This report is a quantitative history of ownership consolidation in the radio industry over the past decade, studying the impact of the Telecommunications Act of 1996 and accompanying FCC regulations.
A Brief History of Radio Regulation
Since the 1930s, the federal government has limited the number of radio stations that one entity could own or control. In the 1980s and early 1990s, the Federal Communications Commission (FCC) began gradually to relax these limits. Finally, in the Telecommuni-cations Act of 1996 (Telecom Act), Congress eliminated the national cap on station ownership, allowing unlimited national consolidation. With the same law, Congress also raised the local caps on station ownership. In addition, as this study describes in detail, the FCC regulations implementing the Telecom Act allowed more consolidation to occur than alternative regulations would have allowed.
Methodology and Data Sources
To keep the quantitative analysis as simple and transparent as possible, we have not included technical statistical analysis. Instead, we have filled this report with standard, antitrust-style measures of concentration; our own new methodologies for measuring localism and diversity; and many time-series analyses that simply track who owned what when. The study covers thirty years of historical data wherever possible; in other places, the study focuses on the last ten to twelve years—the main period of interest for examining the impact of the Telecom Act.
The FCC’s own efforts at collecting data on the radio industry are inadequate, as we emphasize throughout the study. Just as the FCC does, we have relied on industry-collected data to measure changes in radio consolidation and programming. These proprietary sources include: Media Access Pro (Radio Version) from industry consultants BIA Financial Networks, Duncan’s American Radio, and Radio and Records magazine.
Major Findings of the Study
Highlights from the study are organized here in similar fashion to its three chapters. The first chapter focuses on national radio consolidation, the second on local radio consolidation, and the third on radio programming.
Emergence of Nationwide Radio Companies
Fewer radio companies: The number of companies that own radio stations peaked in 1995 and has declined dramatically over the past decade. This has occurred largely because of industry consolidation but partly because many of the hundreds of new licenses issued since 1995 have gone to a handful of companies and organizations.
Larger radio companies: Radio-station holdings of the ten largest companies in the industry increased by almost fifteen times from 1985 to 2005. Over that same period, holdings of the fifty largest companies increased almost sevenfold.
Increasing revenue concentration: National concentration of advertising revenue increased from 12 percent market share for the top four companies in 1993 to 50 percent market share for the top four companies in 2004.
Increasing ratings concentration: National concentration of listenership continued in 2005—the top four firms have 48 percent of the listeners, and the top ten firms have almost two-thirds of listeners [see Figure 1].
Declining listenership: Across 155 markets, radio listenership has declined over the past fourteen years for which data are available, a 22 percent drop since its peak in 1989.
Figure 1: National Share of Radio Listeners, Commercial Sector, 2005.
Consolidation in Local Radio Markets
The Largest Local Owners Got Larger: The number of stations owned by the largest radio entity in the market has increased in every local market since 1992 and has increased considerably since 1996 [see Figure 2].
Figure 2: Number of Stations Owned in a Market by the Largest Owner
in a Market, 1975-2005, Average by Market Group.
More Markets with Owners Over the Local Cap: The FCC's signal-contour market definition allowed companies to exceed local ownership caps in 104 markets.
Increasing Local Concentration: Concentration of ownership in the vast majority of local markets has increased dramatically.
How Lower Caps Can Be Justified: The FCC’s local caps—in fact, even lower caps than the current caps—can be justified by analyzing how the caps prevent excessive concentration of market share.
Declining Local Ownership: The Local Ownership Index, created by Future of Music Coalition, shows that the localness of radio ownership has declined from an average of 97.1 to an average of 69.9, a 28 percent drop.
Restoration of Local Ownership is Possible: To restore the Local Ownership Index to even 90 percent of its pre-1996 level, the FCC would have to license dozens of new full power and low-power radio licenses to new local entrants and re-allocate spectrum to new local entrants during the digital audio broadcast transition.
Radio Programming in the Wake of Consolidation
Homogenized Programming: Just fifteen formats make up 76% of commercial programming.
