FCC clears way for radio deals, raises market boundary issues

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The already consolidated radio market got a push toward further consolidation as the Federal Communications Commission's new chairman, Michael J. Powell, gave the go ahead to a spate of radio deals that give one or two companies dominant control of ad dollars in a single market.

In the past, the Justice Department has reviewed larger deals and raised questions when one company controlled more than 40% of ads for any demographic in a market. The FCC last week approved several smaller deals where two companies would gain control of nearly 100% of the ad market, or where one would control more than 50% of all market advertising, according to a stinging dissent from commissioner Gloria Tristani.

The approval "relies on a simplistic antitrust-like analysis of competition and confounds the commission's primary obligation to implement a federal broadcast communications policy that serves the public interest," she wrote. "Each of these license transfers brings about an increase and in some cases an unprecedented increase in market power concentration. Taken together they exemplify harmful levels of control of advertising revenues."


She called the action on 32 transactions in 26 markets involving more than 60 stations, a "retreat" from past practice and a violation of the commission's statutory duty that would lead to higher ad rates and lesser service.

Mr. Powell said he moved the deals because they had languished red-flagged for as many as two years. But he also expressed doubts that the FCC should be reviewing competitive impacts or diversity questions raised by licensing transactions at all in the future.

Until the FCC completes a re-examination of how to define market boundaries and whether the number of stations any one company can own needs changing, he said the agency should put a moratorium on any further attempt to look at competition issues arising from individual transfers.

The approved deals were generally in smaller markets, but included Lexington, Ky., Santa Barbara, Calif., Utica, N.Y., Cheyenne, Wy., and Great Falls, Mont. Clear Channel Communications, which already has 1,200 stations, will pick up 16 more, and Cumulus Media will add 16 to its current 27. According to Ms. Tristani, the deals would give two companies 100% of the advertising market in Casper, Wy., and Augusta, Maine, and would give one company 67.3% of the market in Beckley, W.V. In 10 others, the deals would result in other competitors having just 2.3% to 10% of the market.

Some advertising buyers said last week that the radio market is already so consolidated the mergers will have relatively little impact nationally.

"At this point the bulk of radio stations are controlled by two people in this country [Clear Channel Communications and Infinity Broadcasting Corp.] so any additional words toward monopoly are somewhat after the last act," said Larry Spiegel, principal of the Richards Group, Dallas. "This is sort of the 10th inning of the game that ended in the ninth."

Andrew Jay Schwartzman, president of the Media Access Project, suggested the move telegraphs the future of the Powell commission.

"What this betokens is a fundamental difference on what the public interest standard is and what it obligates the commission to do," he said.

Contributing: Cara Beardi

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