NAB -- Consolidating With the Stars

I know the major TV networks are relying on reality shows to make it through the writer's strike, but in radio there is an unreality show going on and a new episode developed Monday.

The radio industry's lobby group -- the National Association of Broadcasters (NAB) is asking the FCC to "consider continued relaxation" of the ownership rules having breathed a sigh of relief when the Commission rejected a rollback to pre-1996 levels.

You remember the NAB.

It's the trade group that collects your membership fees, charges you to attend industry conventions and works in the interests of a handful of big companies that want more consolidation.

The NAB is saying all the right things -- if you are a consolidator unable to get your stock price up even with the advantage of a virtual monopoly.

Things like citing the FCC's own research:

The FCC's own studies show evidence for continued relaxation of ownership rules.

Surprise! Surprise!

That FCC studies show consolidation has no statistical effect on advertising rates -- and that it is more likely to lead to even lower prices.

Isn't consolidation great!

That "It is hardly surprising several empirical studies have concluded that radio groups do not exercise undue market power in today's media marketplace given the ever increasing levels of competition radio stations face for listeners and vital advertising dollars".

I guess that's a slam dunk!

The radio industry gave the NAB one free pass when it was instrumental in getting relaxed ownership rules into the 1996 Telecommunications Act at the very last minute. Stealth lobbying.

The NAB isn't all bad. In fact its chock full of good people. But on this issue -- a strategic one, the NAB is dancing with the stars -- the big consolidators "who brung them there" -- who pay the bills. If all of a sudden Clear Channel told their stations not to become NAB members, the NAB would be history. The small owner is still important to them but the real money comes from the comparably small group of owners who own lots of stations and parenthetically, can't seem to operate them. That is -- without another relaxation of ownership rules.

Think about it.

There are so many radio stations on the market right now that Inside Radio reports brokers are turning down listings left and right. A broker turning down a listing is like a crack addict turning down -- well, you get the point. They're doing this only because most of these stations can't be sold right now given the market, the financial situation and the high price expectation of the sellers.

If the Bain and Lee privatization of Clear Channel doesn't happen, the entire industry will feel such a giant vote of no confidence. The financial package has a high penalty fee and the closing was just postponed again. What's more ominous is Clear Channel's per share trading price is going the opposite way of the sale price upon which the deal was based. Would you pay $20 billion for a company that is worth less every day? We'll see, won't we?

Consolidators -- all of them -- have proven they can't run their expanded platforms and they've got 12 years of experience trying.

Here's where we should listen to the advice of radio's largest consolidator -- Clear Channel.

Less is more.

Own fewer stations until you can run a few of them -- and I'm not just talking about Clear Channel here although they are the biggest owner. All the consolidators get a "F" for building shareholder value. Just look at yesterday's closing prices.

Your NAB has been pushing consolidation while pandering to the rest of you. There is no way further consolidation can help. It will just devastate the remaining companies that are barely hanging in there. I say this because owning a lot of radio stations is not the solution.

Running a few of them well -- profitably, in the public interest, with compelling content and marketed in the 21st century with electronic ratings and savvy sales techniques -- is the answer.

And few will fall for the cry baby response we're certainly going to hear that iPods, Internet, downloading, mobile phones, toasters and toothbrushes (I made up the last two!) are new competition that can only be met with running even more stations (inadequately).

More. More. More. Not the answer. Not today. Not any day.

More ventures into mobile content, Internet streaming, rebuilding terrestrial stations (not cutting back), getting into the digital music business, social networking, virtual worlds such as Second Life -- now you're talking. And in the year ahead you're going to hear me talking about these exciting areas that will be available to talented radio people once they accept that more stations is not the solution.

Don't look now but the bottom is falling out of the radio industry.

Ratings -- off (while consolidators amazingly and foolishly beat up electronic measurement at every occasion).

Sales down -- 2008 will be the worst year yet (even without the "mild" recession that's being predicted).

Denial -- read the Radio-info boards and see the arguments pro and con. I hate to tell them but radio is not coming back as a single platform growth industry.

FCC Chairman Martin can't even get further relaxation of ownership rules passed right now -- constituents of Congress apparently long for better radio (hint, hint).

But that's not stopping your NAB.

Even as Clear Channel and other major groups are handing out pink slips instead of holiday hams the real enemy is in the mirror.

What kind of industry supports a lobby group that supports the proven destructive wishes of a few of its biggest members?

NAB, the people who waste millions fighting their great Satan -- satellite radio.

NAB, the people who push the expansion agenda of failed consolidators.

NAB, the group that ought to be as vocal and forceful on fighting for Internet streaming royalties on a parity with satellite radio.

NAB, the group that is working against the future by lobbying for more of the past.

Maybe it's time to give them a pink slip.

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