In requiring Westinghouse Electric Co. to divest two radio stations to complete its $3.9 billion deal for Infinity Broadcasting, the U.S. Justice Department clearly stated that deals giving a single broadcaster more than 40% of radio advertising in a single market would be examined very closely.
"It's likely to get serious scrutiny," a Justice spokesman said, adding that particular elements of an individual deal could affect what finally is allowed.
SELLING TWO STATIONS
The Justice Department approval of the deal, which would create the U.S.' largest radio broadcaster, was announced last week but hung on the condition that Westinghouse sell off WMMR-FM, Philadelphia, and WBOS-FM, Boston.
Without the sale, Westinghouse's share of the Philadelphia ad market would have risen from 28% to 45% and its Boston share from 15% to 40%.
The Justice Department said advertising concentration issues guided its decision and revealed that for the first time it looked beyond simple concentration of dollars to concentration of dollars spent to reach a target audience.
In Philadelphia, the Justice Department said, the deal would have made it difficult for advertisers that didn't want to buy Westinghouse stations to reach 18-to-54-year-old males and in Boston to reach 25-to-54-year-old males.
GOOD NEWS FOR 4A'S
The new guidelines seemed to be good news to the American Association of Advertising Agencies, which had expressed fear that congressional lifting of previous ownership restrictions posed the possibility for unprecedented monopo- ly power.
"When we started off, we expressed concern about ensuring competition in local markets," said Four A's Exec VP Hal Shoup. "We didn't have any preconceived idea of what the number should be . . . That is a number we can live with."
However, some ad agency executives expressed concern that the percentage might still give certain station owners major weight in a market that could prove difficult to overcome.
"Anything that thwarts competition is bad for our clients, and 40% is still too high for one group's hands," said Richard Cotter, senior partner-regional broadcast manager at J. Walter Thompson USA, New York.
The agency already has a policy in place regarding local marketing agreements in which one ad rep handles multiple stations.
"If both stations are repped by the same rep, we go direct with one station and use the rep for the other," Mr. Cotter said. "That's our way of saying we're not happy with it."
Page Thompson, U.S. media director at DDB Needham Worldwide, would prefer to see control in the 25% to 30% range.
TV LIMITS COULD BE BROADENED
Ad agencies stepped into the radio fight in part because of fears that concentration in TV could be next.
The Federal Communications Commission, which has basically banned a single company from owning more than one TV station in a market, recently sent out a notice asking for comment on possible changes that would allow a company to own more that one under certain conditions.
That idea, whatever the limits, worries some ad executives.
"I'm very concerned-that will be a bigger battlefield than radio," Mr. Thompson said. "One of the real concerns with the radio effort was that it would be a forerunner for TV."
The National Association of Broadcasters said it still believes there is no reason to limit radio ownership.
"We still continue to believe that the Justice Department is wrong in concluding that the relevant product market is radio marketing as opposed to the entire market" encompassing all media, an NAB spokesman said.