TRN sues Dial Global for monopoly practices: see complaint


Mark MastersIt’s a case of the syndicator suing the rep firm: On 8/27, the original Talk Radio Network, Talk Radio Network Enterprises and Talk Radio Network-FM announced that they’ve filed a Federal action against Dial Global and multiple other parties, asserting antitrust, anti-monopoly and other claims. The complaint (which demands a jury trial), “Complaint for Violations of the Sherman Act and the Cartwright Act, and for Fraudulent Inducement, Interference with Contract and Interference with Prospective advantage,” names: Dial Global, Excelsior Radio Networks, Triton Radio Networks, Triton Media Group, Oaktree Capital Management, Verge Media Companies, Courstide, LLC, Compass Media Networks, Compass Media Marketing, WYD Media Management (Ron Hartenbaum), Spencer Brown, Ken Williams, David Landau (of DG), Norm Pattiz (of Courtside), Peter Kosann (of Compass) and Ron Hartenbaum.

Why are the other companies like WYD and Compass named?

“Plaintiffs are further informed and believe, and on that basis more particularly allege, that certain of the Defendants, including without limitation Courtside, Courtside Entertainment, Compass Media, Compass Marketing, WYD, WYM, Pattiz, Kosann and Hartenbaum, if and to the extent that they are not in fact Dial Group Members, are in fact acting in collusion with the Dial Group and conspiring with the Dial Group, and/or are acting as surrogates for the Dial Group, for the purpose of disguising the involvement of the Dial Group, and/or assisting the Dial Group, with respect to certain of the unlawful and/or otherwise wrongful actions of the Dial Group as alleged by Plaintiffs in this Action, and that such conspiracy and collusion is effectuated through various means, including without limitation direct and/or indirect equity, financing or other forms of direct, beneficial or other interests.”

See the full complaint here:

More excerpts:

Through a series of anticompetitive mergers and acquisitions, as well as other anticompetitive and wrongful actions, the Dial Group have come to dominate the Independents Ad Rep Market, and the Defendants are actively engaged in efforts to dominate the Independent Spoken Word Syndication Market.

In this regard, Plaintiffs are informed and believe, and on that basis allege, that the Dial Group now controls approximately 95% of the Independents Ad Rep Market. As a result, the Dial Group has achieved a stranglehold on the vast majority of the Independent Spoken Word Syndicators, such as Plaintiffs. Thus, the Dial Group is in the process of securing undue levels of control over what is heard and not heard on radio.

By effectively controlling approximately 95% of the Independents Ad Rep Market, and therefore the flow of advertising revenue for Independent Spoken Word Syndicators, the Dial Group has become the bottleneck through which the predominate share of the revenues which fund the Independent Spoken Word Syndication Market flow. Moreover, the Dial Group has utilized this position to embark on a program of attempting to dominate the business of independent spoken word radio syndication, controlling first the access of Independent Spoken Word Syndicators to the national advertising necessary to their profitable operations via the Dial Group’s control over the Independents Ad Rep Market, and then acquiring or otherwise controlling the Independent Spoken Word Syndicators and/or their programming, whether by mergers, acquisitions, joint ventures or other means, either directly and/or indirectly via one or more Dial Surrogates.

Through a series of predatory acts utilizing their increasing monopoly power, the Dial Group has launched a full scale attack on the Independent Spoken Word Syndicators, including Plaintiffs, such that there is a dangerous probability that Defendants will dominate this content market in addition to dominating the Independents Ad Rep Market.

The Dial Group fraudulently induced Plaintiffs to commit to long term representation agreements, exclusively with the Dial Group, for sales rep services in the Independents Ad Rep Market, by expressly representing to Plaintiffs that the Dial Group: (i) would never engage in activities which would present an actual or potential conflict of interest with respect to the duties owed by the Dial Group to Plaintiffs as Plaintiffs’ advertising representatives; and (ii) would never seek to inure to the Dial Group Plaintiffs’ programming, hosts, producers or proprietary business information. The Dial Group then utilized the strength of such long term representation agreements to generate investment dollars and place themselves in a position to accomplish and fulfill their anti-competitive schemes through mergers and/or acquisitions and other devices.

