REMARKS BY COMMISSIONER JAMES H. QUELLO
                                BEFORE THE
                NATIONAL ASSN. OF BROADCASTERS' RADIO SHOW
                    LOS ANGELES, CA - OCTOBER 10, 1996

     Speaking before a radio audience is a welcome homecoming for me.  Radio was
my principal pre-FCC career.  After five years in the Army, I spent 27 exciting years in
every aspect of radio broadcasting.  Except for a brief period of additional duties
applying for a television station, my career was primarily in radio.

     As a sideline, I am frequently asked about my five years in the Army -- "Were
you in public information?"  I always reply "No, they had some big, mean guy in public
information, I was in the Infantry."  As many of you know, my Army exploits get more
heroic with every passing year.  If you haven't heard my war stories, please, please ask. 
In fact, I heard a member of my staff advise a friend -- "If you want him to vote for
your issue, first ask him how his battalion captured the German SS College in Munich."

     My first job out of the Army in 1945 was with station WXYZ in publicity.  I
moved to WJR in 1947 for $65.00 more per week.  At WJR, I was an active member of
an ad hoc committee of Detroit radio promotion managers meeting back in 1951 to
counter the advertising onslaught of TV, the powerful new medium.  At that time, we
had to convince advertisers, the public, and even ourselves, that TV was not going to put
radio out of business.  As you know, radio established an important niche in the
advertising mix.  It survived and prospered.

     The slogans we originated in Detroit at those 1951 promotion meetings became
widely used nationwide.

     For example, the following will sound familiar:

     "Wherever You Go, There's Radio."
     "You Don't Have To Stop and Look, Just Listen."
     "Radio, Building Mental Images That Can't Be Captured by Mere Film."
     (Inspired by B.T. Radio, The Lone Ranger, Green Hornet, The Hermit's    
        Cave, Suspense, etc.)  
     "Radio, the Most Accessible, Immediate, Survivable and Important           
       Medium for Emergencies and News."
     "Radio, the Point of Purchase Medium as Your Car Heads for the Market."
     
     At that time, WJR, the leading station in town, was expected to play a leading
role in industry and public service projects.  With 50,000 watts and creative "complete
range programming," we were king of the road -- also the city.

     
     Well, today WJR standing alone is no longer the biggest act or the most essential
radio buy in town.  It is competing with 8-station and 6-station multiple owners, with
more to come.

     I have to admit that today I would not relish managing WJR with profit
responsibility against several experienced multiple-owner groups in my market.  WJR's
complete range of programming could be seriously challenged and overpowered by 6-
and 8-station combinations with all varieties of programming and attractive sales
packages tailor-made to meet an advertiser's demographic preference.

     The president of WJR Detroit asked me how I would compete -- I said call Tom
Murphy and ask him to buy a few more stations in the market.

     So, I initially had mixed feelings about super-duopoly ownership.  Even today, I
get mixed reviews from broadcasters -- some, applauding the lifting of ownership rules,
claim that with economy of scale and increased efficiencies, they have more funds for
quality programming and enhanced public service; other owners are grateful that they
were able to cash in at attractive prices.  On the other hand, some complain that they
now face powerful, dominant competition from new radio combinations.

     When first asked my opinion by the press on several mergers, I stated I would
approve mergers as long as the public interest is served with robust competition among
the large competitors and with no antitrust problems presented.  As you know, there is
an ongoing controversy on whether ownership concentration should be defined by the
percentage of radio advertising or percentage of all advertising.

     For example, the initial figures in Detroit showed CBS' acquisition of Infinity
concentrated 35% of the radio advertising revenue but only 8% of the total revenues in
the market.  In my judgment, a good argument could be made for defining
concentration in terms of total market advertising revenue.  In any event, these
concentration issues are also subject to court and Justice Department review.

     Congress addressed the issue of local radio ownership limits by providing that the
FCC revise its restrictions on the number of AM and FM broadcast stations which may
be owned or controlled by one entity in a particular market.  In markets with more
than 45 stations, one company could own, operate, or control eight stations, with no
more than five in any one service (AM or FM).  In markets of 30-44 stations, one
company could own seven stations, with no more than four in any one service; in
markets with 15-29 stations, one entity could own six stations, with no more than four in
any one service.  In markets with fewer than 14 commercial stations, one company could
own up to five stations or 50 percent of all the stations, whichever is less, with no more
than three in any one service.

