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Monopoly Money

FCC chairman Michael Powell wants us to pay no attention to those 'big fish' that are swallowing our media -- and threatening our democracy.
 
 
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A.J. LIEBLING WOULD not be pleased. Nearly 40 years ago, the legendary press critic lamented the rise of one-newspaper cities, a phenomenon considerably less common then than today. Where there is no competition, Liebling wrote, "news becomes increasingly nonessential to the newspaper. In the mind of the average publisher, it is a costly and uneconomic frill, like the free lunch that saloons used to furnish to induce customers to buy beer. If the quality of the free lunch fell off, the customers would go next door."

Since then, things have gotten only worse.

When the first edition of Ben Bagdikian's The Media Monopoly (Beacon Press) was published, in 1983, some 50 corporations were identified as controlling most of our newspapers, magazines, books, television networks, radio stations, and movie and music studios. Twenty years later, in the current "Big Media" issue of the Nation, that list is down to 10 international conglomerates, their vast holdings detailed in a fold-out color chart.

But though media consolidation is hardly a new story, there is a disturbing sense that the pace of monopolization is accelerating, and that the end game, or something like it, is at hand. Particularly distressing is the rapid consolidation of the cable industry, which threatens to turn the wide-open, decentralized, but slow Internet of the 1990s into a corporate-owned, profit-oriented, high-speed network with no room for independent voices. The Net is the last, best hope for a truly democratic media. Yet if we don't act, it may soon be too late to save it.

The most significant recent development took place just a month ago, when AT&T Broadband, the country's largest cable-television provider, was acquired by Comcast, the number-three company. AT&T Comcast, as the new company will be known, will control some 22 million subscribers — more than a third of the nation's 60 million cable households. And if that weren't chilling enough, analysts are already predicting that the most humongous media conglomerate of them all, AOL Time Warner, whose 13 million cable subscribers make it the number-two company, will work out some sort of a partnership with AT&T Comcast.

The AT&T Broadband–Comcast deal did not take place in isolation. Earlier last year, the Federal Communications Commission (FCC), whose alleged job is to make sure that media giants do not trample upon the public interest, dumped a half-century-old rule that had prohibited one network from owning another. The result: Viacom, which owns CBS, was allowed to acquire UPN. That's why, in Boston, you can now watch Channel 4's news on Channel 38 (see "Big Media Stalk Hub," sidebar).

At about the same time that the cable giants were consolidating, the French media conglomerate Vivendi Universal announced that it would buy USA Networks for about $10.3 billion. Vivendi owns the Universal movie studios; USA's holdings include a television-production operation and the USA and Sci-Fi cable channels. Earlier in the year, Vivendi acquired Houghton Mifflin, the last of the big, independent, publicly traded book publishers — and the holder of the suddenly lucrative Lord of the Rings franchise.

Moreover, all of this is taking place at a time when a series of pro-industry court rulings and changes at the FCC threaten to sweep away what few restrictions remain in place following passage of the Telecommunications Act of 1996, which greatly relaxed ownership rules. The FCC appears poised to junk such old standbys as the prohibition against a newspaper's owning a television or radio station in the same market, as well as a passel of local and national restrictions on the number of radio stations, television channels, and cable systems any one company is allowed to own.

"The problem is that a lot of this stuff is happening behind the scenes," says Danny Schechter, executive editor of MediaChannel.org, a media-watchdog Web site with an international and progressive orientation. "The FCC may make any concerns about this completely irrelevant when it chooses to lift all remaining regulations, which is certainly possible. I think there really is kind of a tipping point. It's hard to get it back to the way it was, not that the way it was was so great. But what you did have was more of an ethos, at least a lip-service ethos, to public service. And now even that has gone out the window."

At the center of all this is President Bush's handpicked FCC chairman, Michael Powell, who, like his father, Secretary of State Colin Powell, is bright, smooth, and articulate -- but who, unlike his father, espouses the kind of doctrinaire free-market conservatism that Bush favors in his domestic-policy appointees.

