is
known for the originality of its programming. Both are run by
conservative, politically active billionaire Republicans, and both
exert tremendous, near-monopoly power in their markets. In fact, if
the merger goes through, Univision's power in the Spanish-speaking
world would dwarf what Clear Channel has achieved in the radio and
concert business over the past five years.
It's a transaction brimming with widespread political, cultural and
economic ramifications. The Spanish-language mega-merger comes at a
time when the Republican Party is trying to reach out to the
burgeoning Hispanic voter community in the United States. President
Bush even gave Univision his first national television interview
following his inauguration. More recently, congressional Democrats
have grumbled over Univision's fawning coverage of Miguel Estrada,
the conservative -- and controversial -- judge recently nominated by
Bush to serve on the U.S. Court of Appeals. (At the same time
GOP-friendly Clear Channel has swung open its stations to all sorts
of Republican causes, to the point where one Democratic member of
Congress recently accused Clear Channel of blatantly skewing its war
coverage to favor the administration.)
Culturally, the deal is important because Univision, which utterly
dominates television programming for Hispanics in America, will soon
enjoy extraordinary pull in Latin music, able to use its label,
radio stations and TV outlets to create hits. "It's just ripe for
abuse in terms of Univision deciding which artists appear on TV
shows, and on the radio programs," says Felix Gutierrez, a visiting
professor of journalism at the University of Southern California.
The Univision/HBC announcement set off the usual media consolidation
alarms about the lack of diversity among media owners. "That's too
much power in one person's hands," warns Estor Renteria, president
of Hispanic Americans for Fairness in Media. Hispanics account for
nearly 14 percent of the U.S. population and are the nation's
largest minority group.
"A monopoly wasn't good for Standard Oil or AT&T, so why is it good
for Spanish language broadcasting?" adds Efrain Gonzalez, a New York
state senator and chairman of the National Hispanic Policy
Institute.
Univision insists that even with HBC under its umbrella the company
would not be a monopoly, but only a relatively small player in the
larger English language media universe. Executives point out that
its mighty television unit, which during the 2000-2001 season
accounted for every top 20-rated Spanish-language program in
America, still only attracts 5 percent of American television
viewers between the ages of 18 to 49. Worse, they say, it only lands
2 percent of the advertising dollars. So how can it be a monopoly?
But opponents of the merger, such as Rep. Robert Menendez, D-N.J.,
argue that Spanish-language media should be considered its own
separate market. He wrote to the FCC in March urging that it
"establish a clear definition of the separation between
Spanish-language and English-language media markets." But FCC
watchers are skeptical that the commission will do so, leaving a
loophole wide open enough for Univision to "drive a truck through,"
says Gutierrez, who has studied Latin media for 30 years.
The merger is raising, all over again, the same red flags that have
gone up since Clear Channel began its unprecedented land grab
following the Telecommunications Act of 1996. The company went from
40 stations then to approximately 1,200 stations today, or roughly
970 more than its closest competitor. Clear Channel also takes
advantage of its 37 television stations, 770,000 billboards and
unmatched list of venues, promoters and tours to exert control over
the concert industry. Last year the company sold 30 million concert
tickets, or 26 million more than its closest competitor.
Clear Channel today is a sprawling media player and has attracted
intense political and consumer scrutiny for wielding too much power.
But for its influence to compare with the astounding role a
post-merger Univision would play in the Spanish-language radio, TV
and music markets, Clear Channel would have to first go buy EMI
Records and then NBC as well. Univision executives rarely speak to
the press, and if they do so without permission they run the risk of
getting hit with a five-figure fine -- if not a pink slip -- from
Univision's reclusive chairman, Jerry Perenchio, who refuses to
speak with reporters, according to a report in the Los Angeles
Examiner. (Intriguingly, Univision, the No. 1 Spanish language
television player, wants to merge with the No. 1 Spanish language
radio player, yet neither company is controlled by Hispanics. This,
coming on the heels of a recent poll conducted by Opiniones Latinas
that discovered 87 percent of Hispanics in America are opposed to
having Spanish-language media owned by non-Hispanics.)
