NAB exposes radio’s precarious financial situation

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The National Association of Broadcasters paints an increasingly grim picture of the financial situation of the US commercial radio industry, and said the woes have affected FM stations as well as AMs.

In a 75-page FCC filing on property rule reform, the NAB listed evidence it said shows the impact of increased radio audio and advertising competition.

“In addition to losing nearly 200 radio stations over the past two years, a growing number of stations are unprofitable and experiencing negative advertising growth, while being forced by outdated ownership restrictions to meet these competitive conditions. “, wrote the NAB.

The managing director of a nationally recognized media brokerage said in a statement that there are more and more buyers for struggling AM and FM stations, especially in mid-sized markets. and small, other than a competitor in the same market who often may not be allowed to purchase the struggling stations due to local radio caps.

As a result, he said, more and more stations, both AM and FM, are “unable to maintain a meaningful local presence and offer a high level of local service, and their owners are in need of help. both financially unable to improve their stations or sell them to a viable local broadcaster capable of upgrading underperforming outlets by taking advantage of economies of scale.

The NAB said it had “submitted unchallenged evidence demonstrating the increase precarious the financial situation of the radio industry, which has a direct and negative impact on the ability of stations to hire additional staff or even retain existing staff; modernize their facilities; and maintain, not to mention improve, their programming, including locally oriented content.

He said OTA advertising revenues for local radio stations fell nearly 45% in nominal terms ($ 17.6 billion to $ 9.7 billion) from 2005 to 2020, “and even taking into account Stations’ digital advertising revenue for 2020, their total advertising revenue fell a further 39.8% in nominal terms ($ 17.6 billion to $ 10.6 billion) during this period. In addition, he said , analysts expect only a very modest recovery from the pandemic recession.

“FM station advertising revenues mirror the radio industry as a whole, with FM station revenues over the same period 2005-2020 showing an equally steep decline. “

He cited BIA data showing that OTA advertising revenue for FM stations in the 253 Arbitron / Nielsen Audio continuously polled markets fell from $ 10.5 billion in 2005 to $ 6 billion in 2020, a decrease of 42 billion dollars. , 9% in nominal terms.

These data, he said, show a clear and current threat to “the ability of FM stations to serve the public interest in the spirit of the communications law.”

In addition, FM stations as well as AMs experienced drop-offs. “According to Nielsen Audio, the average quarter hour (AQH) of listening to FM stations has fallen 23.5% over the past five years. Declining AQH audiences has a direct impact on the competitive and financial viability of FM (and AM) stations as advertising is sold based on the stations’ AQH tuning, rather than station audience reach or aggregation. weekly.

These findings, he said, are proof of his argument that US commercial radio stations compete in a larger market and should be regulated accordingly.

The NAB believes that current caps on the number of stations a given company can own in a market should be relaxed or eliminated in the face of competition in the audio and advertising markets and recent market developments. (Not all major broadcasters agree.)

And he says those who support the existing rules ignore the fact that commercial stations, disrupted by digital technologies, “cannot function in the public interest as Congress intended unless they remain economically viable. “.

Read the file (PDF).

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The NAB dossier also addressed a number of other issues.

He said some critics misinterpret the recent Supreme Court ruling in FCC v. Prometheus Radio Project as meaning that the court asserted the “full discretion of the FCC to implement its view of the public interest in diversity.”

In fact, the NAB said, the High Court did not “affirm” such a thing, but rather left open questions about the authority of the FCC to consider minority and female ownership in its quadrennial reviews. The NAB says structural property rules will do nothing to promote future diversity in property.

In addition to addressing several television-specific issues, the association also told the FCC that it needs to act quickly to complete this 2018 quadrennial review, which should have been completed by now. He said the FCC had no flexibility to postpone the process.

“In particular, the commission does not have the power to ignore the 2018 review and incorporate this quadrennial into the upcoming 2022 review, despite the exhortation of some commentators.”

But others have commented on the FCC in the proceedings, including the MusicFirst Coalition and the Future of Music Coalition, which oppose changing the caps. These two groups want the FCC to “chart a different course … rather than accept calls to further weaken important public interest protections on the thinnest of justifications,” and they questioned the NAB’s descriptions of the financial difficulties of many broadcasters.


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