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Introduction
Industry consolidation may be taken to mean the merging of industries so that they can be in a position to realizing their competitive advantage. It’s through this merging of the industries that you will find that they will be in a position to improve on their investment returns and this will be achieved through cost-cutting, more productivity gains plus the economies of scale which the companies through merging will experience. So in this case, the industry consolidation of the radio industry is changing so much hence leading to the change of its economic structure. The industry has now changed from working independently hence leading to the merger of the radio industry so that they can be in a position to cut so many costs hence leading to the realization of their competitive advantage. It is argued that since the telecommunication Act of the year 1996 relaxed its ownership restriction in the US, more than 12,000 radio stations in the US have so much changed hands. This is because they have tried to change the way they do their daily business and this is evident as a result of the deregulation of this industry. This is because there are no independent, local broadcasters. It is through the industry consolidation that so many local radio markets have highly been affected since the industry through merging has been in a position to wear away the local radio market. This is because they have not been in a position to compete with the larger industry hence leading to low performance in the local radio market. This is because it is out of the industry consolidation that the industry has become a powerful firm hence the local radios have not in a position to compete with the industry. So through the paper, am going to try and analyze some of the effects of the local radio market as a result of the radio industry consolidation. This is very much important in trying to analyze the effects of the radio consolidation as far as the local radios are concerned hence be in a position to try and develop various measures which can be used to ensure that these local industries have remained firm since they are too contributors to the economic growth of the country hence the need to try and protect them. (Barnouw, 2002).
Monopoly
The consolidation of the radio industry would encourage monopolies hence leading to a higher ad rate. This is because, after the radio consolidation, you would find that most of the costs, in this case, would be cut down, the advertising would be more hence many people would be in a position to access the radio station, unlike the other local radio. Most of their advertisement would involve the use of the new technology which is not so common in the local radio stations. It is out of this particular fact that the issue of monopoly would arise in this case. Monopoly in this case can be taken to mean the domination of a single market in the marketplace. You find that it is out of the industry consolidation that the radio industry has been in a position to dominate the whole market hence making it hard for the local radio markets to compete well with the industry. It was after the radio consolidation that the company was in a position to cut most of its expenses say through advertising since they have merged hence meaning that most of the expenses which the company was facing earlier can now combine their efforts and hence cutting down their expenses. It is also out of the economies of scale which has made the company compete well in the market hence providing the monopoly in the market. So you will find that it’s through the economies of scale which can be enjoyed by the radio industry which has made the local radio not to compete well with the radio industry simply because the market is so much competition for them. It’s through their increased advertisements say through the internet due to the rise of the new technology which has made the company compete so well hence cutting down its many expenses. Monopoly is one of the market systems which are so much competitive hence meaning that if a certain single producer gets control over the market, it will mean that most of the consumers will be attracted to that industry simply because its services are more advanced, unlike the small scale producers. So most of the local radios have experienced huge losses since most of their services are not of good compared to the radio industry hence leading to more losses in the local radios. (Polgreen, 2005).
Low performance
It is out of the industry consolidation which has led to a low performance by the local radio stations. This is because the radio industry through its merging has tried to dominate the market in the US hence meaning that the local radio stations will be closed down simply because they can’t compete with the large radio firms. This will also have an effect on the societies simply because you tend to find that most of the local radio stations are found in the rural areas and depend largely on the local radios. So, you will find that due to the increased competition from the large firms, these local radios will end up been closed hence the people from the local communities will not be in a position to hear from this local radio. So the consolidation of the radio industry will have a dual impact on both the rural people and the local radio since they will be cut from the market due to the many losses they will incur. It’s through this that you will find that the economy of the country will go down since these local radios are still contributors to the econ0my of the country but when they have been cut from the market, or when they are less effective, you will find that the economy will be low and also affect their living standards. So the merging of the radio industry will have so many effects on the local radio station since monopoly is one of the poor market systems hence government should intervene to ensure that the local radio stations have been protected from the large firms through the giving of incentives to try and motivate them and also cut down their many expenses hence leading to the realization of their competitive advantage. (Mundy, 2000).
The issue of profits also applies in this case. You find that most of the local radios have low profits when compared to the large firms. This is because they have not been in a position to strategically manage themselves. You find that in any business, strategic management is very much important. It’s through strategic management that the company can be in a position to realize its set goals and objectives. But for the case of the local radio, you find that they have not been in a position to try and differentiate their services like the large firms hence leading to poor services. You tend to find that due to the rise of the new technology, so many people would like to go with the new technology hence would prefer only those services which use the new technology. So for this case, many customers would use to listen to those radio stations which try to please them so much hence try to neglect the local radio stations since they have not adapted to the new technology. This is because differentiation of services is very much important in any organization. But due to the fewer profits they get, most of their services are not preferred by many people hence leading to their closure. They have not been in a position to meet the so many expenses which are associated with the performance of the industry hence leading to the realization of its competitive disadvantage. (Hall, 2005).
Unemployment rates
The consolidation of the industry will also have an effect on the rate of unemployment. This is because it’s through the industry consolidation that many local stations will be closed hence contributing to the unemployment rates. This is because most of the local radios will not be in a position to compete so well with the large firms since the large firms will be in a position to use the new technology hence becoming cost-effective. It’s due to this fact that most of the local radio stations will not be in a position to use the new technology hence meaning that the services will be poor when compared with the services from the large firms. Definitely, this will lead to the closure of the business hence so many people will be rendered jobless hence the economy of the country in this case will be affected too. It is due to the deregulation of the radio industry that all these problems have arisen since you tend to find that there are not any laws that have been imposed to ensure that these people are protected. It is due to this particular fact that you will tend to find that the large firms have dominated the whole market hence getting the largest share. (Alger, 2000).
Conclusion
Radio consolidation has had so many effects on the local radio markets since its implementation. It was out of the deregulation of the radio industry which led to the rise of the merging of this industry hence leading to the realization of its economies of scale. This can be seen in the field of advertising whereby the radio industry has been in a position to cut its many costs hence leading to huge profits which are accrued by the industry. You tend to find that it has created its monopoly hence meaning that it has dominated the whole market hence the local radio stations can not be in a position to compete with the large firms. It’s due to this fact that measures have to be taken to ensure that the local radios are not affected hence leading to the closure of so many radio stations due to the losses they get. The government should ensure that they have controlled this monopoly since it is not affecting the local stations alone but you also find that the economy is too affected.
Reference
Alger, D. (2000): The mega media: How the giant corporations would dominate mass Media. Lanham, Maryland. Littlefield Publishers, Inc.
Mundy, A. (2000): The radio merger to bring more opportunities. The capital district Business Journal. Vol. 8(1).
Polgreen, J. (2005): The death of the local radio. Washington Monthly Journal. Vol. 32.
Barnouw, T. (2002): Conglomerates and the media. New York: The New Press.
Hall, H. (2005): Radio networks swell. Caribbean Business Journal. Vol. 6(3).
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