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iHeart to FCC on Local Ownership Rules: Do No Harm

iHeart opposes “extraordinarily aggressive” proposal by NAB that would “exacerbate” the disparity between AM and FM stations

As broadcasters reach out to the Federal Communications Commission on the looming issue of local radio ownership, one broadcaster has a blunt request: Do no harm.

iHeartCommunications, the parent company of iHeartMedia, is one of several broadcasters that have pressed the FCC to only take those steps that do not harm broadcast radio as part of the ongoing Quadrennial Review.

In comments filed with the FCC, iHeart pressed the commission to retain the current limits on FM radio stations, saying that it “opposes strongly the extraordinarily aggressive” FM radio ownership proposals suggested by National Association of Broadcasters.

[Read: Broadcasters Go on Record in Droves to Share Concerns]

The proposed changes suggested by NAB in their most recent comment filing suggests three main changes. One, that the FCC change its ownership rules so that a single entity can own or control up to eight commercial FM stations in Nielsen Audio markets 1–75 (with no cap on AM ownership); two, offer the ability for a licensee to own up to two more commercial FM stations (for a total of 10 FMs) if that licensee participates in the FCC’s incubator program, which is designed to help increase ownership diversity in broadcast radio; three, eliminate restrictions on the number of commercial FM or AM stations a single entity can own in both unrated markets and those outside of the top 75.

iHeartCommunications said the adoption of some of the FM ownership reforms proposed by NAB would “exacerbate the competition problem in the broadcast radio market and harm the public interest.”

The company does agree with one aspect of NAB’s proposal: removing local ownership limits on AM radio stations. By eliminating the local radio ownership limits on AM radio stations, the commission could ameliorate competition concerns between AM and FM radio stations, iHeart said, “thereby helping to preserve the vital roles and services that AM radio stations perform and strengthening the capability of broadcast radio as a whole to serve the public interest.”

But iHeartCommunications said it parts ways with the broadcast association with regard to its proposed treatment of FM stations.

“The reason is fundamental,” iHeart said. Adoption of this type of proposal carries a risk — even though it may be unintentional — of “turning a competition concern into a competition crisis.” Potential accelerated migration of audiences and advertising revenues from the AM to the FM band could result in plummeting valuation of AM stations, iHeartCommunications said. “Adoption of the FM radio component of NAB’s proposal could cause grave harm to AM radio, and to radio broadcasting as a whole,” iHeart said. “Above all else, regulators, like physicians, should do no harm.”

iHeartCommunications said the proposal suggested by NAB would exacerbate the competitive disparity between AM and FM stations.

“Doing so will avert the very real threat of a mass divestiture of AM stations in favor of FM station purchases and the consequent devaluation of AM assets and attendant listener flight from the AM band,” the company said.

iHeart instead pressed the commission to only modify the local radio ownership rules by eliminating the limitations on common ownership of AM radio stations within a market. Otherwise, “potentially disastrous consequences for AM radio” could occur from overly aggressive changes to the FM rules, iHeartCommunications said in its comment filing.

iHeartCommunications also expressed concerned with the impact the NAB proposal could have on the implementation of the commission’s 2018 incubator order.

“Adoption of the FM component of the NAB proposal would destroy [the] indispensable financial incentive,” iHeart said. “Harm to ownership diversity and, derivatively, viewpoint diversity, a byproduct of the NAB proposal were it to be adopted, is contrary to the public interest.”

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