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OLIGOPOLY RULES THE AIRWAVES <br> CONSOLIDATION IS REALITY <br> IN TELEVISION AND RADIO

The game makers at Parker Brothers should get busy: The wild and woolly business of broadcasting in the 1990s offers all the cut-throat elements of a hard-fought Monopoly match, paired with the domination strategy of a Risk tournament.

This newfangled parlor game needs only two types of playing pieces: gobblers and gobblees.

And Buffalo is a slice of what's happening nationally.

Fifteen radio stations once owned by as many as 10 companies are now controlled by three -- two of them industry Goliaths. In local television, meanwhile, there have been nine owners involved in four stations over the past three years.

Lee Coppola, a former Buffalo newspaper and television reporter who is dean of the Russell J. Jandoli School of Journalism and Mass Communication at St. Bonaventure University, said the revolving door of owners has undermined journalistic quality.

"They want to make a return on their investment as quickly as possible. They don't seem to be in it for the long haul. And I think it's diminishing broadcast journalism," he said.

Consider the changes:

Hicks, Muse Tate & Furst Inc., a Dallas company that is the nation's largest owner of radio stations, recently finalized its purchase of WIVB-TV Channel 4.

Last year, Gannett Broadcasting, a division of the parent company of USA Today, bought WGRZ-TV Channel 2.

By June, Sinclair Broadcast Group -- which already owns six local radio stations -- expects to complete its purchase of WUTV Channel 29.

It's an ever-changing world of acquisitions and consolidations.

Lou Verruto, president and general manager of WIVB-TV, said the rules of the game are pretty simple.

"The more stations you own, the more clout you have. Everyone pursues consolidation, and companies like Gannett, Hicks and Sinclair try to be gobblers instead of gobblees."

Verruto predicted that within the next five years, there will be even fewer corporations controlling more broadcast entities.

Call it the quest for synergy, a business buzz word that has been a potent force for driving consolidations in banking, medical care and many other arenas. The number-crunchers tout benefits such as economies of scale, group buying power and operational efficiencies.

Verruto and other champions of consolidation insist that consumers will benefit in the long run as media organizations churn out better quality, more diverse programming. The theory goes like this: Television and radio stations with stronger balance sheets, improved efficiencies and more resources will be able to take risks and experiment with programs and formats.

'Throwback' has warning

Don't believe it, said John B. Casciani, a self-proclaimed broadcasting "dinosaur" who shuns both the gobbler and gobblee role in this high-stakes game.

As the owner of one Western New York's last remaining independent radio stations, Casciani admitted that government deregulation of the radio industry -- the fuel that ignited the consolidation fires -- has boosted the book value of his WNUC-FM perhaps by as much as 300 percent.

"Deregulation has made this station very valuable. But as a broadcaster, I think it has been an awful thing. It has become a Wall Street business and I think you're seeing a lot of mediocrity," he said.

Coppola agreed, noting that the shrinking number of owners has led to such practices as WBEN-AM and WGR-AM -- once fierce competitors -- simulcasting overnight news reports.

"There's no more strong desire to beat the competition, because there is no competition," Coppola lamented.

Prior to deregulation, corporations could own up to seven U.S. radio stations. Over the years, the federal government paved the way for the creation of more than 2,000 new radio stations. Casciani, who is celebrating his 35th year in the business, said many properties were drowning in red ink.

"There were just too many stations. And the pie wasn't growing. It just kept getting sliced up thinner and thinner. Before we knew it, radio was on its back," Casciani said.

By 1991, nearly 60 percent of all radio stations were losing money, according to industry estimates. The sagging bottom lines spurred Congress to ease regulations, allowing corporations to own up to six stations in the same market.

Joe Chille, program and operations manager at WJYE-FM and WECK-AM, recalled that several years ago, many seasoned broadcasters were skeptical about the effects consolidation would have. But Chille is a convert, claiming deregulation has given many stations the resources and expertise to improve programming and promote diverse formats.

"Some of our radio stations in the cluster have never seen this kind of equipment and the amount of resources," said Chille, who works for American Radio Systems.

American Radio also owns WYRK-FM, WLCE-FM and WBLK-FM in the Buffalo market and nearly 100 other stations across the country. Within the next one to three months, it will be gobbled up by CBS for $1.6 billion, giving the network 175 radio stations.

Jeff Silver, vice president and general manager of the five ARS stations in Buffalo, said consolidation also has made the radio industry much more user-friendly for advertisers.

"Our cluster of radio stations reaches two-thirds of the region's adult population, ages 25 to 54. An advertiser can contact one radio company and reach 65 percent of its target audience," he said.

