Editorial: Deregulation’s dead-end path

Feb 25, 2002  •  Post A Comment

If you think media consolidation has already gotten out of hand, wait till you see the next round of acquisitions. The U.S. Court of Appeals in Washington may have opened the floodgates last week when it scrapped the ban on broadcast-cable cross-ownership and took action that is likely to signal the end of the 35 percent cap on station ownership.
The court sent the station cap back to the Federal Communications Commission with orders that the FCC either rewrite it or do a better job of justifying the cap’s existence. Given the current makeup of the FCC, with deregulation-minded Michael Powell in the chairman’s seat, the ownership cap appears doomed.
Meanwhile, other obstacles to concentration of media ownership are dropping like flies. The broadcast-cable cross-ownership restriction, which the court called a “hopeless cause,” is history, barring the unlikely scenario of a successful appeal to the U.S. Supreme Court. And the FCC is widely expected to ease a longtime ban on companies owning TV stations and newspapers in the same city.
Of all these developments, the fate of the station ownership cap is likely to be the most fiercely disputed-and to have the most sweeping impact on the media landscape.
Media behemoths such as News Corp. and Viacom appear poised to go on a buying spree as soon as the cap’s demise is official. AOL Time Warner, meanwhile, is expected to cash in on the elimination of the cross-ownership rule. Each company has expressed delight at the latest court decisions, saying the court’s actions acknowledge that the ownership restrictions have become outdated in an era of media consolidation-which is a lot like saying the laws against murder have become outdated with all the murders that are taking place these days.
Network affiliates and public-interest groups had a different reaction to the rulings, expressing fears of greater network power and greater network abuses. Among their concerns are the potential harm to programming diversity and the likelihood of cutbacks in local news.
At least two watchdog groups, the Media Access Project and Consumers Union, indicated they would appeal the cross-ownership decision to the Supreme Court if necessary. The National Association of Broadcasters, meanwhile, vowed to work to convince the courts, the FCC and Congress to retain the 35 percent cap.
The ball is in Mr. Powell’s court for the moment, a notion that can hardly be reassuring to the public or to the smaller players in the media industry. Given his track record, it is hard to imagine that he will suddenly wake up and realize that justifying consolidation in terms of corporate profitability-the usual rationale for easing restrictions-means falling prey to a Ponzi scheme in which unrestrained corporate consolidation leads the economy and society down a tantalizing dead-end street.
It’s a scheme that has to stop somewhere. The seemingly absurd and yet inevitable conclusion of such a journey would be the nightmarish reality of a one-corporation world.