Orrin Hatch vs Big Radio
By Barry Willis February 23, 2003 — Only a month after being scrutinized by the Senate Commerce Committee, Clear Channel Communications may have to explain itself to the Senate Judiciary Committee.

On Friday, February 21, the chairman of the Judiciary Committee told members of the recording industry that he plans to launch an investigation into alleged "payola-like practices" by big radio groups that also own concert venues. Clear Channel, the nation's number one radio broadcaster with over 1200 stations, also owns Clear Channel Entertainment, the number one concert promoter. Some recording artists have said that the concert division uses its association with the radio division to win concessions from touring artists, threatening them with diminished radio play if they don't accede to unfavorable contracts.

At the annual Entertainment Law Luncheon, held at New York's Waldorf-Astoria two days before the Grammy Awards, Senator Orrin Hatch, (R-UT) told attending members of the National Academy of Recording Arts & Sciences (NARAS) that he would initiate hearings on the issue within a month. "These allegations raise serious competition issues, which my committee will investigate and deal with appropriately," Hatch said. "I would expect to hold a hearing on these issues in the coming month to examine the allegations and see how they affect artists and their ability to distribute and promote their music."

"While I am a strong believer in free markets, I am also a strong believer in the antitrust laws and vigorous competition policy," Hatch stated. Payment for radio play has been illegal since the payola scandals of the 1950s and '60s. Record labels found a way around the law by contracting with "independent promoters" who provide monetary "support" to radio stations and are, in turn, paid by the record companies in proportion to the amount of air play they are able to generate.

An inside connection in the music industry, who asked to remain anonymous, informed us that the system has been in place for more than 20 years, "The general policy is program directors get whatever they want," meaning cash payments, travel stipends, and other perks. Clear Channel CEO Lowry Mays has repeatedly denied any wrongdoing. He has characterized the music industry's use of independent promoters as "stupid," but has also said it would be foolish for any business to say no to free money.