Michael Powell has a penchant for saying provocative things, and sometimes the nuances get lost. For instance, when he was asked last year about the "digital divide" — the technology gap that exists between rich and poor -- Powell memorably replied, "I think there's a Mercedes divide. I'd like one, but I can't afford it." The Washington Post later showed that Powell's remarks immediately before and after showed considerably more thoughtfulness than the dismissive sound bite suggested.

Yet there's little question that when it comes to deregulation, Powell intends to outdo even his deregulation-minded, Clinton-appointed predecessors, Reed Hundt and William Kennard. In a little-noticed interview with the Wall Street Journal published last September 10, Powell spoke disdainfully about "what I call the 'Big Fish Problem,' which is this inherent anxiety about bigness in a capitalist economy." He also made it clear that his view of the public interest was not necessarily the same as that of those whose business it is to act as the public's eyes and ears.

"Every decision I make, I will argue to the last day I am here, I am taking in the name of the public -- not in the name of some company and not in the name of some consumer-interest group," Powell said.

Says Andrew Jay Schwartzman, president and CEO of one of those consumer-interest groups, the Washington-based Media Access Project: "He's very bright, very, very shrewd. And although it's a very appealing package, he is in fact a good deal more conservative than his father, and he's hell-bent on lifting ownership rules. I'm always the optimist, and we won't stop working on him. But he's intent on where he's going, he's come in with preordained objectives, and he's pushing very hard to obtain them."

TO BE SURE, not all media bigness is necessarily bad, and even when it is, not all of it can be regulated or outlawed. The most significant obstacle: the US Constitution. After all, the First Amendment says, "Congress shall make no law ... abridging the freedom of speech, or of the press." As my Phoenix colleague Harvey Silverglate, a noted civil-liberties lawyer, likes to say, "What part of 'no law' don't you understand?"

That doesn't mean media companies can engage in illegal predatory practices aimed at putting their competitors out of business. But it does mean that government can't break up media conglomerates based merely on a sense that such conglomerates are somehow not in the public interest.

Besides, there is at least an argument to be made that only big media have the power and influence to cover the large institutions that dominate modern life. In January 2000, Jack Shafer wrote a piece for the online magazine Slate (owned by the extremely big Microsoft Corporation and thus part of a media alliance that includes NBC, MSNBC, General Electric, the Washington Post, and Newsweek) arguing exactly that.

"Small, independently owned papers routinely pull punches when covering local car dealers, real estate, and industry," Shafer wrote, asserting a nasty little truth known by every reporter and editor who has ever worked for a locally owned community newspaper. "Whatever its shortcomings -- and they are many -- only big media possesses the means to consistently hold big business and big government accountable."

And though Shafer doesn't say it, the whole notion of government officials' regulating the size and scope of media companies sounds suspiciously like what's going on in Russia, where the government of President Vladimir Putin has shut down nearly all of that country's big independent media -- in the public interest, of course. To quote Liebling again: "Men of politics cannot be trusted to regulate the press, because the press deals with politics. Pravda is even duller than the Times."

Moreover, despite the dominance of just a handful of huge conglomerates, it's hard to argue that we have fewer choices today than we did, say, a generation ago. US Representative Edward Markey, a Malden Democrat poised to take over the chairmanship of the Subcommittee on Telecommunications and the Internet if his party can recapture the House this fall, is worried about media concentration — and says he plans to order a "top-to-bottom review of the ownership rules aimed at restoring diversity and localism as cornerstones of telecommunications policy." Yet Markey is quick to add that, in some respects, consumers have never had more options than they do today.

In the 1970s, Markey recalls, there were just three major commercial television stations in Greater Boston. Now there are five stations with daily newscasts, New England Cable News, dozens of channels on cable, and the Internet. "I don't think there's any question that people are better off today than they were then in terms of total diversity," Markey says. And, because of the increasing ubiquity, speed, and capacity of the Net, Markey sees the situation only getting better -- if, he adds by way of warning, the Internet remains as free and open as it is today.

That brings me back to cable television, which may, in turn, pose most the important media-regulation question of all.

