Coming Soon: Multi-Billion Dollar Media Mergers

Federal Court Decision Will Open Floodgates for New Wave of Multi-Billion Dollar Media Mergers http://www.wpkn.org/wpkn/news/mcchesney031502.ram Interview by Scott Harris.

Robert McChesney, author of the book "Rich Media, Poor Democracy," considers the impact this court decision may have on the diversity of programming and political views available to consumers and citizens.

On Feb. 19, a federal appeals court struck down Federal Communications Commission regulations that had prevented cable television companies from owning broadcast TV stations. The court also ordered the government to redraft current rules limiting the number of stations a network can own. FCC Chairman Michael Powell has publicly questioned the need for media ownership rules and is expected to eliminate them soon.

Business analysts predict that this court decision will open the floodgates to a new wave of multi-billion dollar media mergers, further accelerating the concentration of ownership of an already shrinking number of giant conglomerates. The court's green light for the creation of ever more powerful media companies comes as reports circulated that Disney-owned ABC was considering replacing their long running news program "Nightline" with the "David Letterman Show," a development that critics said underscored their concern that a quest for higher profits had supplanted the network's responsibility to bring audiences quality journalism in the name of the public interest.

Between The Lines' Scott Harris spoke with Robert McChesney, research professor at the University of Illinois and author of the book "Rich Media, Poor Democracy," who considers the impact this court decision may have on the diversity of programming and political views available to consumers and citizens.

Robert McChesney: This is in fact, part of a long trend toward increasing concentration of ownership. For the past 10 years or so, the major corporate media lobbies have been working through the court system, through the politicians they subsidize on Capitol Hill and through the FCC itself to try to get these barriers to concentration thrown out and eliminated because they know that if they can bigger and bigger, they can make a lot more money and prevent the possibility of any legitimate competition. Between The Lines: Who are the main folks behind this challenge to federal regulations?

Robert McChesney: Basically, everyone who's a big player in media, and there's not very many companies -- that's less than two dozen -- who stand to benefit from this. The only group that really has opposed deregulation of ownership has been the small TV station-owning companies, because they understand that if you get rid of the 35 percent cap -- meaning that one company is only allowed to own TV stations in up to 35 percent of the country -- that they're going to be pretty much put out of business, much like small radio station owners were when ownership was deregulated in 1996.

There's going to be legislation introduced in Congress by several members, I believe, that will call for stopping any further deregulation and formal congressional hearings to revisit this matter. I think the response has been one of outrage by many members of Congress when they've heard about this and I think that the response among most Americans when they hear about this -- and few Americans actually have -- but when they do hear about it, it's one of outrage, because what this will do, absolutely, there's no debate about it, is it will lead to a huge tidal wave of concentration in the U.S. media.

What we have now in the United States is that there are three or four main restrictions on media concentration that have been in place for the most part for quite some time. It's the only thing that prevents even more monopolization -- and those crucial ones are the two you mentioned at the start of the interview (the lifting of FCC regulations that had prevented cable television companies from owning broadcast TV stations and the court order for the government to redraft current rules limiting the number of stations a network can own.) The other crucial ones are the prohibition on owning a TV station and a newspaper in the same market. Likewise, the prohibition on owning a cable TV system and a newspaper in the same market. Once those are gone, then you can own as many TV stations as you want, you can link them up with newspapers in your own market, you can link up your TV stations with cable systems. It basically means any media company can merge with any other one and there are tremendous economic incentives for them to do so, so that all the big TV networks right now that are owned by our largest media conglomerates, like General Electric owning NBC; Rupert Murdoch's Fox Network; Disney owning ABC; Viacom owning CBS; they will all very quickly link up with the huge conglomerate cable companies like AOL-Time Warner, Comcast-AT&T. Those of them in turn will hook up with the four or five companies that dominate newspaper publishing.

Now this is widely understood on Wall Street; I mean you cannot read a trade or business press publication in this country in the last month that isn't just filled with the absolute consensus this will lead to more concentration. And by any notion of an open, pluralistic marketplace of ideas, this sort of concentration is utterly indefensible.

Between The Lines: Just refresh our listeners' memory about the shrinking number of mega-corporations that own the lion's share of the nation's media.

Robert McChesney: The largest media companies in the world today, companies like AOL-Time Warner, Viacom and Disney are ten or fifteen times larger than the largest media companies in the mid-1980's. I mean they've grown dramatically. When AOL and Time Warner made their deal to merge two years ago for roughly $150 or $160 billion -- it's what the deal was valued at -- it was almost 500 times larger in value than the biggest media deal in history 20 years before that. This is an area that's really grown dramatically thanks to deregulation through massive numbers of mergers.

So these largest companies like an AOL-Time Warner-- you've got a company there that has two major film studios: Warner Bros. and New Line; it's got a TV network, WB. It has the second largest cable service company in the country: Cable Systems, serving all sorts of places in the country. They have the number one cable TV channel in the country. They're one of the five companies that sell 90 percent of the music; they're a major book publisher -- I could go on and on. Viacom, the same way. Rupert Murdoch's News Corporation, the same way.

What you have is a first tier now of seven, eight, or nine enormous companies that between them own all the TV networks, all the film studios, four of the five music companies, many of the book publishers, the majority of the cable TV systems -- and their power is only growing more and more.

So what we've seen in the past 10 or 15 years is that the companies that own our commercial news media really have an ambivalent feeling toward the practice of journalism. It's been something they've "low-balled" in terms of cost over the past 10 or 15 years. Now we have a situation where major newscasts are considered being taken off the air like "Nightline" on ABC. Because while it might be good for our society to have journalism, it's not good for the shareholders of these companies. That's not a good thing. We shouldn't have our public life be something that’s determined by a very small number of firms in non-competitive markets on the basis of what's best for their billionaire owners.

Robert McChesney is research professor at the University of Illinois' Institute of Communication and author of the book "Rich Media, Poor Democracy," published by the New Press.

See related links and listen to an excerpt of this interview in a RealAudio segment or in MP3 on our Web site at: www.btlonline.org for the week ending 3/15/02.

Scott Harris is the executive producer of Between The Lines. This interview excerpt was featured on the award-winning, syndicated weekly radio newsmagazine, Between The Lines, for the week ending March 15, 2002.

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