Before the
Federal Communications Commission
Washington, D.C. 20554


In the Matter of

Rules and Policies Concerning
Multiple Ownership of Radio Broadcast
Stations in Local Markets


Definition of Radio Markets
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MM Docket No. 01-317




MM Docket No. 00-244
NOTICE OF PROPOSED RULE MAKING AND
FURTHER NOTICE OF PROPOSED RULE MAKING

Adopted:  November 8, 2001					Released: November 9, 2001

By the Commission: Commissioners Copps and Martin issuing separate statements.

Comment Date: 60 Days After Publication in Federal Register
Reply Comment Date: 90 Days After Publication in Federal Register

I. INTRODUCTION
1. In accordance with Sections 309(a) and 310(d) of the Communications Act of 1934 
(the 1934 Act), the Commission issues new radio broadcast licenses and approves the assignment 
and transfer of those licenses only when those actions are consistent with the public interest, 
convenience, and necessity.   Pursuant to its public interest authority, the Commission historically 
has sought to promote diversity and competition in broadcasting by limiting by rule the number of 
radio stations a single party could own or acquire in a local market.   In Section 202(b) of the 
Telecommunications Act of 1996 (the 1996 Act), Congress directed the Commission to revise its 
local radio ownership rule to relax the numerical station limits in the ownership rules.   In the 
almost six years since the Commission implemented this congressional directive, the local radio 
market has been significantly transformed as many communities throughout the country have 
experienced increased consolidation of radio station ownership.  In this proceeding, we seek to 
examine the effect that this consolidation has had on the public and to consider possible changes 
to our local radio ownership rules and policies to reflect the current radio marketplace.
II. BACKGROUND
2. To guide our evaluation of the regulatory policies that we should adopt in light of the 
current radio marketplace, we review the background of the local radio ownership rule and the 
traditional interests that the rule was intended to advance.
A. Rules and Policies before 1992
3. The Commission first limited local radio ownership in 1938, when it denied an 
application for a new AM station on the ground that the parties that controlled the applicant also 
controlled another AM station in the same community.   The Commission found that the 
commonly owned, same service stations would not compete with each other and that granting the 
application could preclude a competitive station from entering the market.   Accordingly, “to 
assure a substantial equality of service to all interests in a community” and “to assure 
diversification of service and advancements in quality and effectiveness of service,” the 
Commission held that it would allow commonly owned “duplicate facilities” only where it would 
fulfill a community need that otherwise could not be fulfilled.   Based on this policy, the 
Commission found that the “public convenience, interest or necessity” would not be served by 
grant of the application. 
4. In the early 1940s, this policy was codified in the Commission’s rules.   AM licensees 
were prohibited from owning another AM station that would provide “primary service” to a 
“substantial portion” of the “primary service area” of a commonly owned AM station, except 
where the public interest would be served by multiple ownership.   FM licensees were prohibited 
from owning another FM station that served “substantially the same service area.”   Between 
1940 and 1964, the Commission determined on a case-by-case basis whether two commonly 
owned, same service radio stations served substantially the same area.
5. In 1964, the Commission replaced its case-by-case analysis with a “fixed standard” 
consisting of a contour-based test that looked solely to the overlap of the radio stations’ signals.   
The new rule prohibited common ownership of same service stations when any overlap of 
contours occurred, not just the situation where there was  a “substantial” overlap.  The 
Commission explained that the purpose of the multiple ownership rules was “to promote 
maximum diversification of program and service viewpoints and to prevent undue concentration 
of economic power contrary to the public interest.”   The Commission found that the local radio 
ownership rule in particular was based on two principles:  first, that “it is more reasonable to 
assume that stations owned by different people will compete with each other, for the same 
audience and advertisers, than stations under the control of a single person or group;”  and 
second, that “the greater the diversity of ownership in a particular area, the less chance there is 
that a single person or group can have an inordinate effect, in a political, editorial, or similar 
programming sense, on public opinion at the regional level.”   Quoting Associated Press v. 
United States,  the Commission cited, as support for the local ownership limits, the principle that 
the First Amendment “rests on the assumption that the widest possible dissemination of 
information from diverse and antagonistic sources is essential to the welfare of the public.” 
6. In the early 1970s, the Commission briefly restricted local radio ownership further by 
prohibiting, with certain exceptions, common ownership of different service broadcast stations in 
the same market.   These limits were designed to advance diversity by maximizing the number of 
independent owners of broadcast media in a market, and the Commission rejected arguments that 
common ownership of local broadcast stations would enhance the ability of station owners to 
provide better quality, more responsive programming.   The Commission also found that common 
ownership of local broadcast stations could “lessen the degree of competition for advertising 
among the alternative media” and that common owners could “use practices [such as special 
discounts] which exploit [their] advantage over the single station owner.”   On reconsideration, 
however, the Commission relaxed its new ownership restrictions to allow again, in all 
circumstances, a party to hold a single AM-FM combination. 
7. In 1989, the Commission relaxed certain technical aspects of the contour overlap test, 
which decreased the likelihood of contour overlap between closely located stations and thereby 
increased the ability of a single party to own those stations.   In making this change, the 
Commission determined that ownership diversity was not an end in itself, but a means of 
“promoting diversity of program sources and viewpoints.”   The Commission determined that its 
rule change would not adversely affect programming and viewpoint diversity because the number 
of media outlets had increased since the contour overlap test was developed in 1964 and because 
the efficiencies that common ownership would generate could lead to programming benefits.   
The Commission also cited the increase in media outlets and the competition that radio stations 
faced in the advertising market from television stations, cable systems, and newspapers to support 
its conclusion that relaxing the contour-based test would not harm competition. 
B. The 1992 Radio Ownership Proceeding
8. In a 1992 proceeding, the Commission found that increases in the number and types of 
media outlets warranted further relaxation of the rule.   Citing greater numbers of radio and 
television stations and the growth of cable, particularly cable radio networks, the Commission 
determined that relaxing the local radio ownership rule would not harm diversity or competition.   
Specifically with respect to competition, the Commission found that the radio industry’s share of 
the local advertising market, in which the Commission included television stations and cable 
systems, had remained flat.   Moreover, the Commission found that the inability of radio stations 
to realize the efficiencies arising from common ownership harmed diversity and competition by 
making it more difficult for radio stations to compete and to provide valuable programming 
services.   Accordingly, the Commission decided to relax its ownership rules to permit greater 
consolidation of radio stations in the local market.
9. The Commission initially adopted a tiered approach, similar to the approach that 
would be adopted in the 1996 Act.  Under the Commission’s framework, although common 
ownership of stations with overlapping signals technically remained prohibited, an exception was 
created to allow common ownership of a specified number of radio stations based on the number 
of radio stations in the market.  To determine the number of stations that could be commonly 
owned, radio markets were divided into four tiers, and the maximum number of radio stations that 
a single party could own was 3 AM and 3 FM stations in the top tier, i.e., markets having 40 or 
more radio stations.   In markets with more than 15 radio stations (the top 3 tiers), the numerical 
limits were also subject to an audience share cap of 25 percent.  Although the Commission 
recognized that the 25 percent limit was “substantially more restrictive than ordinary antitrust 
concerns would mandate,” the Commission “decline[d] to base [the] common ownership 
restrictions solely on economic concentration considerations” because the restrictions also were 
“designed to protect and promote a diversity of voices – a concern distinct from antitrust 
objectives.”   Both the market size and the audience share were calculated based on the relevant 
Arbitron market.   In adopting this framework, the Commission reserved the right to “implement 
a full range of remedies” where “ownership levels in a particular market might threaten the public 
interest.” 
10. On reconsideration, the Commission again modified its local radio ownership rule.   
The rule still generally prohibited common ownership of overlapping stations, but the Commission 
revised the exception to allow common ownership of up to only 2 AM and 2 FM stations in all 
markets with 15 or more radio stations.  In smaller markets, a single party could own up to 3 
stations, of which no more than 2 could be in the same service.   The Commission also replaced 
the audience share cap with a provision that, in markets with 15 or more radio stations, “evidence 
that grant of any application will result in a combined audience share exceeding 25 percent will be 
considered prima facie inconsistent with the public interest.”   The Commission explained that 
this provision was designed to prevent “excessive concentration” even if the combination 
complied with the 2 AM-2 FM limit.   The language of the rule indicated that the excessive 
concentration determination would be made under the public interest standard.
11. The Commission also altered the market definition for calculating the numerical caps; 
instead of Arbitron markets, the Commission adopted a contour overlap market definition.   To 
determine audience share, however, the Commission retained use of Arbitron markets, or, if 
Arbitron data was unavailable, the market created by the counties covered by the contours of the 
stations to be combined.   In certain cases, the Commission permitted applicants to make 
alternative showings to demonstrate that the proposed combination would not lead to excessive 
concentration. 
C. The 1996 Act
12. In the 1996 Act, Congress directed the Commission to revise its local ownership rule.  
Specifically, Section 202(b)(1) of the 1996 Act, entitled “Local Radio Diversity—Applicable 
Caps,” required the Commission to revise its local radio ownership rule to provide that:
(A) in a radio market with 45 or more commercial radio stations, a party may own, 
operate, or control up to 8 commercial radio stations, not more than 5 of which are in the 
same service (AM or FM);
(B) in a radio market with between 30 and 44 (inclusive) commercial radio stations, a 
party may own, operate, or control up to 7 commercial radio stations, not more than 4 of 
which are in the same service (AM or FM);
(C) in a radio market with between 15 and 29 (inclusive) commercial radio stations, a 
party may own, operate, or control up to 6 commercial radio stations, not more than 4 of 
which are in the same service (AM or FM); and
(D) in a radio market with 14 or fewer commercial radio stations, a party may own, 
operate, or control up to 5 commercial radio stations, not more than 3 of which are in the 
same service (AM or FM), except that a party may not own, operate, or control more than 
50 percent of the stations in such market. 
The Conference Report provides little additional detail concerning Section 202(b), stating merely 
that “[n]ew subsection [202](b) directs the Commission to further modify its rules with respect to 
the number of radio stations a party may own, operate or control in a local market.”   In 
particular, neither the 1996 Act nor the legislative history elaborates on the intended interplay 
between Section 202(b) and the public interest standard contained in Sections 309(a) and 310(d) 
of the 1934 Act.
13. In addition to Section 202(b), Congress enacted Section 202(h) in the 1996 Act.  
Section 202(h) directs the Commission to “review its rules adopted pursuant to this section and 
all of its ownership rules biennially . . . and [to] determine whether any of such rules are necessary 
in the public interest as the result of competition.”   Section 202(h) further directs the 
Commission to “repeal or modify” any ownership rules that it finds to be “no longer in the public 
interest.”   The legislative history provides little additional discussion concerning the 
implementation of Section 202(h).
D. The Commission’s Implementation of Section 202(b) and Subsequent 
Decisions
14. The Commission responded to Congress’s directive in Section 202(b) by issuing an 
order in March 1996 replacing a portion of the local radio ownership rule, including both the 
numerical station limits and the presumption that an audience share of greater than 25% was 
prima facie inconsistent with the public interest, with the language set forth in Section 202(b).   
The Commission found that prior notice and an opportunity for public comment were unnecessary 
because the “rule changes [did] not involve discretionary action on the part of the Commission, 
[but] simply implement[ed] provisions of the Telecom Act that direct the Commission to revise its 
rules according to the specific terms set forth in the legislation.”   The local radio ownership rule 
has not been altered since the Commission’s March 1996 order.
15. In 1998, the Commission commenced a biennial review to examine whether the local 
radio ownership rule was “necessary in the public interest as a result of competition.”   In its 
biennial review final report, the Commission concluded that the rule continued to serve the public 
interest.   Although the Commission noted that consolidation had produced financial benefits for 
the radio broadcast industry, the Commission expressed concern that consolidation could be 
having an adverse affect on local advertising rates.   The Commission also expressed concern that 
consolidation could reduce diversity of viewpoint and source diversity.   Accordingly, the 
Commission decided to retain the local radio ownership rule without modification. 
16. In the 1998 biennial review proceeding, the Commission also decided to examine the 
method by which it defined the relevant geographic market and counted the number of commonly 
owned and independent commercial radio stations for purposes of applying the rule.  The 
Commission expressed concern that its current method of defining radio markets might be 
achieving results that frustrate the Congress’ intent and that, together with its method of counting 
stations in a market for various purposes, might be undermining legitimate expectations of 
broadcasters, advertisers and the public as to the size of the market and the number of stations in 
it.   The Commission accordingly initiated a rulemaking proceeding in December 2000 to examine 
possible revisions to its methodology for defining the market and counting the number of 
commonly owned and independent radio stations. 
17. The 1996 revisions to the local radio ownership rule enabled greater consolidation of 
radio station ownership at the local level, and, since 1996, thousands of assignment and transfer of 
control applications have been filed to effectuate this consolidation.   Although most of these 
applications were granted summarily, the Commission in certain instances faced concerns 
regarding the competitive impact of proposed transactions.  In response to these concerns, the 
Commission concluded in a written decision that it had “an independent obligation [under the 
statute] to consider whether a proposed pattern of radio ownership that complies with the local 
radio ownership limits would otherwise have an adverse competitive effect in a particular local 
radio market and[,] thus, would be inconsistent with the public interest.”    In several written 
decisions since 1996, the Commission engaged in public interest analyses that considered the 
potential competitive impact of the proposed transaction. 
18. In addition to competitive analyses, in August 1998 the Commission began “flagging” 
public notices of radio station transactions that, based on an initial analysis by the staff, proposed 
a level of local radio concentration that implicated the Commission’s public interest concern for 
maintaining diversity and competition.   Under this policy, the Commission flagged proposed 
transactions that would result in one entity controlling 50% or more of the advertising revenues in 
the relevant Arbitron radio market or two entities controlling 70% or more of the advertising 
revenues in that market.   Most of these flagged applications that proposed radio concentration 
levels that were consistent with Commission precedent were granted on delegated authority.  A 
number of applications that remain pending propose concentration levels that would exceed the 
levels previously approved in Commission-level decisions.
III. DISCUSSION
19. We propose to undertake a comprehensive examination of our rules and policies 
concerning local radio ownership.  The radio industry has undergone substantial changes since 
1996, and we are concerned that our current policies on local radio ownership do not adequately 
reflect current industry conditions.  Our framework for analyzing proposed radio combinations 
particularly has led to unfortunate delays that do not serve well the interests of the agency, the 
parties, or the public.  Our goal in this proceeding is to develop a new framework that will be 
more responsive to current marketplace realities while continuing to address our core public 
interest concerns of promoting diversity and competition.
20. We start with a review of the statutory framework from which we derive our 
regulatory authority and under which we implement our radio ownership policy.  We next 
consider the traditional goals that have supported the local radio ownership rule – diversity and 
competition – and possible ways to measure and promote those goals in the modern media 
environment.  After discussion of these subjects, we lay out possible changes to our radio 
ownership rules and policies.  Our goal here is to consider the public interest advantages and 
disadvantages of various potential rule and policy changes as well as questions surrounding their 
implementation.  In the final substantive section of this Notice, we adopt an interim policy to 
provide guidance on the processing of radio applications pending completion of this rulemaking.
A. Statutory Framework
21. We begin with a review of the relevant statutory framework.  Before 1996, 
Commission regulation of local radio ownership was governed primarily by the statutory mandate 
of Sections 309(a) and 310(d) that the Commission regulate the granting and transfer of radio 
licenses consistent with the public interest, convenience, and necessity.   This public interest 
authority has long been held to authorize regulations, such as the local radio ownership rule, that 
are designed to promote the goals of diversity and competition. 
22. As a result of the 1996 Act, the broad public interest standards of Title III are no 
longer the sole congressional statement bearing on the question of local radio ownership.  We also 
must consider the impact of Section 202(b) and the rule changes it mandated.  In deciding prior 
