David Oxenford

By David Oxenford, Wilkinson Barker Knauer

Wasting no time following the reopening of the government, the FCC has published its Notice of Proposed Rulemaking in the 2022 Quadrennial Review in the Federal Register, setting December 17 as the deadline for initial comments on the questions asked by the FCC.  We summarized the issues raised by the FCC in our article here.  While the FCC will review the local ownership limits for television, following the prohibitions on owning two of the top 4 TV stations in a market being thrown out by the 8th Circuit Court of Appeals in July (see our article here), that FCC review will focus principally on whether the ownership limit of two TV stations in a market should be continued, or if one party should be able to own more. The 39% cap on national ownership of TV stations is being considered in a separate proceeding (see our discussion here).  The FCC will also look at the dual network rule, which currently forbids the common ownership of two of the top 4 TV networks.  With control issues seemingly settled for now at the networks, pressure to move on reform of that rule may have lessened.  Probably the biggest impact of the Quadrennial Review will be on radio, where the local ownership rules have remained unchanged since 1996, limiting one owner from owning more than 8 stations (only 5 of which can be FM stations) in even the biggest markets with more than 45 total stations.

Radio’s role in the media marketplace has become more and more challenging over the last decade, as its traditional place in the car has been challenged by new audio entertainment options.  As those options proliferate, sounding and functioning  more and more like radio, they are becoming more accessible to the public and more and more popular with listeners.  Over-the-air radio now competes with streaming services, podcasts, satellite radio, and other audio media.  These changes in listening habits are coupled with a change in the advertising marketplace, as the digital media giants now take over two-thirds of the local advertising market that was once the province of radio, television and newspapers.

There have been no substantial changes in the ownership rules for radio in nearly 30 years, during a period where there have been massive changes in the rest of the audio industry.  In 1996, streaming was something only a few technologically-forward people even knew existed. Pandora did not launch its streaming service for another decade, and Spotify was even further behind – not launching in the US until 2011. Even those few people who knew that audio streaming existed in 1996 would never have thought that they could listen to a streaming service in their cars. Apple was not offering a streaming music service – in fact it had not even introduced the iPod (introduced in 2001) or the iTunes store (2003) – both themselves technological relics because of subsequent changes in the audio marketplace. Given that there was no iPod, there were obviously no podcasts to bring audio storytelling to the millions who now listen to their favorite programming through the multitude of services that provide podcasts on almost any subject. There was no Alexa to bring Amazon and other music services into the home – in fact, Amazon itself had only begun selling books online in 1995. Even Sirius XM (then Sirius and XM as two competing companies) had not initiated their services at the time of the 1996 Act – as XM did not start providing service to consumers for another 5 years (with Sirius launching a year later). And the pace of change for audio technology is not slowing.

Streaming to cars is replacing over-the-air radio in its prominence on dashboards, and there have been well-publicized plans announced to even take broadcast radio out of some cars completely – most recently, Tesla announced it was removing all radios from its base models.  As the car is radio’s most important listening venue, broadcasters have fought back with requests for legislative fixes – like the AM in Every Vehicle Act, but it is still evidence that its competitive place in the car is under assault.  Between streaming and satellite radio, an unlimited number of audio channels are available to most Americans. Even drivers in rural areas with little or no mobile coverage to deliver streaming services can still receive Sirius XM satellite service, and podcasts and cached content from certain subscription streaming services provide additional audio options. And, over time, with driverless cars on the horizon, video may also become a competitor to radio in the car.

Radio reception in the home is changing as well. The number of homes without an over-the-air radio continues to grow – with 39% of all homes reporting that they no longer had an over the air radio in their homes in 2022.  Alexa, Google Home, and its imitators provide direct voice-activated access to audio content that does not include over-the-air radio. Here, too, the number of channels of programming available from these services is effectively unlimited. These digital giants providing new audio competition – including Facebook, Amazon, Google and Apple – all have market capitalizations at or well above 500 billion dollars, dwarfing the total capitalization of the entire radio industry which is less than 10 billion dollars.

The competition for radio revenue has also dramatically changed since 1996. In 1996, local advertising competitors were the local newspaper, some TV ads, and direct mail. Local cable TV ad insertion networks were in their infancy. And digital advertising competition really did not exist. Facebook did not launch to the general public until 2006 (being available to college students two years before), and Google wasn’t launched until 1998. Analysts say that digital services now take over two-thirds of the local advertising share in most radio markets.  Even regulators seem to recognize this dominance, as witnessed by the recent antitrust lawsuits filed against digital media giants Facebook and Google.

