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(09/18/03 5:25am)
NEW YORK -- In the past 12 months, Clear Channel Communications has been accused of everything from monopolizing and homogenizing the radio industry to banning the Dixie Chicks and being a right-wing mouthpiece.\nThe negative publicity has meant the largest owner of U.S. radio stations spends a great deal of time defending itself against what it says are lies spread mostly by critics, competitors and people who have lost jobs amid changes in the radio industry the past few years. But Clear Channel, which denies any wrongdoing, says the bad PR won't change the way it does business, or stop it from buying more stations.\n"I'd be kidding you if I'd say the scrutiny hasn't had an effect. We have to do a better job of communicating our position, telling our story," said John Hogan, chief executive of Clear Channel's radio division. But "we don't program the stations based on what Washington has to say or what The New York Times has to say. We program them on what our local listeners want to hear."\nStill, the critics are hard to ignore. Consumer groups ranging from the Center for Public Integrity to the Consumer Federation of America have accused Clear Channel of stifling local voices and diversity on the radio. The radio conglomerate has also been attacked for promoting a Republican agenda and using the influence of its 1,200-plus radio stations to decide what gets on the air; playing the music of artists who do business with its entertainment, advertising and TV divisions, while punishing those who don't.\nEven louder is the reproach from Washington. In June, federal regulators relaxed overall media ownership rules but more tightly restricted radio ownership. The fate of those rules is now uncertain because of moves by the courts and Congress against the TV and newspaper ownership changes, but Clear Channel still has other problems. The Justice Department is investigating the company and, though it won't say why, the speculation is the inquiry is about alleged anticompetitive practices.\nThe controversies illustrate what a magnet for criticism the company has become.\n"They were an easy target. Clear Channel started out as a very small company and it grew really fast," said Katy Bachman, a Mediaweek senior editor who covers the company. "They were unprepared and the radio business was unprepared for all the attention. They had no idea people would get upset and there have been a lot of things perpetuated about them that are just not true."\nClear Channel is now trying to repair its reputation by meeting with reporters and correcting what it calls myths: The company says it did not ban the Dixie Chicks from airplay after one of the group's members criticized President Bush and the war in Iraq (that was rival Cumulus Media, and the temporary prohibition only applied to its country music stations.) Clear Channel also says pro-war rallies held by some stations during the Iraq war were the work of individual radio hosts and managers, rather than a corporate directive.\nClear Channel has also made some corporate changes, including hiring for the first time a vice president of corporate communications and a Washington lobbyist. Last October, the company launched www.clearchannelnewmusicnetwork.com, a forum for new music artists to share their music. So far, some 6,000 bands have signed up -- a showing the company hopes will allay detractors who contend Clear Channel's size and focus on profits has made it easier for more established artists to get airtime, while newer ones, who are considered less certain to please audiences, struggle to be heard.\nThis summer, the company cut off dealings with independent promoters after accusations that the relationships promoted "pay for play." The promoters are paid by record companies to tout their recordings to radio stations, and some lawmakers had alleged the practice influenced what songs got on the air.\nA key complaint has been Clear Channel's ownership of radio stations. The conglomerate owns about 9 percent of the 13,000 total U.S. radio stations. But the concentration is much greater in some markets. For example, Clear Channel owns 13, or about 24 percent, of the 53 broadcast stations in the Lexington, Ky., area, according to the Center for Public Integrity, a consumer advocacy group.\nHogan says the company has done nothing illegal, and that he won't let critics hinder Clear Channel's growth.\n"If there was more inventory available in terms of stations and the pricing was more attractive and it was the best use of our free cash flow, we'd be all over it," Hogan said. "I'm certainly aware of the interest that various politicians have in us, have but I'm very, very comfortable with our position and opportunities going forward."\nCompany founder and chief executive Lowry Mays declined to be interviewed for this story. But earlier this year, Mays told Fortune magazine, "We're not in the business of providing news and information. We're not in the business of providing well-researched music. We're simply in the business of selling our customers' products."\nClear Channel's critics say that attitude is the whole problem. Although the conglomerate's actions appear to have all been legal and it is not the only media company to have multiple stations in some markets, they say the company should be more sensitive to public opinion.\n"There's a public responsibility to those who use these airwaves and if you just completely ignore it and say 'I'm just in it for the money and just in it for the shareholders,' the way their CEO has, you're going to get yourself in trouble and you're going to deserve it," said John Dunbar, director of the telecommunications project at the Center for Public Integrity.\nClear Channel has come under further scrutiny for its uses of technology, such as voice-tracking, which allows a disc jockey, for example, to prerecord a broadcast that then plays in another market. Critics don't like voice-tracking because they say it gives the illusion of that DJ being local, when in reality he or she may be hundreds of miles away. Clear Channel says less than 9 percent of its programming uses this type of technology.\nThe Mays family's involvement with the Republican party -- Lowry Mays has been a big financial backer of President Bush-- has also caused concern, despite Hogan's assertion that mixing politics with business is bad business, and that the company would never do it.\n"If you have a politically active CEO who is of a particularly ideological bent you become worried that if they control entire markets, which Clear Channel does, that ideology might make into some of the coverage," Dunbar said.\nEven Wall Street thinks Clear Channel might need to keep a low profile for awhile. Earnings have slipped in recent quarters because of a slump in radio advertising. The stock is currently trading in the low $40 range, after trading as high as $50 and as low as $30 in the last 15 months.\nAlthough profit margins remain high in its radio business -- around 40 to 50 percent by most estimates -- few on Wall Street expect many high-profile moves from Clear Channel anytime soon.\n"Congress is looking at these guys with a microscope," Edward J. Atorino, an analyst with Blaylock & Partners L.P., said. "They're pretty much stuck. I don't think they can make more acquisitions without incurring the wrath" of Congress.
