FCC and Radio Diversity

IN a recent action that has caused much alarm on Capitol Hill, the Federal Communications Commission (FCC) dramatically loosened its restrictions on common ownership of radio broadcast stations. A radio listener will, under the FCC's decision, turn on her radio and find as many as six different stations all programmed by the same owner.

The FCC doesn't plan to stop with radio, either. The agency may soon also loosen its restrictions on television ownership. A TV proposal is expected in May.

Two rules will be changed. The multiple-ownership rule limits the nationwide number of commercial radio and television stations a single owner may hold. Under the old rule, one owner could have 12 FM, 12 AM, and 12 TV stations. The new radio rule will permit an owner to hold 30 FM and 30 AM stations. This change, the FCC calculates, will permit the nation's 10,000 radio stations to be held by as few as 166 owners.

The duopoly rule limits ownership of broadcast stations in the same local area. Under the old rule, a single owner could hold only one FM, one AM, and one TV station within the same area. The new radio numbers will vary depending upon the size of the markets. In large markets, one owner may hold three FM and three AM stations. In very small markets, an owner may hold three stations, one of which must be an AM.

Congress has reacted angrily to the FCC's actions. Key legislators, including the chairmen of both the Senate and House Commerce Committees, have criticized FCC commissioners in hearings and meetings. Several proposals have been floated to reverse the radio decision.

Some self-interest underlies Congress's concern. Members of Congress depend upon access to radio stations. Greater concentration of radio ownership will reduce their access. But the loss in competition and diversity of viewpoints will also have serious public-interest consequences.

The FCC's decision to relax its duopoly rule, in particular, will have a severe impact. An example is the Miami-Fort Lauderdale radio market. Forty-one stations are licensed there, and 40 receive ratings. Under the old rule, these stations had to be held by at least 23 different owners. Under the new rule, they can be divided among eight owners.

Competition is even more intense in smaller trading areas within radio markets. In these smaller areas, the FCC's new rule will permit acute concentration of ownership. In the Miami market, for example, 10 stations serve the immediate Fort Lauderdale area; they can now be divided between only two owners. Boulder, Colo., is part of the Denver market, but is 20 miles from Denver. All four stations licensed to Boulder may now be held by one owner.

Concentrating control of radio stations will also reduce diversity of perspectives. This loss will retard public awareness and debate. In many state capitals, for example, under the new rule all radio stations can be divided between only two owners.

This diversity loss is especially painful now. In the last decade, the FCC eliminated many of radio's public-interest obligations. Among them was the fairness doctrine, which required stations to cover significant points of view on matters of public controversy.

WHY did the FCC relax its ownership rules? Many radio stations are incurring financial losses. The FCC reasoned that if ownership could be consolidated, stations might achieve greater economies of scale, restoring profitability.

Not all stations are suffering losses, however; most remain profitable. By permitting all stations to consolidate, the FCC's solution will exacerbate the problem if already profitable stations merge, making the indigent stations' outlook worse.

The problem is also largely a temporary one. Current losses are closely related to the recession. Radio depends on advertising revenue, which is greatly reduced in a recession as advertisers seek to cut expenses.

Also related to the recession are losses caused by loans left over from the 1980s. Those loans financed purchases of the stations at a time when an acquisition frenzy produced record station prices. The resulting debt could be serviced comfortably only as long as boom times continued. Revenues now are not sufficient to service this debt without losses.

These losses will hurt for a while, but they do not justify the FCC's permanent action.

The station trading frenzy of the 1980s actually makes a strong argument against the FCC's action. That frenzy was set off in part by an FCC decision in 1984 to increase its multiple-ownership limits from seven stations to 12. If the even more liberal increase fuels a new trading frenzy, station prices will soar again.

Station prices are already out of reach for most new entrants to radio, including women and minorities. New price increases will shut the door to these groups. The public will lose if the medium continues - as it has for 70 years - to be a white, male preserve.