Turning Commercial Stations into Non-Com[s]

[Ele]

Anyone here disturbed that well-funded companies are going down the dial and turning commercial stations into non-com stations (primarily so they can immediately fire the staff and operate without local personnel).

WABB, the latest victim, was a very big deal in Mobile, legendary some would say.

 

[borderblaster]

WABB wanted and needs to sell...the deceased mom and pop owner's family did not wish to continue running it. EMF buys them, Any other commercial broadcaster could have purchased WABB and didn't. You would have wanted the owners of WABB to continue to operate it and fully staff it?

 

[secondchoice]

From the outside looking in, The manager failed to make a sufficient profit There should not have been a large "debt" to cover. Sometimes heirs hesitate to fire their managers when needed, and it usually costs them in the long run.

 

[Ele]

WABB’s ratings and profitability was fine and their debt was covered many years ago. The point, should investors, using sleight of hand, be allowed to turn commercial band stations into a non-coms for the purpose of operating without personnel expense.

In simpler terms. I buy your station for $3M and keep it commercial. I have personnel expenses. Someone else offers $3M and goes non-com―for the primary reason of eliminating personnel expenses―is this good for the people working in the industry? If anyone can take any station non-com, why in the world did the FCC designate the left side of the dial as “only non-com.”

 

[davideduardo]

Someone else offers $3M and goes non-com―for the primary reason of eliminating personnel expenses

The primary reason for going non.commercial in this case is that EMF operates its stations as non-coms. Many non-coms have personnel expenses, others operate as, essentially, repeaters. That's a programming decision and not motivated by a burning desire to eliminate jobs.

 

[Chuck]

Being non-commercial has very little to do with staffing. Many non-coms have bigger staffs than lots of commercial stations. It's true that EMF is a satellite network, but that doesn't mean everyone is.

 

[borderblaster]

There really is no Disc Jockey Full Employment Act that requires stations not to be sold to whomever wishes to purchase it.

 

[secondchoice]

The stations that will be / were spun off of commercial clusters (which had / have too many stations in a market) should remain commercial. To allow an operator to "eliminate" other stations could be considered "restraint of trade" which IMHO should lead to anti trust (monopoly) issues. Over the air Broadcasting is a little weird in that your "own" a station that operates on a frequency that really belongs to the Government. Is there anything in the Constitution about "air ways" property protection unlike land.

 

[Goat Rodeo Cowboy]

To allow an operator to "eliminate" other stations could be considered "restraint of trade" which IMHO should lead to anti trust (monopoly) issues. Over the air Broadcasting is a little weird in that your "own" a station that operates on a frequency that really belongs to the Government.

Your comments in this one message could be the basis of a whole new thread.... but a topic that over the years has been "beat up on" many times. The first group of people who come running when they read a "dog whistle" like this might be the people who are focused on politics and the philosophy of how our government work.

Land is about as forever as it gets. Different cultures have dealt with land in various ways. When the "white man" began venturing further and further from the coast line in George and the Carolinas, they bumped up against the Cherokee. Tradition here in south Appalachia says that a settler trying to move in offered to buy "the land" from a Cherokee chief. The chief was mystified. Nobody owns the land. We just borrow it and leave it in good shape for the next generation. The puzzled chief was rumored to have muttered: "What next? You will want to buy the sky?"

Radio is about as fleeting as it gets. For all practical purposes it was harnessed and cultivated starting in about 1920 give or take, and by 2020 we may abandoning that bit of spectrum we use for AM broadcasting. (FM may be not too far behind?)

In this country until what... 15 or 20 years ago... you couldn't own more than one frequency in a given community. Was turning off a non-successful station back before the multiple-ownership era considered "restraint of trade"? From the gossip I heard back in those years there were some small communities where a lack-luster station may have gone out of business because in a very quiet way the remaining owner(s) made it financially graceful for the departing owner. The FCC found such antics to be a big no-no, but they were not enforcing anti-trust laws and worrying about restraint of trade in the financial sense... their concern was restraint of trade programming content.

Current group owners would probably abandon more stations more quickly if they were not afraid that some fool would apply for the same frequency during the next application window, and they would find their old station coming back to haunt them as a competitor. Selling or giving the station to a not-for-profit organization minimizes the "boomerang" probability.

 

[Chuck]

Good point Goat. If you want to sell an underperforming station, but still want to keep your other properties, it is a good idea to sell it to someone who will not directly compete with you. EMF might cost you a few listeners, but they won't be knocking on the doors of local merchants soliciting their advertising dollars.

From what I've seen, EMF also pays pretty good prices for the stations they purchase.

 

[borderblaster]

EMF pays fair prices though they don't overpay. Most of tyhe time the seller totes the note but apparently not in this case, and a case in Ohio.

 

[leethalweapon]

So, who is bank rolling EMF?

