"[Following the 1996 Telecom Act] Radio stocks outperformed the broader

market even more dramatically.

As compared to radio's 107% gain,

the Dow Jones Industrial Average increased 23%,

and the Standard & Poor 500 gained 31%.

Some analysts predicted that radio stocks would continue to outperform the market in 1998, although that question has not yet been answered.

 

These results may well reflect the inefficiency of the prior era of regulation, in all of its glory, including the national ownership limits.  I do not know what will

ultimately happen to the radio industry, which new technologies will drive markets, which combination of assets are valuable and which are not, or which firms will succeed and which will fail.  None of these issues is clearly within the scope of the FCC's governmental interests.

 

But I do worry about markets, and about the effects of excessive government

regulation on markets. Free markets and competition are a consumer's best friend.

NOTE:] Why if "competition is the consumer's best friend" does Mr. Roth defend the amazing merger frenzy that has almost completely destroyed competition??

Regulation is an impediment to markets.  And excessive regulation, frankly, destroys markets.

 

NOTE:] But regulation in the service of the large monopolies is OK. Small businesses, churches and civic organizations are relegated to comitting "civil disobedience" in order to compete.

You know, some folks worried about the effect of deregulation of the ownership caps on format diversity.  That worry was not necessary, as time has told.  After all, it makes little business sense for an owner of several stations in one market to program them identically.  Group owners have every incentive to direct their programming at different market segments and use each station to aim at specific demographic groups, thereby maximizing the group's total audience reach.  To do otherwise would be to forego audience share.  To do otherwise would be irrational."

NOTE:] Too bad Mr. Roth assumed rationality. This is exactly what is happening.
Actually, it IS rational to do exactly what Roth assumed they would not. It takes work and risk to reach out to new cultural centers and markets. On the other hand the "economies of scale" can yield 40% profit margins by carving familiar territory (Rock) into ever thinner slices and slashing staff into nearly automated programming centers run by beancounters staring at Excel spreadsheets and Arbritron books that literally don't count any listener who listens to noncommercial programming.

---

At least some of the commissioners are rooted in reality. Susan Ness is concerned that "economies of scale" can only go so far before it becomes anticompetitive near monopolies. At least Ness seems to realize that price is not the ONLY determinant of market efficiency. Having a variety of products marketed for a variety of people also counts.

"Ness said when reviewing station transactions she asks herself, "at what point does the market become so over-concentrated that small stations cannot realistically compete?

And at what point does the loss from a reduction of voices and competition outweigh any benefits to the public from consolidation?"

"It used to be that a "big" group owned perhaps fifteen radio stations and made a "big" deal by acquiring a couple of AM/FM combos in good sized markets for 50 or 60 million dollars. Today, while there are still plenty of those transactions going on, it is increasingly common for us to review a transaction where a company owning say, thirty radio stations and a few TV stations in six or seven markets, is buying another group of ten or fifteen stations -- many in the same markets they already serve.

Moreover, some deals are spiced with newspaper-broadcast cross-ownership

waiver requests, or combine a collection of radio stations with two television stations in a market -- one owned directly, the other operated under a local marketing agreement."

"What if the company also wants to acquire a TV station in that market?  And once it acquires a TV station, what if that station executes a local management agreement with another television station in the market?

What if the company provides 100% of the equity in the form of non-voting stock or subordinated debt to finance a competitor in that same market?  Now, what if the manager of that competitor is hired from the group owner providing the financing?

At what point is a competitor kept from competing effectively?  At what point does an advertiser have a hard time finding options?

NOTE:] How can Mr. Roth maintain that this consolidation has been good for those seeking to advertise ... yet the profit is up and up and up. Where does that profit come from? The advertisers and ultimately the consumers.

At what point does someone looking for a fresh, independent voice have a hard time finding one?  "

NOTE:] And especially any point of view that is opposite to that of the corporate managers?

NOTE:][And so now the huge mergers are running afoul of Antitrust regulations via the Federal Trade Commission and the Department Of Justice]. The FCC has one more criterion than does the FTC or the DOJ, the "Public Interest Determination"

NOTE:] The Public Interest issue that is uniquely the FCCs is primarily the reason that  Republicans are trying to kill the FCC and the Low Power Radio Service. Republicans such as:

• McCain, (who is hypocritically running on a campaign finance reform platform) Detail HERE
• "Billy" Tauzin (Who's daughter worked for the National Association of Broadcasters (NAB) while he was using his position as the Chair of the House Telecom Subcommittee to demand that the FCC stop proposing to create competition via the Low Power Radio Service ... competition for the NAB stations.)
• Conrad Burns (Senate Telecom Subcommittee Chair who supported the NAB by saying "We don't need all these little radio stations, I've had about all the diversity I can stand!"

NOTE: The story also notes that the self-employed are much more likely to be politically active.
The self-employed are much more likely to act in their own self interest, to exercise their right of assembly and free speech to petition the government (and the corporations that increasingly have purchased the lawmakers) for redress of grievances.
This means that a radio dial that has less and less room for independent single owners and especially minority mom-and-pop radio stations runs counter to a healthy democracy that invites them into the discussion.