Media cross-ownership in the United States

Media cross-ownership refers to the ownership of multiple media businesses by a person or corporation. These businesses can include broadcast and cable television, radio, newspaper, book publishing, video games, and various online entities. Much of the debate over media cross-ownership in the United States has for many years focused specifically on the ownership of broadcast stations, cable stations, newspapers and websites. Meaning, that when one organization owned any two of these media outlets, that organization was involved in "cross-ownership."

Background

The Communications Act of 1934 was the stepping stone for all of the communications rules that are in place today. When first enacted, it created the FCC (Federal Communications Commission). . It was created to regulate the telephone monopolies, but also regulate the licensing for the spectrum used for broadcasting. The FCC was given authority by Congress to give out licenses to companies to use the broadcasting spectrum. However, they had to determine whether the license would serve “the public interest, convenience, and necessity”

The Telecommunications Act of 1996 was a major influential act for media cross-ownership.

In 2003 the FCC set out to re-evaluate its media ownership rules specified in the Telecommunications Act of 1996. The rules where not adopted until later, 2007. "The FCC in 2007 voted to modestly relax its existing ban on newspaper/broadcast cross-ownership"

History of Cross-Ownership Regulations

The FCC designed rules to make sure that there is a diversity of voices and opinions on the airwaves. “Beginning in 1975, FCC rules banned cross-ownership by a single entity of a daily newspaper and television or radio broadcast station operating in the same local market.” The ruling was put in place to limit media concentration in TV and radio markets, because they use public airwaves, which is a valuable, and now, limited resource.In September 2002, the FCC issued a Notice of Proposed Rulemaking stating that the Commission would re-evaluate its media ownership rules pursuant to the obligation specified in the Telecommunications Act of 1996. In September 2002, the FCC issued a Notice of Proposed Rulemaking stating that the Commission would re-evaluate its media ownership rules pursuant to the obligation specified in the Telecommunications Act of 1996.In June 2003, after its deliberations which included a single public hearing and the review of nearly two-million pieces of correspondence from the public opposing further relaxation of the ownership rules the FCC voted 3-2 to repeal the newspaper/broadcast cross-ownership ban and to make changes to or repeal a number of its other ownership rules as well. In the order, the FCC noted that the newspaper/broadcast cross-ownership rule was no longer necessary in the public interest to maintain competition, diversity or localism. However, in 2007 the FCC revised its rules and ruled that they would take it “case-by-case and determine if the cross-ownership would affect the public interest. The rule changes permitted a company to own a newspaper and broadcast station in any of the nation’s top 20 media markets as long as there are at least eight media outlets in the market. If the combination included a television station, that station couldn’t be in the market’s top four. As it has since 2003, Prometheus Radio Project argued that the relaxed rule would pave the way for more media consolidation. Broadcasters, pointing to the increasing competition from new platforms, argued that the FCC’s rules—including other ownership regulations that govern TV duopolies and radio ownership—should be relaxed even further. The FCC, meanwhile, was there to defend its right to change the rules either way.“ That public interest is what the FCC bases its judgments on, whether a media cross-ownership would be a positive and contributive force, locally and nationally.

The Current Review

In June 2006, the FCC adopted a Further Notice of Proposed Rulemaking (FNPR) to address the issues raised by the United States Court of Appeals for the Third Circuit and also to perform the recurring evaluation of the media ownership rules required by the Telecommunications Act. The deliberations would draw upon three formal sources of input:(1) the submission of comments, (2) ten Commissioned studies, and (3) six public hearings.

Media Consolidation in the United States

For those who believe that the American media system is consolidated, the view is advanced that six large media conglomerates own a large percentage of the major media outlets in the United States.

These six corporations are referred to as “The Big Six”;

The "Big Six"

