SBS Sues Rivals on Antitrust Allegations
Wed Jun 12, 2:59 PM ET
By Derek Caney
NEW YORK (Reuters) - Spanish Broadcasting System Inc., a Spanish-language radio company, on Wednesday sued rivals Hispanic Broadcasting Corp. and Clear Channel Communications Inc. , accusing them of antitrust violations and moves to depress its share price.
Clear Channel, the largest U.S. radio station owner with over 1,200 stations, said it would vigorously defend itself against the allegations, calling them unfounded.
Hispanic Broadcasting, the No. 1 U.S. Spanish radio broadcaster, was not immediately available for comment.
Earlier on Wednesday, Hispanic Broadcasting agreed to be acquired by the No. 1 U.S. Spanish-language television group, Univision Communications Inc. , in a stock swap worth $3.5 billion.
Clear Channel, which owns a 7 percent stake in Hispanic Broadcasting, is already the target of intense criticism from rivals and lawmakers that it wields its market-leading position to stymie competition.
Spanish Broadcasting accused the two companies of hampering its ability to raise money, depressing its share price, and driving up prices of its acquisition targets.
Spanish Broadcasting, which is seeking unspecified damages, is represented by well-known attorney David Boies, whose clients have included Al Gore ( news - web sites) in the presidential election recount, and the U.S. government in its case against Microsoft Corp.
The suit alleges that the ultimate objective of Clear Channel and Hispanic Broadcasting was to acquire Spanish Broadcasting and thus eliminate a rival.
"We had attempted over the last few months to negotiate our way through these matters so they didn't occur," said SBS's attorney Bob Dwyer. "But Univision's acquisition has indicated to us that Hispanic is not interested in an out-of-court settlement."
CHARGES 'ABSURD AND UNFOUNDED' SAYS CEO MAYS
Clear Channel's chief executive officer Lowry Mays said: "These charges are false and we will, as we always do with frivolous lawsuits, fight vehemently to defend our position and we have every expectation of winning on all counts. The charge that Clear Channel interfered with SBS's ability to compete fairly is absurd and unfounded."
Spanish Broadcasting said in its suit, filed in U.S. District Court in Miami, Florida, that Clear Channel's chief financial officer, Randall Mays, tried to get two of the lead underwriters, Lehman Brothers and Merrill Lynch, to withdraw Spanish Broadcasting's initial public stock offering.
The suit also alleges that Clear Channel and Hispanic Broadcasting threatened to withhold business from the investment banks unless they limited or eliminated analyst coverage of Spanish Broadcasting.
Spokesmen for Lehman and Merrill were not immediately available for comment.
Spanish Broadcasting also accused the two companies of engaging in bidding wars to drive up the price of radio stations it wanted to acquire.
Clear Channel has been the target of intense criticism that it has used its market position to shut out competitors.
One U.S. lawmaker has called for a probe into allegations that the company, which owns the huge concert promoter Clear Channel Entertainment, had limited airplay of performers that do not use its promotion services.
Clear Channel has also been accused of misleading regulators about the number of stations it controls and of exceeding its ownership limit in several markets by taking control of stations and warehousing them in front companies.
The company has also come under criticism from record labels who have called for increased regulation on radio companies' relationships with "independent promoters."
These promoters are middlemen paid by the labels to pitch their songs to radio program directors.
The labels have complained that the costs have spiraled out of control as the radio industry has consolidated, leaving the airing decisions in the hands of a few powerful players, such as Clear Channel. |
