Domination Fantasies

Does Rupert Murdoch control the media? Does anyone?

Ben Compaine from the January 2004 issue

(Page 2 of 3)

There is little doubt that major players in any given industry will try to create or influence legislation to shore up their positions. Just as steelmakers and the unions representing steelworkers lobby for tariffs and bailouts, we can expect media companies to push for policies they think will benefit them. This is certainly the case with recent changes in copyright, which have been strongly pushed by some media companies. But deregulation, when done properly, typically unleashes market forces that make it increasingly difficult for any one company to dominate an industry. And firms that grow under deregulation typically do so by expanding the range of their offerings. (As we'll see, this is the case with Fox, the bête noire of many media concentration activists.)

When it comes to the proposed FCC changes or questions about the effects of supposed media concentration, there's little indication that the public is exposed to a narrower range of ideas, perspectives, or culture. Indeed, the current flowering of offerings is in large part due to some small deregulatory steps taken by the FCC in the 1980s.

Television, the medium that arouses the most emotion in this debate, illustrates how this process has worked out during the last couple of decades. Consider the following points:

� As even a casual watcher would attest, television has become exponentially more competitive in the last two decades, populated by many new players and distribution channels. Often ignored is the fact that it took two deregulatory moves by the FCC to encourage the formation of the newer networks. When Newton Minow, chairman of the FCC under President Kennedy, made a speech in 1961 calling TV a "vast wasteland," television was synonymous with the three television broadcast networks that existed then and for another quarter of a century thereafter. Today, there are seven national broadcast networks, five of which -- ABC, CBS, Fox, NBC, and the WB -- have distinct ownerships. (UPN is owned by Viacom, which owns CBS; NBC has a minority interest in the PAX broadcast network.)

Breaking the logjam was News Corp.'s Fox network, which made its debut in 1986, not coincidentally the same year that the FCC increased the number of stations a single entity could own from seven to 12. This change gave News Corp. the leverage to use a core of stations it owned to launch a network. The FCC also granted a waiver from rules that prohibited the older networks from owning their programming. News Corp. had previously bought 20th Century Fox and its television production unit, providing the company a base from which to make the costly start-up of a national network more feasible. Fox showed the way for similar ventures by station-owning and content-controlling media companies to start the WB and UPN. New, competitive networks had long been the holy grail of those who criticized television programming as dull and uninventive; they were created by deregulation and market forces, which many critics (then and now) view as the enemy.

� The universal access of households to the vast channel capacity of cable and satellite or digital broadcast satellite (DBS) services has eroded the notion that "television" is synonymous with the technology of "broadcasting." (The growth of cable and, later, DBS only became possible after deregulatory moves of the late '70s and early '80s -- moves that were staunchly opposed by the broadcast networks. Mainstays of today's content universe, such as CNN, ESPN, and HBO, among scores of others, do not rely on the UHF and VHF spectrum licenses of old-time broadcasters.) Cable is available to 97 percent of American households, and DBS is available to nearly 100 percent of the country. Today, about 90 percent of households with television sets subscribe to a multichannel service, primarily cable and DBS, which is up from about 23 percent in 1980. At the same time, the number of channels available to subscribers has grown about fivefold -- from a typical system with six to 12 channels in 1981, to an average of 58 in 2001. The result has been a diversity of programming niches on cable/DBS so vast as to be unimaginable 30 years ago. Among other things, channels ranging from The History Channel to National Geographic to Biography to BBC America to Bravo have meant that the Public Broadcasting Service, originally created in 1969 as an outlet for supposedly non-commercial and culturally serious programming, has had to reinvent itself. Into the 1970s, 90 percent of the prime-time television audience was tuned in to one of the three networks. Today, the new expanded line-up of broadcast networks struggles to get 50 percent, with the rest split among the many unique cable offerings. In fact, cable programs recently have surpassed broadcast programs in prime-time ratings.

� Although a very minor portion of television content can be classified as news and information at either the network or local level, worries over diversity in this form of programming are a regular theme for the opponents of regulatory relaxation. Yet there are orders of magnitude more news and information available today than 25 years ago. Then, there were just three evening network newscasts, each lasting 30 minutes. Besides CBS' 60 Minutes, there were only a handful of prime-time network specials. Local news, weather, and sports were, much as they are today, a quick and shallow gloss available in most television markets. Today there are three 24-hour news channels (CNN, Fox News, and MSNBC), plus the financial news channels CNBC and CNNfn. There are regional all-news channels like New England Cable News. Channels such as the History Channel and Biography Channel provide daily programming similar to the documentaries that used to be "specials" on the broadcast networks and PBS. The programming on these channels comes from many sources, including independent and freelance producers.

