Friday, November 09, 2007

Senate's Media Ownership Crusade: Ignores Research, Will Have Unintended Consequences

Perhaps the most disappointing aspect of the Senate’s latest misguided efforts to prevent the Federal Communications Commission from doing its job is the ignorance—or worse—ignoring— by the Senators of the solid data available to guide it. In a hearing on November 8 on "Localism, Diversity, and Media Ownership," the Senate Committee on Commerce, Science, and Transportation loaded up the testimony with advocates of greater regulation. But they once again turned a blind eye to years of research that have failed to show any pervasive ill effects of the existing media ownership structure. They fall back on anecdotes and “fear” of potential behavior while barely giving lip service to the inevitable and largely positive effects of a rapidly changing media landscape.

Senators Dorgan and Lott, Inouye and Obama, Feinstein and Snow—Democrats and Republicans-- insist on the quaint notion of “locally-owned” media, when there is no sustained body of research that demonstrates that locally owned newspapers, radio or a TV stations provide more, better or more diverse information than corporately owned media entities. The press release from Sen. Dorgan asserts that “’locally-owned' means they're invested in their communities and care about their well-being,” when reputable research does not sustain that.

The Senators applauded the position of Seattle Times owner Frank Blethen, who argued against lifting the newspaper/TV cross-ownership ban, just at the time that newspapers are fighting for their survival and TV stations are facing declining viewership.

The policy they are pursuing is populist to be sure: Thanks to the efforts of the advocacy group the Free Press and the unexamined assumptions of many journalists there is an overwhelming misperception that the mass media are becoming more concentrated, when the numbers show they are not. And there is no denying that if one asked 1000 adults at any mall “Should we allow for greater concentration of media ownership” their response would be an overwhelming “No.” And do you still beat your wife?

A few years ago the Project for Excellence in Journalism, overseen by Tom Rosenstiel, a respected former journalist, conducted a major empirical study that looked at the relationship between local TV station ownership and quality in the news. I have mentioned this study often, including in my last study of media ownership. The Project’s own conclusion was that “overall the data strongly suggest regulatory changes that encourage heavy concentration of ownership in local television by a few large corporations will erode the quality of news Americans receive.” And given the expectations of the constituency of the ongoing Project, that is presumably what it expected to find on initiating the study.

But the authors felt compelled to add some caveats (to me they sounded grudgingly added, but give credit for admitting to this). “Taken together, the findings of the study suggest the question of media ownership [as it affects local television news] is more complex than some advocates of both sides of the deregulatory debate imagine.”

Among the study’s findings:
•Stations with cross-ownership—in which the parent company also owns a newspaper in the same market—tended to produce higher quality newscasts.
• Ownership type made no measurable difference in terms of the diversity of people depicted in the news and little difference in the range of topics a station covered. In general, there is striking uniformity across the country in what local television stations define as news.
• Stations owned by the largest groups produced higher quality early evening newscasts than those owned by the smaller groups. Smaller station groups tended to produce higher quality late evening newscasts than stations owned by larger companies.
• Network affiliated stations tended to produce higher quality newscasts than network owned and operated stations.
• Local ownership offered little protection against newscasts being very poor and did not produce superior quality.
• Stations of privately-owned companies and publicly-owned companies did not perform significantly differently from each other.

Even within these overall conclusions there is something for everyone. For example, the notion of “quality” is highly dependent on the criteria used and how they are weighed. Although small company stations were found overall to have higher quality than those owned by the largest companies, those owned by this latter group rated highest on the criteria of “offering communities a variety of viewpoints in their newscasts.” And medium-sized owners were better than smaller owners when it came to enterprise reporting and the greatest localism.

I noticed that Rosenstiel was not included on the Senate’s panel. It would have been logical, as his group has some useful insights and research. Perhaps he was busy. But although the Project for Excellence in Journalism is likely in sympathy with the goals of the Senate committee, he might also have felt obligated to report findings that fly in the face of the biases of the Senators.

I have explored this territory extensively in my Media Myths study. Adam Thierer has a book with a similar theme. We have both noted that there is at least as much anecdotal evidence that local owners can be far more one sided and biased than corporate owners who tend to be more willing to be responsive to the market than to pet causes and ideologies. The latter has been well documented from publishers such as Walter Annenberg when he owned The Philadelphia Inquirer, William Loeb, owner of the Manchester (NH) Union-Leader, Col. McCormick’s Chicago Tribune and, of course the legendary William Randolph Hearst.

