From the Future of Music Coalition’s Radio Study – December, 2006:

Executive Summary
This report is a quantitative history of ownership consolidation in the radio industry over the past decade, studying the impact of the Telecommunications Act of 1996 and accompanying FCC regulations.

A Brief History of Radio Regulation
Since the 1930s, the federal government has limited the number of radio stations that one entity could own or control. In the 1980s and early 1990s, the Federal Communications Commission (FCC) began gradually to relax these limits. Finally, in the Telecommuni-cations Act of 1996 (Telecom Act), Congress eliminated the national cap on station ownership, allowing unlimited national consolidation. With the same law, Congress also raised the local caps on station ownership. In addition, as this study describes in detail, the FCC regulations implementing the Telecom Act allowed more consolidation to occur than alternative regulations would have allowed.

Methodology and Data Sources
To keep the quantitative analysis as simple and transparent as possible, we have not included technical statistical analysis. Instead, we have filled this report with standard, antitrust-style measures of concentration; our own new methodologies for measuring localism and diversity; and many time-series analyses that simply track who owned what when. The study covers thirty years of historical data wherever possible; in other places, the study focuses on the last ten to twelve years—the main period of interest for examining the impact of the Telecom Act.

The FCC’s own efforts at collecting data on the radio industry are inadequate, as we emphasize throughout the study. Just as the FCC does, we have relied on industry-collected data to measure changes in radio consolidation and programming. These proprietary sources include: Media Access Pro (Radio Version) from industry consultants BIA Financial Networks, Duncan’s American Radio, and Radio and Records magazine.

Major Findings of the Study
Highlights from the study are organized here in similar fashion to its three chapters. The first chapter focuses on national radio consolidation, the second on local radio consolidation, and the third on radio programming.

Emergence of Nationwide Radio Companies
Fewer radio companies: The number of companies that own radio stations peaked in 1995 and has declined dramatically over the past decade. This has occurred largely because of industry consolidation but partly because many of the hundreds of new licenses issued since 1995 have gone to a handful of companies and organizations.

Larger radio companies: Radio-station holdings of the ten largest companies in the industry increased by almost fifteen times from 1985 to 2005. Over that same period, holdings of the fifty largest companies increased almost sevenfold.

Increasing revenue concentration: National concentration of advertising revenue increased from 12 percent market share for the top four companies in 1993 to 50 percent market share for the top four companies in 2004.
Increasing ratings concentration: National concentration of listenership continued in 2005—the top four firms have 48 percent of the listeners, and the top ten firms have almost two-thirds of listeners.

Declining listenership: Across 155 markets, radio listenership has declined over the past fourteen years for which data are available, a 22 percent drop since its peak in 1989.

Consolidation in Local Radio Markets
The Largest Local Owners Got Larger: The number of stations owned by the largest radio entity in the market has increased in every local market since 1992 and has increased considerably since 1996.

More Markets with Owners Over the Local Cap: The FCC’s signal-contour market definition allowed companies to exceed local ownership caps in 104 markets.

Increasing Local Concentration: Concentration of ownership in the vast majority of local markets has increased dramatically.

How Lower Caps Can Be Justified: The FCC’s local caps—in fact, even lower caps than the current caps—can be justified by analyzing how the caps prevent excessive concentration of market share.

Declining Local Ownership: The Local Ownership Index, created by Future of Music Coalition, shows that the localness of radio ownership has declined from an average of 97.1 to an average of 69.9, a 28 percent drop.

Restoration of Local Ownership is Possible: To restore the Local Ownership Index to even 90 percent of its pre-1996 level, the FCC would have to license dozens of new full power and low-power radio licenses to new local entrants and re-allocate spectrum to new local entrants during the digital audio broadcast transition.

Radio Programming in the Wake of Consolidation
Homogenized Programming: Just fifteen formats make up 76% of commercial programming.

Large Station Groups Program Narrowly: Owners who exceed or exactly meet the local ownership cap tend to program heavily in just eight formats.

Only Small Station Groups Offer Niche Formats: Niche musical formats like Classical, Jazz, Americana, Bluegrass, New Rock, and Folk, where they exist, are provided almost exclusively by smaller station groups.

