FCC Inquiry on Its Media Ownership Rules

[KirkSherwood]

I figured that this would be a very timely and interesting topic to discuss. Not sure if someone actually proposed the “perfect plan” that the FCC would “get it,” but it might be worth a shot.

The web site is http://www.fcc.gov/ Just scroll down and download Media Ownership Rules. . . there are 113 Sections of questions, etc.

Just a tiny bit of what you will find. . . INTRODUCTION

We will take a close look at the impact of consolidation on media markets. In 1996, Congress relaxed our local radio ownership rule, providing the basis for the limits in place today. The 1996 revisions allowed for significant consolidation of radio ownership. . .

Local Radio Ownership Rule
Are the current numerical limits appropriate to achieve the goals of the local radio ownership rule? The local radio ownership rule currently distinguishes between AM and FM services. Does it continue to make sense to have sub-caps for the two services? Have recent technological advances eliminated the need for this aspect of the rule? What part should low-power FM stations play in the rule? Should we account for other sources of audio programming in applying the rule? Should the degree of consolidation of other media in the local market be a factor in the rule, or should we continue to count only the number of radio stations in a market in applying the rule? Should this rule take account of market share?

Opinions regarding this FCC inquiry should be interesting.
Have fun.

 

[TheBigA]

The thing about this is it's a huge political football. Consider that nothing has been on on this subject for 8 years, mainly because every time they take it up, everyone gets pissed off. The last time, Kevin Martin just punted and left it for the next administration to deal with. The current group has done a bad job in Congressional relations, so its likely that any decisions they reach (assuming the reach any), will be struck down by Congress.

The bigger issue facing the FCC now isn't ownership limits, but the inability of current owners to stay in business, partly because no one was watching the store for the last ten years, and the inability of minorities to get financing. If the marketplace was better, the ownership discussion would be moot, because the current owners would be glad to sell off some stations. But no one has any money to buy, and if they have money, there are much better places to put it. The marketplace is glutted with radio stations, the FCC has done a poor job of administering them, and as a result they're not in any position to begin creating new regulations and ownership limits. If anything, they need to come up with ways to make their antiquated technology that they've already bashed with their broadband proposal more attractive to private business. Or else they might as well go home. That's just my opinion.

 

[SirRoxalot]

Blaming the FCC for the fact that the consolidators overpaid for radio stations seems disineguous at best. They're the ones who drove the prices up to the point where a number of owners took the cash and got out. The old owners couldn't understand how the consolidators were going to wring enough money out of the stations to pay for the purchase. Well, guess what. Despite the cuts in personnel, VT, syndication, and "synergies", they couldn't. Even when they were close to creating virtual monopolies in some cities in some demographics.

The truth is that radio as an industry couldn't continue to increase revenues at the rate projected by many of the purchasers when they were borrowing money from the banks. That was evident after 9/11. The recession drove that point home with a vengeance.

What do you want, a bailout for the people that overpaid? The bankruptcy court and the marketplace seem to be doing a reasonable job of revaluing radio stations. With luck, the "money guys" who looked at radio as simply a "buy low, sell high" marketplace instead of an industry that generates a pretty good profit will go elsewhere, and companies strong on operating instead of investing will survive.

 

[TheBigA]

Blaming the FCC for the fact that the consolidators overpaid for radio stations seems disineguous at best.

Did I say that? No.

The FCC screwed things up back in 1984. And they've been ruining the marketplace for radio since then. You're talking about recent history. I'm looking at a legacy of terrible regulation that actually dates back to the 60s.

The truth is that radio as an industry couldn't continue to increase revenues at the rate projected by many of the purchasers when they were borrowing money from the banks. That was evident after 9/11. The recession drove that point home with a vengeance.

If you go back and study the revenues from the first half of the decade, they WERE in fact increasing, and continued to increase after 9/11. Things really didn't start to slow down until 2003. Unfortunately, that's when Citadel and Regent got into the game. Bad timing on their part. But lots of other companies that bought stations in 1999, 2000, and 2001 are doing just fine right now.

What do you want, a bailout for the people that overpaid?

Once again, did I say that? No. What I want is for the FCC to take a realistic look at the marketplace, and then evaluate their own goals. They want to increase the amount of minority ownership. No problem. Lots of properties on the marketplace. All they have to do is provide financing for minority owners to buy all the excess stations on the table. Either that, or give tax credits to companies that donate their properties to minority businesses. And operate at TODAY's market prices, not give them a refund on the price they paid. I think a lot of companies would jump at that opportunity, and you'd get a lot of new owners in the ballgame. The bad news is the new owners would run the stations exactly the way they've been run the past five years, cutting staff and local services. But that's just how it is. You have to decide what's important: Minority ownership or community service. And I think we all know where the FCC sits on that.

 

[smedge2006]

One problem with minority ownership is endemic to all small business: undercapitalization. One reason for undercapitalization is having to pay too much to acquire a business. This not only leads to operations that sound and present themselves as substandard (such as, regrettably, the old Bishop Willis chain), it also makes minority broadcasters vulnerable to lender shakedowns, such as happened to TAMA.

It's in the public interest to drive prices for towers and transmitters as close to zero as possible, and certainly not to let the big boys and bankers escape the haircut on the price, for two reasons. One, so that smaller and minority entities can get into the game, and two, so they have enough money to operate in a halfway professional manner until they've established solid cash flow.

 

[TheBigA]

It's in the public interest to drive prices for towers and transmitters as close to zero as possible, and certainly not to let the big boys and bankers escape the haircut on the price, for two reasons. One, so that smaller and minority entities can get into the game, and two, so they have enough money to operate in a halfway professional manner until they've established solid cash flow.