Nor is there convincing evidence that minority or women owned media – particularly broadcast television--are any more likely to program much differently than majority or male-controlled media. The economics and the incentives are the same for all and the research I have seen on this confirms this.

None of this is to say that media combinations are to be encouraged by regulation. What it does say is that any laws or regulation that substantially prevent market forces from operating at this time would have few, if any, known effects in promoting the goals of these legislators. And the unintended consequences—such as speeding the demise of some newspapers or blocking the introduction of local TV news where there is none now—could seriously impede the very objectives sought by the Senators and those egging them on.

This is a movement driven by emotion and populism. It is a stand that politicians like because it has no budget consequences but panders to the electorate as a bipolar issue. It is far more complicated, infected by finer shades of gray than have been presented to the mass audience. The motivation behind the Media Ownership Act of 2007 and the pressure being put on the FCC is based on misconstrued perceptions at best, a conscious avoidance of solid research at worst. It would be terrible policy, untimely law.

Thursday, November 01, 2007

Slate's Shafer "Defends" Murdoch. But it's Really About Encouraging Choice and Diversity

Jack Shafer, who authors the Pressbox column for Slate, wrote “In Defense of Rupert Murdoch” last Friday that Murdoch is “not as bad as some people make him out to be—people like Federal Communications Commission member Michael J. Copps.” In an open letter to the FCC Chairman Kevin Martin, Copps says that in buying Dow Jones, “For residents of the local New York metropolitan area, it will also mean that a single company operates two of the area's most popular television stations and two ofits most popular newspapers.”

Shafer reminds Copps—and the rest of his readership:
Copps—or the blockhead on his staff who wrote the letter—neglects to acknowledge Murdoch's never-ending role in increasing media competition and media diversity. For example, the main reason there are four big broadcast networks for Copps to complain about is somebody staked billions to establish and build the fourth network, Fox. That somebody would be Rupert Murdoch.

Shafer picks apart Copps' knee jerk and tired litany of presumed horrors of the combined News Corporation and Dow Jones. He concludes:
In the most laughable passage in his letter, Copps bemoans the damage to "localism" Murdoch poses. The last time I checked, the Wall Street Journal didn't have a metro section, so what the hell is he talking about?

I’m pleased to see a mainstream media critic demonstrating the hypocrisy, naiveté and frequent elitism in the media reformista (Shafer’s term) movement. I have been making many of the same points in articles and in this Blog here and here about the constructive role News Corp. has played in creating the very diversity of content that the self-styled reformers have called for. He risked his and his stockholder’s capital to start that fourth broadcast network in 1986—a challenge no other media company, union, cooperative, foundation or entrepreneur had been willing to try in over three decades. The Fox Network was not to everyone’s liking—but that’s exactly why it was important. It provided something different than other networks. The cable-based Fox News Network was the same: a competitor to the “monopoly” CNN that has succeeded by being different. We all benefit from the greater choice.

It’s not really about defending Murdoch. He’s a big boy and does not need my help or Shafer’s help. But News Corporation is a case study for how market forces and self interest—if given some space-- can create the variety of content that Copps and the self-styled reformistas think they can accomplish from tighter controls. It's a message that the elites don't understand-- the reality that the content is not culturally or ideologically to their liking is exactly the point. That's the essence of differentiation.

Murdoch has maintained an entrepreneur's mentality-- while having the resources of an enterprise that can supply the venture capital in-house.

Wednesday, October 03, 2007

WOTM FAQ #4: Is the debate about media concentration you are having with other scholars fun and stimulating?

A FAQ series featuring some real questions I have answered from time to time.

It’s been awhile since I last added to my FAQ. The above is based on the opening line of a recent email I received from a graduate student. Following is my response.

I can assure you that the subject of media competition and its effects is not a simple academic debate among scholars. This is a high stakes issue. The measurement of media competition-- indeed the definition of what this means-- has policy implications for a wide range of players as well as for society at large. The folks who style themselves as media reformers I believe are more interested in creating a media environment that would be LESS diverse, more beholden to small time moguls with ideological agendas and more ridden with bias than anything we have now. Today the many large companies are most publicly held (the public being the pension funds that teachers, union members, and the rest of us invest our savings in), that are far more transparent than mom and pop entities are, and, by and large, are interested in profitability rather than steering the political or cultural content in any specific direction. I prefer to have the owners as merchants, not missionaries.

