Analysis: Winners and Losers in the Supreme Court's ISP Broadband Ruling

You’ve seen the basics of the Brand X case: Cable companies are not required to sell access to competing ISPs if that’s what the FCC so rules. And it is highly likely that the FCC will now level the playing field for DSL facilities of the telecos.

So what does that mean? Who are the winners and losers?

It’s not as obvious as it may at first seem.

The self-styled consumerists are already complaining. Consumers Union jumped right in: "We believe consumers remain in a substantial risk of paying bloated prices to cable companies.” The consumers groups seemed to have had a statement ready: “The court's ruling also threatens to cement the cozy duopoly of cable modem and DSL service that has made a mockery of competition in American broadband markets." (Hmm, then what is it again that is driving DSL rates down to below the level of what dial-ups were charging a few months ago?).

Cable companies should be pleased, as would be telcos—a rare alignment of interests. But these are short run victories. In the longer term, The Brand X decision may be a huge win for consumers, a loss for the telcos, and a mixed bag for the cable folks.

Good for Consumers

Here’s why. Major stakeholders in the outcome of Brand X were EarthLink and other ISPs who resell telco DSL and hoped to resell cable broadband. While their participation in the market gives the appearance of greater competition, it is only half a glass. As resellers, they still must depend on the suppliers-- telcos or cable providers-- for wholesale pricing. This sets a floor for their own pricing. It's an easy way into the market—little capital expense. But it does not really add to the broadband infrastructure and create real competition.

With the Brand X decision, these ISPs must now fend for themselves. The good news is they have some very realistic options: multiple wireless broadband technologies. They can do what Philadelphia and various other municipalities are building—city-wide wireless. They can use Wi-Fi. They can use the developing Wi-Max. There are several flavors of fixed wireless technologies.

"We think wireless has a lot of promise and we're very aggressively pursuing that," a spokesman for EarthLink told The Wall Street Journal. The Journal also noted that: “In Philadelphia, for example, EarthLink has put in a bid to provide wireless Web service across the city, and is testing wireless technology in Northern California markets. And in Madison, Wis., AOL plans to test this year a high-speed wireless network to gain direct access to customers.”

My prediction is that, with the easy and cheap option eliminated, competition will be encouraged in new directions. (There is always talk about using electric utility wires, but so far it’s been years of talk, little action. I remain an agnostic on this as an option).

Loss for Telcos

The telcos may gain full control over DSL, but they lose a potential political ally in what may be another high stakes battle: video. As the telcos roll out cable-like video services over their new fiber networks, they are running into the same local franchise barriers that stalled the cable providers in the early 1980s. As it now stands, in most states they will need to go town by town to get permission to be in the “cable” business. Having lost a major state battle (in Texas) to get a pass around this expensive and time consuming barrier, the telcos had hoped to get a competition-oriented Congress to revise the Telecommunications Act of 1996 to provide a federal law overriding the states. If the Supreme Court had ruled in favor of Brand X, the cable companies would likely have also turned to Congress to overrule the FCC. Thus, two major industries would have joined to promote a change.

But the cable industry now sees no need for immediate legislative action, leaving the telcos all alone. That makes the possibility of getting Congress to act far less likely.

Mixed Bag for Cable

The cable industry is the big short term winner. They got the ISPs off their backs. They will not need to engage in an expensive lobby effort with Congress. Their telco competition is mired down in franchise battles and a lonely lobbying effort. (Come to think of it, perhaps the consumerists would want to align themselves with the telcos to persuade Congress to speed up competition for video programming services. I’m serious!) But down the road, cable interests will face the same enhanced competition as the telcos should the concerted efforts of the EarthLinks forge a viable third broadband option in the form of wireless. And, sooner or later, the telcos will be encroaching on their video bailiwick, just as they are moving along with switched telephone offerings in the telco space.

Brand X resolved a battle. But the war of competition and lower prices and/or more bang for the buck—and usually both of these—rages.

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Demythification: The Urban Legend of Clear Channel's KCJB, Minot, ND

This entry is a bit lengthy because I want to again address the need to employ fact and understanding to trump selective perception and social agenda mongering in determining media structure policy.

I have no need or interest to come to the defense of any media company, large or small. They can carry their own water.

But I do enjoy deflating urban legends. And much of what passes for “fact” or “evidence” of how big media is somehow lessening democracy or diversity or culture or localism is indeed myth or distortion. Some of it is repeated knowingly, by those with ideological agendas. In many cases, trusting innocents pass it along, much as they do those serious sounding viral emails about pleading for help for an ill daughter of a Wal-Mart manager in Idaho or some such contrivance. At least in those cases one learns to go to Urbanlegends.com or snopes.com where you can learn the facts. Here is my small step to demythifying an urban legend that involves Clear Channel Communications.

On page 40 of my Media Monopoly Myth study I mention an incident from 2002 as reported by the Washington Post in May 2003:

…Clear Channel owns all six commercial stations in Minot, ND. When a train derailment in the middle of the night released a frightening cloud of anhydrous ammonia, Minot police sought to notify the citizenry of the crisis. They called KCJB, the station designated as the local emergency broadcaster, but no one was home; the station was being run by computer, automatically passing along Clear Channel programming from another city.

The last sentence from a press release announcing availability of my study said:

There is no support for 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.

Within hours of the release of my study, an entry that cut and pasted part of the press release appeared on the Take Back the Media Web site from an anonymous poster who went by Stranger. To which Stranger responded: “'No lowered standards? The fine folks at NMRC [the organization that commissioned the study] are obviously not familiar with what happened a few years back in Minot, SD” followed by his recounting of the event. (Note that Stranger also placed Minot in South Dakota, even though the cut and paste he used to tell the story accurately places Minot in ND).

Typical of folks who already know the “truth,” if anything was obvious was that Stranger (and others who commented afterward) did not bother to read the study itself, feeling that reading the one page press release was close enough.

More critically, what Stranger and other Clear Channel bashers skipped, including North Dakota’s Sen. Dorgan, was first learning the facts behind the Minot incident. In a letter to Sen. Dorgan on February 12, 2003, Clear Channels’ CEO Lowry Mays laid out what in fact happened:

• Station KCJB is staffed 24/7 with an on-duty announcer.

• The local police tried to notify the station using an outdated emergency response hotline rather than the automated system had had been put in place in 1997. The obsolete hot line thus called into the station’s switchboard, which was also being flooded by calls from local residents seeking information.

• Off-duty station personnel started coming into the station on their own as word of the derailment got out. They tried calling their police contacts, but the police phones lines were also inundated with callers, so the station personnel could not get through.

• In the post-mortem after the incident, the KCJB engineer discovered that the Minot police had changed the emergency broadcast frequency they used without notifying the station, thus making the system incompatible.

In his letter Mays was too diplomatic to come out and say that the crisis had more to do with screw-ups by the local authorities than the result of programming on the station.

Half of Air America’s Outlets are Clear Channel Stations

Clear Channel was viewed as the Dark Force as well by a correspondent I quoted in my study on page 43. She had written me:

Clear Channel pulled Howard Stern from the air [from the six of their 1200 stations]. I am outraged. I am disgusted. I am affected because Clear Channel owns--thousands?--of radio stations throughout the country. And Clear Channel is conservative, and Clear Channel is TAKING AWAY MY RIGHT TO CHOOSE. Consolidation is not an issue we should be concerned about? … Clear Channel is a sticking point in my side because of its political affiliations (read: Bush administration) and clear dominance in the industry. They use their stations to support their own agenda (I'm talking specifically of the many pro-war rallies Clear Channel sponsored via radio stations--I believe Clear Channel helped create the cultural climate of "If you are against the war, you are against America”).

