Randy Michaels, former chief executive officer of Jacor and later Clear Channel knows a lot about managing and owning radio stations.
Michaels is now chief executive officer of Radioactive LLC.
Radio + Television Business Report asked him to review and give readers his opinion on the recent Department of Justice decision that essentially forces Entercom to spin off three Denver radio stations it was set to acquire from Lincoln Financial. This is the first in a series of opinion pieces from the radio executive.
Michaels says: Recently the DOJ has started objecting to otherwise legal station combinations on the basis of format overlap. The absurdity of the DOJ’s reasoning has been amply demonstrated by the record since the first time the DOJ asserted this theory. Here are the facts surrounding the first DOJ consent decree involving radio consolidation after the 1996 Telecom bill.
Jacor Communications announced the first two 8 station per market deals on the day the Telecom Bill passed. The DOJ objected to the Cincinnati combination on the basis of format overlap. They claimed that WEBN, a male oriented AOL station and WKRQ, a female oriented CHR station, “competed directly” for ad dollars. They claimed that other stations were unlikely to challenge WEBN or WKRQ and that if someone were to challenge WEBN or WKRQ they were not likely to be successful.
They claimed more new stations or move in’s to Cincinnati were impossible. Here is language from the DOJ consent decree. It read: “No unallocated radio broadcast frequencies exist in Cincinnati. Also stations located in adjacent communities cannot boost their power so as to enter the Cincinnati market without interfering with other stations on the same or similar frequencies. [It’s] a violation of FCC regulations.”
So Jacor was forced to divest WKRQ. We bought a suburban class A station, upgraded to B1 on the Channel 12 tower in the middle of town, changed the formant to CHR as “Kiss 107,” and beat WKRQ almost immediately. Since WKFS moved in, four additional new full power signals have been moved in and at least six new “translator” stations have been created in the market. So much for the DOJ theories.
Subsequent consent decrees continued to make erroneous predictions. After a time, the DOJ backed off on these format theories as they learned how easily and often station change formats and focused instead on market share. It is surprising and frustrating to see this illogical bureaucratic intrusion reappear.
Here is the DOJ action.
