Minding the media's business 


With the merger of AOL and Time Warner -- the largest in history -- the stunning wave of concentration of ownership in media and communication industries over the past decade continues. There were 12 major telecommunication companies in 1996; today there are six. The media system itself is now dominated by eight or nine massive firms, and another 12-15 round out the system. These two dozen profit-driven companies, owned and managed by billionaires, account for nearly the entirety of the U.S. media culture. Because that media system is largely non-competitive in the traditional economic sense of the term, it violates any known theory of a free press in a democratic society.

The merger is also part of the related trend toward "convergence," meaning that with the rise of digital communications, the dominant firms in media, computing, and telecommunications are combining into super colossal transnational corporations the likes of which we have never even imagined. Indeed this deal, which unites the largest media firm with the dominant Internet firm, will in all likelihood trigger another round of mergers that should leave the entire realm of communication under the thumbs of a small handful of companies. And this is for the entire world, not just the United States. As Time Warner CEO Gerald Levin stated on a recent CNN broadcast, firms like AOL Time Warner now are more important than governments, educational institutions, or any other element of society.

The AOL-Time Warner merger hammers the last nail in the coffin of the argument that the Internet will provide the basis for a new group of commercial media to challenge the dominance of the traditional media giants. While the Internet will offer billions of websites, insofar as it is a commercially viable medium, it is going to be dominated by the same few giants that dominate already. If anything, the Internet is accelerating the pace of concentration, because firms know that in times of rapid technological change, it is far better to be very big and have less competition than to be smaller and have more competition. That is Capitalism 101.

Moreover, it is worth reflecting on how rapidly the Internet has changed over the past few years. The Internet is a direct testament to socialism, or, at least, to public sector policy. The government created and subsidized the Internet and its predecessors for three decades; private sector firms wanted no part of it because they couldn't figure out how to make a buck from it. Then, in the early 1990s, without a shred of public debate or deliberation, and with no media coverage whatsoever, the Internet was privatized and turned over to Corporate America. The prohibition of commercialism was lifted.

It is an extraordinary case of corruption; the public does the spade work and takes the risks, Wall Street takes control and rakes in all the profits. The public gets nothing in return except a tidal wave of corporate PR bullshit extolling the virtues of the Corporate-run digital era. The corporate-run news media treats all of this as a business story; only rarely is it asked how this affects consumers. And never is pursued the even more fundamental question: How does this affect us as citizens?

So this is where we are at the dawn of the new century: our communication system is changing at a bewildering pace, and the only thing certain at present is that the eventual course of the Internet -- the central nervous system of our era -- will be determined by where the most money can be made. The handful of billionaires directing this operation cannot care about anything but maximizing their profits. Everything else is irrelevant. And the government, almost entirely under the thumb of these corporations and their super-powerful lobbies, is doing everything it can to expedite the process.

This is absurd. At the very least, it is highly undemocratic. And it is in all our interests that it change.

Here are the implications of the concentrated corporate media system and what we can and should do to reform it.


Media concentration is not a new phenomenon, but it is taking a new and dangerous form.

Classically, media concentration was in the form of "horizontal integration," where a handful of firms tried to control as much production in their particular fields as possible. The U.S. film production industry, for instance, has been a tight-knit club effectively controlled by six or seven studios since the 1930s. The newspaper industry underwent a spectacular consolidation from the 1960s to the 1980s, leaving half a dozen major chains ruling the roost. U.S. book publishing is now dominated by seven firms, the music industry by five, cable TV by six. Nearly all of these are now parts of vast media conglomerates.

But no longer are media firms intent on horizontal integration. Today, they seek "vertical integration," not only producing content but also owning distribution. Moreover, they are players in media sectors not traditionally related. These conglomerates own some combination of TV networks, TV show production, TV stations, movie studios, cable channels, cable systems, music companies, magazines, newspapers and book publishing firms.

This has all come about seemingly overnight. In 1983, Ben Bagdikian published "The Media Monopoly," which chronicled how some 50 media conglomerates dominated the entirety of U.S. mass media. By today's standards, that era was downright competitive.

The mega-media firms have enjoyed a staggering rate of growth in the last decade. In 1988, Disney was a $2.9 billion-a-year amusement park and cartoon company; in 1998, Disney had $22 billion in sales. In 1988, Time was a $4.2 billion publishing company and Warner Communications was a $3.4 billion media conglomerate; in 1998, Time Warner did $26 billion of business. In 1988, Viacom was a measly $600 million syndication and cable outfit; now merged with CBS, the new Viacom is expected to do $22 billion worth of business in the coming year.

