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Radio Is Audio ‘Mainstay’ With ‘Strong Position’ Against Digital Rivals.

Today (Jan. 19) the U.S. Supreme Court will take up a case that could impact the media ownership rules at the Federal Communications Commission. The justices will potentially have some fresh evidence to read as the FCC has published its report on the audio marketplace as part of a biannual look at all the communications sectors. The report is required by federal law, which says the FCC must assess whether laws, regulations, regulatory practices, or marketplace practices pose a barrier to competitive entry.

When it comes to radio, the report calls AM/FM “the mainstay of the audio programming market” but it also acknowledges there have been significant changes as the digital market has grown. “While broadcast terrestrial radio remains dominant in some respects, the gap in usage between broadcast terrestrial and online audio has declined over time,” the report says. “The number of weekly listeners to broadcast radio in the U.S. remained relatively stable, while the audience for online radio grew steadily.” It points to data that shows during the past decade over-the-air radio’s audience has grown each year at an average of 0.55% per year. That compares to a 29% annual growth rate for online radio.

“Online broadcast radio has had more substantial revenue growth than over-the-air radio,” the FCC says. Online radio grew 13.1% between 2010 and 2019 according to the data used by the agency. “Online radio is considered to be an important area of potential growth for radio advertising revenue, especially given the various new devices for accessing online radio, which include smartphones, tablets, and smart speakers,” the report says.

Yet when it comes to competition, the FCC says legacy radio still enjoys some benefits, even as its growing rivals do not face any government oversight. “Many regulated entities, however, often enjoy a strong position as the legacy service provider in the marketplace,” it says. To help even the playing field, the FCC says it has taken several steps to help broadcasters, including the ongoing AM revitalization effort and updates to FM translator interference rules made in April 2020.

The agency acknowledges the National Association of Broadcasters has urged it go further. “To help radio and television stations remain meaningful competitors, NAB argues that the Commission and other government agencies should adopt a broad definition of the relevant competitive markets, including the advertising market, and allow broadcasters greater economies of scale, thereby enabling necessary investments in data-driven and automated sales operations, programming and physical plants,” the report says. But the FCC does not take a position either way on the NAB’s arguments.

The report was approved with a lot of mixed feelings among the commissioners. Republican Brendan Carr said he would like to see the FCC go further in recognizing the “converged market” that now exists.

“The Commission’s decades-old approach of viewing different technologies as competing in distinct and separate markets no longer matches the way that Americans consume these services,” said Carr. “As I’ve emphasized before, the FCC’s market definitions often look backwards to where the sector has been, rather than where it is going.”

Democrat Jessica Rosenworcel agreed that while the overall report is full of facts and figures, it fails to identify the “transformational changes” that are taking place. That includes changes that could put up new barriers to entry.

“The roadmap set forth in this report does not adequately reflect the magnitude of the work ahead for this agency,” said Rosenworcel, who is said to be among those in contention as the next FCC chair.

Read the full Communications Marketplace Report HERE.

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