In a long and distinguished Washington career, Francisco “Frank” Montero has served both at the Federal Communications Commission and in the D.C. legal community. He is a managing member at the firm of Fletcher, Heald and Hildreth. During the Clinton administration, Montero served as director of the FCC’s Office of Communications Business Opportunities.
Frank Montero addresses the 2012 MMTC conference.
His work has long included a focus on Hispanic broadcasters, especially with his service on the board of directors of the Minority Media and Telecommunications Council. He represents the Puerto Rico Broadcasters Association in Washington and has been a key player with the American Hispanic Owned Radio Association, the Spanish Broadcasters Association and the National Association of Minority Media Executives.
Radio Worldprofiled Montero in 1998, and with upheaval in political Washington, we reached out to him at the end of 2016 for insight into what might be ahead at the Portals, especially where minority broadcasters are concerned.
Radio World: What stands out to you as one of the biggest changes in the industry since 1998?
Frank Montero: Eighteen years ago, we were on the heels of what was a pretty dramatic deregulatory step. You had some pretty dramatic lifting of media ownership caps in the wake of the 1996 Telecommunications Act that triggered a feeding frenzy driving radio prices and radio multiples sky-high. Back then, stations were trading at 16, 17, 18 times cash flow. It was absolutely insane. You had companies like Chancellor, SFX and Clear Channel, just buying each other out like crazy.
Clearly, this new administration is making rumbling noises about taking an even more deregulatory stand toward the media landscape. You have two Republican commissioners who are likely to stay, Michael O’Rielly and Ajit Pai, both of whom have been, comparatively speaking, friendly to the broadcast industry, and especially to the radio industry.
Ajit Pai in particular has taken an interest in creating a new class of FM station and in AM revitalization; O’Rielly has taken a stand against pirates.
But this president-elect has not exactly been a huge fan of what he calls the “liberal media” and has already made some noises that he would not favor something like the Time Warner-AT&T merger and may not be a big fan of any further media consolidation.
RW: How does the commission itself change as the Trump administration takes power?
Montero: Let’s walk through a couple of scenarios. It now appears that [Democratic Commissioner Jessica] Rosenworcel will not be confirmed. [Republican Commissioner] Pai will likely become the Acting Chair.
When [Democratic Chairman] Tom Wheeler leaves, you’ve got three FCC commissioners, and Republicans will have a majority of the votes, 2–1, that’s a quorum, and they can really start getting into gear.
But there’s another interesting scenario … what if [Democratic Commissioner] Mignon Clyburn leaves also? Now you don’t have a quorum, and you have two Republican commissioners, but everything is held up until you’re able to get a third or more commissioners appointed and passed through Senate confirmation to get things moving again.
RW: What are some of the priorities you expect a new FCC to tackle?
Montero: One that I’ve heard a lot of people discuss on the radio side are the sub-caps on radio ownership, the ability to have a greater allocation of FM versus AM or AM versus FM. Right now, if you can have seven stations in a market, you’re limited to four FMs and three AMs, but a complete lifting would allow you to go to the full limit within one service, which could have a much bigger impact than might be appreciated.
RW: Do you think they’d allow, say, one company to own eight FMs in Los Angeles or New York?
Montero: Even with this president-elect, I think they might see a complete lifting of the sub-caps as a “safe” step without going to a complete lifting of the ownership caps and without undercutting the position they may take on larger mergers that may impact the whole telecommunications landscape.
The only thing is, if they are lifted, I would be a little worried for AM. I think that AM is struggling now. I would be a little worried that if there were no sub-cap and a limit of eight stations in a market and all eight could be FM, that current group owners might start shedding AMs like crazy. It would be a good little shot in the arm for FM, but you could see it further depress the value of AMs.
RW: Is that ultimately a good or a bad thing for minority owners, if it were to put some bigger AM signals on the market at low prices?
