(By Jeff Warshaw) I recognize that uniform changes to the radio ownership rules are difficult to express, as the radio markets are not uniform. Some markets (even larger ones) have few stations and few meaningful owners, while some small markets have many stations with multiple significant owners. But what is uniform across all markets is that broadcasters need to make the FCC understand that radio ownership limits need to change and change soon; before the economic tides wash over radio like they have the newspaper and other “old” media. Those media outlets, even though they had minimal regulation compared to radio, were overwhelmed by digital competition. Radio needs to be freed to compete against the new entrants in every market.
The FCC needs to be made to understand that radio stations no longer compete just against radio. Instead, they compete against all sorts of local media outlets. Our TV brethren have been freed to acquire two stations in most television markets, and can even have joint sales arrangements with other TV stations in the market — and can own the maximum number of radio stations in the market, and even be co-owned with the local newspaper and the cable system in a community, all without running afoul of the FCC ownership limits. Yet, in no market can a pure radio company own more than eight stations, even though the TV stations, the newspaper, and the cable systems are all competing with radio both for local advertising dollars and to provide viewpoint diversity.
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And, today, what dwarfs all of these traditional outlets is online media. Already, local online advertising spending in virtually every market is greater than that for traditional media. Facebook and Google are in every one of our markets in a very big way, selling to local advertisers, as is virtually every other online platform whether through direct sales or as part of an ad network that is selling to local advertisers. Look at the Gordon Borrell estimates of local advertising spending in various markets. It shows that in virtually every market, digital ad spending outpaces that in traditional media. In addition, in every market digital is growing faster than non-digital advertising. Radio revenue has been shrinking, radio’s audience (AQH) has been shrinking. I’m not saying that we aren’t providing tremendous service to our communities. On the contrary, it’s because we provide a vital service that we need to be freed from ownership constraints. Without that freedom, our very industry will continue to be weakened by our less-fettered competitors.
Today, it cannot be argued that these sources don’t compete for both advertising dollars and provide diverse viewpoints in the marketplace. In the recent ownership order, in assessing the radio-TV cross-ownership limits, the FCC suggested that radio’s contribution to local viewpoint diversity in the marketplace was less than in the past, as most radio stations provide primarily entertainment or national talk programming. Given that recognition, it does not seem to be a stretch to argue that digital media provides exactly that same sort of competition.
The last substantive changes to the ownership rules took place in 1996. Look at how the media landscape has changed since then: Google was started in 1998. Pandora in 2000. Satellite radio in 2001. Facebook in 2004. Spotify in 2006. It is absurd to suggest that radio doesn’t compete with all of those companies. The old rules are antiquated and overly burdensome for radio broadcasters.
Think about a market like Erie, PA. Like every other market in America, there is substantially less revenue than 10 years ago. There are eight significant FM stations that serve the community. There are two Country stations, two AC stations, two Rock stations, and two Top 40 stations. Each competitor plays similar music to the other. In a market where one broadcaster could own all the FM stations, there could be more format diversity, less commercial clutter, and greater economies of scale. We would be in a stronger position to compete with the onslaught of digital.
Let’s not just dream about the “good old days” when AM stations were king and listeners had fewer choices. The industry needs to be free to grow within every market so that we can more fairly compete in a modern world.
Jeff Warshaw is President and CEO of Connoisseur Media and can be reached at [email protected]