NAB Urges FCC to Relax Media Ownership Rules, But Some Disagree

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Radio and television stations now compete for listeners and viewers with digital platforms, satellite and online content providers and more. NAB says the FCC’s media ownership rules, developed when stations only competed with other stations in a market, have to evolve, so broadcasters can compete on a more even playing field.

In comments filed this week with the FCC concerning the 2018 quadrennial ownership review, the NAB discusses the transformation of the media and advertising markets in the digital age and the pressures on broadcast stations in a radically altered competitive landscape. 

Whatever the Commission ultimately decides could affect towers changing hands when a station is bought or sold.

Radio stations face declining listenership due to intense competition for audiences and revenue reductions in local ad markets dominated by digital platforms. “Many stations now struggle to even cover their substantial fixed costs,” according to NAB. “Stations in smaller markets with limited advertising bases particularly struggle to generate revenue, and AMs face special challenges in attracting listeners and advertisers in all markets.”

Noting that the radio local ownership limits haven’t changed since 1996, NAB says the FCC should allow radio owners to achieve greater economies of scale by: eliminating caps on AM ownership in all markets and imposing no restrictions on FM ownership in Nielsen markets 76 and lower and in unrated areas. NAB also urges the agency to permit a single entity to own up to eight commercial FMs in Nielsen Audio markets 1-75, with the opportunity to own up to ten FMs by participating in the FCC’s incubator program.

Not everyone agrees with NAB that AM caps should be eliminated. The National Association of Black Owned Broadcasters told the agency any change to allow more consolidation will have a “significant negative impact” on African-American and other minority station owners. Urban One agrees the radio limits should remain unchanged. “Unfettered ownership may arguably help large radio groups take more revenue from Google and Facebook, but to the extent smaller and niche broadcasters do not sell out, a lack of radio ownership restrictions will allow large radio groups to take considerably more revenue from smaller and less well-funded local radio broadcasters,” Urban One tells the FCC.

The broadcaster also says: “A removal of the AM sub-cap is not going to improve the AM band and will likely lead to lesser AM station valuations. Lesser AM station valuations lead to bad results.” Urban One cites the case of WMAL, a heritage Washington, D.C. station, which was one of the only AM stations in the market with market-wide coverage. “To reap the value of the real estate which became more valuable than the broadcast facility itself, its underlying transmitter site land was recently sold to developers, and the technical facility moved to an inferior location with the result that the former market powerhouse AM station now suffers from substantially reduced coverage,” says Urban One.

On the TV side, NAB notes competition has eroded the rationale for keeping the local Television ownership rule. “For TV stations to remain meaningful competitors in the digital marketplace, broadcasters must achieve greater economies of scale, thereby enabling necessary investments in data-driven and automated sales operations, programming and physical plants.” NAB urges the Commission to reform its local TV rule by removing the per se restrictions that ban any combinations among top four ranked stations and that prevent ownership of more than two stations in all markets, regardless of local competitive conditions.  Comments? Email Us.

May 1, 2019

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