The NAB has put out a press statement indicating it will “urge the Federal Communications Commission” to allow further deregulation of ownership limits as part of its quadrennial media ownership review later this year.
The NAB is seeking to eliminate the subcap on the amount of AM or FM stations a company can own in a market. For example a company would no longer be limited to 5 stations on one band in markets where a company can currently own 8 stations. They also seek to have the limits on stations increased from to 8 in all of the top 75 markets and up to 10 if they participate in the FCC’s incubator program. The NAB also seeks to have no limits placed on the ownership caps outside the top 75 markets.
In its letter sent to the FCC today the NAB states:
Outdated rules that apply only to radio have a real-world impact on stations’ ability to serve their local areas. The financial viability of radio stations’ informational programming, including emergency information and related local weather coverage, would be enhanced by permitting local stations to take greater advantage of economies of scale. Studies have shown that local news production “is subject to strong economies of both scale and scope.”
Although these studies focused on the TV industry, there is no reason to believe that radio broadcasting differs in this regard, as earlier FCC studies indicated. “By definition, economies of scale and scope are associated with falling unit costs of production – that is, with the production of more output at lower average cost – and hence are prima facie welfare enhancing.” Such economies of scale are particularly important for smaller radio broadcasters earning limited revenues.
In addition to allowing broadcasters to take advantage of vital economies of scale, increased common ownership should enhance radio programming diversity. Numerous empirical
studies, including those commissioned by the FCC, have shown that common ownership
leads to greater programming diversity and that the number of different program formats
offered by local radio stations increased following relaxation of the radio ownership limits in 1996. Local listeners, particularly those more reliant on free OTA broadcasting and those residing in small markets with fewer stations, will benefit from greater programming diversity if radio ownership limits are reformed.
The full letter can be read here.
NAB announced today it will urge the Federal Communications Commission to modernize outdated radio ownership rules as part of its quadrennial media ownership review proceeding planned for later this year.
NAB’s request comes at a time of unprecedented consolidation among radio’s competitors in the media world. NAB noted that radio ownership rules have remained static since 1996, a date that preceded the introduction of streaming services like Pandora and Spotify, along with Sirius/XM satellite radio, podcasting, Facebook and YouTube.
NAB’s Radio Board met in Washington this week, with the ownership rules a topic of discussion. Anticipating the FCC quadrennial review later this year, the Board voted in favor of seeking regulatory relief that will allow radio to remain competitive while continuing its commitment to localism.
As part of the FCC’s quadrennial media ownership review, NAB will be filing comments along with supporting evidence that justifies radio ownership modernization.