Relaxed Rules, Consolidations Bump Minorities Off the Air

Judging by the numbers, it’s a good time to be in radio. In fact, if you’re looking to make money, there’s probably never been a better time.

Where else are you going to find a business that earned a record $15 billion in revenue last year, then posted double-digit growth in the first quarter of this year? And how many other multibillion-dollar industries have recorded 80 consecutive months of revenue gain?

Clearly, radio is hotter than a $10 tape deck.

But that rising tide hasn’t lifted all boats. Many minority broadcasters, driven out by rising costs or bought out by well-funded national chains, have failed to share in radio’s explosive growth. And that’s a trend that must be reversed if the industry is to fully serve an expanding and diverse population, says William E. Kennard, chairman of the Federal Communications Commission.

“As more and more licenses get concentrated in fewer and fewer hands, it means [less] opportunity for new voices, fresh formats, experimental formats to come to the airwaves,” he says. “There are a lot of small radio stations--mom-and-pop-type radio stations--that are being pushed out of the market. And the opportunities for new entrants to get in are more difficult.”

Few critics blame overt racism for radio’s retreat from diversity. Instead, most cite the Telecommunications Act of 1996, which eased local ownership restrictions and increased consolidation, usually at the expense of minority broadcasters, whose numbers have declined 11% in the last three years.

Unable to compete with such heavily capitalized chains as Clear Channel, AM/FM Inc. (formerly Chancellor Media) and Cumulus Radio--which together control 1,152 stations, or about 10% of the nation’s total--minority broadcasters have seen their ownership stake slip to just 2.9% of the nation’s 11,500-plus stations. And listeners have arguably suffered as a result.

In Cook County, Ill., for example, home to the nation’s largest African American population, there is now just one local black-owned broadcast outlet--WVON-AM (1450), a 1,000-watt talk station that shares its air time with a Polish-language programmer.

The situation isn’t much better in Los Angeles, the country’s most lucrative radio market. Although there are more than 80 stations on the air in L.A., urban contemporary outlet KJLH-FM (102.3), owned by singer Stevie Wonder, is the only station under local black control, according to the government-run National Telecommunications Information Agency.

“The fact of the matter is [that] a lot of the stations that were owned by blacks, they decided to sell,” explains Larry Wilson, who, as chairman and chief executive officer of 116-station Citadel Communications, wound up purchasing many of them.

“I don’t think it’s hurting America,” he says. “I think people get too serious about radio. We’re entertainers. I think entertainment is what radio is all about.”

But even Wilson agrees that as consolidation has spread and station ownership has centralized, programming diversity has suffered. And that has affected listeners of all races, says civil rights leader the Rev. Jesse Jackson.

“I’m concerned that we focus on the black and white of the matter and not enough on the wrong and right of the matter,” Jackson repeated in two addresses at last weekend’s annual Radio & Records convention in Los Angeles. “This is not just a matter of black and white. It’s a matter of control. It’s a monopoly.”

But although identifying the problem is simple, rectifying it will take quite a bit more work. Among the ideas that have recently been floated are the establishment of a new class of low-power, low-cost radio licenses that would make getting into radio easier and less expensive and the development of an equity capital pool to finance minority broadcast ventures.

The first of those was proposed by Kennard and the FCC earlier this year and has drawn fierce opposition from the National Assn. of Broadcasters, whose members fear that more stations will mean more interference--and, not incidentally, more competition. But the idea has proved popular elsewhere, and the FCC has received more than 13,000 inquiries from people interested in starting low-power stations.

Meanwhile, the subject of financing for minority broadcasters is the focus of a two-day meeting that Jackson’s Rainbow/PUSH Coalition will convene today in New York. “My interest is not in changing ownership but in changing direction,” Jackson told the Radio & Records convention. “Today too much media is owned by too few people. They are driving diversity out of business, homogenizing the culture and undercutting the great genius of American culture running through our veins.”

Two years ago, the Rainbow/PUSH Coalition launched the Wall Street Project, an ambitious initiative that uses research, education, negotiations and, not infrequently, the acquisition of stock to force some of the nation’s biggest corporations to be more responsive to minority issues. That’s the model Jackson is promoting for minority broadcasters.

“When you get that stock, you go from being a sharecropper to being a shareholder,” he said. “Just the idea of [minorities] being at the next shareholder meeting is going to change the whole conversation.”

Consolidation does have its backers, especially in the rapidly expanding English-language chains and in Spanish-language radio, the fastest-growing segment of the industry with more than 500 stations across the United States. David Gleason, vice president of AM programming for the Dallas-based Hispanic Broadcasting Corp. (formerly Heftel Broadcasting), the nation’s largest Spanish-language chain with 40 stations, says the 1996 telecommunications act has allowed well-run, well-financed companies like his to spread their wealth and expertise among a number of markets, improving the programming in each one.

“There are pros and cons to the consolidation issue,” adds Bob Perry of Houston’s El Dorado Communications, another major Spanish-language radio chain. “Houston is a good example, where you have well-funded companies like Heftel who have the money to go out and buy the best signal in town. And that is good for Spanish radio. It helps increase the respect.

“On the other side of the coin, though, I would like to see more minority operations. I’ve always liked seeing lots of players on the field.”

‘Net Assets: Mark Cuban got a few chuckles when he joked with radio and record industry professionals at a Radio & Records Convention seminar that he had a series of motivational tapes on sale for $2,900. But more than a few on hand may well have been willing to dip into their pockets if Cuban really was selling such tapes.

The $2,900 figure represents the initial investment he and his partner made in 1995 when they started Audionet with one computer in Cuban’s house and developed systems and strategies for transmitting radio content via the Internet. The company, now called Broadcast.com and having gone public last year, was just sold to Yahoo! in a deal valued at $5.7 billion. Yes, that’s billion.

But another, albeit more modest, figure also got their attention. Surveys show that in the last six months, the number of people saying they’d listened to Internet audio more than doubled from 6% to 13% and a similar jump is projected for the next six months.

In his talk, Cuban painted a picture of a future--coming sooner rather than later--in which broadcast radio as we know it will be obsolete. The increasingly easy access and relatively low overhead of Internet audio is already changing the landscape.

Anyone with a PC, more or less, can be an Internet radio station--and you don’t have to buy one of the limited and very pricey broadcast signals or deal with the FCC. And with satellite digital transmission expanding and electronics further miniaturizing, audio and video as well will soon be accessible in cars, on cell phones and even Palm Pilot-type devices. At the same time, it allows for both expanded reach--a station could have a global audience--and more localized, specialized services.

But radio people, he said, shouldn’t fear the coming “Jetsons” world. Content still must be created. And it still must be sold. And who knows how to do that? Radio people.

In the present, he said, radio managers should look to the Internet as a way to expand and galvanize their audiences--and to prepare for the new radio world order.

“Everything you produce will be for sale,” he said. “You really have to start thinking that way.”