Relaxed ownership rules have been a disaster for local radio

In an odd twist of irony, it is now some of the smaller radio station group owners asking the Federal Communications Commission to relax ownership rules. In a story published Dec. 22 in industry newspaper Radio World, writer Randy Stine writes that five ownership groups filed comments stating that “increased flexibility would allow smaller radio companies to pool resources, bolster emergency operations and invest in more local content.” Sure. And I have a bridge to sell them as well.

As a friend once asked me, “You hate liver and onions? Have some more!”

Radio has problems, most of which were self-inflicted as a result of increased ownership limits. In the days of strict limits — the FCC called it the 7-7-7 rule — any company was allowed to own a maximum of seven AM stations, seven FM stations, and seven television stations nationally, with no more than one each in any single market.

The purported aim was to promote competition and diverse viewpoints, but it also acted as a forced competition … in order to attract an audience, you had to stand out, either with special music, great personalities, unusual content, contests, or stunts. It didn’t necessarily take a huge budget, as creativity was the most important aspect of all.

When Bill Clinton’s FCC relaxed the rules with the Telecommunications Act of 1996, the promise was that consolidation would reduce costs and allow for more variety of programming. Stations could suddenly own an unlimited number of stations nationwide, and up to eight in large markets. Huge station groups like Clear Channel were formed … and the rapid decline of radio as a viable entertainment source began.

Once large groups of stations were formed, they no longer had to compete. Programming just had to be “good enough,” as the “competitor” was often owned by the same company. As a local example, iHeart doesn’t care if you tune out KOST (103.5 FM); the likelihood, they feel, is you’ll just head over to KBIG (104.3 FM). Both KOST and KBIG are owned by iHeart, and I don’t know if anyone can tell the difference — they play basically the same music.

The wrong things were cut under consolidation. DJs? Reduced or syndicated. Promotions? None. Clever programming? Rare. Community involvement? Gone. Not totally of course, but certainly not at the level before.

And listeners noticed, opening the door for the likes of Apple Music, Spotify, Pandora and more. KIIS-FM (102.7) set ratings records in the 1980s and early ‘90s. After 1996? No one cared any more. Radio didn’t lose listeners to streaming services; it pushed them there. And suddenly station owners  and companies that paid huge premiums to buy stations found themselves facing decreased ad revenue, lower station values, and multiple bankruptcies.

Considering that allowing concentrated ownership is exactly what made radio a declining industry, one must ask — why would those five smaller companies support even more relaxed rules?

My hunch, based upon conversations I had had over the years with small group and independent owners, is a desire to have a viable exit strategy. If rules are relaxed, it opens the door for more companies to be able to buy a station when the owner wants to retire. They may not pay that much, but they would at least pay something, and perhaps bring a little competition among a few potential buyers.

That may be true, in the extremely short term. Long-term: more listeners leaving for other sources.

They say the definition of insanity is doing the same thing over and over and expecting different results. This is a case of that. We know what happens when you relax the ownership rules, and it’s been universally bad. The FCC should not only reject any plan to relax ownership rules, they should instead look to institute caps more akin to the 7-7-7 rule. As but one example, perhaps if  group owners here in Los Angeles were allowed only one AM and one FM each, we’d still have local news and traffic reports available between midnight and 5 a.m.

My vote: three stations maximum in any single market, and 50 total nationwide. Relaxing the rules even more than now? This column won’t have anything to cover.

Richard Wagoner is a San Pedro freelance columnist covering radio in Southern California. Email rwagoner@socalradiowaves.com