STATEMENT OF CHAIRMAN WILLIAM E. KENNARD
In the Matter of the Applications of Shareholders of AMFM, Inc. and Clear Channel Communications, Inc. for Consent to Transfer of Control of AMFM Texas Licenses Limited Partnership, et. al.
I have long been concerned about the increasing ownership concentration in the radio industry that occurred as a result of the Telecommunications Act of 1996. The Act dramatically relaxed rules that had limited the number of radio stations a single company may own. These changes in the law unleashed a frenzy of consolidation in the radio marketplace and forever changed the economics of radio station ownership. Small and minority broadcast owners have found it increasingly difficult to survive in this changed environment.
As the largest radio merger in history, this transaction is in many respects the culmination of the wave of consolidation made possible by the Act. Because of its unprecedented size and scope, this merger presented novel issues about consolidation and reduced competition in local markets.
I carefully reviewed this merger to ensure that the applicants complied with the Communications Act and the Commission's rules and to assess the possibility for anticompetitive effects in each local radio market. The divestitures required by the Department of Justice, along with those required under our rules, weighed heavily in my decision. The consent decree that Clear Channel will enter with the Justice Department includes divestitures designed to address the anticompetitive effects of the merger in local radio markets, including some markets where the transfers would otherwise have complied with the numerical local ownership limits.
And the way Clear Channel conducted these divestitures provided a significant additional benefit, albeit unrelated to our analysis. When Clear Channel announced this merger, its Chairman publicly and voluntarily committed that Clear Channel would provide opportunities for minority companies to purchase stations divested as a result of this transaction. (1) Clear Channel followed through on this commitment. To complete this merger, Clear Channel will spin off approximately 40 stations to small and minority businesses. These spin-offs represent the most significant one-time increase in minority ownership in history and mitigate somewhat the concentration problems presented by this combination.
Nevertheless, the spin-offs do not assuage all of my concerns about increasing concentration in the radio marketplace concentration that will increase market entry barriers for small, minority, and women owners and make it increasingly difficult for them to compete and add their unique voices to the airwaves. For this reason, I believe that applicants and other proponents of radio mergers that raise competitive concerns like applicants in the cable, wireless, common carrier, and satellite contexts should be required to describe the specific public interest benefits that consumers will receive as a result of the transaction.
The Commission should also articulate in a rulemaking its framework for reviewing radio transfer applications that raise competition concerns and seek the benefit of broad public comment. I have asked my fellow Commissioners to consider a Notice of Proposed Rulemaking on this topic and I urge them to act expeditiously on it so that the Commission can bring more certainty, predictability and timeliness to our review of radio transactions.
1 See $56 Billion Merger Between Clear Channel Communications and AMFM Inc. to Create the World's Largest Out-of-Home Media Company, Press Release, Clear Channel Communications, Inc. (October 4, 1999).