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."

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?

Few Americans are aware that in the 1980s VCRs were bought in Western Europe at a far more rapid clip than in the U.S. The reason was that almost all of these societies at the time had the choice of only a handful of "public service" television stations, owned or controlled by the government. The VCR gave the audience the freedom to go to the new rental stores and spend some of their TV time watching entertainment they wanted, not what some elites thought would be good for them. In the U.S. we not only had more choice with the commercial networks, but with the added options provided by cable. VCRs eventually became pervasive, but with less urgency than elsewhere.

A.J. Liebling, the outspoken press critic of half a century ago, had a pragmatic insight into why the ownership structure of the media -- primarily newspapers then -- was a positive influence on content. In his 1947 book The Wayward Pressman he wrote, "The profit system, while it insures the predominant conservative coloration of our press, also guarantees that there will always be a certain amount of dissidence. The American press has never been monolithic, like that of an authoritarian state. One reason is that there is always money to be made in journalism by standing up for the underdog....[The underdog's] wife buys girdles and baking powder and Literary Guild selections, and the advertiser has to reach her."

At the time Liebling wrote this, the Hearst newspaper chain controlled more local circulation than any newspaper company does today. But his insights are actually more relevant today than in 1947. Profit, not ideology, means that whether one wants to focus on the 10 largest conglomerates or the 50 largest players or whatever other number, the content of the media is determined not by what the chief executive officer wants, but by what thousands of editors, producers, publishers, and local operating managers determine is right for the audience they are trying to reach.

This is one reason why big business and business executives are regularly made the villains (see The China Syndrome, Broadcast News, and Erin Brockovich, among many) in film and television features produced by major media companies. In many instances, the profit motive means localism prevails over centralization. It is not likely to matter much (and indeed experience shows it does not) whether a local TV station is owned by a company headquartered in another city. The decisions for much news and information need to be made locally if the owner wants to attract its share of the audience. In short, both locally and nationally owned media outlets are driven by the profit motive.

In fact, the notion that local owners of newspapers or TV and radio stations are inherently "better" -- usually taken to mean more "objective" -- than a large corporation has no standing in the real world. Some of the most biased newspapers in 20th-century history -- McCormick's Chicago Tribune, Annenberg's Philadelphia Inquirer, Loeb's Manchester Union-Leader -- were the creations of local ownership. Local owners are more likely than remote corporate owners to have ties to the local political and business establishment. Local owners may not have the economic resources to withstand a boycott by real estate or banking or similar interests should they risk some criticism of the local industry. Large chains, on the other hand, are far less affected economically by a short-term downturn in any one community. And it is less likely that the publisher is a prep school buddy of the mayor.

On the other extreme from local ownership, Clear Channel Communications has become the poster child for all that has gone wrong with media regulation. The Web magazine Salon headlines it as "Dirty Tricks and Crappy Programming." The chain owns nearly 1,200 radio stations nationally and is the dominant owner in many local markets. I am not about to defend Clear Channel's acquisitions or its policies, but the other side of the pancake has received little attention.

First, some context. Clear Channel's 1,200 stations exist in a universe of more than 10,500 commercial radio stations in the U.S. (compared to less than 8,000 in 1980). On a national basis, it owns less than 12 percent of all commercial stations. Its growth, as well as that of smaller chains, has been dramatic. But, again, there is context: Until 1985, a single owner could own a maximum of just 14 stations. By 1992 this limit had been raised to 36. Still, regulation kept size artificially low. Only in 1996, when the Telecommunications Act became law, were national limits eliminated, other than existing antitrust laws.

Salon's Eric Boehlert writes that after the "domination" by Clear Channel and second-place Infinity Broadcasting, "The result, many longtime radio industry observers feel, has been the degradation of commercial radio as a creative, independent medium." Yet anyone who remembers the radio of the 1950s and the '60s can recall a bland mix of Top 40 stations, sports, talk, and pop. There were, as now, a handful of jazz and classical stations. The late 1960s and '70s saw the unleashing of the FM band and its superior fidelity. There was a brief Golden Age of freeform stations that mixed psychedelic rock with more outre forms of music. But such "innovation" had fizzled out long before Clear Channel.