The Big Six	Media Outlets	Revenues (2009)
File:General Electric.gif	NBC and Telemundo, Universal Pictures, Focus Features, 26 television stations in the United States and cable networks MSNBC, Bravo and the Sci Fi Channel. GE also owns 80 percent of NBC Universal.	$157 billion
File:Walt Disney Company.gif	Owns the ABC Television Network, cable networks including ESPN, the Disney Channel, SOAPnet, A&E and Lifetime, 277 radio stations, music and book publishing companies, production companies Touchstone, Miramax and Walt Disney Pictures, Pixar Animation Studios, the cellular service Disney Mobile, and theme parks around the world.	$36.1 billion
File:News Corporation.gif	Holdings include: the Fox Broadcasting Company; television and cable networks such as Fox, Fox Business Channel, National Geographic and FX; print publications including the Wall Street Journal, the New York Post and TVGuide; the magazines Barron's and SmartMoney; book publisher HarperCollins; film production companies 20th Century Fox, Fox Searchlight Pictures and Blue Sky Studios; numerous websites including MarketWatch.com; and non-media holdings including the National Rugby League.	$30.4 billion
File:Time Warner.gif	Largest media conglomerate in the world, with holdings including: CNN, the CW (a joint venture with CBS), HBO, Cinemax, Cartoon Network, TBS, TNT, America Online, MapQuest, Moviefone, Warner Bros. Pictures, Castle Rock and New Line Cinema, and more than 150 magazines including Time, Sports Illustrated, Fortune, Marie Claire and People.	$25.8 billion
File:Viacom.gif	Holdings include: MTV, Nickelodeon/Nick at Nite, VH1, BET, Comedy Central, Paramount Pictures, Paramount Home Entertainment, Atom Entertainment, and music game developer Harmonix. Viacom 18 is a joint venture with the Indian media company Global Broadcast News.	$13.6 billion
File:CBS Corporation.gif	Owns the CBS Television Network, CBS Television Distribution Group, the CW (a joint venture with Time Warner), Showtime, book publisher Simon & Schuster, 30 television stations, and CBS Radio, Inc., which has 130 stations. CBS is now the leading supplier of video to Google’s new Video Marketplace.	$13.0 billion

FCC's Review of the Broadcast Ownership Rules; (2007)

Ownership Rules	Details
National TV Ownership	The rule does not limit the number of TV stations a single entity may own nationwide so long as the station group collectively reaches no more than 39 percent of all U.S. TV households. For the purposes of calculating the “national audience reach” under this rule, TV stations on UHF channels (14 and above) count less than TV stations on VHF channels (13 and below). The National TV Ownership rule is no longer subject to review in the FCC’s quadrennial review proceeding.
Dual TV Network Ownership	The rule prohibits a merger among any two or more of these television networks: ABC, CBS, Fox, and NBC.
Local TV Multiple Ownership	The rule allows an entity to own up to two TV stations in the same DMA if either (1) the service areas – known as “Grade B signal contours” – of the stations do not overlap; or (2) at least one of the stations is not ranked among the top four stations in the DMA (based on market share), and at least eight independently owned TV stations would remain in the market after the proposed combination.
Local Radio/TV Cross-Ownership	The rule imposes restrictions based on a sliding scale that varies by the size of the market: (1) in markets with at least 20 independently owned “media voices” (defined as full power TV stations and radio stations, major newspapers, and the cable system in the market) an entity can own up to two TV stations and six radio stations (or one TV station and seven radio stations); (2) in markets with at least ten independently owned “media voices” an entity can own up to two TV stations and four radio stations; and (3) in the smallest markets an entity may own two TV stations and one radio station. In all markets, an entity must comply with the local radio and local TV ownership limits.
Local Radio Ownership	The rule imposes restrictions based on a sliding scale that varies by the size of the market: (1) in a radio market with 45 or more stations, an entity may own up to eight radio stations, no more than five of which may be in the same service (AM or FM); (2) in a radio market with between 30 and 44 radio stations, an entity may own up to seven radio stations, no more than four of which may be in the same service; (3) in a radio market with between 15 and 29 radio stations, an entity may own up to six radio stations, no more than four of which may be in the same service; and (4) in a radio market with 14 or fewer radio stations, an entity may own up to five radio stations, no more than three of which may be in the same service, as long as the entity does not own more than 50 percent of all radio stations in that market.

Even though media cross-ownership is allowed it is under strict guidelines and rules. For example, the top networks (ABC, CBS, Fox, and NBC) can not merge with each other - regardless wether it would increase broadcasting quality. Also, media outlets can only own so many "top-rated" stations in each market. The rules where put in place to control how much can be owned by single entities to decrease the barriers of entry that might be created. When large corporations start to consolidate smaller broadcasting stations into a single news-media-outlet, they create tough barriers for others to overcome to compete with them. However, with strict rules dictating that only certain top-rated broadcasting stations can be combined into one, barriers of entry are easier to overcome.

"An objective review of the health and diversity of the current media environment makes one wonder what exactly the government thought it was protecting the public from in keeping the cross-ownership prohibition in place for so long. If a particular transaction truly creates a risk that a single operator will control an overwhelming portion of the public’s mindshare either locally or nationally, the antitrust laws could be used to protect the public interest. The FCC’s new rules are a decidedly positive step in the right direction" - Johnathan A. Knee

Media Conslidation Debate

Robert W. McChesney

File:BobMcChesney.jpg

Robert McChesney, Ph. D.

