FCC Ruling May Let Radio's Rich Get Richer

THERE are myriad opinions on the recent relaxation of radio ownership rules by the Federal Communications Commission, but just about everyone agrees that the ruling will send a lightning bolt through a sluggish industry.

Radio operators were previously limited to owning 12 AM and 12 FM stations nationwide and could not own more than one AM and one FM station per big-city market.

The new ruling, which went into effect last month, allows ownership of up to 18 AM and 18 FM stations, and two AM and two FM stations per market. The deregulation will aid the radio industry's recovery from the recession by boosting ad revenues and offering debt-ridden operators a much-needed opportunity to sell, some radio insiders say.

"The hope is that new station combinations allowed [under the new ruling] will be an antidote to the huge number of new stations which the FCC authorized during the deregulatory period of the 1980s," says J.T. Anderton, managing editor of the Virginia-based Radio Business Report.

By being able to acquire a total of four stations in the same city, companies could offer advertisers a one-stop shopping package and dominate whole audiences.

"A station will be able to say, `Buy advertising with us and we'll give you a great package for a larger audience,"' says broadcast advisor Clark Smidt.

But Mr. Smidt, who owns an oldies station in Concord, N.H., adds that the FCC ruling could also ease out diversity and leave many large markets with only a few radio voices.

"The ruling basically lets the rich gets richer," he says, adding that it remains to be seen whether many struggling stations will be bought. "That depends on the wherewithal of the buyer and the attractiveness of the seller."

The answer to the problems brought on by deregulation is not more deregulation, says Andrew Schwartsman, executive director of Media Access Project. Minority and other smaller, specialized stations that brought diversity to the airwaves in the 1980s will be less able to compete now, he says.

BUT the ruling doesn't necessarily mean the demise of specialized stations, says Mr. Anderton. "It will allow larger stations to buy stations with a niche format which don't generate as much revenue," he says. "The public will be much better served by a station on sound footing."

No deals have been completed yet under the new ruling, but applications for acquiring more stations are now under review by FCC officials. About 75 to 100 applications will probably be filed by companies over the next several weeks, says Mr. Anderton.

Last March, the FCC was set to raise radio ownership limits to 30 FM and 30 AM stations and three of each in major markets. They lowered these numbers over the summer after it seemed likely that Congress would think the ruling too liberal and decide to halt deregulation altogether.

"There was the real possibility that [Congress] would have overturned the ruling ... and we would have been back at square one," says Lynn McReynolds, spokesman for the National Association of Broadcasters.

The new ruling holds the potential to turn the struggling industry around, although results probably won't be seen anytime soon, says Ms. McReynolds.

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