The Debate Over Minot Radio

Now is the time to challenge the inaccuracies and half-truths propounded by Clear Channel as it seeks permission from the FCC to own even more stations in each local market than it already does.
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In January 2002, Minot, North Dakota, became a symbol of what's wrong with media consolidation. One night a train derailed, resulting in a chemical spill, and Minot's emergency-response authorities had difficulty getting their message on the air. Clear Channel, the country's largest owner of radio stations, owns 6 of the 9 stations in Minot. When the authorities called Clear Channel that night to address the problems with the Emergency Alert System, no one answered the phone. Eric Klinenberg's new book, Fighting for Air, describes the Minot incident in detail. (Full disclosure: Eric Klinenberg is a friend and colleague, and I offered comments on a draft of his book.)

Yesterday, Slate's media critic Jack Shafer published an article questioning Klinenberg's claims about the state of Minot's radio stations. He makes some accurate corrections to the record. But the main point of Shafer's article is to debunk a key story used by the media-reform movement, which happens to be meeting in Memphis this weekend at the National Conference on Media Reform. Shafer also suggests that radio consolidation has actually benefited the diversity of programming available in Minot and across the country. Although I admire Shafer's effort to get all the facts about Minot, he does not set the record all the way straight about radio consolidation in Minot. I would also question his conclusions about the alleged benefits of media consolidation.

As a Ph.D. student in economics at the University of Michigan and (until very recently) research director for the non-profit research and advocacy group Future of Music Coalition, I have written or co-written two studies of the effects of radio consolidation. The most recent study, published in December 2006, is titled False Premises, False Promises: A Quantitative History of Ownership Consolidation in the Radio Industry. (The report and related materials are available here.) Since I'm familiar with radio-industry data, I was able to check some of the claims relayed in Shafer's article that originated with Clear Channel's Chairman, Lowry Mays. As it happens, many of Mays's claims are inaccurate. Clear Channel uses its inaccurate information about Minot radio alongside broader -- and also unfounded -- claims about the diversity of its programming.

The FCC is currently examining its media ownership rules, and Clear Channel is advocating the elimination of the local radio ownership rule, which limits the number of stations one company can own in a single market. The stakes in that proceeding make it even more important to set the record completely straight about Minot, Clear Channel's stations in Minot, and the broader impact of radio consolidation on programming diversity.

In my research, I use the industry's own data, collected by a firm called BIA Financial Networks, to evaluate the radio industry. (The FCC's research staff uses this same data in many of its reports.) So the data on radio ownership and radio formats I discuss below come from BIA Financial Networks' Media Access Pro (Radio Version) database. The quotes are all from Shafer's article in Slate.

"Clear Channel Chairman Mays said the Minot stations represented only three radio formats before the company made its acquisitions--country, adult contemporary, and news talk. Clear Channel diversified the mix by adding a classic rock, a hits, and an oldies station."

Chairman Mays's characterization of the formats on Clear Channel's six Minot stations before Clear Channel purchased them is false. The three stations previously owned by Reiten (until Fall 1999) had the following formats at the time of sale: Country, Country, and Adult Contemporary (AC). The three stations previously owned by Roberts (until Spring 2000) had the following formats at the time of sale: Classic Rock, Hot AC, and Country. According to the BIA database, there were no "news talk" stations among the six, and four distinct formats (not three) were represented among the six stations before Clear Channel arrived.

Chairman Mays's characterization of the formats on Clear Channel's six Minot stations after Clear Channel purchased them is also inaccurate. The only format switches came in the Fall of 2000. At that time, Clear Channel switched the previously Classic Rock KRRZ-AM to Oldies, and switched the previously Country KZPR-FM to Classic Rock. This added one new format on net, not three. Clear Channel may have "diversified the mix," but only slightly, and to a much lesser degree than Shafer reports.