cases, the Commission expressed the view that the numerical limits mandated by Section 202(b) 
were important tools for promoting our public interest concerns in local radio markets, but that 
competitive analyses were appropriate in particular cases where compliance with those limits did 
not fully address those concerns.   Because that view developed out of decisions issued in specific 
cases, the Commission never received the benefit of public input that a rulemaking proceeding 
would have afforded.  This proceeding will provide us with that opportunity.  Below we propose 
alternative views on the interplay between Section 202(b) and our public interest mandate.  We 
seek comment on these views and invite comment on other possible interpretations of the relevant 
statutory provisions and the impact any such interpretation would have on our diversity and 
competition goals if adopted.
23. In addressing the three interpretations outlined below or other possible interpretations 
of the statutory framework, commenters should explain the relevance, if any, of Section 202(h)’s 
directive that the Commission review its ownership rules biennially to determine if they are no 
longer in the public interest as a result of competition.  Does the instruction to modify or repeal 
ownership rules when they are no longer necessary in the public interest bear on the relationship 
between Section 202(b) and the public interest standard?  Does Section 202(h)’s reference to 
competition affect our interpretation of the statutory framework?  Aside from modifying or 
eliminating the local radio ownership rule if it is no longer in the public interest as a result of 
competition, are we permitted to revise or replace the current rule with another framework to 
address our public interest goals?
24. Commenters also are encouraged to explain how their interpretation of the relevant 
statutory provisions comports with traditional principles of statutory construction and the specific 
rule of construction set forth in Section 601(c)(1) of the 1996 Act.  Section 601(c)(1) provides 
that:  “This Act and the amendments made by this Act shall not be construed to modify, impair, or 
supersede Federal, State, or local law unless expressly so provided in such Act or amendments.   
Does this savings clause limit the effect that Section 202(b) otherwise could have on the public 
interest standards of Sections 309(a) and 310(d)?
25. Numerical limits are definitive.  One interpretation of the statutory framework is that 
Congress conclusively determined that the numerical limits specified in Section 202(b) establish 
radio station concentration levels that are consistent with the public interest in diversity and 
competition.  Under this interpretation, we would not consider any public interest factors relating 
to diversity or competition beyond compliance with the numerical limits.  We seek comment on 
the reasonableness of this interpretation.  How consistent is this interpretation with the legislative 
history of the 1996 Act and Section 601(c)(1)?  How effective are the numerical limits in 
vindicating diversity or competition concerns?  If the limits are not effective, is it because of the 
numbers themselves or because of the contour overlap market definition we use?   What are the 
legal ramifications, if any, of Congress directing the Commission to revise its rules rather than 
amending the 1934 Act and, in particular, Section 310(d)?
26. Numerical limits address diversity only.  Another possible interpretation of the 
statutory framework is that Section 202(b) addresses the diversity prong of our public interest 
analysis, while leaving competition concerns to be addressed by the general public interest 
standard.  The heading of Section 202(b) – “Local Radio Diversity” – suggests this 
interpretation.   Does the absence of any mention of market share, a traditional element of 
anticompetitive market power, also suggest that Section 202(b) was not intended to address 
competition concerns?  What significance, if any, is there to the fact that an audience share 
presumption was part of the local radio ownership rule before the 1996 Act, and that the revisions 
required by Section 202(b) removed that presumption?  If Section 202(b) addresses diversity 
only, does it nevertheless affect the types of factors we could consider in a competitive analysis?  
If Congress addressed diversity through numerical caps, does that indicate that other 
considerations, such as advertising revenue or audience share, relate only to competition? We 
seek comment on this interpretation.
27. Numerical limits presumptively consistent with public interest.  A third possible 
interpretation of the statutory framework is that Section 202(b) established presumptively 
permissible levels of radio station ownership and that, therefore, the Commission should rely on 
Section 202(b)’s numerical limits absent a specific reason to conclude that the rule is ineffective in 
addressing diversity or competition issues with respect to a particular proposed combination.  
This interpretation would harmonize the rule changes required by Section 202(b) with the 
statutory requirement that every grant, assignment, or transfer of a radio license be consistent 
with the public interest.   We seek comment on this interpretation.  If Section 202(b) establishes a 
presumptively acceptable level of radio ownership, does it also indicate what factors would rebut 
that presumption (and who is responsible for demonstrating the presence of such factors), or has 
that question been entrusted to the Commission to resolve? If we conclude that Section 202(b) 
establishes a presumption, what is the risk, if any, that similarly situated applicants could be 
treated inconsistently based on procedural rather than substantive considerations, e.g., whether a 
petition to deny is filed.  Does this interpretation adequately address diversity and competition 
interests?  Are there downsides to this interpretation that we should consider?  In this regard, we 
specifically invite comment on the possibility that this approach could result in very disparate 
treatment of similar competitive situations based entirely on whether an interested party brought 
competitive concerns to our attention.  Is this appropriate?
B. Promoting Diversity and Competition
28. If we determine that Section 202(b) permits us to exercise our public interest authority 
to promote diversity and competition in radio broadcasting, we seek to explore the contours of 
these public interest goals, which have been the touchstone of our rules and policies on local radio 
ownership.  We undertake this analysis to guide us as we consider, in accordance with the 
statutory framework, revisions to those rules and policies to reflect the rapidly changing media 
marketplace.  In that regard, we are especially interested in receiving comments that provide not 
only the theoretical justifications for adopting a particular regulatory framework, but also relevant 
empirical data on the effect that consolidation in the radio industry since 1996 has had on diversity 
and competition in local markets.
1. Diversity
29. Diversity is one of the guiding principles of the Commission’s local radio ownership 
rule.  This principle is intended to advance the values of the First Amendment, which, as the 
Supreme Court stated, “rests on the assumption that the widest possible dissemination of 
information from diverse and antagonistic sources is essential to the welfare of the public.”   The 
Commission has elaborated on the Supreme Court’s view, positing that “the greater the diversity 
of ownership in a particular area, the less chance there is that a single person or group can have an 
inordinate effect, in a political, editorial, or similar programming sense, on public opinion at the 
regional level.” 
30. In this proceeding, we intend to consider how our rules and polices concerning local 
radio ownership affect our goal of promoting diversity.  To do this, we first must define the types 
of diversity we seek to ensure.  The Commission previously has evaluated three aspects of 
diversity:  viewpoint diversity, outlet diversity, and source diversity.   Viewpoint diversity ensures 
that the public has access to “a wide range of diverse and antagonistic opinions and 
interpretations.”   Outlet diversity ensures that the public has access to multiple distribution 
channels (e.g., radio, broadcast television, and newspapers) from which it can access information 
and programming.   Source diversity ensures that the public has access to information and 
programming from multiple content providers.   We seek comment on which one or more of 
these three types of diversity should guide our public interest considerations.  Are there other 
aspects of diversity that we should consider?  Parties commenting on this issue should explain in 
detail the how the public will be affected if we decide to emphasize one or more of these various 
aspects of diversity.  We especially seek empirical data in support of parties’ positions.
31. We also seek comment on how we should measure the success or failure of our 
diversity goal, however that goal is defined.  Historically, the Commission has looked to the 
number of independent station owners as a proxy for source diversity and viewpoint diversity,  
and Section 202(b) of the 1996 Act similarly speaks in terms of numerical limits on station 
ownership.  We seek comment on the advantages and disadvantages of measuring diversity by 
looking, in whole or in part, to the number of independent station owners.  What other measures 
of diversity, quantitative or qualitative, should we consider, and what tools do we have that 
enable us to measure diversity with a reasonable degree of accuracy?  Are audience demographics 
an appropriate measure of diversity?  Is competition an appropriate proxy for diversity, such that 
the presence of a competitive local market will assuage our concerns about diversity?   Should we 
take a radio owner’s market share, audience share, or subscribership into account in measuring 
diversity, and if so, how?  In considering the various potential ways to measure diversity, we also 
seek comment on how their use comports with the values and principles embodied in the First 
Amendment of the Constitution.
32. In searching for ways to define and measure diversity, we are especially interested in 
the particular impact of our analysis on the radio broadcast industry and radio listeners.  We seek 
comment on whether there are attributes of radio broadcasting that should lead us to define and 
measure diversity in radio differently from other media.  Consumers generally have access to 
news, public affairs, and entertainment programming from a variety of media outlets.  On the 
other hand, two attributes of radio broadcasting – its ability to reach mobile users and its audio-
only programming – may give radio stations singular access to the public in certain situations, 
most notably when listeners are in their cars or at their offices or other places of employment.  
Are those or other attributes of radio broadcasting sufficiently unique that we should look at radio 
separately for diversity purposes, or do consumers consider other outlets as substitutes for radio?  
Are there other attributes we should consider, and how does any particular attribute affect how 
we define and measure diversity in conducting our public interest analysis?
33. We also must consider the appropriate geographic area over which to measure 
diversity as it relates to radio broadcasting.  The current local radio ownership rule contemplates 
that diversity in radio will be measured at the local level.  This appears to be an appropriate result 
if diversity analysis is restricted to radio since radio stations that do not serve the local community 
do not contribute to media diversity in that community.  Would the appropriate geographic area 
change if we consider other media, in particular Internet-related media such as Internet radio, as 
significant contributors of diversity?  Does the appropriate geographic area for measuring 
diversity differ based on the type of information or programming involved, for example, local 
news and sports versus nationwide entertainment programming?  Even if some aspects of 
diversity are not local in nature, should we nonetheless evaluate diversity at the local level in light 
of the value we traditionally have placed on “localism” in the broadcasting industry?   Should the 
appropriate geographic area for measuring diversity be coextensive with the relevant geographic 
market for competition purposes, which we examine below?  We seek comment responding to 
these questions.
34. We also seek comment on whether the level of diversity that the public enjoys varies 
among different demographic or income groups.  Although access to broadcasting services is 
available to all individuals in a community with the appropriate receiving equipment, access to 
other forms of media typically requires the user to incur a recurring charge, generally in the form 
of a subscription fee.  Does this or other differences between broadcasting and other media reduce 
the level of diversity that certain demographic or income groups enjoy?  What is the extent of any 
disparity in access to diversity, and how should we factor in that disparity in our diversity 
analysis?  Parties commenting on this issue are encouraged to submit empirical data to support 
their positions.
35. As we have found previously, the current media marketplace appears robust in terms 
of the aggregate number of media outlets.  As of June 30, 2001, the Commission had licensed 
12,932 radio stations,  1,678 full power television stations, 2,396 low power TV stations, and 
232 Class A TV stations.   Today, there are seven national commercial television broadcast 
networks.  The nation was served in 2000 by 1,422 daily newspapers with a total circulation of 
55.8 million,  and in 1996 by 7,915 weekly newspapers with a total circulation of approximately 
81.6 million.   As of June 2000, cable television systems served 67.4% of TV households, or 67.7 
million people.   These systems offered in the aggregate over 200 video programming services.   
Direct broadcast satellite (DBS) providers now serve nearly 13 million subscribers, or over 15% 
of all households served by multichannel video programming distributors (MVPDs),  and other 
MVPDs serve another nearly 4 million subscribers.  We also anticipate that satellite radio soon 
will become broadly available to the nation.  In addition, as of November 2000, 56% of 
Americans had access to the Internet from their homes.   Although these national figures do not 
necessarily correlate to the level of diversity in particular local markets, the aggregate number of 
media outlets potentially available to the public, including outlets that have developed in just the 
last decade, may have some bearing on our diversity analysis.  We accordingly seek comment on 
the significance of these figures and any other information about marketplace conditions that 
would inform our analysis.
36. Although the number of media outlets has grown, so has the concentration in their 
ownership.  Historically, the Commission has had both local and national ownership limits for 
radio broadcast stations.  Pursuant to the 1996 Act, the Commission eliminated the national 
ownership limit on radio stations, in addition to relaxing its local radio ownership rules.  As a 
result, significant consolidation occurred in the national and local radio markets.  At 
approximately the same time that the 1996 Act became law, there were approximately 5,100 
owners of commercial radio stations nationwide, while now there are only approximately 3,800 
owners, a decrease of 25%.   Local markets have seen similar consolidation.  In March 1996, an 
Arbitron metro market had an average of 13.5 owners; in March 2001, the average was 10.3, a 
decrease of 22%.  Other media also appear to have undergone similar consolidation.  For 
example, in 1995 there were 543 entities nationwide that owned commercial TV stations,  while 
today there are only 360.   Does this consolidation in ownership offset the increases in media 
outlets?  What is the relevance of this consolidation to our local radio ownership policies and to 
diversity in particular?  Commenters are encouraged to submit empirical data on the impact of 
consolidation on diversity.
37. In examining the impact of greater media outlets and increased media consolidation, 
we note that there is considerable debate concerning the relationship between consolidation and 
viewpoint and source diversity.  Traditionally, the Commission has focused on the number of 
different owners on the theory that a larger number of owners would help provide greater 
viewpoint or source diversity.  In addition, multiple owners presumably are more likely to provide 
“divergent viewpoints on controversial issues,” which the Commission has stated is “essential to 
democracy.”   The Commission has noted, however, the contrary theory that “the greater the 
increase in concentration of ownership, the greater the opportunity for diversity of content.”   
Under that theory, competing parties in a market have a commercial incentive to air “greatest 
common denominator” programming, while a single party that owns all stations in a market has a 
commercial incentive to air more diverse programming to appeal to all substantial interests.
38. We seek comment on these competing theories and on any relevant empirical analysis 
of these theories.  Should commonly owned media outlets be considered a single media “voice” in 
evaluating diversity?  Does the answer depend on the type of programming involved, for example, 
entertainment programming versus news or public affairs programming, or on the type of media 
outlet involved?  Does it make sense to treat increased media consolidation as contributing to 
diversity if the common owner exercises editorial discretion over news and programming?  Even if 
some consolidation of media outlets does lead to greater diversity, is there a level of consolidation 
at which the maximum amount of diversity is achieved?  How do we determine what that level is?  
In considering these questions, we are particularly interested in the actual experience of the radio 
industry.  Has consolidation in local radio markets since 1996 lead to greater diversity?  
Commenters responding in the affirmative are encouraged to submit empirical data and analysis 
demonstrating both the increase in diversity and the causal link, as opposed to mere correlation, 
between the increase and greater consolidation in local markets.  Commenters arguing that greater 
consolidation harms diversity also are encouraged to submit empirical data and analysis 
supporting their view.  Evidence comparing the levels of diversity in local communities with 
different levels of radio concentration would be especially useful.
2. Competition
39. Competition is the other principle underlying the Commission’s local radio ownership 
rules and policies.  Generally speaking, radio station groups compete with each other in two ways:  
they compete to attract listeners, and they compete to attract advertising dollars.  These two 
forms of competition are interrelated since advertising revenue is used to finance the production 
of programming, which in turn helps attract listeners, which then enables radio stations to charge 
advertisers.  Nevertheless, because there often is not a one-to-one ratio between audience share 
and station revenue, the degree of concentration in a market may differ depending on whether 
audience share or advertising share (or some other factor) is the relevant measure.  At different 
points in the past, the Commission has relied on both measures.  Between 1992 and 1996, the 
local radio ownership rule included, along with numerical limits, a presumption that a combination 
that created a station group with a greater than 25% audience share resulted in “excessive 
concentration” that was prima facie inconsistent with the public interest.   As consolidation in 
local radio markets increased as a result of the 1996 Act, the Commission began to examine in 
assignment and transfer cases the potential competitive effect of proposed transactions in the local 
radio advertising market.  Because advertisers provide the financial support for programming on 
commercial stations and have an incentive to prefer programming with widespread appeal, the 
Commission has considered competition in advertising markets to enhance the welfare of 