Small Station Groups Sustain Public-Interest Programming: Children’s programming, religious programming, foreign-language and ethnic-community programming, are also predominantly provided by smaller station groups.

Format Overlap Remains Extensive: Radio formats with different names can overlap up to 80% in terms of the songs played on them.

Individual Stations Use Highly Similar Playlists: Playlists for commonly owned stations in the same format can overlap up to 97%. For large companies, even the average pairwise overlap usually exceeds 50%

Network Ownership Is Also Concentrated: The three largest radio companies in terms of station ownership are also the three largest companies in terms of programming-network ownership.

Conclusion
Radio consolidation has no demonstrated benefits for the public. Nor does it have any demonstrated benefits for the working people of the music and media industries, including DJs, programmers—and musicians. The Telecom Act unleashed an unprecedented wave of radio mergers that left a highly consolidated national radio market and extremely consolidated local radio markets. Radio programming from the largest station groups remains focused on just a few formats—many of which overlap with each other, enhancing the homogenization of the airwaves.

From the recent new-payola scandal to the even more recent acknowledgements that giant media conglomerates have begun to fail as business models, we can see that government and business are catching up to the reality that radio consolidation did not work. Instead, the Telecom Act worked to reduce competition, diversity, and localism, doing precisely the opposite of Congress’s stated goals for the FCC’s media policy. Future debates about how to regulate information industries should look to the radio consolidation story for a warning about the dangers of consolidated control of a media platform.

About Future of Music Coalition
Future of Music Coalition (FMC) is a national non-profit education, research and advocacy organization that identifies, examines, interprets and translates the challenging issues at the intersection of music, law, technology and policy. FMC achieves this through continuous interaction with its primary constituency—musicians—and in collaboration with other creator/citizen groups.

About the Primary Author
Peter DiCola is a Ph.D. candidate in economics at the University of Michigan in Ann Arbor. He received his J.D. magna cum laude from the University of Michigan Law School in May 2005, and was awarded the Henry M. Bates Memorial Scholarship. Currently, he serves as the Research Director of the Future of Music Coalition while he works on his dissertation. He has research interests in the fields of telecommunications law, intellectual property law, law and economics, labor economics, and industrial organization. He is the co-author, with Kristin Thomson, of Radio Deregulation: Has It Served Citizens and Musicians? (2002), which was cited by the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC. He has also written a chapter, “Employment and Wage Effects of Radio Consolidation,” for the scholarly collection Media Diversity and Localism (Lawrence Erlbaum and Associates, 2006).

From the publisher:
“Greg Irons was a psychedelic poster artist, underground cartoonist, book illustrator, and an emerging tattoo art virtuoso who brought a new sensibility to an age-old art form. This retrospective book spans his whole artistic career, from his earliest dance posters, to his groundbreaking science fiction and horror comix, to his innovative and colorful tattoo art. Greg Irons was one of the elite among poster artists who worked for Bill Graham’s Fillmore Ballroom in San Francisco during the Age of Aquarius, designing posters for Chuck Berry, Jefferson Airplane, Big Brother, and Paul Butterfield. You Call This Art?! reprints his finest psychedelic posters in full-color, as well as complete comic stories from Slow Death Funnies, Legions of Charlies, Deviant Slice, Yellow Dog, Thrilling Murder, and many other underground comic books. It also includes rarely seen album cover art for Jerry Garcia, Blue Cheer, Jefferson Starship and other counterculture musicians. Irons has a third career as an illustrator of children’s coloring books, and pages from books including One Old Oxford Ox, Last of the Dinosaurs, Pirates, and Wyf of Bathe appear as well. Many examples of his tattoo art are also included. Think you’ve seen it all already? Not a chance. This book reproduces not only his greatest artistic hits, but also never-before-seen pages from his private sketchbooks and journals, personal photographs, and works that appeared in obscure publications, like the San Francisco Organ, which published the lurid story that Mick Jagger tried to suppress.”

296-page softcover $29.95

This is the latest Sublime Frequencies film, directed by Hisham Mayet.
It will be screening on the East Coast in early January….

(former leader of the great Texan band LIFT TO EXPERIENCE, profiled in Arthur No. 1)

“This ‘Survival Town’ house, some 7,500 feet from a 29-kiloton nuclear detonation, remained essentially intact. Survival Town consisted of houses, office buildings, fallout shelters, power systems, communications equipment, radio broadcasting station,and trailer homes. The town was built for a Civil Defense exercise and not previously subjected to a nuclear blast. The test, called Apple II, was fired on May 5, 1955.

