Art & Commerce: Radio Waves

With more stations in fewer hands, the public will pay the price The recent $16 billion Clear Channel Communications/ Chancellor (AMFM) deal has to be the biggest news to date in the world of radio consolidation. Everyone expected Mel Karmazin and CBS-owned Infinity Broadcasting to take over the world. But Clear Channel CEO Lowry Mays blindsided the radio advertising community with his recent deal. While intriguing and defensible by the players, it's a move that should concern the advertising community and the U.S. population at large. There are a number of Clear Channel radio stations about to be put on the auction block. This is even more exciting or disconcerting. Given that these stations will cumulatively command a respectable share of the national radio marketplace, whoever purchases them stands to win big. Is the ABC Radio Network salivating at the chance to get back in the ranks of the national radio elite? In a matter of a few short months, ABC has been knocked off the network radio throne with no realistic promise of reclaiming its once-royal heritage. One has to wonder: Did Michael Eisner fall asleep at the wheel? Or is he waiting for the market to correct itself so he can stand back and watch overleveraged communications companies sweat bullets if the economy turns south and their revenue forecasts do not meet initial projections? He's a great businessman but only time will reveal the outcome. And now there's news about a venture-capital fund designed to help minority broadcasters in their quest for a larger share of the ownership pie. The idea? A group comprised of private investors and communications companies (e.g., No. 1 Clear Channel and No. 2 CBS) would back minority broadcasters who wish to acquire more stations. In turn, the group gains equity positions. Karmazin and Mays support this and with good reason. It could stop the only other potentially major competitive force, the Disney-owned ABC Radio Network, enabling the duo to extend their influence over the country's radio waves even more. Since diversity is inherently a good thing, in theory the idea of free-market competition regulating itself sounds great. (But then, so did the Edsel.) Unfortunately, this new scenario reeks of self-interest. To that end, media consolidation will not be healthy for this country in the long run. Letting large broadcasters be part of another broadcast group, minority or otherwise, will not be in the public interest. Remember that the airwaves presumably belong to the people. For all the market research done to determine customer preferences, it's amazing there's never been a study showing that the average radiophile loves to listen to five-minute commercial pods. What does all this mean? The stage is being set for monopolistic pricing practices on the part of these large group owners. The result: The cost of advertising is driven up and that cost is passed on to the consumer in the form of higher prices for goods and services. For this reason, our industry, and the government that regulates it, must act to preserve competition in the media marketplace.

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Art & Commerce: Radio Waves

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