Mergermania 2003

"A revolution is rarely government led. We must place our faith in entrepreneurs and not extinguish the burning energy of innovation with the wet blanket of over-regulation, as some seem to prefer," said Powell at the Chicago Economic Club (Dec. 18, 2003). To Powell, apparently promoting media monopolies is the key to the future. There is over-regulation and then there is no regulation.

The FCC is now falling into the hands of the worlds largest media conglomerates: AOL/Time Warner, AT&T Corporation, Bertelsmann, General Electric, Liberty Media Corporation, News Corporation, Sony, Viacom, Inc., Vivendi Universal, and the Walt Disney Company. Even though these companies are the biggest, don't be fooled that they are competing against each other. They are actually tied together closer than ever. For example, AT&T owns part of News Corp. and Liberty Media owns parts of Time Warner, Viacom, Vivendi and News Corp.; Warner Brothers, HBO and Cinemax are owned by AT&T and AOL/Time Warner; Comedy Central is owned by AOL/Time Warner, AT&T and Viacom; and E! Entertainment and Style Channel are owned by AOL/Time Warner, Liberty Media, Disney and Comcast. The number of cross-ownerships and mergers can go on down this page. Media mergers are already happening at a rapid pace. The question the FCC should be confronting is whether this should be controlled: Is the omnipresence of media monopolies really in the public's interest?

Kathleen Abernathy, a FCC board member who voted for the new rules, said that she believes that media monopolies are not possible. "For me, given the rules we adopt today, the breakneck pace of technological development, and the ever-increasing number of pipelines into consumers’ homes, it is simply not possible to monopolize the flow of information in today’s world," she said in a statement. "Sometimes the facts have led us to strengthen former restrictions; sometimes they have led us to relax them in part. But in all cases our decisions were based on facts rather than fears."

Not all members of the FCC agreed with Powell and Abernathy. "I’m afraid a dark storm cloud is now looming over the future of the American media. This is the most sweeping and destructive rollback of consumer protection rules in the history of American broadcasting," said FCC Commissioner Jonathan Adelstein in a statement critical of new changes. "In the end, this Order simply makes it easier for existing media giants to gobble up more outlets and fortify their already massive market power. It capitulates too many of the longstanding demands of the media companies we oversee."

Adelstein argued that media conglomerates will threaten the ability of minorities and special-interest groups from getting their voice heard on the airwaves. He stated that the FCC should be protecting the rights of Americans and not making it easier for huge corporations to make more money. "Organizations from nearly every political stripe, from the National Rifle Association to the National Organization for Women, expressed grave doubt about the wisdom of allowing greater consolidation," he said. "It’s not the FCC’s job to make sure every big TV network makes money – that’s up to network management. Our first priority is ensuring the American people get a wide range of diverse viewpoints."

Another dissenting opinion came from FCC Commissioner Michael Copps. Copps attacked nearly every new rule as an attack on competition and a way of undermining the regulatory control the FCC is supposed to possess. "This decision allows a corporation to control three television stations in a single city. Why does any corporate interest need to own three stations in any city, other than to enjoy the 40-50 percent profit margins most consolidated stations are racking up? What public interest, what diversity, does that serve?" said Copps.

"This decision also allows the giant media companies to buy up the remaining local newspaper and exert massive influence over some communities by wielding three TV stations, eight radio stations, the cable operator, and the already monopolistic newspaper. What public interest, what new competition, is enabled by encouraging the newspaper monopoly and the broadcasting oligopoly to combine?" said Copps.

"This decision further allows the already massive television networks to buy up even more local TV stations, so that they control up to an unbelievable 80 or 90 percent of the national television audience. Where are the blessings of localism, diversity and competition here? I see centralization, not localism; I see uniformity, not diversity; I see monopoly and oligopoly, not competition."

The voices of those displeased with the new ownership rules were heard by the U.S. Congress who is now trying to pass a bill to override the FCC's deregulation efforts. On Dec. 8, 2003, the House of Representatives passed legislation which places a permanent cap on television networks, preventing one company from reaching more than 39 percent of the national audience. This would impact News Corp. (Fox) and Viacom (CBS), which are both already at that limit. General Electric (NBC) owns local stations that reach 34 percent of the national viewership and Walt Disney Co. (ABC) reaches around 24 percent. Only time will tell if the Congress has enough willpower to stop the corporate media interests.

One of the major media players is already testing the FCC's new attitude. News Corp., owned by media mogul Rupert Murdoch (picture to the left), received the FCC rubber stamp of approval in December, 2003 to merge with Hughes Electronics Corp's DirecTV. DirecTV is the largest satellite cable television provider in the U.S., and now News Corp. will become the largest pay-television provider in the world. This $6.78 billion merger will add DirectTV's 12 million U.S. customers to the 13 million already served through Britain's BSkyB, Italy's Sky Italia, and Sky Latin America. Along with direct access to 25 million homes worldwide, News Corp. also owns the Fox broadcast network, 20th Century Fox, the New York Post, the New York Knicks basketball team, the New York Rangers hockey team, Madison Square Garden, the Hartford Civic Center, the Los Angeles Dodgers baseball team, TV Guide magazine, HarperCollins book publishers, the Sun and Times in Great Britian, and the TiVo record system (which it actually co-owns with AOL/Time Warner, Viacom, General Electric and Liberty Media).

And the big will only get bigger and the rich will only get richer.

Media megacorp Viacom Inc. paid bonuses of $16.5 million each to chairman and chief executive Sumner Redstone and president and chief operating officer Mel Karmazin in 2002 along with hundreds of thousands of shares of stock. They both received bonuses of $12 million in 2001. Viacom is the parent company of CBS, UPN, MTV, VH1, Showtime, Nickelodeon, TNN, CMT, The Movie Channel, BET, 39 TV stations, Paramount PIctures, Simon & Schuster books, 184 Infinity radio stations and a lot more.

Once again, this is the point of Mergermania: money. The FCC is now in league with the media monopolies. The FCC is making it easier for large corporations to take over small ones: destroying competition and snuffing out dissenting opinions.

Television is about the opinions of the few -- the opinions of the super-rich. Television is about making money and large corporations getting larger. And the American public sits back on fat rumps staring at the glowing box. And they will be paying more and more money for this privilege.

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by Ron Kaufman