- Increased competition - Until the 1980s,
television markets usually consisted of the original
three network affiliates and---in larger
markets---independent stations, which relied on movie
packages, syndicated reruns, and sports to carve a
share of the market. In radio, the battleground was
typically over niche music formats---led heavily by
country and rock formats which attracted younger
listeners.
Today, the typical television market (in the top 150-160 cities) consists of four network stations (with the advent of Fox in 1987 changing the face of the competitive structure) and, in some instances, fifth and sixth stations affiliated with newcomers UPN and The WB. Larger markets in the top 100 have added a seventh network, Pax TV----a national family broadcast network largely consisting at first of off-network reruns of non-controversial series, such as Touched By an Angel, Dr. Quinn, Medicine Woman, and Promised Land. Market shares have become fractionalized. In some instances, as many as four and five stations in a market are now doing nightly newscasts.
In radio, large markets have always faced heavy competition, with as many as 30-40 stations in the biggest metropolitan cities. However, the 1990s have brought increasing station numbers in smaller cities, with the lessened expense of obtaining satellite-delivered national networks which reduces the need for expensive local personnel costs. Two other factors have driven changing competition: the move of a majority of music from AM to FM in the late 1970s and early 1980s; and the increasing numbers of "niche" format services, and relaxed licensing rules from the Federal Communications Commission (FCC), which have allowed station owners licensed to a smaller town to literally move the operation to compete in a larger market where more advertising dollars are available.
- Mergers and consolidations - Changing ownership
rules as approved by the FCC in the early 1990s and
embellished by the Communications Act of 1994 have led to
mass buying of television and radio stations in the last
half of this decade. Until the mid-1990s, broadcast
owners were limited to the following:
Television - Twelve stations, with a limit of audience penetration of 25 per cent of U.S. television homes.
Today, television ownership groups may purchase an unlimited number of stations, with a cap of 35 per cent of U.S. audience penetration. Radio owners may buy an unlimited number of stations, with a restriction of 50 per cent of U.S. audience penetration.
Radio - Twelve AM and twelve FM stations, with a limit of 25 per cent audience penetration.
During the summer, the FCC has loosened yet another restriction on broadcast ownership. Companies are now allowed to own more than one television station in a market, as long as at least eight other television properties (including low-power and non-commercial) are in operation. In the Memphis and Nashville markets, the owner of one station is now legally allowed to purchase another TV property in the market. Eventually, the FCC is expected to deregulate what restrictions remain in the marketplace.
The changes in these caps have led to two key alterations in the broadcast marketplace. One, the price of broadcast properties, including radio stations, has multiplied substantially in the last five years after a near decade of limited station transactions. Some stations in the last three years have sold for as much as 18 times their annual cash flow. Two, larger owning companies are reaching down into smaller markets to purchase more stations. One company, Raycom Media---which owns WMC-TV in Memphis---now controls 31 television stations. Lowell "Bud" Paxson, who built a fortune through over-the-air home shopping channels and a national infomercial network, now owns 78 television stations and has used those properties to launch his own Pax TV network---as detailed above. Paxson is now openly shopping his stations on the market and NBC is expressing an interest in the properties.
In addition, radio properties---particularly well-positioned FM stations---are becoming more valuable. Chancellor is now the largest radio group owner in the world with 463 stations in 105 markets. Likewise, radio owners are allowed to own more than one station in a market. In Jackson, the parent company for Power-92 FM also owns WTNV-FM (104.1) and WTJS-AM (1390). James Wolfe, owner of Wolfe Communications, owns WKXX (Kix-96), WJAK (1460 AM) and WZDQ (Q-102).
- The Shift to Digital - Television and radio station
owners are preparing for their largest required capital
investment since the shifts from black-and-white to color in
the mid-1960s, from film to videotape in television news in
the mid-1970s, and from AM to FM as the preferred medium for
radio in the early 1980s.
As is currently proposed by the federal government, broadcasters must convert to digital signals by the year 2006. For a temporary period, television and radio stations will be allowed to continue with both a digital and the current analog feed simultaneously. However, the conversion is exorbitantly expensive and could force more smaller players from the marketplace.
Radio and television owners will be required to spend millions on new transmitters, conversion to digital editing and camera equipment, and either to broadcast in high-definition video and audio or with a multichannel feed, which could potentially target different niche interests of the audience (in television, one channel as a round-the-clock newsfeed, one channel for entertainment, one channel for special interests; in radio, bringing multiple music and interest formats under the umbrella of one station).
The big players are already experimenting with digital transmitters. WCBS in New York, WRC in Washington, WRAL in Raleigh, and WFAA in Dallas-Fort Worth are among twenty-two stations across America currently doing trial broadcasting of digital signals which virtually no one can see.
The biggest drawback at the moment: cost of the receiving equipment, which will certainly come down in price. The few high-end digital television sets currently on the market are currently selling at a range of $5,000-$7,000.
An additional problem: digital sets are not compatible with the analog sets Americans have used for more than fifty years. Once the conversion is complete, the nation's nearly 100 million television viewers will be forced to buy new receivers. At this point, broadcasters have done a weak job of preparing the nation of what is ahead---which sends one signal they may attempt to lobby for an extended deadline on total conversion.
In radio, managers are fighting one prospect, for which proposals have been before the FCC for three years---superstation radio. Digital broadcasting affords the possibility of radio stations in large cities distributing subscription-based clean signals nationwide via small satellite receivers which could be placed on automobiles. Existing broadcasters believe the concept of superstation radio could render local stations obsolete.
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