(10/03/02 6:39am)
NEW YORK - The publisher of Rosie magazine sued Rosie O'Donnell for $100 million Tuesday for abruptly pulling out of the venture last month.\nGruner + Jahr Printing and Publishing Co. said in court papers that the former talk show host breached her contract and publicly disparaged the magazine when she quit Rosie on Sept. 18.\nA call to O'Donnell's spokeswoman was not immediately returned.\nThe publisher and O'Donnell had been feuding for months about the direction of the magazine.\nRosie debuted in April 2001. The joint venture gave O'Donnell and G+J each a 50 percent stake in the business.\nDuring the first six months of the year, Rosie's total average paid circulation was 3.5 million -- the 13th-highest magazine circulation nationwide for the first half of 2002, according to Advertising Age magazine.\nAmong other things, O'Donnell and G + J had reportedly argued repeatedly about what the magazine cover should look like.\nG+J, the international newspaper and magazine arm of German media giant Bertelsmann, also publishes Parents, Fitness, Fast Company and Family Circle magazines.
(07/25/02 8:23pm)
NEW YORK -- Wall Street's hemorrhaging may not be over, much to the chagrin of investors who have watched stock prices plummet for nine straight weeks.\nEven after the 390-point plunge Friday that took the Dow Jones industrials to their lowest close in nearly four years, many analysts said a brief bounce higher on bargain hunting is the best the market is likely to get -- and more losses Monday were still a strong possibility.\n"There is a total lack of conviction in this marketplace, so we are going to remain weak and there is considerable risk for more selling," said Robert Froehlich, chief investment strategist for Deutsche Asset Management. "This is about emotion -- the lack of confidence around accounting issues and corporate governance."\nIndeed, investor confidence, already battered after two years of losses in the market, shows no signs of improvement. Instead, analysts say investors have grown more disillusioned by the spate of accounting and corporate ethics scandals at companies ranging from Enron Corp. to WorldCom Inc.\nThe market's sharp selloffs have brought the major stock gauges to below their post-Sept. 11 lows, and only increased investors' sense of helplessness.\nAs a result, many would-be buyers are no longer willing to take any chances and are avoiding stocks and mutual funds. Others are selling, and shifting their money to investments perceived as less risky, such as cash savings accounts or bonds.\n"It's time to diversify and go into something safer," said Steve Hinkle, 50, a chemist in Bristol, Penn., who has stopped buying stocks out of concern more declines are ahead. "I don't think we're bottomed out yet. I think we're still in for a long ride down."\nEquity mutual funds lost $11.4 billion during the week ending July 17, the largest outflow this year, according to AMG Data Services. And a third of those surveyed in a CNN-Time poll released Sunday indicated recent declines in the stock market have caused them to consider delaying retirement.\nA rebound was possible Monday simply because of the magnitude of the market's losses this past week -- 665 points on the Dow, 54 points on the Nasdaq composite index and 73 points on the Standard & Poor's index. But a few analysts doubt it would last because the prospects for more bad news are significant.\n"We have more earnings reports coming out, and there's not a lot of optimism," said Bryan Piskorowski, market commentator at Prudential Securities. "Even though the market is very, very oversold here, there's not really a lot of reasons to buy."\nIndeed, the second-quarter earnings reports that have come out so far this month have given investors few reasons to believe an upturn will come anytime soon. Bellwether technology company Intel reported weaker-than-expected results this past week, while announcing more job cuts. Other companies issuing disappointing results included Caterpillar, Siebel Systems and Baxter International. More earnings reports were expected this week, including American Express and Texas Instruments.\nAt the same time, there have been more questions about corporate bookkeeping -- this time at AOL Time Warner and DaimlerChrysler. Many analysts expect the issue to continue to pressure the market until at least mid-August, when the SEC has asked roughly 1,000 top CEOs to certify that their financial statements are accurate. If the process goes smoothly, some analysts say that could reassure the market. Any delays, however, might trigger more declines.\nIn the meantime, Wall Street is doing its best to persuade investors to stay calm -- and not cash out their assets. In an appearance Sunday on NBC's "Meet the Press," New York Stock Exchange Chairman Richard Grasso said that Monday could be another difficult day for the markets, but counseled investors to remain patient.\n"Please don't do something that emotionally feels good but, in the long term, will be a mistake," he said. "What I know is, over the course of the last 10 years, the market, with all of the aberrational downdrafts that we've seen, has gone up, and I believe over the next 10 years the same will be true"