Again, some facts will provide perspective. According to Clear Channel’s Robert Fisher:

Clear Channel has no political agenda. Our local market managers decide what programming is aired. People assume that because we syndicate Rush Limbaugh, Glen Beck, Dr. Laura and that we are headquartered in Texas that we are a Republican company. What people fail to realize is that profits trump politics. If our listeners are demanding certain programming, then we put it on the air. Take for example the new popularity of the progressive talk format (Air America). Clear Channel accounts for half of the Air America affiliates in the U.S. Local market managers started to recognize the popularity and demand for this format and made the local decision to flip the format of their stations. So regardless of some of the hyperbole from those with conspiracy theories that Clear Channel makes corporate decisions on programming, the fact is that local managers are making programming decisions based on the input from the communities they serve.

Once again we see that media companies, like other for-profit organizations, thrive only when they are responsive to some segment of consumer needs and wants. As I conclude in my study (and elsewhere):

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 will.

Let me know of other urban legends in the media ownership relam, or anecdotes that need to be tested for accuracy.

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Major Internet Portals Shaping Up as True Competitors for "Television" Advertisers and Audiences

Competition in television continues to heat up. Not only are the phone companies like Verizon busy implanting fiber optic cable to residences and lining up programming in their assault on the cable and DBS providers, but the Internet is building its video muscle as well. AOL, Microsoft and Yahoo, among others, are becoming serious media players. Although AOL is part of the largest of the traditional media companies, Microsoft and Yahoo are new additions to the media world.

This week AOL (part of Time Warner, as you know) officially announced that it was essentially taking all its content outside its walled garden and making it freely available. Recognizing that well over half of all Internet users access it via broadband, AOL's new strategy places an emphasis on video. As reported at SFGate.com, "Many of the bells and whistles will be based at AOL's Video Hub, which will focus on not only entertainment, but also news." "Visitors will be able to watch music videos, exclusive concerts and a Web-only reality show..."

Indeed, AOL is giving its users two options for a customized home page, one with the usual picture and text links, the other focusing on video highlights. This Video Hub lets users personalize their Internet TV. Initially it will be choices of movie trailers, TV previews, music videos or highlights of news, sports and entertainment. But that is expected to expand over time.

Competition in radio is also getting hotter with AOL's partnership with XM Satellite Radio. This will provide 20 free XM radio stations free at AOL, in addition to the 130 radio channels that AOL had previously made available only for its subscribers.

Yahoo, the most accessed of all Web sites, is moving into video big time. With 75% of its visitors on broadband, Yahoo is actively pursuing ventures with producers and creative talent to provide more video through its portal. Aggregating a worldwide audience of an estimated 300 million visitors, one analyst ventures "Those are numbers that are sufficient to make the likes of Rupert Murdoch salivate and turn green with envy." That is, as Yahoo moves further into content, it is a formidable competitor for both advertising dollars and consumer time to the traditional media companies.

MSN is also video intensive. At the moment it is heavy with news and information clips from NBC's "Today" show, Fox Sports and CNBC for business news. But it is also an outlet for smaller features, such as a video horoscope from Astrocenter.com. However, if MSN wants to differentiate itself and attract a regular audience, they--as well as AOL, Yahoo and Google for that matter -- will inevitably have to deliver more of their own exclusive content – entertainment or information that cannot be found anywhere else on the Internet. All indication is that is exactly where they are heading.

Internet advertising is booming-- a sign that the Internet is indeed becoming an entrenched vehicle for media and commerce. According to Robert Coen, a senior vice president at ad agency Universal McCann, Internet advertising could hit $8.8 billion in 2005, a 25% increase over last year. This would actually be more than 50% as much as the combined ad revenue of the four largest broadcast networks, ABC, CBS, Fox and NBC. Those institutions are forecast to see only a 2% increase in ad revenue this year, to $16.8 billion.

Competition is coming from all directions: the old established players are trying to diversify, even at the risk of cannibalizing their older properties. They are facing entrants who are taking advantage of the growing penetration of always-on high speed Internet connections. The winners are us-- consumers-- who have more variety in what we can access, where we access it and when we can access it.

(Speaking of Internet advertising, you can help support this otherwise pro bono site by clicking through on one or two of the Google-placed text ads to the right. A few cents here, a few cents there.... Thanks).

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The Day the Courts Throw Out all FCC Ownership Regulations

The Supreme Court announced last week that it would not review an Appeals Court ruling that instructed the FCC to come up with stronger justification for its media ownership rules. When the Third Circuit told the FCC to go back to the drawing board there was much crowing among those who favor 1950s regulation for a 21st century information landscape. This despite the fact that the Appeals Court did not actually rule on the merits of the FCC's proposals, which modestly moved parts of the old media industry into the new media environment. And in the end, by at least one possible scenario, the "anti" forces may have achieved only a pyrrhic victory. Here's my reasoning:

The Appeals Court rejected the FCC's ownership policies on a procedural issue: It ruled that the Commission did not provide solid justification for its specific limits. For example, why is 45% the correct number for a cap on national audience for any owner of television broadcast stations? In effect, why not 41.79% or 48.119%?

But that question begs the issue, and one of these days a judge or a panel of judges will understand. There is no national cap on the audience that can be reached by The Wall Street Journal, The New York Times, USA Today, Newsweek or any book published by Random House. There is no national cap on Sirius or XM satellite radio stations. There is no cap on NPR.

The proposed FCC rules say that in markets with five or more broadcast stations, one entity could own two stations but only one of those may be affiliated with one of the four largest networks. Why shouldn't this be limited to six or more stations? Or ownership of three stations? Where do these limits come from? After all, in Philadelphia there are only two daily newspapers, both owned by the same entity. There is only one newspaper in nearby Camden. One in Atlantic City. One in Wilmington. But residents in any of those cities can receive the nine Philadelphia broadcast stations, from eight owners, including two public television stations. And, assuming the Philadelphia area is like most of the country, somewhere between 85% and 90% of households have chosen to get their television via cable or satellite. Many of those viewers no longer have any idea what is a broadcast stations and what, like Bravo or The Food Channel, is "cable." So why are there no limits on newspaper ownership but even under the FCC's proposals strict limits on broadcasters?

Of course we think we know the answer. Broadcasters use the public airwaves. But even if that made sense 50 years ago it is beyond time to re-evaluate that justification. The public responsibilities imposed on commercial television broadcasters today have gone from little to almost none. Perhaps the most obvious is that broadcast television does not have the latitude for language and violence that is otherwise permissible under First Amendment standards for video that does not travel over the terrestrial airwaves within the UHF and VHF portion of the spectrum. Satellite signals, of course, come to Earth via spectrum. That it is not considered broadcasting only highlights the absurdity of the distinction of what slice of the spectrum is used. Cell phones use electromagnetic spectrum. Heaven knows there is no limit on the content -- voice or SMS or an other form of bits-- that goes between towers and handsets.

Now I suppose one could turn my reasoning around: instead of removing regulation on broadcasters we should impose more on satellite providers and anything else that uses the airwaves.

But then there's those 45 pesky words called the First Amendment. The ones that include "Congress shall make no law ... abridging the freedom of speech, or of the press."

So my scenario is this: an enlightened judge is going to be assigned the case with the next version of the FCC's ownership regulations. He or she is going to reject those, too. But the ruling will be more specific: There is no longer justification for limiting broadcasters with restrictions any greater than those imposed on any other media or other industry segment. Television is television. It can longer longer be a second class citizen under the First Amendment.

