Clear Channel tactics appalling Clear Channel tactics appalling (September 09, 2005)

The across-the-board effort of Clear Channel Communications to shortchange the city in its lease agreement at Shoreline Amphitheatre, detailed in last week's Voice, is shocking and clearly shows the arrogance of a $20 billion company that thinks it can bully its way around its financial obligations.

The audit, commissioned by the city and performed by a highly respected Los Angeles accounting firm, shows Clear Channel owes the city at least $3.6 million and probably more, the total amount of which won't be known until the city receives all the information its auditors requested. Under the 30-year lease with Clear Channel's Shoreline subsidiary, the city was guaranteed 6.5 percent of the $20 million in revenue over the last five years, plus other income noted in the document.

The schemes used by Clear Channel to avoid payment ran the gamut from keeping two sets of books when reporting revenue commissionable to the city to shifting revenue to its subsidiary radio stations when it allowed them take over Shoreline for much less than the established rent.

The litany of abuse is incredible for such a company, with its huge stake in the live concert industry and its hundreds of radio stations around the U.S.

The city had been trying for years to get Clear Channel to complete agreed-upon "procedures reports" to make sure the company was meeting its obligations. Then in April, the city grew tired of waiting and demanded a full audit of the company's books going back to the beginning of the lease in 1999.

And although a Clear Channel executive made the obligatory denial last week, saying, "We believe the audit is misleading. The issues are much more complicated than some would suggest," it is difficult to imagine many errors in the audit, which was compiled from information provided by the company.

One example details how an appearance by the Dalai Lama at a charity event in 2001 earned the company $218,000, none of which was reported as income to the city.

A major disagreement between the city and Clear Channel involves payment for parking. In 2000 the company stopped charging ticket-holders for parking and simply added $3 to every ticket sold, regardless of whether the person intended to park (it later grew to $4). Clear Channel claims it should keep all revenue from that cost increase, while the city believes it should get its percentage.

Equally disturbing in this case is Clear Channel's legal tactics. After the city commissioned the audit, a month later the company responded with a series of Public Records Act requests, demanding any supporting information for comments city council members made to the press about the case. This tactic is simply an attempt to intimidate city officials and drive up the city's legal costs.

As noted in last week's coverage, Clear Channel has similar battles going against competitors or government agencies in several other cities, including St. Petersburg, Fla., Chicago, Denver and Austin. In many cases, Clear Channel has attempted to frighten its adversaries by forcing local officials or competitors into lengthy depositions that usually fail to gain the company any usable information.

In Mountain View's case, it appears that even a small city can stand up to a huge corporate bully. Obviously, the battle with Clear Channel has just begun, but the audit released last week will force the company to explain its actions and, we hope, give up the additional information that the company refused to provide the auditors. We commend the city council, City Manager Kevin Duggan and City Attorney Michael Martello for moving forward with this investigation. It was the right thing to do.

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