The radio industry is divided when it comes to more deregulation. That’s the opinion of iHeartMedia CEO Bob Pittman and CFO Richard Bressler who sent out a company note Monday detailing why the company opposes the NAB’s plan to push the FCC for more deregulation. That opinion is not shared by the NAB. A source at the NAB gave us this quote last week. “I can assure you there was overwhelming support in the Board room for directing NAB staff to seek relief from the ownership rules. It was not a close call.” Pittman and Bressler say they do not believe more deregulation is a good idea. Here’s why…
First a reminder of what the The NAB is asking of The Commission: In the top 75 Nielsen Audio markets, allow a single entity to own or control up to eight commercial FM stations, with no limit on AM ownership; To promote new entry into broadcasting, an owner in these top 75 markets should be permitted to own up to two additional FM stations (for a total of 10 FMs) by participating in the FCC’s incubator program; and– In Nielsen markets outside of the top 75 and in unrated markets, there should be no restrictions on the number of FM or AM stations a single entity may own or control.”
Pittman and Bressler told their team that a faction within the board of directors of the NAB wants to change the limits in favor of “breathtaking deregulation, while other board members do not.” They believe the board vote was not even close to unanimous and they support the group opposed to deregulation, which we understand includes Federated Media, Salem and several other companies. Pittman and Bressler also point out that the National Association of Black Owned Broadcasters and the Multicultural Media, Telecom and Internet Council are opposed to more deregulation. Cumulus has not taken an official position on more deregulation. Radio Ink conducted a poll of readers recently and the results showed that 80% of those who participated in the poll were opposed to more deregulation.
Pittman and Bressler said they were surprised and disappointed by the NAB’s decision to endorse unlimited deregulation. “It’s uncharacteristic of the NAB to support any issue that is this polarizing within the industry. While deregulation is often good for business, in this case we think the NAB proposal would be bad for this industry – and here’s why: By permitting increased or unlimited ownership of FM stations, NAB’s proposal would potentially decimate the value of AM radio. With no limits on FM ownership, companies would logically buy FM stations instead of AMs, and would probably divest themselves of AMs – and, at the very least, would not be interested in acquiring more AMs. With that kind of sell-off or lack of demand, the value of AMs would most certainly decline.”
The two iHeart executives say their company values AM stations and AM listeners and their extraordinary reliance on AM stations for quality programming and local news and information especially during emergencies. “We are committed to AM radio for the long haul and oppose any measure that would devalue AM stations – and worse, abandon millions of AM listeners. We think giving up a platform like AM, and losing the value of AM stations owned, would be harmful – not helpful – to the industry and its members.”
The NAB’s main selling point, pushed by many radio CEO’s, is that radio needs more deregulation to compete with Facebook and Google, which are creeping into local markets and taking a chunk of ad revenue. Pittman and Bressler are not buying that argument. They say, the facts simply do not support that theory. “There is little dedicated ‘radio money’ left. We have to compete with TV, Facebook, Google and many other digital players for all our revenue. Having more FM stations does not cause advertisers to prefer us over other options, and more FM stations is not a substitute for ideas, relationships, compelling programming and data solutions for our advertising partners. Our clients can already buy all the stations in a market regardless of who owns them, but too often they have decided not to, instead diverting ad dollars to other media, and radio revenue overall has declined. Increased ownership by one owner offers no benefit for the advertiser, and therefore no benefit for the radio industry. We need enough stations to fully serve the community and the advertisers within it, not enough stations to gouge the marketplace as this new proposal and some of its supporters imply.”
It’s not often we see the radio industry this publicly divided on a major issue and the iHeart position will surely be taken into account by FCC Commissioners, especially those opposed to more deregulation. The opinion from radio’s largest company is meaningful and, no doubt, The NAB would have preferred to have the company on the team as it pushes more deregulation. The NAB has submitted its plan to The FCC which will consider its options as part of its quadrennial review. The July meeting agenda has been set and their is no indication, from the agenda, that this issue will come up in July.