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How Is Removing The Ownership Subcaps Good For All?

Posted: 21 Mar 2017 12:12 PM PDT

From RadioInsight

Earlier this month six group owners wrote a letter to the FCC petitioning
for the removal of the AM/FM band subcaps per market.

The heads of Alpha Media, Connoisseur Media, East Arkansas Broadcasters,
Galaxy Communications, Jackson Radio Works, and Roberts Communications seek
the FCC to act on a previous NAB petition to reconsider the limits on the
amounts of stations a company can own in a market.

The Commission originally adopted the AM/FM subcaps in light of
technological and marketplace differences between AM and FM stations that
the FCC feared disadvantaged AM stations. The Commission’s most recent
broadcast ownership order ignores record evidence that any technical and
marketplace dynamics that may once have differentiated AM and FM stations
no longer exist. On reconsideration, the Commission should find that the
subcaps do not protect competition in local radio markets in light of
today’s marketplace dynamics and eliminate the subcaps.

In the leadup to the 2010 Quadrennial Review, the FCC itself wrote:

Those advocating elimination of the subcaps argue that recent advances in
technology, including online streaming, HD radio technology, and the use of
FM translators to augment AM station broadcast signals, have improved the
ability of AM radio to compete in the marketplace. In addition, they assert
that many of the top stations in large and small markets are AM stations,
which undercuts any argument that AM radio will flounder if the subcaps are
removed. Some broadcasters also assert that lifting the subcaps will create
new ownership opportunities of divested station [sic] for entities, which
include minorities, women, and small businesses, because broadcasters will
buy and sell certain in-market stations to strengthen existing station
clusters. In addition, they state that the owners of these station clusters
would then be in better financial positions to devote additional resources
in local programming.

This statement was used by the letter of the six group owners as were many
of the highly dubious comments filed by other station owners seeking the
removal of the counts. Lets look at these comments and show how out of
place to reality these comments are.

A joint filing by 21 broadcast owners representing 668 AM and FM stations,
highlighting the technological advances and regulatory changes, including
the daytime contours of AM versus FM stations, HD technology, changes to
the FM translator rules, Arbitron (now Nielsen) ratings, diverse ownership
of AM stations and marketplace dynamics of radio.

668 stations represents just 4.3% of all licensed radio stations as of the
end of 2016. By no means do they represent the radio industry as a whole.

Comments by Clear Channel Communications, Inc. discussing the increasing
competition from other audio platforms, including satellite and mobile
phones, the strong performance of AM radio as a competitor, the technical
parity between AM and FM stations, and attaching a study by BIA/Kelsey
dispensing the notion that AM stations are weak competitors.

Yes the increasing competition of other audio platforms is a major concern.
The numbers from the Infinite Dial annual research by Edison Research
earlier this month clearly defend that. How does owning eight FM stations
in a market rather than five change that? All it does is allow a group to
further consolidate costs and the amount of FM competitors in a market. In
theory lack of FM format competition will just drive more listeners to
digital platforms.

Then there is the comment about the strong performance of AM Radio as a
competitor. In the Top 10 markets a total number of TEN standalone AM
stations appear in the top 10 on the ratings for their specific markets.
Also all of the stations are licensed with 50kW giving them a signal
advantage over the majority of the signals on the AM band. Four more AMs
(Including three 50kW signals in Atlanta, Chicago, and San Francisco) also
make the Top 10 thanks to their full-powered FM simulcast. The numbers are
not much different as you go to smaller markets that see the majority of
their groups subscribe to Nielsens ratings.

And technical parity? Electrical noise and market growth have made most AM
signals useless in many parts of their coverage areas. Hence one of the
reasons for the current AM Revitalization process.

Comments by Frandsen Media Company LLC, highlighting the changing
marketplace dynamics “where audio service is simply audio service,” and
where AM stations can be rebroadcast by FM translators, over the internet,
digitally and on FM HD-2 channels.

So because an AM can be rebroadcast via other distribution methods means
that they are equal to FMs? If that were the case wouldnt that mean that
these group owners would see their values and want to retain the AM
stations which they could acquire for less than an FM and use the new
digital transmission methods to create assets equal or greater than their
existing FMs, no?

Comments by Entercom Communications Corp. demonstrating the challenges
posed by the AM/FM subcaps in “delivering full market service with a
diversity of programming.”

