In markets large and small, several radio broadcast groups appear to be getting out ahead of possible changes coming to the Federal Communications Commission’s radio ownership rules by asking for waivers to exceed the current local market caps.
In many respects, experts believe, the industry is already behaving as if those limits have been relaxed.
The commission is considering about a half dozen waiver requests from radio broadcasters to go over the local cap limits, according to those familiar with recent developments.
Broadcasters are “seeking strategic opportunities to consolidate beyond the current ownership limits,” said Greg Guy of Tideline Partners.
The market is not waiting for the FCC to formally adopt new rules to relax the caps or possibly eliminate them, Guy told us.
“I expect dealmaking to continue and accelerate,” he forecasted. “Relaxation of the ownership limits will be an important driver of activity, but current industry conditions will likely keep that increased activity from translating into higher valuations.”
The commission is currently in the midst of its long-delayed 2022 Quadrennial Review. As part of that proceeding, the FCC is examining local radio ownership caps.
It recently voted to eliminate the national television ownership cap, allowing TV broadcasters to better compete with tech giants. Experts predict that move could foreshadow similar actions regarding radio ownership limits, possibly as soon as this fall.
Larry Patrick, managing partner of Patrick Media Brokerage, said no one is sure what the commission will do, but he believes it’s a safe bet changes are coming.
“For some broadcasters, particularly those facing competitive pressures, consolidation provides them with an exit strategy that they have not been able to pursue until now,” Patrick said.
Radio groups are already taking action in markets they would like to grow, he said, and which markets they might sell in order to strengthen their portfolio of properties.
Current waivers
As Radio World has reported, Draper Media is seeking to exceed the local market cap in Salisbury-Ocean City on the Delmarva peninsula.
Magnum Media is also seeking FCC permission to go over the ownership cap in La Crosse, Wisc.
In July, L.M. Communications asked the FCC to waive its local radio ownership rules to build a six FM cluster in Lexington, Ky.
And in a new filing last week, Bee Broadcasting is seeking permission to exceed the local ownership cap in Columbia Falls, Mont., in order to acquire KBCK(FM). The acquisition would bring Bee over the station limit in that market. It currently owns four FM and two AMs in the market. The current limit is six total stations and no more than four in the same service.
The FCC previously granted two waivers to surpass current ownership limits earlier this year in order for Beasley Media Group to sell its Fort Myers, Fla., cluster to Sun Broadcasting and Fort Myers Broadcasting.
Connoisseur Media has secured multiple FCC waivers to exceed the cap limits, most notably taking control of Alpha Media’s five FM stations in Tyler-Longview, Texas, in 2025, and closing on a cluster from Bonneville International in San Francisco earlier this year. It has at least one other waiver request pending.
Radio broadcasters and station groups have been actively lobbying the FCC to make changes to local radio caps. We’ve reported on meetings arranged by representatives from Connoisseur and Beasley Media.
According to Communications Daily, Cox Media Group President Rob Babin met with FCC staff last week and also lobbied for changes to loosen the local ownership caps.
Media broker Doug Ferber of DEFcom Advisors said if further consolidation is allowed, he expects the available inventory to outnumber the shoppers.
“Most will be sellers and swappers, not buyers. The companies that are sellers will look at consolidation as a way to pivot and refresh their capital structure and stay a few paces ahead of their lenders and the bankruptcy court,” Ferber said.
[Do you receive the Radio World SmartBrief newsletter each weekday morning? We invite you to sign up here.]