Robet McChesney is an advocate for media reform, and the co-founder of Free Press, which was established in 2003. His believes are based on that the media needs to be regulated, and more diverse viewpoints should be allowed to compete and enter the market. However, his viewpoints on current regulation are; "there is every bit as much regulation by government as before, only now it is more explicitly directed to serve large corporate interests." He also believes that; "in the next five to 10 years, if not less, fundamental communication policy decisions likely will be made that will shape our nation for decades, maybe generations. Whether we will even have something remotely close to a credible journalism is very much up for grabs, along with much else. These decisions will be made whether we like it or not, under terms over which we have only a little control. If we elect to sit this one out because we are unable to get the ideal results in the short-term, or because this movement does not score high enough on our checklist of core issues, we “ain't going to make it with anyone anyhow.” We will simply be fools" McChesney argued that the future of our journalism will be based more on corporate profits, and what was is most popular to broadcast, then actual true-journalism. The media is a giant conglomerate owned, mostly, by six big corporations that was created to make money. "[T]he American media are dominated by less than twenty firms—and that a half-dozen or so corporate giants hold the commanding positions. These firms use their market power to advance their own and other companies’ corporate agendas. And they increasingly commercialize every aspect of our culture. By any known theory of political democracy, this tightly-held media system, accountable only to Wall Street and Madison Avenue, is a poisonous proposition."

McChesney also holds the position that the current media outlet form is un-natural, and that most American's are unaware of what is happening and which laws are being passed. "There is nothing natural about the existing corporate media system; it is the result of laws, regulations and extensive public subsidies that have been pushed through by the corporate media lobby with almost no public awareness or participation in the legislative process."

McChesney believes that the Free Press' objective is a more diverse and competitive commercial system with a significant nonprofit and noncommercial sector. It would be a system built for the citizen's, but most importantly - it would be accessible to anyone who wants to broadcast. Not only specifically the big corporations that can afford to broadcast nationally, but more importantly locally. McChesney suggests that to better our current system we need to "establish a bona fide noncommercial public radio and television system, with local and national stations and networks. The expense should come out of the general budget" Also, "let’s really make some demands on commercial broadcasters, and finally get something in return for letting them become filthy rich using the scarce public airwaves at no charge. Why not insist on eliminating advertising on children’s and news programs, and use five percent of the broadcasters’ revenues to subsidize three or four hours per day of children’s and news shows on every channel? And put the control over these shows in the hands of journalists and creative people, not advertising executives! And why not ban running any political ads as a condition for getting a license to broadcast? "

Benjamin Compaine

File:BenjamineCompaine.jpeg

Benjamine Compaine (right) receiving Journal of Media Economics Award of Honor from Alan Albarran (left)

Benjamin Compaine believes that the current media system is “one of the most competitive major industries in U.S. commerce.” He believes that much of the media in the United States is operating in the same market. He also believes that all the content is being interchanged between different mediums. "Overall, the media industry -- including broadcasters, newspapers, magazines, book publishers, music labels, cable networks, film and television producers, Internet-based information providers, and so on -- is not substantially more concentrated than it was 10 or 15 years ago. Even after a period of mild deregulation and high-profile mergers, the top 10 U.S. media companies own only a slightly bigger piece of the overall media pie than the top 10 of two decades ago. I compiled data showing that the top 10 media companies accounted for 38 percent of total revenue in the mid-1980s, and 41 percent in the late 1990s. As important, the lists are not filled with the same companies. Meanwhile, the rest of the media universe has continued to expand and diversify: There are more magazine and book publishers than ever, and new categories of vibrant media that were inconceivable just a decade or two ago."

Compaine believes due to convergence, two or more things coming together, the media has been saved. Because of the ease of access to send the same message across multiple and different mediums the message is more likely to be heard. He also believes that due to the higher amount of capital and funding, the media outlets are able to stay competitive because they are trying to reach more listeners/readers by using newer mediums. Also, because of more money pumped into each individual media outlet, consolidated media outlets are higher ranked than smaller and independent stations; "Studies by the FCC's Media Ownership Policy Working Group found that the local television stations owned by the large broadcast networks receive awards for news excellence at three times the rate of stations owned by smaller groups, and produce nearly 25 percent more news and public affairs programming than non-network-owned affiliates. Television stations owned by enterprises that also own newspapers have higher news ratings, win more news awards, and offer more news shows than non-newspaper affiliates. And in 10 cities where the newspaper and a TV station had common ownership, half of the combinations had a similar editorial slant in the 2000 presidential election, while the other half had divergent slants."

Benjamin Compaine's main argument is that the consolidation of media outlets, across multiple ownerships, has allowed for a better quality of content. He also stated that the news is interchangeable, and as such, making the media market less concentrated than previously thought. The idea being that since the same story is being pushed across multiple different platforms, then it can only be counted as one news story from multiple sources. Compaine also believed the news is more readily available and making it far more easier for individuals to access than traditional methods. "I have never heard a convincing argument that any individual in the United States in 2003 cannot easily and inexpensively have access to a huge variety of news, information, opinion, culture, and entertainment, whether from 10, 50, or 3,000 sources. If that is what passes for media concentration, we should consider ourselves pretty lucky."