Local vs. Absentee Ownership

Date: 25 Mar 1997 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

Local vs. Absentee Ownership

by David Morris

March 25, 1997 – published in St. Paul Pioneer Press

This month two enterprises died in our community and weÕre all the poorer for their passing. Some would say they died a natural death. But what passes for natural in the business world these days can be dangerous to our collective health.

One enterprise was a radio station. The day after Rev 105’s demise my younger staff, an unusually sophisticated group musically, came to work enraged and saddened. In only three years the station had built up an almost cult following among music aficionados because of its unique combination of pop and rock and its focus on community. One local music critic described it as, “the one commercial station where local music makers could have a real impact on major league radio”.

The second enterprise was a newspaper. The Twin Cities Reader had earned a loyal audience over almost two decades. The competition between the Reader and its metropolitan rival weekly, City Pages, made better journals of both. The recent stories by Reader reporter John Yewell revealing the true costs of baseball stadiums and the potential for private financing were a stellar example of why we desperately need alternative weeklies to give us a perspective the dailies either can’t or won’t deliver.

Rev 105 was not up for sale when the bid came in. But it had sealed its fate when it strengthened its signal and began to reach an audience sufficiently large to attract the interest of chains. No one owns one or two stations anymore. Chains buy many stations to dominate market segments. Some corporate decisionmaker far away from our community decided that the most profitable course was to buy the station and shut it down, thereby eliminating the competition for its hard rock, 18-34 year market segment.

Rev 105 was profitable and its owners might have continued to go it alone. But independence is difficult these days in the radio business. As General Manager John Kuehne has said, chains can give advertisers a better rate and advertising is the life blood of commercial radio.

Late last year the owner of the Twin Cities Reader put that paper up for sale. The chains found it more attractive to buy both weeklies and shut one down. They made an offer for City Pages, which was not for sale at that time. Could CP have gone it alone against a chain owned Reader? Echoing his Rev 105 counterpart, Steve Perry, CP’s editor says no because of the chain’s ability to “undercut the competition’s ad rates”.

The public wasn’t asked about the sales of Rev 105 or the Reader. Even though two chains now control 50 percent of the Twin Cities radio market, the Federal Trade Commission isn’t concerned. Nor is the FTC concerned that one weekly now controls 100 percent of that market in this area. The FTC doesn’t take into account the impact of these closures on competitiveness, on diversity, on our sense of community.

Was the loss of both enterprises inevitable? Yes, by the current rules. Indeed the new Telecommunications Act virtually ensures increased deaths of independent enterprises. Enough. To prevent cultural desertification it’s time to look for leadership that will craft rules that ensure diversity and competition and strong sense of community.

Like independent bookstores and pharmacies and groceries, radio stations and weeklies need protection from single factor bottom line thinking. If we don’t alter the rules of the game, we’ll become an absentee owned, monopoly market reflecting neither our community’s rich diversity nor its rich potential.

It’s too late to save the Reader or Rev 105. It’s not too late to develop a different set of rules, ones that channel investment capital and entrepreneurial energies in a different direction. The next time your elected representatives tell you how much they value community and diversity and competition and neighborliness and small, independent businesses ask them how the rules they are voting for in the legislature or Congress are serving those ends.

David Morris is vice-president of the Institute for Local Self-Reliance

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David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.