REC position statement on a commercial LPFM service
When Rodger Skinner wrote the petition that resulted in RM-9242, one of the petitions that became a part of the Mass Media Docket 99-25 rulemaking that eventually created the LPFM service, he envisioned that LPFM would mirror the structure of Low Power TV. This included the ability for LPFM stations to be allowed to carry commercials.
While this was going on, there was also a substantial grassroots effort taking place. Many people across America who were upset with provisions of the Telecommunications Act of 1995 which permitted the ongoing concentration of media resulting in companies like Clear Channel (now iHeart Media) to become media empires by acquiring station clusters across the nation and replacing local programming staff with national playlists, voice tracking and syndicated programming. The 1990s were a period of radio rebellion with radio piracy at an all time high and high profile radio activists encouraging the construction of over 10,000 pirate stations across the country.
Then FCC Commissioner William Kennard saw the creation of a new low power community radio service to a way to give a small slice of radio back to ethnic groups and other organizations underserved on the current dial, especially in light of all of the media concentration that was quickly taking place.
The original MM Docket 99-25 notice of proposed rulemaking offered three services, a primary 1000 watt service as well as a secondary 100 and 10 watt (microradio) service. Within that same document, the question of commercials came up. While major players such as the National Association of Broadcasters and National Public Radio opposed LPFM outright, many community organizations supported a non-commercial LPFM service. Very few supported a commercial LPFM service.
Those who support commercial LPFM cite the viability of non-commercial LPFM from a financial standpoint. In the first generation of LPFM, there were about 1,330 stations granted. Today, 780 of them remain fully licensed. Those who support commercial LPFM will tell you that with a high failure rate of LPFM stations (41%), it must be because the stations could not financially survive. Of the 550 granted LPFM construction permits from the first generation that are no longer around today, only 140 of them actually reached the point where they filed a license to cover. In other words, the failure rate of first generation operating on-air LPFM stations is actually only 10.5%.
Where there is some data and testimonials on why these 140 LPFM stations failed, the primary reasons for failure include various reasons such as encroachment by full power stations with no alternate spectrum, a lack of desire by the licensee to include broadcasting as a part of their educational program, the loss of a facility or land and in some cases, the inability to sustain the station. The rest of the failures that make up the other 30.6% were through lapsed or cancelled construction permits. Many of these applicants never even started to build.
It was the FCC's desire with LPFM to allow existing organizations that already have educational programs to be able to use radio as a part of their educational program. Any on-air fundraising was being done to offset the costs borne by the organization to support the station. Many LPFM stations are operated by churches that used existing funds to support the construction of the station and the station is seen as a ministry of the church.
In the first windows, but much more prevalent in the second (2013) window, we saw organizations that were established solely for the purpose of running a (LPFM) radio station. This was very evident by some LPFM consultants who were offering not just filing services with the FCC but were also offering corporation filings.
The following are facts about operating commercial:
- Commercial stations pay an annual regulatory fee to the FCC from just over $400 for a translator to as much as $12,000 for a full power station in a major market.
- Commercial stations would be required to pay more for ASCAP, BMI and SESAC based on a share of station revenues. You will no longer be considered a non-commercial webcaster in the eyes of SoundExchange.
- Mutually exclusive applications are subject to auction. For existing stations needing to make major changes would have to compete with applicants for new stations. Not only will the construction permit be granted to the highest bidder, if a non-commercial applicant is mutually exclusive with a commercial applicant, the non-commercial applicant is immediately trumped.
- Under the Telecommunications Act, the current station cap of 1 station per organization is not enforceable under the statute. The laws could also be interpreted to allow for cross-ownership otherwise meaning that iHeart Media or CBS could own LPFM stations.
What about the British community radio service that permits advertising? In the UK, when you are licensed to operate a radio station, you are not only licensed to run a station but you are authorized to operate a specific format or reach a specific audience. A community station that is authorized in an area where there is no commercial station licensed to reach a similar audience is permitted to carry commercials but the organization must continue to obtain at least 50% of their funding from sources other than advertising (in other words, 50% of your funding does not get an on-air mention). Those community stations that have an audience demographic and format similar to a local commercial station are not permitted to run advertising at all. Because of the Telecommunications Act, the Communications Act and the First Amendment, this type of structure for LPFM would not work here in America.
REC feels that FM is not the appropriate venue for a commercial low power radio service. REC would support commercial community broadcasting in other venues such as LPAM that could be proposed in the future. Non-commercial LPFM has bipartisan support in Congress. This same Congress is going to also protect "big broadcast" as well as protect minority-owned and small market stations that are struggling to survive. Yes, even small commercial stations are struggling. Commercial LPFM would be no different.
Organizations like the National Federation of Community Broadcasters can provide you with creative methods of fundraising and making your station more viable.
While we can understand that some LPFM stations need to raise funds to remain viable, REC will oppose any efforts to introduce any commercial element to the LPFM service. This is a position that is supported by virtually every other long running pro-LPFM advocacy. Financial viability while remaining within the operating rules of a non-commercial educational broadcast station is possible. We wish you the best of luck with your station.