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An Open Letter to the FCC: Your Proposed Fee Hikes Are Not Grounded in Reality

"These proposed increases are ignorant of the real world implications on stations’ financial health"

The author of this guest commentary submitted the following as comments to the FCC and then shared it with Radio World. 

I have been active in the broadcast industry for my entire life; indeed, my first employment in radio was at age 17. I therefore have several decades of experience to draw upon in offering comments on this proceeding. I have held management-level positions at several points in my career and have since 1990 been self-employed as a radio programming consultant.

I work almost entirely with small market stations. With only one exception, all of my past and current clients serve a population of 500,000 or less. I will therefore focus only on the potential impact to these stations, the vast majority of which have local or regional ownership, as opposed to the major market stations with national group owners.

My first comment is more general in nature even as it applies to these smaller stations in a more critical way: I do not believe that the broadcast industry as a whole has significantly recovered from the pandemic-related economic slowdown of the past two years. Using the Bureau of Labor Statistics figures for the Consumer Price Index – a reasonable benchmark when determining expenses not only for the general public but also for business entities – in 2021 the CPI rose by 7% over 2020, which, while significantly higher than the two preceding years (1.4% in 2020 and 2.3% in 2019), is only about half of the average 13% that the ,commission proposes to increase regulatory fees. I therefore suggest that this proposal is not grounded in reality and, if an increase is approved, it should be by amounts that are closer to the BLS figures I reference here.

[Related: “U.S. Radio Stations Face 13% Fee Hike“]

I also observe that, even with the present de minimus threshold of $1,000 exempting the smallest of the small stations that I work with, many have had difficulty maintaining sufficient advertising revenue to continue operations. Over the two year period ending in March of this year, I literally lost every client station I had in these small markets because they went permanently silent and relinquished their licenses.  Many of them served populations higher than 25,000 – the point at which the de minimus threshold becomes meaningless, even under the present fee table – and the combination of expenses and non-exempted FCC regulatory fees was enough to force their balance sheet permanently into the red. I shudder at the idea of even a Class C AM station, serving a population level placing it in the second tier (under 75,000), going from exempt to just over $1,000 in the space of a single year. At the upper end of my client base (population served 150,001 to 500,000) the increase in fees has the same financial impact as adding a 13th monthly electric bill for the transmitter … presuming the station has state-of-the-art solid state equipment, which many small stations do not.

[Read More Guest Commentaries Here]

Simply put, these proposed increases are ignorant of the real world implications on stations’ financial health and if they are approved at these amounts I strongly suggest that the de minimus threshold be concurrently trebled, to $3,000. This would bring nearly all AM stations serving under a 500,000 population into exempt status (the exception being Class A, and there are not likely many licensed for that power level which serve so small a population) and nearly all FM stations – except for Class A, B1 and C3 stations serving more than 150,000 and Class B, C, C0, C1 and C2 serving more than 75,000 – into exempt status as well.  I believe, given my observations of the aforementioned client stations that failed over the past two years, that those stations that would still exceed the de minimus threshold will have a significantly better chance at affording these increased fees due to their potential reach for advertisers.

Therefore, I believe that some combination of a lower increase in regulatory fees and a higher exemption threshold is in the public interest by allowing these station to continue operations.