STEWART: BUREAU MERGER WOULD REFLECT CONVERGING INDUSTRY
NEW ORLEANS -- Without specifically confirming expected merger of FCC Mass Media and portion of International bureaus into Cable Services Bureau, Mass Media Bureau Chief Roy Stewart said he planned to remain in merged bureau and denied that merger was antibroadcast move. At NAB Radio Show here Thurs., he would say only that he had read in the press about restructuring (CD Aug 29 p1), but said it should be seen as further effort to convince broadcasters to accept fact of convergence of media.
“This merger is not an antibroadcast move,” Stewart said in response to question indicating broadcasters were concerned about downgrading of broadcast-only bureau: “I don’t think anyone is interested in gutting the bureau. I don’t think the public or the Congress would stand for that, and the chairman doesn’t want that.”
It would be unfair for broadcasters to consider FCC Chmn. Powell “antibroadcast” because of restructuring, Stewart said. He said Powell had been trying to convince broadcasters to deal with reality that they were competing with media with dual revenue streams, so they had to change their business model: “The industry has got to be aware of convergence. The separate smokestacks of broadcast, cable and satellite are not what the world is like anymore.” He said restructuring made sense because industries were becoming more similar and were dealing with similar issues. Meanwhile, he said, “I intend to stay in the new, merged bureau.”
Meanwhile, broadcasters see possibility that merging bureaus “could be beneficial in terms of understanding the bigger picture,” NAB Pres. Edward Fritts told us: “In a world where TV is becoming more interactive, broadcasters are looking to become involved in a lot of new business opportunities, some crossing media lines. It is positive to recognize that.” Fritts said he “certainly understands and appreciates” FCC’s need to become more efficient, and NAB was “pleased” that Stewart would stay on in bureau because “his good offices have been positive for radio and TV for many years.”
Merging bureaus could be big help for broadcasters in key area of DTV, Fritts said, because the many DTV issues are spread among multiple bureaus: “If this helps us get cable and the manufacturing community and the broadcasters on the same page and expedite DTV, it will be the best thing the Commission has done in recent years.” Asked whether merger might give broadcasting lower priority at FCC, Fritts said “anybody would be concerned,” but he was convinced Commission would “continue to recognize that broadcasting is vital to the lives of most Americans every day.”
In other issues at FCC, Stewart said Sept. 19 would be critical date for agency’s EEO rules since that was date govt. must decide whether to appeal to U.S. Supreme Court decision by U.S. Appeals Court, D.C., rejecting rules. Emphasizing that he wouldn’t make decision, Stewart said he personally believed nation is based on equal opportunity and it was “good business” to make “broad outreach” in employment. If govt. decides not to appeal, he said, options will include doing nothing about media EEO rules or starting new proceeding for more limited rules.
FCC is investigating possibility of “application mills” in low-power FM (LPFM) application process, confirmed Peter Doyle, chief of FCC Audio Services Div., also speaking on panel of FCC staffers. He said it appeared that some “entities” might have filed hundreds of LPFM applications “with little or no applicant involvement.” Doyle told us later that FCC still was in “fact- finding phase” of investigation and it might take as long as 6 months for conclusion. “Application mills” don’t appear to have same economic incentive as earlier mills for wireless cable and cellular, he indicated, but he said applications could be dismissed if they fraudulently indicated that they were filed by independent, local entities.
Testing of LPFM interference levels is “well under way,” Doyle said. He said agency was identifying qualified vendors and gathering cost estimates and expected to issue request for proposals by end of Oct., with contracts to be issued in March. Results would be available by May 2003, he said.
FCC “for the most part [has] solved” its electronic filing problems, said Edward de la Hunt, assoc. chief-engineering of Audio Services Div. He conceded electronic filing, which now is mandatory, had problems earlier, but said they were being resolved through equipment and software improvements, as well as increased experience with system by both FCC and users. For example, he said, filing system once had trouble handling 15% of file attachments, but figure now is under 5%. De la Hunt said problems would continue, but they could be minimized by such things as providing only attachments that actually were needed and not trying to file right at deadline.
Other comments by FCC staffers included: (1) They repeatedly touted agency’s increased efficiency in handling applications, saying for example that 95% of routine license transfer applications were approved within 60 days. (2) Keith Larson, bureau assoc. chief-engineering, said FCC could act “in the very near future” on some special temporary authority applications for satellite radio terrestrial repeaters, but he said overall rulemaking continued to be held up by interference issues.
