Regulation Policy

Deregulation Rescued Radio

Historically one of the most regulated industries in the U.S., radio is enjoying a renaissance brought about by deregulatory provisions of the Telecommunications Act of 1996.

The legislation allowed firms to own an unlimited number of stations nationwide, as opposed to the previous 40-station limit. It also broadened the previous four-station per market limit -- allowing companies to own up to eight stations in the nation's largest markets.

The changes were designed to breathe life into a struggling industry -- and observers say they have accomplished that.

  • In 1996 and 1997, some 4,407 stations valued at $32.4 billion were sold.

  • Although the number of station owners dropped 14 percent from March 1996 to February 1998, the number of stations grew 3 percent.

  • Station owners claim that consolidation has spurred more radio formats -- since owners with several stations in the same market now target each one at a specific audience to better serve advertisers.

  • Radio had been wrestling with a slow decline in listenership -- from 23 hours per person per week in 1994 to 22 hours in 1998.

But industry insiders think the changes will increase ad revenues. Radio has for years drawn about 7 percent of all ad revenues, but they are hopeful that will now increase to 8 percent.

Some critics, however, are not happy with the changes. They charge the number of stations owned by minorities is decreasing and programs contain less local content.

Source: Anthony DeBarros, "Radio's Historic Change," USA Today, June 7, 1998.

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