 

[TheBigA]

WABB’s ratings and profitability was fine and their debt was covered many years ago. The point, should investors, using sleight of hand, be allowed to turn commercial band stations into a non-coms for the purpose of operating without personnel expense.

That's a mis-interpretation of what's going on. Lots of companies keep stations commercial and fire the local staff. It happens every day. There is no connection between becoming non-commercial and the staffing.

The reason EMF changes to non-commercial is because of the religious nature of the programming. And EMF is a non-profit institution. Advertisers usually don't want their commercials to air in advocacy programming. If you're telling the audience to pray, that's advocacy. That kind of programming can be supported by the audience, rather than advertisers.

I don't see this as a national trend, although it's a good idea in an industry where supply exceeds demand, and there are lots of programming formats that might not appeal to advertisers. I think listener-supported stations are far more responsive to the audience than advertiser-supported stations. Regardless of the staffing issue.

On the other hand, the reverse situation is going on now, where Family Radio has changed its' stations from non-commercial to commercial in NYC, DC, and Philly, and they were then sold to commercial for-profit operators. Family didn't want to sell to EMF because they'd make more money selling to a for-profit, and they disagree philosophically with the mission of EMF.

 

[TheBigA]

If anyone can take any station non-com, why in the world did the FCC designate the left side of the dial as “only non-com.”

That was the deal that was made in 1967. And commercial operators at the time, for the most part, were fine with it, because FM wasn't profitable. Ten years afterwards, in 1977, I'm sure there were regrets. The goal was to reserve and preserve a portion of the spectrum for non-commercial educational programming. That didn't change the fact that stations in the other part of the spectrum could operate as non-commercial.

Prior to 1967, it was always possible for stations to become non-commercial. Pacifica was operating before 1967. Lots of other religious broadcasters and educational institutions ran non-commercial stations in the main part of the FM dial. WNYC-FM, originally owned by the City of New York, is a non-commercial station in the commercial part of the band. In fact, the Ivy League colleges, like Harvard and Princeton, own stations in the commercial part of the spectrum. Yale changed its station to commercial and LMA'd it to a profit making company.

 

[w9wi]

The reason EMF changes to non-commercial is because of the religious nature of the programming. And EMF is a non-profit institution. Advertisers usually don't want their commercials to air in advocacy programming. If you're telling the audience to pray, that's advocacy. That kind of programming can be supported by the audience, rather than advertisers.

I would suggest the reason EMF changes to non-commercial is because non-coms are exempt from regulatory fees.

Commercial stations may legally sell airtime -- but there's nothing in the regulations that requires them to do so.

On the other hand, the reverse situation is going on now, where Family Radio has changed its' stations from non-commercial to commercial in NYC, DC, and Philly, and they were then sold to commercial for-profit operators. Family didn't want to sell to EMF because they'd make more money selling to a for-profit, and they disagree philosophically with the mission of EMF.

Would they make more money selling to a non-profit?

I suppose it's possible all of the recent commercial owners who've sold to EMF have done so because (unlike Family) they agree philosophically with EMF and want to do what they see as good. But to be honest given the number of sales, I think that's unlikely. I think we're seeing EMF simply outbidding commercial buyers.

If anyone can take any station non-com, why in the world did the FCC designate the left side of the dial as “only non-com.”

That was the deal that was made in 1967. ...

Prior to 1967, it was always possible for stations to become non-commercial. Pacifica was operating before 1967. Lots of other religious broadcasters and educational institutions ran non-commercial stations in the main part of the FM dial.

I think you mean 1964?, when the FM Table of Allocations, and the general structure of the current FM rules, were established?

Actually, the non-commercial reservations well predate that. When FM was first established before 1941, channels were reserved for non-commercial stations. Reservations continued when the band was moved to the current 88-108 location.

There are indeed plenty of non-coms in the 92-108 spectrum, and there were more years ago, before the big bubble. 106.5 in Richmond, Virginia comes to mind.

I believe most of these were cases where a commercial station failed & donated their facilities to a non-commercial operator. That's certainly the case with 101.9 in Detroit.

_________________________________________________

But the gist of what you're saying is accurate. Converting non-reserved-band stations to non-commercial operation is hardly new nor controversial. And commercial operation is certainly no guarantee of increased employment!

 

[TheBigA]

I think you mean 1964?, when the FM Table of Allocations, and the general structure of the current FM rules, were established?

No I'm talking about the Public Broadcasting Act of 1967, that reserved a portion of the FM band for non-commercial educational radio.

 

[Chuck]

I doubt the motivation is completely about FCC Regulatory Fees. They aren't that much, but when you combine them with cheaper music licensing fees and a way better deal from Sound Exchange (if you stream), and possible tax exemptions, it begins to add up. There are some very definite advantages to being non-commercial, especially if your business model is based on listener contributions, not ad or underwriting revenue.

If you are a noncom, it is also OK to run actual ads for other nonprofits. It is also OK to promote your own products, events, publications, etc. on the air. Not all noncommercial stations do this, but for someone like EMF, it fits very nicely in their business plan. And yes, noncommercial broadcasting is still a business.

