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Clear Channel Communications, the radio industry's 900-lb gorilla, may be getting too big for its britches.

During the last weeks of January, US lawmakers heard complaints from small station owners who had been driven out of business by Clear Channel, and allegations of its strong-arm tactics from recording artists. Some senators expressed doubts about the wisdom of further loosening ownership restrictions on the broadcasting industry, an issue being considered by the Federal Communications Commission (FCC).

Clear Channel is the nation's largest radio operator, with 1233 stations, more than 10% of the 10,800 that cover the US. The San Antonio, TX–based company absolutely dwarfs the next-largest competitor, Atlanta's Cumulus Media, Inc., which has 260 stations. From its origins as a mid-sized player with about 60 stations, Clear Channel took advantage of liberalized ownership caps built into the Telecommunications Act of 1996, and went on an acquisition spree that swelled its roster of stations by more than 2000%. The company also operates Clear Channel Entertainment, the dominant force in the concert promotion industry. In 2002, Clear Channel sold 30.2 million concert tickets worldwide, almost seven times as many as the next biggest promoter, HOB Entertainment, Inc., which sold 4.5 million tickets. (The average concert ticket price in the US last year was $46.56, according to the Wall Street Journal.)

That kind of market clout has led to abuses, witnesses told the Senate Commerce Committee. Musicians' rights activist Don Henley testified that Clear Channel extorts disadvantageous deals from touring musicians, threatening to remove them from radio playlists if they don't agree to concert deals. He said that the company is homogenizing radio through its use of standardized playlists for all its stations. Henley also mentioned Clear Channel's leveraging the long-standing music industry practice of providing "promotional support" to radio stations through a network of middlemen or "independent promoters" in exchange for having records played on the air. Clear Channel chief executive Lowry Mays denied these allegations, saying that his company's radio and concert businesses are independent from each other, that local stations have discretion to play what they wish, and that there is "no play for pay."

Broadcast unions, such as the Communications Workers of America, have protested the Clear Channel practice of feeding a single announcer's voice to stations in several cities simultaneously. Robert Short, Jr. told the committee that he had to sell his FM station in Syracuse, NY because it was impossible to compete with Clear Channel. He described the situation as "David and Goliath," without the Biblical outcome. Democratic senator Byron Dorgan of North Dakota informed his colleagues that Clear Channel owns all the commercial radio stations in Minot, ND. "Consolidation in radio has gone too far," he asserted. "At the moment there doesn't appear to be a limit."

Mays told the senators that he doesn't believe that the radio industry would be harmed if only "four or five" large companies owned all US stations. The FCC is under pressure from Clear Channel and other media conglomerates to lift remaining restrictions on broadcast ownership, and until January's Senate hearings, Chairman Michael Powell, a renowned free marketer, so far has adhered to the position that there was no compelling reason not to do so. He may reconsider after January's testimony.

Senator Russell Feingold (D, Wisconsin) introduced a bill to prevent further radio industry consolidation, ban innovative forms of payola, and prevent Clear Channel from using its broadcasting power to benefit its concert division. Washington observers don't give Feingold's bill much chance of passing, but committee chairman Senator John McCain (R-Arizona) has said he will look further into Clear Channel's operations. Testimony at the hearings was reportedly so compelling that even Senator Ernest "Fritz" Hollings (D, South Carolina), known in some circles as "the senator from Disneyland" for his support of Hollywood-backed legislative proposals, described it as "a cautionary tale if ever there was one" about the abuses of unregulated commercial power.