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Powell Pushes Radio Sales Through; Competitive Review Procedures in Doubt

By akb in Media
Sat Mar 31, 2001 at 04:33:22 PM EST
Tags: News (all tags)
News

The FCC recently announced it had approved the sale of 62 radio stations that had been flagged for competitive review by the previous administration. FCC Chairman Michael Powell ordered the backlog of pending radio license transfers cleared, resulting in the disposition of 75% of the transfers under review, and stated that the remaining transfers would be ruled upon within the coming weeks. His move is a significant sign that the procedure of reviewing license transfers that result in high concentrations of control over a radio market instituted by the previous FCC Chairman, William Kennard, could be dropped altogether.


The FCC adopted a policy of "flagging" for review radio station sales that resulted in monopoly or duopoly control of advertising revenue in a given market following the raising of numerical caps on ownership by the Telecommunications Act of 1996. Deals were flagged when they would allow one entity to control at least 50% of advertising revenues in a market or two entities to control at least 75% of advertising revenue in a market. The flagging policy relied upon the authority of the Communications Act of 1934 which in creating the FCC empowered it to review every license transfer to ensure that it is "in the public, interest, convenience, and necessity" (US Code Title 47, section 310(d)).

Cumulus Media was the largest beneficiary of the license transfers, adding 23 stations to its portfolio of over 300, making it the second largest radio concern in the country. Clear Channel, the market leader with over 1,200 stations and 20% of total advertising revenue, added seven stations. These companies' station holdings have all come in the five years since the passage of the Telecommunications Act of 1996, as the ownership of the nation's 12,000 radio stations has seen rapid consolidation. The Act removed all caps on national ownership, previously limited to 20. It also raised to eight the number of stations a single entity could control within the largest markets from the previous limit of two.

In his comments on the approved transfers Powell cited his concern over the length of time the review process was taking as his motivation for clearing the backlog and expressed concern over issues of ownership concentration. However, industry rag Broadcasting and Cable in an editorial expressing approval of the FCC's action was optimistic, stating that "reading between the lines reveals that Powell has little patience for a process that puts the FCC in the trust-busting business." (March 19, 2001 "Editorials; Committed to the First Amendment"). This suggests that industry views this move as a sign that Powell would drop the competitive review process altogether. The FCC's decision was "welcome news," said Eddie Fritts, president of the National Association of Broadcasters, the broadcast industry's trade group.

Democratic Commissioner Gloria Tristani expressed concern that these approvals "initiate a new era where the Commission will routinely approve transactions resulting in single owner revenue concentration levels over 50% and duopoly concentration levels as high as 100%" and that "the effects of a proposed transaction on the diversity of voices, local programming, and economic competition in a given market have long been core considerations [of the FCC]". Conservative Commissioner Harold Furchtgott-Roth dissented from this view in supporting the transfers, stating that the Telecommunications Act of 1996 "sets the definitive standards for radio ownership to be enforced by the Commission".

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Powell Pushes Radio Sales Through; Competitive Review Procedures in Doubt | 6 comments (4 topical, 2 editorial, 0 hidden)
HHI index (4.00 / 2) (#3)
by MeanGene on Fri Mar 30, 2001 at 06:33:43 PM EST

The common measure of "market power" (monopoly as the extreme) is HHI (Herfindal-Hirschman Index), which tries to measure the relative market penetration by various participants.

HHI = Sum (market share percentage)^2.

For example, a monopoly would have HHI=10,000:

HHI = 100^2 = 10,000

An "equal duopoly" has

HHI = 50^2 + 50^2 = 5000

The treshold varies, but generally "competitive" markets should have an HHI of no more than 1100-1800.

Competition (none / 0) (#5)
by PresJPolk on Sun Apr 01, 2001 at 12:29:55 AM EST

Beware.. Not all markets will necessarily be purely competitive, in the economic sense.

Setting up a large radio station isn't exactly like setting up a lemonade stand, and all the leaning Big Brother does won't change that.

[ Parent ]
Media rant A4 (none / 0) (#4)
by Wah on Sat Mar 31, 2001 at 09:51:51 PM EST

O.k. I was going to post a long rant about the media industry. But instead, I'll link to a few things. First this, which is a out of control information overload, and replaces a page that just freakin' disappeared from google's cache. Quick scenario, I find a page cached of google which is no longer available from the L.A. Times (the article is about Clear Channel taking directs payments for advertising from record companies that would air right after a song was played. Which curiously at $1000 an ad would add up to rediculous amounts of direct payments quickly), who think that 7 days is plenty long for good information to be deseminated to the public. Then that page straight up disappears. This was the search, but the page is gone. I'll see if I can find a remnant, good reason to mirror all of your sources. Which is also a good illustration of the type of things I like to look for. And then we have this. Which is an "A" in my book. (and illustates how to rack up karma like nobodies business).

Next, take a look at this (especially the "spirit" part), and think about gnutella. And wonder for a moment if people would understand what gnubrary is.
--
Fail to Obey?

Salon article on 'indies' (none / 0) (#6)
by bittur on Fri May 04, 2001 at 04:48:12 PM EST

Hey Wah: I think the article you're referring to has been bumped to Salon. Cheers. Bill.

[ Parent ]
Powell Pushes Radio Sales Through; Competitive Review Procedures in Doubt | 6 comments (4 topical, 2 editorial, 0 hidden)
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