FCC Lifts Radio Taboo
by Samuel R. Smith

Note: This article originally appeared in the Winston-Salem Journal, May 21, 1992: p 32

You may have noticed some changes up and down your radio dial lately. WKZL (FM 107.5), for several years the Triad's top-rated contemporary hit station, has become 107.5, The Eagle; the new, lighter sound is essentially mainstream Top 40 minus the rap and heavier rock and roll.

And WWMY, which for years bounced from format to format trying to carve out a niche in the Triad's overcrowded FM market, is now Magic Lite, a softer sister to Adult Contemporary fixture WMAGic 99.5.

Of course, format shifts are nothing new, especially in the Triad, where absolutely everybody agrees that there simply isn't enough advertising revenue - the lifeblood of commercial broadcasting - to support the number of radio stations.

However, thanks largely to a nationwide economic crisis in the radio industry, the Federal Communications Commission is now allowing competitors to enter into cooperative Local Marketing Agreements (LMAs). The LMA permits one station to assume the day-to-day management, programming, and marketing of a weaker outlet in the same market.

A similar arrangement, the Time Brokerage Agreement, is basically a scaled-down LMA which allows one station to serve as sales agent for another, while the second station retains programming and management responsibilities. Before now, such cooperation between competitors was strictly taboo with the FCC. On the local front, WKZL (with WKRR, Rock 92) and WWMY (with Magic) are the first Triad stations to take advantage of these new rules, which FCC officials and area broadcasters say were necessary to strengthen the radio industry financially and to save fringe stations - stations often on the brink of collapse.

But others in the industry use "LMA" like an epithet. They say it's just another opportunity for the rich to get richer, and they decry the inevitable wave of jobs lost to "operating efficiency." Driving all these hopes and anxieties even higher is a new round ownership rules proposed by the FCC which would go LMAs a step further, allowing broadcasters to own as many as six stations in a single market.

William Johnson, the Deputy Chief of the FCC's Mass Media Bureau, says the new rules are necessary.

"People felt they shouldn't just sit here and let what was going on continue." Between 200-300 stations have gone dark in the last couple of years, he says. Many were AM outlets that just couldn't compete with the FMs. The result was gradually worsening service for the listeners.

This led the FCC to explore means of getting resources back into the industry in a way that would provide better service, Johnson says.

"The only way we could figure out to do this was to try and make the operation more efficient. That means more common ownership. [A single owner] having two stations in the market saves a lot of money. Getting that money back into public service will be a big benefit."

The overall economic climate also provided a big incentive for the FCC to make a move, he says.

"The recession certainly gave [the new rules] a push. We spent quite a bit of time at the staff level trying to figure out whether the economic changes were short-term or not, and the people who looked at it don't think they're short-term."

According to Alan Dick, the President of Dick Broadcasting (which owns and operates Rock 92), the proliferation of stations during the 80s made some kind of adjustment necessary.

"They paid too much for their property, a recession hit and there are too many radio stations. And the banks are sitting there, and they've gone out to minorities and to other people and they've allowed them to borrow all this money, and now the banks are taking multi-million dollar hits. You know who's going to pay for that, don't you?

"So this, in a way, will bring back some value to the signals in the marketplace."

Bill Johnston, the General Manager at WMAG-FM/WMFR-AM, agrees, saying that radio in the 80s was like a crap shoot, with lots of people betting the come line.

"The upside of these fringe radio stations is not what it used to be," he says, "so now the basis of radio is very similar to the basis of real estate or any other business. It's not based on the tax, or the appreciation value, as much as it is on the real cash and business value.

"As a result of that, stations like WWMY would have been off the air if there had not been some creative way of structuring it where there was a double win. So what the LMA process does today is allow the licensee to win because they still have an asset, they're still able to pay their bills, and we have an opportunity to generate more revenue and make some profit."

But radio owners and managers aren't the only ones in the industry with economic concerns, and as scores of people across the country have learned in the past few months, one man's efficiency is often another's unemployment.

Kevin Carter, the Top 40 Director/Editor for Hitmakers magazine, says that LMAs and TBAs seem to be good for station owners, but bad for everyone else in the business.

"All I know is that my phone is ringing every single day with people looking for jobs, looking for leads. It gets pretty disheartening sometimes, because I've been there myself."

In the Triad, the employment numbers are most dramatic at WKZL. When HaPa Communications purchased the station from Nationwide Communications last summer, WKZL employed 23 fulltime workers. By the time HaPa owner Victor Rumore finally gets the station moved into its new Greensboro facilities with Rock 92 (probably within the next 90 days), WKZL will be down to seven fulltime employees.

According to Rumore, "the only thing we cut out was sales - it was only sales, nothing else. Sales managers, sales people." And he says that all of WKZL's sales people were offered the chance to interview with Rock 92. Of these, two were offered jobs. One accepted the position, and the other opted instead for a similar position in Charlotte. Rock 92 has hired a total of four new sales representatives since the LMA.

"If I didn't have the relationship with Rock 92, and still bought the station," concludes Rumore, "the only difference is I would have had a sales department of my own and instead of him having ten I would have had five and he would have had five. So I don't see any difference. I don't see where it's left people out at all."

He also says that he would have consolidated as many positions as possible.

"Promotionally I would have tried to find a General Manager that could also be a Promotions Director. You always try to find people who can do two or three jobs.

