WOTM FAQ, Part 2

Some real questions I have answered from time to time, often from students writing papers who e-mail me for some primary research points.

How ethical is it for corporations who own media to try to make a profit?

Ethical? Ethical? Profit is not a matter of ethics. A newspaper never went out of business for lack of content, but only for lack of revenue to pay a staff an acceptable wage, mainatin its plant, and produce a return that is higher than putting the invested capital in a safe U.S. Savings Bond. Profit is what provides jobs, income, and the wherewithal for government to raise money by taxes—on profits. Ethical? It would be unethical not to seek a profit. Compare the performance and efficiency (and pay) of the U.S. Postal Service to the performance and service (and pay scales) to that of UPS or Fed Ex! (Not to criticize the people who work at USPS. It's a different environment, with different organizational structure, incentives and mission. But that's the point).

The Critical Role of Private Enterprise on Free Expression

A.J. Liebling was the outspoken press critic of his day. Yet he had a pragmatic insight into why the ownership structure of the media—primarily newspapers then —was a positive influence on content. In 1947, in The Wayward Pressman he wrote:

The profit system, while it insures the predominant conservative coloration of our press, also guarantees that there will always be a certain amount of dissidence. The American press has never been monolithic, like that of an authoritarian state. One reason is that there is always money to be made in journalism by standing up for the underdog…. His wife buys girdles and baking powder and Literary Guild selections, and the advertiser has to reach her.”

At the time he wrote this the Hearst newspaper chain controlled more local circulation than any newspaper company does today.

Liebling’s insights are actually more relevant today than in 1947. Profit, not ideology, means that whether one wants to focus on the 10 largest conglomerates or the 50 largest players or whatever number, the content of the media is not determined by what the chief executive officer wants but what the various editors, producers, publishers and local operating managers determine is best for the audience they are trying to reach. It is why Big Business and business executives, even the media industry, are regularly made the villains in major film and TV productions that are produced by the big business media companies (see “The China Syndrome,” “Erin Brockovich,” “Broadcast News” or the 2004 version of “Manchurian Candidate” among many).

Take Michael Moore. Please.

The example of director Michael Moore’s propaganda film, “Fahrenheit 9/11” released in summer 2004, is a recent case on point. It was financed by Miramax, a studio owned by Walt Disney Co. Disney management told the Miramax executives before the film was made that they did not want to distribute the film – the kind of decision film studios make daily for artistic, financial, or image reasons. Disney did agree to sell its rights (Miramax had gone ahead and invested Disney money in the project) to the top executives at Miramax. They in turned made distribution arrangements with Lions Gate Entertainment, a small media conglomerate with interests in the production and distribution of motion pictures, home entertainment, television programming, animation and video-on-demand content. The film received extensive distribution and became the highest grossing film of its type in history.

Why is this case a good example of the vibrancy of the media? First, the film got financing and got produced, despite—or because of – its controversial viewpoint. Second, it got national distribution even though one of the largest studios decided not to be the distributor. Third, the ultimate distributor was a large, publicly-owned, New York Stock Exchange listed company for whom potential profit was more important than any ideological viewpoints held by management or the stockholders.

Although Disney was criticized in some quarters for trying to “censor” Moore and one U.S. Senator demanded a hearing on the matter, there was little or no public comment on the passion of Bob and Harvey Weinstein, the former owners and still top managers of Miramax, for using their own funds to repay the Disney money they had allotted to fund the project. In announcing that they would donate any profits they made on the film to charity, there is the implication that the film expressed a viewpoint they felt comfortable with. That is, they were interested at least as much in the politics of the film as the profits. A recent article in the New York Times Magazine notes that Miramax “has enjoyed a name recognition, and a notoriety, nearly unique in today’s streamlined and standardized movie industry.” The article also notes that the Weinsteins’ maverick approach was not solely for profit or to cultivate the public’s taste for exotic or adventurous films, “but rather to revive the tradition of prestige filmmaking that the studios had allowed to languish in their pursuit of franchisable blockbusters, overseas receipts and cross-media synergy.” Although only speculation, it lends credence to the notion that smaller, personally run and nonpublicly accountable media firms (as seen in the research on newspaper owners) are more likely to be driven by ideology than large, public media conglomerates run by professional managers.

In fact, the many quaint notions that local owners of newspapers or the TV or radio stations are inherently “better” than a large corporation have no standing in the real world. Some of the most biased newspapers in recent history—McCormick’s Chicago Tribune, Annenberg’s Philadelphia Inquirer, Loeb’s Manchester Union-Leader—were the creation of local ownership. Local owners are more likely than removed corporate owners to have ties into the local political and business establishment. Local owners may not have the economic resources to withstand a local boycott of real estate or banking or similar interests should they risk some criticism of the local industry. Large chains, on the other hand, are far less affected economically by a short-term downturn in any one community. And it is less likely that the publisher is a prep school buddy of the mayor.