Diversity in programming in this case means eliminate in-format or
demographic competitors so they can have the majority of the local
listening and revenue.

Comments by the National Association of Broadcasters highlighting the
competitive advancements of AM stations and the possibility for increased
market entry by diverse owners through elimination of the subcaps.

Only because these group owners will be seeking to dump off their now
unwanted AMs at fire sale prices. Yet these diverse owners will be stuck
with limited options to compete on an equal level with the sellers.

As CBS Corp. succinctly stated:

These subcaps were historically premised upon supposed technological and
marketplace disparities between AM and FM stations which have been
eradicated by the increasing competitiveness of AM stations and the advent
and increasing utilization of digital radio technology. As the record
compiled in response to the initial Notice of Inquiry in this proceeding
conclusively demonstrated, the subcaps have long been unsustainable, are
even more so now, and cannot lawfully be maintained as an aspect of any
local radio ownership rule that might be left in place

As CBS Corp. succinctly did:

Paying $75 million in 2012 for 101.9 in New York in order to move Sports
660 WFAN to FM in order to keep up with the demographic shift of its
listeners away from AM. CBS also eliminated stand-alone FM brands in
Chicago, Detroit, Philadelphia, San Francisco and for awhile in Las Vegas
to either simulcast or completely shift an AM stations brand to FM. How did
that make AM more competitive?

This all comes down to one thing. AM stations are increasingly useless in a
market and unable to compete on a local level. The NAB and large group
owners have spent the past two decades blocking any large-scale attempt to
put AM and FM stations on truly equal levels (moving to a new all-digital
band like the rest of the world, or keeping all FM HD Radio subchannels for
the original analog FM). Now they see the values of these AMs at an
all-time low and want to be able to dump them off and spur another round of
consolidation without creating a public outcry about the government
eliminating further competition.

But call it what it is. Dont try to feed us bull that the remaining AM
stations are better off or more competitive now than at any time in the
recent past. Or that the public will be better served because you can now
own eight FMs in a market and take some of your competition out of a market.

Small and independent owners that make up the majority of radio station
licensees should be banding together to ensure their wants and needs are
heard by the FCC. Being rendered further unable to compete with large
groups that fear being rendered further unable to compete with digital
platforms does no good for the industry as a whole.

The post How Is Removing The Ownership Subcaps Good For All? appeared first
on RadioInsight.

Entercom/CBS Radio Place Future Spin-Offs In Divestiture Trust

Posted: 20 Mar 2017 09:38 PM PDT

From RadioInsight

Entercom and CBS Radio have filed with the FCC to create the Entercom
Divestiture Trust to handle the divestiture of the stations in seven
markets that it is required to spin-off.

While Entercom will only be required to divest fourteen stations to get
under the current FCC market caps, it is seeking permission to assign the
licenses of 43 different stations into the trust. This will give Entercom
flexibility to choose which stations it will seek to keep and which ones it
will spin-off. Among the stations being filed for placement into the
divestiture trust are all of CBS Radio and Entercoms stations in the
Boston, Sacramento, San Francisco, and Seattle markets.

Entercom will be required to spin-off 2 FMs in Boston, 1 FM in Los Angeles,
3 FMs in Sacramento, 1 FM in San Diego, 4 FMs in San Francisco, 2 FMs in
Seattle, and 1 FM in Wilkes-Barre PA where it will lose its grandfathered

The filings do however, let us know what the companys plan is in Los
Angeles, San Diego, and Wilkes-Barre. In Los Angeles, CBS Variety Hits 93.1
Jack-FM KCBS-FM and Entercom Classic Rock 100.3 The Sound KSWD will both go
into the trust giving the company the option to sell one or the other. In
both San Diego and Wilkes-Barre, the Entercom Country station will lose its
rimshot simulcast used to increase the stations reach. 92.1 KSOQ Escondido
CA currently rebroadcasts 97.3 KSON San Diego to the northern reaches of
San Diego County, while 95.9 WGGI Benton PA brings Froggy 101.3 WGGY
Scranton to the Bloomsberg area.

Entercom will decide which stations need to be placed in the trust prior to
closing of their merger with CBS Radio pending that any divestitures have
not been completed by that time. The trust will be overseen by MVP Capitals
Elliot Evers.

The post Entercom/CBS Radio Place Future Spin-Offs In Divestiture Trust
appeared first on RadioInsight.

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