News Corp. is often held at the bogey-man by the reformistas. Yet News Corp. has been one of the major providers of choice and diversity in the media business.

-- In the 1980s, it was Murdoch's company that created the fourth broadcast network that media critics had been pleading for over decades.
--In the 1990s, News Corp. risked more of its money to start a second competitive all-news and information network.
-- In the current decade News Corp. continues to subsidize a money losing New York Post newspaper, when other publishers are cutting and running.

One reason this does not impress the so-call media reformers is that the content of these outlets is not what they think "the people" should have ready access to. What they all have in common is that they present us consumers with real choices, with media diversity in the most pragmatic sense.The Fox Network initially went down market, when the reformers assumed a new network would be more elitist. Fox News may or may not be conservative, but it is certainly different than CNN or MSNBC: that's diversity. The New York Post is not my idea of a great newspaper-- but New Yorkers already have the Times and Newsday and the Daily News. The Post is a real choice. Not mine, but for hundreds of thousands of readers. If owning Dow Jones will help News Corporation launch-- again with its own money at risk-- a competitive financial news network to compete with CNBC, then how do we lose?

I don't know if these comments fit into your research, which apparently is looking at a global context. I am merely reinforcing what I hope you have leaned from these "debates": that there is more to media competition than a string of percentages of audience share, who has how much revenue and lists of who owns what.

Friday, July 13, 2007

News Corp. as an acquirer is limited by family ownership

While the outcome of News Corporation’s audacious bid to acquire Dows Jones continues to percolate, it might also be timely to look at News Corp. as an acquirer of media companies over time. Despite the image perpetrated by the company’s vocal detractors, News Corp is actually one of the few large media companies that has been much more of a creator and builder of media outlets than an acquirer. I’ll explain why.

Of the 20 largest media deals between 1981 and 2002, News Corporation was involved in exactly---one. That was its purchase of Gemstar-TV Guide for $6.5 billion, number 14 on that list. It also bought a controlling interest in DirecTV. In that period, however, the company started the broadcast Fox Network, with some smaller purchases of 20th Century Fox and some local TV stations; it started a satellite TV system for the UK (now BSkyB) and invested in a very early stage another for Asia (Star); it started from scratch the cable Fox News Network.

News Corporation’s recent high profile acquisition of MySpace for $580 million was impressive only because it was for a company less than three years old with maybe $20 million in revenue and no profit. But that price is small in media terms. When compared to McClatchy's acquisition of the Knight Ridder newspaper and broadcast group for $4.5 billion, the $5 billion offered for Dow Jones is modest. And it doesn't come within shouting distance of the $36 billion value of Viacom’s merger with CBS in 1999 (and since divested) or the Time Warner-AOL merger debacle.
News Corporation’s penchant for growing organically—as the strategic planners put it—is partly a reflection of its leader, Rupert Murdoch. It is also an outcome of the corporate structure and priorities that Mr. Murdoch has maintained throughout his career. News Corporation is a public company, which means that its ownership is shared among thousands of individuals, mutual funds and trust funds. The Murdoch family, however, controls about 30% of the voting stock, which gives it effective control over the company. This is essential to understanding its growth strategy.

But first some background. (MBAs can skip the next few paragraphs). There are two basic models for one firm to acquire another. One is by using cash. The other is by providing stock of an equivalent value.

A cash acquisition is easy to understand. The owners of the acquired company get a check when they send in their stock. The value of the deal rarely changes between the time it was announced and when it is completed.

However, the most common structure that acquisitions take with large public companies is through stock swap. That is, the acquiring company issues shares of its stock in exchange for the stock in the company being acquired. So, if the acquiring firm, Company A, has stock currently trading for about $10 per share and has agreed to acquire Company D for $500 million, it would need to issue 50 million of its shares and parcel those out to the stockholders of Company D, who would trade them for their own shares in Company D. Thus, Company A now has all the stock – hence ownership--of Company D.

The stock swap has some advantages and disadvantages, but the former tend to win out. The advantage for many stockholders of the acquired company is that the transaction does not typically involve any capital gains tax liability. The sellers are simply swapping ownership shares. They have not realized any gain (or loss) until and if they sell that stock. In a cash transaction, owners are simply selling their shares, so there are immediate tax consequences.

