(FORTUNE Magazine) – Jesse Morreale was gearing up for the Van's Warped Tour, a punk-rock concert that appeared in Denver last summer. Morreale's 25-person company, Nobody in Particular Presents (NIPP), had been promoting the Warped Tour for the past five years, but that was one of the few remaining bright spots of his business. Recently NIPP had been losing acts to Clear Channel, a national radio powerhouse that had made a big move into concert promotion in 2000. In the nearly two years since, NIPP had watched its share of Denver's live-entertainment business steadily erode.

But none of that mattered now. The sun was shining, the stages were set, and 11,000 kids were lined up to watch heavily tattooed bands you've probably never heard of. Then Morreale spotted a van from KTCL-FM, a rock station owned by Clear Channel. For Morreale that was the last straw. He'd bought radio ads for the Warped Tour on KTCL, but he says the station ran the spots at the wrong times--or worse, not at all. He'd also tried to promote the show with an on-air ticket giveaway but says the station gave the tickets to its own employees. Now KTCL had the nerve to try hanging its banners at Morreale's concert. No way, he thought. He walked over to the van and kicked the station employees off the grounds.

That decision would come back to haunt him. Just days after the show, some bands on the Warped Tour found out that they were being dropped from KTCL playlists. For a band, airplay is like oxygen--without it, you die. Record executives scrambled to make peace and get their bands back on the air, and after a few furious rounds of shuttle diplomacy, that finally happened. But for Morreale and NIPP, the incident meant that promoting even the Warped Tour would become that much harder.

In Denver, competing against Clear Channel is a little like climbing into the ring with Lennox Lewis every business day. Over the past two years the company has been on an acquisition binge, spending almost $30 billion on radio stations, advertising companies, and--most distressing for Morreale--concert promoters. It now owns more than 1,200 AM and FM stations, and its concert division operates or exclusively books 135 venues across the U.S. Last year it produced 26,000 live events, or about 70% of the total market. In Denver, where Morreale has been a promoter since 1990, Clear Channel now owns or controls the most lucrative concert arenas and eight radio stations, including all of the market's alternative and hard-rock channels--the kind of music Morreale built his business on.

"Before, the concert business was a mom-and-pop industry of fiercely independent entrepreneurs who operated on a local basis," says Gary Bongiovanni, editor in chief of Pollstar, a trade publication. "Now there's a national company with enormous force." And as Clear Channel gets bigger, the little guys are disappearing. Over the past two years the number of independent promoters in the U.S. has shrunk from several dozen to just ten. Most of them merged or sold out to SFX Entertainment, a consolidator of the late 1990s that itself was acquired by Clear Channel for $4.4 billion in the summer of 2000. Three or four other small promoters are close to going out of business, according to John Scher, CEO of Metropolitan Talent in New York City. Another is up for sale--Metropolitan Entertainment (the concert company Scher used to run). Among the suitors: Clear Channel.

"Somebody had to raise their hand and cry bullshit, and that's us," says Morreale. Convinced that the company had nothing left to lose, NIPP filed a lawsuit this past August charging Clear Channel with violating antitrust laws by leveraging its radio playlists and promotional airtime to freeze out competing promoters. Specifically, the lawsuit alleges that Clear Channel has built a "monopolistic multimedia empire" that has decreased competition, reduced consumer choice, and driven up ticket prices. NIPP declines to reveal the amount of revenue or the number of shows it has lost. It's asking for undetermined damages, expected to be in the millions.

In response Steve Smith, Clear Channel Entertainment's chief operating officer, says there's no merit or logic to the NIPP complaint. "The principals of NIPP have decided to paint a picture of restraint of competition--that's not true," Smith says. And Lee Larsen, a vice president of Clear Channel radio in Colorado, disputes Morreale's version of the KTCL fight: "We don't do business that way."

Even if Clear Channel does "do business that way," NIPP faces steep odds in suing a massive corporation with a platoon of well-funded lawyers on retainer. Antitrust charges are notoriously difficult to prove in court, and the Bush Administration is unlikely to get involved in a potentially messy monopoly battle. Another problem for NIPP is that it's fighting Clear Channel on its own. Other promoters, record executives, and agents complain about the company's tactics, but so far they've all refused to put their name--and their business--on the line. "People are reluctant to talk because Clear Channel is so powerful," says Bongiovanni at Pollstar. "Whether you love them or hate them, you still have to work with them."

