Media Bureau points out petition was unopposed and is in public interest

By John Eggerton

The FCC’s Media Bureau has granted a petition by a pair of Australian citizens to control 100% of broadcast stations (four radio stations in Alaska and Texas).

The FCC has granted aggregate foreign investments in broadcast licensees of up to 49.99% under foreign ownership rules loosened in 2013 (the Pandora decision), and just last month allowed foreign investors to own up to a 49% equity stake in TV and radio station owner Univision, including up to a 40% stake by Mexico’s Televisa.

But this is the first time it has allowed 100% foreign ownership of the parent of broadcast licensees.

The FCC’s Media Bureau, which issued the declaratory ruling Feb. 23 allowing the ownership change, said the petition had been unopposed and that it had consulted with the “relevant agencies” on law enforcement, national security, foreign policy and trade issues—and none of those agencies raised any objections or said any conditions should be put on the deal.

Any deal that will result in more than 25% foreign ownership triggers such heightened scrutiny, but since 2013 such a 100% control scenario has been possible, which the FCCs’ Media Bureau pointed out in noting that the petition was reviewed under that 2013 clarification rather than the 2015 decision to streamline foreign ownership reviews, which explicitly said the FCC would consider petitions for 100% control. That is because the 2016 streamlining has yet to take effect.

But under that heightened scrutiny, the bureau has concluded that not only are there no grounds to object, there are grounds to favor the deal. “[W]e find that grant of the Petition would: (1) increase the likelihood of continued service to small communities by authorizing investment by individuals who are ready, willing, and able to operate the stations based on their extensive experience operating them to date; (2) facilitate foreign investment in the U.S. broadcast radio market; and (3) potentially encourage reciprocal investment opportunities for U.S. companies in foreign markets. For these reasons, we find that grant of the Petition will serve the public interest.”

The stations at issue are KGTW (FM) Ketchikan and KINY (AM) Juneau, both Alaska, and KCMC (AM) Texarkana and KTOY (FM) Texarkana, both Texas.

The stations are owned by Frontier, an Alaska-based company controlled by Richard and Sharon Burns, who are Australian citizens. They each own 10% of the ownership interests in the stations and want to buy the other 80% so they would hold 100% of the ownership interest.

“[A]fter the proposed transaction, the Burnses, would hold 100 percent of the ownership interests in Frontier, the parent of all four Licensees, and, through Frontier, would indirectly own 100 percent of the interests in the Licensees,” the Bureau said.

Both of the Burnses have lived and worked in the U.S. for more than a decade, the FCC pointed out. They have managed the Alaska stations since 2006 and the Texarkana stations since 2013.

Your Editor Welcomes this liberalization. No more borders, not even there.

A report by the Columbia Journalism Review

Out of all Trump’s appointees, Ajit Pai has perhaps received the dimmest spotlight. But as the new chairman of the Federal Communications Commission, he fits the pattern; from the EPA head’s questioning of climate change to Betsy DeVos’s allergy to public education, Trump seems to favor those whose public stances run counter to the department to which they are assigned.

Pai says he will focus on closing the digital divide—the stratification between those with access to the internet and its myriad devices, and those without. But Pai, who was formerly employed as a lawyer by Verizon, has a mixed record. Pai voted against an order that would have brought high-speed internet to schools and libraries in poor neighborhoods, citing concerns it would raise charges on phone bills. (It did, by 16 cents.) Because Pai was already a member of the agency, he bypassed Senate confirmation.

Pai is also opposed to net neutrality—the doctrine leveling the playing field for internet delivery—in favor, apparently, of a smaller role for the FCC. He unleashed a dozen actions in his first week in office “rolling back consumer protection regulations,” reported The New York Times.

Even prior to Pai’s appointment, there was concern that Trump would use the FCC for his own aims. As Klint Finley wrote for Wired in January, Trump’s transition team was already united against net neutrality—a good indication of policy to follow. Finley suggests Trump could also “use the FCC as a weapon against perceived enemies in the media”—through selective enforcement of net neutrality in a consolidated media industry.

Why should journalists care about the FCC, when newspapers are not affected by airwaves licenses? Tracie Powell laid out the case for CJR in 2013: Besides ensuring a free marketplace, neutrality, and transparency, “the FCC is the only agency with a mandate to make the media more diverse, local, and accountable.”

A few reads on net neutrality:

• From the CJR archives: A letter from the desk of a former FCC Commissioner, who makes a forceful argument against media consolidation in the age of the internet.
• The Intercept reports that civil rights groups have a conflict of interest when it comes to supporting or opposing net neutrality.
• In “The Trump Administration’s Other War on the Media,” Katrina vanden Heuvel enumerates the ways in which Pai has “declared war on consumers” in favor of making friends with large companies.

Your Editor Urges: Journalism is a weapon. Use it.

By Paul Resnikoff

When will radio stop ignoring the internet? And, everyone under the age of 25?

It’s a question whose answer is obvious. Why are people tuning out of ‘traditional’ broadcast radio? Usually the answer involves one or more of the following:

(a) long commercials

(b) lots of repeated songs

(c) long deejay breaks

(d) Spotify

(e) podcasts

(f) mobile phones in general

(g) lameness

(h) Nickelback

Maybe you could add ‘no EDM’ to that list, though somehow DJs went pop enough to get airplay.

But there is one good thing going for old-school radio: it’s easy and cheap. And, it’s ready to go in the car. Flick it on, and it’s there, all for free. But that’s slowly starting to change, especially with mobile-ready radio apps, streaming apps, and podcasts invading the dashboard.

Sure, a lot of people still tune in to local radio and deejays, but there’s never been more competition during drive time. And fewer younger people are tuning in.

