Magazine article Insight on the News

Justice Makes Radio Waves

Magazine article Insight on the News

Justice Makes Radio Waves

Article excerpt

The Antitrust Division is unhappy about a trend toward consolidation in the broadcasting industry.

Steve Ruxton hosted a radio show on WJJD in Chicago for five years -- until last month. Ruxton didn't lose his broadcast slot due to poor ratings. The radio veteran was replaced because of the policies of the Clinton Justice Department.

WJJD is owned by Westinghouse Corp., which recently purchased Infinity Broadcasting for $3.7 billion. In approving the deal, Justice forced Westinghouse to diversify some of its holdings, insisting that the corporation's Chicago station be sold to a minority-owned beneficiary. The new management of WJJD then laid off Ruxton and his colleagues. The move by the department was unprecedented.

Since Congress passed and President Clinton signed the Telecommunications Act loosening restrictions on the ownership of broadcasting stations, 120 mergers and acquisitions have transpired in the radio industry But former Whitewater spinmeister Joel Klein, now deputy assistant attorney general for antitrust, has taken a dim view of the mergers. He and fellow Clinton trustbusters say they're breaking up potential advertising monopolies. Their opponents claim they are using their powers of investigation to extract concessions from radio stations to meet social-policy goals -- including diversity of ownership.

Until this summer, the Justice Department never had conducted an antitrust investigation of radio, according to Ted Henneberry, an attorney who represents the National Association of Broadcasters, or NAB. "The Federal Communications Commission had always handled radio deals," he tells Insight. But the FCC has not flagged any potential antitrust violations. And other critics claim that Justice lawyers on the cases have a limited understanding of the radio business, which competes with television, newspapers and magazines but receives just 7 percent of all marketing dollars.

Indeed, many stations say they are barely surviving. Some on-air personalities with years of experience in big-city markets make around $20,000 per year, hardly a glamorous show-biz salary. To survive, the industry "is not only consolidating, but rearranging itself, rapidly," says Sandy Phunder, an antitrust attorney with Gibson, Dunn & Crutcher in Washington. "Stations are being bought and sold and flipped and traded. But the [Justice Department's] Antitrust Division has brought three cases in the last four months challenging the acquisitions."

In recent weeks, Klein and his aides have ordered Midwest radio-giant Jaycor to divest itself of a station in Cincinnati when it purchased Citycasters, another broadcaster. …

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