Fall 2009 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

New Technologies Bring New Challenges and Opportunities Not unlike many companies in the current economy, the broadcasting industry has faced numerous challenges as its customers — businesses across multiple industries — are forced to streamline processes and make reductions in expenditures. Whether due to a decreased adver- tising budget or a location closing in the local market, companies running fewer ads cuts into the revenue streams of radio and television broad- casting companies. In addition to economic and other traditional challenges, broadcasters have increased competition due to more and more destination media, such as the Internet and satellite, competing for their audiences and advertisers. Traditional advertising dollars such as a new product, a car dealership By Jessica Sackman, CPA

or mortgage broker are not the only customers broadcasters compete for; political campaigns, with historically large volumes of radio advertising dollars, also are affected by new technologies. Gone are the days in which Roosevelt came into millions of American homes giving fireside chats through radio sets. Following the disputed presidential election in Iran, the opposition candidate Moussavi was said to be maintaining contact with supporters, at least in part, via Facebook and Twitter. And while television in the United States has been intertwined with the political process since its beginnings in the 1950s, the cyclical nature of the political process means television and radio broadcasters alike have to entice successful advertising campaigns outside of the political spectrum this year if they want to see advertising dollars grow. With new technologies competing with the more traditional radio and television, the cyclical demand on advertising, and customers facing economic hardship, the challenge of increasing market share to grow revenue becomes prevalent. Many broadcasters turn to acquisitions of additional stations or other media outlets in order to increase the value of their advertisers’ dollars by capturing a larger audience. However, challenges through expansion are seen due to the regulation of Federal Communications Commission licenses and the related restrictions on media ownership. To broadcast radio or TV signals in the United States, an owner or operator must obtain a license from the FCC. The FCC licenses radio transmitters according to geography and certain other common ownership rules that are intended to help prevent radio stations from interfering with the signals of other stations. The spectrum of available radio and television frequencies is limited, so the FCC can only issue a certain number of licenses. The FCC also limits individuals or corporate entities from acquiring more than a certain number of stations in order to promote diverse viewpoints over the airwaves. FCC Restrictions

38 u fall 2009 issue