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Big Media's Value to Consumers

Deregulation leads to a wider range of choices for the public at better prices.

June 01, 2003|Nick Gillespie | Nick Gillespie is editor in chief of Reason magazine and Reason Online. Web site:

The prospect of a second season for Fox television's "Married by America" is frightening, but two media ownership debates are generating even more fear: The Federal Communications Commission's apparent readiness to relax "cross-ownership" rules governing the number of radio and television stations that a company may operate; and media magnate Rupert Murdoch's move to add the nation's largest satellite television provider, DirecTV, to his already large holdings at News Corp.

Current FCC rules prevent companies from owning TV stations that reach more than 35% of U.S. households and preclude them from owning a newspaper and a television or radio station in the same city (there are already exceptions to this latter rule, including the Tribune Co., which owns both the Los Angeles Times and KTLA-TV). The FCC on Monday is expected to allow considerably more cross-ownership of media outlets in large and medium-sized markets. Critics fear that the results will homogenize programming and news coverage.

At April's National Assn. of Broadcasters convention in Las Vegas, former Fox television network chief Barry Diller assailed "deregulation," saying: "The big four networks [ABC, CBS, Fox, NBC] have ... reconstituted themselves into the oligopoly that the FCC originally set out to curb in the 1960s.... We need more regulation, not less."

Such worries are misguided. First, the concentration of media ownership, despite deregulatory steps dating back to the Reagan administration, has stayed roughly flat in percentage terms. "In the United States, today's top 50 largest media companies account for little more of total media revenue than did the companies that made up the top 50 in 1986," writes MIT researcher Benjamin Campaine.

The AOL Time Warner mega-merger a few years back touched off similar howls from the same people who now protest the proposed FCC rule changes. But beleaguered stockholders of AOL Time Warner can attest that the media business is a tough racket to dominate, and there's no reason to believe that looser ownership rules would change any of that.

Second, Americans now have more media options available to them than ever. Cable television, delayed for decades because of lobbying by broadcast networks, is now in about 70% of U.S. households, and most cable subscribers receive more than 55 channels, a number that continues to increase. Over the last 15 years, the "big three" networks became the "big four" under the sort of deregulation that Diller decries. The rise of the World Wide Web now allows people to see virtually any news source or perspective in the world.

These are not incidental outcomes of deregulated competition but its very essence. With few exceptions, whether broadcast and cable television, video, music, publishing or news, we have a far wider range of choices available to us than we did 10, 20 or 30 years ago. Even content providers with near-monopoly power recognize that audiences will go elsewhere if they are not offered the material or service they want at an acceptable price.

In such a world, giant media companies realize -- just as supermarkets, big-box retailers and superstore book chains do -- that the key to getting and keeping customers is by offering more of everything, not by limiting choices or selection. Murdoch, when grilled by Congress regarding his pending acquisition of DirecTV, was asked whether he would still carry CNN, the arch-competitor to News Corp.'s Fox News Channel. "Of course we're going to keep CNN on the air," he replied. "We want to have as much diversity as possible."

You can read that as the Machiavellian response of a master businessman who wants to pass muster with the powers that be. But his sort of thinking and his knowledge of the customer are some of the reasons Murdoch is in a position to buy DirecTV for more than $6 billion.

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