Clear Channel for Sale: Why Bigger Is Not Better
Posted November 21st, 2006 by Jen Howard
Clear Channel – the notorious radio giant – is being bought by a group of private equity firms in a $27 billion-deal that will include the sale over more than 448 radio stations in smaller markets and the chain’s 42 television outlets.
While it’s far too early to celebrate the demise of Clear Channel – which at its peak owned some 1,200 stations and imposed cookie-cutter content from coast to coast – it’s clear that the Big Media model has failed.
At big conglomerates like Clear Channel, Tribune, and Knight Ridder, investors’ appetite for quarterly profit growth couldn’t be satisfied by continually sacking newsroom staff, cutting out local coverage, or piping in remote DJs with their pay-to-playlists of J.Lo and Celine Dion.
In the end, the lesson from these companies’ demise isn’t that media isn’t a profitable business. It’s that the Big Media model fails to serve the needs of local communities, which ultimately leads to displeased investors.
But the breakup of Clear Channel or Tribune will do little to change the underlying problems created by the Big Media model and a complacent FCC. The era of Big Media is far from over, and the events from past decade clearly illustrate why good media policy is still so important.
The outcome of Clear Channel’s decision to exit the TV business and the smaller radio markets will depend upon who ends up buying each of these stations. In an ideal world, the stations would return to the control of local owners, who have a proven track record of better serving local communities.
Instead, most expect that Clear Channel’s stations will fetch top dollar when the deals close, selling in large clusters to other media conglomerates. The asking price for these properties will be very high, too high for many local owners.
It didn’t have to be this way. If the FCC had policies in place to promote female and minority ownership (which they are required to do by law), then Clear Channel’s breakup could create the opportunity to increase the abysmally low level of female and minority broadcast media ownership.
In 2003, the FCC chartered a Diversity Committee to look at this specific issue. The committee offered proposals for fostering female and minority ownership, including those that would give companies like Clear Channel very strong incentives to sell to women and minorities. But the FCC has ignored the recommendations of its own advisory panel.
Instead of the more diverse ownership – and content – we desperately need, the FCC seems satisfied to keep playing the same old song.
