"Mark Howell" wrote in message
As the author of what you term the Bakersfield argument, I contend
your argument fails because you (a) assume the station is priced
correctly and the buyer did not over-pay -- which is a common
phenomenon in broadcasting -- and (b) fail to take market size into
account. Los Angeles is so big that a station with a tiny percentage
of the audience is still reaching so many people that it can be
profitable.

On a) I suppose my phrasing was a bit ambiguous. I didn't mean to imply
that this particular station was correctly priced, only that markets are wise to
price a scarce asset like a radio station according to its reach, not according
to its billing in some passing, suboptimal implementation.

Whether in large communities or small, a free market in scarce licenses
virtually guarantees that stations end up in the hands of the brave or foolhardy
or optimistic entities that are willing to pay the most. At least where there's
no sentimental legacy attachment, as there clearly is in Bakersfield.

Can the govt. really know how many stations a market is able to support, if
entrepreneurs are willing to bet their own funds that that market can support
one more? Isn't the advertising market dynamic with the evolution of
traditional employees into contractors who must flog their services continually?
Most importantly, doesn't the rate of return generated by that advertising
market depend fundamentally on what the high bidders freely dared to pay for
their licenses? And wouldn't a Bakersfield-inspired, govt.-imposed scarcity
work its way right back into the license price...to where the buyer's ROI from
operations got knocked down all over again?

Jerome