FCC clears Cumulus buy in Green Bay

The FCC has cleared another "red-flagged" radio transaction, giving Cumulus Media (O:CMLS) a go-ahead to close its $7.25M purchase of WDUZ-AM & WQLH-FM in the Green Bay, WI market. But Commissioner Michael Copps once again parted company with his colleagues and said too much concentration is being allowed.

The FCC had designated the Cumulus purchase from Ben Laird's Green Bay Broadcasting for scrutiny because the combination would give two operators 87.3% of local radio revenues. But even with the proposed superduopoly of one AM and three FMs - - a combination that effectively exists already, since Cumulus has LMA'd the Laird stations since 1999 - - Cumulus would have only 34.3% of Green Bay radio revenues, still far short of the 53% commanded by market leader Duke Wright's Midwest Communications, which has two AMs and two FMs.

Cumulus had argued that several stations from the adjacent Appleton-Oshkosh market were also significant players in the Green Bay market - - both in terms of listening audiences and local sales efforts. In fact, Cumulus and Wright both have stations in the Appleton-Oshkosh market, as does Woodward Communications, which Cumulus argued helped make Woodward a viable third competitor in the Green Bay market, although its two in-market FMs command only 12.7% of radio revenues, according to BIA estimates.

The FCC accepted the argument that out-of-market stations did make a difference in the Green Bay market and recalculated its revenue estimates: 42.5% for Midwest; 34.7% for Cumulus (including the Laird stations); 18.9% for Woodard; and 3.9% for other owners. The FCC also noted that Midwest and Woodward will each own three of the top 10 rated stations in the market - - including both #1 and #2 for Midwest - - and Cumulus will have four of the top 10. "As such, Cumulus will not have a dominant position with respect to revenue share, facilities or top-rated stations," the Commission said in its ruling.

Commissioner Copps, however, was not persuaded.

"As a result of this transaction, the top two station groups in Green Bay, Wisconsin will control a total of 87.3% of the revenues in the radio market, giving rise to what the majority calls 'potentially serious competitive concerns.' While the majority finds that the remaining station group with 12.7% of the revenues will be a strong competitor to the two larger groups, I respectfully disagree. To the extent that the majority's approval of this transaction rests upon the competitive discipline created by a third competitor in the market, I question how rigorous this discipline may be, and whether this grant is consistent with the public interest.

RBR Observation:

What's most amazing about this FCC ruling is how it glosses over two key points as being more-or-less insignificant.

First, that Cumulus is already LMAing these two stations and could continue to do so until the cows come home, regardless of the decision of whether or not to allow this transaction. In fact, there are so few stations in the Green Bay market - - and so many signal overlaps from Appleton-Oshkosh and other nearby areas - - that none of the three primary players is bumping up against the local ownership limit.

Second, and even more bizarre, Cumulus is not the dominant radio group in the market and still won't be after closing this transaction! How would it be more of a competitive threat to Midwest to have three competitors with 22.5% (Laird), 12.7% (Woodward) and 11.9% (Cumulus) revenue shares than to face a real challenger with 34.4%? Yes, that's right, sans the Laird combo, Cumulus would rank fourth in terms of in-market radio revenues.

RBR's Executive Editor, Jack Messmer, once worked in Green Bay, so we know something about this market. With two daily newspapers (incredible for such a small market), six commercial TV stations (including a CBS O&O) and lots of signal cross-over with Appleton-Oshkosh radio stations, even Duke Wright's 53% of in-market radio revenues doesn't give him any monopoly control over rates.

Other than maybe having watched the Packers play on TV, we wonder, does Commissioner Copps has any knowledge of this market? Does he care? He appears to be on a political agenda with no regard whatsoever for consideration of real conditions in real markets.