FCC Report Finds Negligible Impact Of LPFM On Commercial Stations

In response to a directive of Congress, the FCC’s Media Bureau has released a report that concludes that the Low Power FM (LPFM) service is unlikely to have a demonstrable economic impact on full-service commercial FM radio stations.

The study was required to be completed within one year of adoption of the Local Community Radio Act of 2010 and is limited to the impact of LPFM upon the financial health of commercial broadcasters. Consequently, benefits to consumers or the public interest were not considered. Nor, for that matter, were non-economic factors of concern to established broadcasters, including interference protection, LPFM adherence to local, non-commercial programming requirements, and the FCC’s ability to effectively monitor the parameters of LPFM operation.

The conclusion of no meaningful competitive impact comes as no surprise, since LPFM stations have severely limited power (100 watts) and service contours (about 3.5 miles), are prohibited from broadcasting commercials, cannot be owned in common with other regulated mass media, cannot cause interference to full-service stations, and receive a licensing preference for broadcasting at least eight hours of daily local programming.

After receiving comment from industry groups and LPFM advocates, the study focused on three primary metrics. The first considered the LPFM operational restrictions noted above and its consequent negligible audience ratings compared to commercial outlets. Thus, LPFM listening was found to comprise less than 0.1% of total radio listening. Interestingly, though, the study noted that the most popular LPFM stations have a loyal fan base and that those with Arbitron ratings achieve high Time Spent Listening values. Half of all LPFM stations were found to have religious formats (versus 5% of commercial stations) and only 12.6% to have music-based formats (versus 83% of commercial stations).

The second part of the report consisted of in-depth case studies of eight LPFM stations. Based largely upon interviews with LPFM station managers concerning structure, goals and operation, the report found that the stations broadcast a variety of programming throughout the day, operate with small budgets, rely mostly on part-time and volunteer staffs, have limited population reach, attract insignificant underwriting, and do not consider themselves as competing directly for listeners with any specific full-power stations.

The final approach was a statistical analysis that compared the economic health of full-service stations having LPFM stations in their service areas with full-service stations that do not. Comparisons were made across various market sizes and formats. The analysis found no significant correlation between the presence of LPFM stations in a given market and the financial status of full-service stations there, even when considering stations with similar formats. It further found LPFM programming unlikely to reduce commercial broadcasters’ audiences or draw away their advertising revenues by offering underwriting announcements.

Left unanswered is the question of how the FCC intends to reconcile its goal of opening a new LPFM application window this summer with the lingering issue of how to treat the thousands of FM translator applications that remain pending after nearly a decade. The difficulty of resolving that issue is compounded by vague policy directives in the Local Community Radio Act.

A complete copy of the Report (DA 12-2), including appendices detailing the statistical studies, is available on the FCC website at: http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0105/DA-12-2A1.pdf.

If you would like to discuss the Report, please contact Peter Gutmann or any member of the firm’s Communications Law Group.