Upon eliminating by merger all viable alternative advertising representative firms for the Independents Ad Rep Market which did not engage in conflict of interest programming, the Dial Group, in direct violation of their prior representations to Plaintiffs, began engaging in mergers and other activities, including acquisition and development of the Dial Group’s own spoken word radio programming within the Independent Spoken Word Syndication Market, which created direct conflicts of interest between the Dial Group and the ad rep obligations which they owed to Plaintiffs, as well as surreptitious and collateral activities designed to evade and violate such representations through seemingly indirect means, and the attempted surreptitious use of apparent surrogates, including without limitation various Dial Surrogates.

Plaintiffs are informed and believe, and on that basis allege, that, in or about April of 2002, Dial I merged with the Global Media Division of Excelsior, with the merged entity (apparently Dial Communications) under the continuing supervision of Williams and Landau and a former partner in Dial I and Dial Communications as co-presidents, in order to create what was then described by the Dial Group as “an industry leading national radio sales representation company with anticipated 2002 advertising sales revenue of $50 million and a client roster of over forty independent radio production companies”.

From and after that 2002 merger, Brown, acting as the CEO of Excelsior, began to become active in the interactions between Dial Communications and Plaintiffs, and eventually became the primary representative of the Dial Group interacting with Plaintiffs at the executive level.

Upon the formation of TRNE in 2003 and TRN-FM in 2004, the Dial Group, now
communicating with Plaintiffs through Brown, Williams and Landau, repeated to TRNE and TRN-FM their prior representations, inducements, promises, assurances, and commitments to OTRN to the effect that the Dial Group would never engage in any actual or apparent conflict of interest in their ad representation of Plaintiffs by engaging, either directly or indirectly, in Spoken Word Syndication for their own account, and would not seek to inure the programs, hosts, producers and other proprietary rights of TRN-E and TRN-FM, respectively, to the Dial Group’s own purposes.

As a result of such representations by the Dial Group to Plaintiffs, first OTRN, then TRNE and then TRN-FM agreed to retain the Dial Group as their sole ad rep in the Independents Ad Rep Market, for all of Plaintiffs’ programming, and further recommended the Dial Group to other Independent Spoken Word Syndicators, thus materially facilitating the Dial’s Group’s expansion in multiple respects.

During such period, Plaintiffs’ CEO developed what he believed to be a strong bond of mutual respect and trust with Brown, in particular, as a result of the ongoing communications from Brown which he understood to be communicated on an executive to executive business basis, and without knowledge at the time that Brown had a legal background as a commercial litigator. Regardless of whether the perception on the part of Plaintiffs’ CEO of mutual trust and respect was accurate, Plaintiffs developed complete faith and trust in Brown as someone they then perceived to be a person of integrity who could be relied upon to ensure that the Dial Group would fulfill its obligations to Plaintiffs as their
sales representative.

Plaintiffs also provided Plaintiffs’ business plans to the Dial Group, on a confidential basis, also based upon the representations from the Dial Group to Plaintiffs that the Dial Group would never engage in Spoken Word Syndication for their own account or otherwise participate in activities which would create a conflict of interest with respect to their serving as Plaintiffs’ sales representative within the Independents Ad Rep Market, or inure Plaintiffs’ programs, talent or proprietary information to the Dial Group’s account.

Plaintiffs are informed and believe, and on that basis allege, that, in or about June of 2008, the Dial Group acquired Jones Media Group and the operating companies of Jones Media (Jones America, Jones Radio Networks and JonesTM) in order, as stated in a press release on such acquisition, to obtain “industry-leading positions in national advertising sales representation” and other radio markets.

