On February 8, 1996, President Clinton signed into law the Telecommunications Act of 1996. Section 202 of the 1996 Act eliminated limits the FCC had previously placed on the number of radio stations a single entity could own nationally. It also significantly relaxed limits the FCC had placed on ownership of radio stations in a local market. On March 7, 1996, the FCC implemented these provisions of the 1996 Telecom Act by revising Section 73.3555 of our Rules (47 C.F.R. §73.3555) to eliminate the national multiple radio ownership rule and relax the local ownership rule.
In March 1998 and January 2001, the Mass Media Bureau Policy and Rules Division released the previous Reviews of the Radio Industry examining changes in various aspects of the commercial broadcast radio industry as a result of the implementation of these provisions of the Telecom Act. These reports indicated a trend toward consolidation of radio station ownership resulting in fewer owners at both the national and local levels. This report provides an update of the impact of the Telecom Act through March 2001.
Overall, there has been an increase in the number of commercial radio stations of 7.1 percent between March 1996 and March 2001. The number of radio owners declined by 25 percent during this five-year period. This decline is primarily due to mergers between existing owners. Over the same period, there has also been an increase in the size of the largest radio group owners. In 1996, the two largest radio group owners consisted of fewer than 65 radio stations each. In March 2000, the two largest radio group owners consisted of more than 440 radio stations each. In August 2000, the two largest radio groups merged, so that now Clear Channel Communications owns approximately 1,000 radio stations, with pending acquisitions before the Commission for over 200 additional stations. The second largest group owner, Cumulus Broadcasting Inc, has approximately 250 stations.
At the local level, there continues to be a downward trend in the number of radio station owners in Arbitron Metro markets. Further, the top owners in each Metro market generally account for an increasing share of the total radio advertising revenues in these markets. The largest firm in each radio Metro market has, on average, 46 percent of the market’s total radio advertising revenue. The largest two firms in each radio market have, on average, 73 percent of the market’s radio advertising revenue. Overall, the variety of radio formats available to consumers had held steady. However, in recent years the average number of formats appears to have declined slightly for some of the large markets while increasing slightly for most of the smaller ones.
Most of the financial-market trends reported in previous Radio Reviews continue to hold through 2000. Our analysis of publicly-traded companies whose primary business is radio broadcasting continues to reflect strong earnings. Publicly-traded radio companies, however, still carry heavy debt loads, which contributes to the high volatility observed in their earnings. Also, the high debt loads of these publicly-traded radio companies also contribute to the volatility of their stock market valuations. Finally, except for the year 2000, the valuations of these radio companies have outperformed the broad market of publicly-traded companies, as reflected in Standard and Poor’s 500 (S&P 500) index returns.
- Review of the Radio Industry, 2001 (Text only): [ Word '97 ]
- Review of the Radio Industry, 2001 (Charts and Tables): [ Excel ]
- Review of the Radio Industry, 2001 (Text and Appendices): [ Acrobat ]