(07/25/02 8:23pm)
NEW YORK -- The Dow Jones industrials stormed up almost 490 points, the second-biggest one-day gain ever, and climbed back over 8,000 Wednesday as Wall Street cheered legal and legislative action on the corporate ethics scandals that fueled nine weeks of sharp losses.\nAlthough stocks began the day by extending a four-day losing streak, the arrest of top Adelphia Communications Corporation executives for allegedly looting the cable TV company triggered a broad rally that intensified as the session wore on. An agreement between House and Senate negotiators on legislation to crack down on corporate fraud added momentum to the advance.\nStill, many market observers were dubious about the sustainability of the rebound, noting that stocks have rallied before and then pulled back.\n"I'm a little skeptical," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "Every time we've had one of these violent rallies, it's been a classic bear market bounce with no follow-through."\nIndeed, after the market closed, AOL Time Warner said regulators were looking into its accounting practices -- a reminder that concerns about the truthfulness of corporate ledgers have not been put to rest.\nThe Dow closed up 488.95, or 6.4 percent, at 8,191.29, an advance second only to the 499.19-point gain it had on March 16, 2000.\nThe surge was also the Dow's first triple-digit gain since July 5, when the average rose 324 points. However, it still demonstrated the volatility that has swept over Wall Street lately. The Dow dropped more than 170 points early in the day before shooting higher.\nBroader stock indicators also closed sharply higher. The technology-focused Nasdaq composite index advanced 61.18, or nearly 5 percent, to 1,290.23. The Standard & Poor's 500 index rose 45.73, or 5.7 percent, to 843.43.\nThe advance was a dramatic break from the sharp selling that has plagued the market since mid-May as pessimism growing out of the accounting and ethics problems overshadowed an improving economy and healthier earnings reports. Triple-digit drops in the Dow have become the norm -- the blue chips lost 840 points over the previous four sessions alone.\nBut most analysts said the buying was an expected rebound following significant declines, rather than an end to the bear market.\nBill Barker, an investment strategy consultant at RBC Dain Rauscher in Dallas, said technical factors played a major role as many traders were forced to buy back stock that they had sold short. In short trades, investors sell borrowed stock, expecting the market to fall; when the market then rises, they are forced to buy stock to pay back the debt.\nThis process, called short covering, creates upward momentum because the higher stocks go, the more traders with shorts have to buy stock.\n"I think the market is increasingly being dominated by short-term traders," Barker said.\nHowever, Barker noted that the market began to rally shortly after the arrests of the founder of Adelphia and his two sons were reported. The accounting scandal at Adelphia has been one of several that have been weighing on market sentiment.\n"The market has been waiting for this," Alan Ackerman, vice president at Fahnestock & Co., said of the Adelphia arrests. "We have a big turnaround in process, but whether it will last or not is a big question."\nSome companies were rewarded for positive earnings reports Wednesday. Reebok climbed $2.13, or 9.1 percent, to $25.44 after beating analysts' estimates by 9 cents a share.\nDuPont advanced $3.23 to $40.28 after reporting it swung to a profit in the second quarter despite falling sales.\nJ.P. Morgan Chase rose $3.22, or 16 percent, to $23.30, while Citigroup advanced $2.59, nearly 9.6 percent, to $29.59. Both stocks were pummeled Tuesday on concerns the banks would suffer from the Enron fallout.\nMicrosoft climbed $3.22, or 7.5 percent, to $46.23. Intel soared 89 cents, or 5 percent, to $18.70.\nAmong retailers, Wal-Mart advanced $2.84, or 6.3 percent, to $47.97, while Sears, Roebuck rose $3.72, or 8.7 percent, to $46.32.\nAOL Time Warner, which also released earnings that beat expectations by 2 cents a share, was off 75 cents in after-hours trading following the news about its accounting. In regular trading, AOL was down 15 cents at $11.40 a share. The company said it stands by its books.\nAdvancing issues outnumbered decliners by more than 3 to 2 on the New York Stock Exchange, which had its busiest day ever. Volume came to 2.74 billion shares, compared with 2.43 billion Tuesday.\nAs the market tumbled the past two months, major indicators have fallen to levels not seen in at least four years.\nOn Tuesday the S&P 500 closed below 800 for the first time since April 1997. The Dow fell to its lowest close since October 1998 and the Nasdaq dropped to its lowest close since May 1997.\nThe Russell 2000 index was up 14.57, or 4 percent, Wednesday to 378.56.\nOverseas, Japan's Nikkei stock average fell 2.6 percent. In Europe, stocks were mixed. Germany's DAX index rose 3.3 percent, recovering from a steep drop earlier. Britain's FTSE 100 fell 2.1 percent, and France's CAC-40 lost 1.5 percent.
