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Yes It’s Monopoly, But Listeners Will Never Know

June 28, 1996

NEW YORK (AP) _ When Westinghouse Electric Corp. plunked down $3.9 billion for Infinity Broadcasting, it did more than create the nation’s biggest group of radio stations.

In an era when movie studios gobble cable and broadcast TV networks and telephone companies gobble each other, the deal announced earlier this month conjured up visions of monopolistic media robber barons putting elevator music across the dial.

Is bigger bad? Does the merger of No. 1 Westinghouse with No. 2 Infinity put too much wattage in too few hands? Or is bigger blander? Will drive-time ``shock jocks″ yield to Muzak that soothes?

Not necessarily. On the contrary, broadcasting executives and others say, the Westinghouse-Infinity superpower could help stimulate creativity and diversity on the airwaves. The reasons behind that seemingly convoluted logic reflect the nature of the radio business and who is listening.

``Radio’s big success is niche markets. It’s not like TV,″ said Katy Bachman, editor in chief of Radio Busines Report, a weekly trade newspaper. ``Radio targets specific niches, demographics and lifestyle groups.″

Westinghouse gets 83 stations _ 69 in the Top 10 markets _ only because the Telecommunications Act of 1996 let the Federal Communications Commission drop its national cap on how many AM or FM stations a single entity can own.

``It might concern me if I had to compete against them,″ said FCC Commissioner James Quello, former vice president and general manager of Detroit’s radio station WJR.

``From a regulatory standpoint, it meets the new rules,″ Quello said. ``As long as there’s robust competition and no market dominance, no monopoly, big is not necessarily bad. There are economies of scale, of efficiency.″

Important limits remain: In cities with more than 45 commercial radio stations one company can own, operate or control as many as eight stations but no more than five in either the AM or FM frequencies.

In Chicago and Dallas, Westinghouse exceeds the limit and must shed stations or swap them for stations elsewhere.

In small markets with as many as 14 stations, the ownership limit is five stations, three in either AM or FM, and no one can control more than 50 percent of the market.

``Anyone who discusses the words antitrust and radio just doesn’t get it,″ said Infinity Broadcasting Corp. boss Mel Karmazin, who becomes chairman of the new entity and gets about 2 percent of Westinghouse’s stock.

``If (cable TV tycoon) John Malone can control 70 channels in how many markets and Ted Turner is able to have six channels in every home in the world, how is five radio stations in a market limiting diversity?″

Besides, he said, radio gets only 7 percent of the $162 billion spent annually on advertising. ``There are 10,000 radio stations, there’s about $13 billion spent in radio, and roughly 50 percent of all radio stations in America lose money,″ Karmazin said.

``In radio today, for both the consumer and the advertiser, there are plenty of other choices,″ he said. ``You’re not sitting there with something advertisers HAVE to buy.″

He said Infinity and Westinghouse aim for diversity in station format and programming in markets where they own several stations.

``We have classic rock stations, all-news, sports, Spanish language and urban contemporary,″ he said.

``There’s an argument that says diversity is sacrificed, but there’s no evidence,″ Karmazin said.

He pointed to Infinity’s New York City-based radio personalities Howard Stern and Don Imus, whose shows air head-to-head, competing nationwide in morning drive time.

Also in New York City, for example, Westinghouse has owned all-news stations WINS and WCBS since December. Both are successful, competitive and aimed at different audiences.

``It’s a little more prudent allocation of assets, using the signals to complement each other instead of beating each other up,″ said Carl Butrum, president of Eastman Radio, a radio advertising service.

Multi-station owners ``can take their three stations and aim them slightly away from each other, instead of the middle of the demo,″ Butrum said.

``When you have a free market, you tend to find people programming formats alike, to grab the other fellow’s coattails,″ said Porter Bibb, an investment banker who follows the broadcasting business. ``Common ownership will probably reduce the likelihood of that.″

In Bibb’s view, common ownership not only will improve the diversity but the quality of programming.

``A single, large owner like Westinghouse can pay for better talent,″ Bibb said.

Is bigger blander? Stern, the raunchy ``shock jock,″ has a long-term deal with Infinity and a special relationship with Karmazin, who paid $1.7 million in FCC ``indecency″ fines.

``It’s a terrific work relationship. It has served Howard and us very well over the course of 10 years,″ said Stern’s agent, Don Buchwald.

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