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U.S. Regulators to Revisit Media Concentration

Kagan Research reports that as the Federal Communications Commission prepares to revisit the hot-button issue of broadcast media concentration, TV and radio operators are hoping regulatory relief could spur further consolidation and help both the efficiencies and stock valuations of the business.

But current regulation has not dampened the pace of radio station sales, which are within historical ranges although significantly lower than for 1997, when they spiked after Congressional de-regulation ignited M&A activity.

Between 6-7 percent of radio stations changed hands each year from 2002-2005, off only slightly from the merger & acquisition levels of the early 1990s. However, both those stretches are far below levels for the boom from 1995-2000 when a loosening of ownership caps triggered a huge wave of consolidation.

Kagan notes that Clear Channel Communications mushroomed from 39 radio stations in Feburary 1996, when it was the third largest U.S. group radio broadcaster, to 1,187 stations by end 2005, becoming the industry leader. Second place Cumulus Media had 303 stations. The U.S. licensed 13,748 full-power radio stations as of March 31, 2006.

"The top 10 operators went from owning 4 percent of radio stations in 1996 to 22 percent by 2005," says Kagan analyst Michael Buckley. "With so many small operators still running stations, further consolidation is possible and, according to some executives, highly desirable. But even if that were to occur, the radio industry would not be nearly as concentrated as other media sectors such as movie theaters, where one company alone � Regal Cinemas � owns 18 percent of all U.S. screens."

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