� There is nothing inherently better or more "diverse" about a media company buying its content from outside sources rather than from its vertically integrated production operation. The trend in recent mergers has been for distributors, i.e., broadcast networks, to align with production companies, i.e., film studios. Their decision to do so is a classic "make vs. buy" case. No one has criticized newspapers for running their own content-creation businesses, even though they could rely on freelancers and independent contractors. Some do more than others. Magazines do some of both. TV networks and local stations have long had their own in-house news operations. But a combination of business model and (for two decades) regulation kept most entertainment production out-of-house at the three older networks. Over time the combined studios/TV networks are likely to find that they were better off being able to pick and choose programming from what outsiders offered them rather than being stuck with whatever their limited in-house operations offer. The economics offer powerful incentives: To cite one of many examples, Warner Brothers Television, part of AOL Time Warner, owner of the WB and HBO television networks, produces the top-rated television show, ER. It could run that show on either of those in-house networks, but instead sells it to NBC, based on a cold calculation that this is the better financial decision.

� Nor should anyone assume that smaller media entities are somehow "better" in the quality or quantity of news and public affairs programming. Or even that a commonly owned newspaper and television station in the same market create a single "voice." Studies by the FCC's Media Ownership Policy Working Group found that the local television stations owned by the large broadcast networks receive awards for news excellence at three times the rate of stations owned by smaller groups, and produce nearly 25 percent more news and public affairs programming than non-network-owned affiliates. Television stations owned by enterprises that also own newspapers have higher news ratings, win more news awards, and offer more news shows than non-newspaper affiliates. And in 10 cities where the newspaper and a TV station had common ownership, half of the combinations had a similar editorial slant in the 2000 presidential election, while the other half had divergent slants.

There are other points to consider when reflecting on the variety of material and viewpoints available in what Stanford law professor and FCC critic Lawrence Lessig decries as an era "when fewer and fewer control access to media." Movie studios now derive more revenue from video cassettes and DVDs than they do from ticket sales. The relatively new formats allow smaller and specialty producers to get distribution for their exercise tapes, music videos, documentaries, foreign language works, and other types of content that could not get theatrical or network distribution in the good old days. With the proliferation of rental stores, chain merchants such as Best Buy and Wal-Mart, and untold thousands of e-commerce sites, audiences have far greater access than at any time in history to programming from sources other than the traditional mass audience producers.

Similarly, the Internet has proved a boon for news, information, and entertainment, whether global, national, or local. While not a direct substitute for TV (yet), the Internet boasts a historically fast adoption rate. In less than 10 years since its widespread commercial availability, about 60 percent of Americans have access to the Internet and nearly 30 percent of Internet households now have broadband connections, according to figures derived from the FCC and the National Telecommunications and Information Administration. The rapid adoption of wireless networks in homes promises further portability of Internet-based content, bringing small but serviceable video and high-quality audio to computer monitors. Studies have found that households with the highest Interest usage are shifting their time away from television viewing.

There is one last paradox regarding concerns about programming "diversity." News Corp.'s Fox Network and its cable Fox News Channel are commonly trotted out by critics as icons of what is bad about the media. For example, McChesney dismisses Fox News with the assertion that it "does virtually no journalism at all. Its profitability is based on eliminating core journalism operations as much as possible, and broadcasting far less expensive commentators like Bill O'Reilly who merely pontificate ad nauseam." Yet both Fox operations are exactly what media critics have been calling for over the decades: a clear and decisive alternative to what had been considered the bland middle ground of the traditional TV networks.

Honoring Profits

Animus against the profit motive runs deep among FCC critics and activist groups. Consider this complaint in the mission statement of the Free Press, a lobbying group founded by McChesney: "The main problem is that the structure of the media system makes socially dubious behavior...the rational outcome." One proposed scenario? "If the government gave all the publicly owned radio and TV frequencies to nonprofit groups, rather than a relative handful of huge corporations, the content of our broadcasting system would probably be radically different from what exists today."

They are almost certainly half-right. Content might well be different. But it wouldn't necessarily be better. Would nonprofits be able to pay their employees well? Would they have the capital to reinvest in equipment and technologies? Who would determine the content of their programming, and on what basis? This might work only in a Harrison Bergeron world of enforced equality, where no democracy of content was allowed, where the voice of the audience was not heard. The experience with the Public Broadcasting Service is instructive in this regard. At its best, PBS could rarely get the attention of more than 2 percent of the total TV audience. And that was when it had only three rivals. Who exactly would benefit from a model of only PBS-like programming?

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Video: Interview with Rupert Murdock | Political Byline links to this page. Here’s an excerpt:

…him; it cannot be denied that he is making an impression in the media right now and is quite successful at it. This video comes via Reason Magazine’s Blog called Reason Hit and Run ; Reason did an article in 2004 bashing Murock’s strangle hold on the media industry. Now whether that stranglehold is real or imagined is for others to judge. I have to honestly wonder aloud; is Reason magazine’s…