Silver does not expect the sweeping changes to have a major effect on advertising rates, noting that rates have not increased substantially since the consolidations. And he doesn't see much more acquisition-driven activity in the local market. In his words, there's not much more to consolidate.

Better long-term prospects

While the long-term effects of deregulation on programming will be debated for years, one thing is clear: The move has improved the industry's bottom line.

The Radio Advertising Bureau said 1997 revenues reached an estimated $16.6 billion, a 10 percent increase over the prior year. The industry finished 1997 with its 64th month of revenue gains.

Terrence Rodda, vice president of Sinclair Radio Buffalo and its six stations, said the industry's financial outlook is encouraging.

"It's robust. The economics of the industry have never looked healthier," said Rodda, who works for a company that owns AM stations WBEN, WGR and WWKB and FM stations WKSE, WMJQ and WWWS.

Sinclair, which expects to take over Channel 29 later this year, is planning to build a multimillion-dollar broadcasting complex on the downtown waterfront. Architects are working on design plans that will bring seven broadcast entities that currently occupy three sites under one roof. The move should be completed by June 1999.

Rodda spoke about the efficiencies that will be achieved by the move.

But could there be job cuts? For example, the simulcasting of overnight newscasts at WBEN and WGR has already eliminated one staffer. There has also been speculation that consolidation and technological automation could result in future job cuts.

"I don't see it happening. In fact, I think this will create jobs in the long term, with the single largest growth area being in radio sales," Rodda said.

If his declaration that consolidation will equal job gains sounds like fantasy, some major players in the national arena are pointing to the same possibility.

An article in the November issue of "Radio Ink," a national trade magazine, reported that some consolidated radio stations in all market sizes have already increased the number of sales representatives and managers. Station executives hope that stronger units will be able to compete more effectively with other advertising vehicles, including newspapers, television and direct mail.

What of public interest?

But how much clout is too much clout when it comes to control of the public airwaves?

Some broadcasting veterans such as Charles Banta think the issue of power concentration has been neutralized by the explosive growth of other communication vehicles, including cable television.

"By the time this consolidation phase is over, you will still have far more owners than most other major industries. Look at the auto industry where you only have a handful of major players," Banta said.

He is president of Mercury Radio Communications, which controls FM stations WEDG, WGRF, WHTT and WHTT-AM. Mercury gained new investment partners last summer when a national company known as Broadcasting Partners Holdings ponyed up $62 million. The company owns 21 stations in seven markets.

Banta highlighted another business-related effect of deregulation in the industry. For the first time, radio station clusters could grow to a size that attracts the attention of Wall Street.

"They suddenly have the potential to get investment dollars. Is this some horrible thing from a consumer standpoint? I don't think so. Accessing the market means accessing cheaper financing and improving both product and diversity," he said.

Radio executives seem to agree on one thing: The number of independent owners in medium and large size markets is likely to shrink further.

Casciani's WNUC-FM -- a "hot country" station is one anomaly in the local market. So is Ramblin' Lou Shriver's WXRL-AM, WJJL and WHLD in Niagara Falls and WLVL in Lockport.

"I may be a dinosaur in this industry, but I take that as a compliment," said Casciani. "I look at it this way: I've got a classic Ferrari. They're not making these things anymore."

What's next for TV?

Some industry insiders predict that television will be the next area that will see regulatory change.

Federal officials have already been reviewing TV/radio cross-ownership guidelines and some look ahead and see the possibility that prohibitions could eventually be lifted that ban one entity from owning television, radio stations and newspapers in the same market. Other issues being reviewed include the number of television stations a group can own.

The general managers of all three major commercial television stations in Buffalo see the industry as a whole being relatively strong.

But Lawrence P. Herbster, president and general manager of WGRZ-TV, noted that national trends don't always trickle down to Buffalo. He and other television executives see trouble signs, noting that the population drain has shrunk Buffalo's market size from 19th to 40th over the past few decades.

Industry analysts look for "churn," the number of new people coming into a region.

"Obviously, we haven't seen kind of influx of people that other markets our size have witnessed. It has been a static environment and we're seeing some cities that are behind us in population that are growing at a pretty good clip," said Herbster, who previously managed WIVB-TV for two years in the early 1990s.

Bill Ransom, general manager at WKBW-TV, who has 30 years in the business, does not envision more television ownership changes soon.

"You have four broadcast groups in this market that are long-term players," said Ransom, whose station is owned by Granite Broadcasting Group in New York City. "I don't think you're going to see the kind of ownership turnover that we've witnessed in recent years."

But then again, in the broadcasting business 1990s-style, the corporate strategies seem to change faster than the number of houses on Park Place or Boardwalk.

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