Photo courtesy of National Nuclear Security Administration / Nevada Site Office”

Link courtesy Gabie Strong!

Black-Market Weapon Prices Surge in Iraq Chaos

By C. J. CHIVERS
SULAIMANIYA, Iraq, Dec. 8 — The Kurdish security contractor placed the black plastic box on the table. Inside was a new Glock 19, one of the 9-millimeter pistols that the United States issued by the tens of thousands to the Iraqi Army and police.

This pistol was no longer in the custody of the Iraqi Army or police. It had been stolen or sold, and it found its way to an open-air grocery stand that does a lively black-market business in police and infantry arms. The contractor bought it there.

He displayed other purchases, including a short-barreled Kalashnikov assault rifle with a collapsible stock that makes it easy to conceal under a coat or fire from a car. “I bought this for $450 last year,” he said of the rifle. “Now it costs $650. The prices keep going up.”

The market for this American-issued pistol and the ubiquitous assault rifle illustrated how fear, mismanagement and malfeasance are shaping the small-arms market in Iraq.

Weapon prices are soaring along with an expanding sectarian war, as more buyers push prices several times higher than those that existed at the time of the American-led invasion nearly four years ago. Rising prices, in turn, have encouraged an insidious form of Iraqi corruption — the migration of army and police weapons from Iraqi state armories to black-market sales.

All manner of infantry arms, from rocket-propelled grenade launchers to weathered and dented Kalashnikovs, have circulated within Iraq for decades.

But three types of American-issued weapons are now readily visible in shops and bazaars here as well: Glock and Walther 9-millimeter pistols, and pristine, unused Kalashnikovs from post-Soviet Eastern European countries. These are three of the principal types of the 370,000 weapons purchased by the United States for Iraq’s security forces, a program that was criticized by a special inspector general this fall for, among other things, failing to properly account for the arms.

“Every type of gun that the Americans give comes to the market,” said Brig. Hassan Nouri, chief of the political investigations bureau for the Sulaimaniya district. “They go from the U.S. Army to the Iraqi Army to the smugglers. I have captured many of these guns that the terrorists bought.”

The forces propelling the trade can be seen in the price fluctuations of the country’s most abundant firearm, the Kalashnikov.

In early 2003, a Kalashnikov in northern Iraq typically cost from $75 to $150, depending on its condition, origin and style. Immediately after the invasion, as fleeing soldiers abandoned their rifles and armories were looted, prices fell, pushed down by a glut and a brief sense of optimism.

Today, the same weapons typically cost $210 to $650, according to interviews with seven arms dealers, two senior Kurdish security officials and several customers. In other areas of Iraq, prices have climbed as high as $800, according to Phillip Killicoat, a researcher who has been assembling data on Kalashnikov prices worldwide for the Small Arms Survey, a Geneva-based organization.

The price ranges reflect not only a weapon’s condition but its model. A Kalashnikov made in a former Soviet-bloc factory costs more than a Kalashnikov made in China, North Korea or Iraq. Collapsible-stock models have become disproportionately expensive. The price ranges do not include the most compact Kalashnikovs, like those Osama bin Laden has been photographed with, which now have a collector’s value in Iraq and can cost as much as $2,000.

In many ways, weapon prices provide a condensed history of Iraq’s slide into chaos.

Prices began moving upward in the summer of 2003 as several classes of customers entered the market together, Iraqi security officials and the arms dealers said. Western security contractors, Sunni insurgent groups, Shiite paramilitary units and criminals who were released from prison by Saddam Hussein before the war all sought the same weapons at once.

Kalashnikov prices quickly reached $200, they said. Since late last year, prices have been moving up again, as sectarian war has spread. Militias have been growing at the same time that more civilians have been seeking weapons for self-defense — twin demand pressures that pushed prices to new heights this fall.

“Now the Sunni want the weapons because they fear the Shia, and the Shia want the weapons because they fear the Sunni,” said Brig. Sarkawt Hassan Jalal, the chief of security in the Sulaimaniya district. “So prices go up.”

