Clear Channel: Internet means we get to buy more radio stations

story by arstechnica
written by Matthew Lasar

It's time once again for the Federal Communications Commission to consider its broadcast ownership rules. That means another huge petition from Clear Channel Communications calling for the elimination of any restrictions on the number of radio stations that the company can buy.

Why? The Internet.

"Today, terrestrial radio stations compete not only with their local peers but also with the growing panoply of regulated and unregulated competitors at the local, regional, and global levels," Clear Channel writes. "These competitors use new technologies and services to deliver music, entertainment, and news in formats and on platforms that today’s audiences demand. Many of these outlets did not exist in 1996, and several were in nascent stages in 2006; today, satellite radio and internet-based services are robust competitors to terrestrial radio stations."

Given broadcast radio's "past dominance as a purveyor of audio content," Clear Channel adds, the presence of these new competitors "axiomatically reduces radio broadcasters' share of the market," making the agency's ownership restrictions outdated.

Who has a share of what?

That mention of 1996 refers to the Telecommunications Act, passed by Congress that year. The massive law eliminated any national restrictions on the number of terrestrial radio stations an entity could purchase, capping the maximum in big local markets (New York, Los Angeles) at eight, and in the smallest at five. As a consequence, Clear Channel famously went on a buying spree, snapping up 1,168 commercial licenses by 2006 and winning a reputation as "radio's big bully."

Then, as the audience for over-the-air radio shrank, the company lightened its load. At present the broadcaster owns 857 signals, or 5.9 percent of the nation's 14,400-plus free, over-the-air radio licenses.

So does nearly six percent represent the kind of "media consolidation" that critics constantly inveigh against? It depends on how you look at it. The American Federation of Radio and Television Artists, also commenting in this proceeding, notes that if you add Cumulus Media's almost 400 stations to the mix, the duo controls about 74 of the revenue in any given terrestrial market. Not bad for companies that respectively owned 62 and 53 stations in 1996.

But Clear Channel sees it differently, arguing that if you consider the growth in Internet and satellite based radio over the last decade, the company's share of the audiosphere isn't that big. What's informative about the filing is that it chronicles the degree to which audio listening really has changed.

For example:

Edison and Arbitron research indicate that 70 million Americans now listen to Internet radio on a monthly basis, up from 50 million four years ago. In 2006 the majority of these sources were terrestrial stations streaming on their websites. Today they're more likely to be independent online broadcasters like Pandora, which I'm listening to as I write this post.

The Pew Research Center indicates that a third of cell phone users now use their devices for some kind of audio playback. iPhone owners are particularly fierce in this regard. Over 74 percent listen to music or talk "radio" on their gadgets.

In 2006, only one out of five Americans over the age of 12 had even heard of podcasts. A mere tenth had actually listened to one. By 2009 that share had jumped to one in five, and 43 percent knew of their existence.

"In sum, terrestrial radio competes in a far more diverse and robust media environment than ever before," Clear Channel concludes. "Yet, none of the new competitors to free, over-the-air radio broadcasting are constrained by government-imposed limits on the number of outlets that can be owned."

What is radio again?

These stats raise three challenging questions for the FCC. First, what exactly is "radio" now? Does the category include music downloads and DJ-less music streams? Are podcasts radio?

Second, what share does terrestrial radio now command of this category as a whole?

Finally, the Commission is going to have to come up with some kind of renewed assessment of the extent to which radio, which has become a hybrid of terrestrial and Web-based services, still serves the "public interest, convenience, and necessity," especially when it comes to coverage of local issues.

Clear Channel is particularly sensitive to the localism thing. The company pushed back hard against allegations that its stations dropped the ball on emergency coverage for the town of Minot, North Dakota, following a 2002 toxic spill in that area.

In pursuit of these questions, the FCC is commissioning a series of studies about radio. These will include an assessment of the amount of local news that radio stations provide, and a survey that will "examine the availability and usage of local content on the Internet," and how much of this content is provided by sources affiliated with local radio stations, television stations, or newspapers. Clear Channel has its own online service: iheartradio.com.

The irony of Clear Channel's filing, however, is that while the company emphasizes the increasing power of the Internet, its urgent call for a relaxation of the FCC's radio station ownership rules suggests that these old-school radio licenses are still very valuable. For years the company has doggedly pursued the authority to buy more stations, testifying to its dedication (or at least attachment) to the medium, despite years of financial trouble.

This passion makes us wonder whether over-the-air radio's "past dominance" is really a thing of the past. Indeed, the growth of Internet radio seems only to whet Clear Channel's appetite for more conventional licenses.

"All of these competing platforms are allowed to grow freely to meet marketplace demands," the company insists. "Giving terrestrial radio broadcasters equal treatment by eliminating the local radio ownership caps will enable the industry to remain competitive in the current, unsettled economy and in today’s age of media abundance."