Perenchio has dealt with creative talent his entire career, first as
a Hollywood talent agent (Marlon Brando), then boxing promoter (Ali
vs. Frazier), and movie producer ("Driving Miss Daisy"). In 1992
Perenchio purchased five Univision stations for $550 million and
began assembling a Spanish-language media empire. Perenchio, an
Italian-American, doesn't speak Spanish, but Univision has made him
a billionaire two times over and catapulted him into the ranks of
America's 100 wealthiest people. He lives in a 20,000-square-foot
Bel-Air mansion and plays golf on his own private course overlooking
the Pacific Ocean.
A Republican, Perenchio has shared a lot of that wealth with
politicians and political causes. Between 1994 and 1996 he gave
$400,000 to California Gov. Pete Wilson. The generosity raised
eyebrows: During and after that period Wilson campaigned hard for
the passage of Proposition 187, which tried to end public schooling
for the children of illegal immigrants. Prop 187 was seen by most as
anti-Mexican immigration, and for Perenchio to support it was
considered a strange stance for the head of a Spanish-language
network, the largest bulk of whose viewers have emigrated from
Mexico.
More recently Perenchio flip-flopped and wrote a check for $1.5
million to support an effort to defeat California's Proposition 227,
which would have abolished the state's public bilingual education
system. "That was a make-up for being on the wrong side of Prop
187," says one veteran Hispanic activist. But cynics suggest
Perenchio's largesse stemmed from a profit motive; his all-Spanish
Univision television stations would attract more viewers if more
Hispanic immigrants continued to speak Spanish.
Despite the fact that a strong majority of Hispanics vote
Democratic, "There's no question that Univision is looked upon as
Republican-leaning," says one political consultant who requested
anonymity. "It's not seen as fair and balanced." Specifically, there
have been complaints in Hispanic political circles over Univision's
coverage of the Estrada nomination. "It's been biased," says one
Democratic source on the Hill. "They always lead with 'hailing from
Honduras,' and portraying him as the all-American story. Then
there's a quick clip at the end from an opponent after a longer clip
from an Estrada proponent." The Congressional Hispanic Caucus, made
up of Democrats, adamantly opposed Estrada.
A Univision spokeswoman denies the charge of bias, saying the
company would never use its news coverage for political purposes.
Nonetheless, the network's influence is pronounced -- in major
markets such as New York, Los Angeles and Chicago, Univision's
nightly newscast often draws more viewers than its competitors on
ABC, CBS, NBC, and Fox.
Some Univision observers see a marked similarity to Clear Channel,
whose founder and CEO, Lowry Mays, is a staunch Republican, a good
friend of George Bush Sr., and close to Bush's son, the president.
"I see him all the time," Mays told a reporter during the 2000
presidential campaign. "His father's a friend of mine." Mays and the
company have showered the party with contributions (while
essentially stiffing Democrats).
Meanwhile, Texas investment banker Tom Hicks sits on the Clear
Channel board. In 1998 Tom Hicks bought the Texas Rangers from a
group that included President Bush; Bush pocketed $15 million off
his initial investment of $605,000, most of which was borrowed.
Clear Channel is also the corporate home of Bush booster Rush
Limbaugh, who spoke to company managers during a Clear Channel
conference on the eve of the 2000 presidential election. According
to one person who attended, Mays also addressed assembled executives
about the campaign, telling them a Bush administration would be good
for the radio industry and good for America.
Those remarks mirrored similar ones Hicks made during a conference
call among Clear Channel's senior radio executives during the 2000
campaign. He announced that the company was going to support Bush,
that everyone was encouraged to make donations, and that the legal
department would be in contact with donors in order to maintain a
proper roster. "Some people took out their checkbooks, but lots of
people felt it was staged like a shakedown," says one knowledgeable
source who requested anonymity. "To be fair, Hicks told everyone
they were free to vote for whoever they wanted. But some senior
people felt there was an implied pressure there, especially with the
mention of the law department maintaining a roster of donors."
Clear Channel made news recently when its syndicated talk show host
Glenn Beck began sponsoring "Rallies for America." The tightly
choreographed events attracted tens of thousands of people, coming
on the cusp of the war as the White House was struggling to garner
wider support for its actions against Iraq. Critics complained that
media companies with news department shouldn't be taking advocacy
positions. Clear Channel insisted the events were simply pro-troops
rallies, grass-roots events undertaken independently by local
stations that carried Beck's program. Either way, at a time when
antiwar rallies were dominating the news, Clear Channel played a key
role in giving war supporters a voice by providing a turnkey
service; staging the events, acquiring any necessary permits, taking
care of security, assembling speakers, and of course relentlessly
promoting the events on Clear Channel radio stations.