Which is why the government must come up with a plan that will encourage that to happen. And I've suggested a few in my previous post. I think some of the biggest raqdio companies, like Clear Channel, will be happy to donate some of their properties to minority owners if they can receive a requisite tax break. Same with Citadel. I think the industry as a whole would support the concept of turning the AM band into a mostly minority-owned band, and see if that would revive it. Maybe excepting one station per market to operate as the primary EAS station.

At the same time, it is my experience, as someone who worked for a minority owner in my career, that they don't operate any differently than other owners, and so I don't expect any changes in programming philosophy or levels of staffing under minority ownership. I also don't expect any branch of the government to make any new requirements in those areas of new minority owners.

 

[Stewy]

Break up the big oligarchs. Limit not only the number of stations a group can own in a market but also the number of markets in which they can occupy. That seems about the most reasonable way to even come close to getting the Gennie back into the bottle.

 

[TheBigA]

Break up the big oligarchs. Limit not only the number of stations a group can own in a market but also the number of markets in which they can occupy. That seems about the most reasonable way to even come close to getting the Gennie back into the bottle.

The genie can't be put back in the bottle. It's not going to happen. You can't force radio to operate under rules that don't apply to anyone else. That's unfair, and definitely not in the public interest. Because it weakens radio and empowers other forms of media.

 

[KirkSherwood]

In spite of today’s enormous challenges, the FCC’s Inquiry could turn out to be meaningful, especially regarding media ownership limits. Case in point, this week the FCC began looking into breaking up television’s virtual duopolies or, at the very least, prevent the formation of new ones. Their new mind set regarding competition in the marketplace seems clear.

Granted, the FCC has a long record of grandfathering their mistakes, so figure that the FCC is not going to bust up any big groups (they will rely on the lenders for that). If the large radio groups are ready to divest their stations then this is the perfect time to create a new marketplace environment. Halve the current number of stations a future buyer can own in any given market, limit the period of an LMA. . . from filing to closing, etc.

What the FCC is doing with their Inquiry is asking broadcasters for new ideas and possibilities for the future. . . so shelve the present financial situation (this too will pass) and how today’s situations came to be. . . give them what they are asking for, your opinion. Be it that bigger is better or create a market maximum, such as the 2 out of 10 rule, or. . . .

 

[TheBigA]

Granted, the FCC has a long record of grandfathering their mistakes,

They also have a long record of completely misunderstanding how private business operates. These folks are either life-long bureaucrats, educators, or policy wonks. None of them have ever run broadcasting operations. So they're trying to accomplish political agendas, like ownership diversity, without understanding that these are profit-making companies. If they can't make a profit, they have no reason to own radio stations. Trying to come up with lots of rules in order to accomplish a political agenda isn't going to get anyone to invest their own personal money. I certainly won't. There are far better places for me to put my money with a lot fewer regulations. And I'm not the only one who thinks that. Which is why we currently have a glut of radio stations, and why the current big companies are all looking to sell. If no one wants to buy what you're selling, how does it make it more attractive to new owners make it even harder for them to make money? That's the inherent contradiction of a public-private partnership.

 

[Goat Rodeo Cowboy]

I'll try to be a bit more charitable to those charged with regulating the broadcast industry than some of you are.

The whole radio broadcasting industry has to be a "drop in the bucket" compared to the whole-ball-of-wax the FCC deals with. The wired telephone industry is big. The wireless/cell phone industry is big. Whatever ever role the FCC has or does not have in the future of the Internet is big. Public safety radio for police, fire, ambulance, etc is big. At the rate things are changing in houses of worship, the wireless microphone industry for churches may soon be a larger regulatory item that radio broadcasting. (I'm probably exaggerating that market a bit, but throw in the devices that share those frequencies such as sporting events, NASCAR racing and concerts and you have a monster market that has to have some adult supervision.) Then there is aviation radio and maritime radio to deal with.

If you are an FCC Commissioner or a influential staff member for the FCC, and you see where radio broadcasters sometimes don't even make themselves available to answer the phone in time of flood and other emergencies, would you feel compelled to put the needs and management of the broadcasting industry on the top of your to-do list?

 

[TheBigA]

If you are an FCC Commissioner or a influential staff member for the FCC, and you see where radio broadcasters sometimes don't even make themselves available to answer the phone in time of flood and other emergencies, would you feel compelled to put the needs and management of the broadcasting industry on the top of your to-do list?

I don't expect them to put the needs of the industry on the top of their to-do list. I expect them to be fair and unbiased in their regulation and administration of America's airwaves. And they haven't. They clearly have an agenda, and the public isn't the main focus. Everyone is in it for themselves, including the regulators. This is how we end up with Fannie and Freddie.

At the same time that they're mishandling broadcasting, they're seeking to expand their power into the internet, so they can screw that up the same way they screwed up broadcasting. Thankfully, Congress isn't as quick to rubber stamp their power grab.

 

[KirkSherwood]

Permit me to go back to square one.

The idea of this thread is to read the opinions and ideas “radio pros” have to offer the FCC. You can trust that the sentiments of the group owners will be presented through their high priced law firms, their lobbyists, their executives and themselves. Perhaps I should add the NAB to that list.

If you feel that the economy will always be awful for radio, or that Wall Street hates radio or that the FCC cannot do anything other than roll over and play dead, fine. Start your own thread and have at it.

I realize that it takes a little bit of time to download the Inquiry and read it. But should you decide to give it a shot. . . it would be refreshing is to read your “Ideas.” Thanks.

 

[Gatekeeper007]

Ok guys play nice, So long as there is an auction off of frequencies for the broadcast radio segment there will never be a level playing field for media ownership, the owners with big money will get what they want, the owners or want to be owners that have limited money will not, maybe the idea of divesting will work but then again who knows if it would ever come about.