Ownership Deregulation Seen as Biggest Question Mark for 2019 Radio Show

The biggest industry question mark going into the Tuesday to Thursday 2019 Radio Show in Dallas is the future of the AM/FM subcaps, said broadcasters, media brokers and broadcast attorneys in interviews. An NAB spokesperson said the trade group doesn’t announce show attendance, but it’s generally 1,500-2000.

Radio stations are also concerned with growing their digital-income, music rights and evolving advertising questions, but every industry official interviewed cited uncertainty about ownership deregulation as an important issue for radio. Radio licensees can’t be certain what kind of opportunities could become available, and that could be seen as putting damper on dealmaking. “Slow and steady is the state of the deal market right now,” said Patrick Communications media broker Gregory Guy.

“It’s not like something is going to happen with it real quickly,” said broadcaster Ed Henson. “But it’s certainly going to be the topic of discussion.” With the quadrennial review (QR) proposal considered uncertain after of a 3rd U.S. Circuit Court of Appeals ruling (see 1909230067) and the industry divided over how deregulation should proceed, there's a host of possible scenarios for what deregulation could look like. That “massive swing” between possibilities makes it hard for broadcasters to make plans, said Guy.

NAB wants elimination of subcaps outside the top 75 FM markets and for all AM stations, along with relaxed limits within the top 75. Other commenters propose limiting deregulation to AM, or keeping the status quo (see 1904300203). The QR NPRM didn’t appear to include tentative conclusions (see 1812120054), and with the 3rd Circuit ruling against the FCC, broadcast attorneys aren't sure how the 2019 quadrennial will turn out.

Broadcasters aren’t necessarily “keeping their powder dry” awaiting ownership deregulation, FCC action to loosen up the rules would be a definite stimulus to dealmaking, Guy said. Radio's “a shallow market in terms of buyers,” he said. “There’s not a lot of new money.” Broadcast industry analysts don’t expect any big radio deals (see 1909060045).

Music licensing should be of concern to the radio industry, said Wilkinson Barker broadcast attorney David Oxenford. “Every bit of music rights is in flux.” He noted ongoing litigation on rights-holder Global Music Rights (GMR), DOJ review of the ASCAP and BMI consent decrees, and streaming royalties as areas of concern.

Rising industries that could be a source of ad dollars for radio are hampered by legal uncertainty, Oxenford said. They include sports betting, marijuana and CBD products, and vaping -- products involved in “legal limbo,” Oxenford said.

Finding ways for radio to expand revenue from digital content and digital advertising is also on the mind of most radio licensees, said Henson. “Radio is uniquely positioned to take full advantage” of digital ad dollars, said Neuhoff Communications Chief Operating Officer Mike Hulvey. Though radio's working out how best to monetize online content such as podcasts, it’s where stations are looking, Hulvey said. Neuhoff's looking to emphasize original online content, rather than online versions of its broadcasts, Hulvey said. “It’s still early,” he said. Radio groups are also keeping an eye out for changing technology like smart speakers, Hulvey said. “We need to be skating to where the puck is going.”