Mr. Killicoat put it another way. “When households start entering the market, that’s a free-for-all,” he said.

The surge is evident across a spectrum of arms. Pistol prices have nearly tripled since 2003. Western 9-millimeter pistols now sell for $1,100 to $1,800 in the bazaars of this city. Sniper rifles cost $1,100 to $2,000, the dealers said. In the West, similar pistols sell for $400 to $600.

Arms dealers say that rising prices have led to more extensive pilfering from state armories, including the widespread theft of weapons the United States had issued to Iraq’s police officers and soldiers.

“In the south, if the Americans give the Iraqis weapons, the next day you can buy them here,” said one dealer, who sold groceries in the front of his kiosk and offered weapons in the back. “The Iraqi Army, the Iraqi police — they all sell them right away.”

No weapons were displayed when two visitors arrived. But when asked, the owner and a friend swiftly retrieved six pistols, a rocket-propelled grenade launcher and three Kalashnikovs from a car and another room.

The rifles and the grenade launcher were wrapped in rice sacks. He slipped two of the rifles out of the cloth. They were spotless and unworn, inside and out, and appeared never to have been used. They had folding stocks and were priced at $560 each.

The dealer said they had recently been taken from an Iraqi armory. “Almost all of the weapons come from the Iraqi police and army,” he said. “They are our best suppliers.”

One pistol was a new Walther P99, a 9-millimeter pistol that the dealer said had been issued by the Americans to the Iraqi police. It was still in its box.

Glock pistols were also easy to find. One young Iraqi man, Rebwar Mustafa, showed a Glock 19 he had bought at the bazaar in Kirkuk last year for $900. Five of his friends have bought identical models, he said.

When asked if he was surprised that the Iraqi police and soldiers sold their own guns, he scoffed.

“Everything goes to the bazaar,” he said.

He added: “It is not only pistols. A lot of police cars are being sold. The smugglers brought us three cars and asked if we wanted to buy them. Their doors were still blue, and police labels were on them. The lights were still on top.”

Although the scale of weapons sales is unmistakably large, it is impossible to measure precisely. Sales are almost always hidden and unrecorded.

Tracing American-issued weapons back to Iraqi units that sell them is especially difficult because the United States did not register serial numbers for almost all of the 370,000 small arms purchased for Iraqi security forces, according to a report by the Special Inspector General for Iraq Reconstruction.

Lt. Gen. Martin E. Dempsey, commander of the Multi-National Security Transition Command-Iraq, agreed that weapons provided by the United States had slipped from custody.

“I certainly concede that there are weapons that have been lost, stolen and misappropriated,” General Dempsey said. He noted that the inspector general had estimated that 4 percent, or about 14,000 weapons, were lost between arriving in Iraq and being transferred to Iraqi forces. Most of the weapons were pistols.

The general said that he thought the estimate was high and that accountability was improving. A weapons registry was being created, he said. “Serial numbers are being registered,” he said.

But the estimate of a 4 percent loss did not include weapons that were lost or stolen after being issued to Iraqi units. The arms dealers said this was the main source of their goods.

The arms dealers described several factors that kept weapons flowing from state custody.

Some have been taken by insurgents in ambushes or raids. Defections and resignations have also been common in Iraqi police and army units, they said, and often departing soldiers and officers leave with their weapons, which are worth more than several months of pay.

Aaron Karp, a small-arms researcher at Old Dominion University, said Iraq resembled African countries that had had extraordinary difficulties with the police selling off their guns. “The gun becomes the most valuable thing in the household,” he said.

“If anything happens to a police officer’s family and he needs money, he walks into work the next day and says, ‘Hey, my gun got stolen.’ ”

Another weapons dealer, who Kurdish officials said had been providing them with weapons since 1991, said the latest black-market sales followed an old pattern precisely.

Throughout Mr. Hussein’s rule, Iraqi Army officers were in the arms trade, he said, selling weapons to smugglers. This was how the Kurdish guerrillas kept themselves supplied.

Now, he said, the smugglers remain in business, and their trade is made easier because the units often do not have inventories. “I am surprised sometimes by the numbers,” he said. “Sometimes they come by the hundreds.”

James Glanz contributed reporting from Baghdad.

Title and link courtesy Arthur “Do the Math” columnist Dave Reeves