It is not likely to matter much (and indeed experience shows it does not) whether a local TV station is owned by a company headquartered in another city. The editorial qualities and decisions for news and information need to be made locally if they want to attract their share of the audience—all driven by the profit motive.

Publicly-owned companies are frequently criticized for being too driven by quarterly earnings needs. It is a fair criticism. So it is again ironic that the poster child for the evils of media conglomerates, News Corp., is probably the least driven by short term profits and quarterly earnings. Though publicly owned, working control and ownership has been retained by its chairman, Rupert Murdoch, and his family. The company has invested hundreds of millions of dollars in its groundbreaking efforts in creating the Fox Network and then a viable second all-news cable network; in creating direct broadcast satellite service covering parts of the Third World as well as developed countries that did not have the advantage of a multichannel cable infrastructure.

There is a very positive side to profit-driven public ownership. The stocks of these companies are widely held, by teacher’s pension funds, by mutual funds, by individuals and 401k plans. The chief executives of these companies have a fiduciary responsibility to their stockholders. They take that seriously. Restricting their coverage, their range of films or magazine titles or news shows is not what the big companies are about. They seek to reach the mass market when they can and niche markets when they spot them. Given the vast diversity of interests in a nation the size of the United States there is potential profit in reaching the right wing as well as the left wing, in programming for Spanish speakers a well as English, in publishing books for escapism and for self help, in investigative reporting that is critical of government as well as editorials that may be supportive. And if the big guys don’t provide it, some small publisher or producer does.

WOTM FAQ, Part 1

Some questions I have answered from time to time, often from students writing papers who e-mail me for some primary research points.

Is there bias in the news media today?

First, see Bernard Goldberg’s books, Bias and Arrogance. Goldberg, a long-time CBS News reporter, provides dozens of examples of bias. Crucial, though, he believes it is not institutional, i.e., corporate, bias. It is seen in the biases of those who edit and report news. Corporations—especially large, publicly owned media corporation -- tend to refrain from overt biases. They are in the business of making money, which means reaching large audiences. Alienating even relatively small audiences reduces their ratings, hence advertising, hence profit. More on this another time. (This applies to TV news—the main interest of most people who ask this question). Obviously many print media want to be biased and make no bones about it: Among many examples, The Weekly Standard and The Nation magazines, books that the largest publishers publish, such as Fast Food Nation, each have stated or obvious biases.

How much effect does corporate ownership have on news media content?

The academic research that has been reported does not support the contention that media ownership by chains or conglomerates leads to any consistent pattern of lowered standards, content, or performance when compared with media owned by families or small companies. For example, a review of 17 studies concluded that there were few differences in the editorial page slant of newspapers owned by groups and those that were independent. On the other hand, editors of chain-owned newspaper were found to have greater editorial latitude in determining editorial policy than those at family-owned newspapers. Put another way, publishers of family owned newspapers exert greater editorial control over the editorial process than at group-owned. While publicly owned newspaper chains perhaps may be more focused on profitability than those that are family controlled, they are less likely to have an ideological agenda they want to promote. The overall consistency of studies show that large group, corporate and public ownership have had a neutral to positive effect on the editorial side of newspapers. One of the most thorough studies of the role of ownership was a five year study by the Project for Excellence in Journalism. It looked specifically at television news at the local station level. As most broadcast television programming at local stations comes from the networks –ABC, CBS, NBC, Fox, WB, UPN, Pax— the one area for decisions about original programming at the local station level comes in the form of the local news shows.

Ownership Does Matter, But Not in Expected Ways

The Project for Excellence in Journalism study confirms that ownership does matter, but not alway in ways that support the conventional wisdom. The study attempted to create objective measures of “quality” and then used a content analysis to apply these to 23,000 stories in 172 television news programs over five years. “Taken together, the findings 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 the smaller owners when it came to enterprise reporting and the greatest localism.

Local newscasts are the most prominent programming that can distinguish one local television station from another. For the most part, “television” is defined and described by the programming provided by networks. In any market, most programming most of the time is the same, whether the station is owned by a large multi-media conglomerate or an independent local owner, whether the station is owned and operated by a network or is simply an affiliate of a network.

The Technology Liberation Front: Senate hearing / testimony on media ownership

[This was posted by Adam Thierer at The Technology Liberation Front blog on September 28, 2004]

The Senate Commerce Committee held a hearing today on media ownership regulation and I was invited to testify. Here's the link to my [Adam's] testimony.

