“The industry is still trying to work its way out of the ‘we need to get bigger at any cost’ mentality of the last time, and I would hate to see us fall into the same trap if the FCC rules on relaxing media ownership rules,” said Hubbard Radio CEO Ginny Morris.
Under current Federal Communications Commission chief Ajit Pai, the agency has signaled it may be willing to roll back some of the limits currently dictating how big a local radio market cluster can become. Sensing that opening, in June the National Association of Broadcasters told the FCC it supported relaxing limits on FM ownership and AM/FM subcaps while at the same time permitting a company to own as many AMs as it wants.
Pillsbury's Broadcast Finance 2018 session, featuring (L to R) panelists J. Davis Hebert, director & senior high yield media, cable & telecom analyst, Wells Fargo Securities; Dhruv Prasad, co-chief executive officer, Townsquare Media; Ginny Morris, chair and CEO, Hubbard Radio; Caroline Beasley, CEO, Beasley Media, and moderator Scott Flick, partner, Pillsbury Winthrop Shaw Pittman LLP.
Beasley Media Group CEO Caroline Beasley, who serves as president of the NAB Joint Radio-TV Board, said the motivation is a belief that larger clusters will be able to operate more efficiently and that will free up dollars that can be invested in content, technology and making sure stations stay connected with their markets. “I think deregulation is very important for radio,” she said.
Townsquare Media has been among the companies most actively pushing for an update to media ownership rules at the FCC; and co-CEO Dhruv Prasad told the annual Pillsbury Leadership Breakfast that bigger companies will be better positioned to go up against consolidation across the overall media industry.
Wells Fargo Securities media analyst Davis Hebert said the investment community has a built-in preference favoring consolidation. But he acknowledged they’re mainly focused on television at the moment, where multi-billion dollar deals command more attention than whether a cluster can add another FM or two. Hebert said it’s also unlikely to open more lenders to doing business with radio.
Prasad said if the FCC doesn’t greenlight enough changes to its ownership limits to make a substantive difference, he doesn’t think it will be a “disaster scenario” for the industry, since a lot of focus is already being paid to efforts to show radio’s effectiveness to advertisers. “There are plenty of growth catalysts and stable days ahead for radio for a variety of reasons,” he said. “So if we don’t get media ownership rule changes, the industry isn’t going way—far from it. There are brighter days ahead of us.”