Next month, the FCC is expected to propose changes to the way it defines radio markets, a key factor in determining how many stations are in a market and how many one owner may control. The agency also will try to clarify rules for determining when a radio merger creates too much concentration of local ad revenue.
Broadcasters worry that the changes could make it harder for some deals to go through. "We have real deep concerns," said one industry source. The FCC, on the other hand, aims to provide speedier approval for the deals that do go through.
Since August 1998, the FCC has sought public comment on radio deals that allow one or two companies to dominate local radio advertising. Deals are given a so-called "red flag" when one company would have 50% or more of radio-ad revenue or two companies together have 70%.
Broadcasters complain that the policy has delayed radio deals, even though the FCC has never taken the next step of blocking a deal by designating a merger for a hearing in front of an administrative law judge.
Some deals, however, have "died on the vine," said one radio-industry attorney. The problem: The FCC has no clear policy on deciding a deal's fate once it has been slated for public comment. "The commission has no known method for resolving red-flag mergers," said Griffith Johnson, a broadcast attorney in Washington.
FCC officials say they have not tallied how many deals have been flagged and would not comment on the proposals. But an industry source said the agency may propose that three "viable competitors" remain in a market after a flagged merger.
Revising the FCC's radio-merger review policies has been of particular concern to Commissioners Gloria Tristani and Susan Ness, who have complained that the FCC's policy allows some mergers to go through even though they appear to violate limits on the number of stations one company may own in a market.
In March, Tristani complained of "regulatory sleight-of-hand" that led the FCC to ignore some of the 11 stations Citadel Communications would control around Lafayette, La. The move permitted Citadel to exceed the market's eight-station limit. In other markets, the FCC counts stations in distant communities in order to beef up the number of stations one company may own in that market. "The commission's current radio ownership policies are not only illogical, but are doing serious damage to the public interest," she said.