Good afternoon. Id like to thank Representative Conyers for convening this important discussion. Id also like to thank Wayne State University for hosting us, Karen Morgan, and everyone responsible for organizing the event.
My name is Peter DiCola, and I am a PhD student in economics
as well as a law student at the University of Michigan in Ann Arbor. I
serve as the Director of Economic Analysis for the Future of Music Coalition,
or FMC. In November of last year my colleague Kristin Thomson and I published
a report entitled
If we were to ask how radio deregulation has affected minorities, we would find similarly discouraging answers. Those who work in media, musicians and reporters for instance, have felt the sting of downsizing and consolidation already. But the burden of changes in the radio ownership rules has been borne by the public.
Deregulation and the ensuing consolidation of ownership were supposed to promote competition, localism, and diversity in radio. Our findings show that this policy has failed its goals. To show you why thats the case, Id like to talk through a few of the key findings from our study. First:
(1) By 2002, there were 33 percent fewer owners of radio stations than there were in 1996.
Relaxing the ownership rules for radio resulted in a flurry of mergers and acquisitions. After the dust settled, only 3,406 owners of commercial stations in 2002 were left. In 1996, that figure had been 5,133. Im not an expert on the subject of minority ownership but I do know that 33% fewer owners in all likelihood has meant fewer minority owners too.
(2) Two companies control 42% nationwide market share in radio.
Clear Channel and Viacom are the two largest radio parent companies. Its important to focus on parent companies to keep track of true diversity in ownership. Clear Channel owns 1240 stations nationwide with a 27% share of listeners. Viacom, through its subsidiary Infinity Broadcasting, owns 183 stations, with a 15% share. These two firms tower over the radio industry, even the other consolidators. Both own businesses in other media and advertising-based industries, such as network television, cable television, concert venues, and billboards. The bottom line is that, contrary to Chairman Powells comments, concentration is by definition the opposite of competition.
(3) Almost every local market is controlled by four firms with 70, 80, 90 or even 100 percent market share.
An even bleaker picture emerges when we consider the radio industry as a collection of local markets meaning cities and their metropolitan areas. Consolidation is extensive in all sizes of local markets, but its most severe in the smallest markets. Deregulation has frustrated the longstanding goal of localism in radio.
Audiences in local markets nationwide are now much less likely to hear locally-based programming or local musicians on the air. That means less local news stories about our inner cities. It also means less local reporting on issues of concern to minorities. In contrast with Commissioner Abernathys comments on radio news, the Radio-Television News Directors Association and Foundation reported in 2001 that in the last seven years, the size of the typical radio newsroom has fallen 56.7 percent, from 4.5 newspeople in 1994 to 1.95 today. A newsroom with two people is bound to devote less resources to covering issues of interest to minorities both ethnic minorities and people with minority opinions.
(4) Among music formats, we found that extensive overlap exists between nominally different formats.
Using radio playlist data, Radio and Records magazine computes weekly charts for 13 categories of music formats. We took these charts from one week in August 2002 which show the top 30, 40, or 50 songs played on a given format and calculated the number of overlapping songs between formats.
The results are alarming. For example, Urban and Contemporary Hit Radio/Rhythmic (CHR/Rhythmic) overlap at a 76% level. 38 of their top 50 songs are the same. These are the two of the three highest-rated music formats that target urban and especially minority audiences. Theyre supposed to be different formats having formats with different names is what the industry wants to call diversity. But theyre playing essentially the same set of songs on Urban and CHR/Rhythmic. Minority radio listeners have far less choice than the radio companies would have you believe.
Homogeneity and overlap also mean that less airplay is available for musicians. Each big radio company has been or will likely be consolidating each formats programming decisions under a single executive. This organizational choice means that CHR Rythmic radio in Cleveland is going to sound a lot more like CHR Rhythmic radio in Detroit. The FCC itself, in its recent Media Ownership Working Group papers, has found that homogeneity has increased within formats, not just between formats. Just a few gatekeeps control access to the airwaves now.
So weve seen that radio deregulation has resulted in a small number of dominant companies, not competiton; it has resulted in extensive local oligopolies, not localism; it has resulted in format homogeneity, not diversity in programming; and it has resulted in small number of gatekeepers for music and news, not a diversity of viewpoints. Clearly something has gone wrong. From the perspective of citizens and musicians, deregulation has failed to achieve its goals.
If we were to ask the most pressing question how will further relaxation of the FCCs media ownership rules affect minorities? I think wed find even more reason for concern. Radio news staff has shrunk by more than half we should ask ourselves whether we want that to happen to television. We should ask whether having a small number of owners will help our cities shape their communities. And we should ask ourselves whether we really believe that decreasing ownership diversity will really spark more diversity of programming and news coverage on our media. Whats happened to radio is a cautionary tale. Media policy should change direction at this point not continue headlong towards further homogeneity.