NAB's "Fact Sheet" critiquing FMC's 2002 Radio Deregulation Study

Below is a copy of a “fact sheet” that the National Association of Broadcasters issued on Friday, November 15, 2002 as a premature response to the release of our research report Radio Deregulation: Has It Served Citizens and Musicians? Since this was not posted on the NAB’s site, we’re posting it ourselves. Click here to read our reply to them.


NATIONAL ASSOCIATION OF BROADCASTERS’ “FACT SHEET

Future of Music Coalition Circulates Flawed Study Containing Inaccurate Conclusions About the Radio Industry

As reported today by the Hollywood Reporter and the LA Times, the Future of Music Coalition (FMC) has once again circulated a study regarding radio ownership deregulation and consolidation. This study was authored by a public relations professional and a graduate student.

It contains very little, if any, news. First, a large portion of the substance is based upon a highly flawed public opinion survey, which was released and pitched to reporters in May, yielding minimal coverage. This survey was done with a sample of 500 respondents. Some of the results in the survey lead one to question the randomness of the sample.

We would urge reporters to ask to examine the questionnaire in its entirety. Many questions posed reflect the preexisting opinions of its authors, a fact that would cause any scientific pollster to disregard the study’s results. Since the data is in conflict with a voluminous amount of information put forth by other organizations, it’s clear that the questions in the FMC survey were framed in a biased manner. Therefore, this survey has little credibility.

The inaccurate conclusions made in this report are refuted by numerous governmental and respected research organizations, which we urge you to read, including a November 2003 report by Bear Stearns, a September 2002 Federal Communications Commission (FCC) white paper, and a July 2002 Arbitron/Edison Media survey. Clearly, any critical examination of this issue requires one to examine the entire body of data before drawing conclusions on the issues contained in the FMC “study.”

In their report, FMC puts forth a number of assertions that other studies have shown to be myths.

Myth: Diversity of programming on radio’s airwaves is decreasing.

Fact: Radio diversity has been, and is in fact, increasing.

  • The FMC study actually makes this point: “From 1996 to 2000, format variety - the average number of formats available in each geographic market - increased in both large and small markets.”
  • An FCC report finds that song diversity has remained largely the same since 1996.
  • A Bear Stearns paper examining format diversity concludes that the Telecommunications Act of 1996 has led to an increase in format diversity by 7 percent (1996 to 2001), resulting in more than 250 formats.
  • An examination of the number of Spanish speaking stations before and after the
  • Telecommunications Act of 1996 shows that prior to the Telecommunications Act there were 400 Spanish language stations. Today, there are more than 600.

 

Myth: The Telecommunications Act of 1996 has made radio ownership an oligopoly.

Fact: With nearly 4,000 separate companies owning radio stations in America, radio is one of the least consolidated mediums. Consider other mediums:

  • Five music labels account for 84 percent of album sales,
  • A handful of movie studios account for 99 percent of industry revenues
  • In cable TV, the top 10 MSO’s account for 89 percent of industry revenues.

By way of contrast, the top ten radio station owners account for 49 percent of industry revenues.

 

Myth: Consumers are dissatisfied with radio.

Fact: According to Arbitron/Edison Media Research (which uses more reliable samples of 3,000 respondents compared to FMC’s 500):

  • Three-quarters of Americans use radio every day;
  • 95% of Americans tune into local radio weekly;
  • Almost 70% of consumers say that radio provides them with news and information they value;
  • Almost 75% say “radio does a good job of playing the kinds of music they like”;
  • 66% say that radio is where they turn first for new music;
  • 30% of respondents are using radio “more frequently” compared to other media;
  • And, radio trails only TV as the medium consumers cite as “most essential” to their lives.

The Coalition asserts that radio listenership is in rapid decline due to consolidation. Clearly, however, Americans continue to value radio even as the arrivals of cable and satellite television, the Internet, VCRs, DVDs, Personal Video Recorders, and other new mediums have vastly widened consumers’ range of entertainment choices. All of these points are further evidenced in the following studies.

Radio Market Structure and Music Diversity; Federal Communications Commission; September 2002. http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-226838A18.doc

Format Diversity: More or Less; Bear Stearns; 11.04.02
http://www.nab.org/FormatDiversity/Format Diversity - More from Less.pdf

Internet 9: The Media and Entertainment World of Online Consumers; Arbitron/Edison Media Research; September, 2002 http://www.arbitron.com/downloads/I9Presentation.pdf

Has Format Diversity Continued to Increase? BIA Financial Network; 06.03.02
http://www.nab.org/Newsroom/Issues/ownership/FormatDiversity060502.pdf

We also recommend that you examine these articles on format diversity, available at NAB’s website at:
http://www.nab.org/FormatDiversity/You%20Make%20the%20Call.pdf

Clearly, there is a preponderance of evidence indicating that radio remains vibrant, diverse, and local. Bottom line: the Future of Music Coalition’s study was written to promote an activist agenda with a disregard for objectivity.


FMC’s Reply to NAB’s “Fact Sheet”
Read FMC’s full report or supporting documents