CLEAR CHANNEL LOBBIES FOR MEDIA OWNERSHIP RULES CHANGE Ron Orol – The Deal Despite the certainty of another high-profile battle with opponents of media consolidation, Clear Channel Communications Inc. has quietly floated a plan that would allow the radio giant and other station owners to boost their holdings in the largest U.S. markets.
Clear Channel is considering filing a formal petition with the Federal Communications Commission seeking to raise the caps limiting how many stations one company can own in the largest individual U.S. markets, according to sources close to the company.
The commission last month launched its congressionally mandated review of FCC rules, which it must conduct every four years.
Clear Channel, the country's largest radio station group with 1,189 outlets, wants the FCC to relax a rule that limits a company's radio station ownership in individual markets. The limits are set on sliding scale and based on market size. A company may own no more than eight radio stations in the largest U.S. markets, such as Los Angeles, New York and Chicago, where at least 45 full-power radio stations operate. Radio industry sources say Clear Channel is seeking approval from the FCC to own 10 stations in markets with 60 radio stations and 12 radio outlets in the largest U.S. markets that have 75 radio stations or more.
The local radio limits and other media ownership restrictions are maintained because the FCC is charged with making sure Americans have access to diverse points of view.
Radio officials contend that today's limits are out of date because so many new competitors to traditional radio have emerged since the FCC last reviewed its rules three years ago. Satellite radio, iPods and Internet radio are all new places individuals can receive news, "talk radio," information and music that did not previously exist, they argue.
"Easing the ownership restrictions will help level the playing field and let free radio compete with iPods, online music services and satellite radio," said a Clear Channel spokeswoman. "Certainly, seeing that satellite radio has 150 unregulated stations in every market and free radio is limited to just eight shows the apparent disparity."
The competitive environment contributed to a 6 percent drop in the company's annual radio broadcasting revenue during 2005, down to $3.5 billion. A rebound during 2006, however, is expected to bring radio revenue this year to $3.7 billion.
Consumer groups contend that the new outlets are less able than radio to provide local news, weather and traffic information. Jenny Toomey, executive director of the Future of Music Coalition in Washington, D.C., said new entrants such as Internet radio are not adding a significant new source of local news, a key product traditional radio stations must provide. Without additional places for consumers to receive local news and information, more consolidation cannot be permitted, she said.
Toomey added that the limited citizen-produced news and information on the Internet is being driven by the big broadcasters' neglect of their duties. "It's happening because radio and television have abdicated responsibility."
Jim Snider, research director of the Wireless Future Program at the New America Foundation in Washington, added that radio broadcasters have been leading the fight to prohibit satellite radio companies, such as XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc., from being permitted by the FCC to offer local news, traffic and weather information as part of their services. For the most part, satellite radio is not permitted to offer local news and information. Snider added that Clear Channel should not be allowed to buy more traditional radio outlets because it soon can take advantage of a new digital process known as "multicasting" by offering several new programming streams over the same signal. Many radio companies already are operating several experimental multicast-programming signals.
"Why do they need more radio stations when they can do multicasting?" Snider asked.
But Andrew Lipman, partner at Bingham McCutchen LLP in Washington, countered that the verdict is still out on whether these new digital programming streams will be a success. Meanwhile, radio companies will want to acquire other successful radio companies because they can achieve economies of scale in major markets. "You can cut overhead and take advantage of advertising and other relationships," Lipman said. "It's really more of a question of how many voices are out there and how many multiple voices of communications listeners are getting."
Lipman added that satellite radio, iPods and the Internet have all provided new "voices" that should be taken into account by the FCC, particularly in the largest markets.
Many observers expect FCC Chairman Kevin Martin to press for a new rule eliminating a prohibition on one company owning a television broadcast outlet and the major newspaper in a particular community.
But fewer observers predict Martin would relax local radio limits, even in the largest communities. That's because of a perception among some regulators that the radio rules are untouchable. Massive radio industry consolidation after Congress lifted the nationwide ownership cap 10 years ago provoked intense public criticism.
Even if Martin wants to loosen local radio limits, it would be a hard goal to pull off without jeopardizing support for media rule changes he wants more, said Howard Liberman, a partner at Drinker Biddle & Reath LLP.
Martin has long declared that one of this priorities is eliminating the prohibition on owning a broadcast station and a daily newspaper in the same market. "There is so much on the table in the media proceeding that [local radio] is a difficult area to move forward on," Liberman said. |