Does Radio Need More Deregulation (Part 2)

Story by Radio Ink

All week long we’ll be interviewing radio CEOs to get their thoughts on whether or not they believe ownership caps at the FCC need to be changed, eliminated, or whether they are fine as they are now. The NAB is working with broadcasters to come up with a plan to present to the Commission next month. Our second interview features JVC Media CEO John Caracciolo

Radio Ink: Are you in favor or against lifting ownership caps?
John Caracciolo: Definitely in favor of modifying the caps as well as many of the archaic rules imposed by the Commission that unfairly limit our ability to compete in this high-tech communication industry. A lot has changed since the 1960s; unfortunately the Federal Code of Regulations part 73 and 74 is not on that list.

Radio Ink: Do you have a specific number in mind?
John Caracciolo: There should be no caps at all. Why limit the ability of any business to compete and succeed in their home market?

Radio Ink: What are you hearing? Is there a consensus among owners as to what should be done?
John Caracciolo: The large group owners that have already achieved market dominance obviously don’t want it. Small and midsize cluster owners are looking for the ability to level the playing field.

Radio Ink: What do you say to the broadcasters who say the first round of deregulation ruined radio?
John Caracciolo: Deregulation didn’t ruin radio, radio broadcasters ruined radio. We did it! We went crazy with consolidation and ruined the local livelihood that made our medium so special. We consolidated and destroyed the very essence of our business by limiting local and live content, getting rid of locally produced shows and staff, and decimating promotion and public service. What we did is like buying a high-end successful steak house and walking in day one and cutting the quality of the food, limiting the portions, and getting rid of most of the help and thinking these moves are going to make us more money. Shame on us for what we did with the first round of deregulation. We cut the product, we cut content, we got rid of great people.

Radio Ink: We’ve heard the argument that caps need to be lifted in order to compete with FB and Google and other big unregulated digital companies.
John Caracciolo: True. They are getting more and more ad money, but do you really think that argument is going to fly?

Radio Ink: Radio stations in nearly every market are playing so many commercials every hour, yet the revenue never grows. Isn’t the issue really a rate issue?
John Caracciolo: Caps need to be lifted to make our business locally produced once again. Yes we need to raise rates but we do that by not competing against our own medium. We need to take on FB and Google, but we also need to stop dropping our pants every time a competing radio station comes in with a lower rate. By giving a group more dominance in a market the hope is ownership will invest in good local content that will drive listeners back to their hometown stations and we will have the ability to maintain rates, monitor commercial load, and produce a quality product once again. Reinvestment in content, product, and people is the key to this round of deregulation working.

Radio Ink: Right now, in a lot of markets, owners that have multiple stations throw in the weak ones at no charge, killing the average unit rate and devaluing the product. How would being able to own more stations make that better and not worse?
John Caracciolo: Hopefully, if an owner has more stations and can fight off some of the FB, Google competition, they can find a happy balance to enforce rate integrity since they will not have to worry about protecting their flank on the digital side. I think what happens now is a large group in a market can HD three or four of their stations, find three or four translators and put them on at low cost with no local content or programming and just let them run. With fill-in translators at 250 watts and an unlimited height, you can have signals as good, if not better, than some class A stations. Under today’s rules, a well-positioned cluster with HD and good translators can have nine to 10 signals on the air. Are they giving the translators away at no charge? Are they using the translators as competition busters and really don’t care about monetizing them? My hope would be an elimination of caps would put the medium back into the control of real broadcasters that understand rate integrity, local programming, and good content.

Radio Ink: Is it true iHeart is basically the only holdout against lifting caps?
John Caracciolo: I have heard a lot of rumors of who wants them and who wants to keep things the same. If I had to guess, I would say iHeart would be a holdout. Let’s face it, they dominate a lot of markets now and under their current financial limitations they would be hard pressed to go on a buying binge now.

Radio Ink: Look into your crystal ball. What do you think will happen in June?
John Caracciolo: I think we see some modification of the caps, unfortunately I don’t think they will be eliminated altogether. I don’t think anyone at the Commission has the guts to do that, I wish they did. Looking into that same crystal ball a little further down the road, I think once all the dust settles with iHeart and Cumulus, and the FCC modifies the market caps, a new radio landscape will emerge where separate radio groups will be successful large-market companies and separate groups will be excellent mid-market operators and you will have a third level of ownership groups of small-market stations. Radio is and always will be best live and local. Radio is not a national platform; leave that for satellite and Pandora.

Radio Ink: Do you know any broadcasters opposed to lifting the caps?
John Caracciolo: I do not. I surround myself with owners and operators that love this business. They don’t negative sell against the competition, they care about the content, the programming, and the people. And most of all they care about the community. These are the real radio broadcasters that will do whatever it takes to succeed and prosper.