"So I guess the point I'm trying to say is the FCC rules have no effect on people losing their jobs, because I don't see anybody replaced."

The numbers, though, don't add up. Aside from sales, WKZL's new organizational structure has eliminated (or will upon the move) the Promotions Director, Traffic Manager, Business Manager, Copywriter, Receptionist, and Programming Assistant.

Hitmakers magazine recently named WKZL's lame duck Promotions Director, Melissa Bucell, its national LMA Victim o' the Week. Rumore responds by saying that anytime you share facilities, people will lose their jobs.

"The station has lost money for years and years and years. The people that bought it before me paid $5 million, I paid $1.5 million. Do you think if it were healthy and profitable they would have sold it for a $3.5 mil loss? No way. You have to run a station for profitability. It has nothing to do with the new rules changes."

And even without the new FCC rules, he says, there was nothing preventing him from moving into the same building with Rock 92 and sharing, for example, a receptionist.

As for the displaced employees, Rumore says that talented people will never have trouble getting jobs.

Kevin Carter's response to Rumore's remarks was direct: "In this current economic climate? Boy, he's full of _______. That's easy to say when you're employed.

"There's a ton of talented people sitting on their butts right now watching All My Children because they can't find jobs because of the economic climate out there. Things like LMAs are just making it tougher. You're throwing more and more people into a talent pool that's already overcrowded with qualified people. There's not enough positions to fit the number of bodies. Simple arithmetic."

Bill Johnson of the FCC says that fewer owners could result in greater listening options for the public.

"When you have one operator who's in control of a few channels, instead of shooting for the lowest common denominator with each of those, there's a tendency, at least in theory, to sort it out in terms of a more diverse package. Those are the business incentives."

In other words, if one person owns several stations, there's no reason to have two Adult Contemporary stations competing against each other.

And right now, competition in the Triad's Adult Contemporary market is intense. WMAGic and B-100 (WWWB) are the two pure AC stations, with MAGic Lite skewing a little older and The Eagle skewing a little younger. Oldies 93.Fun also makes a strong bid for the same listeners.

Bruce Wheeler, Rock 92's Program Director, thinks there will be greater diversity because stronger broadcasters have superior resources to invest in a new product.

"If you have operators who are in a position to do their homework, to talk to these audiences, to look at what's being called for in the marketplace, and then to deliver on it - and not to have to have success necessarily on a revenue level in 3 months or 6 months or whatever kind of pressure they're under - then I think you're in a position to look at what kind of niches there are in the market and whether or not they make sense on an advertising level."

But Dr. Jim Booth, a media scholar who heads the Communications Department at Salem College, laments the increasing homogenization of radio over the last fifteen years, and says that the latest round of rules will only make things worse for the listener. "When you take away competition in a market, you have monopoly. You'll have even more formulaic programming of radio stations according to business and marketing considerations based on demographic data."

It's this absorption with marketing and research that Booth believes has destroyed what was once an exciting, progressive medium.

"If you conceive of radio as a medium designed to market goods and services, then sure, [research-driven programming] is great. But if you conceive of it as a medium for providing entertainment and perhaps some artistic enlightenment, then no, it's not." But Tom Jackson, the Program Director and General Manager at WKZL, echoes the sentiments of every radio owner and manager interviewed when he says that radio is a business, first and foremost. But "you have to try to satisfy listeners at the same time and that's really difficult.

"There are a lot of people out there that have unique tastes that would kill to have a radio station that catered to those tastes. But the simple law of numbers is that there aren't enough of them. So you have to do the most mass thing that you can in order to have decent numbers so you can stay in business." Alan Dick is optimistic that the next few years will provide more diversity in the market, saying there could well be a mainstream rock entry in and perhaps even a Young- or Thunder Country-style format. And while no plans are being made, he admits that a mainstream AOR (Album-Oriented Rock) station would make a sensible addition to the Rock 92/Eagle family.

Jackson says that even though the Triad has never been a very progressive market, a progressive-edged rock or hit station is a distinct possibility in the 90s.

Much of this could be idle speculation, as the duopoly rules have not been implemented, and some wonder if they will be. WKZL's Jackson says the new rules will have to get past Congress first. "I don't think the FCC is going to get away with it...It depends on how much heat minorities put on Congress. Minority groups are making noise, and it depends on how much noise they can make."

Alan Dick says that "the National Black Media Coalition, the NAACP, and women's organizations have filed a counter-petition to the FCC, saying this is not fair - it'll take minorities three stations to get in."

Still, given the recession-driven mindset behind the rules, it's a safe bet that something similar, at least, will be done. As the rules read right now, in the largest markets the FCC would allow a single owner to operate up to three FM and three AM outlets. According to WMAG's Johnston, the Triad will likely be a 2FM/3AM market.

Whether or not these changes will result in better fare for Triad radio-listeners is unclear. The first major programming move of the first wave - the LMAs - saw WKZL taking a big step in the direction of the already crowded AC dogfight.

Stay tuned.

PostScript: The multiple ownership rules alluded to in this article did, in fact, take effect. The same afternoon that the FCC announced the rules change Dick Broadcasting confirmed the suspicions of many by purchasing WKZL. It had been speculated, by me, among others, that Rumore was nothing more than a front - that Dick actually had the money behind Rumore's operation. Had I been able to confirm this I could have gotten both operations in huge trouble with the FCC. Alas, no such luck.