Tough company

Clear Channel is as big as NBC or Gannett. Chances are it owns a half-dozen radio stations in your town. And it's fighting employee suits alleging everything from broken contracts to sexual harassment.

Published May 30, 2001 7:39PM (EDT)

When word got out three years ago at a radio station in Florida that the news-talk operation was being taken over by Clear Channel Communications, staffers began to fret.

"I started hearing all about 'Cheap Channel,'" says Jack Cole, a veteran talk-show host at WJNO in West Palm Beach, referring to the radio giant's reputation for implementing salary and budget cuts.

Still, Cole was taken aback by his first encounter with the new Clear Channel general manager, Skip Schmidt, who arrived to tour the facilities, shake some hands and greet the staff.

"I said, 'Hi, I'm Jack Cole,'" the host recalls. "He looked at me and said, 'Jesus you make a lot of money.'"

On the day that Clear Channel officially took control of WJNO, Cole was called into his boss's office and fired. Worse, he says, the company did not honor his $120,000-a-year contract -- even while enforcing a non-compete clause for six months in the market by threatening potential employers with legal action.

"They're ruthless," says Cole, who is now an announcer for Florida's Money Watch Radio Network. His breach-of-contract suit is still pending against Clear Channel. (Schmidt did not return a call for comment.) Cole says he's not alone. "There must be a hundred guys just like me across the country."

Like John London, a longtime Los Angeles morning man. He's suing Clear Channel for several million dollars in unpaid salary and stock options. Last fall Clear Channel closed on its $24 billion purchase of AMFM Inc. and its 460 radio stations nationwide, including KCMG, where London was a host. Within 60 days of the purchase London was terminated, and despite what London says were assurances to the contrary, Clear Channel refused to honor his two-year written contract.

At the same time, according to London, Clear Channel demanded he exercise his AMFM stock options within 90 days, even though London accumulated the options under his former employer, not Clear Channel.

When he consulted a broker, London was informed restrictions had been put on those options, which were valued at approximately $1 million. Three days later he received a letter informing him he had forfeited the options at the time of his termination.

"That's unheard of, but it's just indicative of how they operate," says London, who has three lawsuits pending against Clear Channel, seeking back pay as well as damages. (Clear Channel executives declined to comment for this story.)

"I've never seen anything like it in 28 years in radio," London says.

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But, of course, radio has never seen anything quite like Clear Channel, which has swallowed up nearly 1,200 radio stations while putting its unique -- and some say nasty -- stamp on the business. In a series of recent Salon reports, insiders from the radio, record and concert industries have voiced concerns about the juggernaut's unmatched power, and how the company uses it. (You can find out the Clear Channel stations in your area by searching the company's Web site.)

That was the view from Clear Channel's competitors. What about a glimpse from the inside? In interviews with dozens of industry professionals, including past and present Clear Channel employees, an unflattering portrait emerges of a Fortune 500 company devoted to cost-cutting and wrapped up in a macho corporate culture.

Employees say that company morale has plummeted, with some openly referring to Clear Channel stations as "radio sweatshops."

"When I think of Clear Channel," says a jock who used to host a morning show on one of the company's Southeast stations, "I think vicious, malicious and salacious."

Adds an insider currently working for Clear Channel in Southern California, "That 'Cheap Channel' nickname really fits because that's the bottom line; they don't care about their employees."

Present and former Clear Channel employees stress it hasn't always been that way, and that sleepy Clear Channel was once known as a staid and, yes, cheap company. Its culture, they say, has gone through a drastic evolution in the last two years.

"The change came when Randy Michaels came on board," says one former salesperson, referring to the bombastic chief of Clear Channel's radio division. (Michaels' history was detailed in a previous Salon report.) He had been head of the radio-broadcasting company Jacor. In 1998 when Clear Channel bought Jacor for $3.4 billion, Michaels was tapped to run Clear Channel's radio holdings; he brought with him a tightknit inner circle of executives to run the company. "It became a micromanagement vs. an entrepreneurial atmosphere. And they started not treating people very well."

The Jacor style was undeniably brash. In fact, back in 1993 while overseeing "The Power Pig," an outlandish Tampa Top 40 outlet, Michaels waged a relentless on-air war with crosstown rival Q105, mocking the station and its employees. When Clear Channel bought Q105, the Pig laid into its new owner, Lowry Mays, with recorded comedy bits, dubbing him "Lowry Mayonnaise," and later "Low Rent Mayonnaise," a womanizing, "evil Texas banker" whose first priority, when not telling a black disc jockey to wax his Cadillac, was to "cut costs" at Q105. Mays is still Clear Channel's CEO -- and now Michaels' boss.