During the course of the merger and acquisition activities with the Jones Media companies, the Dial Group, now acting primarily through Brown, initially represented to Plaintiffs that the Dial Group would be acquiring the rights to certain long form talk radio programming as a result of that merger, and that, in order to comply with their agreements, representations, inducements and commitments to have no conflicts of interest by owning or controlling other talk radio shows, they would divest such shows to Plaintiffs following their acquisition of such rights.

Notwithstanding these representations, after the Dial Group acquired the rights to various programs that created a conflict of interest as a result of the merger with Jones Media, the Dial Group failed and declined to divest such programs, contrary to what the Dial Group had represented they would do, claiming that third party impediments precluded this, and instead, in December of 2008, extended enhanced commitments, representations, inducements, promises and assurances from the Dial Group that, with the exception of any talk radio shows and/or syndication contracts which the Dial Group acquired upon the acquisition of Jones Media and one additional weekday talk show which was described but not identified by name, the Dial Group would have no equity or other financial interest in other independent spoken word shows, and would not engage in the broadcast or syndication of, or announce the intention to commence, any news and/or political talk programming, and/or long form weekday talk programming of any kind, during the term of Dial’s representation of Plaintiffs.

Plaintiffs are informed and believe, and on that basis allege, that, as a result of the merger with Jones Media, Dial had now increased its market share to approximately forty-five percent (45%) of the Independents Ad Rep Market and provided advertising representation services to over 200 independent programs and networks.

Although Plaintiffs had not realized it in 2002, the 2002 merger which resulted in the combination of Dial I with Excelsior’s Global Media Division resulted in Dial Communications being the only significant rep firm for the Independents Ad Rep Market which did not also rep its own conflict programming. Plaintiffs are now further informed and believe, and on that basis allege, that this situation continued until the Dial Group acquired interests in various talk radio programs as a result of the Jones transactions in 2008.

As a result of the merger with Jones Media, the Dial Group effectively eliminated any options for Plaintiffs, or other Independent Spoken Word Syndicators, to place their business with a vendor which was not directly or indirectly interested in conflict of interest programming, and left Plaintiffs with no viable alternatives for utilizing a different advertising representative firm for the Independents Ad Rep Market, since the only remaining significant ad rep firms for the Independents Ad Rep Market had talk radio shows that also would create a conflict of interest.

Dial Global doesn’t handle distribution of TRN product, but does do ad sales for just about all of the company’s Talk, News and Entertainment products—from Michael Savage down to ARNN News. DG also reps and distributes NBC News Radio and CBS Radio News (after the merger with Westwood One).

Dial Global is still repping TRN companies to the best of RBR-TVBR’s investigation and various sources who wish not to go on the record—there is no mention of any cancellation of any contracts and business is still being written.

We’ve heard Dial Global is in no way trying to block TRN programming from getting onto affiliates. This is what we’ve been able to put together so far.

In announcing the action, Mark Masters, CEO of the plaintiff companies, stated:

This is a sad but necessary day for us.  But the steps we take today are for the sake of the entire community of independent spoken word syndicators, and independent radio networks who depend on outside sale representation for their very financial survival.

These independent producers, syndicators and networks serve America’s over 10,000 commercial radio stations, helping them save costs, and increase quality at a critical time to those stations’ survival in the current difficulties they face in navigating today’s national economic environment.

Today, we reluctantly are forced to bring this action, as the largest group of independent spoken word syndicators/networks in the United States.

In doing so, we hope this signals a beginning of the end to active monopoly and anti-competitive actions within radio’s independent spoken word syndication markets.

The plaintiff companies note that the federal action is necessary, as the community of independent spoken word producers, syndicators and networks of national radio programming cannot afford for a single company to have critical control of the revenue streams (read: Ad Repping) which cash flow America’s national spoken word radio programming providers (independent syndicators and independent radio networks).

Once an active monopoly achieves control in the national institutional advertising marketplace for spoken word radio, it is able to “pick and choose” which companies it will allow to succeed on America’s airwaves in the spoken word space, and what companies it will cause to fail, in both cases to its own benefit, the plaintiffs note.