One disadvantage of a stock acquisition is that the values of the transaction can change if the value of the stock of the acquiring company fluctuates substantially before the deal is completed. For example, in the above example the parties had agreed on a $500 million value. Should the stock market in its collective opinion feel that this is not a good deal for Company A, the price of the stock may be driven down, let’s say to $9 per share. If the stockholders of Company D still get 50 million shares, then the value of that stock is down to $450 million. Depending on what was negotiated, the acquiring company may have to pony up more shares, in this example 5.5 million more shares, to keep the value the same.

What does all this have to do with News Corporation? It’s crucial. When a company issues stock, it may dilute the ownership of current stockholders. For example, say there are 100 million shares outstanding and one stockholder owns 30 million of those. It then has 30% control. If the company issues 50 million shares to make an acquisition, that stockholder still has 30 million shares, but now only 20% of the total.

Why would such a stockholder approve a deal that would dilute their ownership interest? In making the acquisition, the company becomes larger, hopefully more profitable. So 20% (or .02% or whatever for a smaller stockholder) ) of a bigger pie may be better in the long term than 30% (or .03%) of a smaller company.

But if maintaining control is paramount, then dilution by issuing stock is off the table. This has been the case with News Corporation, where the Murdoch family places a high priority on maintaining control. The result is that it must make the bulk of its acquisition by cash or grow by reinvesting profits in organic development. When it makes an acquisition for cash, it may need to offer a higher price than a stock alternative, as it must accommodate the tax liability of those stockholders who had not planned on selling. This is a problem in the Dow Jones offer that has not received much attention. The tax consequences could be substantial, especially for long term owners, such as the Bancroft and Ottaway families that have had their Dow Jones stock for many years.

This self imposed constraint on News Corporation has kept the company out of the major acquisition business. When it does make a large acquisition, such as the bid for Dow Jones, it must pick its spots. If it succeeds with this bid, it will likely be out of the major acquisition business for awhile, especially given its cash-gobbling plan for starting a financial news network for cable. At the end of March, News Corporation had about $7 billion in cash, more than enough to cover its $5 billion bid for Dow Jones, but not much left over when working capital needs are considered. And, given its near death experience in the early 1990s when it took on too much debt to finance its growth into television and satellite, it is not likely to want to load up much further on its current $15 billion in debt.

Although News Corporation has made media acquisitions over the years, they have tended to be relatively small by big media standards. They have been made with the intent on growing them by further investment and good management. To a far greater extent than most of its major media company competitors, it has added to media competition by its new ventures and added resources provided for smaller acquired ventures. And it has pursued this strategy in large measure due to its priority to maintain the company as a family run enterprise.

(Full disclosure: As a result of some divestitures and spins offs I find myself with ownership of some News Corporation shares with current value of under $400.)

Friday, April 06, 2007

Flow chart and new ad data reinforces competition and fragmentation in the media industry

I posted an entry today at the Rebuilding Media site which was primarily focused on media strategy.

Figure 1

However, I can use much the same data to further bolster the point that the media industry today is far more open and competitive than ever. Although Figures 1 and 2, originally created by Winnipeg-based Ken Goldstein of Communications Management, repurposed here, illustrate how the television business has opened up and fragmented, similar charts for other legacy media industries would be quite similar.

Figure 2

The number of players has proliferated exponentially. Indeed, considering peer-to-peer and aggregators such as YouTube that provide easy access to materials from content creators that range from the highly professionals to the rank duffer, the close circle of content providers is blown apart. And this is possible because the gate keeping function of the broadcasters and then cable providers has been undermined by satellite and the Internet, not to mention offline conduits such as DVDs.

Meanwhile, advertising expenditures, the primary funding sources of our subsidized media, are quickly being transferred to Internet-based outlets. I graphed that trend last month here. The latest data on this front shows that 65% of online advertising is accounted for by four providers: Google accounts for 25%, Yahoo, 15%, AOL, 8% and MSN, 7%. Note that only one of these, AOL—-part of Time Warner--is associated with a traditional media company.

(There may be some legitimate difference of opinion whether all these companies should be classified as “media” in the sense of newspapers, magazines, radio, etc. But I have never seen a widely accepted definition of who can be included within the media rubric. I would argue that Yahoo certainly qualifies, with its original content in finance, news and sports. Google, on the other hand, may be the weakest candidate, though I could make the case that Google News performs a legitimate media function (Reader’s Digest qualified as a condenser of articles from other magazines and the original Time magazine was a compilation as well.)