The so-called consumerists and media reformers will howl at the termerity of applying the First Amendment to this media technology. Congresspersons will grandstand. But it would be the right decision. The Supreme Court will uphold the Appeals Court.

By the way, current broadcast license holders might not like the implications of this either. First, the implication is that they, like anyone else who gets spectrum, will have to pay for it. They should have been required to bid on digital spectrum. Maybe it's not too late. Another consequence of being treated like any other video provider would be the end of the "must carry" rule. Whereas nonbroadcast cable networks must bargain with cable and satellite operators for channel space, broadcasters get a free ride. That too could end.

It could be -- and should be-- the end to one of the longest running free -- and very profitable-- lunches of all time.

(For a good discussion with a wealth of citations covering the First Amendment and media access issue, click here and go to chapter six of Adam Thierer's new book, Media Myths).

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Love and Marriage: Viacom's Divorce is a Natural Part of Media Industry Evolution

One of the wonderful things about documentation (whether text, aural or visual) is that it's akin to leaving a trail of breadcrumbs to find your way back to where you started. For those of us in the research and analysis business, it's a method for keeping score: what did you say, when did you say it and how accurate were you? However, most of the time it is too daunting to go back into volumes of records to compare then and now, though digital storage and improved search engines are changing that dynamic.

To get to my point: Richard Siklos, in London's Daily Telegraph, is just one of several who have commented of late on the momentum for divestiture in the media industry. He wrote (see the entire column here):

Media giants have been assembling and disassembling themselves for years. Remember when John Malone split his cable and programming assets from the old Tele-Communications, forming Liberty Media, then sold the cable business altogether? Or the whole Seagram-Universal-Vivendi debacle? Time Warner has only just unwound Time Warner Entertainment, a strange construct it created years ago to house some of its best assets in partnership with outside investors.

Adam Thierer has been chronicling the slew of announcements here and here (and more).

This is preface to a bit of personal gratification I found in yesterday's announcement that Viacom's Board voted to deconsolidate itself into two pieces, as the most recent development in this series of announcements of media company divestitures. I've held for many years that many media mergers were bad news. Not because they were a sign of any sort of economic or thought-control monopoly, nor as speculation that they endangered journalism or civic discourse. I thought they were bad news because they were simply (but expensively) bad business decisions. As such they drain resources from the content they could create or the distribution they could provide. In my strategic view many did not make sense. CEOs talked about synergies that I just did not see as being realistic. The technologies did not mesh nor did the business models. The Time Warner-AOL merger was the high water mark of ill-advised combinations.

Fortunately I documented my (in hindsight) right-on analysis. In the 3rd edition of my book, Who Owns the Media? (on page 566) I wrote that vertical combinations in particular were ill-advised. The perpetrators would need to "undo them years later." And so they are. I continued:

In the real world of business, sometimes what looks like monopoly power from the outside can drag down profits, development and growth when looked at from the inside. Eventually, savvy managers divest as well as acquire.

And so it is coming to pass. And for just the reasoning I suggested. (Hear my horn tooting?) Following is a five year chart of the stock performance of Viacom, News Corp., Disney and Time Warner, the four largest publicly owned media conglomerates, compared with the Dow Jones Industrial Average. (A two year chart would look much the same). Viacom performed the poorest. But every one is trading well below what they were worth in 2000, while the Dow ended on Tuesday roughly where it started.

What this says is that investors-- mostly institutions and similar aggregators of yours and my 501k and pension funds-- have come to the conclusion that big is not always better. Having more and more Web pages indexed in Google's data servers is better -- and profitable. A merger between Google and eBay, for example, would be neither.

Given the dramatic changes in the information industry over the past few decades and into the foreseeable future, it would be ludicrous for incumbent players not to be looking for new opportunities, including mergers and acquisitions. A newspaper company today that restricted its investment to new presses or adding journalists would be signaling its own downward spiral to death or selling out. The recent acquisition by The New York Times Co. of About.com makes sense strategically -- though I might question if the $410 million cash price paid was too dear.

When Viacom's chairman, Sumner Redstone, announced the acquisition of CBS in 1999 he said, "This partnership seems almost dictated by destiny." Like many marriages, the match made in heaven may end with divorce when the incompatibilities that could have been spotted initially were papered over by infatuation. Corporate mergers seem to be no different -- they are created by men and (less often) women who are prone to mistaking the excitement of the deal for the rationale underlying business logic. The Viacom separation is just the latest and most dramatic of the natural ebb and flow of the media industry's dynamism.

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More Than 1000 New Periodicals Started in 2004 Indicates Robustness of Old Media

With so much attention focused on electronic media and the Internet, we may lose sight of the robustness of older media, in particular magazine publishing. When last I checked for the 3rd edition of Who Owns the Media? there were nearly 12,000 different titles, ranging from mass circulation titles like Reader’s Digest to small political titles like The Nation and thousands of titles aimed at hobbyists, all manners of professions, trades and hundreds of special interest.

Before the Internet, starting a new periodical was perhaps the easiest of the mass media to launch, despite the short odds on their success. Whether started with the deep pockets of an established media company of by entrepreneurs, only about 20% of new titles survived for at least five years.

So given the low cost and ease of entry to the Web world, what’s been happening with magazine start-ups? According to Samir Husni, a journalism professor at the University of Mississippi who has been tracking magazines start-ups for decades, new magazine titles are on the rebound from the turndown of a few years ago. Last year he counted 1006 launches, up from 953 the previous year. In the first quarter of this year he found 236 launches, an increase of 11% from 2004.

Prof. Husni does not provide details on who started these magazines. But if history is a guide, about two thirds would be the initiative of individuals or small publishers.

Do large publishers dominate what we read? If they do it’s only because of what we choose to read. Reader’s Digest has a larger readership than, say, the literary Utne Magazine because the former publishes general interest articles while Utne republishes articles from “2000 alternative media sources.” By definition the sources are “alternative” because they are not mainstream!

The data shows that from the 1950s through the 1990s the percentage of all periodical industry revenue accounted for by the four, eight and even 50 largest publishers was eadily declining. In the late 1990s it ticked upward. Nonetheless, in 2002 the largest periodical publishers accounted for about the same proportion of sales as they did in the 1960s.

It’s hard to make a convincing case of insidious media concentration when investors are still risking their funds in periodicals and the industry is no more concentrated than it was 30 or 40 years ago when there were “only” 8000 titles and the most popular titles like Life and Look accounted for a greater proportion of total readership than any titles do today.

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Editorial Cartoon Captures Spirit of Peercasting

I few weeks ago I posted an entry called Peercasting as the New Western Frontier. In short, it asks whether the easy access the Internet has created to self expression formats such as blogs and podcasting may not be providing the same sort of safety net for ideas and opinions as the Western frontier provided in the early 19th century for those seeking self-made opportunity.

Clearly others are thinking along the same lines. Editorial cartoonist Jeff Danzier captured in a whimsical panel a hint of what I am proposing. You can see the original here.

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For Decades Number of Radio Stations Grew, Advertising Declined, Ownership Caps Unchanged. What Would You Expect?

I said on May 24 I’d get back to radio.

For the small but vocal segment of the population that spends much time mulling about the media industry, the changes in the radio business in the past decade may seem to be immense. And it was, though only in the context of how little the industry changed structurally in the previous 70 years. The radio industry had seen only one or two “inflection points’ (to use a term from Intel’s Andrew Grove) in its history. The first and still most significant was television, which hit barely 25 years into the development of the industry. FM stereo, in early 1970s, was a second and less violent change. And that’s about it.

