Media consolidation

Media consolidation is a term used to describe mergers and acquisitions among media outlets. In recent years, there has been a debate between those who support free market competition between media companies, including consolidation, and those who believe that governments should control the industry to prevent monopolies and to promote media diversity.

Globalization has created new models of media ownership and control. The integration of international businesses and economic markets, through media consolidation, has created market domination by an increasingly small number of business owners. The dominant forces in media ownership worldwide include global media empires and conglomerates.

The global debate over media consolidation has taken place in most of Western Europe, the United States, Canada, and Australia. In the US, the discussion has focused on the activities of the Federal Communications Commission (FCC), which has worked to enact legislative changes to media ownership laws.

Supporters of media consolidation believe that companies must be free to pursue any economic measures available to aid in their economic growth. Some advocates believe that the proliferation of Internet-based media has made current laws obsolete.

Critics of media consolidation argue that media diversity will diminish without regulation. In addition, some believe that federal media regulations have a positive effect on minority and special interest groups by helping ensure that media coverage is fair, comprehensive, and of good quality.

Recent changes to the FCC’s ownership restrictions have led to a situation in which an increasingly small number of corporate media outlets dominate the television, cable and radio media in the United States. Critics believe that economically-dominant media providers will prevent the proliferation of independent and alternative media sources unless the federal government maintains and strengthens current regulations.

Understanding the Discussion

Deregulation: The process by which a controlling agency or government removes restrictions on businesses or individuals.

Federal Communications Commission (FCC): A federal office established by the Communications Act of 1934 to regulate all interstate and international communications media in the United States.

Globalization: A process of economic and cultural integration around the world caused by changes in technology, commerce and politics.

Media Conglomerates: A company that maintains ownership or control over several forms of mass media including but not limited to motion pictures, radio, television, print and Internet.

Monopoly: A market-economy model in which a single provider controls the distribution of a certain service or product.

Oligopoly: A situation in which the market for a certain product or service is dominated by a few providers. The term may also refer to a situation in which a single controlling organization directs the actions of a group of independent providers.

Telecommunication: The transmission of signals for the purpose of communication. Telecommunication includes the use of electromagnetic wave devices such as telephones, Internet, and cable.

History

The concern that media companies could form monopolies or oligopolies led to the establishment of government regulations designed to restrict media ownership. In many countries, media broadcasting is considered a public trust, making it the responsibility of the government to police the content of media broadcasts.

In the United States, the federal government first began to regulate media with the Radio Act of 1912, which placed radio under the auspices of the Department of Commerce. In 1927, the Federal Radio Commission was established to regulate radio in the public’s interest.

In 1934, the government passed the Telecommunications Act, which established the Federal Communications Commission (FCC) as the national body in charge of media regulation. The legislation officially claimed all broadcast media as the property of the federal government.

The FCC began charging fees for broadcast licenses, which caused many independent companies to close and led to the dominance of a few major companies. In 1941, public concern over the development of monopolies prompted the FCC to adopt the Local Radio Ownership Rule, which states that no single company could own television stations that reach more than 35 percent of the nation’s homes. The Dual Television Network Rule of 1946 further prohibited any major television network from purchasing another major network.

Other regulations restricted the amount of advertising that any network could run, and set limits on the relative levels of entertainment versus informative or educational programming. The FCC also determined that radio and television were “public trusts,” and as such had a responsibility to broadcast opposing viewpoints.

Through the 1960s and 70s, the FCC and Congress created new regulations that prevented companies from owning alternative media outlets within the same market, and also determined that no company could own more than seven broadcast networks.

During the 1980s, Congress and the FCC moved toward deregulation. New provisions allowed broadcast companies to own up to twelve networks and abolished restrictions on content, including levels of advertising. In 1987, the FCC removed regulations requiring that broadcast networks provide “fair” coverage by giving equal time to opposing viewpoints. By 1983, analysts determined that fifty companies controlled the majority of media outlets in the country.

The Telecommunications Act of 1996 lifted restrictions on radio and cable television ownership. The FCC and Congress stated that the act was intended to foster competition; however, critics argued that the FCC’s actions allowed major companies to merge, effectively limiting the public’s media options.

In 2001 and 2002, Senate hearings were organized to study the effects of media consolidation. In early 2003, several media organizations petitioned Congress to allow for complete deregulation, claiming that the proliferation of Internet media made current federal regulations obsolete and limited rights to fair competition.

In June 2003, the FCC rules changed again, allowing media organizations to own 45 percent of the media in a single market. In addition, the FCC formally removed restrictions that called for media organizations to serve in the public’s interest.

That July, Congress repealed the FCC’s most recent deregulatory decisions on the grounds that deregulation would encourage the formation of monopolies. A federal appeals court further ruled that the FCC would have to rewrite its restrictions.

Throughout 2004 and 2005, debate continued between congressional committees and members of the FCC, backed by representatives from many of the major media conglomerates. The FCC was permitted to remove restrictions that prevented major media agencies from purchasing one another, after which several major mergers and economic partnerships formed between leading companies.

Media Consolidation Today

In the United States, major media companies include AOL Time Warner, Disney, General Electric, News Corporation, Viacom, Vivendi, Sony, Bertelsmann, AT&T, and Liberty Media; together, they account for over 98 percent of media coverage.

In September 2006, employees of the FCC came forward with information indicating that members of the FCC had actively concealed research studies conducted since 2003 that showed the negative impacts of media consolidation. Information in the studies included detailed analyses of local news coverage and the number of independently owned radio and television stations before and after media mergers occurred. Congress is currently conducting an investigation into the FCC’s conduct.