Whatever the case, these players, along with Apple’s iTunes, Netflix, Wal-Mart, among the literally countless others, are playing a critical role in providing outlets for content, much of which continues to come from traditional players. But central to my theme of media competition is that the avenues illustrated in Figure 2 are providing all of us with more options than ever to be creators of content, with an option of finding an audience (Exhibit 1: you are reading this post. How large an audience could I have reached—and how—before the Internet?) And for anyone who so desires we have the tools to cheaply and readily find this content.

Link to this entry

E-mail this entry

Friday, March 02, 2007

Media “Monopoly” as seen from the real world

You don't have to be an economist to intuitively know that close substitutes can act as very effective competition. Remember pop in glass bottles? When the only choice for diapers was to wash poopie cloth? When television news meant three broadcast networks? When music had to be distributed on vinyl?

The media debate du jour is whether a merger of two satellite radio providers, Sirius and XM, would create a monopoly. Regulators will need to determine the relevant product market. Is it the means of distribution—satellite—or the product: music and talk coming from speakers or earphone?

Weighing in on this debate is one Scott Stolz of Tarpon Springs, Fla (and therefore probably not the same Scott Stolz who is a sound mixer in Hollywood). This Mr. Stolz had the following letter published in yesterday’s Wall Street Journal. (sub required). I repurpose it without further comment.

XM and Sirius
March 1, 2007; Page B7

The thought that a merger between XM and Sirius could create a monopoly is absurd ("Making Radio Waves," Review & Outlook, Feb. 21). They would offer only one of many content options for consumers. It's a moot point anyway. By the time the merger is completed, satellite radio will have won the battle with radio but lost the war. When I subscribed to XM three years ago, I immediately quit listening to traditional radio. Satellite radio is simply a superior choice. However, now that my 927 favorite songs reside on my iPod, I have little need for radio of any kind. Why scan the dial in hopes of finding a song that I like when my iPod contains only songs that I like?

Scott Stolz
Tarpon Springs, Fla.

Link to this entry
email this entry

Tuesday, February 20, 2007

Sirius/XM Merger Proposal: The two sides of the pancake.

The two satellite radio providers, XM and Sirius, announced a proposed merger yesterday. The FCC, which must approve such a combination, quite reasonably went on record as having reservations. Chairman Kevin Martin added that “the hurdle here, however, would be high as the commission originally prohibited one company from holding the only two satellite radio licenses."

What’s reasonable here? On the one hand, aside from the statutory license restrictions (no small matter), the merger would on the face eliminate competition that had been very fierce in this alternative to traditional terrestrial radio. On the other hand, despite signing up millions of subscribers each, both are losing prodigious sums of money. But that is in part due to the profligate spending on programming, such as Sirius’$500 million commitment to Howard Stern or $107 million for NASCAR, while XM with more subscribers, committed $55 million for Oprah Winfrey. If they had spent less on expensive programming perhaps they would be profitable.

On the other hand (whoops, is that the third hand?) if they hadn’t spent big on high visibility programming, then they might not have aggregated 14 million subscribers paying $12.95/month.

By one important measure, such a merger reduces competition less than it first seems: Subscribers to one service cannot listen to the other. Although the two services compete for subscribers, the radio sets sold for each service works only for that service. Thus, once a consumer chooses which service they want (or buy a car outfitted with one radio), the barrier for switching services is high, as the costs of the receivers is relatively steep compared to AM/FM receivers. To the extent that a merged service would provide the best of both, many subscribers would benefit. (Losers may be the higher profile talent that has sometimes been able to bid one service against the other).

Another reason why perhaps it should go through is that it is already being bad mouthed by the National Association of Broadcasters (NAB). Predictably the NAB must oppose it, as satellite radio is competition for its traditional radio membership. It quickly issued a statement that included: "In coming weeks, policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming. We’re hopeful that this anti-consumer proposal will be rejected."

This, of course, is the same Howard Stern that until a year ago was the pride and joy of an NAB member. (or if not exactly “pride”, at least a profitable “joy.”). And the same NAB that has lobbied for freedom of mergers in local television and radio.

But there is a point here: Satellite radio is not a medium to itself. Its competition is free terrestrial radio, including the expanded—but still under utilized—HD radio. The NAB must see a merged XM/Sirius as a more formidable competitor than two money losing entities.

Bottom line: This should be a tough sell for approval, but it's not a one way argument. One approach: Let the two merge, but sell one of their licenses. The surviving firm can carry what they have room for on their one license frequencies and let a new compeitor in the sky. Perhaps the model for a new competitor would be for less expensive programming at a less costly subscription fee.