For most of the second half of the 20th century radio was a rather sleepy industry. By the early 1950s it had been eclipsed by television as the medium with the greatest national interest to audiences and to advertisers. It took barely 10 years from its peak in 1945, when 15% of all advertising revenue was devoted to radio, to its trough with just 6% of advertising expenditures. Over the next 50 years radio edged its way up to 8% of all media advertising. But in 1947 there were only 1212 stations spread out over the U.S., compared to more than 13,000 today (about 2700 of these being noncommercial).

The result of the 10-fold multiplication of stations during a time that their total source of income -- advertising -- grew only about three times (in constant dollars) was that the average revenue per radio station plummeted 42% between 1950 and 1970. (The details can be found here, in Table 7, page 19 of my new Media Myths study.) By 1990 there had been some rebound, but the average revenue per station was still below the 1950 level. It was not until later in the 1990s that radio station revenue equaled the mid-century level and finally surpassed it.

In other words, the radio business was rather moribund through much of the second half of the 20th century. Unlike virtually any other industry, it was not able to restructure itself in a way that recognized the growth of competition for advertising revenue and audiences. The newspaper industry, faced with many of the same competitive trends, was able to consolidate. While some critics may lament the disappearance of many daily newspapers, the reality is that with a shrinking circulation and advertising share the mature industry had to restructure to leave those that remained robust enough to carry on. But regulation largely prevented radio operators from achieving the economies of scale available to almost ay other industry. In 1990 no single entity could own more than .23% (that’s .0023) of all radio stations then operating. If there was a reason for many individual local stations to cut back on money-losing news and public affairs operations it was the declining financial fortunes of the industry in general.

If the de facto limit on station ownership that existed in 1947 had been maintained proportionately to the number of stations in operation in 1990, a single entity would have been allowed to own 105 stations nationally, or about 1%, instead of 24. Only with the cap finally loosened by the Telecommunications Act of 1996 was the industry allowed to find an equilibrium. It should surprise no one that initially, like a bottle of seltzer that had been jostled before opened, it spurted to find that equilibrium it could have been moving to more gradually—and less visibly—if the cap had been loosed slowly over time. Consistent with this expectation the pace of radio consolidation has retreated markedly in the past three years.

Over the next few days I will be following up with the real story of radio in Minot, ND, which persists as an Urban Legend on the presumed horrors of group radio ownership, as well as analysis of the oft-repeated but misleading concern about the supposed demise of localism in the media.

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Adam Thierer's New Book on Media Ownership Now Available

Adam Thierer's much anticipated book, Media Myths: Making Sense Of The Debate Over Media Ownership has been published.

It's a real tour d’force. He contends:

No matter how large any given media outlet is today, it is ultimately just one of hundreds of sources of news, information, and entertainment that we have at our collective disposal," Thierer says. "It is just one voice in our contemporary media cacophony, shouting to be heard above the others. Information and entertainment cannot be monopolized in a free society, especially in today's world of media abundance.

Thierer will discuss the book and its themes at a forum at the National Press Club on June 24. Former FCC Commissioner Susan Ness will be on hand to discuss the book's themes with Thierer and address the role the federal government plays as a regulator of media. See the press release here.

Whether you agree or disagree with his analysis you will find it a treasure trove of original researech and data. I happen to think Adam hits it out of the ball park with this one.

If you are at all interested in the media ownership issue it is a must read. Adam is currently a Senior Fellow with the Progress & Freedom Foundation and Director of its Center for Digital Media Freedom.

A Critical Need for Restructuring the Media Industry Before It’s Too Late?

Let me play Devil's Advocate here. An unintended consequence of the information technologies that have become widely available in the last two decades is a dangerous fragmentation of culture and community. Millions of blogs compete for our attention. We’re on the verge of hundreds of video options available via cable and satellite and the Internet. New players providing satellite radio are adding to the one or two dozen land based stations most of us can receive. Thousands of “radio” stations are available via the Internet and, via wireless connections—played through home audio rigs.

Our attention is being further subdivided by the new wealth of movies and video available on DVD. As recently as five years ago our choices seemed enviable: a few thousand titles available at a neighborhood Blockbuster. But with services like Netflix providing easy access to several times that number of titles, we now can spend our time watching classics, independent films, documentaries and even re-runs of past TV series. Who woulda thunk? With the flood of new DVDs being released weekly, shelf space at retailers cannot keep up.

And books. In recent decades 50,000, 60,000 or more new titles have been published each year. But it was between difficult and impossible to know about, yet alone obtain, more than a handful of them. The Waldenbooks in the mall stocked maybe 5000 titles, including backlist. The newer superstores helped, but only marginally. We weren’t distracted by this wealth of titles because we couldn’t find them. But then came Amazon and it’s imitators. So not only can we order almost any book published, but with their search engines we don’t even have to know they exist and we can still find them. This makes it even harder for a publisher to churn out a bestseller with the same volume as in the good old days. So much competition for our attention and so little time.

And magazines. Lots of small circulation titles like The Nation, The Weekly Standard, The American Prospect. But what’s happening to the mass circulation magazines, the ones that we all had in common? In 1980 Reader’s Digest had a circulation of 18 million. It’s now down by 44%, to 10 million and shrinking yearly. At TV Guide the downward spiral has been even more pronounced. In 1980 it was picked up at the newsstand by 18 million people each week. Now its half that number, 9 million, and falling. Who has time to read about TV when there’s so much to watch?

There are so many choices of media—within print, video, audio, online, in the movie theater—that every old channel, every traditional mass audience publication, every network, every frequency has not been able to sustain the kind of unifying, common influence that used to provide a national common thread.

Look at the fragmentation of television audiences: As the population has increased the notion of what constitutes a large television audience has diminished. When the comedy series “M*A*S*H” aired its final episode in 1983 most of us had only three networks to watch, so 106 million people tuned in—to this day the largest television audience ever. For the finale of “Cheers,” the next blockbuster TV sit-com, cable was in 62% of households and, more damaging, there were now six broadcast networks and dozen of cable networks. “Cheers” drew only 80 million viewers. By the time of the final “Friends" in 2004, multichannel television was in more than 85% of television households and the last show claimed only 53 million viewers, despite an additional 54 million population since”M*A*SH’s” day.

We are losing our common base for culture and discussion.

The same is happening with television news reports. During the Vietnam War, those of us who were around all had to share 30 minutes (counting commercials) on only one of three evening newscasts. So we all saw much the same thing and were able to share Walter Cronkite’s take on the war. Those three newscasts now have less than half the evening news audience they had then, while some of us watch reporting on Iraq on Fox, which gives us a different perspective than CNN which is different still than the 120 seconds from about Iraq I might get most evenings on CBS.

We are losing our homogeneity. Is that progress for American society?

The Internet creates new diversions like kudzu: 10 million blogs and counting. Podcasting. Streaming and archived radio. Peercasting is going to undermine the national desire for a very limited number of sources. We will not have a basis for common subjects for discussion over coffee at Starbucks.

The media industry must be reformed. It needs the restructuring that only the federal government can undertake. Congress is certainly on the right track, having already handed out free digital spectrum to the incumbent broadcasters. Good thing they didn’t have it auctioned off to other players. The shrinking media companies must not be permitted to get any more fragmented. We must write to the FTC and Justice Department urging them not to permit further divestitures, such as the recently announced sale of big multinational Bertelsmann’s magazines to the much smaller publisher, Meredith. The FCC must be convinced to limit the bandwidth available for wireless services such as satellite radio, Wi-Max and the like so newer services cannot be initiated. And certainly we cannot allow any further news services to find room on the multichannel video providers. Even better would be to roll back to the conditions that existed before 1986, thus taking the Fox, WB and UPN networks off the air as well as removing Fox News and MSNBC from the cable line-up.

