Guess what happens when a handful of players owns nearly all the important radio stations in the United States? Those players become very powerful, and they get to charge more for advertising time.

At least that’s the fear of media buyers who are carefully eyeing the new CBS Radio Group, now the biggest owner of radio stations in the nation following the purchase of Infinity Broadcasting Corp. by Westinghouse Electric Corp. last November.

There are rumblings that they may have legitimate cause for concern. The U.S. Justice Department doesn’t comment on ongoing investigations, but Advertising Age reported last week that the feds are investigating alleged price gouging at CBS stations in Chicago.

CBS stations completely dominate the L.A. market the group owns eight here, including the market’s top-billing station (KRTH-FM 101.1) and three of the top 10 in annual ad billings, according to Duncan’s American Radio.

Advertisers worry that large blocks of stations like this one in major markets across the country will gain so much clout that they will be able to force advertisers to buy time on low-rated stations owned by the group in order to gain access to the high-rated stations. Local media buyers say that so far, this isn’t happening in the L.A. market. But it may well be in other cities, and media buyers don’t expect the good times to last in L.A.

There aren’t any radio monopolies in the United States, despite the passage of the Telecommunications Act of 1996, which allowed companies to own as many as eight radio stations in a market and sparked a wave of consolidation in the industry that is still running its mad course. But the new radio environment has unquestionably given companies like CBS Radio more leverage.

Shortly after Infinity announced the deal with Westinghouse Infinity President Mel Karmazin said that the biggest change at the Infinity stations would be a raise in advertising rates, because the combined company would be so powerful. Karmazin was actually joking he knew perfectly well that a substantial raise in rates might be considered an antitrust violation.

But the Justice Department apparently doesn’t think it’s funny, at least in Chicago.

According to Ad Age, the feds are questioning ad agencies there about advertising rates at CBS stations. Chicago media buyers were quoted as saying that the No. 2 CBS station in the market used to charge between 10 percent and 20 percent less than the No. 1, but now the difference is more like 2 percent or 3 percent.

And some claimed that after greatly raising ad rates for their top three or four stations, CBS salespeople began calling media buyers and offering discounts if they bought time on all the stations as a group.

In Los Angeles, meanwhile, media buyers say ad rates at CBS-owned stations have remained fairly constant since the Infinity acquisition.

Edith Whaley, a vice president at Carat/ICG Inc. who specializes in radio buying, said CBS can’t really use its market clout to raise rates in L.A. because CBS does not control any individual demographic segments here.

CBS’s L.A.-market stations range in format from classic rock (KRTH) to New Age (KTWV-FM 94.7) to talk (KLSX-FM 97.1) to all-news (KNX-AM 1070 and KFWB-AM 980). What this means is that its stations attract very different listener demographics, from young men to older women and everything in between.

That’s a very important factor in the radio business, because advertisers typically use radio in much the same way they use magazines to target a specific audience.

Whaley says she’s more concerned about group owners like Jacor Communications Inc. than she is about CBS, because Jacor stations dominate the young male audience in cities like Denver and San Diego so advertisers seeking to reach those listeners have to pay Jacor’s jacked-up rates, Whaley said. Because it doesn’t control any demographic segments in the L.A. market, CBS can’t do the same thing, she added.

Still, other buyers say they eventually expect to see CBS making group deals, in which buyers will get a deep discount if they purchase time on all the stations in the local market.

“I wouldn’t be surprised if they started doing that here. I mean, why would you own all those stations if you weren’t going to do that?” said one buyer with a major local agency.

Indeed, Whaley suggests that big station groups like CBS have little choice but to raise ad rates, because they have paid such exorbitant prices acquiring stations in the past months. Until recently, radio stations sold for multiples of about eight to nine times cash flow; the $4.9 billion CBS paid for Infinity was a multiple of about 18 times its 1996 cash flow (defined as earnings before interest, taxes, depreciation and amortization).

The CBS stations in L.A. have separate advertising sales staffs, but there is in fact one man who is trying to sell time on all eight as a group. His name is Earl Baer, former general sales manager for KFWB, whose title as of June 2 is director of business development for CBS Radio Los Angeles.

Baer insists that he has no intention of offering discounts to advertisers who buy time on the entire group, nor of raising rates at top stations and insisting that people buy time on lesser-rated stations in order to get advantageous placement on the important ones. Rather, he says, his mission is no less than to change the way people think about radio.

Baer seeks to convince advertisers to see radio as a mass medium like television or newspapers, rather than a targeted medium like magazines. The CBS group, with its broad coverage some industry analysts estimate that CBS’s eight L.A. stations reach up to 50 percent of the listening audience in L.A. at certain times and wide demographic reach does seem to make it a mass medium of a sort not seen in radio since the Golden Age.

Baer is pursuing very large advertisers like department stores, clients that typically use newspapers or television rather than radio because they’re after a mass audience.

“Radio is a very effective medium for target marketing. On the other hand, it can be used as a mass-reach medium as well,” Baer said.

Los Angeles Business Journal staff reporter Dan Turner covers the marketing, entertainment and media industries