consumers.  In this proceeding, we seek to examine more fully our interest in the various types of 
radio station competition and to develop the appropriate standards and measures to help us 
evaluate how best to promote that interest in the modern media environment.
40. We begin by examining our interest in competition in light of current marketplace 
conditions.  As Americans increasingly are willing to pay for information and programming by 
subscribing to programming services, like satellite radio services, for example, it is incumbent on 
us to define more precisely the goals of our competition analysis.  Should we be interested in 
competition for listeners, competition for advertisers, or a combination of the two?  With respect 
to advertising, does our authority to regulate the radio market justify our basing regulation on the 
level of competition in the radio advertising market?  Are we interested in competition as a proxy 
for ensuring an appropriate level of diversity in a local community?  If we conclude that Section 
202(b) definitively establishes the levels of radio station concentration that are consistent with our 
diversity interest, how would this affect the role of our competition analysis, if at all?  Is one 
objective of competitive analysis to ensure a healthy radio advertising market so that radio 
stations not affiliated with larger station groups in a community will be able to attract sufficient 
advertising dollars to support their operations and their ability to provide valuable news and 
programming services to the public?  Is one objective to protect radio advertisers from any 
anticompetitive pricing or conduct that could occur if a single party achieved market power or 
monopoly using the public airways?  What precisely are the harms consumers suffer as advertising 
prices rise, and what empirical evidence of these harms is available? We note also that our biennial 
review mandate requires us to consider whether our local radio ownership rule is no longer 
necessary in the public interest “as a result of competition.”   One of the objectives of our 
competition analysis therefore must be to guide our biennial review examination.  We seek 
comment on these objectives and on any other objectives that should guide the competition aspect 
of our public interest analysis.
41. Competition analysis requires us to define the relevant product and geographic 
markets in which radio stations compete, as well as the market share of the participants within the 
relevant market, and then weigh the competitive benefits of consolidation (e.g., economies of 
scale and scope that may lead to lower costs and prices or superior products) against the harms 
(e.g., the exercise of market power or reduction in output).    We seek information that would 
help us conduct our analysis.
42. We seek comment on the relevant product market.  In determining the relevant 
market, should we look at the advertising market or the market for audiences?  If we look at 
advertising, does radio advertising constitute a separate market from other forms of media 
advertising?  In its enforcement of the antitrust laws, the Department of Justice (DOJ), looking at 
the advertising market, has taken the position that radio advertising constitutes a separate 
market,  finding that advertisers find value in certain of radio’s unique attributes.  First, unlike 
other media, radio is exclusively sound-based.  Second, radio allows advertisers to focus narrowly 
on specific demographic groups (e.g., women age 18 - 49).  Third, radio allows an advertiser to 
build repetition or frequency by advertising at a reasonable price.  Fourth, the cost of producing a 
radio commercial is much lower than producing a television commercial, thus allowing advertisers 
to change advertisements more often.  Fifth, radio allows for fast turnaround of advertising copy.  
Sixth, radio can reach people driving in their cars.  Consequently, according to the DOJ, 
advertisers considering one radio station generally perceive other radio stations as the closest 
substitute, and therefore radio stations tend to set the price of their radio advertising time based 
upon prices charged by other radio stations rather than those of alternative media.   We seek 
comment on the DOJ’s analysis, both as it relates to the advertising market and the market for 
listeners.  We recognize that many advertisers consider alternative media to be good substitutes 
for radio advertising, but the DOJ’s analysis indicates that alternative media are not good 
substitutes for a significant number of advertisers.  Are there studies or empirical data that 
confirm or refute the theory that radio advertising is a separate market?  Similarly, do listeners 
substitute other forms of media for radio, or do listeners tend to complement radio with other 
media?  What is the evidence from local markets that have witnessed consolidation of radio 
station?  Does the substitutability of radio and other media depend on the size of the geographic 
market at issue?  We seek pertinent data that will help us determine the relevant product market.
43. We also seek comment on the relevant geographic market.  We note that antitrust 
analysis defines the relevant geographic market as the region where a hypothetical monopolist that 
is the only producer of the relevant product in the region could profitably raise the price of the 
relevant product.  We tentatively conclude that the relevant geographic market is local in nature, 
but we seek comment on the precise parameters of that market.  What would be the appropriate 
market if we focused on listenership rather than advertising?  With respect to advertising, is there 
a distinct regional or national market we also should consider in our analysis?  If so, what are the 
relative sizes, in terms of radio station revenue and media revenue, of those markets vis-à-vis each 
other and local advertising markets?  Do some radio stations rely more on national or regional 
advertising than on local advertising, and, if so, what characteristics lead to that result?  What are 
the implications of these different geographic market definitions for our competition analysis? 
44. Under the Commission’s current local radio ownership rule, the geographic market 
is defined based on a system of mutually overlapping signal contours, which makes the geographic 
market endogenous to a common owner’s particular station holdings.   Is this the appropriate 
basis for defining a relevant geographic market for purposes of a competition analysis?  If so, 
why, and what are the benefits of this market definition?  If not, what other geographic market 
definition should we use?  The Commission before 1996 used the Arbitron radio metropolitan 
area as the relevant geographic market to determine whether a proposed combination implicated 
the 25% audience share presumption, and since 1996 to assess the competitive effects of a 
proposed transaction.   This market definition also is the one that radio advertisers customarily 
recognize and rely on in making their purchasing decisions.   Are Arbitron markets the relevant 
geographic market for purposes of our competition analysis?  Can Arbitron radio markets be 
manipulated to make a particular market or transaction appear less troublesome.  If so, how 
should we deal with this issue?  If we adopt the Arbitron market as the relevant geographic 
market, how should we treat “below-the-line” stations that Arbitron reports as having audience 
shares or reportable revenues in the relevant market?   Commenters advocating use of the 
Arbitron market should propose a relevant geographic market definition for radio stations not 
located in an Arbitron radio market.  We also seek comment on any other potential geographic 
market definitions we should consider. 
45. Once we define the relevant product and geographic markets, how should we measure 
the market share of those that compete in the market?  Accurately calculating market share is key 
because higher levels of concentration of the post-transaction firm could indicate a greater 
likelihood for the exercise of market power due to unilateral or coordinated effects.  In many 
industries, market share is often measured as a function of revenue, although, as indicated above, 
we also have relied on audience share data to determine concentration levels.  If radio advertising 
constitutes the relevant product market and the Arbitron market (where defined) is the relevant 
geographic market, we can readily obtain actual or estimated local advertising revenue from a 
commercial industry reporting service, such as BIA.  If we rely on listenership, we also should be 
able to obtain audience share data from BIA or another commercial reporting service, at least for 
stations located in Arbitron markets.  Alternatively, if the market includes media for which 
revenue data is not readily available, we could rely on circulation and ratings information, which 
presumably correlate to advertising rates, and therefore overall revenue and share.  Even if we 
rely on station revenue, we could either look at the combined market share, as we used in 
implementing the 50/70 screen, or use the Herfindahl-Hirschman Index (“HHI”) as a method of 
measuring pre- and post-acquisition market concentration.   We note that actions by the DOJ 
indicate that revenue share is a principal determinant in their evaluation of radio mergers, while 
HHI is less critical and we have taken a similar view.  In addition, the Commission has flagged 
proposed transactions based on market share.  We also seek comment on other sources of 
available data that we could use to determine market share and concentration levels.  Although we 
have focused on advertising revenue and audience share as the principal potential measures of 
concentration, there may be other approaches we should consider.
46. Although a large market share in itself does not demonstrate market power, market 
power may be inferred when a party’s market share is protected by high barriers to entry.   We 
seek comment on barriers to entry into the relevant product and geographic markets. We 
tentatively believe that the possible entry of additional stations would seldom be sufficient to 
counteract the exercise of market power.   While new entry is possible in some radio markets, it 
is unusual for a strong new signal to be placed into a market.  Because of the scarcity of 
spectrum, a particular geographic area can support only a certain number of radio broadcasting 
signals.  Generally, the good signals were taken many years ago, resulting in little unused capacity 
that could support new radio station entry.   If the relevant product market includes other forms 
of media, the barriers to entry may be different.  We seek comment on our tentative conclusion 
regarding entry by new radio stations, and request comment on barriers to entry through other 
media that may be part of the relevant product market.  We also seek studies or evidence, 
particular those relating to the radio industry’s experience since 1996, that would support any 
finding we may make regarding entry barriers.
47. Although we believe that entry by new stations is unlikely, we seek comment on 
whether the mere existence of other stations in the market negates market power, even where the 
current market shares of those stations are low.  Should we consider the number of other stations 
in the market and their signal strength, either as an alternative to or in addition to market share? 
We note that in order to attract more listeners, stations often change their programming format, 
sometimes radically (e.g., from classical music to country and western).  This suggests that radio 
stations with low market share may be able to increase their market share and provide a check on 
the leader’s market power. We seek comment on this analysis.  Is it easier to increase market 
share in the radio industry than it is in other industries?  Or do market shares tend to remain static, 
with only small shifts in listening audiences? Further, does the amount of concentration in the 
market have an impact on the ability of stations to increase their market share?  Is it easier for a 
station with a low audience share to increase its listenership in markets with low concentrations 
than it is in markets where one or two owners control a majority of the stations?  What has been 
the experience of the radio industry since 1996?
48. After identifying and defining key market characteristics, we next consider the 
economic benefits and harms of permitting greater horizontal consolidation of local radio stations 
under common ownership.  What are the benefits of these combinations, not only to the radio 
stations, but also to advertisers, and the public?  Combining radio stations or radio groups may 
have the potential to produce efficiencies that result in cost-savings from co-locating facilities, 
consolidating support services, and eliminating redundant management positions.  Advertisers 
may benefit from the combination from being able to access a variety of formats and demographic 
groups in a single transaction.  In some cases, combining radio stations may strengthen several 
weak competitors, resulting in intensified rivalry with stronger competing stations that benefits 
both advertisers and listeners.  In particular, cost savings produced by combining radio stations 
may result in lower prices for advertising if price competition post-transaction is intensified by the 
strengthening of former weak competitors.  Some of the additional savings in advertising 
expenses could also be passed on to listeners in the form of enhanced content.  We seek 
information on the nature and scope of efficiencies combinations might realize, and the nature and 
magnitude of benefits that flow through to advertisers and ultimately to consumers.   We seek 
evidence that horizontal radio combinations produce efficiencies that flow through to advertisers 
and consumers.  Evidence of asserted efficiency gains should demonstrate that such gains arose 
because of the combination of local radio stations, as opposed to being caused by the unique 
circumstances of the common owner.   Studies showing that radio station combinations have 
lower advertising rates or greater programming benefits than separately owned stations would be 
particularly useful.
49. What economic harms might radio station consolidation bring?  The potential harms of 
such combinations include creating and exercising market power.  A particular combination may 
garner such a share of the local advertising market that advertisers believe they must advertise on 
the combination’s media in order to reach consumers, such that the combination can charge 
anticompetitive prices.  A dominant firm could also bundle the advertising on its various stations 
in such a way so as to make it more difficult for rivals of one of those stations to compete.  We 
seek additional information on the nature and scope of the economic harms that radio station 
combinations might bring.  Studies and other evidence showing that advertising rates for radio 
station combinations are significantly higher after a consolidation than before a consolidation 
would be particularly useful.  We also seek comment on associated harm to consumers.  For 
example, if the existence of market power would prevent any efficiencies that otherwise would 
arise out of consolidation from flowing to the public, or would harm the incentive of radio 
stations to produce quality programming responsive to community tastes and needs, that may be a 
harm we should consider.  Similarly, if a certain level of consolidation causes the market to “tip” 
such that independently owned radio stations could not obtain sufficient revenue to remain on the 
air or fulfill their public interest obligations, the public interest also may be harmed.
50. We are also concerned about the possibility that coordinated behavior would increase 
as the number of independently owned competitors in a local market declines.   Three factors 
could provide incentives for coordinated behavior in highly concentrated local radio markets:  the 
ability to price discriminate, the ease of monitoring a collusive agreement, and the existence of 
barriers to entry.  As such, a concentrated market may raise significant competitive concerns.  We 
seek comment on the relationship between radio concentration and coordinated behavior, and the 
adverse effects such behavior would have on listeners and advertisers.
C. Specific Case Studies
51. To assist us in formulating our radio rules and policies, we seek not only theoretical 
arguments but specific empirical data on the effect that consolidation will have on the public 
interest.  In the following paragraphs, we examine in detail particular local markets that have 
undergone substantial consolidation since 1996.  We seek data on the public interest harms, if any, 
that have been caused by this consolidation.  Has the public in these markets suffered from an 
unacceptable reduction in diversity?  Have advertising rates increased?  What has been the 
financial impact on independently owned radio stations?  We also seek data on the specific 
benefits that consolidation has produced in those markets.  Have the listeners received better 
quality radio programming, or greater diversity?  Have efficiencies produced more radio voices 
than would otherwise have been possible?  Has news and local affairs programming improved?  
We seek information that addresses these questions and any other public interest factors that we 
should consider in this proceeding.
52. Parties are encouraged to file information on any local market that they feel is relevant 
or helpful. In addition we would appreciate comments on three specific local markets that have 
experienced consolidation.  The Arbitron metros that we seek information on are Syracuse, New 
York; Rockford, Illinois; and Florence, South Carolina.  These markets illustrate significant 
differences in market structure and, presumptively, differences in the intensity of price competition 
in the local radio advertising market.  Empirical evidence concerning the competitive behavior of 
the competing radio groups in each market would be helpful.  Empirical indicators of market 
performance in these markets, such as changes in program quality or changes in the price of radio 
advertising, would also be useful.  Evidence of possible harms to both listeners and advertisers 
that are the direct consequence of increasing consolidation would be most informative.
53. The Syracuse radio metro consists of three New York counties: Madison, Onondaga 
and Oswego.  The population of the Syracuse metro is estimated to be 650,100.  This metro is 
the 75th largest metropolitan area by population and ranks 67th in terms of radio advertising 
revenue.  The three Syracuse counties generated $7.2 billion in retail sales in 2000.  Local 
advertising accounts for approximately 73 percent of station revenues.  Appendix A contains a 
spreadsheet listing all of the stations belonging to the Syracuse metro and other stations that 
receive a share of the listening of Syracuse residents.  Estimated revenue and the date that the 
station was acquired are presented along with other information.
54. The Rockford radio metro consists of two Illinois counties:  Boone and Winnebago .  
The population of the Rockford metro is estimated to be 308,500. This metro is the 150th largest 
metropolitan area by population and ranks 139th in terms of radio advertising revenue.  The three 
Rockford counties generated $3.9 billion in retail sales in 2000. Local advertising accounts for 
approximately 93 percent of station revenues.  Appendix A contains a spreadsheet listing all of the 
stations belonging to the Rockford metro and other stations that receive a share of the listening of 
Rockford residents.  Estimated revenue and the date that the station was acquired are presented 
along with other information.
55. The Florence radio metro consists of two South Carolina counties:  Darlington and 
Florence .  The population of the Florence metro is estimated to be 192,400. This metro is the 
204th largest metropolitan area by population and ranks 181st in terms of radio advertising 
revenue.  The three Florence counties generated $2.4 billion in retail sales in 2000. Local 
advertising accounts for approximately 80 percent of station revenues.  Appendix A contains a 
spreadsheet listing all of the stations belonging to the Florence metro and other stations that 
