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Relaxing Local Ownership Caps Would Harm AM Radio, Says MMTC

Organization said relaxation will discourage minority ownership and undo incubator efforts

The onus to boost diversity in today’s broadcast ownership falls squarely on the shoulders of the Federal Communications Commission, said the Multicultural Media Telecom and Internet Council — and the 2018 Quadrennial Review gives the commission an opening to take action.

That sentiment was expressed by MMTC as part of the record being gathered by the FCC. The commission is in the midst of re-reviewing three of its broadcast ownership rules as part of the Quadrennial Review: the local radio ownership rule, the local television ownership rule and the dual network rule.

[Read: The Three Types of Radio Deregulation]

When it comes to broadcast ownership, the organization said that the commission has effectively depressed minority ownership for five decades, pointing to a recent article by MMTC President Emeritus David Honig that outlines how the FCC has “deliberately and systematically kept minorities almost entirely out of broadcasting for 50 years.” Some of the commission’s actions continue to this day, the MMTC said, “through [the commission’s] failure to remedy the lingering effects of its past history.”

When it comes to proposed changes to the local radio ownership rule, MMTC said the priority must be on welcoming new voices rather than taking the step of lifting local ownership caps. According to the organization, lifting subcaps would benefit only a tiny handful of broadcasters — those who have been able to acquire enough stations in a market to bump up against the local ownership cap.

In large markets where the need for new voices is the greatest, there are only a few groups that would benefit from consolidation changes, MMTC said. “A benefit for these few companies would come entirely at the expense of others who entered the industry late or have yet to enter — including nearly all of the nation’s minority, women and aspiring broadcasters,” MMTC said in its filing. “Greater consolidation would suppress the development of the new voices the industry needs the most for its survival in the face of new competition.”

The organization agrees that radio broadcasters are facing increased competition for ad dollars but said the solution cannot be found through consolidation. Rather, the solution is more diversity, more new entry by innovators and more new voices, the organization said.

“[T]he successful answer to the competitive challenge presented by online media must be found in innovation and local service — not in more consolidation,” MMTC said.

The organization highlighted a Radio World guest commentary that said that horizontal deregulation in the form of greater FM ownership would eviscerate AM stations’ value and marketability.

“How would buying an additional four or five radio stations in a market allow a broadcaster to take on Google or Facebook?” wrote African American broadcaster Glenn Cherry and Latino broadcaster Ronald Gordon in Radio World. “To the advertiser, what difference does it make who owns the station? Horizontal deregulation just shuffles the deck in favor of the big guys; it does nothing to improve radio’s ability to compete with big tech.”

Changing the subcap rules would also jeopardize the FCC’s incubator program, which is designed to encourage larger, experienced broadcasters to assist small, aspiring broadcasters to get a foothold in the market. An increase in the subcaps would remove any incentive for a broadcaster to participate in incubator program, MMTC said.

“[L]ifting the caps or subcaps will effectively kill the incubator program just at the time when the industry needs the incubator program the most for revitalization and diversification, and just at the time when the commission is relying on that program as its preferred method for meeting its responsibility to advance diversity in broadcast ownership,” the organization said.

MMTC also pointed to concerns over dominant radio groups migrating to the FM band, thus diminishing AM traffic and the value of AM radio.

“Elimination of the subcap rule would undermine all of the commission’s efforts to revitalize AM radio,” the organization said, echoing sentiments made to the commission by the National Association of Black Owned Broadcasters. “The requests to eliminate that rule must be denied.”

The filing deadline is set for Monday, April 29. Comments are being accepted through the ECFS database using Docket Number 18-349.

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