Despite the long odds, though, NIPP's quest seems well received. The company may be brave, crazy, or both, but some view its lawsuit as the last stand of small businesses in the bigtime concert market. "I feel like Robin Hood," says Morreale. "It's not just a battle for us." No matter what the outcome, NIPP vs. Clear Channel gives a detailed look at how a multibillion-dollar corporation can remake an industry of mom-and-pops overnight.

The founders of NIPP, Jesse Morreale, Doug Kauffman, and Chris Swank, seem unlikely crusaders at first glance. Morreale, 31, has been promoting bands since he was 19 and formerly produced a radio show called Metal Retardation. Kauffman, 41, dropped out of college to play in a band. Along the way he paved driveways, washed dishes, sold grave plots door-to-door ("high commissions," he says), and created an impressive promotion business. He was voted Pollstar's independent concert promoter of the year in 1996. Denver native Swank, 35, went to engineering school on a tennis scholarship but ditched engineering for music. His first foray into the promotion business was buying the Bluebird, a onetime silent film theater and more recently a porn house, which he turned into a concert space. In the past few years, NIPP has promoted acts like the Beastie Boys, Sarah McLachlan, Indigo Girls, Ringo Starr, and Tool, and it typically handles about 550 shows a year in Colorado, plus another 200 in nearby states.

In the old days, competition in the music industry was largely limited to practical jokes. Barry Fey, a legendary promoter now running House of Blues in Denver, says he once persuaded stagehands at a competing theater to ensure that the house lights "mysteriously" came on during a show. Clear Channel has reportedly pulled a few pranks itself, like dumping a truckload of rocks in front of a competitor's box office so that customers couldn't line up, or dropping 100 pounds of rotting fish in the space where bands unload.

Recently, though, the stakes have gotten a lot higher, particularly in the Denver ven-ues where major concerts get staged. Two years ago NIPP handled 80% of the shows at the 3,600-seat Mammoth Event Center, but Clear Channel has since taken control of that venue, which it renamed the Fillmore Auditorium and now books exclusively. Clear Channel also struck a deal with the 20,000-seat Pepsi Center, and it's planning to build an outdoor amphitheater called City Lights Pavilion, which--surprise--would also be an exclusive.

NIPP's lawsuit alleges that Clear Channel can use its radio stations to promote concerts but denies competing promoters access to that airtime. In Clear Channel's 2000 annual report, the company explains its strategy: "Our entry into live-entertainment operations allowed us to take advantage of the natural synergies between radio and live music events and to gain immediate industry leadership." Morreale says that Clear Channel stations intentionally exclude NIPP's events from on-air concert calendars and, as with the Warped Tour, play its ads at the wrong time or not at all. In other situations, he says, Clear Channel simply refuses to sell advertising to competitors.

Clear Channel denies those allegations. Larsen, the head of Clear Channel operations in the region, says his stations play the ads when they're supposed to, and if mistakes occasionally get made, "they were not intentional." In the instances when competitors could not get advertising time, he says, the spots were sold out. The stations decided not to present shows or do ticket giveaway deals in situations when the proj-ects "did not reflect what the audience wanted.... There is no policy that we won't present competitors' shows," he says.

Another problem, says Morreale, is that because Clear Channel owns radio stations and concert venues coast-to-coast, it can offer bands one-stop shopping for big tours, which has hurt independents all over the country. Danny Eaton, president of 462 Concerts in Dallas, says he's lost 20% to 30% of his acts to Clear Channel, including Amy Grant, who had been with him for a decade. Jerry Bakal of New Jersey-based Concerts East lost a seven-year relationship with Jon Bon Jovi, and Jon Stoll at Fantasma Productions in Florida says Clear Channel snatched a long list of artists he once promoted, including Crosby Stills & Nash, Madonna, Ozzy Osborne, and the Backstreet Boys.