To this day, Clear Channel programs both KCJB-AM and KYYX-FM with the same format -- Country -- in the same small market of Minot, according to the BIA database, which collects its format data directly from the radio stations themselves on a quarterly basis.

"The six stations weren't owned by six mom 'n' pop broadcasters but by two broadcasters."

This claim is accurate, but it's important to note that the ownership structure was quite different before the Telecommunications Act of 1996 (Telecom Act). In the fall of 1995, the six Minot stations in question actually had four different owners: Reiten Broadcasting (KCJB-AM and KYYX-FM), CD Broadcasting Corp. (KRRZ-AM and KZPR-FM), the Hoberg family (KMXA-FM), and Judith Ekberg (KIZZ-FM). So, including Faith Broadcasting's KHRT-FM and KHRT-AM, the Telecom Act pushed the number of independent commercial owners from 5 to 3, and eventually to 2 by the Spring of 2000.

Minot's experience is not atypical. I documented the dramatic change in radio's market structure over the last decade, both nationally and locally, in Chapters 1 and 2 of False Premises, False Promises.

"Wherever a broadcaster consolidates ownership in a region, it will tend to diversify programming for economic reasons."

This chestnut from economic theory is a venerable one -- it dates back to an article by Michigan's own Peter Steiner in 1952 (he wasn't yet at Michigan when he published the piece). Unfortunately, Shafer reports this theoretical economic claim without supporting it with data beyond his flawed Minot data from Chairman Mays.

In False Premises, False Promises, I tallied up the array of formats offered by the largest station groups -- those that meet or exceed the FCC's limits on local radio ownership -- and compare the formats offered to those offered by the smaller station groups (see Ch. 3, pp. 93-98 for the details). I found that the largest station groups actually focus on a narrow range of formats, and that the niche formats are actually offered by smaller station groups. In fact, many large station groups offer redundant formats in the very same markets, as we saw with Clear Channel operating two Country stations in Minot.

Just to check whether Clear Channel's radio stations might provide an exception to this general trend, I looked at the formats offered in both Spring 1996 and Summer 2005 (the latest quarter for which I have data from BIA) by stations Clear Channel now owns but did not own in Spring 1996. Among these stations, the top twenty formats were offered on 81.8% of the stations in Spring 1996. By Summer 2005, once under Clear Channel's ownership, the top twenty formats were offered on . . . 81.8% of the stations. Clear Channel has not used its size -- often much larger than its competitors' sizes locally -- to diversify its format offerings.

"The economic incentive to occupy as many strong programming niches as possible is so great that the scurvy bastards at Clear Channel even broadcast the liberal Air America network in about 17 markets."

While I can't personally speak to any deficiencies in Clear Channel executives' Vitamin C levels, I can point out an opposing economic incentive to the one Shafer describes. Offering homogenized programming is cheaper than offering something different on every station. It's really important to note that Peter Steiner's 1952 economic model did not have a cost side. Steiner's model relies on the assumption that offering two Country stations in the same market cost exactly the same as offering one Country station and one News station. Clear Channel's attempts to exploit economies of scale in programming -- through voice tracking, redundant programming formats, etc. -- shows what a crucial and ultimately misleading assumption that is.

I applaud Jack Shafer for sparking a debate about media consolidation, questioning some commonly cited stories, and getting more of the facts about Minot. I hope that I have corrected a few of the inaccurate and misleading comments from Clear Channel he quoted, and added a counterweight to the economic theory he cites.

I also hope I have clarified part of the main narrative of economic, social, and political concerns about media consolidation. While Steiner's economic model supports the idea that consolidation leads to diversity, that model misses a key feature of reality: the cost savings of homogenized programming. More importantly, such a model is not supported by the facts. Radio consolidation has not added to diversity; on the contrary, consolidation appears to detract from it.

The media-reform movement should raise concerns about the situation of radio in Minot. It is especially important to challenge the inaccuracies and half-truths propounded by Clear Channel as it seeks permission from the FCC to own even more stations in each local market than it already does.

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