receive a share of the listening of Florence residents.  Estimated revenue and the date that the 
station was acquired are presented along with other information.
D. Options
56. In this section, we explore the potential ways we could use the results of the preceding 
diversity and competition analyses to formulate a concrete framework for addressing proposed 
combinations of radio stations in local markets.  In prior cases, the Commission has both applied 
the local radio ownership rule, which set a ceiling on the number of stations that may be 
commonly controlled, and conducted a case-by-case analysis to determine whether the particular 
transaction was in the public interest.  We could continue our current approach, rely exclusively 
on bright-line rules, analyze each case individually, or apply numerical limits for some aspects of 
the case, e.g., diversity, and conduct a case-specific analysis for others, e.g., competition.  We 
seek comment on the various policy options.
1. Bright-line Rules or Case-by-Case Analysis
57. We first seek comment on the general advantages and disadvantages of relying on 
numerical limits or other bright-line rules to guide our public interest determination versus 
conducting a case-by-case public interest analysis.  We see several advantages to the use of 
bright-line rules rather than case-by-case analysis.  Because numerical limits can be easier to apply 
in any individual transaction, they help conserve scarce regulatory resources in deciding cases.  
Bright-line rules also provide greater certainty to industry participants, and help avoid long delays 
in regulatory decision-making.  Thus, bright-line rules can result in substantially lower transaction 
costs than case-by-case analysis.  Finally, bright-line rules apply to all industry participants 
uniformly.  
58. We also see several advantages to conducting case-by-case analyses.  A bright-line 
rule indiscriminately applied to all situations might allow undesirable concentrations of radio 
stations in certain instances and preclude desirable combinations in others.  In the latter instance, a 
bright-line rule could prevent a more efficient firm from acquiring a less efficient firm, and could 
prevent combinations that would result in increased economies or efficiencies that would 
otherwise have passed through to advertisers or listeners in the form of lower rates or better 
programming.  A case-specific analysis, on the other hand, would allow the Commission to take 
into account the nuances of the particular case, and to adapt more readily to changing market (and 
other regulatory) conditions.
59. We seek comment on the various trade-offs between bright-line rules and case-by-case 
analysis.  The benefits of bright-line rules may be more likely to outweigh their costs when there 
are substantial similarities among cases or where relevant factual information would be difficult to 
obtain or evaluate.  In these circumstances, it is more likely that simple application of an 
appropriately defined bright-line rule will achieve the “right” result.  We seek comment whether 
the characteristics of the radio industry make it more susceptible to bright line strictures or case-
by-case review or proposed radio combinations.  What are the common characteristics of various 
radio combinations, and what differences do they have that would be difficult to encapsulate in a 
rule?  Are there other characteristics that weigh in favor of relying on either predetermined rules 
or case-specific review in conducting a public interest review of a proposed combination?  Are 
diversity concerns more amenable to being encapsulated in a bright-line rule than competition 
concerns?
60. We also seek comment on whether the advantages of both bright-line rules and case-
by-case analysis be obtained by other regulatory tools, such as presumptions, processing 
guidelines, and screens.  To what extent has the 50/70 screen been helpful, and what are its 
disadvantages?  If appropriate, we could adopt a combination of rules, fact-specific analysis, and 
other formal and informal regulatory tools.  We seek comment on the appropriate regulatory 
“mix” that would provide the greatest benefit to the agency, the industry, and the public.
2. Implementation of Radio Rules and Policies
61. We examine here a number of possible frameworks that we could adopt to implement 
our policies on local radio ownership.  We discuss several below and seek comment on their 
advantages, disadvantages, and possible ramifications on our diversity and competition goals.  We 
also invite suggestions for other possible frameworks that we should consider.
62. Rely exclusively on current numerical limits.  To the extent we have the authority 
under the statutory framework to consider public interest factors other than compliance with the 
numerical limits of the local radio ownership rule, should we nonetheless rely on those limits to 
address our competition and diversity concerns?  We seek comment on the advantages and 
disadvantages of relying exclusively on numerical limits.  One advantage to this approach is its 
administrative simplicity.  Our experience since 1996, however, suggests that one disadvantage to 
this approach is that compliance with numerical limits alone may not adequately address our 
competition goals, and perhaps not our diversity goal as well.   If we decide to rely exclusively 
on numerical limits, should we change the market definition we use to apply the rule to reflect 
more accurately the relevant geographic market?  As discussed above, the Commission has 
expressed concern that the current methodology leads to irrational and unintended results.  We 
have discussed this issue at length in the Market Definition proceeding,  and the comments that 
have been filed in that proceeding will be incorporated here.  We seek any additional comments 
that would be useful in light of the broader policy issues raised in this proceeding.
63. Rely exclusively on modified rule.  Another possibility we may consider is modifying 
the local radio ownership rule to revise the numerical limits or adopt a new framework entirely.  
We seek comment on whether our authority to tighten or loosen the numerical limits in the local 
radio ownership rule, or otherwise to alter the rule, is limited by the statutory framework.   To 
the extent we have the authority to make such changes, we seek comment on what changes we 
should make.  Aside from revising the numerical limits, are there other standards we could adopt?  
For example, between 1992 and 1996, the rule provided for consideration of excessive market 
concentration, which was presumed to exist if a proposed radio combination would have had an 
audience share exceeding 25% in the Arbitron market.  Do we have the authority to adopt an 
audience share limit,  and, if so, should we adopt a similar presumption or bright-line rule?  
Should such a limit replace or accompany a numerical limit?  Would such a rule be beneficial in 
promoting diversity even if the relevant market is competitive, or would numerical limit best meet 
our concerns regarding diversity and a market share limit best meet our concerns regarding undue 
market power.  Alternatively, if there is a sufficient amount of competition in the relevant market, 
there may be sufficient incentive for stations to offer diverse programming, such that strict limits 
on common ownership may be unnecessary.
64. Commenters who propose a market share limit should discuss the following issues:  
Should we examine audience share, share of the advertising revenue, or some other measure?   If 
we adopt a presumption instead of a rule, what evidence would be sufficient to overcome the 
presumption?  What percentage limit should we adopt, and why should we adopt it?  For 
example, we could adopt limits that attempt to ensure the presence of at least three competitive 
firms.  Commenters supporting this approach should explain how many firms should we seek to 
ensure remain in the market (counting all commonly controlled stations as one firm) and what 
maximum market share limit should we impose.  Commenters should provide economic, other 
theoretical, and actual evidentiary support for such limits.
65. Commenters proposing that we modify the local radio ownership rule to change the 
numerical limits or to include new standards or presumptions should also propose what action we 
should take with respect to existing combinations that would not comply with the revised rule?  
Should we require divestiture?  Should we grandfather those station groupings?  Should we 
permit assignment and transfer of potentially non-compliant station groups to third parties?  What 
are the benefits and harms of adopting these various approaches?
66. Case-by-case competition analysis.  Rather than attempting to establish a bright-line 
rule that would address competition issues, we could examine the public interest concerns of any 
proposed radio combination on a case-by-case basis. We could adopt an entirely case-by-case 
approach or conduct a case-by-case analysis within the context of specific rules or presumptions.  
For example, we could establish a screen that would permit all transactions falling below it to be 
granted without a competitive analysis.  In addition, we could limit our case-by-case approach to 
competition issues, while using a bright-line rule to protect diversity.  We seek comment on these 
alternatives. 
67. To the extent we are required to conduct a competition analysis of a proposed 
assignment or transfer control of a radio broadcast license, we nevertheless may have some 
latitude to consider the actions of the antitrust enforcement agencies, particular the DOJ,  in 
conducting any such competition analysis.   We note that our current practice is to await 
completion of any DOJ review of a radio transaction and consider the results of that review in our 
competition analysis.  Should we continue that approach?  How should we take into account the 
various possible outcomes of DOJ review, e.g., early termination or issuance of a “second 
request” under the Hart-Scott-Rodino Act, entering into a consent decree with the merging 
parties, or full-fledged trial?  In particular, given the DOJ’s prosecutorial discretion, can we 
assume that non-action by the DOJ is the result of a determination that a proposed transaction 
does not raise competitive concerns?  How should we treat cases where the transaction is below 
the newly revised Hart-Scott-Rodino threshold  and thus may not have been reviewed by the 
DOJ?  What would be the legal and policy implications of adopting these or any alternative 
approaches?  
E. Framework for Possible Case-by-Case Competitive Analysis
68. In this section, we consider what the framework for a case-by-case competitive 
analysis should be if we decide to adopt that approach.  We lay out below certain possible 
frameworks and competitive factors we could take into account in evaluating a proposed radio 
station combination.  We seek comment on these factors and on our framework generally.
1. General Framework
69. In evaluating the competitive impact of a proposed license transfer, we could adopt 
the framework that we have used for assessing market power in other contexts, which is also 
embodied in the antitrust laws.   We would first analyze each proposed radio combination by 
defining the relevant markets, both in terms of the relevant products and geographic scope,  and 
identifying the market participants.   Next, we would evaluate the effects of the transaction on 
competition in the relevant market, such as whether the transaction is likely to result in either 
unilateral or coordinated effects that enhance or maintain market power.   We would also 
consider whether the proposed transaction would result in transaction-specific efficiencies such as 
cost reductions, productivity enhancements, or improved incentives for innovation.   No single 
competitive factor taken alone would provide a definitive indicator of the level of competition or 
potential competitive problem.   We seek comment on this approach.
70. One alternative of the approach described above is to develop certain assumptions that 
would apply to all proposed radio station combinations.  Earlier in this Notice, we sought 
comment about the relevant product and geographic markets to which radio belongs, barriers to 
entry, and the benefits and costs of consolidation.   Some factors such as the relevant product 
and geographic market and barriers to entry are likely to be relatively uniform across most 
proposed radio combinations such that we could presume that they are constant in all cases.  
Factors such as efficiencies and the ability to exercise market power may not be as generally 
applicable.  We seek comment concerning the assumptions that we could consistently apply in 
evaluating applications proposing radio station combinations and the advantages or disadvantages 
of those assumptions.  If we adopt certain assumptions, we propose that the party seeking to 
demonstrate that an assumption is not true in a particular case bears the burden of proof as to that 
fact.  We seek comment on this proposal.
71. Another possible alternative to the basic analytical framework is to examine not only 
whether a proposed transaction could lead to the exercise of market power, but to take the 
additional step of considering whether that market power would harm consumers, as opposed to 
advertisers, of radio broadcasting services.  Are there certain situations in which the exercise of 
market power would not harm consumers?  Are there situations in which consumers would 
affirmatively benefit if we permitted a certain degree of market power in the relevant market?  For 
example, would permitting some degree of market power in smaller geographic markets generate 
more diverse or better quality programming for the people living in those markets?  If so, how do 
we draw the line between acceptable levels of market power and unacceptable levels of control 
over local media, and what are the relevant considerations we should examine to help us 
determine on which side of the line a particular transaction falls?  We seek comment on these 
issues.
2. Specific Factors
72. We seek comment on the specific factors we should consider within our general 
framework.  As discussed above, any competitive analysis of a proposed transaction must take 
into account the relevant product and geographic markets, the market participants and their 
relative market share, barriers to entry, potential efficiencies, and possible harms.  To the extent 
not already discussed, we seek comment on how we should evaluate these factors in the context 
of a particular case.  In addition, are there other factors we should consider?
73. First, we seek comment on how we should review applications proposing to assign or 
transfer control of existing station groups to a new owner.  We tentatively conclude that we 
generally would not subject the transaction to competitive analysis if such transfers do not change 
the relative market share or competitive conditions.  That will generally be the case if the new 
owner owns no other radio stations or other media in the relevant geographic market that may be 
in the relevant product market with radio.  We invite comment on this tentative conclusion.
74. Second, we invite comment on how to treat under our proposed guidelines claims that 
a station is failing.  Highly concentrated radio markets often contain stations with small revenue 
share that are independent of the one or two largest radio groups.  Some applicants have argued 
that consolidation eliminates the possibility that a small player can remain competitive.  In such 
cases, applicants often propose to sell their stations to the first or second largest group in the 
market.  If the Commission grants this transfer, the transaction may augment the market power of 
the large station group in the local market for radio advertising.  Such transactions often pose a 
trade-off between keeping a small station on the air together with the benefits it provides to 
advertisers and listeners versus a reduction in competition that may tip the current radio market 
structure toward a duopoly and its implied increase in market power.
75. In our decision revising the television ownership rules, we adopted several criteria to 
evaluate whether a failing station showing would justify waiver of the television duopoly rule in a 
particular case.  We stated that we would presume a waiver would serve the public interest if each 
of the following criteria were satisfied:
? One of the merging stations has had low all-day audience share. 
? The financial condition of one of the merging stations is poor.  A waiver is more likely to 
be granted where one or both of the stations has had a negative cash flow for the previous 
three years.  We required the applicant to submit data, such as detailed income statements 
and balance sheets, to demonstrate this and stated that the Commission staff will assess the 
reasonableness of the applicant’s showing by comparing data regarding the station’s 
expenses to industry averages.
? The transaction will produce public interest benefits.  A waiver will be granted where the 
applicant demonstrates that the tangible and verifiable benefits of the transaction outweigh 
any harm to competition and diversity.  At the end of the stations’ license terms, the 
owner of the combined stations must certify to the Commission that the public interest 
benefits of the transaction are being fulfilled, including a specific, factual showing of the 
program-related benefits that have accrued to the public.  Cost savings or other 
efficiencies, standing alone, will not constitute a sufficient showing.
? The in-market buyer is the only reasonably available candidate willing and able to acquire 
and operate the station; selling the station to an out-of-market buyer would result in an 
artificially depressed price.  As with the showing required of failed station waiver 
applicants, one way to satisfy this fourth criterion is to provide an affidavit from an 
independent broker affirming that active and serious efforts have been made to sell the 
station, and that no reasonable offer from an entity outside the market has been received. 
We further provided that a combination formed as a result of a failing station waiver could be 
transferred only if the combination met the revised duopoly rule or the waiver standards 
(including the failing standard just described) at the time of the transfer.  We also concluded, “if 
necessary we will tailor these criteria further as we gain experience in administering the ‘failing’ 
station standard.” 
76. We invite comment as to whether to use a similar approach in our competitive 
analysis.  We believe this approach to failing station showings, including the criteria, may provide 
a useful starting point for our evaluation of failing station showings in the radio merger context.  
We invite comment on this proposal.
77. Third, we seek comment on how we should analyze applications proposing the 
granting of a new license or the acquisition of an unbuilt facility or a "dark" station.  Competitive 
analysis focusing on concentration in the advertising market or audience shares would be 
insufficient to analyze these transactions because new licenses, unbuilt stations, and dark stations 
generally will not have an associated radio advertising business or audience share.  In the absence 
of this data, what should we consider in determining the effect of a proposed transaction on 
competition?   And how should we weigh the relevant public interest benefits and harms?  Grant 
of these types of applications could have public interest benefits if they result in an increase the 
quality or quantity of radio programming available to listeners.  If a large or dominant radio 
station group in a local market acquires a new license, unbuilt station, or dark station, however, it 
could cause a competitive market to tip toward consolidation or could eliminate a potential source 
of competition in markets that are not fully competitive.  We invite comment on how we should 
analyze these competing considerations.
78. Fourth, we seek comment concerning how we should coordinate our competitive 
analysis with any DOJ review that may occur with respect to the same transaction.  Where a 
transaction remains under review or investigation by DOJ, the Commission generally defers 
ultimate action on the applications.  Where DOJ devises a remedy in a radio merger case, we 