Montero: In the late 1990s, [Spanish-language radio] was a market that was on fire in terms of how quickly it was growing, but it was still in its early phases of development. I attribute the change in the landscape to the 1990 Census. That’s when things started turning around, when Jerry Perenchio bought a sleepy little network called Univision, when a retired U.S. senator, Cecil Heftel, started the company that became HBC and then Univision Radio. By the late 1990s, it was running on all cylinders, but even then, breaking in on FM in a major market like New York, Los Angeles or Chicago was still a relatively new thing.
What you had not really seen yet was the infiltration of Spanish-language into secondary and tertiary markets in places like Birmingham, Raleigh or Charlotte, or even places like Boise or Milwaukee. Now those markets have exploded. So Spanish-language media today is very much mainstream.
But having said that, it’s still something that can flourish in the AM band. For Latino broadcasters who are looking to get in, AM still has a low barrier to entry and affordable prices. If you happen to be in a small, emerging Spanish-language market, you can get a foothold and grow. I have seen an extraordinary number of broadcasters taking advantage of the FM translator window as a way to expand their signals and audience.
Access to capital in those markets has been difficult. There hasn’t been the ability to get a lot of financing. Banks are not racing to make broadcast loans the way they had been 20 years ago. Local, regional and community banks are, frankly, afraid to get into broadcasting because they’re not familiar with it. They don’t understand how broadcasting works, and so even though they have a good relationship with local broadcasters, they’re a little hesitant.
This is an area I’ve gotten very involved with, working on educating banks to familiarize them with the process of making broadcast loans — how such loans are structured, how valuations work, on the difference between stick valuation and cashflow valuation, so that loan applications can get through their loan committees more readily to help small broadcasters get into the marketplace and grow their businesses. Because otherwise, with a lifting of ownership caps and subcaps, it will help the larger players and some of the regional, midsize players, but if you don’t have a foot in the door, it’s going to be very difficult.
RW: In the political climate now, is there danger to Spanish-language and other minority broadcasters?
Montero: If anything, the last election campaign, as ugly as it got … put a bright spotlight on the importance and integral role of the Hispanic community in American politics, culture and the economy.
The Latino population wields a great influence. It can tip elections; it can make or break businesses; and it has attracted the attention of political candidates and of mainstream media. The point that has not been lost on either side of the political aisle nor on Madison Avenue is that there are elements of the Latino population that are completely juiced up over this election. They’re going to want to have their voices heard.
There are others who may not be as strongly opposed to the Trump administration but may want to further develop the political influence that was seen during this election campaign, and their voices are all going to be heard more and more in the media. This segment of the population is not going to be stifled. If anything, you’re going to see more attention paid to them, more content on the airwaves.
I work with a great number of Spanish-language media companies that are based in Latin America. You have radio networks, TV networks, content providers throughout Latin America and Spain falling over each other to get access to the U.S. market.
If we were to see any stifling of this market … if a wall is built by this administration, or they take action to try to round up or deport aliens that are here illegally, that’s going to be huge news. Radio, I think, is going to play an integral role in disseminating that information, and that’s also a medium that politicians and PACs are going to want to have access to.
RW: What becomes of the FCC’s current push to allow more foreign ownership of broadcasters?Will that be reversed, given the Trump platform’s isolationist stances?
Montero: I’m inclined to think not. The broadcasting community has made it pretty clear that they favor these changes. It facilitates the ability of foreign capital to come into this industry, and that’s good for station values and for the market generally. Right now, you have two Republican commissioners who are very favorable to the broadcast community, and actually listen to broadcasters and go to conventions … so I’m inclined to think that these commissioners are going to be receptive to what the issues are in the broadcast community and not do a reversal.
RW: Are you concerned about First Amendment issues for broadcasters in a Trump administration?
Montero: I personally think that any attempts by this administration, or any administration for that matter, to try to dramatically change the laws is going to be very difficult. So much of this is based on judicial precedent. While the president could end up appointing one or more Supreme Court justices, the Supreme Court will surprise you. They won’t always vote the way the president that appointed them wants them to.
An earlier version of this article misstated Montero's first name as Fernando.