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Media Consolidation Nation: Buying America's Airwaves

Nearly 90% of the commenting public opposes relaxing broadcast ownership regulations.

This is what the DigitalTV-Television Broadcast Magic 8-Ball predicts the public will get: A repeal of the current national 35% TV audience cap, with a few caveats about providing news and public affairs programming; duopoly limits rendered superfluous by the inclusion of other forms of media in the “voice” test; and an easement allowing a single entity to own a daily newspaper in markets where it also has TV and/or radio holdings.

And why, you might ask, would such powerful public consensus ultimately be neutralized in the media ownership debate? Let’s look at today’s match-up:

Lawyers employed by conglomerates to fight media regulation in court: at least 20. Probably 100 or more.
Lawyers hired by the commenting public: zero.

The irony, and perhaps the illusion, of the current media regulation debate is that the resolution rests with the FCC and Congress. Nothing could be further from the truth. Congress issued the 35% national audience broadcast limit in 1996, apparently believing, in the words of Representative Ed Markey, D-MA, that it “should settle the issue for many years to come.” For more than 50 years, the Commission had justified media ownership restrictions as a matter of public interest. Then, in late 2001, a little more than a year into Michael Powell’s tenure as FCC chairman, a cadre of Fox attorneys marched into the Washington, DC U.S. District Court of Appeals and fried ownership regs to a crisp.

And why, you might ask, would Fox do a thing like that? News Corp. has around 35 stations that reach approximately 39% of the U.S. audience, including duops in New York, Los Angeles, Chicago, Houston, Dallas, Washington, DC, Phoenix, Minneapolis, and Orlando. According to News Corp. Chairman K. Rupert Murdoch, à la his October 2002 shareholder speech in Adelaide, Australia, “These duopolies have enabled us to generate significant savings from combining operations and to improve station operating margins. Indeed, once fully integrated, we expect these markets to operate at or near 60% margins.” The News Corp. station group plus the network generate more than $4 billion in annual revenue. The Court demanded proof that ownership restrictions protected the public interest.

For Powell and his Georgetown law school chum Media Bureau Chief Ken Ferree, this was no run-of-the-mill legal challenge, but an open hand across the chops. The ruling, which called the FCC’s regulations “capricious and contrary to law,” was signed by none other than Judge Harry T. Edwards, who once employed both Powell and Ferree as law clerks. Early in his tenure with the FCC, Ferree, as if shaking off the memory of an Arctic blast, let it be known that he would take nothing before the Honorable Judge Edwards that wasn’t legally airtight.

Ferree and Powell know darn well with whom the last word lies, but the uncertainty before them now is how the play will unfold. Between the regulators and their desire to avoid a tongue-lashing by their former mentor lies the usual Beltway B-list: the politicians, the corporations, the experts, the lawyers, and the public.

Politicians will do contortions to at least appear supportive of the public’s desire. Take the June 2001 letter urging the FCC to maintain the 35% cap, signed by 14 legislators, including Representative John Dingell (D-MI). Three years before, Dingell had threatened the Commission with extinction if it didn’t approve the AT&T-TCI merger, toot sweet.

Most politicians will likely rely on sound bites to look like guardians of the public interest. Take this one from the January 14 Senate Commerce Committee Hearing, in which Senator Byron Dorgan, D-ND, asked Monsieur Powell, “When you talk about more voices, are you talking about more voices by one ventriloquist?”

(He said “ventriloquist.” Heh heh, heh heh. He’s making Chairman Powell look like a dweeb. Heh heh, heh heh. You get the picture.)

Others will simply wrinkle their brows and express “concern,” as did committee members Senator Ron Wyden, D-OR; Senator Kay Bailey Hutchison, R-TX; Senator Trent Lott, R-MS; and Senator Olympia Snowe, R-ME. By the way, all of these senators, along with Dorgan, received around $361,000 from the TV/movie/music industry from 1995 to 2000, according to the Center for Responsive Politics. Committee Chairman John McCain, R-AZ, traditionally a champion of deregulation, received $541,823.

It’s not that we’re suggesting legislation is for sale on the Hill. Au contraire. Media deregulation is easily worth more than a few hundred-thousand bucks. But to underestimate the influence of money in DC is to be pleasantly suspended in a childlike state of delusion. Political contributions made by AOL more than doubled (to $4.1 million) in the 2000 election cycle, when its acquisition of Time Warner was pending federal approval. Go figure.

Corporate Culture Shock

Which brings us to corporations. Those who favor regulations fear that without ownership caps, control of the media would fall into the hands of a few giant mega-corps.