propose to generally incorporate that remedy in our decision and would likely rely upon it in most 
cases as a sufficient resolution of competition issues raised by the transaction.   We seek 
comment on this approach.
3. Treatment of Brokerage and Sales Agreements
79. Local Marketing Agreements and Time Brokerage Agreements.  A local marketing 
agreement (LMA) and time brokerage agreement (TBA) is “a type of contract that generally 
involves the sale by a licensee of discrete blocks of time to a broker that then supplies the 
programming to fill that time and sells the commercial spot announcements to support the 
programming.”   In calculating the number of radio stations under common control for purposes 
of applying the local radio ownership rule, we attribute a same-market, brokered station to the 
broker if more than 15% of the stations’ weekly broadcast time is brokered.   We do not, 
however, require station owners to obtain prior Commission approval before entering into LMAs 
or TBAs as long as the licensee continues to exercise ultimate control over the licensed station.   
As a result, if a broker files an application to acquire its brokered radio stations, the Commission 
would examine the potential competitive impact of the proposed transaction as if two station 
groups were wholly independent economic actors.
80. As we consider whether and how to conduct case-by-case competitive analyses of 
radio transactions, we seek comment on the appropriate regulatory treatment of LMAs and 
TBAs.  We have recognized that LMAs and TBAs permit the broker to exercise “a degree of 
influence” over the brokered station, and they can have a similar effect on competition as common 
station ownership in cases where the brokering station controls a significant portion of the sale 
and pricing of brokered station’s advertising inventory.   To the extent we rely on bright-line 
rules to vindicate our competition concerns, we can take the competitive impact of LMAs and 
TBAs into account by continuing our policy of attributing brokered stations to their brokers.  We 
seek comment on this proposal.
81. To the extent we decide to conduct a case-by-case analysis of proposed radio 
transactions, how should we evaluate LMAs or TBAs?  Should we continue the practice of 
treating the merging parties as independent economic actors regardless of the economic realities 
of the relevant market?  If we ignore economic realities, what purpose would our competitive 
analysis serve?  On the other hand, if we treat the merging parties as a single economic unit 
because of a pre-existing LMA or TBA, what potential competitive harm would our analysis ever 
uncover?  We could address this problem by requiring prior Commission approval of LMAs and 
TBAs, in some if not all circumstances.  If so, what would those circumstances be?  Rather than 
require prior approval of LMAs and TBAs, we could rely on our enforcement authority to require 
termination of LMAs or TBAs that are contrary to the public interest because of their effect on 
competition.  We also could provide expressly for voluntary filings by parties that seek certainty 
as to whether their LMA or TBA is consistent with our policies.  What are the costs and benefits 
of these various procedures?  If we adopt new policies towards LMAs or TBAs, how should we 
apply those policies towards pre-existing agreements?  We seek comment on these proposals and 
on any other proposals that we should consider with regard to the regulatory treatment of LMAs 
and TBAs?
82. Joint Sales Agreement.  Unlike LMAs and TBAs, joint sales agreements (JSAs) 
involve primarily the sale of advertising time and not decisions concerning programming.   In the 
Broadcast Attribution Order, the Commission declined to attribute JSAs to sales agents provided 
the terms of the JSAs did not materially extend to programming or certain other station 
operations.   Although acknowledging that JSAs could raise competitive concerns, the 
Commission determined that JSAs limited to advertising sales did not “convey a degree of 
influence or control over station programming” or non-sales operations and that JSAs could 
promote diversity by “enabling smaller stations to stay on the air.”   The Commission declined to 
require that JSAs be filed, but did require that they be placed in the station’s public inspection 
file.   The Commission also noted that it retained the discretion to conduct a public interest 
review of JSAs on a case-by-case basis where competition or other concerns were raised. 
83. As with LMAs and TBAs, we seek comment on the appropriate regulatory treatment 
of JSAs.  Even if we adopt a bright line rule, JSAs would not be attributable to the sales agent.  
Should we reconsider this blanket exemption to attribution in light of the new local radio 
ownership policy we intend to adopt?  If so, what should our new rule be?  To the extent we 
decide to conduct a case-by-case analysis of proposed radio transactions, how should we evaluate 
JSAs?  Should we distinguish between JSAs and LMAs or TBAs in a case-by-case review of 
proposed transactions or in other contexts?  What are the reasons for and against affording similar 
treatment to all three types of agreements?
IV. INTERIM POLICY
84. We set forth in this section the interim policy that the Commission will apply to guide 
its actions on radio assignment and transfer of control applications pending a decision in this 
proceeding.  We recognize that certain guidelines need to be established both to handle currently 
pending radio assignment and transfer applications and to address any future applications filed 
while this proceeding is pending.  At the same time, we are mindful of the concern that our policy 
not expressly or implicitly prejudge, or be viewed as prejudging, our ultimate decision in this 
proceeding.  In that regard, we believe that any fundamental changes we make to our policy and 
procedures governing radio station combinations should be the result of the record in this 
rulemaking proceeding, and should not be implemented as an interim measure.  We believe that 
the interim policy we are adopting today strikes a fair balance that addresses our statutory 
responsibilities while providing guidance to applicants and the public on the process the 
Commission will use to resolve pending applications during this interim period.
85. Consistent with our precedent and the principles mentioned above, we will continue to 
examine the potential competitive effects of proposed radio station combinations, and, and to that 
end, we will continue to rely on the 50/70 screen to bring to our attention proposed radio 
transactions that may raise competitive concerns.  Under this screen, an application that proposes 
a radio station combination that would provide one station group with 50%, or the two station 
groups with 70%, of the radio advertising revenue share of the relevant Arbitron metro market, as 
reported by BIA, will be flagged when the Commission issues public notice that the application 
has been accepted for filing.   While we are aware that the utility and appropriateness of 50/70 
screen has been the subject of disagreement, we are concerned that adopting another screen or set 
of processing guidelines on an interim basis would create significant confusion and uncertainty to 
applicants and could be seen as prejudging the rulemaking proceeding.
86. As the Commission has done in the past, we will presume that an application that falls 
below the screen will not raise competition concerns, and the staff will not conduct a further 
competitive analysis of those proposed transactions absent the filing of a petition to deny raising 
competitive issues.  For applications that are flagged, the staff will review the facts and arguments 
contained in any pleadings that are filed, and will conduct a public interest analysis, including but 
not limited to an independent preliminary competitive analysis of the proposed transaction based 
on publicly available information and information in the Commission’s records.  In addition, the 
staff is authorized to request additional information from the parties to the extent required for the 
staff to issue or recommend a decision on the application.  We establish the following generic 
categories of information that may be requested or received by the staff in conducting its 
competitive analysis:
? Product market definition.  During the interim period, the Commission will presume that 
the relevant product market is radio advertising.  The staff nevertheless should consider 
evidence from the parties that the relevant product market in a specific case includes other 
forms of media advertising or should be based on listenership rather than advertising.
? Geographic market definition.  During the interim period, the Commission will presume 
that the relevant geographic market is the Arbitron metro market.   The staff nevertheless 
may ask for or receive evidence from the parties that the relevant geographic market in a 
specific case is larger, smaller, or otherwise different from the Arbitron metro market.
? Market participants.  The staff may ask for or receive evidence concerning the firms that 
participate in the relevant product and geographic markets.  The list of market participants 
should include firms that could enter the relevant product and geographic markets within 
one year without expending significant sunk costs of entry and exit in response to a small 
but significant and non-transitory increase in price.  If the presumptive product and 
geographic market definitions are used, the list of market participants should include 
operating commercial radio stations and any “dark” station that might be expected to 
become operational in response to such an increase in price.
? Market shares and market concentration.  The staff may ask for or receive evidence 
concerning the market shares of the market participants.  If the presumptive product and 
geographic market definitions are used, the radio advertising revenues reported in the BIA 
Master Access Database will be presumed to be an accurate reflection of actual market 
shares, absent persuasive evidence that another measure of market share should be used.  
The staff may use market share data to calculate any HHIs that may be relevant for the 
staff’s analysis.
? Barriers to entry.  The staff may ask for or receive evidence concerning the barriers to 
entry into the relevant product and geographic markets, including the timeliness, 
likelihood, and sufficiency of entry to counter any potential market power.
? Potential adverse competitive effects.  The staff may ask for or receive evidence 
concerning the potential adverse competitive effects of a proposed transaction.  Relevant 
evidence may include direct proof of adverse competitive effects or facts that demonstrate 
that structural conditions (e.g., a high market share and significant barriers to entry) will 
facilitate the exercise of market power.  In asking for or receiving evidence of potential 
adverse competitive effects, the staff should consider the effect on competition, if any, that 
may have resulted from a pre-existing LMA, TBA, or JSA between the applicants.
? Efficiencies and other public interest benefits.  The staff may ask for or receive evidence 
concerning any economic efficiencies that the proposed transaction would produce.  In 
addition, the staff may ask for or receive evidence concerning other public interest benefits 
the proposed transaction would provide listeners or advertisers, such as improvements in 
the quality, scope, and quantity of community responsive programming, improved 
community service, and the furtherance of localism.  Parties asserting that a proposed 
transaction will produce efficiencies or other public interest benefits should show both 
how the transaction will produce those benefits and how those benefits will flow through 
to listeners or advertisers.
87. After completing its preliminary competitive analysis of the proposed transaction, the 
staff may grant any application that is consistent with the public interest and that may be granted 
on delegated authority.  For applications that the staff cannot grant, we establish the following 
timetable to ensure that they are resolved expeditiously.  For each application that, as of the date 
of adoption of this Notice, has been pending for over one year, within 90 days of the date of 
adoption of this Notice, the staff will distribute to the Commission a draft order recommending 
that the application either be granted or designated for hearing.  For all other currently pending 
applications, within six months of the date of adoption of this Notice, the staff will distribute to 
the Commission a draft order recommending that the application either be granted or designated 
for hearing.  For all applications filed after the date of adoption of this Notice, within six months 
of the date after such application is filed, the staff will distribute to the Commission a draft order 
recommending that such application either be granted or be designated for hearing.  In all of these 
cases, the draft order shall include the relevant facts of the proposed transaction, and the staff’s 
competitive analysis and recommendation, including any issues to be resolved at hearing (if the 
staff recommends a hearing).  After receiving the draft order, the Commission shall then decide 
whether the relevant factors support grant (with or without conditions) of an application or 
whether the application should be designated for hearing.
88. For applications that the Commission decides to designate for hearing, the hearing 
designation order shall afford the applicants with the opportunity to elect instead to have their 
applications held pending completion of this rulemaking proceeding and having the outcome of 
this proceeding apply to their application.  We provide this election because we believe it is 
appropriate to provide applicants with the ability to have their applications evaluated under our 
permanent radio rules and policies rather than our interim policy.  We caution, however, that our 
provision of this election will not in any way prejudice or limit the range of actions we could take 
in processing pending applications, including designation for hearing, upon completion of this 
rulemaking.
89. The interim policy we outline above will apply to currently pending applications to 
assign or transfer control of radio broadcast stations.  This interim policy also will apply to radio 
assignment or transfer applications filed on or after the date we adopt this Notice until we adopt a 
decision in this proceeding.
V. ADMINISTRATIVE MATTERS
90. Comments and Reply Comments.  Pursuant to Sections 1.415 and 1.419 of the 
Commission's rules, 47 C.F.R. §§ 1.415, 1.419, interested parties may file comments on or before 
60 days after publication of the item in the Federal Register, and reply comments on or before 90 
days after publication of the item in the Federal Register.  Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper copies.  See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 Fed. Reg. 24,121 (1998).
91. Comments filed through the ECFS can be sent as an electronic file via the Internet to 
<http://www.fcc.gov/e-file/ecfs.html>.  Generally, only one copy of an electronic submission must 
be filed.  If multiple docket or rulemaking numbers appear in the caption of this proceeding, 
however, commenters must transmit one electronic copy of the comments to each docket or 
rulemaking number referenced in the caption.  In completing the transmittal screen, commenters 
should include their full name, Postal Service mailing address, and the applicable docket or 
rulemaking number.  Parties may also submit an electronic comment by Internet e-mail.  To get 
filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and 
should include the following words in the body of the message, "get form <your e-mail address."  
A sample form and directions will be sent in reply.  Parties who choose to file by paper must file 
an original and four copies of each filing.   If more than one docket or rulemaking number appear 
in the caption of this proceeding, commenters must submit two additional copies for each 
additional docket or rulemaking number.  All filings must be sent to the Commission's Secretary, 
Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 
Twelfth Street, S.W., TW-A325, Washington, D.C. 20554.
92. Parties who choose to file by paper should also submit their comments on diskette.  
These diskettes should be submitted to: Wanda Hardy, 445 Twelfth Street, S.W., Room, 2-C207, 
Washington, D.C.  20554. Such a submission should be on a 3.5 inch diskette formatted in an 
IBM compatible format using WordPerfect 5.1 for Windows or compatible software.  The 
diskette should be accompanied by a cover letter and should be submitted in "read only" mode.  
The diskette should be clearly labeled with the commenter's name, proceeding (including the 
docket number in this case, MM Docket Nos. 01-317, 00-244, type of pleading (comment or 
reply comment), date of submission, and the name of the electronic file on the diskette.  The label 
should also include the following phrase "Disk Copy - Not an Original."  Each diskette should 
contain only one party's pleadings, preferably in a single electronic file.  In addition, commenters 
must send diskette copies to the Commission's copy contractor, Qualex International, Portals II, 
445 12th Street, S.W., Room CY-B402, Washington, DC 20554.
93. Comments and reply comments will be available for public inspection during regular 
business hours in the FCC Reference Center, Federal Communications Commission, 445 Twelfth 
Street, S.W., CY-A257, Washington, D.C.  20554.  Persons with disabilities who need assistance 
in the FCC Reference Center may contact Bill Cline at (202) 418-0270, (202) 418-2555 TTY, or 
bcline@fcc.gov.  Comments and reply comments also will be available electronically at the 
Commission’s Disabilities Issues Task Force web site: www.fcc.gov/dtf.  Comments and reply 
comments are available electronically in ASCII text, Word 97, and Adobe Acrobat.
94. This document is available in alternative formats (computer diskette, large print, audio 
cassette, and Braille).  Persons who need documents in such formats may contact Martha Contee 
at (202) 4810-0260, TTY (202) 418-2555, or mcontee@fcc.gov.
95. Ex Parte Rules.  This is a permit-but-disclose notice and comment proceeding.  Ex 
parte presentations are permitted except during the Sunshine Agenda period, provided they are 
disclosed as provided in the Commission's Rules.  See generally 47 CFR Sections 1.1202, 1.1203, 
and 1.1206(a).
96. Initial Regulatory Flexibility Analysis.  With respect to this Notice, an Initial 
Regulatory Flexibility Analysis ("IRFA") is contained in Appendix B.  As required by Section 603 
of the Regulatory Flexibility Act, the Commission has prepared an IRFA of the possible 
significant economic impact on small entities of the proposals contained in this Notice.  Written 
public comments are requested on the IRFA.  In order to fulfill the mandate of the Contract with 
America Advancement Act of 1996 regarding the Final Regulatory Flexibility Analysis, we ask a 
number of questions in our IRFA regarding the prevalence of small businesses in the radio 
broadcasting industry.  Comments on the IRFA must be filed in accordance with the same filing 
deadlines as comments on the Notice, but they must have a distinct heading designating them as 
responses to the IRFA.  The Secretary shall send a copy of this Notice, including the IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration in accordance with Section 
603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C. § 601 et 
seq. (1981), as amended.
97. Authority.  This Notice is issued pursuant to authority contained in Sections 4(i), 303, 
and 307 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 303, and 307.
VI. ORDERING CLAUSES
98. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1, 
2(a), 4(i), 303, 307, 309, and 310 of the Communications Act, as amended, 47 U.S.C. §§ 151, 
152(a), 154(i), 303, 307, 309, and 310 this Notice of Proposed Rulemaking and Further Notice of 
Proposed Rule Making ARE ADOPTED.
99. IT IS FURTHER ORDERED that the Interim Policy set forth herein IS ADOPTED.
100. IT IS FURTHER ORDERED that the Commission’s Consumer Information 
Bureau, Reference Information Center, SHALL SEND a copy of this Notice, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.
						FEDERAL COMMUNICATIONS COMMISSION



