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Manager's Journal: What Media Monopolies?
Manager's Journal: What Media Monopolies?
Crews and Thierer Op-Ed from the Wall Street Journal
June 29, 2003
AN ODD-BALL COLLECTION of special interests are patting themselves on the back this week after convincing the House of Representatives to scale back the liberalization of media ownership rules that the Federal Communications Commission pushed through less than a month ago. In particular, the FCC's revision of a rule raising the potential audience share any television network could reach to 45 percent from 35 percent was pulled back to the original limit by a vote last week. All is apparently now safe for our democracy. Imagine the horror if we actually allowed media companies to deliver more news and entertainment to the citizenry.The alliance of interests that shot down the liberalization rally around the flag of "diversity," claiming that media is too homogenous for their tastes even though, by all measures, today's media marketplace is more diverse and competitive than ever before. As FCC Chairman Michael Powell recently noted, "You can't have the NRA in the debate saying there are gun-hating media liberals, and at the same time, I've got Code Pink screaming about the conservative pro-war bias of the media. And then I'm supposed to somehow reconcile that?" If such a motley crew of groups can each find something different to gripe about, in other words, today's overall media offerings are quite diverse.Here's the real problem with the debate about media ownership in America today—it is based on political fumings of those with an ax to grind with the media. Some are convinced media is too large and out of control, others that it is too liberal or too conservative, too censored or too libertine, too something-or-other and the government needs to fix it.Let's consider some of the numbers that aren't usually mentioned in the debate. Of the 1,721 full-power commercial and non-commercial TV stations in the U.S., Viacom owns only 39 stations, or 2.27 percent of total. Fox owns 35, or 2.03 percent. NBC owns 29, or 1.69 percent. And ABC owns only 10, or 0.581 percent. It is in this environment in which the FCC voted to slightly relax the national TV ownership cap such that potential household viewership could rise to 45 percent from 35 percent.This ownership cap is mistakenly perceived by some to be a limit on overall, actual market share. It is actually even more restrictive: It is a cap on the total potential percentage of eyes and ears that networks are able to reach with combined broadcast properties that it directly owns.But even if a network could reach half or more of the total viewing audience, so could the other networks and many other non-network broadcasters. Despite potential audience reach, actual market share for TV networks is far smaller and the competition they face is quite intense. For example, non-network broadcast station owner Sinclair Broadcast Group, Inc. owns 63 TV stations (3.66 percent of U.S. TV stations). Paxson Communications owns 61 (or 3.54 percent), Hearst- Argyle owns 34 (1.98 percent), Tribune owns 27 (1.57 percent), Gannett owns 22 (1.28 percent), and Belo owns 19 (1.10 percent).Importantly, none of these companies faces the artificial 35 percent audience reach cap imposed on their TV network rivals. Given the competition that networks face from these rival station owners, it is unclear why the relaxation of the national ownership cap has generated such intense opposition.The competition has also led to a diversification and splintering of both content and the audience itself. Geoffrey Colvin of Fortune noted recently that, "25 years ago the three major networks controlled 90% of the audience. So we've gone from each dominant player having 30% of the audience on average to each having 14%. That is not a trend toward increasing concentration." Mr. Colvin also noted that, "In the old days, if a prime-time show didn't get a rating of 20, it was in danger of cancellation. Now TV's top-rated shows typically get a 12; the finale of American Idol got a 20 and made national headlines. And of course that was on Fox, a network that didn't exist 25 years ago. The overwhelming trend is not fewer choices but increasingly splintered audiences paying attention to more media voices."OK, so what's the problem here again? Media barons monopolizing the airwaves? Hardly. While the old media universe featured television, radio, and newspaper, today's boasts competition between all those old outlets plus cable, satellite and the Internet. Consumers have more and better choices today for news and entertainment today than ever before. Artificially limiting the size of the soapbox that a company can build is uncompetitive, unconstitutional, and not the kind of reality program anyone had in mind.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />