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Media Consolidation - Let The Free Market Prevail

An editorial by Carl Goldman

The following editorial was written by KHTS AM-1220 co-owner Carl Goldman in response to news that plans for a non profit radio station are being brought about by Carole Lutness and a group called SCOPE. Click here to read that article.  Carl's editorial originally appeared in the Signal Newspaper on November 25, 2007.

 

Sponsored By:

Sheila R. Veloz

As co-owner with my wife Jeri, of Santa Clarita’s only local radio station, we take issue with an editorial written by Carole Lutness in the Signal, November 21, 2007. We’d also like to disclose, which Ms. Lutness failed to do in her editorial, that she, through the vehicle of SCOPE, has applied for her own non-commercial FM radio station in Santa Clarita.

In a recent interview, Ms. Lutness informed KHTS that our station does a great job, but it doesn’t represent the community, “the local station is definitely the organ of the City Council and the establishment.”

SCOPE is applying for a radio station license so they say “we can reach the underserved listeners of Santa Clarita, including Hispanics, African-American, Gay, Lesbian and Transgender listeners.”

Our surveys haven’t yet detected how many Transgender listeners are being underserved in Santa Clarita. We doubt we’d obtain much local advertising support if we programmed to that fragmented audience on KHTS, unless we don’t know something about Valencia Acura’s dogs Scooter and Spark Plug that might require further investigation.
 
We wish Scope and Ms. Lutness good luck with their endeavor.

 KHTS will continue to maintain our “open-door” policy, allowing those in Santa Clarita with an opinion about local issues to express it over our airwaves.

Unlike Ms. Lutness, we feel strongly we should let the free market place dictate media consolidation, not the FCC. The story of KHTS is a good example of why it might be wise to keep our Government away from trying to stifle consolidation.

In 1990, we bought AM-1220 (then KBET) and made it into a strong, successful local radio station. Those living in Santa Clarita during that era know what the station accomplished, especially during the 1994 Northridge Earthquake. In 1998, we sold the station to Clear Channel, the largest radio conglomerate in the world, owning over 1,200 radio stations. In 2003, we re-purchased the station back from Clear Channel and turned it on as KHTS AM-1220. During that time, we also owned and operated a cluster of radio stations in Ventura and the Antelope Valley. In those two markets, we competed directly and successfully with Clear Channel and another large media conglomerate, Cumulus Broadcasting.

Ms. Lutness suggests big media is bad for democracy. She outlines a number of areas where media consolidation has hurt the marketplace. Some are legitimate arguments, but most of her points come from a very one-dimensional perspective; “all large companies are bad, local Mom and Pop ownership is good.”   

From our perspective there have been many positive points to media consolidation along with a number of negative ones. Which way are the scales tipped? That depends on the market size and the companies who have orchestrated the consolidation. Either way, the free market place, not Government regulation, has been the determining factor in deciding which path is better.

When we purchased our first two radio stations in Ventura in 1995, prior to Congress opening the doors for consolidation, there were 18 radio stations under 14 different ownerships.  Many of those stations were playing the same Mariah Carey song as they were scrambling to capture the same mass audience.

Today, Ventura has three large radio clusters controlling the majority of audience and revenue. One of these clusters has all of their programming serving the Hispanic community. Another cluster has an award winning local news department. There’s a station devoted to all Women’s Talk, there’s Spanish Talk and a commercial religious station in the market. Individually owned, many of these niche formats could never survive economically, nor could a station afford the kind of news team you can currently hear on KVTA-AM. It’s the free market place and responsible media ownership (from both large and small companies) that has allowed the Ventura radio market to blossom under consolidation.

In our own Santa Clarita Valley back in 1998, when we sold AM-1220, we saw the “evils” of consolidation as the Wal-Marts and Best Buys killed the Mom and Pop stores. The big boxes weren’t spending any local advertising dollars. Financial institutions and grocery stores were merging. Why advertise for one store on AM-1220 or in the Signal when they could capture the entire Southern California marketplace by advertising on Los Angeles Radio stations or in the Los Angeles Times?

But the free market place, not Government regulation allowed the business landscape to sort itself out for the positive. For each Wal-Mart that opened in our Valley, killing off some of their direct local competition, dozens of other locally owned businesses in niche categories blossomed. Since the last local bank, Valencia Bank was bought out by Union Bank in the late 1990’s, dozens of new local banks have sprung up, serving the small and medium size businesses who weren’t even on the radar screens of the mega financial institutions. KHTS now has more bank advertisers on the air than we ever had before consolidation. And that’s with no support from any of the large regional and national banks.

Clear Channel learned operating radio stations in small and medium size markets took a different tact than operating stations in a large market. They realized they couldn’t effectively do both and have since sold most of their small and medium market stations back to local ownership. That was their decision, based on the realities of the marketplace, not because the FCC forced them to do so.

We’ve learned, in most cases, mistakes made in a free market system usually correct themselves in a natural fashion. The end result is often much healthier for the community than if Government attempts to regulate it. In 1998, the FCC had no better vision of the 2008 Santa Clarita business landscape than we possessed. Both predictions were wrong. If the Government had stepped in, KHTS might very well currently be programming for the handful of Transgender listeners who may be living in our Valley.  We doubt if the station would really effectively be serving as broad a base of our community as it currently does.

Several weeks ago, as the fires were raging throughout the Santa Clarita Valley, our radio station, KHTS aired non-stop emergency coverage. We provided a service the Los Angeles media was missing. Along with providing up to the second fire coverage, we were updating our website on a continuous basis with very thorough, local information.

A manager from the “big conglomerate” Clear Channel radio cluster in the Antelope Valley (whom we compete with directly since we still have ownership in the competing Antelope Valley radio cluster) called to offer our radio station the use of their mobile broadcast studio, along with use of their announcers and any other staff or assistance we might require. We will never forget their sincere generosity and will certainly reciprocate if a disaster ever hits their market.

On the same day, our locally “Mom & Pop” owned SCV-TV, decided it would be better for their audience to post a link to the Los Angeles news station, KNX, rather than to link to our radio station.   

We’d like to ask Ms. Lutness, which one of these two businesses was more responsible in serving the needs of our Valley during our time of crisis?

Do we think one company should control all the media in our Valley? Absolutely not. But we’re entering a new era, where so many new options are emerging to disseminate news and communicate diverse ideas. Let’s allow the free market place to sort through the changes and pave the path, rather than rely on our Government to determine the outcome.  

Carl Goldman
Co-Owner
KHTS AM-1220 Radio