Deregulation? An unspoken reason radio needs “government assistance.”

 

What could go wrong

The National Association of Broadcasters (N.A.B.), a group that would sell out a frail great grandmother in hospice, now wants more deregulation of the radio industry to the exclusion of consumers like you.

As with any lobbyists, they “encourage” politicians to do what’s best for the bank accounts of its members, rarely the consumer.

First a quick history lesson. The Telecommunication Act of 1996 was the first major change to communications law since the 1930’s. It focused on technologies like the Internet, cable and cellphones. At its signing into law, then President Bill Clinton said, “It promotes competition as the key to opening new markets and new opportunities. It will help connect every classroom in America to the information superhighway by the end of the decade. It will protect consumers by regulating the remaining monopolies for a time and by providing a roadmap for deregulation in the future.”

We were told it would encourage competition, increase diversity, drop prices, and create jobs. Instead we got media concentration, a reduced amount of diversity in programming and ownership, tens of thousands losing their jobs and prices? I’ll bet you never thought you’d be paying what you are for cable, if you haven’t cut the cord yet.

Screen Shot 2018-06-19 at 3.06.43 PM

Slipped in at the last moment, under Title II, Section 202, were a few words about increasing radio ownership limits. The bill overwhelmingly passed through the Senate. The House approved it without objection. And Bubba signed it.

Over 20 years later, the N.A.B., which in the past has come up with clever slogans like “Radio – Hear it Here,” now wants radio ownership limits increased through another round of deregulation. The reason? Business sucks. Radio advertising revenues are generally not good, either flat or decreasing, and the radio industry, some say, can’t compete with Google and Facebook, each of which are taking advertising dollars from other media, including radio.

Go ahead and blame it on increased competition from digital media, as some do. It’s easier to point fingers and accuse someone or something else, especially when it comes to an inability to financially compete, and worse still, lacking the desire to innovate and collectively change for the betterment of an entire industry. Making a call to a Congressman, whose hand is out, and pleading for government’s assistance and protection is much easier. Status quo takes a lot less effort.  And let’s face it, there’s always a Congressman on Capitol Hill willing to sell his soul for a few Benjamin’s.

There’s one thing rarely discussed when summarizing the financial issues facing radio today. Let me put this as simply as I can.

THERE ARE TOO MANY RADIO STATIONS AND TOO MANY COMMERCIALS TO SELL.

Clear enough?

Even the American airline industry figured it out. They were flying too many planes with too many seats. With all the empty seats, the airlines couldn’t increase ticket prices or create new revenue streams, like charging to check your luggage. The brilliant idea? Fly fewer planes and fewer seats. Create an increased demand for the product. Did all the main carriers come together and create a new cohesive business strategy for the industry? Possibly. Today, airlines are doing pretty well, making billions annually charging you to check a bag at the counter.

The former CEO of American Airlines, Robert Crandall once famously said, “I’ve never invested in any airline. I’m an airline manager. I don’t invest in airlines. And I always said to the employees of American, ‘This is not an appropriate investment. It’s a great place to work and it’s a great company that does important work. But airlines are not an investment.’” Crandall is credited with many innovations in the airline industry, but not with the idea of reducing inventory to increase demand and profit.

LSD

It’s a core of capitalism – The Law of Supply and Demand. If there’s limited supply with high demand for a product the price increases. If there’s less demand with a lot of available product the price goes down.

Since 1996, thousands more radio stations are broadcasting in America. And today the FM band is being overrun with more and more low power translators, each increasing the amount of available commercial time to sell and diluting the product.

Since 1996, there have also been huge cutbacks in station personnel. One market I’m familiar with had 97 account executives in 2004. Today, there are around 20, each responsible for selling more commercial time than their 97 counterparts did 14 years ago.

Too many commercials to sell with limited or decreasing demand means per spot prices will go down. If you’re wondering why radio stations are playing 20 minutes of commercials an hour, it’s because there’s no price integrity with available radio time. Commercials are being sold on the cheap. A “dollar a holler” is no longer an industry insider joke with some stations and FM translators.

The N.A.B. is encouraging the Federal Communication Commission (F.C.C.) to increase ownership limits. In the Top 75 radio markets ownership limits would be increased to 8 FM, without having to sell any AM stations that owner may already have in that market. In markets 76 and above, there would be no limits, meaning in a small town one owner could have a monopoly in radio programming and advertising.

Deregulation worked so well the last time, what more could go wrong?

 

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  1 comment for “Deregulation? An unspoken reason radio needs “government assistance.”

  1. July 18, 2018 at 9:45 pm

    Yep…simply put…this idea is a turd in a punchbowl. The NAB is in the back pockets of the big owners.

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