Clear Channel's Concert Unit Isn't Living Up to Its Billing
Hardly more than a week ago, rock icon Don Henley walked Washington's corridors of power with a dark message about Clear Channel Communications Inc.'s tight grip on the nation's live concert business.
Performers, Henley told lawmakers at a Senate committee hearing, felt increasing pressure to play Clear Channel-owned concert venues because they feared that the company's 1,200 radio stations otherwise might not air their latest songs. Clear Channel, which operates Los Angeles' Wiltern and Orange County's Verizon Wireless Amphitheater, accounts for well over half of U.S. concert ticket sales.
Henley's high-profile testimony was the latest allegation to hit Clear Channel, whose rollup of media assets -- from radio stations to airplay research services to live events to television to billboards -- has become a lightening rod for critics who say the conglomerate's clout is strangling artists and competitors.
But if the San Antonio-based company is flexing its muscle to monopolize the concert business, it isn't getting much -- other than pain -- for the effort.
Some analysts contend that the performance unit, which runs more than 60 venues in the U.S. and 120 worldwide, is beginning to look less like a bastion of strength than a gaping hole in Clear Channel's future.
The division "is the company's Achilles' heel," said David Miller, a media analyst with investment firm Sanders Morris Harris. Clear Channel, he added, "radically overestimated" the benefits of linking concert venues to its radio empire, complaints of wary musicians notwithstanding.
Randall Mays, Clear Channel's chief financial officer, doesn't dispute that, saying the division has "underperformed our expectations, unquestionably." But he said, "As we sit here today, you have a division that we think is going to grow very fast relative to the rest of the company."
Clear Channel's sagging live-events division, which features everything from motor-bike rallies to Broadway productions to rock shows, might exhibit some improvement when it reports fourth-quarter and annual results Feb. 25, thanks to easy comparisons with weak numbers a year earlier. For the first nine months of 2002, however, the division saw earnings before interest, taxes, depreciation and amortization -- a common measure among media businesses -- drop 14% to $145 million. Revenue fell 8% to about $1.9 billion.
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