Only that way can we be sure that we have the base of shared values, shared views and shared culture that we had in the Golden Age of the media from the 1950s until the 1980s.

Postscript: As I stated at the outset, I was taking the role of Devil's Advocate with this argument. In truth, I hold that if there was ever a Golden Age of media we are living it now. Media consolidation? Less choice? If there is any problem today (and I underscore that I don't believe there is a problem) it is that we have too many sources, too much choice, 180 degrees from a lessening of media diversity and sources.

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Peercasting as the New Western Frontier

I hope that somewhere along your educational path you were exposed to the seminal work of historian Frederick Jackson Turner. Perhaps to refresh your memory, in 1893 he presented his view that the key component to the unique American character of democracy was the settlement of the American West. That is, the availability of vast stretches of free land away from the initial settlements of the East Coast provided a safety value for those who were dissatisfied with their circumstances. The expansive western frontier offered anyone an opportunity to build a farm and become an independent member of society. Free land thus tended to relieve poverty in the Eastern cities while on the frontier it fostered greater economic equality.

What does this have to do with the media? Here’s what: Though it may be a tad premature to know with certainty, in the equally unlimited expanses of information available through the Internet and its related ecosystem I see the makings of a similar safety value for expression and communication. Today it is Blogs, Live365 streaming radio and Podcasts. Tomorrow it is likely to be the video version of streaming radio and Vodcasting. Better than a soapbox at Hyde Park Corner, reaching farther than leaflets handed out in Times Square, more user-controlled than letters to the editor, peercasting may be for the Information Age what free land was for the late Agricultural/early Industrial Age.

While large media companies may continue to provide us with the entertainment and high production value news that they do so well — and that so many people choose to use – bubbling from below is what may be viewed as a revolution in peer communication. There are, according to multiple sources, perhaps 10 million blogs. One service alone claims more than 5000 Internet radiocasters. Apple is adding a Podcast facility to its popular iTunes service while broadcast and Google and similar services .

We’ve already seen how the old Newsgroups and Listservs helped aggregate and invigorate communities of interests. Peercasting takes this a liberating leap further, removing the structure and limiting format of those tools. What inevitably happens is that no matter what the cause, what the rant, what the subject, someone—or many ones—will sooner or later write a comment or send an e-mail to the blogger that says “Hey, yeah. I agree.” Or, “Yeah, I have the same problem. Let’s talk.” Soon there is a community of five or 19 or 3000 people from around the world exchanging bits. In most cases that alone will be satisfying to the bloggers/xcasters. They will have hard evidence that someone is listening.

In a very few instances the bloggers' community may actually evolve into a larger organized group or association. Their message might get the attention of first more mainstream Web sites and bloggers and, in rare cases, the mainstream media. (Of course, “rare” might be 0.1%, but out of 10 million that would be 10,000 “breakout” sites). Even that need not happen for my “safety value” hypothesis to be validated. Most Americans did not head West, though all knew that they could. The free land of the American West enabled those who were most motivated and most dissatisfied with the opportunities where they were to have hope. They did not see themselves as being stuck. Nor did every city slicker who headed West prosper. But it was the opportunity that helped shape them and the spirit of this country for over two centuries. And today’s dissatified or motivated peercasters are learning that, for the first time, they too will be heard.

Blogging and podding and vodding or whatever else these formats might be called should not be viewed as a veneer or a Potemkin Village of phantom access to the world stage. The move to the Western frontier was real. Similarly this digital outlet that gives voice to the leafleteer, corner orator or anyone with a point of view or a story to be told is real and meaningful. We saw in Howard Dean’s meteoric rise the power of the Internet is getting the word out and in raising money. It happened for the most part under the radar of the mainstream media.

In the next decades peercasting will be become the norm to one degree or another. It will not replace traditional mass media but will add a significant dimension to what and how the media is viewed. And, I believe, peercasting will have an overall positive effect on the American -- and no reason why not the rest of the world’s – experience with the expanded boundaries of this new frontier. I think that’s how Frederick Jackson Turner would describe it.

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Radio Redux: Radio Has Been Less Local Than You May Think

In an article in last Sunday’s Boston Globe, Michele Hilmes, a professor of media and cultural studies at the University of Wisconsin, wrote how radio is being reinvigorated and reinvented by new methods of transmission such as the Internet, satellite and even podcasting. Her conclusion is very compatible with the discussion in my new study of the considerable robustness of the radio landscape, turning 180 degrees the argument that the radio industry is becoming more consolidated and less local.

Prof. Hilmes wrote:

Radio thus becomes a gatekeeper again for individual producers, creating culture out of their local environments combining bits and pieces of music and information drawn from all over the world, now finding a wider audience not in their geographical communities but in the global associations that the content itself builds for them. This model is at once much more like early radio, the one created by amateurs and small businesses in the 1920s, and completely different in its time, space, and community-shifting qualities. But it is radio, after radio, and stronger than ever.

I couldn’t agree more. Unfortunately, in her introduction to her main argument she perpetuates more erroneous history of the radio industry. She asks: “What was radio?” Then she explains “In the United States, it was always primarily a local phenomenon emanating from that local station downtown or out on the beltway.” She laments that today “A drive across the country brought in not the staticky succession of widely divergent, colorful local accents and tastes, but the same hit list of songs and raucous DJ patter, wherever you went."

However, it was the radio industry that actually developed the network model later adopted by the television industry. Today, radio is largely a local medium serving primarily local advertisers and local audiences. But at its pre-television peak, radio was dominated by four national networks: NBC, CBS, ABC and Mutual. By 1947 94% of all stations—and all of the largest—were part of one or more networks. Even more germane for understanding policy today, the nature of the long-term contracts that the networks had with their affiliates gave these four networks the final say on most of what local stations programmed.

With four networks providing the bulk of radio programming, radio looked much like television did prior to the 1980s: hundreds of local stations that relied on national networks for their content. In 1937, for example, during typical weekday evening prime time hours, the Milwaukee AM radio station WTMJ (owned by the Milwaukee Journal newspaper) broadcast all NBC Red network programming (NBC had a Red and Blue network. Blue was later spit off and became ABC). The bulk of its afternoon schedule was network as well.

After television gained audience share in the 1950s, radio localism began to take the form of “Top 40” formats. Packagers such as Todd Storz and Gordon McLendon helped stations across the U.S. implement their formula. From 20 such stations in 1955 there were hundreds by 1960. Although the names of the disc jockeys may have been different – Hy Lit in Philadelphia, Alan Freed in New York — the sound was the same. They subscribed to national “tip sheets” to identify the emerging hits and Top 40 play list services.

Thus, it was back in the 1940s through the 1960s when one could drive across the country and hear the same programming on the stations with the strongest signals and largest audience no matter what city you were in.

I’ll have more on radio another day. Stay tuned.

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WOTM FAQ #3: Are the Media Monolithic? Can they Suppress the News?

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

I received an email this week from a stranger. I reprint it below with my response. I hadn’t heard about the ”conspiracy” about the 10 Downing St. memo until I did some quick Googling about the issue. One of my first finds was an article by Washington Post ombudsman Michel Getler in which he noted that two self appointed “media watch dog” groups had been circulating via email a charge that U.S. media had been suppressing the story since it broke in the UK on May 1.