(3) Doyle said FCC hoped to decide soon how to auction licenses sought by both commercial and noncommercial entities, which he said could affect hundreds of licenses. But he indicated FCC was having difficulty figuring out how to “compare apples and oranges.” (4) Larson said Commission remained committed to starting digital audio broadcasting (DAB) as soon as possible and was encouraged by iBiquity test results to date. He said he hoped FM evaluation would be completed by end of year, and AM soon after, allowing FCC to “move ahead.” -- Michael Feazel
NAB Radio Show Notebook…
RIAA is “single-handedly holding back” new technology for delivering music programming and may be “cutting off its nose to spite its face,” Wall St. Journal columnist Walter Mossberg said in opening keynote here. He said RIAA had “managed to roll over every other technology” with its efforts to limit distribution of copyrighted music files. Mossberg said he was big supporter of copyright, but music industry could be “making a very wrong decision” and “cutting itself off from a much bigger market” for music sales. He cited failed effort of movie industry to limit home video recording decades ago, with that failure creating video industry that generates more revenue than movie theaters. It’s “not smart” for music industry to “treat honest consumers like criminals,” Mossberg said, and it should create method for consumers to acquire music legally over Internet. He said RIAA Internet music distribution plan wouldn’t be attractive because songs could be recorded on only single device and for only limited period of time: “Napster is probably illegal, but it is the way that music ought to be distributed. There needs to be a new business model.” Video programming industry may move toward similar mistake, Mossberg said, since it also needs effective digital rights management. He predicted its first copyright effort also would be too restrictive, but said video industry could learn from music’s mistakes, since its critical time is further in future. Mossberg predicted proliferation of specialized, user-friendly Internet access devices would replace most PC functions: “We are moving from an era where it’s all about technology to an era where it’s what comes through the devices that matters.” He predicted that new version of Internet would be much more successful than current one. -- MF
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More than 42% of radio stations in local markets are part of consolidated operations, BIA Financial Network said in new study. Study also said that 5 years after Telecom Act eased ownership restrictions, top-10 radio groups generated almost 50% of industry revenue despite owning only 18% of commercial radio stations. BIA said in 5 years there had been 20% increase in percentage of radio stations owned by top-50 radio groups and in percentage of radio revenue they generated. Radio transaction market has been slow recently, said BIA Vp Mark Fratrick, ex-NAB staffer, but he predicted renewed interest in buying and selling radio stations by end of year. Despite economic downturn, Fratrick said, radio is “a much stronger industry than prior to deregulation of ownership rules."
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“If you didn’t like the last 5 years [of radio industry consolidation], you probably won’t like the next 4 or 5 years,” said Alfred Liggins of Radio One during radio executives “supersession” here Thurs. Lew Dickey of Cumulus Media agreed, predicting there could be 4-5 radio group owners with 4,000 or more stations each within 5-10 years. Consolidation is natural for every industry, said Randall Mays of Clear Channel, and consolidation is happening so quickly because “radio has been artificially constrained by the FCC for 70 years into something that’s unnatural.” Robert Neil of Cox Radio conceded that consolidation “makes people nervous,” but said consumers shouldn’t be concerned because it actually contributed to program diversity since single owner wanted each station in market to reach different audience. Joan Gerberding of Nassau Media Partners, like others, expressed concerns about some offensive content on radio stations, saying owners should exert responsibility over content. “Obviously we all have a responsibility to our communities,” Dickey said. He said network TV was pushing content envelope in bid for higher ratings, but said such content quickly lost its appeal. FCC has been “in the right” in most of its content-based enforcement action, Dickey said. Mays said owners should regulate own content, both because it was responsible and because it was good business, but govt. shouldn’t get involved. Asked about impact of satellite radio and Internet-delivered audio, Mays acknowledged threat of new delivery media, but said “people generally drastically overestimate the penetration of new devices.” He said he didn’t discount potential impact in future, “but it will be less than they think."
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Although he said he was not opposed to all industry consolidation, author Tom Peters said “the essence of great radio isn’t a great collection of radio stations, it’s a collection of great radio stations.” In Thurs. keynote, he repeatedly warned broadcasters to key on exceptional talent and groundbreaking ideas rather than on “me-tooism.” He also urged broadcasters to both hire more women and to target women more as audience and consumers. Peters said “organizations that are ordinary are doomed” in rapidly changing environment and predicted pace of change would accelerate: “Everything will be turned upside down regarding the transmission of information. The last 15 years will be a mellow, boring prelude to the amount of change that is to come.”