Net Soup: Frank Beacham

Media Consolidation: The Noose Tightens

As media outlets consolidate, diversity diminishes. Now, armed with a significant new court ruling, the pay television industries are poised to consolidate much further. The ramifications could have a far-reaching impact on terrestrial broadcasters, program producers and the television audience.

The U.S. Court of Appeals for the District of Columbia has struck down a regulation that prevented a single company from owning an interest in more than 30 percent of U.S. cable and satellite systems. The matter now goes back to the FCC, where Republican Chairman Michael Powell has expressed skepticism of such ownership caps.

The court also struck down a requirement that prevented cable companies from having an ownership interest in more than 40 percent of the programming they carry on their systems. This is a potentially devastating blow to independent program producers who could lose automatic access to cable programmers.

In making the unanimous rulings, the three-judge panel cited the First Amendment rights of the pay television operators, finding that the government-imposed regulations thwart their right to reach new audiences and to control their own program content.

"This is an enormous loss and a devastating blow to consumers," said Gene Kimmelman, co-director of Consumers Union. "It enables cable monopolies to consolidate further and expand their dominance of the television market by owning more cable systems and putting more of their own programming on those systems.

CABLE COMPETITION

"As large cable companies become more powerful," Kimmelman continued, "it becomes more difficult to get cable competition. It also creates a greater incentive for cable companies to limit programming choices to their own programs instead of providing a wider array of programming that consumers may want to see."

Cable giants, such as AT&T and AOL Time Warner, lauded the decision. There were immediate predictions that television broadcasters will embrace the same First Amendment argument in court to seek removal of caps on TV station ownership.

However, in doing so, it would seem that the broadcasters could enter some dangerous new territory. If the appellate court's logic is applied to terrestrial broadcasting, why does it not violate the pay TV operator's First Amendment rights to be forced to carry a station's programming under a digital must-carry regulation? Once that constitutional door is opened, it seems a logical next step that cable and satellite companies would have strong constitutional grounds to challenge any form of digital must-carry.

Why, with the digital spectrum that Congress has granted the broadcasters, should cable and satellite companies be forced – in a free market – to deal with broadcasters at all? Why not let the broadcasters live or die by the 8-VSB transmission technology that they chose and have so confidently assured American consumers will work?

If we're going to live by the First Amendment rights of media corporations, how are cable and satellite companies any different from newspapers? No government regulation requires a newspaper editor to run unwanted content. Why should pay TV operators not enjoy the same freedom to choose any content they wish to carry?

IN THE POLITICS

The answers to these questions, of course, aren't based in logic or common sense. They lie in politics – and with the decisions of lawmakers who enjoy the vast campaign contributions showered on them by the media conglomerates. While few politicians can muster any warmth for the cable moguls, the nation's broadcasters – whose $70 billion spectrum grab gets more embarrassing by the day – don't rate much better.

After another dismal performance before Congress on the sorry state of the DTV transition, a fed-up Sen. John McCain recently predicted the broadcasters will soon mobilize their monied lobbyists to delay the 2006 deadline to go all-digital.

"There's not a snowball's chance in Gila Bend, Ariz., that we'll be on-track," an irritated McCain lamented during another blame-game DTV hearing before the Senate Commerce Committee.

It was so bad that both the Consumers Union and Consumer Federation of America, two of the country's leading consumer groups, called on Congress to take back the digital spectrum given to broadcasters and use it to immediately get the maximum value for the public's airwaves.

Unfortunately, the First Amendment rights of consumer advocates are not enough to slow today's rapid-fire media consolidation. Only the changing media technology itself can trip up these bold players. We now know that the Internet's end game – though it's not here yet by a long shot – is a global interactive media delivery system. Geographic boundaries will eventually be erased. In this global environment, no single cable or broadcasting conglomerate can maintain the level of control over viewers that they enjoy today.

NO MORE MONOPOLY

Nor will they monopolize the technology, whether it be video or the Internet. One key factor is competence. From their remarkably poor track records so far, it's far from certain that traditional cable or telephone companies will even continue to control the broadband pipe to the home in the markets they now dominate. Neither industry has shown any ability to offer consistently reliable service. Though customers are willing to pay for broadband access, customer satisfaction is at an all-time low. There's huge opportunity for reliable broadband alternatives.

The tastes of audiences are also changing. A generation of Internet users is now spending less time watching television. This comes from a Jan. 2001 survey sponsored by the online games site Pogo.com and conducted by Greenfield Online.

SURVEY SAYS

The survey found that 52 percent of viewers watch less TV once they have Internet access. Of those, 49 percent view 6 hours to 10 hours less each week. According to the survey, 39 percent of Internet users say TV quality has declined. Forty-seven percent of the respondents watch less television because the Internet quickly provides them with more information.

The noose of media consolidation continues to tighten. But, so far, there are no clear winners. That's the funny thing about technological revolutions. There are no sure things. In this game, no one is in control – yet.

Frank Beacham is a New York City-based writer and producer. Visit his Web site at: http://www.beacham.com. E-mail: frank@beacham.com.