News Articles

FCC Could Close Radio Loophole

Broadcasters fight to keep current market measures 2/09/2003 07:00:00 PM Eastern

The radio industry is lobbying hard to head off what appears to be an FCC move to reduce the number of stations that one company can own in some local markets, particularly small towns.

Feds Hold the Reins
A history of radio combos
Source: FCC
1938 FCC bans ownership of two AMs in a market.
1953 Bans local FM combinations.
1964 Bans combos when station signals overlap
1970 Forbids AM/FM combos
1971 Reinstates AM/FM pairs
1992 Allows same-service combos: two AMs/two FMs in markets with 15+ stations if share doesn't exceed 25%. In smaller markets, three-station combos permitted, but all cannot be same-service.
1996 Congress lifts local limits again based on sliding scale. Markets with 45+ stations permit 8 to one owner if no more than 4 same-service. In markets with 14 or fewer stations, 5-outlet combos permitted but no more than half of market total. National ownership limits removed.
1998 To slow consolidation, FCC "flags" radio mergers giving one owner 50% of Arbitron-market revenue or two 70%.

FCC Chairman Michael Powell has told lawmakers that the extent of radio mergers is "disturbing" and he has "teed up" proposals to address longstanding anomalies in the way markets are measured.

Lawyers for the National Association of Broadcasters, Clear Channel and Entercom have held several meetings with FCC officials urging them to keep things as they are. The possible revisions would be included in the FCC's broad review of media-ownership rules due in late spring.

Broadcasters are worried because the FCC appears willing to make permanent an interim solution that effectively reduces the number of stations one company may own in a market. What's more, Democratic Commissioners Michael Copps and Jonathan Adelstein are said be pushing an even tougher solution that would replace current measurement techniques with tighter Arbitron market definitions.

Broadcasters argue that both solutions would create anomalies of their own. Any switch, they say, would thwart Congress, which intended to increase the amount of local ownership when it lifted ownership caps in 1996. Arbitron won't work, they say, because many markets are too small to be measured by the ratings company.

In 1996, Congress raised limits on local radio ownership by establishing a sliding scale that permits one company to own up to eight stations in the largest markets. The FCC isn't planning to change that scale, which also allows seven stations in 30-to 44-station markets, six in 15-to 29-station markets and five in markets with 14 or fewer. For almost three years, the agency has been trying to figure how, or whether, to remove inconsistencies between the way it measures the number of stations in a market and the way it decides how many stations one company owns in it.

During their tenures, former Commissioners Susan Ness and Gloria Tristani repeatedly complained that "regulatory sleight of hand" allowed stations to own more stations in a market than Congress intended. For instance, in 11-station Pine Bluff, Ark., the FCC ignored one of the three stations Seark Radio controlled when it sought to buy three more in 1999.

The two commissioners persuaded then-Chairman William Kennard to examine whether the measurement policy should be changed and to defer rulings on acquisitions that mirror the "Pine Bluff anomaly."

In a briefing with reporters three weeks ago, Powell said the measurement practice in place since 1992 did not pose a dilemma until Congress lifted local-ownership caps in '96.

The Pine Bluff anomaly arises because the FCC measures the number of stations in a market by including every station with any degree
of signal overlap with those in the principal community, even those that may overlap only one other outlet. But to decide how many stations one company owns, only stations with signal contours touching all
the other signals in the market are counted. As a consequence, critics say, a market is often considered larger than it really is and one company's stable of outlets considered less, and companies can circumvent limits for that market.

In the past two years, the FCC has withheld rulings on two such deals: Clear Channel's purchase of an AM/FM combo in Port Jervis, N.Y., and James River Cos.' buy of a Pierre, S.D., construction permit. Last year, the commission did approve sportscasting legend Curt Gowdy's sale of KDGY(FM) Laramie, Wyo., to Clear Channel after ruling that stations in nearby Cheyenne didn't count toward the company's Laramie total.

There area other anomalies. A 50-KW signal from KXMR(AM) Bismarck covers so much of North Dakota that distant communities like Minot are considered to be in the same market, allowing one company to own potentially all stations in that town. The dilemma has stalled Clear Channel's purchase of KXMR until the FCC measurement problem is fixed.

Although fighting any change, broadcasters have suggested, as a fallback, that the signal contours of powerful out-of-town stations could be ignored when measurements are made.

September
October