June 16, 2003

Proposals to relax rules on media ownership in the United States have raised concerns; there and elsewhere. Adam Christie considers some reactions.


A grave danger - or justifiable 'catch up'?

REACTIONS ranging from outright condemnation to more placid murmurings of understanding have emerged from US academics following the Federal Communications Commission decision to try to relax some constraints on media ownership.

Among those most forthright in their criticism was Michael Saffran, senior news specialist at the Rochester Institute of Technology in New York state.

'Curtailment of media cross-ownership restrictions by the FCC presents a grave danger to competition within the mass media and, moreover, dire consequences for American society, similar to pernicious effects on radio from ownership consolidation spurred by the Telecommunications Act of 1996,' Mr Saffran said.

'In radio, a handful of conglomerates - comprising a nationwide oligopoly - dominate audience share and advertising revenue in many US cities despite program fare that's increasingly automated and non-local.'

'Due to consolidation sparked by the telecom bill, which placed no limit on national radio station ownership, today there are about one-third - or more than 1,000 fewer radio station owners in America than in 1996.'

Jeff Smulyan, chairman and CEO of Emmis Communications, was fearful of how size and strength would be affected by the FCC decision.

Diversity suffers
'Raising ownership limits will only serve to help major players in the industry to the detriment of small and mid-sized competitors,' he said.

Jason Shrinskly, partner and chair of the partner and chair of the telecommunications department at New York city-based lawyers Kaye Scholer LLP, said: 'Newspapers and TV stations will be owned in common, except in the smallest markets.

'Diversity will, of course, suffer. From a regulatory standpoint, the real problem is that the public will not have an opportunity to formally comment on the rules when they are released, a fait accompli for the "big dogs."'

Shrinsky's fears come from experience. He served as attorney-advisor to the Complaints and Compliance Division of the Mass Media Bureau for the FCC for three years in the early 1960s and since then has represented broadcast and other telecommunications clients before the FCC on regulatory matters.

Not everyone, however, was so critical of the FCC. Patrick Moreton PhD, a professor of organization and strategy at the Olin School of Business at Washington University in St Louis, Missouri, took a different perspective.

Technologically driven
'The changes [the FCC is proposing] are, in a very real sense, a "catch-up exercise" forced on it by changes in the technology used to produce and deliver entertainment and news,' said Professor Moreton.

'Media firms, large and small, have successfully made this argument in the federal courts to force the FCC to update its restrictions on media ownership.

'The heart of the issue is a familiar one to any business historian. There are tremendous advantages to being big in many, but not all, industries, and these advantages place substantial pressure on regulations that seek to limit firms from exploiting them,' he concluded.

Unfortunately for Professor Moreton, media businesses operate in an environment where far more diverse and sensitive political and public service dynamics and effects cannot be ignored.

Economies of scale may be acceptable elsewhere, but culture alone demands that the media should be regulated differently and views such as those put forward by Michael Saffron should be afforded greater respect.