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Mandel Cites 'Consolidation Tax'

7/13/2003 08:00:00 PM Eastern

Multiple-station ownership has generated advertising-cost increases far above the supply and demand of the free market, according to Jon Mandel, co-chairman of ad-time–buying giant MediaCom.

Cost to Advertisers
Sample calculations of what industry concentration did to CPMs
Market Increase 'Consolidation Tax'
Source: MediaCom analysis of data from 1994 to 2002
Atlanta 155% $144.5M
Austin, Texas 95% $25.3M
Minneapolis 78% $50.7M
Washington 32% $82.9M
New York 30% $156.0M
Las Vegas 30% $14.0M
San Diego 30% $34.6M
New Orleans 7% $2.8M

Mandel made his case as one of the witnesses at last week's Senate Commerce Committee radio-ownership hearing (see page 20). Armed with statistics to back up his claim, including what he called the "consolidation tax," Mandel said he was concerned about the future "not just of the advertising industry but of the broadcast industry as well."

He singled out Clear Channel, the nation's largest radio group at more than 1,200 stations, as a major source of consolidation-related market-control issues.

Responding to Mandel's "tax" contention, Clear Channel lobbyist Andrew Levin said, "Advertising rates are so volatile right now, there's no way they aren't completely market-driven."

Mandel provided the committee with examples from various markets of the percentage increases in marketwide CPMs (costs per thousand) over what MediaCom has calculated they would be in an unconsolidated market. That increase, expressed as the dollar difference between what the ads should cost in an unconsolidated market and what they actually do cost, he labeled the "consolidation tax."

 

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