The fact that over-the-air radio continues to command a significant audience reach is no doubt attributable to the quality and relevance of the content that it provides to local listeners, its ease of access, the lack of subscription fees, and habit. But the time spent listening to radio continues to decrease, with some younger demographics already spending more time with other audio sources.  With all the competition now in the radio marketplace, rules that were written when the only competitive mobile audio content was from the cassette player would seem ripe for review. So how will the new FCC react to these marketplace changes as it completes the work on the Quadrennial Review?

What changes in the ownership rules will the new FCC be prepared to make to address the seismic shift that has occurred in the audio marketplace? Will the FCC recognize that radio is no longer an island unto itself? Will they recognize that radio no longer is a separate market where radio stations only compete with other radio stations? These are real questions, as sometimes the government is slow to recognize the transformation of the marketplace.  While Chairman Carr has in past stated that the rules are outdated and should be abolished, his actions now that he is running the agency remain to be seen.

In the past, some radio companies have suggested a lifting of the “subcaps” in the radio ownership rules that limit the number of AM or FM stations that can be owned in a single market (see our article here). Right now, in the largest markets, one party can own up to 8 stations, but no more than 5 can be in one service – AM or FM. Some fear that lifting the subcaps will mean that the big players will all migrate to FM, further damaging the already-ailing AM band. The FCC will need to address whether this artificial support for the AM band is still in the public interest – and consider whether, even if the big radio owners move to FM, that won’t create more opportunities for niche programmers on the AM dial.  In the comments filed in 2019, even some broadcasters who opposed relaxation of FM ownership supported deregulation of AM ownership, seeing the removal of AM limits as a way in which innovation in AM operations might be possible.

But does lifting the subcaps go far enough to make it possible for radio owners to develop the synergies needed to compete with the plethora of new audio competitors? Some suggest that, to compete effectively against the digital giants who are thus far subject to little or no regulation, radio owners need to be able have a marketplace presence that is even deeper than 8 stations. For instance, in a market like New York City, BIA Kelsey (the broadcast analysis service on which the FCC relies to determine which stations compete in each market) says that there are 154 radio competitors serving all or part of the market. In Los Angeles, BIA says that there are 93 stations that compete in the market. These numbers don’t include the plethora of digital sources.  Are 8 stations enough to really compete in the media marketplace in those markets?

Others worry that more concentration will shut out potential new owners and believe that new technologies still don’t provide an equivalent means to reach the radio audience. Fearing that new entrants, diverse owners, and niche programmers will be priced out of radio ownership if more consolidation is allowed, some are likely to continue to oppose any change in the radio ownership rules just as they have opposed changes to the TV and cross-ownership rules in the past.  But as the price of buying radio stations has plummeted in recent years in most markets, we have not seen an influx of new buyers.  Presumably, investors see more opportunities for investment in other less regulated industries.

Small market radio provides its own challenges. In markets not rated by Nielsen, the FCC looks at the overlap of radio station’s service contours to determine which stations compete, and how many radio stations are in any market. In the smallest markets, a broadcaster can own up to 5 stations, no more than 3 of which can be in any service, and in no case can the broadcaster own more than half the stations in a market. Some small market broadcasters suggest that these limits often leave one or two weak stations in a market – stations that provide little local service. Many of these stations are in effect digital jukeboxes, hooked into some satellite or internet delivered national music service, and providing little or no local service.  Just as many markets have a single newspaper (if they even have one); some argue that some smaller markets simply cannot support multiple commercial radio operators. Should the more successful stations in the market be allowed to own some of these orphan stations, or would further consolidation in the small markets foreclose service from some operator who might come up with a unique idea that could revive an otherwise failing station?  This will be one of the questions that the FCC will face in its review of the ownership rules.

There are plenty of questions with which the FCC will need to contend in its Quadrennial Review, and it will seemingly have to move quickly to resolve these issues, as its next Quadrennial Review is set to begin in 2026.  We expect many broadcasters to comment in this proceeding.  Now that the comment dates are set, start preparing your comments now.

Reply comments are due January 16, 2026.