Large Station Groups Program Narrowly: Owners who exceed or exactly meet the local ownership cap tend to program heavily in just eight formats.
Only Small Station Groups Offer Niche Formats: Niche musical formats like Classical, Jazz, Americana, Bluegrass, New Rock, and Folk, where they exist, are provided almost exclusively by smaller station groups.
Small Station Groups Sustain Public-Interest Programming: Children’s programming, religious programming, foreign-language and ethnic-community programming, are also predominantly provided by smaller station groups.
Format Overlap Remains Extensive: Radio formats with different names can overlap up to 80% in terms of the songs played on them.
Individual Stations Use Highly Similar Playlists: Playlists for commonly owned stations in the same format can overlap up to 97%. For large companies, even the average pairwise overlap usually exceeds 50% [see Figure 3].
Network Ownership Is Also Concentrated: The three largest radio companies in terms of station ownership are also the three largest companies in terms of programming-network ownership.
Figure 3: Average Pairwise Overlap Between Stations in the Same Format,
By Owner, June 25-July 1, 2006.
Conclusion
Radio consolidation has no demonstrated benefits for the public. Nor does it have any demonstrated benefits for the working people of the music and media industries, including DJs, programmers—and musicians. The Telecom Act unleashed an unprecedented wave of radio mergers that left a highly consolidated national radio market and extremely consolidated local radio markets. Radio programming from the largest station groups remains focused on just a few formats—many of which overlap with each other, enhancing the homogenization of the airwaves.
From the recent new-payola scandal to the even more recent acknowledgements that giant media conglomerates have begun to fail as business models, we can see that government and business are catching up to the reality that radio consolidation did not work. Instead, the Telecom Act worked to reduce competition, diversity, and localism, doing precisely the opposite of Congress’s stated goals for the FCC’s media policy. Future debates about how to regulate information industries should look to the radio consolidation story for a warning about the dangers of consolidated control of a media platform.
About Future of Music Coalition
Future of Music Coalition (FMC) is a national non-profit education, research and advocacy organization that identifies, examines, interprets and translates the challenging issues at the intersection of music, law, technology and policy. FMC achieves this through continuous interaction with its primary constituency—musicians—and in collaboration with other creator/citizen groups.
About the Primary Author
Peter DiCola is a Ph.D. candidate in economics at the University of Michigan in Ann Arbor. He received his J.D. magna cum laude from the University of Michigan Law School in May 2005, and was awarded the Henry M. Bates Memorial Scholarship. Currently, he serves as the Research Director of the Future of Music Coalition while he works on his dissertation. He has research interests in the fields of telecommunications law, intellectual property law, law and economics, labor economics, and industrial organization. He is the co-author, with Kristin Thomson, of Radio Deregulation: Has It Served Citizens and Musicians? (2002), which was cited by the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC. He has also written a chapter, “Employment and Wage Effects of Radio Consolidation,” for the scholarly collection Media Diversity and Localism (Lawrence Erlbaum and Associates, 2006).
Musicians Get the Hint About Health Insurance
Two Raleigh concerts in memory of musician Drew Glackin; proceeds go to Glackin’s family and Future of Music Coalition’s Health Insurance Navigation Tool
April 10, 2008 Press release FMC's HINT program
New York State Music Education Events Examine Crucial Issues Facing Artists Forums in Rochester (April 28), Syracuse (April 29) and Albany (April 30) to focus on music, media, technology and policy issues for songwriters, composers and performers from all genres.
March 25, 2008 Event details | RSVP
Pop Rockers OK Go "Tour" Congress in Support of Net Neutrality
Damian Kulash and Andy Ross discuss the importance of open Internet structures to musicians; Kulash testifies before House Judiciary Committee.