My correspondent evidently was alerted by one of these emails that spread like kudzu. Who needs the Associated Press when we have e-mail propagation? But I get ahead of myself. First, read the email I was sent:

I just read your rather interesting piece, The Myths of Encroaching Global Media Ownership, and am hoping that as an expert you might be able to shine some light on a more specific, media-related conundrum for me.

In just about every other nation the press has been reporting, starting two weeks ago in Britain, on the internal minutes of a British meeting in which President Bush and Prime Minister Blair made clear they were fixing the facts to further their desired goal of war on Iraq. It also made clear that the decision to start war with Iraq was set as of July 2002, in contrast to our president's claim that he hoped to avoid such a conflict up until March of 2003.

My question is not whether the president has been misleading the public; I believe there is abundant evidence to demonstrate that. Instead I am wondering if you can offer any possible explanation as to why our own media would, across the board, take a pass on this story for two weeks, the potential bombshell just now beginning to trickle in? It should be noted that the exact same pattern emerged with the Abu Ghraib scandal-- a story breaking abroad but not being reported on in the U.S. media until weeks
later.

I personally can come up with only two explanations for our media's reluctant and stingy coverage: the interests of a pressuring party, or parties, are being put before the citizenry's right to unadulterated information; or alternatively, the media is itself manipulating and omitting important stories to further an agenda more important to them than informing the masses. Sounds a bit sinister, but are there less outrageous options? That the media wanted to make sure the story was legitimate first? Two weeks seems a ridiculous amount of time for that.

As you can see, the whole thing is indeed a conundrum. That is, unless I've already whittled the puzzle down to the correct options. I would very much appreciate any new insights you can offer me.

My response:

Neither of your "hypotheses" would hold up to an understanding of how editors think and work at the dozens of major news organizations (not to mention the reliable sector of the Blogosphere).

1. For one, I personally was aware of the story from an article in the NY Times in early May. So the story was out there, if not with the ubiquity you would have preferred.

2. You're question has been addressed by the Washington Post's ombudsman, who wrote in part:

When I asked editors at the time why there had been no coverage, I was told that "it was a story that, in the best of all worlds, would have been in the paper, but we were tied up with [British] election coverage."

In subsequent questioning, editors agreed that this story should be covered and said they were going to go back and do that. On Friday, a solid story by reporter Walter Pincus was published on Page A18. Nevertheless, I have to say I'm amazed that The Post took almost two weeks to follow up on the Times report.

3. Last Thursday an article in The Minneapolis Star & Tribune reported: "The underlying reality is that the United States has moved beyond the debate over the reasons for invading Iraq, said Daniel Hofrenning, a political scientist at St. Olaf College in Northfield. Most Americans are focused on seeking positive outcomes from the war, not reason to blame the Bush administration for starting it."

4. The "media" are not monolithic. The news organizations are extremely competitive. They have consistently lead with pieces about various reports that have not found WMD. The pressure to "break" news lead to CBS News' using the dubious memo on Bush's National Guard service and Newsweek's just admitted mistake in using shaky information about use misuse of the Koran at Guantanamo. If anything, the growth in the number of news organizations and the end of the 24 hour news cycle with the spread of the real time Internet news cycle has lead to a greater probability of stories embarrassing to government -- federal, state, local, school boards, etc -- than may be reasonable.

5. If "they" or our government were even remotely complicit in "hiding" big stories it would have been something like Abu Ghraib, not the British memo. The fact that more editors didn't pick it up may reflect the "culture" of editing (See Herbert Gans' landmark work from 1979, Deciding What's News. I mention it in my new study.) The British memo surfaced in the midst of their Parliamentary elections and therefore would naturally be pertinent domestic news in the UK and I would guess it was initially viewed by most US editors as a British domestic story.

Editors are not supposed to wear their political ideology on their sleeves (or on their news pages) though of course indirectly that seeps through-- hence the constant debates about whether the news media are overtly liberal (See Bernard Goldberg's book Arrogance) or too conservative (FAIR, et al). The fact that both sides seem to feel so morally indignant suggests that overall (that is, not every individual operation all the time) they are probably doing their job.If YOU were an editor, you might have played the story differently. That's why the Blogs are so much more opinionated than mass media-- they are often run by people who have a well articulated ideology they want to promote.

We all need to be less paranoid. Most of the time things are exactly what they seem to be. In this case, is was a broad consensus from a wide range of decision makers of all sorts of personal political stripes who, by and large, did not see the story as front page news. Perhaps it was poor news judgment. But I see no dark side to it. And, of course, the story was out there all along. Anyone who feels that the U.S. media doesn't provide everything they need only has to open up Google News daily to get it all.

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Media "Reform" Conference Finds Plenty of Media Available to Report on It

A conference of a sort was held last weekend in St. Louis called the National Conference on Media Reform to “mobilize to fix our broken media system.” According to the conference Web site, among its grievances are “shoddy journalism”, “government-funded propaganda,” and “corporate consolidation.”

In a column reporting on the event, Mediachannel.org's Danny Schechter summarized the goal of the organizers: “To redirect the most powerful arsenal of communication technology humanity has ever known away from serving corporate interests and into the hands of our citizens and public needs.”

As best I can tell the event was totally the faithful preaching to the choir. If you look through the list of speakers there is no one invited to speak, on even a token basis, to articulate the positive, to question the assumptions of the organizers. To be sure, it was their conference (Robert McChesney, John Nichols and others from The FreePress.net) and they could invite whomever they wanted. But I wonder if this is what they mean with their mantra of “diversity” and "media democracy." I think it safe to presume that the conference organizers and attendees share the rhetoric of Mediachannel.org. Part of that group’s mission statement is “to provide information and diverse perspectives and inspire debate, collaboration, action and citizen engagement.”

Makes me wonder how these folks would program the mass media with their vision of democracy should “they” succeed with their agenda. Does media democracy mean imposing their values for someone’s else’s values? How would media content be any different if “they” took over without it being less responsive to the “people” than it is now? If the marketplace does not determine what gets watched, read and listened to, then another, alterative mechanism must be in place. And if that mechanism is anything other than what the audience chooses from a plethora of options it must be less democratic than the existing system. Recall that when there were only three commerial networks, the PBS network rarely achieved a rating greater than 2%, about one tenth of commercial network ratings.

I was also struck in viewing the conference’s Web site how much they touted the media coverage the conference received from multiple outlets:

• A video stream archive provided by Cambridge Community TV [my home town local access TV organization] from selected conference sessions.
• Daily editions of the Media Minutes radio show -- with interviews and audio highlights from the conference.
• MP3 audio files of panels and sessions that will be posted throughout the weekend.
• Links to the "best of the blogs" reporting from St. Louis.
• Pacifica radio affiliates across the country broadcast live from the keynote event.
• Highlights from the conference on LINK-TV, Free Speech TV, Chicago's CAN-TV and community televisions stations from across the country.
• And in the coming weeks, they promised, their site will include archived audio and video recordings and full transcripts of the sessions.

I suppose they can complain that CBS did not cancel their prime time schedule for live coverage. Or even provide a 90 second report on the evening news. But then, I could grouse that neither did CBS report on the press conference releasing my new study, "The Media Monopoly Myth", which provides data that undermines the entire premise of the media reform movement almost as thoroughly as their own recounting of how the Internet and radio provided substantial exposure erodes any argument that a handful of companies control our access to information. In promoting the media that gave an outside voice to the conference they blew away much of the explicit rationale of their movement.

