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FCC Notes Industry Contraction

But says sustainable online business model not there yet

In its media ownership NOI, the commission references the recent credit crisis and recession that affected industry in beginning in 2008 and says that because advertisers cut back spending while station operating costs rose, media companies have had problems meeting their debt obligations.

“Consequently, in 2009, a total of 12 broadcast television and radio companies filed for bankruptcy,” wrote the commission. “In addition, several radio companies have recapitalized, i.e., negotiated with lenders, effectively wiping out shareholder equity in the process, including Westwood One Inc. and Cumulus Media Partners.”

The industry contraction is accompanied by an increase in content from Internet and mobile platforms. Changes in technology — particularly an accelerating trend toward online and mobile formats — are reshaping how people get their news and audio and video programming.

Citing figures from the Pew Center for Excellence in Journalism, the FCC said that while the number of Americans reporting that they listen to radio regularly has remained static over the last five years, in 2009 nearly one in three stated that they listen to online radio.

With the rise of online radio, Twitter and social networking sites, radio and other media have new ways of disseminating information, however the agency cites Pew again, saying PEJ reports “that a sustainable business model currently does not exist to finance the production of online content and finds that even the best new media sites have limited ability to produce content.”

I can see how this will play out in Congress and at the commission. Broadcasters will ask for the shackles of ownership limits to be loosened given the plethora of media choices available to consumers while stations figure out how to make money using new distribution platforms. Consumer groups will fight that, saying too few owners will control the content.

Radio’s efforts to get on all devices as well as its digital transition will likely be the most radio broadcast tech-related parts of the debates; last time TV’s V-chip was the most broadcast-related discussion focus as lawmakers turned it into something to attract voters.

Those ’95-’96 debates typically degenerated into partisan lines: The Republicans told the Dems they wouldn’t need a V-chip in our digital televisions to prevent kids from seeing terrible things if their wives stayed home during the day and monitored their kids’ TV viewing like the GOP wives did. Dems retorted that it must be nice to have enough money to afford that choice but since GOP policies wrecked the economy, most Dem wives had to work outside the home.

I wonder if those arguments would fall along the same lines now that women comprise more than 46% of the workforce, according to 2008 stats (the latest available) from the Women’s Bureau of the U.S. Department of Labor.

The FCC, meanwhile, says it will examine whether consolidation adversely affects consumers, advertisers, content creators and platform owners. Stay tuned for vigorous debate.