Before 1996, a radio broadcast company could own only two stations in one market and no more than two dozen nationwide. If it earned a too-unpleasant reputation, jocks, programmers and salespeople might simply stay away. But the Telecommunications Act of 1996 removed those restrictions, and now Clear Channel has amassed so many radio stations nationwide that it wields the type of dominance inside the radio business that no player in any other media industry can claim today.

Thanks to laissez-faire regulators in Washington, Clear Channel has put together a stunning piece of vertical integration inside the music and broadcasting business. Its 1,170 outlets represent 10 percent of the nation's radio stations, and a much higher percentage of its major ones. (For example, the company controls 60 percent of rock radio nationwide.)

Clear Channel owns SFX Entertainment, the dominant concert-touring business -- a key marketing tool for rock 'n' roll radio stations. Clear Channel also owns radio research companies, an airplay monitoring system, syndicated programming, radio trade magazines, hundreds of thousands of outdoor billboards and 19 television stations.

It all added up last year to more than $5 billion worth of revenue. In other words, while no one was looking, little-known Clear Channel has surpassed traditional media giants like Hearst and the New York Times Co. in size. Indeed, the company is now on a par with Gannett, the Tribune Co. and NBC. (On NBCi's board of directors, Clear Channel CEO Mays is said to be enjoying a budding friendship with GE chairman Jack Welch.)

It's hard to imagine Gannett or NBC or the Tribune Co. operating any of its properties the way Clear Channel does without attracting harsh scrutiny. But the radio industry, traditionally a network of independent companies with a largely local focus, has always operated in a separate universe, away from the media spotlight, which explains why so little attention has been paid to the company's day-to-day practices.

That, and the fact that so many people in the radio business are reluctant to discuss Clear Channel, since its empire reaches into virtually every corner of the business.

"Nobody wants to say anything because everybody knows they're going to own you. Where are you going to go to find a job in radio?" asks one former Clear Channel on-air personality. "People are paranoid. Nobody wants to rock the boat."

Clear Channel itself actively discourages its workers from speaking with the press. One employee recalls his surprise when, after Clear Channel bought the station he worked at, the first e-mail he received from corporate headquarters was about the press: "It said if you talk to the press without our consent you'll be fired."

Many Clear Channel contracts today include nondisparagement clauses, which stipulate that unflattering statements about the company are cause for dismissal. Employees who are fired find their severance packages conditional on signing forms that stipulate they will not sue the company nor speak to the press.

Despite that, a number of Clear Channel employees have come forward to talk about the company.

Aside from the rampant cost-cutting -- some Clear Channel AM stations' news departments have been cut from 15 full-time staffers down to one -- what's most often mentioned by employees is the culture of the company. It's an often rowdy, good-ol'-boy way of doing business that leaves some employees, and particularly women, uneasy.

"If the FCC ever put out an announcement that they were investigating Clear Channel and wanted to talk to employees with incidents of sexual harassment, they'd get a flood of phone calls," suggests one former employee.

Last fall, the industry was abuzz over word that Bev Tilden, AMFM's highest-ranking female and dubbed one of radio's most influential women, had quietly left Clear Channel after it acquired AMFM -- but not before complaining about a sexual-harassment incident. Tilden would not comment for this story.

Earlier this month April Yerger, a former assistant at two Clear Channel stations in Tampa, Fla., filed a sexual harassment suit. According to her attorney, a station jock harassed her with unwelcome sexual comments ("When are you going to let me lick you?"), and when she complained to her supervisors they retaliated against her regarding other work incidents ("You fucking whining baby") and by opening a file on her and filling it with work critiques.

"There's an unwritten rule at Clear Channel: If you rock the boat they'll make life miserable for you," says Yerger's attorney, Michael Babboni.

Clear Channel has yet to respond to Yerger's suit in court.

"The employee atmosphere is abusive towards any minority or woman," says Liz Richards, a former talk-show host who years ago sued one of the same Tampa stations as Yerger -- citing the same disc jockey -- for sexual harassment. (Richards eventually settled out of court.) "Any minority was at high risk to be the brunt of jokes and not treated well."

Adds another former Clear Channel on-air host: "There are absolutely incredible amounts of gender problems. My own boss told me once there are only two kinds of women in radio: hookers or cheerleaders. That's how he sees and treats women."

Employees say that atmosphere comes from the top down inside the company. "There are no women in power at Clear Channel," says one, "so when there was a corporate meeting in town they all went to the men's club to see strippers. It's an ugly, frat boy posse mentality."

In addition, she recalls a station meeting in which the head of Clear Channel programming for a major market mocked a white employee who messed up as being "the Negro" of the group. "Everybody noticed it and felt uncomfortable but were afraid to they might lose their jobs if they said anything."

Another employee tells of the Clear Channel manager who told programmers that when it came to designing station Web sites, "tits equals hits."

