Page 119 - Battleground The Media Volume 1 and 2

| Conglomerat on and Med a Monopol es

CongloMeration and the loss oF loCalisM
The headlines about conglomeration are often written when studios and networks combine,
but less discussed is the potential impact at the local level. Local ownership of newspapers
was once common, but as newspaper chains expanded, local ownership became rare and the
number of cities with multiple dailies declined. The nature of local television and radio owner-
ship also changed, as Congress and the Federal Communications Commission (FCC) relaxed
one-to-a-market rules and allowed groups to reach a higher percentage of households na-
tionwide. These changes transformed the marketplace with massive station groups and less
local ownership, and more appear to be on the horizon. In 2003, the FCC voted to relax its
prohibition on the cross-ownership of newspapers and television stations in the same market.
The justification was the numerical increase in the number of available outlets, including the
Internet. The firestorm that followed made clear that there was not universal agreement and
courts blocked their implementation, but the FCC started down a similar path in 2006.

seller of a given product in a market. True monopolies are most common in the
newspaper business. Countless cities have just one daily, like Atlanta’s Journal-
Constitution. Far more common are media markets that are oligopolies, which
feature a few giant sellers of a product with each having a significant share of the
market. In 2005, for example, four global giants—Universal Music, Sony BMG,
Warner Music, and EMI Group—combined for over 80 percent of music sales
in the United States and worldwide. Some use the phrase media monopolies to
describe the small collection of corporations that are dominant in various media
markets.

issuEs oF ownErshiP anD ConTroL

One of the battle lines in the debate over conglomeration is whether owner-
ship and control matters or not. From a free market perspective, ownership of
a firm is not a concern unless combinations create market structures that lead
to anticompetitive conditions. The Sherman Antitrust Act was enacted in 1890
to address such behavior in the United States, and it has shaped media mar-
kets. In 1938, the federal government launched a decade-long legal battle with
the Hollywood studios, accusing the majors of “combining and conspiring” to
“monopolize the production, distribution and exhibition of motion pictures.”
When the same corporation owns production studios as well as the theaters that
show the movies it makes, the control of production, distribution, and exhibi-
tion could effectively close out competition. The so-called Paramount consent
decrees, a series of agreements between the government and studios, prohibited
anticompetitive behavior and forced the “divorcement” of production and dis-
tribution from exhibition. Free market advocates argue that this is as far as the
government should delve into the marketplace.
The question is whether the nature of media products raises more signifi-
cant concerns and demands additional government action. The attention to
such issues has shifted over time as new ideas and ideologies come to the fore.