						Magalie Roman Salas
						Secretary


APPENDIX A



APPENDIX B

	Initial Regulatory Flexibility Analysis

As required by the Regulatory Flexibility Act of 1980, as amended (RFA),  the Commission has 
prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the policies and rules proposed in 
this Notice of Proposed Rulemaking (Notice).  Written public comments are requested on this 
IRFA.  Comments must be identified as responses to the IRFA and must be filed by the deadlines 
for comments on the Notice provided above in paragraph 90.  The Commission will send a copy 
of the Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA).  See 5 U.S.C. § 603(a).  In addition, the Notice and IRFA (or summaries 
thereof) will be published in the Federal Register.  See id.

A.	Need for, and Objectives of, the Proposed Rules
Application to and consent by the Commission are required under Section 310 of the 
Communications Act before the sale of any licensed radio broadcast station may be consummated.  
The Commission may grant its consent only if it determines that “the public interest, convenience 
and necessity will be served thereby.”  47 U.S.C. § 310(d).  The effects of a proposed transaction 
on the diversity of voices and economic competition in a given market have long been core 
considerations in making this public interest determination.  The Commission’s concern for 
diversity and competition in broadcast markets has prompted us to adopt and maintain structural 
ownership rules intended to vindicate these interests. Until recently, these ownership rules have 
been sufficiently strict that we have not been presented with proposed transactions that comply 
with the ownership rules but nonetheless present economic concentration issues.  The 
Telecommunications Act of 1996, however, substantially relaxed the Commission’s local radio 
ownership rules.  Heretofore, the Commission’s radio ownership rules have been based strictly on 
the number of stations proposed for common ownership, without regard to the power or 
dominance of the stations that are being combined.  This was not a problem under the former 
Commission rules which strictly circumscribed the number of radio stations that could be 
commonly owned in a local market.  Now, however, under the new rules, which allow greater 
numbers of radio stations to be commonly owned in local markets, the Commission has 
encountered sales applications that propose transactions which comply with the numerical station 
limits but which result in substantial economic concentration in the relevant economic markets.  In 
such cases, the Commission “has an independent obligation to consider whether a proposed 
pattern of radio ownership that complies with the local ownership limits would otherwise have an 
adverse competitive effect in a particular radio market and thus, would be inconsistent with the 
public interest. 47 U.S.C. § 309(a) (requiring the Commission to make a determination that the 
transfer or assignment of a broadcast license would be in the public interest).”  CHET-5 
Broadcasting L.P., 14 FCC Rcd 13041, 13043 (1999).  Accordingly, we are adopting this Notice 
to consider possible changes to our local radio ownership rules and policies.

B.	Legal Basis
This Notice is adopted pursuant to sections 1, 2(a), 4(i), 303, 307, 309, and 310, of the 
Communications Act, 47 U.S.C. §§ 151, 152(a), 154(i), 303, 307, 309, and 310.

	C.	Description and Estimate of the Number of Small Entities To 
Which the Proposed Rules Will Apply

The RFA directs agencies to provide a description of, and, where feasible, an estimate of the 
number of small entities that may be affected by the proposed rules, if adopted.  The RFA defines 
the term “small entity” as having the same meaning as the terms “small business,” “small 
organization,” and “small governmental jurisdiction.    In addition, the term “small business” has 
the same meaning as the term “small business concern” under the Small Business Act.   A small 
business concern is one which: (1) is independently owned and operated; (2) is not dominant in its 
field of operation; and (3) satisfies any additional criteria established by the SBA. 

Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies "unless an 
agency after consultation with the Office of Advocacy of the SBA and after opportunity for public 
comment, establishes one or more definitions of such term which are appropriate to the activities 
of the agency and publishes such definition(s) in the Federal Register.”  A “small organization” is 
generally “any not-for-profit enterprise which is independently owned and operated and is not 
dominant in its field.”   Nationwide, as of 1992, there were approximately 275,801 small 
organizations.    “Small governmental jurisdiction” generally means “governments of cities, 
counties, towns, townships, villages, school districts, or special districts with a population of less 
than 50,000.”   As of 1992, there were approximately 85,006 such jurisdictions in the United 
States.   This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, 
have populations of fewer than 50,000.   Thus, of the 85,006 governmental entities, we estimate 
that 81,600 (91 percent) are small entities.

The SBA defines a radio broadcasting station that has $5 million or less in annual receipts as a 
small business.   A radio broadcasting station is an establishment primarily engaged in 
broadcasting aural programs by radio to the public.   Included in this industry are commercial, 
religious, educational, and other radio stations.   Radio broadcasting stations, which primarily are 
engaged in radio broadcasting and which produce radio program materials, are similarly 
included.   However, radio stations which are separate establishments and are primarily engaged 
in producing radio program material are classified under another NAICS code.   The 1992 
Census indicates that 96 percent (5,861 of 6,127) of radio station establishments produced less 
than $5 million in revenue in 1992.  Official Commission records indicate that 11,334 individual 
radio stations were operating in 1992.   As of June 30, 2001, Commission records indicate that 
12,932 radio stations (both commercial and noncommercial) were operating of which 2,216 were 
noncommercial educational FM radio stations.   Applying the 1992 percentage of station 
establishments producing less than $5 million in revenue (i.e., 96 percent) to the number of 
commercial radio stations in operation, (i.e., 10,716) indicates that 10,287 of these radio stations 
would be considered “small businesses” or “small organizations.”  These estimates may overstate 
the number of small entities because the revenue figures on which they are based do not include or 
aggregate revenues from non-radio affiliated companies. 

D.	Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

The Notice proposes no new recordkeeping or other compliance requirements associated with the 
subject rules and policies.  These rules amend the Commission’s procedures and review processes 
and do not change existing documentation and application requirements. 

E.		Steps Taken to Minimize Significant Impact on Small Entities, 
and Significant Alternatives Considered

The RFA requires an agency to describe any significant, specifically small business, alternatives 
that it has considered in reaching its proposed approach, which may include the following four 
alternatives (among others): (1) the establishment of differing compliance or reporting 
requirements or timetables that take into account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance or reporting requirements under the 
rule for small entities; (3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small entities. 

In this Notice, the Commission explores the underpinnings of two principles underlying the 
regulation of the radio broadcast industry, namely diversity and competition.  The principles of 
diversity and competition are of particular import to small entities.  Thus we seek comment on the 
general advantages and disadvantages of relying on numerical limits or other bright-line rules to 
guide our public interest determination versus conducting a case-by-case competitive analysis.  
The framework minimizes the impact on small entities by not subjecting to further competitive 
analysis transactions below a threshold level.

This Notice invites comment on a number of alternative interpretations of the relationship 
between the revision of local radio ownership rules, embodied in Section 202(b) of the 
Telecommunications Act of 1996 and the Commission’s public interest mandate.   Specifically, 
we propose alternative views on that relationship in the Notice, paragraphs 25-27, seek comment 
on these proposals, and invite additional possible interpretations of the relevant statutory 
provisions.  Further, the Notice seeks comment on how the Commission’s rules and policies 
concerning local radio ownership affect our goal of promoting diversity.   In light of the fact that 
a majority of the radio broadcasting stations likely to be affected are small, we seek comment on 
the impact of industry consolidation on both viewpoint and source diversity.   

