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Radio Mergers Source of Static at Columbia, S.C., Stations (fwd)
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- Subject: Radio Mergers Source of Static at Columbia, S.C., Stations (fwd)
- From: James Packard Love <email@example.com>
- Date: Mon, 7 Jul 1997 10:58:47 -0400 (EDT)
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Date: Sun, 22 Jun 1997 17:47:14 -0700
Radio >>Mergers<< Source of Static at Columbia, S.C., Stations
BY YON LAMBERT, THE STATE, COLUMBIA, S.C.
Knight-Ridder/Tribune Business News
Jun. 23--Bob Raleigh winds through a narrow hallway in the cramped, aging
building on Millwood Avenue that houses radio stations WCOS-FM and
The stations' program director strolls past studios and a series of
imposing black monitors, almost as far back as one can go, before he
enters a windowless office he jokingly calls ``the cave.''
Raleigh might not have to make the trip too much longer.
The two country music stations are expected to move into a new building
with four other local stations owned by the same company: Capstar
Given the seismic changes sweeping through the radio industry, where
Raleigh's office sits is likely the least of his concerns. Like thousands
of other programmers, he is adapting to a new way of doing business.
In the last year, radio has experienced an unprecedented wave of
>>mergers<< because of the Telecommunications Act of 1996. Deregulation
left just a few leviathan companies in control of the airwaves in most
cities. It also has left an industry awash in questions: how programming
methods will change, what will happen to advertising rates, which jobs
will remain and whether there is enough competition.
Local radio is a very different place than it was in early 1996.
In Columbia, three corporations will soon own 13 of the city's top 15
commercial stations. They will divide into what in the industry are called
Two huge Texas groups, Capstar from Austin and San Antonio-based Clear
Channel Communications, have been the major players here. A third,
Bloomington Broadcasting Corp., owns three stations.
Once it gets approval from the Federal Communications Commission, Capstar
will own six stations in Columbia. Lisa Dollinger, Capstar's director of
corporate communications, said it does not plan any format changes
although it is assessing sites for new studios. Capstar plans to close its
deals by the end of this month.
Clear Channel already owns two Columbia stations: urban-formatted WWDM-FM
and modern rock WARQ-FM. In late April, it agreed to buy urban WOIC-AM and
classic rock WMFX-FM. That will give it the franchise in rock programming
and a powerful grasp on urban listeners. WWDM and WARQ general manager
Steve Patterson said he does not foresee any programming changes.
Bloomington, an Illinois-based company, has been quiet on the acquisitions
front. But it still remains a major player here.
>>Merger<< mania is a relatively recent trend in radio. According to a
December report by New York media investment banking firm Veronis, Suhler
& Associates, ownership groups logged a record $13.4 billion in
>>mergers<< and acquisitions during 1996. In 1995, that number was just
And even though the pace of consolidation is slowing, some industry
insiders found the speed with which it happened alarming.
``We have gone from a well-diversified ownership base to one which is
extremely consolidated and dominated by a few giants on Wall Street,''
said Jon Sinton of Sinton, Barnes and Associates, a radio consulting firm
However, many programmers such as WCOS-FM/WHKZ-FM's Raleigh see radio
improving under the supergroups.
``Right now, what we're seeing is a lot of these big groups coming in and
scooping up stations to reach critical mass,'' Raleigh said. ``Once the
dust settles, they'll figure out how to run them.
``I compare this to situations we have already seen at Wal-Mart,
McDonald's or even newspapers. For programmers it's good because we'll be
able to trade information and develop the product better .f.f. but what we
do as individual stations will determine our success.''
The boon: Telcom. The Wal-Mart analogy is exactly what many media critics
feared when lawmakers passed Telcom. In an industry where personality and
localism matter, radio seemed poised for a perilous makeover that favored
big business over diversity.
This isn't the first time a loosening of federal regulations has resulted
Before 1993, a company could own only 12 FM and 12 AM stations and just
one of each within a market. The FCC revised that rule with a premise
called duopoly. It allowed operators to own two AM and two FM stations in
any market and up to 20 on each band.
Then Telcom rewrote the rules for every industry associated with
telecommunications and led to further deregulation in radio.
It enabled the FCC to revise its ``multiple ownership rules'' and lift its
cap on how many stations one company can own nationally. Locally, the rule
is more complex. In a market the size of Columbia (the 88th largest in the
U.S.), companies may own no more than seven commercial stations or four on
the same service (AM or FM).
That revision led directly to this wave of >>mergers<< and sparked much
interest, most notably in the Justice Department. Its >>antitrust<<
division began investigating whether the >>mergers<< might trigger a surge
in radio advertising rates.
In some cases, Justice blocked >>mergers<< it believed would allow one
company to control more than 40 percent of the total radio advertising
revenues in a market. A spokesperson in the >>antitrust<< division said he
did not know of plans to oppose the >>mergers<< in Columbia.
That likely pleases Bill McElveen, general manager at WTCB-FM, WOMG-FM and
WISW-AM. He is on the board of directors for the National Association of
Broadcasters, which is at odds with Justice over the issue.
``We think a safeguard (against >>antitrust<< issues) was already built in
because we're only allowing a company to own seven stations in a market
the size of Columbia,'' McElveen said.
McElveen also points out that radio makes up only about 7 percent of all
the money spent on advertising in the media. He says that would make it
difficult for a >>merger<< in one city to spark >>antitrust<< concerns.
Sales staffs, he said, have too much competition.
However, industry analysts say the large chains see potential to increase
radio's share of all advertising revenues to 10 percent.
``That may not sound like a lot,'' said Jack Messmer, a senior editor at
the Virginia-based trade publication Radio Business Report. ``But on the
whole that means billions of dollars. Radio wants a bigger piece of the
Unintended consequences. That's not the only issue worrying those who find
the >>mergers<< unsettling.
``The intended consequence (of Telcom) was more competition,'' said
Sinton, the consultant from Atlanta. ``The unintended consequence is there
are now 10 companies that matter in radio.''
The economics of corporate ownership are so powerful critics fear it may
homogenize programming even further.
Most operators know of duopoly situations where owners realized they could
``flank'' or ``buffer'' larger, money-making stations with smaller ones.
Sintonsaid his firm purposely advised some stations to program music that
would help it ``lose'' listeners to other similarly formatted stations
owned by the same company.
Columbia listeners might recognize a similar situation.
A year after it went country in 1991, the 6,000-watt WHKZ had risen from
last place in the Arbitron Ratings Co. book to sixth. Its exciting, young
country format posed a serious challenge to a demographic held by the
larger, traditional country power, WCOS. The two stations waged a yearlong
marketing and promotions battle that was great for listeners but expensive
But in June 1993, Benchmark Communications completed a deal to buy both
country stations and create Columbia's first duopoly. By the fall of 1994,
WHKZ was mired at the bottom of Columbia's ratings. It has remained in the
lower echelon ever since.
McElveen and others agree WHKZ was likely a victim of a poorly managed
duopoly: owners who made low-maintenance programming and marketing
decisions while WCOS continued to rake in advertising dollars and stay in
the public eye. Meanwhile, no other owner in Columbia dared to risk a
fight because Benchmark could ``turn up'' WHKZ's profile.