The entire rationale for media regulation is the notion of scarcity. The reason that the government may regulate the number of radio or TV stations a company owns is that those stations make use of the airwaves -- a finite, public resource. The Internet, at least theoretically, is infinite. Seen in that light, there's no more rationale for regulating the Internet than there would be for regulating the number of newspapers Gannett can own on the basis that its papers are made of ground-up trees, which are, after all, a finite, public resource. And since just about all media -- radio, TV, newspapers, what-have-you -- will one day be delivered over the Internet or something like it, then government regulation will, of constitutional necessity, go the way of all dinosaurs.

Except it's not that simple.

Last summer, a small advertising firm in Wakefield called Prime Communications filed a $20 million lawsuit against AT&T Broadband. According to accounts in both the Boston Globe and the Boston Herald, Prime accused AT&T of refusing to sell it advertising time after Prime turned down AT&T's offer to buy an Internet-based business it had developed. Prime president Neil Bocian told the Herald, "I have to have access to all the media. Now I can't buy cable, and I don't have an alternative because they own all the cable systems."

AT&T, of course, denied Bocian's charges, and it remains to be seen how this will play out. But it's a perfect illustration of a much larger problem: cable companies typically control both programming (or some of it, anyway) and the pipeline over which that programming travels. Cable companies such as AT&T claim a First Amendment right to run their businesses as they see fit. The problem is that one aspect of their business -- the pipelines -- is a monopoly, usually granted by local elected officials. That gives them enormous leverage over what content will be allowed to travel through those pipelines. It's as if state highway officials let you drive on the Mass Pike only in cars you rented from them. Neil Bocian may be right or he may be wrong, but this much is certain: he can't take his business to a competing cable company, because there isn't one. And with cable companies emerging as the preferred provider of high-speed Internet access, corporate control of the pipeline is becoming a threat.

As Stanford Law School professor Lawrence Lessig argues in Code and Other Laws of Cyberspace (Basic Books, 2000) and his new The Future of Ideas (Random House), the reason that anyone can be a content-provider on the Internet is that the Net was specifically designed to be wide-open, democratic, and neutral. The flip side, Lessig warns, is that it could just as easily have been designed another way -- and big media, having missed out on the first wave of the Net, could take advantage of the dot-com meltdown and the rise of broadband to rewrite the rules to their advantage this time around. In an interview with Newsweek's Steven Levy this week, Lessig said that "every major change that's going on right now around the Internet is a change to undermine that neutrality, so those who control the legal system or control the physical network are able to veto innovations they don't like. So you get the right to innovate depending on whether AOL or AT&T or the music industry likes your innovation."

Without government regulation, in other words, there's nothing to stop the cable companies from excluding Internet content just as surely as AT&T Broadband may be excluding Prime Communications. This private Internet could be engineered in such a way that only content approved by the cable company can be accessed. Or only content for which the cable company is receiving money can be easily found. Or certain types of content that the cable company doesn't want to compete with, such as streaming video from independent media, can't be transmitted at all.

It's not that the old, wide-open Internet will go away, says Jeff Chester, executive director of the Washington-based Center for Digital Democracy. It's that the high-speed Internet is going to become Fun City, and few people will bother with the traditional Net, where nonprofit and independent voices will cry out to be heard. It's at least theoretically possible that the full range of content will remain available only to those who keep a slow dial-up connection --- something most people just aren't going to do.

"While the Internet posed a truly competitive threat in the early 1990s of a much more open and democratic communications system, that promise is now truly threatened," Chester says. "It is not visible, it is not apparent, it is an iceberg sitting in the water. It's not like somebody's going to take away your Internet, but the fact is that the Internet is going to change in subtle ways. Clearly the network owners are going to have the ability to banish certain Web sites if they wish."

Chester fears that when Big Media perfect the high-speed, privatized Internet, with full video, music delivery, personalization, and other features, "people are going to love this stuff. That's the other problem." Independent voices, he says, "will just fade into the digital twilight."

CALL IT THE GREATEST story never told. According to a report by the Center for Public Integrity, which keeps an eye on the unappetizing stew of politics and money, media corporations and their employees contributed $75 million to candidates for federal office and the two major political parties between 1993 and mid 2000. From 1996 to 2000, the report continues, the 50 largest media companies and four of their trade associations lobbied Congress and the executive branch to the tune of $111.3 million.