In addition to the principle of diversity, this Notice seeks comment on the principle of competition 
in the radio broadcast industry, with regard to the definitions of the marketplace and measurement 
of market share.  

F.		Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed 
Rules
None.

  47 U.S.C. §§ 309(a); 310(d).
  See 47 C.F.R. § 73.3555(a) for the current version of the local radio ownership rule.  In addition to limiting the 
number of radio stations that may be commonly owned, the local radio ownership rule in effect between 1992 and 
1996 presumed that acquisitions of radio stations that proposed a combined audience share greater than 25% 
were contrary to the public interest.
  Pub. L. No. 104-104, § 202(b), 110 Stat. 110.
  Genesee Radio Corp., 5 FCC 183.
  Id. at 186.
  Id. at 187.
  Id.
  See Amendment of Sections 3.35, 3.240 and 3.636 of the Rules and Regulations Relating to Multiple Ownership 
of AM, FM and Television Broadcast Stations, Report and Order, 18 FCC 288, 290 ( 4) n.3 (1953) (1953 
Decision) (citing 5 Fed. Reg. 2384 (1940), 6 Fed. Reg. 2284 (1941), and 8 Fed. Reg. 16065 (1943)); id. at 290-
91 ( 8), 295-96; Amendment of Section 73.3555 of the Commission’s Rules, the Broadcast Multiple Ownership 
Rules, First Report and Order, 4 FCC Rcd 1723, 1723 ( 5) (1989) (1989 Decision).
  See, e.g., 1953 Decision, 18 FCC 2d at 295-96.
  See, e.g., id.  Unlike the AM rule, the FM rule did not expressly provide for a public interest exception.  Id.
  See Amendment of Sections 73.35, 73.240, and 73.636 of the Commission’s Rules Relating to Multiple 
Ownership of Standard, FM and Television Broadcast Stations, Report and Order, 45 FCC 1476, 1484 ( 20) 
(1964 Decision).
  Id. at 1476-77 ( 2).
  Id. at 1477 ( 3).
  Id. (internal quotation marks omitted).
  326 U.S. 1 (1945).
  1964 Decision, 45 FCC at 1477 ( 3) (quoting Associated Press, 326 U.S. at 20). 
  See Amendment of Sections 73.35, 73.240 and 73.636 of the Commission Rules Relating to Multiple Ownership 
of Standard, FM and Television Broadcast Stations, First Report and Order, 22 FCC 2d 306, 307 ( 5-6), 309 
( 10-13) (1970).
  Id. at 311-12 ( 21-23).
  Id. at 313 ( 25).
  The Commission indicated that it wished to examine the question of AM-FM combinations further.  
Amendment of Sections 73.35, 73.240 and 73.636 of the Commission’s Rules Relating to Multiple Ownership of 
Standard, FM and Television Broadcast Stations, Memorandum Opinion and Order, 28 FCC 2d 662, 671-72 ( 
35-36) (1971).
  1989 Decision, 4 FCC Rcd at 1723 ( 1).
  Id. at 1724 ( 7).
  Id. at 1727 ( 31, 37).
  Id. at 1727 ( 33).
  Revision of Radio Rules and Policies, Report and Order, 7 FCC Rcd 2755, 2773-74 ( 35) (1992).
  Id. at 2757-58 ( 4-6), 2773-74 ( 35).
  Id. at 2759 ( 8).
  Id. at 2774 ( 37).
  Id. at 2776 ( 40).  The complete framework was as follows:
In markets with fewer than 15 radio stations, a single licensee will be permitted to own up to three 
stations, no more than two of which are in the same service, provided that the owned stations represent 
less than 50 percent of the stations in the market. Common ownership of one AM/FM combination will 
continue to be allowed in any event.
In markets with 15 to 29 radio stations, a single licensee will be permitted to own up to two AM stations 
and two FM stations, provided that the combined audience share of the stations does not exceed 25 
percent.
In markets with 30 to 39 radio stations, a single licensee will be permitted to own up to three AM 
stations and two FM stations, provided that the combined audience share of the stations does not exceed 
25 percent.
In markets with 40 or more radio stations, a single licensee will be permitted to own up to three AM 
stations and three FM stations, provided that the combined audience share of the stations does not 
exceed 25 percent.
Id.
  Id. at 2780 ( 50).
  Id. at 2778 ( 45).  For stations that were not in Arbitron markets, the Commission used a contour overlap 
market definition under which a radio market was the area encompassed by the principal community contours of 
the commonly owned stations whose contours overlapped.  For purposes of applying the numerical caps, the 
number of stations in the market was calculated based on the number of commercial radio stations whose 
principal community contours fell fully or partially within the radio market.  To apply the audience share test in 
non-Arbitron markets, applicants were required to commission an audience survey for the counties that were 
located in whole or in part in the radio market.  See id. at 2778-79 ( 45-46) & n.101; 2798.
  Id. at 2783 ( 56) n.109.  In particular, the Commission suggested that, in appropriate circumstances, it may 
order divestiture of a station if through audience growth “any station group reaches or exceeds a 40 percent local 
market share.”  Id.
  See Revision of Radio Rules and Policies, Memorandum Opinion and Order and Further Notice of Proposed 
Rulemaking, 7 FCC Rcd 6387 (1992) (1992 Reconsideration Order).
  Id. at 6393 ( 32).
  Id. at 6406.
  Id. at 6393 ( 32).
  Id. at 6395 ( 39-40).
  Id. at 6398 ( 52-53).
  Id. at 6399-400 ( 54-58).  The Commission issued a second reconsideration order in 1994 in which the 
Commission maintained the rule adopted in the 1992 reconsideration order, except for certain technical 
modifications.  Revision of Radio Rules and Policies, Second Memorandum Opinion and Order, 9 FCC Rcd 
7183, 7187-90 ( 24-39) (1994).  In deciding not to modify the rule further, the Commission acknowledged that 
its new rule would increase concentration in smaller radio markets, while maintaining an unconcentrated market 
structure in larger markets.  Id. at 7186 ( 17-18).  The Commission concluded, however, that consolidation 
permitted greater efficiencies and could increase diversity by providing the means for marginal stations to come 
or remain on the air and by providing incentives for common station owners to offer diverse formats targeting 
different segments of the audience.  Id. at 7186 ( 19-20).
  Section 202(b) also provides that the Commission may permit a party to exceed these limits “if the Commission 
determines that [it] will result in an increase in the number of radio broadcast stations in operation.”  1996 Act, 
§ 202(b)(2), 110 Stat. at 110-11.
  H.R. Conf. Rep. 104-458, 104th Cong., 2d Sess. 162 (1996).  The legislative history of Section 202(b) reflects 
the significant differences between the local radio ownership provisions of the Senate and House bills and Section 
202(b).  The Senate bill would have required the Commission to modify its broadcast ownership rules to 
eliminate numerical limits on the number of AM or FM stations that may be owned or controlled by one entity 
nationally or “in a particular market.”  S. 652, § 206(b)(2).  The bill authorized the Commission to “refuse to 
approve the transfer or issuance” of a radio license if it finds that an entity would “obtain an undue concentration 
of control or would thereby harm competition.”  Id.  Thus, the Senate bill would have replaced numerical and 
audience share limits with a case-by-case analysis focused on competition issues.  The House bill would have 
eliminated the local radio ownership rule in its entirety, but would have authorized the Commission to deny an 
application for a station license, license renewal, or license assignment if the combination of the station and 
“more than one other nonbroadcast media of mass communication would result in an undue concentration of 
media voices in the respective local market.”  H.R. 1555, § 302(c) (July 4, 1995) (proposing to add new section 
337(c) to the Communications Act).  The term “medium of mass communication” was intended to include radio 
and television stations licensed to communities in the market, daily newspapers published in communities in the 
market, and cable television and other equivalent delivery systems that service communities in the market.  See 
H. Rep. No. 104-204, pt. 1, at 118.  The House bill also would have prohibited grant of such an application if it 
would result in “all the media of mass communication in such local market” being owned, operated, or controlled 
by “two or fewer persons or entities.”  H.R. 1555, § 302(c) (July 4, 1995).
  110 Stat. at 111-12.
  Id. at 112.
  Implementation of Sections 202(a) and 202(b)(1) of the Telecommunications Act of 1996 (Broadcast Radio 
Ownership), Order, 11 FCC Rcd 12368.
  Id. at 12371 ( 5).
  1998 Biennial Regulatory Review -- Review of the Commission’s Broadcast Ownership Rules and Other Rules 
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Notice of Inquiry, 13 FCC Rcd 11276, 
11276 ( 1) (1998) (1998 NOI) (quoting Section 202(h) of the 1996 Act).
  1998 Biennial Regulatory Review -- Review of the Commission’s Broadcast Ownership Rules and Other Rules 
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Biennial Review Report, 15 FCC Rcd 
11058, 11087 ( 52) (2000) (Biennial Review Report)
  Id. at 11088 ( 55).
  Id. at 11089-90 ( 56-57).
  Id. at 11091 ( 60).
  See id. at 11093-94 ( 65-68) for a more complete explanation of the market definition methodology at issue 
in the MM Docket No. 00-244.
  See Definitions of Radio Markets, Notice of Proposed Rulemaking, 15 FCC Rcd 25077 (2000) (Market 
Definition NPRM).
  Radio station consolidation also occurred at the national level as a result of the elimination of national radio 
ownership limits.  See 1996 Act, § 202(a), 110 Stat. at 110.
  CHET-5 Broadcasting, L.P., Memorandum Opinion and Order, 14 FCC Rcd 13041, 13043 ( 8) (1999) (citing 
47 U.S.C. § 309(a) and KIXK, Inc., 13 FCC Rcd 15685 (1998)).
  See, e.g., Shareholders of Citicasters, Inc., Memorandum Opinion and Order, 11 FCC Rcd 19135, 19141-43 
( 12-16) (1996); Great Empire Broadcasting, Inc., Memorandum Opinion and Order, 14 FCC Rcd 11145, 
11148 ( 10) (1999); Shareholders of AMFM, Inc., Memorandum Opinion and Order, 15 FCC Rcd 16062, 16066 
( 7-8) & n.10 (2000).
  See Broadcast Applications, Rep. No. 24303 (Aug. 12, 1998).
  See AMFM, Inc., 15 FCC Rcd at 16066 ( 7) n.10.
  47 U.S.C. §§ 309(a); 310(d).  In addition, 47 U.S.C. § 303(r) authorizes the Commission, “as the public 
convenience, interest, or necessity requires,” to “[m]ake such rules and regulations and prescribe such restrictions 
and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this Act.”
  See, e.g., FCC v. National Citizens Comm. for Broadcasting, 436 U.S. 775 (1978) (upholding newspaper 
broadcast cross ownership rule as rational means to promote diversity); United States v. RCA, 358 U.S. 334, 351-
52 (1959) (“in a given case the Commission might find that antitrust considerations alone would keep the 
statutory standard from being met, as when the publisher of the sole newspaper in an area applies for a license for 
the only available radio and television facilities, which, if granted, would give him a monopoly of that area’s 
major media of mass communication”); National Broadcasting Co. v. United States, 319 U.S. 190 (1943) 
(upholding various broadcast ownership and network affiliation regulations issued under the public interest 
standard); United States v. FCC, 652 F.2d 72, 81-82 (D.C. Cir. 1980) (en banc) (because “competitive 
considerations are an important element of the public interest standard,” agencies must “make findings related to 
the pertinent antitrust policies, draw conclusions from the findings, and weigh these conclusions along with other 
important public interest considerations”); Mansfield Journal Co. v. FCC, 180 F.2d 28, 33 (D.C. Cir. 1950) (“It 
is certainly not in the public interest that a radio station be used to achieve monopoly”); American Broadcasting 
Co., Inc., Memorandum Opinion and Order, 7 FCC 2d 245, 251-52 (1966), recon. denied, 9 FCC 2d 546, 548 
(1967).
  See, e.g., AMFM, Inc., 15 FCC Rcd at 16066 ( 7).
  1996 Act, § 601(c)(1), 110 Stat. at 143.
  A detailed description of our contour overlap definition, see Market Definition NPRM, supra.
  Courts have recognized that titles and headings can be important tools in construing a statute or regulation.  
See, e.g., Almendarez-Torres v. United States, 523 U.S. 224, 234 (1998); Hardin v City Title & Escrow, 797 F.2d 
1037, 1039 (D.C. Cir. 1986).  We note, however, that the Commission has not always given meaning to statutory 
headings.  See, e.g., Federal-State Board on Universal Service, Report and Order, 13 FCC Rcd 11501, 11584-
11589 (interpreting Sec. 254(h) as not being limited to telecommunications services, despite the heading, 
“Telecommunications Services for Certain Providers”).
  See 47 U.S.C. §§ 309(a); 310(d). 
  See Associated Press, 326 U.S. at 20.
  1964 Decision, 45 FCC at 1477 ( 3).
  1998 NOI, 13 FCC Rcd at 11278 ( 6).
  Id.
  Id.
  Id.
  See 1989 Decision, 4 FCC Rcd at 1724 ( 7).
  We seek comment elsewhere in this Notice about our use of competition analysis in evaluating our rules and 
policies concerning local radio ownership.
  The Commission’s localism policy historically has been grounded on the notion that “as many communities as 
possible should have the opportunity of enjoying the advantages that derive from having local outlets that will be 
responsive to local needs.”  Sixth Report and Order in Docket No. 8736, 1 RR 91:559, :624 (1952).
  FCC News Release, Broadcast Station Totals as of June 30, 2001 (July 13, 2001).
  FCC News Release, Broadcast Station Totals as of June 30, 2001 (July 13, 2001).
  SRDS, Circulation 2001, at 1038.
  Newspaper Ass’n of America, Petition for Rulemaking, at 24 (filed Apr. 28, 1997).
  Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming, Seventh 
Annual Report, 16 FCC Rcd 6005, 6017 ( 19) (2001) (Seventh Annual Report).
  Id. at 6105, Table B-5.
  Id. at 6037 ( 61) n.235.
  Id. at 6054 ( 107).
  Mass Media Bureau Staff Report, Review of the Radio Industry, 2001, September 2001, p. 3. 
www.fcc.gov/mmb/prd/radio.html.
  Id. at 7.
  Broadcasting & Cable Yearbook 1995, at A98-A123.
  BIA MasterAccess Database, Mar. 2001.
  Amendment of Sections 73.34, 73.240, and 73.636 of the Commission’s Rules Relating to Multiple Ownership 
