The National Association of Broadcasters radio board last week voted on a proposal to revise the FCC rules limiting the number of stations that one company can own in a radio market. This proposal was forwarded to the FCC for consideration in the next Quadrennial Review of the FCC’s ownership rules, scheduled to commence at some point later this year, in a letter delivered to the FCC’s Chief of the Media Division. The NAB suggests that one party should be able to own up to 8 FM stations in any of the Top 75 Nielsen radio markets. It proposes that there should be no FCC ownership limits in markets smaller than the Top 75, and that AMs do not need to be counted against the ownership limits. Owners who incubate the ownership of stations by new entrants into broadcasting would be allowed to own up to two additional FM stations in a market. Why would the NAB take this position?
The letter sets forth many of the same issues that we cited in our article on radio ownership here. Competition is significantly different than it was in 1996, when the current rules setting limits at 8 stations in a market (only 5 of which can be AM or FM) in the largest markets, and in the smallest markets, only two stations (one AM and one FM). As we wrote in our April article, competition for listening like Pandora, Spotify or even YouTube did not exist in 1996 (not arriving on the scene for another decade). Changes in competition for local advertising has been even more dramatic, with some sources showing that over 50% of local advertising revenue (the bread and butter of local radio) is now going to digital competitors – with Facebook, Google, and even the digital music services selling advertising to local advertisers throughout the country, even in the smaller markets.
Obviously, a proposal like this one will be controversial – and the NAB notes that its Board’s decision was not unanimous. Proponents of more diversity in broadcast ownership will suggest that consolidation will hinder opportunities. Additionally, opponents will likely contend that consolidation since 1996 has not benefitted the economics of radio companies, but instead led to some being financially overextended.
Parties will have plenty of time to comment on these issues and the various suggestions as to how the rules should be changed. While some radio trade publications have been suggesting that a Notice of Proposed Rulemaking in the Quadrennial Review was imminent, in fact we are hearing that the Notice may not be out until significantly later in the year. That NPRM will set out tentative findings of the FCC and proposals for reform of the rules. The public will likely have at least 60 days to comment on any proposals, and then there will be a period for replies. After that, the Commission will take the issues under consideration, and no doubt interested parties will meet with the decision makers to argue their positions, with no decision likely until at least late in 2019.
So any changes to ownership rules for a new radio industry will take some time to implement –if any of them are implemented at all. Watch as these issues are argued over the course of the next year.