Link to this entry
e-mail this entry

Friday, February 09, 2007

Columbia Forum Yields No Answers But Highlights Ambiguities on Media Ownership Issue

The mini-symposium at Columbia Journalism School yesterday on Media Reform: Is it Good for Journalism? was barely a toe-in-the-water event. Still, for anyone who was seriously interested in both sides of the pancake of the so-called media reform debate, it provided more grist for the mill than the three day one dimensional pep rally that the movement holds annually, mostly recently last month in Memphis.

The usual suspects made the usual speeches. Keynoter Walter Cronkite, looking a tad unsteady in gait but at 90 years old was nonetheless sharp on his message, delivered in that familiar deep and smooth voice. He lamented the cuts in newsrooms and repeated that good journalism was important for democracy. It occurred to me that it is not likely we will ever again have a news personality on the order of Cronkite. He was the CBS Evening News anchor when we had only three choices for television news—and because the three newscasts were usually broadcast at the same time, we had to make a choice of which one to watch. Uncle Walter was the top dog of the three in the 1970s. There were no replays (and, note for those under 25, there were no VCRs or PVRs). Disaggregation (read "lots of alternatives to choose from") means fragmentation.

FCC Commissioner Michael Copps also stayed in his role. Apparently not one to use the up and down channel button on his cable remote, he continues to look to re-impose the failed structural remedies on broadcasters in the heyday of television regulation: Let's bring back the Fairness Doctrine and those every three year competitive license renewal hearings, the better to hold the local stations accountable to government bureaucrats for a determination of what they think is the “public interest." That may have made sense in the days of scarce spectrum but not in an age of nearly unlimuted bandwidth.

Given the short time and the many panelists (nine of us had a shot in two groups over about two hours), it was hard to get much more than a flavor for how rich a true debate could get. I contributed some of the points I made in a recenty entry here asking what is even meant by "ownership consolidation" or "quality journalism." Moderator Dick Wald, summing up my panel, concluded that what was missing was data. True, there was little in this session. I tried to bring in a few specific points— only one person in the audience (Columbia’s own Eli Noam) knew that the five largest media companies (as measured by revenue) among them owned only one newspaper in the U.S. So these ”media powerhouses” as they are frequently called cannot be blamed for any perceived loss in quality print journalism. But I reminded Wald afterward that there was a plethora of data. The problem is that it does not all point in the same direction, suggesting that answers are complex and nuanced.

Indeed, probably the most useful take away from the afternoon was a comment by Tom Rosenstiel, the director of the Project for Excellence in Journalism. Local ownership, the Center’s research has found, does not translate into high quality content. And large chain ownership does not default to lower quality. There are better and worse local owners, better and worse large corporate owners. Based on the Center’s own empirical research over the years on the quality of television journalism, Rosenstiel reminded the audience that good journalism or poor journalism was not a function of the ownership structure per se but of the values of those who controlled whatever entity.

Case in point: Sitting next to me was Frank Blethen, publisher and part of the family that owns the Seattle Times. His family’s stewardship of that paper over decades makes a strong case for local ownership. But two of us, myself and later Norman Pearlstine, most recently editor-in-chief at Time Inc., referred to the gross abuse of power of Walter Annenberg, a Philadelphia boy who owned the Philadelphia Inquirer and how it evetually became one of the top newspapers in the country only after being acquired by the Knight Ridder chain, based in Miami.

Rosenstiel also was on point when he observed that the publicly owned chains have a tendency to add people and resources to improve the weak properties they buy, recognizing that there is some correlation between bigger audiences (and therefore profit) and higher quality. Yet the same chains are known to cut back expenses at acquisitions where they feel that there is too much being spent for too little return, therefore being open to the charge they bring down some measure of quality. (You can find an example of just this phenomenon on pages 16-17 of the 3rd edition of Who Owns the Media?, referring to two newspapers acquired by Gannett). On the one hand. On the other hand.

Jack Shafer, editor-at-large for Slate, was his usual voice of reason. He reiterated his point from a recent Slate column that the media reform movement should be viewed as a media regulation agenda. He reminded us of the (failed) attempt of the Nixon Administration to use the license renewal process for two television stations owned by the Washington Post Co. to blackmail the newspaper into easing up on its Watergate reporting. Although Commissioner Copps later said that reinforces his call for a ban on cross ownership, he misses the point: Whenever anyone is beholden to the subjective whims of a government entity for its survival it may feel constrained in being critical of that government. The media reform folks have it backward: If they regulated broadcasting in this way they are more likely to stifle voices than to unleash them.