One former Clear Channel salesperson recalls the difficulty she faced after announcing she was pregnant. "My manager's whole attitude changed towards me right after," she says. His complimentary e-mails and memos stopped, she says, replaced by comments about how she seemed overwhelmed, despite the fact that she was meeting her monthly sales goals. "They started setting me up after I announced I was pregnant," she says. A few months later she was fired.

Another Clear Channel salesperson who quit after many successful years with the company cites a simple reason: "They want to limit how much money you can make." He says management doesn't want salespeople to become too successful for fear that if they quit they'd take their clients with them to the competition. The solution? "They started taking clients away from salespeople," says this person. "I think it's unheard of."

Some in the advertising community who deal with Clear Channel's sales teams, which aggressively leverage their clusters of stations in any given market, are just as unhappy. "You can't negotiate with them because they want to bundle everything," says Patricia Bruni, associate media director for San Antonio ad agency Atkins/Lord & Lasker, referring to companies that try to force clients to buy ads on as many of their stations as possible. For broadcasters, it is one of the biggest advantages of consolidation.

"They're just obnoxious and badger you to death," says Bruni. "They try to sell you absolutely the wrong [radio] format for your demographic and they won't let it die. It's fine up to a point; that's sales. But they cross the line to where it just becomes harassment. It's gotten to the point with Clear Channel where I try my best not to deal with them."

Because of consolidation though, "that's almost impossible," she says. "They literally own so many markets it's ridiculous."

Bruni, a 33-year veteran of the business, resents the take-it-or-leave-it nastiness unique to Clear Channel sales teams. "I've had Clear Channel people tell me I don't know what I'm doing. I've had Clear Channel people call clients direct, to try to undermine the agency, and tell them we're not doing the best job. I just think they are cutthroat. Their philosophy is pure unadulterated greed. And I think everybody has just had it with them."

Earnest James managed Clear Channel stations in New Orleans for six years before leaving voluntarily this spring to run four Infinity Broadcasting stations in San Francisco. "When I started at Clear Channel it was great, a great place to work," he says. "What happened was the culture changed when the company grew. Management became Randy-ized, which is much more contentious. The culture changed to the point of making me uncomfortable going to work every day."

In what employees suggest was a typically heavy-handed Clear Channel move, the company's Indianapolis stations recently pulled out of a fundraising dinner for the Indiana Children's Wish Fund, after management learned that a radio competitor, the CEO of Emmis Communications, would be honored at the dinner. According to the Indianapolis Star, the local Clear Channel GM even asked for his $5,000 charity donation back; Emmis made up the difference to the Children's Wish Fund.

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For jocks and programmers, recent Clear Channel changes have meant doing more with much less -- smaller budgets and fewer employees. One key way Clear Channel has saved money is to eliminate hundreds of on-air personality positions by simply having one company jock send out his or her shows to dozens of sister stations. The practice is known as "voice tracking," and thanks to clever editing, the shows still often sound local in various markets.

But for the company jocks doing the voice tracking and saving Clear Channel millions in announcer fees, "you get maybe $3,000 a year," says a former company jock. "That's forced labor because you don't really have a choice of doing it, and they're not paying a fair rate."

Another point of contention for some Clear Channel programmers has been the company's national contests, in which listeners can win big prizes, such as $10,000, if they're the pre-selected caller dialing into a 1-888 number. The catch is that listeners are simultaneously competing with Clear Channel listeners in dozens of other markets, making the odds of winning tiny.

Worse, jocks at each of the stations have to make it seem like the winners are local listeners. They do that by downloading interviews with the winners recorded by Clear Channel corporate. Then engineers at the various stations dub in the voice of local jocks "interviewing" the winners to make it seem as if that station's personality is giving away the big prize.

"It was the most distasteful thing I ever did in broadcasting," says one jock who played along and "interviewed" contest winners. "You're deceiving the audience."

Florida's attorney general's office agreed. Last year it fined Clear Channel $80,000 for deceptive trade practices and stipulated that if Clear Channel stations in Florida aired interviews with contest winners they had to make it clear where in the country the winner was from. As a way around that, some Florida Clear Channel stations have simply stopped airing the interviews.

Just this month, broadcasters in Alabama contacted that state's attorney general and asked that Clear Channel's national contests be investigated for deceptive practices.

But in the end, Clear Channel's harshest critiques seem to come from its own employees. "They spent too much money acquiring all these properties and now they can't afford to pay people to run them," says one programmer still with the company. "Is Clear Channel good for the industry, or good for broadcasting? Capital N. Capital O."

By Eric Boehlert

Eric Boehlert, a former senior writer for Salon, is the author of "Lapdogs: How the Press Rolled Over for Bush."

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