of Standard, FM, and Television Broadcast Stations, Second Report & Order, 50 FCC 2d 1046, 1074 ( 99) 
(1975).
  Review of the Commission’s Regulations Governing Television Broadcasting, Further Notice of Proposed 
Rulemaking, 10 FCC Rcd 3524, 3551 ( 63) (1995).
  See supra Section II.B.
  1996 Act, § 202(h), 110 Stat. at 111-12.
  Review of the Commission’s Regulations Governing Television Broadcasting, 10 FCC Rcd 3524, 3532 ( 16) 
(1995).
  U.S. Dep’t of Justice & FTC, 1992 Horizontal Merger Guidelines, §§ 1.1, 1.2 (revised 1997) (1992 Merger 
Guidelines).  In settlements requiring divestiture, the DOJ concluded that the sale of advertising time on radio 
stations constitutes the relevant market for antitrust purposes.  See, e.g. Competitive Impact Statement, United 
States v. CBS Corporation and American Radio Systems Corporation, Case No. 98CV00819 (D.D.C. March 31, 
1998); Competitive Impact Statement, United States v. Hicks, Muse, Tate & Furst Inc., Case No. CV 98-2422 
(March 31, 1998); Competitive Impact Statement, United States v. Jacor Communications, Inc. and Citicasters, 
Inc., Case No. C-1-96-757 (S.D. Ohio, August 5, 1996); Competitive Impact Statement, United States v. American 
Radio Systems Corporation and EZ Communications, Inc., Case No. 97CV405 (D.D.C. March 20, 1997).
  U.S. Department of Justice, Comments in Response to Public Notice, In re Application of Citadel 
Communications Corporation and Marathon Media L.P. for consent to Assignment of Licenses of Stations (April 
26, 1999) at 7.
  1992 Merger Guidelines § 1.21.
  For example, out-of-market stations that can be heard in a local market may provide more competitive pressure 
on local radio stations with respect to national or regional advertisers, but not with respect to local advertisers.
  Specifically, we have defined the radio market “as that area encompassed by the principal community contours 
… of the mutually overlapping stations proposing to have common ownership.  The number of stations in the 
market will be determined based on the principal community contours of all commercial stations whose principal 
community contours overlap or intersect the principal community contours of the commonly-owned and mutually 
overlapping stations.”  1992 Reconsideration Order, 7 FCC Rcd at 6395 ( 39).  See also Biennial Review Report, 
15 FCC Rcd at 11091-94 ( 62-65).  In the Notice issued in MM Docket No. 00-244, we sought comment on 
possible revisions to the market definition for purposes of applying the local radio ownership rule.
  See, e.g., AMFM, Inc., 15 FCC Rcd at 16068 ( 15).
  The DOJ also generally has relied on the Arbitron market as the relevant geographic market.  U.S. Department 
of Justice, Comments in Response to Public Notice, In re Application of Citadel Communications Corporation 
and Marathon Media L.P. for Consent to Assignment of Licenses of Stations (April 26, 1999) at 8-9.
  “Below-the-line” stations are classified as “out-of-market” stations by BIA Publications, Inc. in BIA’s Master 
Access Database.
  Comments filed in MM Docket No. 00-244 will be included in the record in this proceeding.
  The HHI for a market is calculated by summing the squares of the individual market shares of all firms 
participating in the market.  Under the Merger Guidelines approach, markets with an HHI below 1000 are 
deemed unconcentrated; those with an HHI between 1000 and 1800 are moderately concentrated; and those with 
an HHI above 1800 are termed highly concentrated.  In cases where the post-merger market is highly 
concentrated, and an acquisition would result in an increase of more than 100 points in the HHI, the acquisition 
is presumed to be likely to create or enhance market power or facilitate its exercise.
  See Great Empire Broadcasting, Inc., supra.  The following radio mergers that included settlements with the 
DOJ attest to the Department's recognition that an HHI over 1,800 may not necessarily imply adverse competitive 
consequences in a local radio market.  See, e.g., Final Judgment in United States v. CBS Corporation and 
American Radio Systems Corporation, Case No. 98CV00819 (D.D.C. June 30, 1998); Final Judgment in United 
States v. Hicks, Muse, Tate & Furst, Inc., Case No. CV 98-2422, (E.D.N.Y. Aug. 17, 1998); Final Judgment in 
United States v. EZ Communications, Inc. and Evergreen Media Corp., Case No. 97CV00406 (D.D.C. Jun. 17, 
1997); Final Judgment in United States v. Westinghouse Electric Corporation, Case No. 96 CV02563 (D.D.C. 
Mar. 10, 1997);  Final Judgment in United States v. Jacor Communications, Inc., Case No. C-1-96-757 (S.D. 
Ohio, Dec. 31, 1996).
  United States v. Microsoft Corp., 253 F.3d 34, 54 (D.C. Cir. 2001) (en banc).
  Easy entry into an industry can offset the potential anticompetitive effects of other aspects of firm dominance, 
such as format dominance or signal strength dominance in a given geographic radio market.  The assessment of 
the conditions of entry considers, in addition to the timeliness, likelihood, and sufficiency of entry, two important 
types of entry barriers, namely, (1) technical, economic, and regulatory barriers into any given geographic radio 
market, where "radio" constitutes a relevant antitrust market; and (2) mobility barriers that influence the cost to a 
radio station of switching from one programming format to another. Barriers into a local radio market may be 
substantial if no spectrum is available to permit an additional AM or FM station to enter the market.  Similarly, 
mobility barriers between and among different radio formats may also be substantial, such as a talk-radio AM 
station that considers competing with a rock and roll FM station.  In any given transaction, low entry barriers 
may offset the potential for increased market power due to increased concentration.
  We note that radio stations generally can and do change format in response to perceived profit opportunities.   
We believe that this ability to change format fairly rapidly and at relatively low cost may often defeat an attempt 
by a station group to dominate a format or target a demographic in a local market.  We invite comment on this 
view.
  For profit-maximizing firms, including monopolies, facing many customers, reductions in fixed costs that do 
not affect marginal cost ordinarily do not create an incentive to lower price.  See 1992 Horizontal Merger 
Guidelines at § 4.  If, however, the firm faces just one or few customers, then the seller may bargain with the 
customer or customers over price and other terms of sale.  In this case, then reductions in the seller’s fixed costs 
may be “shared” with the customers to an extent that reflects the relative bargaining power of the seller and 
buyer. 
  For example, any efficiency gains created solely because the common owner also owns radio stations in distant 
markets, or because the common owner is vertically integrated with program producers, likely would not be 
relevant to the issue of whether consolidation of stations in a local market produces efficiency gains.
  The basic economics of coordinated behavior among cooperative oligopolies are summarized in Dennis W. 
Carlton and Jeffrey M. Perloff, Modern Industrial Organization, 2d ed. (New York: HarperCollins, 1994), Chapter 
6.  In relatively concentrated markets, even as few as three independent competitors can nevertheless induce 
competitive-like market conduct, an empirical finding with direct relevance to maintaining competition in local 
radio advertising markets.  See Timothy F. Bresnahan and Peter C. Reiss, “Entry and Competition in Concentrated 
Markets,” Journal of Political Economy 99 (1991): 977-1009.
  The local market information presented here is based on the BIA database as of September 24, 2001.
  For example, a combination of four radio stations with a total radio advertising revenue share of 20% will 
likely have a very different competitive effect from a combination of four radio stations with a combined radio 
advertising revenue share of 90%.
  Market Definition NPRM, 15 FCC Rcd 25077 (2000).
  See supra  23.
  See supra  26.
  See supra Section III.B.
  See also supra  57.
  Historically, the DOJ, not the Federal Trade Commission, has taken the lead in reviewing proposed radio 
station transactions.
  We do not, however, have the statutory authority to forbear from our public interest obligation with respect to 
broadcasting services.
  Under the new threshold, transactions valued at less than $50 million are not subject to review under Hart-
Scott-Rodino.  See Pub. L. No. 106-553, 114 Stat. 2762, 2762A-109.
  1992 Merger Guidelines, §§ 1.0 - 1.2.  See Regulatory Treatment of LEC Provision of Interexchange Services 
Originating in the LEC's Local Exchange Area and Policy and Rules Concerning the Interstate, Interexchange 
Marketplace, Second Report and Order in CC Docket No. 96-149 and Third Report and Order in CC Docket No. 
96-61, 12 FCC Rcd 15756 (1997); Rulemaking to Amend Parts 1, 2, 21, and 25 of the Commission's Rules to 
Redesignate the 27.5-29.5 GHz Frequency Band, To Reallocate the 29.5-30.0 GHz Frequency Band, To Establish 
Rules and Policies For Local Multipoint Distribution Service and for Fixed Satellite Services, Second Report and 
Order, Order on Reconsideration, and Fifth Notice of Proposed Rulemaking, 12 FCC Rcd 12545 (1997); Pacific 
Telesis Group, Memorandum Opinion and Order, 12 FCC Rcd 2624 (1997); Motion of AT&T Corp. To Be 
Declared Non-Dominant for International Service, Order, 11 FCC Rcd 17963 (1996); Sprint Corporation, 
Declaratory Ruling and Order, 11 FCC Rcd 1850 (1996); Motion of AT&T Corp. To Be Reclassified as a Non-
Dominant Carrier, Order, 11 FCC Rcd 3271 (1995); BAMS-NYNEX Mobile, 10 FCC Rcd 13368 (1995); Market 
Entry and Regulation of Foreign Affiliated Entities, Report and Order, 11 FCC Rcd 3873 (1995); Craig O. McCaw 
& American Tel. & Tel. Co, Memorandum Opinion & Order, 9 FCC Rcd 5836 (1994), recon. denied, 10 FCC Rcd 
11786 (1995), aff'd sub nom. SBC Communications v. FCC, 56 F.3d 1484 (D.C. Cir. 1995); Request of MCI 
Communications Corp. British Telecommunications PLC, Declaratory Ruling and Order, 9 FCC Rcd 3960 (1994).
  See 1992 Merger Guidelines.  See also Brown Shoe Co. v. United States, 370 U.S. 294, 324-25 (1962) (defining 
relevant product market in terms of reasonable interchangeability of a service or product and its substitute, while 
considering  price, use, and quality); United States v. FCC, 652 F.2d 72, 97 (D.C. Cir. 1980); Craig O. McCaw, 9 
FCC Rcd at 5845  10, nn.27-28.  With regard to the definition of the relevant geographic scope of relevant 
markets, see United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 359 (1963) (defining relevant geographic 
market as an area in which a buyer may purchase a product or service from alternative sources, or in which the 
presence of other sellers restrains prices charged to buyers).
  See 1992 Merger Guidelines § 1.3.
  See, e.g. Philadelphia Nat'l Bank, 374 U.S. at 363 ("[A] significant increase in the concentration  . . . must be 
enjoined in the absence of evidence clearly showing that the merger is not likely to have such anticompetitive 
effects.").  See also 1992 Horizontal Guidelines at 41558 §§ 2.1, 2.2; New York v. Kraft General Foods, 926 F. 
Supp. 321, 359 (S.D.N.Y. 1995); Amendment of Parts 20 and 24 of the Commission's Rules -- Broadband PCS 
Competitive Bidding and the Commercial Mobile Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 
7824 (1996).
  See 1992 Merger Guidelines § 4 et seq.; see, e.g., FTC v. University Health, Inc., 938 F.2d 1206, 1213 (11th 
Cir. 1991) (stating that defendants must show that acquisition would result in significant efficiencies that would 
benefit competition and the consumer).
  See Great Empire Broadcasting, 14 FCC Rcd at 11151 ( 15-16).
  See supra  42-50.
  Review of the Commission’s Regulations Governing Television Broadcasting, Report and Order, 14 FCC Rcd 
12903, 12939 ( 81) (1999).
  Id. at 12940 ( 81).
  See, e.g., Capital Cities/ABC, Inc., 11 FCC Rcd 5841 (1996).
  Review of the Commission's Regulations Governing Attribution of Broadcast and Cable/MDS Interests, Report 
and Order, 14 FCC Rcd 12559, 12591 ( 66) (1999) (1999 Attribution Order).
  47 C.F.R. § 73.3555 Note 2(k).
  See 1992 Reconsideration Order, 7 FCC Rcd at 6402 ( 66).
  1999 Attribution Order, Report and Order, 14 FCC Rcd at 12594, 12598 ( 72, 87).
  Id. at 12612-13 ( 122-23).
  Id. at 12612-13 ( 123).
  Id. at 12612 ( 122).  Although the DOJ had argued in favor of attribution because of the potential competitive 
impact of JSAs, the Commission found that its concerns, unlike those of the DOJ, included not only competition 
but also diversity and reducing administrative burdens on licensees.  Id.
  Id. at 12612-13 ( 123).
  Id.
  We will continue the policy of not flagging proposed radio transactions that do not involve stations located in 
Arbitron metro markets.
  To the extent that the relevant geographic market for a proposed transaction involving radio stations not 
located in an Arbitron market is raised, it will be determined on a case-by-case basis without a presumption.
   See 5 U.S.C. § 603.  The RFA, see 5 U.S.C. § 601-612, has been amended by the Small Business Regulatory 
Enforcement Fairness Act of 1996 (SBREFA), Pub.L. No. 104-121, Title II, 110 Stat. 857 (1996).
   5 U.S.C. § 603(b)(3).
    Id. § 601(6).
   Id. § 601(3).
    15 U.S.C. § 632.
    5 U.S.C. § 601(4).
    1992 Economic Census, U.S. Bureau of the Census, Table 6 (special tabulation of data under contract to Office 
of Advocacy of the U.S. Small Business Administration).
    5 U.S.C. § 601(5).
    U.S. Dept. of Commerce, Bureau of the Census, “1992 Census of Governments.”
    Id.
    13 CFR § 121.201, NAICS code 513111 and 513112.
    1992 Census, Series UC92-S-1, at Appendix A-9. 
  Id.  
  Id.
  Id.
  FCC News Release, No. 31327 (Jan. 13, 1993).
  FCC News Release, Broadcast Station Totals as of June 30, 2001, (issued July 13, 2001).
  5 USC § 603(c).
  See Notice, paragraphs 14-18.
  Id. at paragraphs 29-38.
  Id. at paragraphs 36-38.
  Id. at paragraphs 39-50.
 
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