All in all, the audience of about 300 listened respectfully, asked a few questions and filed out. I doubt if many minds were changed. Hopefully at least a few left with a better sense of the complexity of the issue. Dean Nicholas Lemann has got the ball rolling. But is there an encore?

Link to this entry
email this entry

Wednesday, February 07, 2007

What Media Consolidation? Whose Quality Journalism? Response Below

I was asked by a documentary film maker if I would agree to be interviewed for a film on the media ownership issue, specifically the FCC hearings that are being held around the country. I was asked:
Our major focus is how consolidation affects journalism. Is quality journalism declining, morphing, getting better? Does it have any affect at all?
My response follows:

Well, I remain a bit hesitant. I'm perplexed by your question of whether, as the result of consolidation, quality journalism is declining, morphing or getting better.

First, I'm not sure what consolidation you refer to. The one that has liberated me from the hegemony of the 1960s three national TV networks that were the airwaves in the time of the FCC 's Newton Minow's "Vast Wasteland" speech? Or is it the 2007 television landscape in which those three networks have half the audience ratings they had then and indeed the now five companies that own broadcast networks, combined with all their owned cable networks, have a smaller prime time market share than in the 1970s? Maybe the 1970s when each of those three networks each carried 30 minutes of evening news (at the same hour so I could only watch one-- there were no VCRs or PVRs) or 2007, when I can not only watch them but three others that go on 24/7 with news and info, not to mention services such as New York 1 or New England Cable News that keep me apprised on the local developments?

Second, I'm not sure if the range of "diversity" fits into your notion of quality. I do recall that the media critics of the 1950s and 60s and 70s and into the 80s complained that there was little diversity in television. So I guess they would have been celebrating the arrival in 1986 (concurrent with the FCC loosening ownership limits from 7 to 12 TV stations) of the Fox Network, which brought a noticeably different brand of programming (e.g. "Married with Children"). And I was sure they would cheer cable’s Fox News Network, which, rather than duplicating what we already had brought a noticeably diverse approach. But I think neither brought cheers from the critics-- just from the viewers. I suppose critics meant the kind of diversity they liked, not the taste of the great unwashed. Be careful what you wish for I always say.

Was the quality journalism standard the period of Hearst's Yellow Journalism? Or when Tammany Hall ran
New York City and City Hall reporters were in their pockets? Or, again, was it the 1960s, when the Philadelphia Inquirer, owned by local publisher Walter Annenberg, ran such a rag that he would not let his editors show any photos of gubernatorial candidate Milt Shapp on the front page because he disliked him? No, I would guess you are thinking of the quality that became associated with the Inquirer after the Miami-based Knight chain bought it, hired Gene Roberts from The New York Times, and started winning a string of Pulitzer Prizes. (I guess we could also consider Col. McCormick's Chicago ("Dewey Beats Truman") Tribune or William Loebs Manchester Union Leader as standard bearers for locally owned journals.)

Or maybe you were referring to the quality journalism on the 7000 radio stations-- mostly AM-- that existed in 1970, when the leading pop stations in Philadelphia, New York, Chicago, LA, Denver, Seattle, etc. were all using the same top 40 play list they bought from national syndication services. Then again, maybe the Golden Age of radio journalism dates back to 1937, when four radio networks and their owned local stations accounted for 50% of industry revenues, much more than the four largest radio groups have today. Or was it 1947, when 94% of all radio stations were part of only four networks?

Probably any quality radio journalism is the product of the 20% of all 14,000 radio stations we have today that are non-commercial, getting most of their identical programming created for them from two national networks in Washington (NPR) or Minneapolis (APM).

And, you may notice, I haven't even mentioned the Internet, YouTube, Yahoo's Kevin Sites in the Hot Zone series , Huffington Post, Buzz Machine,, Pegasus News,, Al Jazeera's streaming TV and the BBC, too, for a start.

So in the end, what I need to know is, what is your benchmark for "consolidation" and what is your standard for "quality?"

Link to this entry
e-mail this entry

Friday, February 02, 2007

“Media Reform: Is It Good for Journalism?” at Columbia J-School Feb 8

I will be a participant at Columbia University’s School of Journalism mini-conference next Thursday, Feb 8 it’s labeling “Media Reform: Is It Good for Journalism?” The keynote speaker is Walter Cronkite. (See Slate’s Jack Shafer on “media reform.”)