March 13, 2008 Press release
Spoken testimony
Written testimony
Rock the Net
New York State Music Education Events Examine Crucial Issues Facing Artists Kick-off forum in Buffalo on April 2 to focus on music, media, technology and policy issues for songwriters, composers and performers from all genres. March 7, 2008 | Event details
Philly Bands Rocking for Net Neutrality February 23 Sugar Town show at Tritone in Philadelphia will showcase lady rockers and DJs, as well as musicians' support for net neutrality. February 15, 2008
OK Go and Bonerama Rocked DC for New Orleans Musicians Bands also champion FMC's "Rock the Net" campaign for net neutrality February 2 benefit show at DC's 9:30 Club raised over $8,000 for New Orleans musicians. Bands played cuts off their new benefit EP, You're Not Alone, available on iTunes on February 5. February 4, 2008
Upcoming Washington, DC show and benefit EP from OK Go & Bonerama
On February 2, OK Go and Bonerama will play a benefit at D.C.'s 9:30 Club in support of You're Not Alone - an EP to support Sweet Home New Orleans and Al "Carnival Time" Johnson. January 21, 2008
Successful New Orleans Concerts Aid Big Easy Musicians
Last week, two benefit concerts raised over $6,000 for Sweet Home New Orleans - a coalition of non-profit organizations that helps find affordable housing and provides rental assistance for the city's musicians - and Big Easy music legend Al "Carnival Time" Johnson.
January 15, 2008 Press release | Event details
Ann Chaitovitz Appointed
FMC's New Executive Director A proven leader in musician and public policy issues, Chaitovitz replaces founding Executive Director Jenny Toomey January 3, 2008
Concerts for New Orleans Musicians Bring Artists Together Two New Orleans shows and upcoming benefit CD from OK Go and Bonerama January 2, 2008
FMC's Jenny Toomey Appointed Program Officer for Ford Foundation
Kristin Thomson to Serve as FMC’s Interim Executive Director Michael Bracy to Chair FMC Board of Directors November 26, 2007
Seattle "Rocked the Net" Rep. Jay Inslee advocated network neutrality;
joined by rocker Matt Nathanson, Reclaim the Media, FMC and local music business representatives October 31, 2007
Rock the Net: Campaign for Net Neutrality Rocks Seattle
Teleconference with Rep Jay Inslee on Tuesday, Oct 30. Matt Nathanson performs at Seattle’s Crocodile Café on Tuesday, Oct. 30 October 26, 2007
Future of Music Policy Summit to Tackle Critical Issues at the Intersection of Music, Law, Technology and Policy Sen. Byron Dorgan and Sen. Ron Wyden to Deliver Keynote Addresses
Mac McCaughan, Bob Mould, Marybeth Peters of the U.S. Copyright Office and More Than 90 Other Panelists Confirmed. September 10, 2007 Summit home page Press Credentialing
AT&T's muting of bands points toward a pattern of silencing political speech Content monitor did not edit out 20 instances of curse words during Pearl Jam webcast, despite AT&T claim it hires monitors to block "excessive profanity". August 13, 2007
Top musicians, lawyers, technologists confirmed for FMC's 7th annual Policy Summit August 13, 2007 Press Release Summit home page Press Credentialing
FMC Statement on AT&T Silencing Pearl Jam's lyrics during Lollapalooza webcast August 9, 2007
FMC Statement on Federal Trade Commission Report on Net Neutrality June 29, 2007
FMC files testimony with House Small Business Committee on CRB Webcasting Rates June 27, 2007 Press Release | Testimony
Clear Channel strips local, independent artists of digital performance royalties
FMC has discovered that Clear Channel's online application for local and independent artists to submit their music for airplay on each of its stations requires the artist to approve a licensing agreement that does away with their digital performance right. June 22, 2007
Low Power Radio Gets New Push in Congress
Congress introduces bills to create hundreds of new low power FM radio stations to cities and suburbs across the country. June 22, 2007
FMC Announces Dates for 7th annual Policy Summit
September 17-18, 2007
GWU Betts Theatre, Washington, DC June 11, 2007
FMC Organizes "Musicians Bringing Musicians Home II"
