Mega Media Merger Mania
A federal court ruling on Feb. 19 delivered a dramatic victory to media corporations by eliminating important restrictions on media ownership. Analysts are predicting that mega-mergers of the past will seem like small potatoes compared to the corporate deals that will be possible under the new rules.
The decision "strips away a critical part of the few remaining checks and balances on media conglomerate power," said Jeffrey Chester, executive director of the Center for Digital Democracy.
The ruling weakens two of the main regulatory barriers that have limited the power of television moguls. The first is a 60-year old Federal Communications Commission rule that limits the number of broadcast TV stations a single company can own. The cap is currently set so that a single company cannot reach more than 35 percent of the national TV audience. The second FCC rule prevented a company from owning both a cable channel and a broadcast station in the same city.
The decision in the lawsuit -- which was filed by four of the biggest media groups, AOL Time Warner, Viacom, News Corp and NBC -- declared these limits "arbitrary and capricious" and not in the public's best interest. The cable/broadcast restriction was fully overturned and the station ownership cap rule was sent back to the FCC for reconsideration.
Both financial analysts and consumer advocates agree that the court decision -- unless reversed on appeal or mitigated by congressional action -- will dramatically alter the media landscape. Media deals that were impossible yesterday seem all but inevitable today. America Online can now buy NBC. Comcast, which is planning to buy AT&T Broadband, could buy Disney.
The media moguls reacted with predictable enthusiasm to the decision. Paul T. Cappacio, general counsel of AOL Time Warner, told the New York Times that the rules were "an anachronism" and were "not remotely necessary to protect competition."
Consumer advocates, however, say the ruling will lead to bigger and more powerful monopolies, accelerating the current trend of consolidation. "The 'prize' these companies seek is a digital landgrab," Chester said. Under these new rules, gargantuan media conglomerates will have the power to control the flow of information and therefore shape public opinion. "It will be freedom for a half-dozen major companies, not the public," Chester said.
The ruling comes on the heels of other regulatory moves aimed at removing barriers to media mergers. The FCC is currently considering a rule change that will allow joint ownership of newspaper and broadcast outlets. A recent study conducted by an alliance of public interest groups, including the Center for Digital Democracy, the Media Access Project and Consumer Federation of America, shows that fully two-thirds of all existing newspaper markets and one-seventh of TV markets are monopolies. Researchers also conclude that the elimination of the cross-ownership ban will cut the number of independent newspaper owners by half.
Last month, the Bush administration also put forward a proposal that critics say will weaken oversight of media companies. The measure would shift oversight of media and cable mergers from the Federal Trade Commission to the Department of Justice. Members of Congress, consumer advocates, policy experts and two FTC commissioners have criticized the proposal, saying the DOJ would be more lenient on media mergers than the FTC. They also complain that the two Bush appointees who drafted the proposal-- FTC chairman Timothy Muris and assistant attorney general Charles James -- did it behind closed doors, seeking input only from prominent corporate lawyers and not consumer groups.
The cumulative effect of the latest court ruling, along with other FCC initiatives, could be an unprecedented wave of media mergers. "One media company will be able to control several TV and radio stations, the cable system and a newspaper in a community," Chester said. "How can such power be healthy for democracy or competition?"
If you want to help resist these mega-mergers, join the March 22 protest against the FCC in Washington, D.C.
The Center for Digital Democracy's filing with the FCC contains results of their media consolidation study, and the center also offers a simple guide to complicated FCC rules and why they matter.
Also, MediaChannel.org's in-depth guide explains the issues and offers tools to get involved. While you're there, check out their global media ownership chart. Or take a look at Iwantmedia.com's media consolidation page.