THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, May 13, 1996 TAG: 9605110228
SECTION: BUSINESS WEEKLY PAGE: 04 EDITION: FINAL
TYPE: Editorial
SOURCE: Ted Evanoff
LENGTH: Medium: 88 lines
Just about anyone in Tidewater who tunes in rock 'n' roll knows of 96X, a radio station in Virginia Beach that plays the music of modern rock bands.
What you might not know is that it is a little station. And it has become valuable, quite valuable, almost overnight, as if Washington had passed a law making it so.
In fact, that's exactly what has happened.
On Feb. 8, President Clinton signed the Telecommunications Act of 1996.
While most headlines concerned telephones (local and long-distance companies can compete head-on) and cable television rate deregulation, the bill revitalized radio.
The law partly deregulated the radio business and in turn inflated the price an owner could put on a station. Hampton Roads, long regarded in the radio industry as a sterile market for profits, suddenly blossomed for one reason.
The law changed the rules of station ownership. Now broadcasters expect an industrywide consolidation.
Before Feb. 8, a company could own two stations in one radio market. After, a company could own up to seven stations in an area the size of 1.7-million-population Hampton Roads.
``There are seven or eight major owners of radio stations in Hampton Roads, but I think within the next 12 months that'll be down to four or five. We'll be one of the them. We'll be one of the four or five,'' said Bob Sinclair, president of Sinclair Communications Inc., which owns 96X.
Two trends now look possible.
Companies could dominate an entire swath of the radio market by acquiring a variety of stations in one area.
One company could own all the country stations, or the modern rock music stations, or those stations that attract rush-hour commuters ages 34 to 45 who favor gardening.
What's more, having a whole swath of listeners tuning in could give owners the clout to raise advertising rates. That in turn makes the stations more valuable, in some cases in Hampton Roads as much as 50 percent.
One month after Clinton signed the bill, Clear Channel Communications of San Antonio paid $140 million for US Radio of Philadelphia and its 15 stations, including urban music playing 103-JAMZ, WOWI-FM, which has the largest listening audience in Tidewater.
Only 18 months earlier, the New York investment group Blackstone Capital Partners had bought 80 percent of US Radio for $26 million.
Hampton Roads broadcasters expect this is just the start. They say the big will get bigger.
Four years ago, Sinclair saw a niche and prepared to launch his station.
``I didn't think you had to be a rocket scientist to realize that modern rock was going to be mainstream rock,'' Sinclair said. ``Generation X, this is their music, and the older they become the more valuable they are as consumers.''
If Sinclair found a niche, it became a crowded niche. Sunshine Wireless Co. of Fort Lauderdale came on the air in March with The Point, WPTE-FM. Its competitors include 96X and an established station, The Coast, WKOC-FM, owned by Benchmark Communications Radio of Baltimore.
The crowd surprised few broadcasters. Radio stations fill Tidewater, partly because of the many cities, which years ago attracted new radio stations. As growing suburbs meshed the region into one urban area, the stations widened their market and overlapped.
But with more than 30 commercial stations on the air, broadcasters have not easily raised rates.
``From a business standpoint, Norfolk has a reputation for being a poor radio market,'' Sinclair said.
As Sinclair readied 96X for the air, help was emerging in Washington.
Congress was grappling with telecommunications deregulation, gripped in a gridlock that would take four years to resolve.
Radio broadcasters watched the debate turn on how to dismantle rules for cable and local phone service, America's two most protected monopolies. Broadcasters watched patiently. They eventually were rewarded.
``The radio industry benefited the most with revolutionary deregulatory changes that will significantly heighten competition in individual markets,'' reported radio stock analyst Rita Zanella of the New York brokerage firm Gruntal & Co.
``It would follow, I believe, that there would be less pressure to cut ad rates,'' Sinclair said. ``Rates should firm up. I don't think it'll happen a great deal. There's still a lot of competition.'' by CNB