Moreover, each of these firms averages at least one equity joint venture -- sharing actual ownership of a company -- with the other media giants. Rupert Murdoch's News Corp. has at least one joint venture with each of them. AT&T Liberty owns nearly 10 percent of both News Corp. and Time Warner. This looks more like a cartel than the fabled competitive marketplace.

For decades, U.S. laws and regulations forbade film studios from owning movie theaters, and television networks from producing their own entertainment programs, because it was understood that this sort of vertical integration would effectively prohibit newcomers from entering these production industries. Likewise, regulations forbade companies from owning more than one radio or TV station in the same market and put a strict cap on the number of stations that a single family could own. Such restrictions have been relaxed or eliminated in these deregulatory times, and, as the Viacom/CBS merger shows, producers and distribution networks are racing to link up with each other.

What these media conglomerates have learned is that the profit whole is greater than the sum of the profit parts. Viacom/ CBS, for instance, will now be able to produce a movie at Paramount or a TV show at Spelling studios, air it on Showtime and CBS, advertise it on its 34 TV stations, as well as on the 163 Infinity Radio stations, and then sell it at Blockbuster Video -- all owned by the same merged company.

"When you can make a movie for an average cost of $10 million and then cross-promote and sell it off of magazines, books, products, television shows out of your own company, the profit potential is enormous," said Viacom's Sumner Redstone, even before he put his money down on CBS.


Perhaps nowhere is the effect of concentrated media control more insidious than in journalism, democracy's lifeblood. Today, journalism -- meaning the rigorous accounting of the powers-that-be and the powers-that-want-to-be, as well as wide-ranging coverage of our most urgent social and political issues -- has nearly ceased to exist on the air and has been greatly diminished elsewhere. The reason is simple: Good journalism is bad business, and bad journalism can be very, very good for business.

The corporate assault on journalism assumes many forms. Since the mid-1980s, for example, there has been a 50 percent reduction in the number of broadcast network reporters in Washington, D.C. This shifts more power to the P.R. industry and its corporate clients, which are ever eager to provide news fare to the media. It is bad business, too, to do hard investigative work on corporations and powerful government agencies that primarily serve elite interests, like the Pentagon, the CIA and the Federal Reserve Board. Such exposés can lead to expensive lawsuits and acrimonious relations with major advertisers, corporate brethren and political heavyweights.

It is far better business practice to cover stories about celebrities, natural disasters, sensational crimes, the Kennedys and the royal family, and to limit political reporting to mindless speculation about campaign tactics and the regurgitation of mainstream politicians' soundbites.

For network and cable TV, news has gone from being a loss-leader and a mark of network prestige to being a major producer of network profit. NBC is renowned not so much for the quality of its news as for its extraordinary success in squeezing profit from it. NBC uses QNBC, a high-tech statistical service, to analyze its news reports to see exactly how its desired target audience is reacting to different news stories, and to the ads.

Meanwhile, the owners of the networks are increasingly hostile to airing reports that may call into question some of their other activities. In 1998, Disney-owned ABC News killed a "20/20" segment by Brian Ross, its leading investigative reporter, about Disney World. Ross was prepared to air charges that Disney was so lax in doing background checks on employees that it had hired pedophiles. Although ABC News claimed the cancellation was due to factors other than pressure from above, the stench of conflict-of-interest could not help but fill the air.

The same censorship mentality spills over into programming. Last May, NBC heavily advertised a two-part mini-series called "Atomic Train," which was originally about a runaway train carrying nuclear waste. But just days before broadcast, NBC started to pull the ads for the program and dubbed out all references to nuclear waste, choosing the more generic "hazardous material." Not incidentally, General Electric, which owns NBC, is a major nuclear energy producer.

The commercial media are increasingly cozy with other wealthy corporations, as well. A News Corp. station in Tampa in 1997, for instance, fired two of its on-air reporters for refusing to water down their investigative story on Monsanto's bovine growth hormone. And CBS News last year rebuked Roberta Baskin, one of its "48 Hours" correspondents, who was responsible for an acclaimed 1996 exposé of Nike's labor practices in Vietnam. Her apparent crime? She had protested too loudly when CBS on-camera correspondents wore the Nike logo and Nike gear during the CBS telecasts of the 1998 Winter Olympics, for which Nike was a major sponsor.

If we are serious about democracy, we need decent journalism. And to get decent journalism, we need to make fundamental reforms in our media system.


Even among those who deplore conglomeration, hypercommercialism and the decline of public-interest journalism, there is a fatalistic sense that this is the way it must be. But the U.S. media system is the result of a series of political decisions, not natural law or holy mandate. The U.S. government and the citizens of the United States did not -- and do not -- have to turn over the broadcast spectrum to nine mega-corporations interested only in profit.

