Lecture: Media Concentration

 

Ownership and control are often separate

• Ownership – stockholders
• Control – CEO

      Goal and duty is the maximization of profits

May be achieved through growth

Concentration of power

Elimination of competition

 

Localism v. Concentration

Localism tends to be favored by consumers

Concentration favored by big business

 

Localism - the dispersion of power

• Part of American culture
• Control should be decentralized - kept on a level closest to those persons who are controlled

 

Re: Federal Communications Commission (FCC)

Rationales for regulation:

–Public airwaves

•A condition of licensing is that the station operate in the public interest

–Spectrum scarcity

 

Communications Act of 1934 mandates the FCC promote:

–Localism

–Diversity

–Competition

 

 

FCC limited number of stations a company could own and the markets in which they could operate

• In 1980s rules were relaxed
• The Telecommunications Act of 1996 further relaxed the limits
• The 2003 rules enacted by the FCC relaxed even further
• The 2007 rules lifted the ban on owning TV or radio station and a newspaper in the same city

 

The media industry has generally achieved concentration

This is self-reinforcing in that it raises barriers to entry in a market

 

Types of Concentration:

• Horizontal merger – one company buys another company of the same type
• Vertical merger – one company buys suppliers or distributors to control both the production and distribution
• Conglomerate merger – company buys a combination of other companies and/or companies in a completely different market

 

Table 11.4  Most Powerful Media Companies in the United States, as of 2003

AOL Time Warner ($41 billion)

Walt Disney ($25.3 billion)

Viacom ($24.6 billion)

Comcast ($2 1.1 billion)

Sony ($17.2 billion)

News Corp. ($15.2 billion)

General Electric ($13 billion)

 

Since 1996, the FCC has become even less concerned about the creation of monopolies
Media industry owned and controlled by fewer and fewer multinational conglomerates

• In 1982, The Media Monopoly estimated the major media in the US to be controlled by 50 corporations
• In 1993 estimated 20
• In 2000 estimated 6
• The 2004 edition, The New Media Monopoly, 5

 

Issues of Concern

Critics claim:

1.  Deregulation has led to a high degree of concentration

2.  With less competition it is claimed that the quality of media products declines. 

3.  As concentration increases, access to the media decreases.

            a. Ownership

            b. Ability to be heard

4.  The internet is becoming more concentrated