At the same time Clear Channel was promoting rallies for the war,
Rep. Janice Schakowsky,
D-Ill., claimed company-owned stations barred ads she wanted to
purchase opposing the war in the Iraq, while at the same time
limiting news coverage of war protests. A Clear Channel spokesperson
did not respond to calls for comment.
Other Clear Channel players were less subtle. A company jock in
Denver labeled Democratic presidential candidate Howard Dean a
traitor for his antiwar stance, suggesting the Vermont governor
should be shot. Musicians got the political message Clear Channel
was sending. During a speech at the National Press Club last week,
actor and outspoken antiwar activist Tim Robbins told reporters, "A
famous middle-aged rock-and-roller called me last week to thank me
for speaking out against the war, only to go on to tell me that he
could not speak himself because he fears repercussions from Clear
Channel. 'They promote our concert appearances,' he said. 'They own
most of the stations that play our music. I can't come out against
this war.'" As is the case with Clear Channel, blamed by critics for
reducing radio's diversity and dumbing down its programming,
Univision's brand of programming has also come under fire. One New
Times Los Angeles critic dubbed its Spanish-language diet of
breathless novellas, or soap operas, imported from Latin America, as
"the dumbest, cheapest, most prurient TV programming imaginable."
And like Clear Channel, or "Cheap Channel" as it's sometimes known
in the radio industry, Univision is known for being tightfisted.
Three years ago employees at the company's Fresno television station
staged a hunger strike to protest their low wages; the news
anchorman for the most-watched telecast in Fresno was making
$32,000, or roughly one-third of what his Anglo counterparts in town
were earning.
Some advertisers and music industry players, after having witnessed
the radical changes Clear Channel has worked on the radio landscape,
have a foreboding sense of deja vu as they prepare for the Univision/HBC
merger. "We've already seen this with the Clear Channel model,"
laments Liza Santana, who runs Creativas, a boutique ad agency in
Miami. "It's basically a monopoly. If you want to buy outdoor
advertising, it's Clear Channel. Radio, it's Clear Channel. Posters
on bus shelters, concerts, event marketing? It's Clear Channel and
it's their way or the highway."
As for the reach Univision would have in the Spanish language market
once the HBC deal gets FCC approval, "We're talking about an
integrated animal, literally," says Santana. "It's scary for me. The
capacity for Univision is just huge. And it's permanent, so the
consequences of anything negative happening will be permanent as
well."
There's also some fear in the Latin music industry that by grabbing
HBC -- the largest player in Spanish-language radio -- Univision
will end up with too much star-making power. The company hasn't been
shy about marrying its Univision recording artists with its
Univision TV shows. The most obvious example featured the previously
unknown Univision singer Jennifer Pena who sang the official theme
song to the 2002 World Cup soccer tournament broadcasts, which
attracted tens of millions of Univision viewers. The saturation
coverage she received helped launch Pena's album and career.
"It's pretty basic. She became a star because that commercial ran
every 20 minutes throughout the tournament," says Jesse Rodriquez,
founder of Bandidoradio.com, an online tejano radio station. The
addition of HBC's stable of radio stations to the Univision empire
"will be a blessing for artists signed to Univision," says
Rodriguez. "But for independent labels and artists, they're going to
be playing second fiddle trying to get radio airplay."
A Univision spokeswoman acknowledged that there will be obvious
cross-promotional opportunities to expose its artists on TV and
radio commercials, but insisted the company will not add acts to
HBC's playlist simply because they record on a Univision label. "The
HBC stations are going to play the No. 1 act on Billboard's Latin
music charts, whether they're on Univision or on other labels. It's
not going to jeopardize ratings or ad sales -- it will not
compromise stations themselves -- just in order to promote Univision
artists."
"We have to take Univision at their word and assume they're going to
remain independent," says John Whipple, executive vice president of
Tejas Records in San Antonio, Texas. "If it got to where they gave
Univision artists preference, that would be horrible because it
wouldn't be a level playing field."