The possible consequences of current media consolidation include increasingly homogeneous media ownership; barring the entry of new media competition into the system; reducing access to a wide range of media resources and options; creating an environment that favors pro-business media content; allowing media censorship; and neglecting the interests of underrepresented groups.

There is concurrent debate over Internet media ownership and efforts to prevent the development of Internet monopolies through regulation. Dominant media companies have proposed creating a hierarchy of connectivity, making certain websites easy to access while others are more difficult. Critics argue that such developments could lead to Internet monopolies and reduce diversity in online media.

Supporters of deregulation continue to argue that dominant organizations are inherent to competitive markets and that current regulations have a negative effect on media competition in general. Critics of consolidation believe that the dominant media companies are exerting undue influence on the course of legislation.

In 2012, statstics from Statists’ Felix Richter show that Google, in the first six months of 2012, acquired 20.8 billion in revenue, which exceeds the entire US print media at $19.2 billion.

In July 2011, The News of the World, a 168-year-old tabloid newspaper, announced it was closing after a hacking scandal involving the cell phones of crime victims. While this closure was not associated with the decline of print media, many other companies, such as TV Guide, which was sold for less than one dollar to OpenGate Capital, were hit hard in 2011 and 2012. Other print media companies have been significantly reduced in size, including the Star-Ledger of Newark, which was cut by 40 percent. In October 2012, Newsweek reported that it would stop print publication, resulting in a large reduction in staff.

The Federal Communications Commission (FCC), under conservative Donald Trump appointee Ajit Pai, eliminated some media ownership regulations in 2017, including the rule against newspaper/broadcast cross-ownership and the "eight voices rule," under which television stations were prevented from merging if this would result in fewer than eight separately owned television stations within a given broadcast area. In 2018, AT&T acquired Time Warner and Disney acquired 21st Century Fox. With that, AT&T and Disney became two of five companies that, among them, controlled the majority of the US media; the others were Comcast, Viacom, and CBS. The AT&T–Time Warner merger, in particular, was controversial, and the US Justice Department appealed the lower court decision that had allowed the merger to proceed, citing antitrust legislation—although AT&T, in its brief for the appeal, questioned whether the appeal was motivated by Trump's personal dislike of the Time Warner division CNN.

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Bibliography

Books

Bagdikian, Ben H. The New Media Monopoly. Rev. ed. Boston: Beacon, 2004. Print.

Crawford, Susan. Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age. New Haven: Yale UP, 2013. Print.

Hardy, Jonathan. Critical Political Economy of the Media: An Introduction. New York: Routledge, 2014. Print.

McChesney, Robert W., Russell Newman, and Ben Scott, eds. The Future of Media: Resistance and Reform in the 21st Century. New York: Seven Stories, 2005. Print.

Periodicals

Beckerman, Gal. "Tripping Up Big Media." Columbia Journalism Review Nov.–Dec. 2003: 15–20. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=11292253&site=ehost-live.

Chavkin, Sasha. "Déjà News." Columbia Journalism Review Sept.–Oct. 2013: 18–21. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=90077276&site=ehost-live.

Cottle, Simon, and Julian Matthews. "US TV News and Communicative Architecture: Between Manufacturing Consent and Mediating Democracy." Journal of Broadcasting & Electronic Media 57.4 (2013): 562–78. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=94074643&site=ehost-live.

Davis, Charles, and Stephanie Craft. "New Media Synergy: Emergence of Institutional Conflicts of Interest." Journal of Mass Media Ethics 15.4 (2000): 219–31. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=4758377&site=ehost-live.

"FCC Adopts Sweeping Changes to Media Ownership Rules." Wiley Rein LLP, 22 Nov. 2017, www.wileyrein.com/newsroom-articles-FCC‗Adopts‗Sweeping‗Changes‗to‗Media‗Ownership‗Rules.html. Accessed 13 Dec. 2018.

Freedman, Des. "Metrics, Models and the Meaning of Media Ownership." International Journal of Cultural Policy 20.2 (2014): 170–85. Academic Search Complete. Web. 9 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=93927023&site=ehost-live.

Gara, Tom. "In the Facebook Era, Who's Afraid of the Old Media Giants?" Wall Street Journal. Dow, 16 July 2014. Web. 6 Nov. 2015. http://blogs.wsj.com/corporate-intelligence/2014/07/16/in-the-facebook-era-whos-afraid-of-the-old-media-giants/.

Gold, Hadas. "What You Need to Know about the AT&T-Time Warner Appeal." CNN, 5 Dec. 2018, www.cnn.com/2018/12/05/media/att-time-warner-doj-appeal/index.html. Accessed 13 Dec. 2018.

Hickey, Neil. "Unshackling Big Media." Columbia Journalism Review July–Aug. 2001: 30–33. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=4763867&site=ehost-live.

Lowry, Tom, et al. "Mega Media Mergers: How Dangerous?" Bloomberg Business. Bloomberg, 22 Feb. 2004. Web. 6 Nov. 2015. http://www.bloomberg.com/bw/stories/2004-02-22/mega-media-mergers-how-dangerous.

Nichols, John, and Robert W. McChesney. "For Media Democracy." Nation 22 Apr. 2013: 3–4. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=86726161&site=ehost-live.

Peterson, Laura. "The Moguls Are the Medium." Foreign Policy Nov.–Dec. 2004: 85–86. Academic Search Complete. Web. 6 Nov. 2015. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=14854255&site=ehost-live.

"The Politics of Big Media." Economist. Economist Newspaper, 11 Sept. 2003. Web. 6 Nov. 2015. http://www.economist.com/node/2054729.

Rapp, Nicolas, and Aric Jenkins. "Chart: These 6 Companies Control Much of U.S. Media." Fortune, 24 July 2018, fortune.com/longform/media-company-ownership-consolidation/. Accessed 13 Dec. 2018.