Buyouts squelching independent radio

Media consolidation weeds out local voices


October 24, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

They came from all over Greater Baltimore, an unlikely swarm drawn by an invisible force. They came in Mercedes sedans and old pickups on September's last day, shooting in off the Beltway like stones from a slingshot.

They parked in the grass near the base of WNST's transmitting tower and piled into a small ranch house to join their hero, "Nasty" Nestor Aparicio, as he ended a fledgling attempt to bring independent, sports-and-nothing-but radio to Baltimore.

Snapped up by Catholic Radio Network LLC of San Diego for $1.5 million, a price far higher than Aparicio and his colleagues were willing to pay, 1570-AM now pipes in national talk-show programming that is identical at all of Catholic Radio's 10 stations around the country.

WNST's fate illustrates some of the forces that are reshaping American radio, which has generally been dominated by locally oriented stations whose news and patter were delivered by local broadcast journalists, disc jockeys and talk-show hosts.

Those days are dwindling. Like so many other media industries, radio has become the province of large corporations that find it cheaper and easier to serve up canned, nationally distributed content than to rely on local voices.

"Now, a single individual will make local decisions on playlists for 150 stations in a regional area," said Cheryl A. Leanza, deputy director of the Media Access Project, a nonprofit telecommunications law firm in Washington. "Radio has always been the most local medium, the most intimately connected to the community, and that's disappearing rapidly."

From a strictly financial standpoint, these have been flush times for radio, with stations commanding high prices from broadcasters eager to expand.

According to an industry report by Prudential Securities Inc. in New York, the going rate to buy a radio station in 1993 was about 12 times its projected broadcast cash flow; that multiple is now up to around 16. The report found that the value of radio acquisitions nationwide in 1997 and 1998 totaled $29.4 billion -- more than the tally racked up in the previous 12 years combined.

In the biggest radio acquisition so far, Clear Channel Communications Inc., the nation's largest radio-station owner, announced Oct. 4 that it is buying the industry's No. 2 player, AMFM Inc., for $16.6 billion. Even after shedding some stations to comply with federal laws, the bulked-up Clear Channel will hold 830 stations nationwide.

Locally, Cockeysville-based Sinclair Broadcast Group Inc. agreed in August to sell the bulk of its radio holdings -- 46 stations in nine markets -- for $824.5 million in cash to Entercom Communications Corp. of Bala Cynwyd, Pa.

Radio's new era of corporatization and consolidation has a birth date: Feb. 8, 1996. On that day, President Clinton signed into law the Telecommunications Act of 1996, which cast aside old regulatory barriers in the communications world.

Telecommunications Act

The Telecommunications Act's impact on radio has been enormous. Previously, a broadcaster could own a maximum of 20 AM and 20 FM stations nationwide, two AM and two FM stations in any single market. Thanks to the 1996 act, a broadcaster can own an unlimited number of stations nationwide and up to eight in any given market.

"Deregulation really allowed fundamental change in the industry," said analyst Geoffrey G. Jones of Donaldson Lufkin & Jenrette Inc. in New York. "It's amounted to essentially a land rush."

Consolidation enables a broadcaster to lock up a range of stations catering to different demographic groups, creating attractive packages for advertisers. The rampant buying of radio properties has also stoked station prices.

"As consolidation occurs, those [stations] that remain standing are worth more money," said Bruce Leichtman, an analyst for the Yankee Group, a Boston-based technology and communications research firm.

One consequence of this, Leichtman said, is the homogenization of the radio dial. "Certainly, consolidation has put a large number of stations in the hands of fewer and fewer, and certainly that leads to less diversity of programming."

Leichtman and other industry experts say relief from this blandification of radio may have to come from nontraditional sources, such as satellite, Internet and low-power stations.

In the meantime, the consolidation spiral will not exhaust itself anytime soon. "You will see the big get bigger," Jones said. "It's not over yet."

What is over is WNST's all-sports experiment, which first hit the airwaves Aug. 3, 1998. Aparicio had bought up all the time slots on the station from the owner, Capital Kids Radio Network, and then made money from advertising.

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