Media cross-ownership in the United States

Media cross-ownership refers to the ownership of multiple media businesses by a person or corporation. These businesses can include broadcast and cable television, radio, newspaper, book publishing, video games, and various online entities. Much of the debate over concentration of media ownership in the United States has for many years focused specifically on the ownership of broadcast stations, cable stations, newspapers and websites. Meaning, that when one organization owned any two of these media outlets, that organization was involved in "cross-ownership."

Owners of American media

The "Big Six"

The Big Six[1]	Media Outlets	Revenues (2009)
General Electric	NBC and Telemundo, Universal Pictures, Focus Features, 26 television stations in the United States and cable networks MSNBC, Bravo, CNBC, The Weather Channel and Syfy. GE also owns 80 percent of NBC Universal. As of 2011, GE's share in these companies has been sold to Comcast, who themselves own Versus, style., G4, E!, Comcast SportsNet, the Philadelphia 76ers and Philadelphia Flyers.	$157 billion
Walt Disney Company	Owns the ABC Television Network, cable networks including ESPN, the Disney Channel, SOAPnet, A&E and Lifetime, 277 radio stations, music and book publishing companies, production companies Touchstone, and Walt Disney Pictures, Pixar Animation Studios, the cellular service Disney Mobile, and theme parks around the world.	$36.1 billion
News Corporation	Holdings include: the Fox Broadcasting Company; television and cable networks such as Fox, Fox Business Channel, National Geographic and FX; print publications including the Wall Street Journal, the New York Post and TVGuide; the magazines Barron's and SmartMoney; book publisher HarperCollins; film production companies 20th Century Fox, Fox Searchlight Pictures and Blue Sky Studios; numerous websites including MarketWatch.com; and non-media holdings including the National Rugby League.	$30.4 billion
Time Warner	Largest media conglomerate in the world, with holdings including: CNN, the CW (a joint venture with CBS), HBO, Cinemax, Cartoon Network, TBS, TNT, America Online, MapQuest, Moviefone, Warner Bros. Pictures, Castle Rock and New Line Cinema, and more than 150 magazines including Time, Sports Illustrated, Fortune, Marie Claire and People.	$25.8 billion
Viacom	Holdings include: MTV, Nickelodeon/Nick at Nite, VH1, BET, Comedy Central, Paramount Pictures, Paramount Home Entertainment, Atom Entertainment, and music game developer Harmonix. Viacom 18 is a joint venture with the Indian media company Global Broadcast News.	$13.6 billion
CBS Corporation	Owns the CBS Television Network, CBS Television Distribution Group, the CW (a joint venture with Time Warner), Showtime, book publisher Simon & Schuster, 30 television stations, and CBS Radio, Inc., which has 130 stations. CBS is now the leading supplier of video to Google’s new Video Marketplace.	$13.0 billion

Also note that although Viacom and CBS Corporation have been separate companies since 2006, they are both partially owned subsidiaries of the private National Amusements company, headed by Sumner Redstone.

Others of note

Discovery Communications

Owns Discovery Channel, Animal Planet, Planet Green, The Hub, Science, Military Channel, Investigation Discovery, Velocity, 3net, and distribution rights to BBC America and BBC World News.

E. W. Scripps Company

Owns Food Network, HGTV, Travel Channel, and Great American Country.

DirecTV

Owns n3D, Audience Network, Root Sports, and GSN. DirecTV has some ownership ties to News Corporation, but antitrust restrictions limit News Corporation's influence on DirecTV.

Companies tied to Cablevision and the Dolan family

Own AMC, IFC, MSG, Fuse, SportsTime Ohio, the Cleveland Indians, the New York Knicks and the New York Rangers.

Oaktree Capital Management

Owns the former assets of Westwood One (which includes Transtar Radio Networks, NBC Radio, and the Mutual Broadcasting System), Jones Radio Networks, Waitt Radio Networks, Townsquare Media (which owns Regent Communications, Gap Broadcasting, Millennium Broadcasting, and Double O Radio), and Dial Global.

Clear Channel Communications

Owns Premiere Networks (which in turn owns The Rush Limbaugh Show, The Sean Hannity Show, The Glenn Beck Program, Coast to Coast AM, American Top 40, Delilah, Fox Sports Radio, and The Jim Rome Show, all being among the top national radio programs in their category), a portion of Sirius XM Radio, and previously held a stake in Live Nation as well as several television stations (now under the management of Newport Television). Parent company Bain Capital also owns a share in The Weather Channel.