Among the goodies these media moguls sought were more-corporate-friendly copyright laws, the elimination of the estate tax, fewer restrictions on tobacco and alcohol advertising, a halt to proposals that would mandate free air time for political candidates, and, most important, the elimination of FCC rules aimed at restricting ownership.

Usually the media love such a story of greed and influence -- especially when it's spoon-fed to them in the form of a respected interest group's report, complete with a predigested three-page summary. But chances are you didn't read, hear, or see anything about this one, titled, fittingly, Off the Record. "This is major news about the influence of an extremely powerful industry and its relationship to government and its favors from government," says Charles Lewis, executive director of the center. "And it was basically nonexistent in terms of news coverage. I don't think that's completely coincidental. Of course, what makes the media industry so powerful is not just the amount they spend, but the fact that they control access to the airwaves and newspaper pages."

It was the power of the media lobby -- especially in the form of the National Association of Broadcasters -- that croaked a plan by the previous FCC chairman, William Kennard, to license low-wattage, nonprofit, community-oriented radio stations whose reach is measured in city blocks rather than square miles. The NAB -- joined, believe it or not, by National Public Radio -- argued, against compelling technical evidence, that these small stations would interfere with its members' own signals, even if care were taken to locate the low-powered stations on unused portions of the FM dial. Kennard's vision, limited though it was, got nixed by Congress in the closing days of the Clinton administration, with no prospects of revival any time soon.

"It's been shut down completely in any urban area," says Steve Provizer, who heads a tiny, grassroots outfit called Allston-Brighton Free Radio, which transmits a barely detectable signal at AM 1670. (Some of its programming is rebroadcast on WJIB, AM 740.) "It's really a service that will only be useful in rural areas or exurban areas. God bless it for having that much usefulness, but it's largely been undermined by congressional action as instigated by NPR and the NAB." Previously, Provizer ran Radio Free Allston, shut down by the FCC several years ago for broadcasting without a license. Illegal? Well, yes. But also vital -- so much so that the station had received a commendation from the Boston City Council for broadcasting local political debates and otherwise serving the community in ways that bottom-line-obsessed commercial stations just don't care about.

The media lobby's next target: ownership rules that prevent a company from owning more than eight radio stations in a given market, that prohibit one company from owning a cable system and a TV station in the same market, and that prevent one company from owning a TV or radio station and a major daily newspaper in the same market.

That last regulation -- known as the cross-ownership rule -- had a major role in shaping the Boston media landscape. The Boston Herald Traveler, a predecessor to today's Herald, survived for years on the strength of its ownership of a radio station and a TV station through a waiver it had dubiously obtained from the FCC. The Globe fought back — and in the early '70s, the Herald Traveler lost its broadcast properties. The paper fell into the hands of the Hearst Corporation, and it appeared to be dying a slow, lingering death until international media magnate Rupert Murdoch acquired it in the early 1980s. (So close did the Herald come to shutting down that work crews started ripping vending machines out of the cafeteria.) Murdoch himself ran afoul of the cross-ownership rule when he bought WFXT-TV (Channel 25) in the late '80s, and Senator Ted Kennedy, a frequent target of the Herald, blocked Murdoch's attempts to obtain an FCC waiver. Murdoch sold Channel 25 only to repurchase it after selling the Herald in 1994 to his long-time protege Pat Purcell.

To bring the story full circle, Purcell -- who a year ago bought about 100 community papers in Greater Boston and on Cape Cod -- would now like nothing better than to go into the broadcasting business in order to compete more aggressively with the Globe, whose corporate owner, the New York Times Company, also owns the Worcester Telegram & Gazette and, unless the sale is derailed, will soon own a chunk of the New England Sports Network and the Boston Red Sox as well.

"If the rule didn't exist anymore, who knows what would happen?" asks Purcell. "It's a little early to speculate, but a whole lot of options would open up for us." Clearly, it's a subject close to his heart. His newspaper has come out against the cross-ownership rule on both its editorial page and in its business columns. And Herald reporters are already featured on Channel 25 — just as Globe reporters are featured on New England Cable News and on Channel 4's The Boston Globe/WBZ News Conference.

