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Does ownership consolidation stifle local radio? KLQP owner

MADISON -- The radio industry has gone through a period of steady consolidation that shows no sign of abating. The drive toward consolidation "exploded'' when the Telecommunications Act of 1996 opened the gates, according to Jim du Bois, director...

MADISON -- The radio industry has gone through a period of steady consolidation that shows no sign of abating.

The drive toward consolidation "exploded'' when the Telecommunications Act of 1996 opened the gates, according to Jim du Bois, director of the Minnesota Broadcasters Association. He said the trend continues today, as the economies of scale still favor consolidation.

A group of stations under common ownership can cut staffing costs and consolidate operations into fewer facilities, while often improving advertising opportunities and clout in various markets.

The trend toward consolidation, he said, "is pretty much entrenched.''

Does this trend mean the end of the kind of local voice that independently owned stations like KLQP provide their communities? The jury is still out, according to du Bois.

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He said that critics of the trend toward consolidation charge that it stifles diversity and encourages radio stations to "go on the cheap.'' They point out that radio stations can broadcast satellite-beamed, centrally produced programming at a fraction of the cost it takes to operate and produce local programming.

Du Bois said there is a risk to that approach. Many radio stations fear they will lose audience to satellite radio, pod casting and even wireless Internet if they abandon localism. They don't want to find themselves vulnerable to these emerging competitors.

Also, many radio stations already know the value of locally produced programming and the advertising it attracts. Many stations have done well economically because they have embraced localism, he said. They have no incentive to replace a successful format, especially when they're also enjoying the economies of consolidation that can reduce operating costs.

In urban markets such as the Twin Cities, du Bois said there has also been an unmistakable trend toward greater diversity in programming as a result of consolidation. Consolidation has meant that stations that couldn't take the risk of programming for a niche market as stand-alone operations are now able to do so. "There's far more variety today (in the Twin Cities radio market) than 35 years ago,'' said du Bois.

The experience in rural areas is mixed. There are cases where consolidation has meant that local programming has been replaced by beamed, national material.

Maynard Meyer of KLQP Radio in Madison and Dawson said he has no doubts about the importance and economic value of localism in radio. But he fears that the days of independent, rural stations like KLQP are numbered all the same.

For one, Federal Communication Commission rules work against independent stations, he said. When KLQP applied for its broadcasting license years ago, its pledge to provide local, community programming played a big role in the FCC's decision to award it.

Today, new broadcast frequencies are awarded by auction. The license goes to the company with the "deepest pockets," which is more likely to be a chain or group-owned operation, he said.

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He said the system works against small, rural communities and the small entrepreneurs who want to serve them. Meyer pointed to both Sunburg and Atwater as examples. He had worked to secure a broadcast frequency for Sunburg, but lost out in the bidding process for it. His goal was to open an office in Sunburg and provide local radio programming. Instead, the Sunburg and Atwater frequencies are held by stations with their offices and operations located in Willmar.

Du Bois said there are some in the industry who predict that the big chains of stations will lose interest in the small, rural markets and begin to shed them. He said large companies, like the 1,200-station Clear Channel system, may see no advantage in owning small rural operations.

But Meyer said the chains -- even if they are smaller groups -- will likely remain the primary buyer for smaller, independent stations when they come up for sale. He said that does not bode well for the communities which value their independently owned stations.

"And when you lose it nowadays, you're never going to get it back,'' said Meyer.

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