Concert Promoter Alleges Christian Radio 'Monopoly' in Portland

July 5, 2012 — -- A Christian concert promoter in Portland, Ore., has filed suit against a Christian radio broadcaster and publisher, alleging monopolistic practices that Jesus would definitely not do.

LMG Concerts, the concert promoter, claims in its suit that Salem Communications, which owns and operates about 100 radio stations, including stations in 23 of the top 25 markets, is using "monopoly control" that locks up the market for concerts in that city and many other U.S. metro areas.

LMG Concerts is an independent concert promoter, based in Vancouver, Wash., that has produced concerts for Toby Mac, Steven Curtis Chapman, Third Day, and Michael W. Smith, among other Christian artists.

Allegations of anti-competitive practices are becoming a more significant issue as the music industry becomes more heavily concentrated, said C. Evan Stewart, partner with the law firm, Zuckerman Spaeder in New York City.

"Fewer and fewer companies are controlling more and more of the product," Stewart said.

Christian music sales have declined in the past five years along with much of the music industry with concert sales fueling the revenue of most labels and performers. In 2011, there were 23.7 million Christian/Gospel albums sold, down 2 percent from the previous year, according to Nielsen SoundScan.

In 2006, the genre had 39.7 million albums sold, up 1.3 percent from the previous year.

LMG alleges that Salem Communications, which owns and operates about 100 radio stations, including stations in 23 of the top 25 markets, "has built a monopolistic, multimedia empire that is severely harming LMG's ability to compete, decreasing overall competition, and resulting in higher prices and fewer offerings for consumers," according to the suit filed with a U.S. District Court in Portland on June 21.

The suit claims Salem Communications' unlawful acts and practices "threaten to drive LMG and others from the marketplace, not only in the Portland metro area, but outside the state of Oregon..."

LMG is suing for punitive damages and an injunction for alleged violations of state and federal antitrust law.

In addition to naming Salem Communications, incorporated in Delaware, the suit alleges that its radio arm in Portland, Salem Media, and its radio station, The Fish, KFIS FM 104.1, the only Contemporary Christian Music radio signal in the Portland metro area, "dominates the Christian music airwaves in the Portland metro area," according to the suit. The Fish is ranked 17th in listenership for radio stations in the Portland market, according to a court filing, "on par with mainstream popular music stations."

The Fish's listenership in an average reach in a week is about 214,000, according to the suit.

The suit claims Salem Communications' live entertainment arm, Fish Concerts, "is attempting to dominate the Christian concert promotion business."

According to the lawsuit, concert promoters, the "wholesalers for the live music industry," "buy" concerts from booking agents "at wholesale prices negotiated separately between the agent and the promoter."

Lowell MacGregor, LMG's principal who has nearly 30 years experience in concert production related work according to the suit, and Anthony McNamer, LMG's attorney, declined to comment.

Promoters can be responsible for concert expenses including the venue and they use various marketing strategies to promote a concert in particular markets, such as through print, television, and flyers. However, "radio is by far the most important and effective tool for promoting concerts because of its close relationship to the product being advertised," the suit states.

The promoter then "resells" the concert as a live music event to the general public at retail prices through tickets.

"Because The Fish controls 100 percent of the market share for commercial Contemporary Christian Music in the Portland metro area, for LMG to successfully advertise and otherwise promote a Contemporary Christian Music concert in the Portland metro area, it must have access to advertising and promotion on The Fish," the suit states.

That may be a "dubious proposition," according to Stewart.

Much of the anti-trust law developed decades ago when public access to media was more limited, Stewart said.

"If you wanted to watch television about 50 years ago, it was only NBC, ABC and CBS," he said. "Or if you were in Austin, Texas, or wherever, you only had one radio station to listen to music. Those days are long gone."

LMG Concerts will have to prove that radio is the best or only effective way to promote concerts or these particular artists while "communication with the public has become more of open ended and broadly diverse in the history of mankind through the internet," Stewart said.

The concert promoter's attorneys will also have to show that the consumer's ability to get concerts at a reasonable price has been impacted.

Christopher Henderson, general counsel for Salem Communications, declined to comment, citing the pending litigation.

LMG alleges that Salem's practice of "threatening to deny, and in fact denying critical airplay, advertising, and other on-air promotional support, for LMG concerts and to LMG's artists, has caused LMG to lose many business relationships and prospective business relationships."

The concert promoter claims in the suit that "Salem Communications repeatedly has used its size and clout to coerce artists – including artists who had pre-existing business relationships with LMG and/or its principals – to use Salem Communications to promote their concerts or else risk losing airplay and other on-air promotional support" on Salem's radio stations.

LMG also claims Salem Communications "uses its monopoly control over locally programmed Christian commercial radio airtime as the primary selling point to lure clients away from LMG and other promoters, placing LMG and other promoters at an even greater competitive advantage."

Other "anticompetitive" practices by Salem Communications, LMG alleges, allegedly include: refusing to accept paid advertising to promote "or even acknowledge" concerts promoted by LMG, offering discounted or free advertising to artists in exchange for using "Fish Concerts," and bidding up fees paid to artists so that LMG and others "cannot profitably compete."

"Salem Communications will be able to recoup, through higher ticket prices and lower payments to artists, its losses from such tactics when LMG and other promoters are driven from the market," the suit states.

Among other effects of the "anticompetitive" practices, "fans of music artists promoted by LMG have been, or will be, denied the benefits of competition in a free and open market and have been, or will be, forced to pay artificially high ticket prices," the suit states.