Now, there’s a station wanting to add a little internet into the stodgy old radio station. And, add even more competition alongside Pandora, Spotify, podcasts, and Sirius XM. Enter GoViralRadio, an app-based radio concept that wants to bring younger listeners back into the fold.

What this is.

Here’s what these guys are up to. Basically, GoViralRadio is an app, for Android or iOS. And all it does is offer a blend of bigger hits and emerging, viral hits. So, it’s hits you like, plus stuff that’s blowing up on YouTube (and other places like SoundCloud).

Mix it all together, and these guys think they have something more exciting and appealing than anything out there.

GoViralRadio is actually targeted at a younger demo, which makes sense. Think 12-24 age demographic. Basically, the people who (a) care about pop hits and (b) care about viral hits. And, the people that would rather Bluetooth-connect their devices than lean back and listen to 98.7. “Concerts are selling out, interaction is extreme, kids and parents know the brands, yet radio is not playing,” the founders explained.

In terms of genres, there’s zero adherence to the traditional divisions of rap, country, EDM, whatever. That stuff is oftentimes made up by the industry and radio, not people. “Our goal is to promote viral superstar artists from around the world,” said Ray De La Garza, one of the founders of GoViralRadio. “We are not format-specific, we are what Top 40 was forty years ago. Think the hottest combination of pop, urban, rap, rock and country.”

Why this might have a shot.

Next question: will these guys be dead in 6 months? Possibly. The mortality rate among music startups is about 99% (trust us). But the founders of this company actually aren’t tech outsiders, pounding their fists in the air while touting theoretical mumbo-jumbo. De La Garza is actually a seasoned radio executive, who prides himself on plugging formatting holes.

The other founder, DJ Lynnwood, has been programming traditional and online radio stations for 10+ years. That includes nationally-syndicated radio shows, and even stuff for earlier platforms like MySpace and Beatport.

The last piece.

Here’s the part of the playbook that’s Radio 101. Target a demographic, then sell the crap out of it. And the proposition here is that under 25s are being woefully underserved.

So, once they are served, advertisers will want to reach them. GoViralRadio calls it an ‘obvious and massive demographic’. Let’s see if they can corner and monetize them.

Your Editor Applauds programming diversity also

FCC commissioner Mignon Clyburn is using her bully pulpit to give CBS Radio a public nudge. With the company’s IPO expected by the end of the first quarter, Clyburn is urging the company to use the opportunity to sell some of its 117 stations in 26 markets to new entrants. “I would encourage this group owner and others like it to consider offers from women and minority-owned businesses seeking to enter or expand their presence in the radio business,” Clyburn said during a speech on Wednesday in Washington. It’s unknown whether CBS would even consider the idea, however. The company didn’t respond to a request for comment.

As the only Democrat on the Commission until President Trump fills two vacancies, Clyburn also signaled she will be doing what she can to block any efforts by the new Republican majority to ease media ownership restrictions and put more stations in the hands of the big media conglomerates. “I have heard those Commission rules described as ‘outdated relics of a long-gone era’ and that the elimination of some of these rules would increase investment opportunities,” she said. “What I am still waiting to hear is how we should work together in order to move the inclusion and opportunity needle for those of us who still dream of owning and operating broadcast properties.”

Clyburn is the former owner of a weekly African-American-targeted newspaper in South Carolina and she told the National Association of Broadcasters’ Capital Assets Conference that the idea of owning a radio or television station has been “a dream” of hers for as long as she can remember. “But the hard, cold reality is this: A new entrant, with no existing license, has a supreme challenge when it comes to acquiring the capital necessary to seal a broadcast property deal,” she said. “Compound this with being a woman or person of color, and it may seem next to impossible to break into the business.” Clyburn told the conference focused on helping women and minority operators secure financing that she met with four different station owners at the NAB-RAB Radio Show in Nashville and learned firsthand just how big a challenge it can be. “A minority-owned station group estimated that launching a single new radio station would require around $10 million in financing,” Clyburn said. “So we should not be surprised at all that our local banks are not rushing to finance these deals.”

The FCC says just over 8% of commercial radio stations and about 6% of local television stations are owned by minority broadcasters. To help boost those numbers, Clyburn said she also now supports an idea, first suggested by the National Association of Broadcasters, of backing a pilot incubator program that would waive certain ownership restrictions for an incumbent broadcaster if the operator agrees to help a new entrant get a toehold in the business. “Such incubation, perhaps in the form of lending financial, programming or technical support, could result in the successful entry of a new broadcaster, increasing the diversity of voices available to the public,” she said.

Clyburn last month released a multipart proposal—what she’s calling her “Solutions 2020 Call to Action Plan”—that urges the reinstatement of the FCC’s Minority Tax Certificate Program be the first step taken. During its 17-year existence, according to Clyburn, it helped minority radio ownership rise from just 40 radio and TV stations in 1978 to 288 radio and 43 TV stations by the time Congress pulled the plug. “Despite ending in 1995, I am convinced not only does bipartisan support for this program remain, but that we should collectively push for an updated bill,” she said.

Reviving the minority tax certificate would require an act of Congress. The last time legislation was introduced was in 2007, and while it drew no opposition, there was also limited support with similar fraud concerns that had sidelined the program earlier. Rather than giving a seller a break on capital gains taxes as in the past, supporters have suggested a new program be crafted more as a tax deferral program that would impose a cap on the amount of tax that could be deferred in a transaction, and imposing a cap on the total deferred taxation for all transactions within a year.

This story was first published by Inside Radio

Your Editor Echos: Beautiful work, Commissioner