Under the current statute, if you went to see Titanic or any of the Star Wars movies, if you watched Joe Millionaire on Fox or Cops on Court TV, or NASCAR races...Major League Baseball, NFL games, or FX or the National Geographic Channel or Fox News, or Outdoor Life...or The Hughleys on UPN or Divorce Court on a local station, or The X-Files on Sci Fi, or a Dodgers game on cable in L.A...or if you bought the Ice Age DVD, or subscribe to TV Guide, watched satellite TV in the U.K., Singapore, India, or the Middle East (and in a matter of time, the U.S.), used an EPG to channel surf, read a New York Post or Michael Crichton’s Prey, sent your brother-in-law a golf club cover resembling Homer Simpson’s head, or listened to Kylie Minogue’s Love at First Sight, you, my friend, consumed media from News Corp.

On the deregulatory side of the debate are the free market advocates who contend the explosion of media forms renders ownership regulations obsolete. Or as in the case with AOL Time Warner and AT&T/TCI, stupidity and ineptitude rendered the ownership obsolete.

The primary concern raised by deregulation is that it will inhibit the holy triad of the FCC’s public interest argument: competition, diversity, and localism, particularly as they apply to news. This is where the experts come in.

The FCC, in its quest for proof, ordered several studies from experts on how media consolidation affects the holy triad. Here are a few of the conclusions:

*O&Os outperform affiliates in quantity and quality of news. (Bye-bye, national 35% cap...)
*Consumers “substitute” between radio, TV, the Internet, newspapers, and cable for news. (So long forever, duopoly rule...)
*Advertisers don’t substitute so much. (Oh well.)
*Diversity of opinion is probably not affected by cross-ownership. (That’s right, probably not...)
*Diversity of content is not affected by a decrease in program suppliers. (If you’re thinking diversity in terms of BET and Univision, forget it. Think genres, such as comedy, movies, dramas, etc. Continue to rest in peace, fin-syn...)
*Media concentration will result in more ads unless people change channels. (I would like to submit a contract for the next survey of this nature.)
*Broadcasters have to make money. (See previous comment.)
*Two companies control the radio market, but they play just as many songs as in pre-deregulation days.

(That is, when they actually play a song...)

This is basically what the commissioners have for the Court, where the remaining bones of the regulatory carcass will be picked clean by the same Fox lawyers who dismantled much of the current statute by quibbling over the meaning of “necessary in the public interest” versus “in the public interest.”

We The People

Only the public, it seems, is not qualified to determine what is in its own interest, although it knows full well how it feels. More than 2,500 comments on media consolidation were filed with the FCC by January 22. Of a random sample of 334 filings, 300 opposed lifting regulations (89.8%). Of the 34 that did not express opposition, only one was from a citizen who favored raising the national cap to 50%. The rest were requests for comment-period extensions, more data, submissions of data, rebuttals, and corporate filings in favor of lifting the restrictions.

Instead of drilling the usual cast of media consolidation pundits for their all-too-familiar opinions, we decided to ask actual consumers of media how they felt about relaxing the FCC’s current ownership structure:

“I’d be all for it, as long as I get more options and not [sic] have to pay more for them,” said Cheryl Dyer, of Westford, MA. “It’s all about the pocketbook for me.”

Lee Johnson, a Naval officer from Northern Virginia, said, “I have no sense that there is much real diversity on TV today...Therefore, should [Rupert] Murdoch gain control of every station in the country, our viewing options would remain pretty much the same—consistently poor. However, I am morally opposed to anyone or any conglomerate having control of an important communications/information source on First Amendment grounds.”

John Edgecombe is the owner of a weekly newspaper in Geneva, NE: “As far as independent—free—voices in the media, I don’t think that Viacom or any other large consortium will have the national market on a free press.”

Evette Porter, executive editor of Black Issues Book Review, in Manhattan, said, “Media conglomerates already control most of the print, broadcast, and cable outlets...so I’m not sure whether further relaxation of media ownership rules will accelerate media consolidation any more than the current regs.”

Mark Tapscott is the director of the Center for Media and Public Policy at The Heritage Foundation, but for our purposes, he agreed to be a member of the media-consuming public: “I don’t think concentration of ownership in the old media industries of broadcast networks and newspapers is a serious problem when new media is exploding with...thousands of new bloggers [Web logs] appearing on the Web every day, technology driving proliferation of broadcast outlets, and the coming appearance of a generation of communications gadgets that will exponentially increase the individual’s access to news and information sources.”

And finally, Will Norton, Jr., dean of the University of Nebraska-Lincoln College of Journalism: “The issue is not the FCC. The issue is the tax law that encourages large corporations.”

Stay tuned for scenes from next month’s episode: Regulating, American Style.



Deborah D. McAdams is a contributing editor. She can be reached at: dmcadams@uemedia.com.