Mount Wilson Broadcasters owner Saul Levine is not one to go with the crowd. The independent broadcaster in Los Angeles speaks his mind, and many times, his view differs from the pack. His latest FCC filing is one that many high ranking radio executives are not going to want to hear about. The industry would rather be united, as much as it can be, when The FCC decides whether to change radio’s ownership rules.
In response to the Commission’s 2018 Quadrennial Review, Levine has filed comments with the FCC opposing raising the radio ownership limits. In fact, he thinks they should be lowered. A major reason for his opinion is the way the larger company drop their advertising rates for the lower rated stations, undercutting independents like himself.
Levine opposes raising the limit on the number of radio stations an entity is allowed to own in radio markets with at least 45 radio stations under the Local Ownership Rule. He also opposes the current proposal to raise the broadcast radio subcaps for AM and FM stations.
Mount Wilson owns an AM/FM combo in the Los Angeles market – KKGO-FM, Los Angeles, and KSUR-AM, Beverly Hills, California – as well as KNRY-AM and KIDD-AM in Monterey, California.
Mount Wilson has commented in the past that limiting the number of radio stations an entity can own promotes competition, which is in the public interest, and raising the caps results in consolidation and harms competition. We recommend reducing the number of stations one company can own in a community, and we oppose the proposal to raise the radio broadcast subcaps.
Currently, the Local Radio Ownership Rule already allows an entity to own up to eight commercial radio stations in markets with at least 45 radio stations. Here’s what Levine has to say about raising those caps. “By allowing group owners to freeze out competition from operators of single AM or FM stations, this rule increases unfair competition and harms the radio broadcast industry. I personally built KKGO in Los Angeles when FM was an upstart technology in 1959 and continue to serve as general manager. My children work in the business with me. We have competed in that market as a small operator despite the increased consolidation. Removal of the subcaps would substantially impair Mount Wilson’s ability to compete against large owners in the market. A major problem with large co-owned clusters is that they use their dominance to sell to both local and national advertising accounts. Licensees will include some stations as a bonus or others with very low rates with the goal of obtaining the entire advertising buy for the cluster.”
Levine says those practices leave no opportunity for other competitive small operators such as Mount Wilson to participate. “If large operators were prohibited from offering all or part of their clusters as bonuses or at special low-balled rates, small operators would not be excluded from advertising buys. If the subcaps are removed, restrictions on how large groups can undercut nonaligned operators through use of bonuses, low-balling, and tying stations together would mitigate the adverse impact on small independent broadcasters in the market.”
The NAB and many radio CEO’s believe raising the limits on the number of stations companies can own will help radio compete with the digital giants like Google and Facebook who are taking local ad money from markets they operate in all over the country. The NAB has proposed:
-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.”
According to Levine, prior to the Telecommunications Act of 1996, local radio was a creative and community oriented service and consolidation has killed that. “Competing with many other operators, each with no more than an AM/FM combo, fostered a vibrant creative process. Competition benefitted the public, as evidenced through young people making careers in broadcasting. Now, although radio currently reaches 92% of adults in the U.S. and continues to be the leading media source, local radio faces increasingly burdensome challenges. Radio station layoffs are common as a result of over-leveraged group owners, and there are few locally-owned, family-operated stations in the market competing against goliaths. Consolidation is increasingly being recognized by policymakers as anti-competitive; candidates for President like Elizabeth Warren have called for major conglomerates like Google, Facebook, and Amazon to be broken up. Radio as a competitive, creative medium, is worse off today. The broadcast industry faces extinction as a local service if additional consolidation is allowed. Open competition by multiple operators, increased viewpoint diversity, improved local employment, and inspiring creative solutions stand out with the competition. Mount Wilson has survived by operating niche formats (Jazz, Classical, and, yes, Country in L.A.) because a need in the community for these formats exists despite limited revenue opportunities which make such formats unattractive to large group operators. The radio broadcast industry would be well served by more owners with a passion for radio and public service, not by greater local consolidation.”
The Quadrennial Review is required by the Telecommunications Act of 1996 which directs the FCC to periodically determine if its broadcast ownership rules remain “necessary in the public interest as the result of competition.” Comments are due to The FCC by May 29.
A sign of our times, I guess, when someone takes this issue and responds in what appears to be a pro-Socialism post. Unfortunate.
From here:
When the ideology-of-the-day includes support of a rampant, unbridled and unchecked capitalism, the only losers are the audiences, the advertisers and the employees.
Ownership, lobbyists and poodle-politicians win.
Again.
For now.
There seems to be some confusion about this subject. This is not an industry decision. This is an FCC decision. Government regulates or deregulates, not industries. There are lots of radio companies that are opposed to deregulation. For 8 years under Obama, there was no talk of deregulation. Now there is. What changed? If the FCC changes ownership rules, as it wants to do, the sky will not fall. There will not be a requirement that companies MUST buy more stations. They can do what ABC did 20 years ago, and sit it out. We saw what happened to ABC Radio. Was that good for radio? My only advice is to remember that regulation is what the government does. If you don’t like deregulation or consolidation or big corporations, keep that in mind in 2020, and vote for candidates who think that way. Otherwise, we’ll be discussing this again.
Seems the industry has, long ago, bought into the adage: Find out what doesn’t work. Do it harder.
Saul is 100% on target..There are no “benefits” to the consumer with clusters. There is no parallel to Walmart vs Main Street. We are a regulated business.. ostensibly the “airwaves” are supposed belong to the citizens.. The FCC was formed to regulate frequency traffic and assure the licensees served the community in at least some capacity. They abdicated that responsibly. Telecom 96 was a lazy way to stay competitive, it stifled competition, screwing listener and advertisers alike. It introduced a “land rush” mentality in which capital acquisition and heavy debt became king. Creativity, innovation, and service became irrelevant when you operate 6 stations in a single market…the quality and excellence of your individual stations is no longer a concern. It has eroded our industry down to a joke. It need not stay that. More of the poison that killed us is not the answer
Radio is no different than any other client we call on – the business landscape has changed and the industry needs to change with it. I think back to the ‘good old days” prior to 1996 – I remember far more rate cutting, many more poor reps, hostility among competing groups with radio presenting a fragmented story.
I believe the consolidation did cause some issues, but I wonder how many problems and concerns radio would have had consolidation not happened. I believe eliminating caps on 75+ markets will result in radio having stronger community and business footprint.
Radio today is like a Benz dealer selling an S for sticker and throwing in a C class to close the deal.
Unfortunately, this is the Amazon/Walmart vs. Main Street Retail story as it applies to broadcasting. Who cannot be sympathetic with Saul? Yes, achieving scale can often result in consumer benefits, while adversely impacting typically smaller businesses and their unique personalized service.
Looks like the toothpaste has vacated the tube, for better or worse. Part of me says it’s progress, another part says, like Saul, “not so much.”
Who can forget the Telecommunications Act of 1996? Much of the argument (back then) was that was the only way radio would be able to complete in a ‘global economy’ was deregulation. See the similarities? It worked, the flood gates were kicked in, and here we are. Radio is not a chess, marbles, jacks or tiddlywinks. You do not win by having the most pieces. Try creating compelling content instead. A homogenized product and 200 tune playlists won’t make your community any better, and hardly serves the public. I do not see companies adding more employees-just more antennas. If this is passed, once again; we are doomed to repeat history.