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Anti-Competitive Behavior: Radio

Posted By Barry Ritholtz On August 23, 2004 @ 5:23 am In Finance,Music | Comments Disabled


Oooh, I’m shocked! Shocked [1] to find anti-competitive behavior in the radio industry! (Your winnings, sir.)

Forbers takes a swipe at it:

“For decades the radio industry has crushed incipient competitors by wielding raw political muscle and arguments that are at once apocalyptic and apocryphal. Radio station owners, who formed the National Association of Broadcasters in 1923, have won laws and regulations that have banned, crippled or massively delayed every major new competitive technology since the first threat emerged in 1934: FM radio.

In 1945 many AM incumbents, ostensibly concerned that interference related to sunspots might endanger their rivals in FM, encouraged the feds to uproot the FM dial and move it to a higher frequency band. This rendered half a million FM radios useless and forced the nation’s FM stations to start over. A congressional investigation in 1948 found that the interference fears were bogus and that a Federal Communications Commission report had been conveniently altered to disguise that fact. Too late–the shift helped inferior AM technology remain dominant for the next 25 years. The coda: In 1954 the inventor of FM radio, Edwin Armstrong, frustrated by repeated setbacks and all but bankrupt, penned a suicide note to his wife and leapt out the window of his 13th-floor apartment.

Fifty years later radio’s old guard has been as effective at thwarting the digital threat. Existing stations thrive on an array of perks won by radio operators, including free use of the airwaves (XM and Sirius, by contrast, had to pay almost $200 million combined for their spectrum) and an exclusive exemption from paying royalties to performers. But the NAB’s real forte has been in the modes of attack and delay, persuading regulators and Congress to impose daunting restraints on the satellite rivals and stalling their debut for the better part of a decade.”

A good article worth the read if this subject matter interests you. And, it helps to explain why music and broadcast executives’ first instincts are usually so awful — their bad behavior has a rich — and surprisngly successful history.

Broadcast Bullies [2]
Scott Woolley
Forbes, 09.06.04



Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2004/08/anti-competitive-behavior-radio/

URLs in this post:

[1] shocked! Shocked: http://www.imdb.com/title/tt0034583/quotes

[2] Broadcast Bullies: http://www.forbes.com/forbes/2004/0906/134.html

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