The first major law for U.S. broadcasting was the Communications Act of 1934; the second was the Telecommunications Act of 1996. In 1934, there was considerable opposition to corporate domination of radio broadcasting, but those who led the opposition had barely any influence in Washington. In 1996, there was nowhere near the organized opposition that existed in 1934, and the communications lobbies pushed the law through at breakneck speed.

The striking feature of U.S. media policy-making is how singularly undemocratic it has been -- and remains. That has got to change. These four proposals for media reform are by no means blueprints; they are meant only to get the discussion going.

Shore up nonprofit and noncommercial radio: A nonprofit, noncommercial media sector currently exists in the United States and produces much of value, but it's woefully small and underfunded. This sector is unbeholden to corporations, and its views are undistorted by the profit motive. It thus has the inclination to air stories that run counter to the interests of the huge corporations; it publishes viewpoints on national issues that get short-shrift elsewhere, and it engages in the kind of public-spirited debates that we need more of in our democracy.

Foundations and organized labor could and should contribute far more to nonprofit media. And government itself should foster this sector. It could extend lower mailing costs for a wide range of nonprofit publications. Or it could permit tax deductions for contributions to nonprofit media.

To leave the nonprofit, noncommercial sector to starve as the commercial sector gets fatter and fatter makes no sense at all.

Strengthen public broadcasting: Public broadcasting today is really a system of nonprofit commercial broadcasting, serving a sliver of the population. What we need is a system of real public broadcasting, with no advertising, one that accepts no grants from corporations or private bodies, one that serves the entire population, not merely those with high-brow tastes and disposable income to give during pledge drives.

A new system should include more national networks, local stations, fully utilized and subsidized public access television, and independent community radio stations. Every community should also have a stratum of low-power television and micropower radio stations.

Where will the funds come from to underwrite such a service? At present, the federal government provides $260 million annually. The public system I envision -- which would put per capita U.S. spending in a league with Britain's and Japan's -- may well cost $5 billion to $10 billion annually. Draw the funds from general revenues. A system of genuinely nonprofit, noncommercial and public broadcasting is essential if we are to be not just consumers but citizens.

Toughen regulation: Media reformers have long been active in this arena, if only because the public ownership of the airwaves gives the Federal Communications Commission a clear legal right to negotiate terms with the chosen few who get broadcast licenses. Still, broadcast regulation has largely been toothless, with the desires of powerful corporations and advertisers rarely challenged.

Commercial broadcasters should be granted licenses only on the following terms: First, they will not air any paid political advertising during electoral campaigns unless every candidate on the ballot is given equal time, free of charge, immediately following the paid spot of a rival. This would go a long way toward clearing up the campaign spending mess that is destroying electoral democracy in the United States.

Second, follow the lead of Sweden and ban advertising to children under 12. Likewise, remove advertising from TV news broadcasts.

Third, broadcasters should donate some percentage of their revenues to subsidize several hours per day of noncommercial children's and news/public affairs programming. Educators and artists should control the children's programming; journalists, the news programming.

Antitrust: Not only do the media giants make a mockery of free competition; they also impede the very functioning of democracy. Antitrust laws were put on the books at the turn of the last century to counteract the power of a few huge companies over both our economic and our political system. We should recall those concerns today as we wrestle with the media behemoths.

What is needed is a new media antitrust statute that would emphasize the importance of ideological diversity and noncommercial content. The objective should be to break up the media conglomerates and smash their vertical integration so that their book publishing, magazine publishing, TV show production, movie production, TV stations, TV networks, cable TV channels, cable TV systems, retail store chains, amusement parks, and so on, all become independent firms. With reduced barriers to entry into these specific markets, new firms could more easily join in, and something resembling fair competition could ensue.


As the agitator Saul Alinksy noted, to beat organized money, you need organized people. The issue of media reform can attract the enthusiastic support of many who have not been previously active. There's a general disgust with the media and entertainment industry, and there's a wellspring of populist resentment toward media giants.

While the fight for a democratic media is a necessary component -- even a cornerstone -- of any democratic movement, it cannot be won in isolation. Media reformers need to work with those involved in campaign finance reform, organized labor, civil rights, women's rights, gay and lesbian rights, immigrant rights, environmental protection, health care and education. A broad movement is required to reshape our society, redeem its democratic promise, and put power in the hands of the many.

It won't be easy. On the media front, the giants are unusually canny, and they have the means at their disposal to get their own views across.

Unless we marshal the forces on our side and organize, we will continue to be spectators to more and more mergers, and the prospects for democracy will grow weaker and weaker.

Media critic Robert W. McChesney's latest book is "Rich Media, Poor Democracy: Communication Politics in Dubious Times" (University of Illinois). Portions of this essay, which he updated for Orlando Weekly, originally appeared in the November 1999 issue of The Progressive.


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