(09/12/01 7:28am)
NEW YORK -- The nation's securities markets shut down and New York's financial district was left in chaos Tuesday by the terrorist attack that devastated the World Trade Center. \nThe New York Stock Exchange, American Stock Exchange and Nasdaq Stock Market planned to remain closed at least through Wednesday. Analysts were divided on the effect the attacks would have when trading resumes. \nThe shutdown on the NYSE, the nation's oldest exchange, was the longest since the market closed for two days at the end of World War II. The NYSE's longest closing was nearly four months during World War I. \nThe trade center is a few blocks from the NYSE in the area known as the Financial District, home to dozens of investment houses and brokerages. Its twin 110-story towers, among the tallest skyscrapers in the world and a distinctive part of the city's skyline, collapsed after two hijacked jetliners crashed into them, scattering debris throughout the area. \nThe New York Mercantile Exchange, where energy futures are traded, is in the nearby World Financial Center, which was not directly hit in the plane assault. \nIn Europe, stocks closed sharply lower and panic buying caused oil and gold prices to soar as investors looked for the safest, least risky places possible to place their cash. Bond prices also moved higher. The U.S. dollar, meanwhile, fell against other foreign currencies. \n"This attack was an overt attempt to disrupt the financial system. But a lot of how the U.S. market reacts will probably depend on how long it stays shut," said Richard Dickson, technical analyst at Hilliard Lyons. \nIf the shutdown is brief, there might be some initial selling when trading resumed, Dickson said, but "things would stabilize pretty quickly." \nHowever, Brian Belski, fundamental market strategist at US Bancorp Piper Jaffray, cautioned against making too many assumptions, noting that "the market is very reactive right now, and it's never seen anything like what just happened." \nLonger term, other economists worried that billions of dollars in lost business because of the attacks could further jeopardize companies already struggling and tip the fragile U.S. economy into recession. \n"The attack will hurt (consumer) confidence and economic growth will suffer," said Sung Won Sohn, chief economist at Wells Fargo. \nThe Federal Reserve said it was ready to provide additional money to banks if needed, a step designed to reassure Americans that the nation's financial system was still working. \nTo most market watchers, financial concerns were secondary to thoughts about the thousands feared killed. \n"I am broken up by this. I have a lot of friends up there," said Dickson, the Hilliard Lyons analyst. "I'm sort of sitting on the edge of my chair." \nAbout 50,000 people worked in the World Trade Center towers and the complex. The biggest tenant was Morgan Stanley, which set up a toll-free line for people to call for information about its 3,500 workers. \nMorgan Stanley spokeswoman Diana Quintero told Dow Jones Newswires that the company was still trying to account for all of its staff. \nDetlev Rahmsdorf, a spokesman for Deutsche Bank, which also had an office in the Trade Center, said he believed all of its 300 employees had gotten out in time, although no final confirmation had been made. \n"It's just incredible disbelief to look on TV and see both towers gone. It is surreal because it is an image we have seen in the movies, but haven't considered a possibility in real life," said investment banker Lee Mirman, who was on vacation in Florida away from his office on the 87th floor of the World Trade Center. \n"It is hard to find the words to describe the extraordinary destruction and the magnitude of suffering that must be going on. ... It doesn't seem real"