The latest information is that there will be two panels. I will be part of one, on Media Competition (they call it media concentration), which will be moderated by Dick Wald, a member of the J-school faculty and a former NBC News and ABC News executive. In addition it will include Ed Baker, University of Pennsylvania law school, Frank Blethen, publisher, Seattle Times, and Tom Rosenstiel, director, Project for Excellence in Journalism.

A second panel will cover a variety of other topics of concern to journalists, including network neutrality. It will be moderated by Dean Nicholas Lemann and include Michael J. Copps, FCC Commissioner; Kathleen Carroll, executive editor and senior vice president, the Associated Press; Jack Shafer, editor-at-large,; Hodding Carter III, professor of leadership and public policy, University of North Carolina at Chapel Hill; Norman Pearlstine, former editor-in-chief, Time Incorporated, and Michael Fancher, editor-at-large, Seattle Time.

The sessions are scheduled from 1:00 to 4:00 p.m. in the 3rd Floor Lecture Hall, which is at 116th Street & Broadway.

If you’re in New York, know that the event is free and open to the public, but a RSVP is required to As far as I can tell, no arrangements have been announced for streaming or later Podcast, but I’ll update this if I learn otherwise.

Link to this entry

Thursday, January 11, 2007

Slate Further Questions the Minot-Clear Channel Urban Legend

Back in June 2005 I wrote about the Urban Legend that was growing up about the events surrounding a toxic gas spill in the area of Minot, ND and the supposed lack of responsiveness of the six radio stations owned by Clear Channel Communications in Minot. The media reform (sic) movement has used this story as the poster child for all that they claim is wrong about the state of media ownership in the U.S.

In his column in Slate yesterday, editor at large Jack Shafer, who often writes about media topics, takes to task sociologist Eric Klinenberg for opening his new book, Fighting for Air: The Battle to Control America's Media with the Minot story, despite some critical inaccuracies—or at least omissions.

Having already covered this territory, I won’t repeat them. You can read my earlier piece. But Shafer makes two other points that are worth elaboration.

First, Shafer reminds us of the increasing validity of the hypothesis advanced by economist Peter Steiner in his now-classic dissertation. As a reminder, Steiner proposed that a broadcast monopolist would be more likely to provide a diversity of radio formats than the same number of individually owned stations. Shafer states Steiner’s observation concisely:

Wherever a broadcaster consolidates ownership in a region, it will tend to diversify programming for economic reasons. Consider: If six companies own six stations in a small market, all six will tend to gun for the highest ratings possible and put the other stations out of business. Such a strategy will almost always result in duplication of formats, as was the original case in Minot. But when a single owner controls all six stations, there is no incentive to put the other stations out of business. He's more likely to diversify his programming portfolio to reach the largest aggregate listenership, which is what mega-owners like Clear Channel aim for when they own multiple stations in a market.

And, indeed, prior to Clear Channel’s purchase of the stations in Minot, they were held by two owners who competed on only three formats: country, adult contemporary, and news talk. When Clear Channel took over, it diversified the mix by adding a classic rock, a hits, and an oldies station.

But the bigger point Shafer makes, albeit in passing, that is “spot on” as my very British friends say, is that those who are highly critical of today's media ownership have no recall of what media content was like 20 or 50 years ago. Shafer simply says: “Now, you might be right that six of Minot's commercial stations went from serving three kinds of crap to six kinds of crap. But if you're willing to give the devil his due, you can't say that Clear Channel paved Minot's radio paradise.”

That is, when was the supposed Golden Age when broadcast entertainment or local news was better than today? In the 1960s, when Newton Minow was moved to proclaim it a “vast wasteland?” In print, was the Kansas City Star “better” before it was acquired by Capital Cities or Disney or McClatchy than when it was employee owned and pushed hard for the nomination of Gov. Alf Landon for President? Was it during the 1950s, when we only had AM radio stations, many of which used the same top 40 play lists no matter who owned them?

Finally, Shafer also takes Klinenberg to task for failing to note that there was another station broadcasting locally in Minot the night of the gas leak that broadcast no news or warning. But unlike the Clear Channel stations, which had local personnel, the other station was KMPR, a nonprofit NPR affiliated station that was totally programmed by Prairie Public, its parent company, 269 miles away in Fargo. It has no presence in Minot other than a broadcast tower. How come that is never mentioned as part of the Minot story by the “reform” movement? Guess it’s a piece of data that just doesn’t fit with the myth.

Link to this entry
E-mail this entry