Optical Illusions and Media Ownership: A Lesson for Policymakers

Many years ago I was returning from a trip through Canada’s Maritime Provinces when I stumbled on a tourist spot called Magnetic Hill. It was what looked to be simply a hill you could drive down. At the bottom, you put your car in neutral, released the brake– and the car rolled backward– seemingly up the hill. It was a disconcerting feeling and it certainly strained credulity.

An enterprising local had built a strategically located raised platform which, for a small fee, one could climb upon and watch as cars drove “down” to the bottom of the hill and then rolled backward. Only from the vantage point of the platform could I see the optical illusion. Of course I knew that I could not roll uphill. But even as I stood on the platform seeing the truth my brain was still convinced that what it saw and felt when I was in the car was real. Very real. That was in 1971 and I still recall how vivid the illusion was.

What’s the connection between the Magnetic Hill experience and media ownership? Just this: Despite the overwhelming data that shows that media ownership is not becoming increasing concentrated, despite the documented robustness of competition among firms and formats that exists, despite the lack of anything other than the occasional anecdotal tale of ownership abuse, otherwise smart and rationale policymakers keep harping on “growing media concentration.” They think there is less local programming. They either refuse to climb the platform to understand the illusion – or they are so convinced that their senses are correct that they ignore what their intellect should tell them is the reality.

In some cases I sense that the people who are most influential in policy – many members of Congress – have the least clue to what is happening. Here’s what I mean. Last September I was asked to provide testimony to the full Senate Commerce Committee investigating media ownership. During the Q&A, North Dakota’s Sen. Dorgan complained the Clear Channel-owned radio stations in Minot, ND no longer provided the extended agricultural weather reports they used to do. This was his way of showing how they have degraded local radio. My response to him was that it is silly (not sure I used that word) for a radio station that otherwise is programming country or Christian or Pop music for a wide audience to take five minutes several times daily for a detailed report on soil conditions and temperatures for the 100 farmers within earshot, while thousands of other listeners are bored silly.

I continued that farmers have from the start been in the forefront of using information technology. In the mid-1980s they were early adopters of the TRS-80 personal computers from Radio Shack. With a 300 baud modem attached they could dial into to one of the nascent services offered by agricultural stations that provided data on weather, soil conditions and the like. Today, via the Internet, they access sites that can provide far more detail about their specific crop interests than could possibly be imparted on a public radio broadcast.

In Sen. Dorgan’s backyard they may go to the North Dakota Agricultural Weather Network. A click away is the U.S. Dept of Agriculture’s Joint Agricultural Weather Facility. Or the High Plains Regional Climate Center. So why settle for a radio report that is verbal and for which the farmer must be available at just the time it is broadcast? This is not the best use for the public airwaves when more detailed, more targeted, more timely information is available at a time it is most convenient for the farmer to access it, not when a broadcaster decides to air it. And the broader public hears the music, news headlines or general weather they tune in for.

It is time for more policymakers to learn that we are all changing how we get our news, information and entertainment. It’s not their Father’s media environment. It’s not even the media environment they grew up with. Besides getting hands on, they should be devouring the studies from the Pew Internet & American Life Project, such as “How the Internet Has Woven Itself into American Life.” This study finds “The Web has become the ‘new normal’ in the American way of life; those who don’t go online constitute an ever-shrinking minority.” This is not from a techno-cheerleading band of futurists. It comes from a highly regarded, sober, survey research based non-profit with a solid track record of empirical data mongering.

To media policymakers: It’s time to climb the observation deck and see that you have been following an optical illusion.

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Where are Newspapers at "Dominant" Media Companies?

Quick: Name the three most influential newspapers in the United States today.

Did you say The New York Times? The Washington Post? The Wall Street Journal? There may be one or two others: The L.A. Times; maybe, in its fashion, USA Today. Even in this age of falling newspaper circulation, these newspapers often set the agenda for what gets covered by the TV news operations. I can't count the number of times I've seen a story on ABC Evening News or CNN that is straight from the pages of the Journal the day before.

Quick again. Which of the five monster media companies that Ben Bagdikian says in the 7th edition of his Media Monopoly book "decide what most citizens will or will not learn" owns these papers?

Answer: None. For all the properties these five (Time Warner, Viacom, News Corporation, Disney, and Bertelsmann) own, not one is a national newspaper or even a moderately influential one. Sure, all but Bertelsmann reach a large television audience (though a smaller one than 20 years ago). Yet on the crucial news and information scale they are at best second tier players when it comes to agenda setting. Indeed, even the Watergate story, perhaps at the pinnacle of reportorial events of the second half of the 20th Century and within the broadcasters' heyday, it was The Washington Post that did the heavy digging.

This observation of the disconnect between the presumed "power" of some five or whatever number media companies and the absence of any of the important print media in their portfolios is courtesy of Jack Shafer, who is the media critic for Slate. In his review last August of Bagdikian's latest iteration of the multi firm "monopoly" series Shafer writes:

But the Big Five determine what the majority learns only in those places where the newsstand sells only the New York Post and Time and where TV receivers have been doctored to accept signals only from CNN, ABC, CBS, and the Fox News Channel —which is to say nowhere.

I repeatedly hear this litany of five dominant media companies. Yet not one of them is dominant across all-- even most-- mass media. None of the first four (Bertelsmann is not in the television, cable, or radio business in the U.S.) is even dominant in television, as they split up, along with GE's NBC/Universal, about half of the all households on a typical evening. Five players sharing 55 million households may be a good business, but it ain't dominance. GM, Daimler-Chrysler, Ford, Honda and Toyota each sell lots of cars, but none dominate the market the way GM did into the 1970s when it alone accounted for just shy of half of all cars sold.

The other half of households are watching someone else's programming or perhaps reading someone else's newspaper. To be sure, some might be reading Time Warner's People magazine instead of watching a Fox produced movie on Viacom's Showtime cable channel. They could also be among the millions doing something else altogether: online bidding at eBay, watching the Spanish language Univision network, downloading music at iTunes, reading this or one of millions of other Blogs -- or maybe helping their kids with homework.

I know there's a small cadre of media bashers who get no solace from this analysis. To them (and I am confident none will be reading this Blog) it really makes no difference how many providers there are. To them, so long as the media are driven by private enterprise and the marketplace anything they produce is tainted.

But for everyone else, I ask once again: Do you have more choices in types of programming and selections of viewpoints today than 20 years ago? Or if you're under about 30 -- and your choice 20 years ago was mostly in the form of Mr. Roger's Neighborhood, Sesame Street or Dr. Seuss -- do you truly find that you can't locate the music, art, opinion, film, entertainment, sports, or games that you would prefer to have over what is out there?

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"Bill of Media Rights" Further Decomposed

Adam Thierer, in his Blog today, takes apart the underlying presumptions of those who hold that the First Amendment is fundamentally about the people's right of access to private media. The First Amendment "does not serve as an affirmative grant of access to privately owned media."

Rather than repeat Adam's well reasoned and documented argument, you should read it for yourself. Even those who might be sympathetic to the so-called Bill of Media Rights will learn some history and law along the way they might find worthy of debate.

One point Adam brings up was the Supreme Court's Red Lion decision in 1969, which established the justififcation for the right of the government to impose content mandates on broadcasters that only five years later were prohibited to be placed on print media in the Miami Herald v. Torinillo case. I've been waiting for 10 years now for a case to make its way through the courts that would directly challenge Red Lion. The argument that television and radio outlets, which once were severely restricted in number by primitive technology and bad regulatory decisions, should be given lesser First Amendment rights than print has been fatally undermined by improvements in using spectrum and the proliferation of channels being made available by cable, the Internet and finally fiber to the home. Soon it will be easier-- and certainly cheaper-- to construct an audio or even video soapbox than a print soapbox. (Pardon the mixed metaphor-like construction.)