The Top 40 list in Philadelphia was rarely much different than the playlist in Denver. Precious little radio programming has truly been local other than the sports scores, traffic, weather, and perhaps some early Sunday morning interview. No matter who owns the local stations, it's unlikely that Clear Channel's Boston stations will be giving the Miami traffic report.

Like television, the radio business is changing rapidly. Here, it is satellite and the Internet that are driving progress. Satellite radio services, such as XM and Sirius, are providing new options, with dozens of commercial-free "stations" for those who are willing to pay $120 annually. And the Internet is a very robust option for anyone unsatisfied with what they get on the AM and FM dials. Services such as RealOne Radio and Live365 offer thousands of radio options. Some are transmissions of over-the-air stations from around the world. In a 2001 study I co-authored, we found more than 2,500 stations listed at RealOneRadio.com. The most listened-to stations were those that were Web-based only.

Services such as Live365 provide the capability for anyone to put themselves "on the air" over the Internet for as little as $10 a month. And The Boston Globe recently reported that 100,000 listeners a day are using this nascent service. The consumer research firm Arbitron says that in August 2003, 50 million Americans viewed a video or listened to an audio stream on the Internet. "The idea that Rupert Murdoch's Fox media empire or Arthur Sulzberger's at The New York Times can overwhelm the voice of the people seems a little more absurd with each new broadband Internet subscription," concluded Globe technology columnist Hiawatha Bray.

Public Considerations

Publicly owned companies are frequently criticized for being too driven by quarterly earnings needs. It is a fair criticism. So it is again ironic that the poster child for the evils of media conglomerates, News Corp., is probably the least driven by short-term profits and quarterly earnings. Though the company is publicly owned, working control and ownership have been retained by its chairman, Rupert Murdoch, and his family. The company has invested hundreds of millions of dollars into its groundbreaking efforts in creating the Fox Network, then a viable second all-news cable network, then creating direct broadcast satellite service covering parts of the Third World as well as developed countries that did not have the advantage of a multi-channel cable infrastructure. While in no way endorsing his apparent political ideology, one might even point to his bankrolling of the conservative Weekly Standard as another contribution Murdoch has made to the marketplace of ideas and cultural offerings.

Advocates for small, local, nonprofit media companies routinely ignore or discount the benefits of profit-driven public ownership. The stocks of these companies are widely held -- by teachers' pension funds, by mutual funds, by individuals, and by 401(k) plans. The boards of these companies have a fiduciary responsibility to their stockholders. Most of them, most of the time, take that seriously. Restricting their coverage, their range of films or magazine titles or news shows, is not what the big companies are about. They simultaneously seek to reach the mass market when they can and niche markets when they spot them. Given the vast diversity of interests in a nation the size of the United States, there is potential profit in reaching the right wing as well as the left wing, in programming for Spanish speakers as well as English, in publishing books for escapism and for self-help, in investigative reporting that is critical of government as well as editorials that are supportive. And if the big guys don't provide it, some small publisher or producer will.

Having said that, it remains likely that, as in many fields, a relatively small number of companies will capture a large chunk of market share. This needs to be understood properly. If large segments of the public choose to watch, read, or listen to content from a relatively small number of media companies, that should not distract policy makers from the key word there: choose. At a time when such a fragmented audience is dividing itself among niche cable channels, tens of thousands of book titles published annually, and hyper-individualized Web surfing, it may even be socially positive that there are some mass audience shows, movies, and books that, like the Harry Potter series, give us something common to talk about. It may indeed be that at any given moment 80 percent of the audience is viewing or reading or listening to something from the 10 largest media players. But that does not mean it is the same 80 percent all the time, or that it is cause for concern.

Walter Lippmann once wrote, "The theory of a free press is that truth will emerge from free discussion, not that it will be presented perfectly and instantly in any one account." I have never heard a convincing argument that any individual in the United States in 2003 cannot easily and inexpensively have access to a huge variety of news, information, opinion, culture, and entertainment, whether from 10, 50, or 3,000 sources. If that is what passes for media concentration, we should consider ourselves pretty lucky.