A college president once told me, "I've never seen a pancake so thin it didn't have two sides." The hype and noise surrounding the Federal Communications Commission's proposed relaxation of broadcast outlet ownership rules have made the perennial debate over media concentration seem like a one-sided pancake: No right-thinking person is in favor of more media consolidation.
Yet the FCC has research, technology, and economics on its side, while its critics rely on emotion, utopian visions, and anecdotes. Unfortunately for sound policy making, the hysteria has swept along many lawmakers, who are either pandering to uninformed voters or being poorly advised by their own staffs.
Last June the FCC proposed rules easing some of its longstanding regulations. Most controversially, under prodding from several federal court decisions, it raised the maximum national audience size a single television broadcaster would be allowed to reach from 35 percent to 45 percent, while liberalizing restrictions on common ownership of newspapers and TV stations in a single local market. Sen. Byron L. Dorgan (D-N.D.) led the fight against the FCC's new rules, sponsoring a resolution to combat "galloping concentration" in the media.
The first problem with the anti-FCC activists is that their basic premise is false. The media industry is not, as a matter of fact, highly concentrated. Moreover, it has not become substantially more concentrated during the last decade or so, despite repeated warnings to the contrary. Most important, there is no compelling evidence that the current level of media concentration has had negative consequences for consumers, culture, or democracy.
Like blind men trying to describe an elephant by touching only a leg or a trunk, critics of media concentration are each touching different parts of a complex beast and proclaiming to know its true, malevolent nature. They tend to focus on one of three main concerns: economic power, cultural power, and political power. Each of these fears is overblown.
The Monopoly That Isn't
Overall, the media industry -- including broadcasters, newspapers, magazines, book publishers, music labels, cable networks, film and television producers, Internet-based information providers, and so on -- is not substantially more concentrated than it was 10 or 15 years ago. Even after a period of mild deregulation and high-profile mergers, the top 10 U.S. media companies own only a slightly bigger piece of the overall media pie than the top 10 of two decades ago. In my book Who Owns the Media?, I compiled data showing that the top 10 media companies accounted for 38 percent of total revenue in the mid-1980s, and 41 percent in the late 1990s. As important, the lists are not filled with the same companies. Meanwhile, the rest of the media universe has continued to expand and diversify: There are more magazine and book publishers than ever, and new categories of vibrant media that were inconceivable just a decade or two ago.
The general assumption is that fewer and larger companies are controlling more and more of what we see, hear, and read. Certainly a casual scanning of the headlines lends evidence: Time merges with Warner, buys CNN, and then combines with America Online. But the incremental growth of smaller companies from the bottom up does not attract the same attention. Break-ups and divestitures do not generally get front-page treatment, nor does the arrival of new players or the shrinkage of old ones.
Right now, the 50 largest media companies account for little more of total U.S. media revenue than they did in 1986. Back then, for example, CBS was the largest media company in the country, with sizable interests in broadcasting, magazines, and book publishing. In the following decade it sold off its magazines, divested its book publishing, and was not even among the 10 largest American media companies by the time it agreed to be acquired by Viacom in 1999. Conversely, Bertelsmann, though a major player in Germany in 1986, was barely visible in the United States. Ten years later, it was the third-largest media company in America. Upstarts such as Amazon.com, Books-A-Million, Comcast, and C-Net were nowhere to be found on a list of the largest media companies in 1986. Others, such as Allied Artists, Macmillan, and Playboy Enterprises, either folded or grew so slowly they fell out of the top ranks. It is a dynamic industry.
In 1986, I employed a widely-used measure of economic concentration called the Herfindahl-Hirschmann Index (HHI), to assess the 50 largest American media industry players. In the HHI a score of 10,000 means a total monopoly. Anything above 1,800 indicates a highly concentrated market; 1,000 represents the bottom range of oligopolistic tendencies (meaning the major companies have some capability to limit price competition and perhaps indirectly constrain the range of content diversity), while any score under 1,000 reveals a competitive market. In 1997, the index for media companies stood at 268. This was up some from 206 in 1986, but hardly what you'd expect given fears of concentration. Skeptics would point out that 1997 was before AOL and Time Warner or CBS and Viacom merged, but it was also before magazine publisher Ziff-Davis broke itself up or Thomson, once the owner of more newspapers than any other company in North America, sold off most of its holdings to several established as well as newer players. Competitiveness in media compares favorably to other industries: The 1997 HHI for American motor vehicles was 2,506; for semiconductors, 1,080; and for pharmaceuticals, 446.
Much of the best-known merger activity has been more like rearranging the industry furniture: In the last 15 years, the American owners of MCA and its Universal Pictures subsidiary sold out to the Japanese firm Matsushita, who then sold Universal to Seagram's (Canada), who sold it to Vivendi (France), which is selling parts of it to General Electric's NBC. But at the same time Vivendi sold textbook publisher Houghton-Mifflin to a private investment group, and it did not include its Universal Music Group in the NBC sale. There is an ebb as well as flow, even among the largest media companies.
With all this fluidity, it is strange to read in the 1992 edition of Ben Bagdikian's influential book The Media Monopoly that our primary concern should be about "concentrated control" by "fifty corporations." Monopoly means exclusive control by one company. An oligopoly could involve two or three or four. In a 2001 online debate with me, academic critic and anti-consolidation activist Robert McChesney wrote that a top tier of seven "transnational giants -- AOL Time Warner, Disney, Bertelsmann, Vivendi Universal, Sony, Viacom and News Corporation -- ...together own all the major film studios and music companies, most of the cable and satellite TV systems and stations, the U.S. television networks, much of global book publishing and much, much, more." Of course, he wrote this in 2001, before Comcast became the largest cable company. So now it's the top eight? McChesney continues that the media cabal "is rounded out by a second tier of 60-80 firms," including many based in Asia and Latin America.
It is hard to contend that such a large and diverse group of companies has anything like "monopoly power," certainly in the economic sense. Indeed, any industry with 60 or more major players (who frequently change positions, appear out of nowhere, and disappear altogether) seems the very definition of a strong, competitive market.
How Deregulation Saved Television
If the charge of media monopoly is patently false, there is a set of seemingly more plausible, yet vaguer anxieties about the control of content. The basic argument here is that consolidation of the media into fewer hands results in less diversity of substance, both in terms of political views and cultural richness. Media moguls, goes this line of thinking, can and do exert substantial political clout on issues affecting their own economic interests. Like any other interest group, they push for policies that secure or improve their positions and make it more difficult for new players to enter their field. Vertically integrated media companies will favor their own in-house production over "independent" producers. The result in each case is a supposedly diminished marketplace of ideas and cultural offerings. As Bagdikian puts it, "The American audience, having been exposed to a narrowing range of ideas over the decades, often assumes that what it sees and hears in the major media is all there is. It is no way to maintain a lively marketplace of ideas, which is to say that it is no way to maintain a democracy."