 

[fybush]

I think you mean 1964?, when the FM Table of Allocations, and the general structure of the current FM rules, were established?

No I'm talking about the Public Broadcasting Act of 1967, that reserved a portion of the FM band for non-commercial educational radio.

The channels from 88.1-91.9 were reserved exclusively to NCE use from the very beginning of the 88-108 MHz FM band in 1948. The 1967 act didn't affect that in any way, nor do I see anything in its text (http://www.cpb.org/aboutpb/act/) that refers to FM allocations.

Doug is correct that there were stations operating noncommercially on commercial-band channels (92.1-107.9) both before and after 1967, but I don't believe any of those channels were specifically reserved solely for noncommercial use until much, much later on, and it was only a handful of channels. Most of the noncommercial signals on commercial channels even now are doing so "at will," and could convert to commercial operation at any time. (And in fairness, however many signals are getting "K-Loved" and taken out of commercial use, there are always channels going the other way, too - look at Family Radio's signals in DC, Philadelphia and soon, New York, which are all going to commercial owners.)

Doug is also correct that a big impetus for EMF to convert stations to noncommercial operation comes with lower regulatory fees. I'd expand further on that: only by being noncommercial can EMF operate its stations in the lean fashion it does.

Not only is EMF exempt from hundreds of thousands of dollars a year of regulatory fees by operating noncommercially, but it also gets the immense tax break that comes from operating as a nonprofit - and, most critically, it can get main-studio waivers that free it from the responsibility other broadcasters have to operate local offices and studios. Those main-studio waivers were never meant to allow EMF to operate hundreds of signals in big markets from one studio in California. They were meant to allow noncommercial broadcasters to expand their service to smaller nearby markets without having to bear the expense of full local studios in each location with a transmitter. A commercial broadcaster can't get a main-studio waiver the way EMF can, and that's why EMF will not take over operation of a newly-purchased station until it gets that waiver.

The result? If EMF were commercial, or if it were denied its main-studio waivers, it would have to employ at least two full-timers (probably more) at each of more than 300 locations around the country...where it would also have to install studio equipment and pay rent for office space. 600 full-timers, even at a fairly minimal $40k a year including benefits, adds up tp something like $24 million a year that EMF would have to spend if it were a commercial operator - and, again, that's not even counting office space, phone lines, electric bills, etc.

Talk all you want about "government-subsidized" public radio...by my lights, EMF gets what amounts to a huge indirect annual public subsidy simply by virtue of this loophole in the main studio rules, a loophole that's not available to noncommercial broadcasters who operate on a less-than-national scale, or to any commercial broadcasters.

 

[w9wi]

Doug is correct that there were stations operating noncommercially on commercial-band channels (92.1-107.9) both before and after 1967, but I don't believe any of those channels were specifically reserved solely for noncommercial use until much, much later on, and it was only a handful of channels. Most of the noncommercial signals on commercial channels even now are doing so "at will," and could convert to commercial operation at any time. (And in fairness, however many signals are getting "K-Loved" and taken out of commercial use, there are always channels going the other way, too - look at Family Radio's signals in DC, Philadelphia and soon, New York, which are all going to commercial owners.)

IIRC it has only been what, maybe ten years that it's been possible to reserve channels above 92MHz for non-commercial operation?

Not only is EMF exempt from hundreds of thousands of dollars a year of regulatory fees by operating noncommercially, but it also gets the immense tax break that comes from operating as a nonprofit - and, most critically, it can get main-studio waivers that free it from the responsibility other broadcasters have to operate local offices and studios. Those main-studio waivers were never meant to allow EMF to operate hundreds of signals in big markets from one studio in California. They were meant to allow noncommercial broadcasters to expand their service to smaller nearby markets without having to bear the expense of full local studios in each location with a transmitter. A commercial broadcaster can't get a main-studio waiver the way EMF can, and that's why EMF will not take over operation of a newly-purchased station until it gets that waiver.

In kinda the same vein as commercially-licensed stations not bothering to sell airtime...

Is there really any reason EMF has to have non-com licenses in order to be a non-profit? Can't a non-profit organization own a commercial radio station, as long as any revenue that exceeds expenses is plowed back into the organization? (WFMT comes to mind)

 

[fybush]

IIRC it has only been what, maybe ten years that it's been possible to reserve channels above 92MHz for non-commercial operation?

Not even that long, I think.

Is there really any reason EMF has to have non-com licenses in order to be a non-profit? Can't a non-profit organization own a commercial radio station, as long as any revenue that exceeds expenses is plowed back into the organization? (WFMT comes to mind)

Indeed it could, but I can't see any way in which EMF does as well with commercial licenses as it does by running them as noncommercial licenses. They'd have to make an awful lot in ad sales to overcome the cost of operating local studios and offices in each of the markets in which they have a commercial-band station.