That's why there's a reluctance to speak out. "Some of the artists
are concerned about the merger, but none of them want their names
used," says Renteria, at Hispanic Americans for Fairness in Media.
"They're concerned about their ability to keep working if something
goes wrong with their relationship with Univision."
Such a sentiment will sound familiar to artists and managers in the
English-language music business who have shied away from publicly
criticizing Clear Channel for fear of economic repercussions.
When the merger plans were first announced last June, executives at
both Univision and HBC were hoping for formal government approval by
the end of the 2002 calendar year. They had good reason to expect
swift passage, since "the FCC has really become a deregulatory
agency," says Gutierrez. Yet today, with the one-year anniversary of
the deal's announcement quickly approaching, there's still no green
light from the FCC. (The Department of Justice did sign off on a
consent decree, provided Univision divests itself from certain
television properties in order to avoid the possibility of a
monopoly.) Merger watchers expect a decision any day, but that's
been the case for weeks now.
Univision and Clear Channel aren't just similar corporations looking
to grab near-monopoly control of their markets. If the merger goes
through, Clear Channel will have a significant stake in the entity.
Clear Channel is HBC's largest shareholder, controlling 26 percent
of its stock. Clear Channel insists it's only a passive investor
with no controlling interest over the country's largest
Spanish-language radio broadcaster, but critics say that's just not
true, and that behind the scenes hard-charging Clear Channel, not
known for its passive management style, has taken an active role in
HBC, including steering station sales and influencing internal
financial matters at HBC. That's reason enough, they say, for the
FCC to veto the merger.
In its filing with the commission, the National Hispanic Policy
Institute argues its case in part by pointing to annual employment
reports, the kind every broadcaster must file with the FCC. The NHPI
notes it was Clear Channel's corporate counsel -- not HBC's -- who,
under the penalty of perjury, certified information for several HBC
stations. Despite being an officer at a company that's a passive
investor, " He apparently believes that as Clear Channel corporate
counsel he has the authority to prepare, execute and file these FCC
forms on the behalf of HBC," noted the NHPI.
HBC answered the allegation by informing the FCC the confusion
stemmed from a glitch in Clear Channel's database and it was a
"simple mistake -- nothing more." The NHPI shot back, "Clear
Channel's mistake was in truthfully identifying and listing each
station at which Clear Channel had employees, without first
considering which stations it secretly owned or operated in a
prohibited manner."
And then there's the antitrust lawsuit filed by Spanish Broadcasting
System, HBC's main competitor. Angry that a deal fell through to
merge the two Spanish-language radio companies, SBS filed charges
the day the Univision/HBC deal was announced. Earlier this year a
judge ruled that even if the facts of the allegation were true, SBS
couldn't prove Clear Channel had created a monopoly in violation of
the Sherman Act. He dismissed the case, although his ruling is being
appealed.
Some of SBS's more outlandish accusations against Clear Channel have
stuck, though. For instance, SBS charged that just as it was
preparing its 1999 IPO with Lehman Brothers as its co-leading
underwriter, Clear Channel's CFO Randall Mays (Lowry Mays' son)
called a Lehman Brothers executive and warned her that SBS's CEO,
the Cuban-born Raul Alarcon, Jr., was a "drug user and/or
trafficker."
During his deposition earlier this year, Mays admitted he had called
the banker to tell her he'd heard a rumor that Alarcon had used
drugs, but that he did not mention trafficking: "I said, look, I
heard something that I didn't know if it was true, that there was
something in the public domain where Raul admitted to using drugs."
Mays denied the charge that relaying the unsubstantiated rumor was
an effort to get Lehman to withdraw from SBS's IPO. He did admit
though, that he was unhappy that Lehman was handling SBS's public
offering. Again, critics ask, if Clear Channel is simply a passive
investor in HBC, why does it care who handles the IPO for HBC's
competitor?
That might all be moot soon. "I can't see the FCC ruling against the
merger," says America Rodriguez, professor at the department of
radio, television, film and journalism at the University of Texas,
who's concerned about the future of Spanish-language media if it
ends up controlled by Univision. "We deserve to have more than one
voice. One is not a choice."
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