Is Clear Channel A Monopoly?

25 March, 2005

There was an interesting post a couple of days ago over at The Technology Liberation Front on The Radio "Monopoly" Myth. You hear so much discussion of the dangers of media consolidation, much of it with a Chicken Little-ish tone, that it's refreshing to see any argument on the other side, even if that argument happens to be tragically misguided.

Here's his argument: the Herfindahl-Hirschman Index (HHI) (the sum of the square of the market shares of each individual firm in the market) rates the consolidation of any market on a scale from zero to 10,000. It is a major benchmark that the FCC and the DOJ use to gauge antitrust violations and to approve mergers. Because of the very large total number of radio stations in this country, the HHI for radio is very low: either 462 based on revenue or 92 based on the raw number of firms. This is on a scale where the normal range is 1000 (normal market concentration) to 2000 (high concentration verging on antitrust). Therefore, despite their large number of stations, Clear Channel can't possibly be a monopoly since they control such a small fraction of the total industry's revenue or stations.

So my question is: What happens when you limit the pool to large urban markets? I bet these market percentages go way up and even push the numbers necessary for monopoly status. For example, according to Journalism.org, Clear Channel's 1194 stations (which is more than the next seven competitors combined, by the way, including both Viacom subsidiaries, Infinity and Citadel) are spread throughout about 180 markets making for more than six stations in each market. What do you want to bet that these 180 markets include at least the 100 largest media markets in America? Can you even name six radio stations in your market? What about if you don't include public radio? When you look at it this way, even though Clear Channel doesn't literally own a monopoly share of all radio stations, it starts to look very much like they have a monopoly share of the actual market, of ears if not frequencies. But isn't that the metric that really matters?

In regards to the HHI based on revenue, I don't think that it's to Clear Channel's credit that they've managed to put such dreadful and unpopular programming on their stations that, despite their monopoly shares of most urban markets, they still can't manage to make any money. It's interestinng that, when looked at this way, the HHI, which at first glance seemed to clear Clear Channel of the cloud of monopolist accusations, now starts to look like a snapshot of exactly the way the company has destroyed the radio industry: they own all the big stations but they somehow have managed to drive away the audience and therefore eliminate all the revnues. This seems like a somewhat strange fact to bring up on their behalf.

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