     In an ad lib statement, I said broadcast properties should be owned and managed
by professional broadcasters, not commodity traders.  But in all fairness, Lowry Mays,
Mel Karmazin and other multiple owners certainly qualify as career broadcasters --
even smart aggressive ones.

     Also radio, with its lifelong tradition of local service, remains a very viable
medium competing with a super-abundance of TV signals now available with many
increased transmission facilities -- over-the-air TV, cable, DBS, MMDS, Internet  and
soon telephony OVS.

     However, the principal incentive for multiple owners paying such high multiples
for some stations must be economies of scale.  Multiple owners in a market realize the
probability of reduced overhead, flexible improved pricing for spot inventory and
increased operating profit and cash flow margins.  These aggressive multiple-station
buyers may even increase radio's share of overall advertising budgets through efficient,
combined selling of large mass audiences.  Today radio is still a growth medium.  Radio
generated 7% more advertising revenue in 1995 than in 1994 from combined local,
national and network advertisers.  It is an especially effective means of local advertising. 
Multiple owners can also claim more funds and facilities available for quality
programming and increased public service contributions.

     Dan Gammon, Managing Partner, American Radio Brokers, was quoted in Radio
Business Report saying, "Marketing clout is what makes superduopoly so different from
duopoly.  For the first time, a broadcaster can assemble enough mass to reverse the
long-standing situation where advertising agencies had the upper hand in negotiating
cost-per-point.  That's why agencies are so miffed."

     As for me, I'll implement the Congressional Act on national and local radio
ownership as Congress intended.  I also believe in preserving the vital local service that
radio performs.  For example, at this time, I believe DARS, with its multiple channels
should be a subscription service.

     The potential benefits of duopolies or super-duopolies are effected by another
important consideration -- the level of government regulation.  As a general matter, I
firmly believe that the scarcity argument for continued, or even much less for additional,
regulation is outdated -- particularly when in addition to radio we have the super-
abundance of TV, cable, DBS, MMDS, Internet and soon, OVS signals.  I'm particularly
critical of additional regulatory proposals from government regulators who have no
experience or real world, practical understanding of the broadcasting industry, the
community interaction, and the wide variety of services broadcasters perform.

     In the upcoming FCC proposals for cross-ownership and multiple ownership
regulation, we should all remember that both President Clinton and Congress
proclaimed with widespread, enthusiastic approval that the era of big government is
over.  And regulation, and particularly additional regulation, represents big government. 
As this audience knows, burdensome regulation obstructs industry growth and
innovative developments.

     American broadcasting, both radio and TV, was originated, financed and
developed by business entrepreneurs and private funds, not by government funds or
government regulation.

     Nothing happened to the initial broadcast spectrum for radio and TV until risk
capital inaugurated the service and was willing to incur losses the first several years in
each service.  Program and technological improvements all came from broadcast
industry innovation and funding.  Actually the spectrum lay fallow until business
entrepreneurs bought the land, financed the building and broadcast equipment and
hired the personnel to start the service.  Both radio and TV endured a lengthy trial and
error evolutionary period before profitability.

     Today America has the largest, most diversified, most imitated and most envied
free over-the-air radio and TV service in the world.  You and your broadcast
predecessors played a major role in that world leadership.  The oncoming large
conglomerates and super-duopolies have the responsibility of enhancing this leadership
with increased quality programming and expanded voluntary public service.

     Government should help you achieve your goals by working with you in a
progressive spirit of mutual cooperation to encourage growth and innovation with
minimal regulatory intrusion.  In this regard, it is significant to note that President
Clinton has "reduced regulation" as one of the mainstays of his presidency and of his
re-election platform.

     So, with continued robust competition, avoiding undue concentration problems,
and less regulation, the future looks bigger and better for radio, the vital local
"wherever you go" service. 

     Just make sure it is bigger and better for the public you are serving.

     Good luck and may your tribe increase!

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