A Benefit Concert on May 27 at New Orleans' Tipitina's for Sweet Home New Orleans featuring: Indigo Girls, Damian Kulash of OK Go, Jim James of My Morning Jacket, Matt Nathanson, Pamela Z...and special guests
May 23, 2007 Press Release | Details
Congressman Mike Doyle to address conference on music, law and technology
May 2 event will bring together leading experts from worlds of music, law, technology and policy. April 25, 2007
A2IM Endorses Rock the Net Campaign
American Association of Independent Music urges its label members to join the campaign for network neutrality. April 17, 2007
Music Mashes with Policy at upcoming Technology and IP Policy Day
May 2 event will bring together leading experts from worlds of music, law, technology and policy. April 16, 2007
FMC Applauds FCC's Payola Settlement
Payola agreement by FCC and big broadcast chains represents a major - but tentative - step toward once again opening the nation's airwaves to local music and voices. April 13, 2007
Rep. Edward Markey, Ted Leo kick off "Rock the Net"
Nearly 150 artists and labels have already signed onto campaign for net neutrality
March 27, 2007 Press Release | Rock the Net
Major Artists To Join Launch of Rock the Net Campaign for Net Neutrality March 23, 2007
FMC Statement on FCC's "Rules of Engagement" On Payola March 5, 2007
FMC Files Reply Comments in FCC Media Ownership Proceeding January 16, 2007
FMC Statement on FCC Payola Settlement
FMC's statement on FCC's reported consent decree with the broadcast industry in regards to payola. January 16, 2007
Radio Station Ownership Consolidation Shown to Harm Musicians and the Public
FMC study shows that the rapid consolidation of the commercial radio industry that followed the Telecommunications Act of 1996 has led to a loss of localism, less competition, fewer viewpoints and less diversity in radio programming in media markets across the country.
December 13, 2006 Press release Report details
FMC Organizes Musicians Bringing Musicians Home Benefit concert at New Orleans' Tipitina's on November 6th featuring Steve Earle, Mike Mills, Allison Moorer, Tom Morello, Boots Riley, Corin Tucker and special guests.
October 23, 2006 Read press release Read press coverage
Job
Losses Associated with Radio Consolidation Undermine Localism and Diversity FMC, Newspaper Guild and Consumers Union urge FCC to take employment effects
of their policies into account during upcoming review of media ownership rules August 9, 2006
FMC Releases Research on Employment and Wage Effects of Radio Consolidaton August 9, 2006
FMC on Preserving the Dynamism of the Internet Opinion Piece on ABC News June 29, 2006
FMC Statement on Senate Commerce Committee Vote in Support of LPFM June 28, 2006
FMC Statement on FCC Media Ownership Proceeding June 21, 2006
Indie-rock revolution, fueled by net neutrality Op-ed by FMC's Jenny Toomey and Michael Bracy June 13, 2006
Pearl Jam Donation To Help Musicians Help Themselves Proceeds From Washington, DC Appearance to be Donated to FMC Artist Research
Council May 25, 2006 Press Release
FMC signs on letter to preserve net neutrality May 17, 2006
FMC Announces Dates for Sixth Annual Future of Music Policy Summit
October 5-7, 2006 Media Advisory May 15, 2006
FMC Statement on Release of Feingold's Radio and Concert Disclosure
and Competition Act of 2005 November 18, 2005
FMC Sends Letter to Senate Commerce Committee in Support of a
Public Performance Right for Sound Recordings October 19, 2005
Top Names in Music, Law, Technology and Policy Return to Debate Critical
Issues at Fifth Annual Future of Music Policy Summit
September 6, 2005 Media Advisory | Policy
Summit home page
FMC Announces Health Insurance Navigation Tool
August 9, 2005 HINT Home Page
FMC Press Release: Music Mashes with Policy at DC Policy Day April 8, 2005
FMC's Michael Bracy Testifies in front
of House Judiciary Committee on "Digital Music Interoperability" April 6, 2005
FMC files comments at US Copyright Office on "Orphan
Works"
Comments also ask Copyright
Office to consider status of out-of-print recordings March 25, 2005
FMC Sends Letter to Senate Stating Concerns about S 193, Broadcast Decency Enforcement
Act March
10, 2005
FMC and artist groups file joint reply comments at FCC on localism in broadcasting,
MB Docket 04-233
January
3, 2005 PDF of document