The cross-ownership rule, in fact, may need some rethinking. Allowing a media executive such as Purcell, who's rooted in the community, to extend his franchise and spread out his costs could benefit not just him but also those who like the Herald's brand of journalism. But simply repealing the rule could be dangerous. Who, after all, would be better positioned to buy a TV or radio station (or both) than the mighty Times Company, thus giving the Globe even more of an advantage in a market that it already dominates?

The Center for Digital Democracy's Jeff Chester says he would have no problem with allowing, say, the number-two newspaper in a market to acquire the number-three or -four TV station. But he adds that Boston -- one of the few competitive newspaper towns left in the country -- "is a unique case." Preventing one media company from amassing too much power in a given community, Chester says, is still a worthwhile goal.

BACK WHEN A.J. LIEBLING was writing about the death of newspapers, he was mainly concerned about the cuts in news coverage that monopoly publishers inevitably ordered. "Money is not made by competition among newspapers, but by avoiding it," he wrote. That's still true today, even when competition at least theoretically exists. Witness the foreign bureaus that were closed and the reporting positions that were eliminated during the 1990s as the Big Three networks fell into the hands of conglomerate owners -- cuts that made it difficult (although not, thankfully, impossible) to cover the war against terrorism following the September 11 attacks.

Just as important as competition or the lack thereof is the dominance of corporate over community values.

Huge radio companies compete fiercely, but they do so by offering lowest-common-denominator syndicated programming in city after city, such as Howard Stern and Opie and Anthony, and right-wing talk shows, such as Rush Limbaugh's. The crude-but-intelligent Imus in the Morning is a notable exception, but even that stands in contrast to the localism that once made radio a unique medium.

A conglomerate such as AOL Time Warner produces the movie Harry Potter and the Sorcerer's Stone, and then promotes it in its magazines (Time, People, Sports Illustrated), on CNN, and on the AOL Internet service.

NBC News and ABC News have to think two or three times before running any negative reports on their corporate owners, General Electric and Disney, respectively.

Newsweek is owned by the Washington Post Company, which has a content-sharing relationship with MSNBC and MSNBC.com. That will prevent Newsweek from ever again getting beaten on its own exclusive, as it was with Michael Isikoff's revelation that Bill Clinton had had sex with that woman, Monica Lewinsky. But there are weeks when the magazine looks like nothing so much as a print version of MSNBC, flogging the MSNBC.com Web site on every page and, recently, publishing a piece of media criticism by that noted journalistic thinker Chris Matthews. (His verdict: the media are doing a pretty damned good job, thank you very much!)

"Who owns these companies makes all the difference," says Tom Rosenstiel, director of the Project for Excellence in Journalism. "Ownership matters profoundly. It's not just the system of ownership, it's the human values of the people who do the owning." He adds, though, that he is concerned whenever news organizations are acquired by conglomerates whose primary businesses are not news. He notes, for example, that ABC News represents just two percent of profits at Disney.

"There's a lot of reason to worry about the fact that journalism is being subsumed as a minority presence inside conglomerates," Rosenstiel says. "One dark cloud of conglomeration is if you have owners who don't care about journalism. The second dark cloud is if they see their properties as an opportunity for synergy."

Michael Powell told the Wall Street Journal last September, "I think I'm a little misunderstood on the whole area of media consolidation." He added: "The public interest is not always served by strict liability and slavish commitment to a linear judgment made 30 years ago."

Big isn't always bad, and, in some respects, it makes as much sense to rail against media conglomerates as it does to boycott Starbucks, where the coffee is better than it was at the mom-and-pop shop it replaced and where the employee benefits include health insurance and stock options. Nostalgia based on blind allegiance to the past is just stupid.

But Powell needs to understand that the public interest doesn't consist merely of getting the coolest technological advances into the public's hands as quickly as possible. A diversity of voices and a place for independent media are just as much a part of the public interest.

There's a reason that the First Amendment protects the media from government regulation: the framers believed that free and independent media were absolutely essential for the same public interest that Powell claims is his primary guide.

The danger is that Powell will release the media from the last vestiges of government regulation — and then stand back and watch as the media's corporate masters use their power and influence to silence any voices that threaten their economic interests.

Dan Kennedy is a media critic for the Boston Phoenix.