The Justice Department has already interviewed officials of the American Association of Advertising Agencies and Page Thompson, exec VP-U.S. media director for DDB Neeham Worldwide., about Jacor's attempt to acquire Citicasters and Westinghouse Electric Corp.'s purchase of Infinity Broadcasting.
FOUR A'S QUESTIONS DEALS
Last week, the Four A's formally questioned the effect of the deals in a letter to Federal Communications Commission Chairman Reed Hundt. While saying he wasn't challenging the deals "presently," Exec VP Hal Shoup warned that FCC needed to take action to preserve a competitive marketplace.
"Increased local concentration of ownership and control may allow market distortion in the price of advertising. .*.*. The direct concern of the AAAA is the likely increase in the price of advertising time in markets with duopoly ownership and/or control," said the letter.
The ad group is worried because the acquisitions would give the two broadcasters major shares of radio advertising in certain markets. Jacor would end up with a more than 50% share of Cincinnati's radio ad market; the Westinghouse/Infinity deal would give Westinghouse more than 30% shares in six markets-Boston, Chicago, Dallas, Detroit, New York and Philadelphia.
FCC, FTC APPROVAL NEEDED
Both the FCC and Justice Department must approve the deals, with the Justice review coming first. The National Association of Broadcasters has already gone to Justice with an economic study claiming the radio market isn't by itself a separate advertising market.
"Particularly given radio's insignificant share of this mass media market, the current trend in radio station consolidation...should not raise antitrust concerns," said NAB counsel Edward P. Henneberry in a letter opening a 28-page economic analysis. "Indeed, deregulation will provide an opportunity for the radio industry to develop a sounder financial basis...and [improve] its ability to provide quality programming."
That analysis from NAB's consultant said the number of radio stations nationally-10,000-also assures competition. "Unlike
newspapers, radio has no category of advertisers who are dependent on the radio medium to distribute their advertising," the report said.
A SEPARATE AD MARKET
Some agency media directors were quick to dispute that analysis, arguing not only that radio is a separate ad market for some products but that having a single owner of all the stations in a market with a single format does carry the potential for antitrust violations.
"The concern is for those advertisers who want to use radio only. It's a potential problem with pricing because the alternative is limited," said Alan Banks, exec VP-media director, North America, Saatchi & Saatchi Advertising, New York.
Jean Pool, exec VP-media buying at J. Walter Thompson USA, said ownership of too many outlets in a single market is the major concern in these acquisitions, larger than her concern about media owners having a large number of outlets in different markets.