The plaintiffs also note that this federal action is also necessary to “prevent the formation of a second generation monopoly over intellectual property rights within the independent spoken word syndication market.  If one company is permitted to continue to monopolize the sales representation function, it can use that monopoly (which acts as a primary funding source and cash flow “life line” for its core customers – independent radio syndicators and independent radio networks) to form a second generation monopoly which will use the first monopoly to ultimately wipe out most of today’s national independent spoken word programmers, syndicators and networks and replace them with its own programming.”

The plaintiff companies note in particular that the recent destruction of CNN radio (which was on over 1,100 radio stations in the US and had been operating for over 20 years), going into a Presidential election, in favor of its immediate replacement by a branded news operation, at the election of its sales representatives (Dial Global), is a telling example of the “threat posed by the ability of a small handful of unelected Wall Street executives who have achieved sufficient dominance in one sales market to force changes in the separate independent spoken word market, and the threat posed to other independent spoken word syndicators absent prompt corrective actions.”

TRN is asking for the following in relief, including DG divesting some of its assets:

Plaintiffs respectfully request that Plaintiffs be granted the following relief against the
Defendants, and each of them, as their responsibilities are determined, for the unlawful, wrongful and improper actions of the Defendants as hereinabove alleged, and/or as otherwise established in this Action:
1. That the acts of Defendants, as hereinabove alleged, be adjudged and decreed to be in
violation of Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, and other relevant laws;
2. That Plaintiffs recover all damages, as provided by law, determined to have been
sustained as to each of them, in accordance with the antitrust laws, and that judgment be entered against
Defendants and on behalf of Plaintiffs;
3. That Plaintiffs recover all other damages under all other cause of action determined to
have been sustained as to each Plaintiff;
4. For a disgorgement of profits and restitution by Defendants, and each of them.
5. For exemplary and punitive damages against each Defendant, in sufficient amounts in
relation to the net worth and annual incomes of each such Defendant to dissuade such Defendant from engaging in future wrongful conduct of the nature hereinabove alleged;
6. For divestiture of the assets illegally acquired by the Dial Group in the Independents Ad
Rep Market and the Independent Spoken Word Syndication Market;
7. For preliminary and permanent injunctive relief prohibiting the Defendants, and each of
them, from further commission of the wrongful acts hereinabove alleged, or from taking any actions to
retaliate against, or otherwise damage, Plaintiffs, or any of them;
8. That Plaintiffs recover all of their costs of suit incurred in connection with this Action,
including without limitation attorneys’ fees, as provided by law; and
9. For such other and further relief as is just under the circumstances.

RBR-TVBR could not reach Masters at deadline for comment.

RBR-TVBR observation: Interesting that Masters is protecting and advocating for Time Warner, owner of CNN Radio News (which DG repped before switching to NBC Radio News in a mutual separation), who one can argue is one of the largest media companies on the planet. It looks to us that since TRN’s America’s Radio News Network formed, Masters may have thought his timing would assure him the lion’s share of clearances and subsequent ad dollars. Considering the O&O’s control which news product goes on their stations, Mark may be having trouble clearing his news product against well established news names being repped and distributed by Cumulus, Dial Global and Clear Channel’s Premiere—ABC, CBS, NBC, and Fox News. At the end of the day, ARNN is competing in a very established and crowded marketplace for news.

Nonetheless, the first stage of this battle is being waged in the press, where the standard is accurate reporting of what is and is not happening. When and if it moves on to the court, the standard will be more stringent: it involves the law, the evidence, and the burden of proof. That’s where this will ultimately be decided – stay tuned.

Also, if the case is heard, the proof will be in the auditing of ad contracts and written contracts between the parties–just to find out what monetary damages are on the table. Bear in mind–this may not get settled out of court, because DG’s pockets are deeper than TRN’s. How long can TRN pay for the war? It would be a long trial and attorneys fees exorbitant. In the meantime, TRN has a business to run with a rep that is now an enemy, so to speak.


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