Big radio companies ditch smaller market stations

by BILL VIRGIN, Seattle Post-Intelligencer

Two members of the Federal Communications Commission are in town today for an informal hearing on media ownership rules and the potential dangers of companies with extensive holdings of broadcast properties, even as some of those big companies are themselves rethinking the "bigger is better" philosophy.

Commissioners Michael Copps and Jonathan Adelstein, who have been critical of previous FCC attempts to loosen the rules on such issues as how many television stations one company can own nationally, or how many radio stations it can own in a single market, will convene the hearing at 6 p.m. at the downtown Seattle Public Library.

Advocates of changes say FCC rules should be updated to match the realities of the media marketplace, which has been expanded considerably with the Internet. Opponents say concentration of media properties in the hands of a few companies limits diversity of opinions and viewpoints and squelches local content.

In radio, much of the criticism has been aimed at Clear Channel Communications, which owns 1,150 radio stations nationally, including six in Seattle (the current maximum permitted for one company in Seattle is eight, including a maximum of five AM or FM stations).

Interestingly, the Seattle hearing comes as Clear Channel has announced plans to sell 448 stations in markets smaller than the top 100; among those on the list are stations in Yakima, the Tri-Cities and Centralia. Another big radio operator with Seattle properties, CBS, also has unloaded 17 stations in five markets.

Even Seattle-based Fisher Communications, a relatively small player in the business, is getting out of small-market radio by selling or putting up for sale 24 stations in Eastern Washington and Montana. That would leave it with just three radio stations, all in Seattle.

So what has changed in the business model or operating philosophy that earlier had companies assembling as many stations in as many markets as they could afford?

Tom Taylor, editor in chief of the trade publication Inside Radio, says the reasons differ by company, although there are some common themes.

"For Clear Channel, it's more a change from the earlier philosophy that they needed to be everywhere, to offer advertisers access to the entire country (all 300 markets)," Taylor says in an e-mail. "It's axiomatic that it takes almost as much management attention to operate in Casper, Wyo., as it does in Denver or Seattle -- and now the vision from San Antonio (Clear Channel's headquarters city) is that they can shed those 448 stations in 90 smaller markets, and still be the radio company with the largest reach (by far). Note that they're keeping over 100 of their markets outside the top 100."

CBS Radio, meanwhile, has defined itself as a large-market operator, Taylor says, which has pushed it to unload medium-size markets such as Fresno, Calif. In other markets, "They just weren't able to acquire additional stations," and it makes more sense to devote time and attention to those where it owns five or more.

In some cases, media companies find potential investments they like better. Fisher, for example, has been investing the proceeds of the radio sales into television, particularly Spanish-language outlets in the Northwest.

As the large radio conglomerates unload properties, it raises the question: Will the stations go to smaller, more local operators who will restore more local programming, or will those new owners simply fill more time with syndicated content off the satellite?

"I really think there's a whole category of former operators (people who sold out years ago and profited handsomely) and smaller but ambitious operators who like the local-market radio model," Taylor writes. But listeners don't necessarily object to national programming or prefer local if what's coming from the satellite is something they like. Notes Taylor, "It's a question of fitting together the best programming from all sources, and having the local focus and patience to operate the right formats.

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