While many hands have been wrung and much has been written lamenting the loss of jobs and diversity of opinions as a result of concentrated media ownership, I’ve seen nothing about the most victimized group of all - the Main Street retail advertiser.

In September of 1996, the Charlotte advertising and media buying community was blindsided by an article in The Observer describing the proposed configuration of station ownership resulting from The 1996 Telecommunications Act. It was frightening, less than a month from being a reality and this was the first we’d heard of it.

That very day, a group of fiercely competitive professionals who don’t particularly like each other but are nevertheless responsible for efficiently placing millions of dollars in broadcast advertising cried “Foul!” Knowing the fix was already in at the (Democratic) FCC and that approaching the agency would be futile, we called on the Anti-Trust Division of the U.S. Department of Justice.

Our fear was that station managers and spot sellers who were already driving across town to fix prices would surely walk down the hall to do it. What Rush might call “Big Broadcasting” could set the rates they’d charge for spots, but buyers couldn’t set the rates we’d pay. That would be collusion, which is illegal, isn’t it?

To its lasting credit, DOJ sent an experienced investigative attorney and very sharp paralegal to Charlotte for two days of interviews with broadcasters and media buyers. A return visit a week or so later resulted in several GM’s being called to testify in Washington. I don’t know what the other buyers said to DOJ because (unlike certain broadcasting executives), we don’t talk to each other.

My own argument was that anyone with an elementary understanding of how the business of broadcasting works could see looming disaster and the biggest loser would be the radio industry.

Media consolidation was basically financed with 90’s dot com bubble money. I call it “stupid money.” Deals and investments were made by people with no knowledge of how broadcasting works. Their business model had always been, “Need more money? Make more widgets.” As investors soon found out, you can’t add more minutes to an hour, more hours to a day; more days to a week and so on and still attract an audience large enough to attract the mother’s milk of broadcasting - advertising dollars.

Listeners weren’t going to pay for what they had always received for free. The government would never admit it made a mistake and bail the industry out or stop the madness by nullifying the Act. No, the debt service on the stupid money used to finance the unprecedented number of dubious acquisitions could only be paid from one source: advertisers.

Unlike newspapers which simply increase or decrease the supply of advertising space to accommodate demand, a well-programmed radio or TV station has a fixed amount of supply. Run too few spots, your station loses money. Run too many spots, your station loses audience. It’s a delicate, well-researched formula ultimately governed by the laws of supply and demand. Debt service on the stupid money upset the free market.

Certainly, stations are free to raise rates as their markets and shares of audience grow. But when prices (rates) for a dozen stations in one market are set by a parent conglomerate instead of market forces, advertisers will flee to more competitive media. An expensive TV spot was suddenly more attractive than a less expensive radio spot because a least its price was set by market forces. Cable advertising got a boost. Internet advertising got a kick start. Advertisers learned they could live without radio.

To make matters worse, the dot-com bubble burst resulting in recession 2001. Investors and corporate CFO’s who are solely and, in my opinion, properly focused on ROI were left with few options. Laying off 20% of the industry workforce post 9/11 was one they chose. Today, stories of the industry’s financial woes regularly appear in the trades. A second wave of layoffs occurred in July, mostly under the radar.

The industry’s answer? The FCC’s answer?
MORE CONSOLIDATION! BRING IT ON! LET CLEAR CHANNEL BUY IT ALL!

Radio has become its own worst enemy. Instead of investing in people, promotion, technology and (if you must) diversity, it is drowning in its own greed, trying to convince us that less is more by charging 70% of the price a one-minute spot for a half-minute spot so they can run more units but not more minutes while pretending the listener will never notice the clutter. (Has anybody written about how the listener is being cheated by all this? Maybe I’ll get to that in my second blog, this being my first)

It may surprise you to know that even though I’m a one-man shop, I love big corporations. Big oil, big fast food, big pharmaceuticals, big anything (except government) brings efficiencies unattainable on a small scale. Big Broadcasting is different in one fundamental way - it requires a federal license. Equipment and people to run a radio station require a fraction of the cost of the license to turn it all on.

The old 7-7-7 rule was ridiculous on its face. Any broadcasting company, like any fast food company, should be free to open a “store” in any market it chooses to invest in. But they shouldn’t own every store in the market. I’ve never had a problem with “broad.” We all have a problem with “deep.” In the 20’s, we busted the oil trust. The time has come to either bust the airwaves trust or throw open the spectrum to anyone with a studio, transmitter, tower and a passion for radio.

Obviously, we didn’t win the war, but we won four key battles that prove action will get their attention:

1. Implementation of “The New Order” was delayed by almost a year while the wheels of Justice turned.

2. The original proposed configuration was altered so the two main players had more balanced demographic targets. (Subsequent format changes effectively neutralized what might have actually left a degree of competition in the market.)

3. A message had been sent to the broadcasters that we’d be watching them and wouldn’t hesitate to report any hint of collusion to the governing authority.

4. The group CHARM (Charlotte Area Radio Managers) was forced to disband.

Our dealings with DOJ in 1996 offers hope. At the time, “Deputy Assistant Attorney General David Turetsky cited adverse affects on competition in the market as reasons for nullifying the divestiture. To its credit, The Justice Department continues to keep its eye on deals even after they’ve been approved and to nullify them when competition is threatened. That was 10 years ago and no one can convince me that broadcasters, listeners or advertisers want more consolidation. (Inside Radio 9/18/06)

To be sure, busting the airwaves trust will be an uphill battle; but one that has to be fought and won. It’s the Bush FCC but it was the Al Gore Telecom Act and Clinton’s false prosperity that created the situation in the first place. It’s time to put politics aside, bust big broadcasting and allow fresh, creative if under-funded players to get in the game. Nothing less than the survival of radio itself is at stake.