Talk Radio Giants Accused of Ad Monopoly

MEDFORD, Ore. (CN) — In a federal antitrust complaint, a national talk radio network claims that Cumulus Media, Westwood One and Compass Media conspire to monopolize syndication, ad rates and employment of advertising reps.

Talk Radio Network (TRN) specialized in conservative talk radio before expanding into a wider variety of talk programming. The network brought talk radio personalities Art Bell and Michael Savage into national prominence.

The lawsuit was brought by four interrelated parties. Plaintiffs America's Lifestyle Radio Network and America's Talk Network syndicate morning news programs, including shows featuring Sam Sorbo and Jerry Doyle.

Talk Radio Network Entertainment is not active because they are "struggling to deal with the ongoing damages," its attorney Ron Severaid told Courthouse News.

The April 11 lawsuit includes three major claims: that the defendants monopolize syndication of talk radio shows; that they monopolize the employment of ad reps who sell the ads; and that they "bundle" the syndicated shows with the ads, and fail to provide accounting on how they do it, to the detriment of smaller players.

The plaintiffs also claim that Cumulus unfairly used market leverage in a number of mergers and acquisitions to become one of the biggest owners of terrestrial radio stations in the country, and that have not paid them for advertising or provided accounting on it.

"Defendants' conduct poses a significant risk to free speech under the First Amendment because it holds the prospect of eliminating or substantially reducing the number of independent radio syndicators, and limiting the news and talk radio broadcasts available within the United States," the complaint states.

Defendant Charles Steinhauer, chief operating officer of Westwood, is called "the key overseer" for "the formulation and implementation of defendants' unlawful scheme to convert millions of dollars in ad revenues," in what the plaintiffs calls "allocation fraud."

The defendants "would face competitive pressure to be transparent in handling bundles of programs" if not for their monopoly of advertising rates and salespeople, according to the complaint.

"If Westwood faced any meaningful constraint on its market power in the independent national syndication ad rep market, it would be forced to include more programs from other producers in its advertising bundles, even at the expense of defendants' own programs," the complaint states.

TRN seeks damages on 15 causes of action, including violations of the Clayton Act, illegal restraint of trade, and conspiracy to monopolize.

It is represented with Christopher Cauble of Cauble, Cauble & Selvig in Grants Pass, Ore.; the Alioto Law Firm in San Francisco, and Severaid & Glahn in Sacramento.

Attorney Ron Severaid said the case shows a "sad commentary on the state of American business" and that evidence will show massive allocation fraud in ad revenue.

TRN has fought multiple legal battles in recent years.

In January, the U.S. Supreme Court denied the company's petition for appeal of a 2010 lawsuit brought by radio host Michael Savage over a contract dispute.

Savage said at the time that his contract with TRN "contains provisions that are illegal and unenforceable."

Representatives for Westwood, Cumulus, and Compass did not immediately return requests for comment.

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