FCCs radio revamp

In a move that could prevent some radio mergers, the FCC last week proposed to change the way it measures local markets.

At issue is an FCC policy that some commissioners say allows owners to control more outlets in a market than intended by government rules. The number of stations an owner may control in a market is capped according to a sliding scale based on the total number of stations there. In large markets, the number tops off at eight.

Under the FCC's new plan, which must go through two rounds of public comment and a final vote by the five commissioners, the agency would scrap its complex formula based on the number of stations with overlapping signals, relying instead on Arbitron's market definitions.

Commissioners Gloria Tristani and Susan Ness have long argued that the FCC's differing measuring sticks often overcount the number of total stations in a market or undercount the number of stations one company owns.

"Real listeners in real communities have been harmed by a consolidation of the airwaves that should not have been permitted to take place," said Commissioner Gloria Tristani.

Although 80% of the U.S. population lives in the 850 counties tracked by Arbitron, the FCC asked for advice on measuring the 2,250 that aren't. The FCC also asked for comment on retaining a signal overlap instead, but making the measurements for market size and corporate control consistent.

A separate FCC effort to resolve another angle of the radio-concentration debate was sent into limbo last week when Anderson Broadcasting withdrew its application to sell five Bismarck, N.D., stations to Cumulus Media.

The merger was slated to be reviewed by an FCC administrative law judge. Out of an estimated 200 "red flagged" radio deals, the merger was the first to be designated for hearing. To clamp down on rapid industry consolidation, the agency in 1998 began red flagging mergers that would allow one company to control 50% of a market's ad revenue or two companies to hold 70%.

Although the public is invited to comment on any red-flagged deal, the FCC has no clear policy for resolving concerns about the mergers, and the Anderson case was expected to provide the first guidance. Radio owners have complained that the policy has accomplished little more than delays.

Now, the FCC will have to bring another merger before a judge or simply launch a general rulemaking on the red-flagging issue.

FCC foot-dragging prompted one station-group owner to ask federal judges for help. William Benns, owner of five stations in the Parkersburg, W.Va., area said the agency has held up his applications to sell the outlets to Clear Channel for more than 13 months with no justification.

With 10 of the market's 15 stations controlled by two companies, the deal was red flagged on Sept. 22, 1999. A month later, PBBC Inc., which also owns five stations in the market, urged the FCC to deny the sale. Ironically, PBBC was permitted to sell a 60% interest in its group in August.

Barring the Clear Channel purchase is unjust, Benns argues in a suit filed with the federal appeals court in Washington.