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on media bigness
A new mood: Rethinking wisdom of deregulation
By Jeff Bercovici
In the economic expansion of the 1990s, Americans came to see consolidation of media ownership as something akin to gravity: a force that one simply accepted. The nation was in the grips of deregulation fever.
Dereg fever reached its peak last year with the appointment of Federal Communications Commission chairman Michael Powell. Powell marched into office as a general returning in victory, so sure was he that his battle to roll back limits on media ownership was already largely won.
Now the tide seems to be turning.
In recent weeks, opponents of consolidation have not only reemerged but have begun to win some key fights, especially in the theater of public opinion.
Consider the public lashings of radio giant Clear Channel for its alleged role in "legalized payola" and other shenanigans of the sort attributable to companies that have grown too big for their britches.
Consider the way Senator Fritz Hollings brazenly blocked the Bush administration's attempt to weaken merger oversight by assigning it to the Justice Department from the Federal Trade Commission.
Hollings roared of the need to protect the interests of all Americans. The White House replied in mouse peeps before folding quietly.
Meanwhile, many have had cause to wonder what's so great about bigness, anyway.
As they ponder the very symbol of media bigness and all that it seemed to offer, AOL Time Warner, proceeds to get less big, shedding value in the stock market with all the public unpleasantness of an obese man jogging in a rubber suit in the hot August sun.
When earlier this month it was revealed that AOL Time Warner had ceased being the world's biggest media company, having fallen behind Viacom, the news seemed but an afterword on the excesses of prior era.
In Washington, Michael Powell's early triumphalism has given way to defensiveness, with the media dons who cheered loudest at his elevation now accusing him of dragging his feet in the deregulation process.
What all this adds up to is nothing less than a broad reassessment of the feasibility, necessity and desirability of further ownership deregulation, says Andrew Schwartzman, president of the Media Access Project, a group that opposes further media ownership concentration.
"The resistance has been around for some time and underappreciated," he says. "Now it's gained a critical mass and is bubbling to the surface."
According to Schwartzman, the criticism of Powell is grounded in the same stuff that fuels AOL bashers: the disillusionment that follows inflated expectations.
"There was an artificial environment over the last two years in which people were expecting that limits were just going to fly away," he says.
Powell would like to move ahead with deregulation, but he has been slowed down, ironically, by pro-deregulation federal court decisions in two cases: one over the 35 percent audience reach cap for TV broadcasters, and the other over the rule banning cross ownership of TV stations and newspapers in the same market.
"The FCC is very troubled by these decisions for procedural and technical reasons," says Schwartzman. "Powell doesn't want to go there in the way the court wants to go there."
Meanwhile, parties that have heretofore avoided involvement in the debate have cast their lots with the opponents of deregulation. This week, a group calling itself the Caucus for Television Producers, Writers & Directors asked the FCC to produce a study on the effects of consolidation. This comes as legislators in Congress are considering reinstituting restrictions on network ownership of TV programming after a hiatus of almost 10 years.
Schwartzman summarizes these developments thusly: "There's an ongoing and increasing resistance to media concentration taking place among opinion leaders in the public, among some legislators, and among other people in the media industries who are medium size and would like to stay that way."
Given the shift in the winds, it's not surprising that those who have been opposing media consolidation for years are viewing recent events as a vindication.
Jean Pool, president of operations for Mindshare, was among the first to criticize the merger of America Online and Time Warner as unnecessary at best. The company's recent troubles have not changed her mind, to say the least.
"AOL Time Warner, in my opinion, was never very thought out," she says. "You look for complementary pieces and cultures. If you think of the type of company that AOL was and Time Warner was, it's like oil and water."
Even when companies benefit from merging, those around them usually suffer, she says.
"It's not good for advertisers and it's not good for consumers. It doesn't achieve diversity of programming."
June 14, 2002© 20
02 Media Life-
Jeff Bercovici is a staff writer for Media Life.
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