Senators John Thune (R-SD) and Amy Klobuchar (D-MN) each fired off letters for FCC Chairman Julius Genachowski tied to the Quadrennial Review, suggesting that the AM-FM subcaps should be eliminated. Thune said technology was bringing parity to the bands, and that groups restructuring to the FM side may beneficially increase ownership diversity by spinning off lower-priced AM stations.
Klobuchar wrote the earlier letter of the two – it’s dated 6/20/11, but Thune’s 7/26/11 effort was the more detailed of the two – so we’ll focus on his arguments.
He noted that simply as a matter of consistency, AM and FM are not differentiated when considering local cross-ownership caps, so he thought there should be no differentiation when the caps concern radio only.
Thune argued that technology was making the difference between the two services negligible. He wrote, “From a technical standpoint, there should no longer be a distinction between the AM and FM services. Digital technology has revolutionized the programming capacity of AM stations. In-Band On-Channel (lBOC) technology allows AM stations to broadcast the same programming at the same quality as analog FM stations. Today, there are 455 AM stations licensed using IBOC technology. Further, the Commission recently permitted AM stations to employ FM translators to fill in any signal deficiencies. In addition to these technological improvements in AM station over-the-air signals, almost 2,000 AM stations now simulcast their signals over the Internet.”
Thune said that in many markets AMs are among the very highest rated stations and earn significant cash – he said 30% of the revenue in New York City goes to the AM band.
Then he made his diversity pitch, writing, “While the Commission strives to promote diversity in broadcast ownership the AM / FM subcap actually produces a chilling effect on ownership opportunities. Traditionally, AM stations are far more affordable than their FM counterparts. Therefore, AM stations present a much easier path to broadcast ownership for small business, especially those owned by women and minorities. Should the AM / FM subcap be repealed, many current broadcast owners are likely to restructure their radio holdings, freeing up a number of incumbent AM stations for purchase. The result would be greater opportunities for those who are essentially locked out of the market by the current rules.”
Klobuchar emphasized the diversity angle mentioned by Thune and suggested relaxing or eliminating the subcaps would revitalize the stagnant station trading market.
Genachowski thanked each for their letters, said he anticipated circulating the review among his colleagues in the near future and promised to make the letters part of the record. He offered no comment pro or con on either of the senators’ suggestions.
RBR-TVBR observation: We’ve heard a lot of things, but the notion that AM signals are now at par with FM signals thanks to digital technology and translator use isn’t one of them. Anyway, perhaps one day the latest attempt at the quadrennial review will be released and we’ll see if this concept has legs.
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