(By Ed Levine, Paul Stone, and George Reed) Much has been written in the radio trades over the last week regarding the NAB Radio Board vote in favor of recommending to the FCC an update of its radio ownership rules. We’d like to give you our take.
Some in our business think the NAB board went too far in calling for significant relaxation of the rules; others think the board did not go far enough, arguing that for broadcasters to be competitive with our totally unregulated digital competitors, radio needs complete elimination of any ownership restrictions.
You can count us — as small- and medium-market radio station owners dedicated to localism and delivering great radio to our listeners — as strong supporters of the NAB Board recommendation. You can quibble over details of the specific board recommendation. But we say hats off to the NAB Board for facing down a tough issue, and for taking bold action that will allow radio operators the opportunity to achieve the scale needed to endure and thrive in the digital world of today.
The reality is this: radio ownership rules have remained unchanged for 22 years. Forget whether the consolidation ushered in by the 1996 Telecom Act was good or bad for listeners. What is undeniable is that the world has changed dramatically since 1996, and regulations on our business need to evolve with the times.
CHECK OUT OUR ENTIRE SERIES ON DEREGULATION HERE
Radio faces challenges today that would have been unimaginable 22 years ago — or even five years ago. The competition for listeners — whether it’s from YouTube or Sirius/XM or Pandora or Spotify — is intense. And it’s growing. Moreover, we aren’t competing for advertising dollars just from radio stations across the street or even across state boundaries. Collectively, we’re losing ad business by the billions to digital companies like Google and Facebook. Case in point: BIA Kelsey analyzed the Syracuse market last year and found the following: Google, Facebook, and Bing combined exceeded the local advertising market of all the local Syracuse radio stations ($40.5 million to $32.5 million).
That’s not just an upstate New York problem; that’s a problem facing every radio station owner across America, and it’s only going to get worse. Digital platforms like Google and Facebook are unregulated business models hell-bent on eating local broadcasting’s ad-dollar lunch. And they could care less about FCC mandates of serving localism and the public’s “interest, convenience and necessity.”
As we see it, the NAB Radio Board faced two options: Option 1 was to bury its collective head in the sand and ignore a tsunami. Option 2 was to address the issue honestly, forthrightly, and directly, and present to Chairman Pai and his FCC colleagues some ideas that will keep free and local radio alive for our millions of listeners for decades to come. We think the NAB Radio Board chose the right option.
Ed Levine is President and CEO of Syracuse-based Galaxy Media, LLC, which owns 14 radio stations in Syracuse, Utica, and Rome, NY; Paul Stone is President of Southern Broadcasting Companies, which owns 33 radio stations in Virginia, Florida, Georgia, Alabama, and Tennessee; and George Reed is co-owner of Monticello Media, which owns six stations in Charlottesville, VA, and co-founder of Media Services Group, a brokerage firm.
“Over-acquiring properties simply results in raising rates, which chases advertisers away from the medium.”
Barry, if that were the case there would be a lot more of us on board. The fact of the matter is, the very companies who benefitted the most from deregulation are the ones that are keeping rates below where they were twenty five years ago. They simply control a massive amount of inventory that they can’t possibly sell.
Owning more stations for a given operator will not translate into a greater share of the ad dollar pie. The experiment of consolidation has proven to work for no one–not the listeners, not the advertisers, not the employees–and certainly not for the investors that had to choke on the ensuing bankruptcies. Radio has always had to compete with other media–newspapers, cable, outdoor, direct mail–an none of them were regulated. Over-acquiring properties simply results in raising rates, which chases advertisers away from the medium. It also results in anti-cometitive practices. It’s simply not going to generate more revenue.
“Radio faces challenges today that would have been unimaginable 22 years ago…” Please stop this fallacy. The radio industry had been warned of all that has unfolded since the beginning. I was one of those who started the discussions, in 1998, and was simultaneously ostracized and criticized as a “naysayer.”
In a meeting with John Hogan in 2006 he, literally, disregarded a couple dozen suggestions I made on what was happening and what needed to be done (Lisa Dollinger and John Gorman were in that meeting.)
Even if given the opportunity to expand it’s common knowledge that radio’s major execs will not spend the money on upgrading digital assets, radio programming, or sales techniques to improve. When was the last time any of these received massive influxes of cash to be updated to today’s standards?
“Forget whether the consolidation ushered in by the 1996 Telecom Act was good or bad for listeners.”
Should have added “and advertisers”.
So long as the ownership’s oxen aren’t being gored, every mewling justification seems acceptable – even reasonable.
Here’s the problem as I’ve experienced it. Most operators in small markets pour the majority of their assets in two, maybe three stations, no matter how many are in their cluster, less if it’s a smaller cluster. The remaining stations operate as stations in a box. No attention, basically after thoughts that run on automatic pilot. No local programming. These stations are used as added value to secure buys for the top stations. How is that going to change for the better by relaxing the ownership rules? It’ll only get worse.
Sorry guys, you lost me with “Forget whether the consolidation ushered in by the 1996 Telecom Act was good or bad for listeners.”
How can you ask us to forget the source of the problem? Your point of view reminds me of the referee at the old All Star Wrestling Show who turned his back on the match while the bad guys jumped in the ring and beat up the good guys.