Should you decide not to click to Adam's article, I did want to at least highlight his pentultimate paragraph. Referring to what seems to be the real agenda of many of those who support the ideas behind this so-called Bill of Media Rights, he says they are saying:

The American people want what WE want and what WE want is something different that what we see on networks or outlets that WE don't control. That's why, so they say, it is so important that the government give US control over more of the decisions about media in this country. You see, WE are the enlightened ones who will tell the rest of your ignorant runts what you really need to read, see, or hear. And it all begins by giving US just a little more say over how media is regulated in this country.

This conclusion is much of what I was saying in my entry here yesterday. From ground level, it is manifest in the e-mail exchange I included on page 43 of my new study. My correspondent admits that her anger at Clear Channel Communications is over what she perceives as their support of the Bush Administration. If they had manifestly liberal leanings -- well, it sounds like she wouldn't be so concerned about their ownership position.

As a long time pluralist, I would not want to taint everyone who thinks the media can be better with a single brush. But I believe there is a close parallelism between respect for market mechanisms in the media and democracy. Either you believe that the people have the right to make their decisions about their leaders or about the content they consume based on their own choices -- even if sometimes the choices seem like bad ones to others of us-- or you will head down the road to some form of benevolent authoritarianism.

Scratch some of these media "reform" activists and you will likely find a frustrated editorial writer/producer/publisher-- monopolist.

"Bill of Media Rights" May Not Be What it Seems

An advocacy group that calls itself the Media and Democracy Coalition held a news conference in Washington today to announce The Bill of Media Rights.

The Preamble starts positively enough, proclaiming "A free and vibrant media, full of diverse and competing voices, is the lifeblood of America’s democracy and culture, as well as an engine of growth for its economy." No quibbles from me about this. Indeed I hold that this is exactly where we are in the U.S. today. But the very next sentence quickly devolves into mythsville: "Yet, in recent years, massive and unprecedented corporate consolidation has dangerously contracted the number of voices in our nation’s media."

I think to myself: The word of the press conference was spread cheaply and efficiently by an e-mail blast. The Web site, which provides a link to the pdf of the "Bill," is easily accessed by anyone in the world with a Web connection. No "big media" needed. So by the second sentence I'm asking, "Where's the beef?"

My problem-- and everyone's problem -- should not be with the principals but with the implementation of the rights. One right, for example, is:

"Newspapers, television and radio stations, cable and satellite systems, and broadcast and cable networks operated by multiple, diverse, and independent owners that compete vigorously and employ a diverse workforce."

We already have multiple and diverse. What is meant by "independent?" Independent of whom, of what? Of government? The primary direct role of government in media today are those regulations on broadcasters that limit their free speech rights compared to other media. Recall that the fines levied for the Janet Jackson "malfunction" could not have applied if the same had happened on cable-only ESPN. The Clear Channel stations fined for Howard Stern's speech will not be repeated once he moves over to satellite radio. So if independent from government, then that implies cutting the curbs on broadcasters. I don't think that's what the coalition has in mind.

Independent of non-media institutions? Or corporate ownership of any sort? Would that include ownership by Big Labor as well?

What about the right to "Programming, stories, and speech produced by communities." That sounds a lot like public access cable, municipal channels, university and other publicly-owned radio stations (20% of all radio stations are non-commercial). It sounds like the millions of Web sites and Blogs, such as the Media Bill of Rights Web site.

But I'm afraid that many of the organizers behind the Bill of Media Rights want something more. Between the lines of this document it sounds much like Robert McChesney's prescription. He tries to make the case that we cannot have a democratic society so long as the media--no matter how many firms--are privately owned, profit-seeking and supported by commercialism. Media reform, he writes in his book The Problem of the Media, is prevented because the people think there is diversity and that the media "give people what they want." We're not smart enough to make our choices without some higher authority to guide us. Thus, the mass audience cannot be left to the whims of the marketplace to choose what they watch, read and hear. His prescription, right out the "Bill of Media Rights" is for change that favors small, locally owned or family based media organizations, perhaps some owned by nonprofits, by labor unions or other noble institutions.

I suspect that if the idealists behind the Bill of Media Rights had their way, CBS' "Survivor" would be replaced by the local School Board meeting; Fox's "24" would become Bill Moyers 24/7 and "American Idol" would be "Monday Night at the Opera." Any choice so long as it's not a mass market choice. That's democracy!

Well, at least we'll have the diversity provided by Netflix (unless the Hollywood studios fall under the control of Michael Moore's production company).

[If you have not found it before, Robert McChesney and I were central participants in an online "debate" about media ownership a few years ago at opendemocracy.net. It remains fresh and appropriate. I think time has reinforced my position. But if you're a fan of Prof. McChesney I think his contributions will be fulfilling. To read in the order posted, start at the bottom of the listings.]

My New Study: "Media Monopoly Myth"

The New Millennium Research Council released my newest study today, The Media Monopoly Myth: How New Competition is Expanding Our Sources of Information and Entertainment.

Consistent with my findings over the past 25 years, it provides new empirical data that undercuts the myth that U.S. media ownership is over concentrated today. The study finds that fears about media control have reached the level of Urban Legend, not based on fact. What my study found is that we are often looking at inappropriate “metrics” to prescribe what to do when it comes to media ownership. We’ve got rules that were designed for the world of the 1950s and 60s. And here we are in 2005 when the Internet and all things digital are making a mockery of our continued attempts to pound the square pegs of media ownership policy into the round holes of today’s media landscape.

I found that most fears about media control and program choices are just that, “fears." They are based on anecdotes, conjecture and social agendas. The facts simply do not make any kind of case that Americans have something to fear when it comes to current media ownership.

Current measures for media ownership do not take into account the massive shift over the last 10 years. Two-thirds of Americans are now using the Internet for a variety of purposes including listening to radio, streaming video and reading online news content from around the country and the world. The approach in the U.S. to regulating media ownership should not be fixed by the environment of 1980 or even 1995.

Drawing on my own research and incorporating that of others, among my findings:

Americans have more choices available to them when it comes to media content than ever before. Television viewers have more choice from more sources than at any time in the history of the medium.

Who owns the media does matter for content, but not always with the outcomes in the direction proclaimed in the common wisdom.

There is no support for 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

Publicly owned newspaper chains are less likely to have an ideological agenda they want to promote than those that are family controlled.

Television stations with cross-ownership—in which the parent company also owns a newspaper in the same market—tend to produce higher quality newscasts.

The largest television industry players control less of the market today than they did in the past. Contrary to the widespread perception that television is more concentrated than 30 or 20 or 10 years ago, by a number of critical measures, there is more competition. The market share of the three traditional television networks—CBS, ABC, and NBC—has declined substantially since 1980, while new networks from newer players have become increasingly competitive for viewer attention.

The report also addresses radio competition as well as the impact of the Internet on sources of information, news, entertainment and culture.

The report was launched with a news conference with commentators Adam Thierer of The Progress & Freedom Foundation and Adam Clayton Powell III, at University of Southern California. An archived audio stream of the news conference is available at the NMRC home page.

The New Millennium Research Council (NMRC) was created in 1999 to develop workable, real-world solutions to the issues and challenges confronting policy makers. Its work has focused primarily in the fields of telecommunications and technology.

Link to this entry

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.