All the charts and tables you will see in the appendix of my testimony will appear in my forthcoming book Media Myths: Making Sense of the Debate over Media Ownership. I strongly encourage you to take a look at Ben Compaine's excellent remarks when they are posted, as well as everything else he's done on the issue. No one knows more about this issue than Ben.

Posted by Adam Thierer at September 28, 2004 12:05 PM"

More Competition or Less in TV? You Decide

The debate on media competition constantly keep returning to television. Yeah, there's a declining newspaper industry and a robust radio business. There are thousands of book and magazine publishers. Oh yeah, the Internet. But the 600 pounds gorilla in the room is always television.

So lets look at what really matters in TV land, eyeballs.
Over the period 1960 to 1980, there commercial broadcast networks dominated the television landscape. The were ABC, CBS and NBC . On average during that period that had a combined prime time rating of 56%. That is 56% of all households with television sets were tuned to one of those networks on a average weekday night.

But with the development of cable, competition from new networks, videos and other distractions, the audience share of those big three networks has declined steadily. By 2003, the three old broadcast networks were averaging only a 38% rating. But, you note, these networks have become part of larger media conglomerates, with extensive cable holdings.

I added up all the networks owned by each of the media conglomerates: Viacom includes CBS, Nickelodeon, MTV, TNN, BET, TV Land, among others. Besides ABC Disney owns ESPN, Disney Channel, , Minority interests in others. I added the still pending combination of USA Networks with NBC. Add to the mix the Fox Networks, which did not exist until 1986, along with Fox News, FX, et al. An Time Warner, which started the WB network to add to CNN, TNT, HBO and the like. These five entities combined has a prime time audience rating in December 2003 that was 5% less than the rating of three networks pre cable, pre-Fox.


Call me what you will (except late for dinner). But that looks to me like despite all the mergers and acquisitions in the television business, there is greater competition, less concentration, than in old days of highly regulated broadcast television. The old dominate networks are getting fewer eyeballs relative to the population, not more. And to do it they are having to produce a wide range of programming in order to satisfy not only the middle of the road mass market but the many niche markets, from all news to wrestling, that had been underserved in the good old days.

Link to this entry

Competition and the Media

About this Blog

This forum is about media ownership and competition. Notice I don't say media concentration. They are two sides of the coin. As more competition is generally viewed as better than less, I favor speaking about the degree of competition in the media industry.

It is also about empirical data on the subject. It seeks to add to an informed debate. Not one based on anecdotal stories or worst case scenarios. It is perhaps a cliche, but nonetheless accurate, that honest participants can haggle over the interpretation of data (see my piece about Tom Wolizen’s data). We can even have differences of what questions need to be asked. But having some hard numbers should, indeed get in the way of a good argument.

This forum also has a high regard for the First Amendment. To those who seek that the government take this or that remedy, let us recall that this lead-off amendment to our Constitution was created because of the prime fear that it was a powerful government that must be kept out of the media business. Any tinkering with any restrictions on private voices needs to be certain that it does not erode this distinction.

This forum is not about the usual laments of the perceived growing economic clout, negative social impact, worrisome cultural affect or dangerous political trends of media ownership trends. There are plenty of sites that whip up these passions. This forum does not start, a priori, that overall media competition is leading us to bad places.

The changes proposed by the FCC in broadcast ownership rules in June 2003 were only the latest in decades of government attempts to fine tune what we see, hear--and to a much lesser extent-- read. And government response to a perception of possible unhealthy growth in media ownership concentration was responded to as early as 1978, when the Federal Trade Commission held a two day public symposium on the subject. It was about that time that I was getting involved in creating an empirical look at who owned the media.

When U.S. media pundit A.J. Liebling wrote that freedom of the press belongs to those who own one he summed up the emotion that separates the media business from virtually any other enterprise. The press -- or today more generically the mass media -- stands not simply for the power to convey information, but more crucially for the assumed ability to shape attitudes, opinions and beliefs. The media are the vehicles for education--and propaganda. Who controls these outlets and what the players' intentions are for their use has been a contentious issue at least since the 15th century, when both Church and State recognized the potential of the printing press and immediately sought to control it.

Does Ownership Really Matter?

In the end, of course, one must ask whether this concern about who owns the media really matters. To what extent, if any, do changing patterns of ownership have an effect on media content, economic functions, or audience impact? We have assumed it does, but what do we really know? With your help, I aim to help address these and similar questions that are relevant to the policy debate, while commenting on current topics and issues.