What Media Monopolies?

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[This editorial appeared in The Wall Street Journal on July 29, 2003,p. B2]

An odd-ball collection of special interests are pattingthemselves on the back this week after convincing the House ofRepresentatives to scale back the liberalization of media ownershiprules that the Federal Communications Commission pushed throughless than a month ago. In particular, the FCC's revision of a ruleraising the potential audience share any television network couldreach to 45% from 35% was pulled back to the original limit by avote last week.

All is apparently now safe for our democracy. Imagine the horrorif we actually allowed media companies to deliver more news andentertainment to the citizenry.

The alliance of interests that shot down the liberalizationrally around the flag of "diversity," claiming that media is toohomogenous for their tastes even though, by all measures, today'smedia marketplace is more diverse and competitive than ever before.As FCC Chairman Michael Powell recently noted, "You can't have theNRA in the debate saying there are gun-hating media liberals, andat the same time, I've got Code Pink screaming about theconservative pro-war bias of the media. And then I'm supposed tosomehow reconcile that?" If such a motley crew of groups can eachfind something different to gripe about, in other words, today'soverall media offerings are quite diverse.

Here's the real problem with the debate about media ownership inAmerica today-it is based on political fumings of those with an axto grind with the media. Some are convinced media is too large andout of control, others that it is too liberal or too conservative,too censored or too libertine, too something-or-other and thegovernment needs to fix it.

Let's consider some of the numbers that aren't usually mentionedin the debate. Of the 1,721 full-power commercial andnon-commercial TV stations in the U.S., Viacom owns only 39stations, or 2.27% of total. Fox owns 35, or 2.03%. NBC owns 29, or1.69%. And ABC owns only 10, or 0.581%. It is in this environmentin which the FCC voted to slightly relax the national TV ownershipcap such that potential household viewership could rise to 45% from35%.

This ownership cap is mistakenly perceived by some to be a limiton overall, actual market share. It is actually even morerestrictive: It is a cap on the total potential percentage of eyesand ears that networks are able to reach with combined broadcastproperties that it directly owns.

But even if a network could reach half or more of the totalviewing audience, so could the other networks and many othernon-network broadcasters. Despite potential audience reach, actualmarket share for TV networks is far smaller and the competitionthey face is quite intense. For example, non-network broadcaststation owner Sinclair Broadcast Group, Inc. owns 63 TV stations(3.66% of U.S. TV stations). Paxson Communications owns 61 (or3.54%), Hearst-Argyle owns 34 (1.98%), Tribune owns 27 (1.57%),Gannett owns 22 (1.28%), and Belo owns 19 (1.10%).

Importantly, none of these companies face the artificial 35%audience-reach cap imposed on their TV network rivals. Given thecompetition that networks face from these rival station owners, itis unclear why the relaxation of the national ownership cap hasgenerated such intense opposition.

The competition has also led to a diversification andsplintering of both content and the audience itself. GeoffreyColvin of Fortune noted recently that, "25 years ago the threemajor networks controlled 90% of the audience. So we've gone fromeach dominant player having 30% of the audience on average to eachhaving 14%. That is not a trend toward increasing concentration."Mr. Colvin also noted that, "In the old days, if a prime-time showdidn't get a rating of 20, it was in danger of cancellation. NowTV's top-rated shows typically get a 12; the finale of AmericanIdol got a 20 and made national headlines. And of course that wason Fox, a network that didn't exist 25 years ago. The overwhelmingtrend is not fewer choices but increasingly splintered audiencespaying attention to more media voices."

OK, so what's the problem here again? Media barons monopolizingthe airwaves? Hardly. While the old media universe featuredtelevision, radio and newspaper, today's boasts competition betweenall those old outlets plus cable, satellite and the Internet.Consumers have more and better choices today for news andentertainment today than ever before. Artificially limiting thesize of the soapbox that a company can build is uncompetitive,unconstitutional, and not the kind of reality program anyone had inmind.

Adam Thierer (athierer@cato.org) is the directorof telecommunications studies and Wayne Crews (wcrews@cato.org) is the director oftechnology studies at the Cato Institute in Washington, D.C. Theyare the authors of "What'sYours Is Mine: Open Access and the Rise of InfrastructureSocialism." To subscribe, or see a list of allprevious TechKnowledge articles, visit www.cato.org/tech/tk-index.html.

Adam D. Thierer

Reprinted from The Wall Street Journal © 2003 Dow Jones & Company, Inc. All rights reserved.