In a recent decision, the FCC interpreted its radio multiple ownership rules in a case involving changes in an Arbitron market. The FCC’s rules restrict the number of radio stations that one company can own in a market based on how many stations are in that radio market. In situations where stations are rated in an Arbitron market, the number of stations is determined by how many stations are in that Arbitron market, as determined by data compiled by the financial analysis firm BIA. In this case, while the application to acquire the station was pending, BIA came out with its first list of stations that it considered to be in the newly created Arbitron market. That list showed that, in the new market, the Buyer already owned more stations than allowed by the rules, so acquisition of this additional station was prohibited. The case stands for the proposition that, while changes in Arbitron markets that allow an acquisition to take place must have been in place for two years to become effective (to prevent owners from gaming the system by making short-term changes), changes that adversely affect the ability of an owner to acquire a station become effective immediately.
According to the decision, at the time that the application in question was filed, the station to be bought was listed by BIA as being in the Manchester, New Hampshire Arbitron market. The number of stations owned by the Buyer in Manchester was such that the acquisition of the station was permissible at the time the application was filed. However, Arbitron announced the creation of a new Concord radio market just before the filing of the FCC application for approval of the transfer of control of the radio station. Soon after the filing of the application, BIA released its list of stations in the new Concord market, and it included a number of the stations owned by Buyer, including the station it was proposing to acquire. In the new Concord market, the Buyer would have too many stations to permit the acquisition of this station under the restrictions set out in the multiple ownership rules.
In the 2003 rulemaking proceeding adopting the FCC’s radio multiple ownership rules, the FCC made clear that a broadcaster could not make changes to the stations listed in the Arbitron market and immediately rely on those changes to allow it to acquire a station. For instance, a broadcaster would have to wait for two years before it could rely for purposes of a new acquisition on another station being moved from one market to another, or a change in the counties in a market which could have the effect of changing the number of stations in the market. However, the rulemaking did not specifically address the question of how soon changes would become effective if the change made it more difficult to acquire a station. This case seems to answer that question in holding that the adverse change becomes effective immediately. So, if you are anticipating a change in the Arbitron radio market, to the extent possible, be sure that all transactions are complete before the change takes place.