In an attempt to fight back, 11 regional promoters formed a partnership in 1999 called the Independent Promoters Organization to try bidding on national tours. But the group has gone after 30 tours so far and hasn't landed one. More ominous, membership is now down to nine; two partners have since been bought out by Clear Channel.

Morreale and NIPP also say that Clear Channel promises artists fees of 100% or more of their ticket sales--in essence promoting shows for free or at a loss. The company owns or controls major venues, so it can generate additional revenue from concessions sold at the concerts or from "add-ons," per-ticket surcharges that it says cover things like facility fees and parking. Many believe the company is buying business, running the concert division at a loss until the competition gets squeezed out, at which point it would control ticket pricing. Smith, Clear Channel's COO, denies this, but Clear Channel's balance sheet does seem to raise some questions. The company's concert division is growing fast--it saw a 12% increase in tickets sold over the first six months of 2001 (the most recent numbers as of press time), while industry ticket sales were down 12%. Yet the division's revenue over that period was up just 2.3%, and its earnings before interest, taxes, depreciation, and amortization (Ebitda, a financial metric for media companies) actually dropped 16%.

The most serious allegation NIPP makes in the lawsuit is that Clear Channel's radio reach allows it to make promises (or threats) to the bands it's trying to sign. As in--come with us, and we'll play your record; go with them, and we won't. "It happens every day," says one industry insider. Clear Channel categorically denies negotiating airplay with touring acts. "The threat of reduced airplay is a total fabrication. It's ridiculous," says Chuck Morris, vice president of music for Clear Channel in Denver. "It's all about us being successful and them losing bands. Big is not bad--ask Ford."

In October, Clear Channel filed a legal motion to have the lawsuit dismissed. Antitrust laws, the motion states, "are not intended to deny the benefits of vigorous competition to consumers simply because some competitors can't keep up." NIPP's main complaint, Clear Channel says, is that it competes "too effectively." (Counters Morreale: "Of course they're successful. So's the Mafia.") It can take up to eight months for a judge to rule on such motions, and the case may not make it to trial for two years.

In the meantime, the government has quietly voiced its own concerns. Representative Robert E. Andrews (D-New Jersey) wrote to Attorney General John Ashcroft last August requesting a Department of Justice investigation into possible antitrust violations. In late January, Representative Howard L. Berman (D-California) wrote letters to the Department of Justice and the Federal Communication Commission asking them to prosecute Clear Channel if they uncover any wrongdoing. Justice has been informally investigating Clear Channel for years, say several industry players who have been interviewed repeatedly by Justice Department attorneys. But it's hard to believe the federal government would halt the company's growth, given that it's largely a result of federal deregulation that began just five years ago. Prior to the Telecommunications Act of 1996, a radio company could own only 40 stations nationwide and four in a particular market.

For its part, NIPP isn't counting on help from the Justice Department anytime soon. Clear Channel's former lawyer--Charles James, who ran the antitrust practice at Jones Day Reavis & Pogue in Washington, D.C., the firm that helped steer the SFX acquisition through regulatory approval--was confirmed this past June to head the department's antitrust division. His longtime firm, Jones Day, is helping Clear Channel's defense against the lawsuit. James did not respond to repeated requests for comment.

And then there's the Bush factor. Industry watchers don't expect the President to be aggressive with antitrust law, and Lowry Mays, chairman of Clear Channel, is reportedly a friend of George Bush senior. Mays has also donated more than $100,000 to the Republican Party. In fact, the door to government help for NIPP may already be shut. Ashcroft replied to Representative Andrews' request saying that he wouldn't launch a formal investigation; at press time Representative Berman was still waiting for a response.

"The days of taking on corporate America and beating them are long gone," says one record executive, who thinks there's no way NIPP can win. Jesse Morreale, at his desk in Denver, surrounded by platinum CDs, signed posters, and a picture of Britney Spears with a blacked-out tooth, says he just wishes business could go back to normal. But cash flow is waning and legal costs are mounting (NIPP says it's bearing these costs itself, without pro bono work from lawyers), and his situation is likely to only get worse. But he's not giving up the fight. "We have no other choice," he says.