History of FCC regulations

Founding

Prior to 1927, public airwaves in the United States were regulated by the United States Department of Commerce and largely litigated in the courts as the growing number of stations fought for space in the burgeoning industry. The Federal Radio Act of 1927 (signed into law February 23, 1927) nationalized the airwaves and formed the Federal Radio Commission, later named the Federal Communications Commission (FCC) to assume control of the airwaves.

Communications Act of 1934

The Communications Act of 1934 was the stepping stone for all of the communications rules that are in place today. When first enacted, it created the FCC (Federal Communications Commission).^[2] It was created to regulate the telephone monopolies, but also regulate the licensing for the spectrum used for broadcasting. The FCC was given authority by Congress to give out licenses to companies to use the broadcasting spectrum. However, they had to determine whether the license would serve “the public interest, convenience, and necessity”.^[3] The primary goal for the FCC, from the start, has been to serve the "public interest". A debated concept, the term “public interest” was provided with a general definition by the Federal Radio Commission. The Commission determined, in its 1928 annual report, that “the emphasis must be first and foremost on the interest, the convenience, and the necessity of the listening public, and not on the interest, convenience, or necessity of the individual broadcaster or the advertiser.” ^[4] Following this reasoning, early FCC regulations reflected the presumption that "it would not be in the public’s interest for a single entity to hold more than one broadcast license in the same community. The view was that the public would benefit from a diverse array of owners because it would lead to a diverse array of program and ser- vice viewpoints."^[5]

The Communications Act of 1934 refined and expanded on the authority of the FCC to regulate public airwaves in the United States, combining and reorganizing provisions from the Federal Radio Act of 1927 and the Mann-Elkins Act of 1910. It empowered the FCC, among other things, to administer broadcasting licenses, impose penalties and regulate standards and equipment used on the airwaves. The Act also mandated that the FCC would act in the interest of the "public convenience, interest, or necessity."^[6] The Act established a system whereby the FCC grants licenses to the spectrum to broadcasters for commercial use, so long as the broadcasters act in the public interest by providing news programming.

Lobbyists from the largest radio broadcasters, ABC and NBC, wanted to establish high fees for broadcasting licenses, but Congress saw this as a limitation upon free speech. Consequently, “the franchise to operate a broadcasting station, often worth millions, is awarded free of charge to enterprises selected under the standard of ‘public interest, convenience, or necessity.’”^[7]

Nevertheless, radio and television was dominated by the Big Three television networks until the mid-1990s.

Cross ownership rules of 1975

In 1975, the FCC passed the newspaper and broadcast cross-ownership rule.^[8] This ban prohibited the ownership of a daily newspaper and any "full-power broadcast station that serviced the same community".^[5] This rule emphasized the need to ensure that a broad number of voices were given the opportunity to communicate via different outlets in each market.

The FCC designed rules to make sure that there is a diversity of voices and opinions on the airwaves. “Beginning in 1975, FCC rules banned cross-ownership by a single entity of a daily newspaper and television or radio broadcast station operating in the same local market.” ^[9] The ruling was put in place to limit media concentration in TV and radio markets, because they use public airwaves, which is a valuable, and now, limited resource.

Telecommunications Act 1996

The Telecommunications Act of 1996 was an influential act for media cross-ownership. One of the requirements of the act was that the FCC must conduct a biennial review of its media ownership rules “and shall determine whether any of such rules are necessary in the public interest as the result of competition.” The Comission was ordered to “repeal or modify any regulation it determines to be no longer in the public interest.” ^[10]

The legislation, touted as a step that would foster competition, actually resulted in the subsequent mergers of several large companies, a trend which still continues.^[11] Over 4,000 radio stations were bought out, and minority ownership of TV stations dropped to its lowest point since the federal government began tracking such data in 1990.^[12]

Since the Telecommunications Act of 1996, restrictions on media merging have decreased. Although merging media companies seems to provide many positive outcomes for the companies involved in the merge, it might lead to some negative outcomes for other companies, viewers and future businesses. The FCC even found that they were indeed negative effects of recent merges in a study that they issued.^[13]

Since 2000

In September 2002, the FCC issued a Notice of Proposed Rulemaking stating that the Commission would re-evaluate its media ownership rules pursuant to the obligation specified in the Telecommunications Act of 1996.^[5][14] In June 2003, after its deliberations which included a single public hearing and the review of nearly two-million pieces of correspondence from the public opposing further relaxation of the ownership rules^[15] the FCC voted 3-2 to repeal the newspaper/broadcast cross-ownership ban and to make changes to or repeal a number of its other ownership rules as well.^[5][16] In the order, the FCC noted that the newspaper/broadcast cross-ownership rule was no longer necessary in the public interest to maintain competition, diversity or localism. However, in 2007 the FCC revised its rules and ruled that they would take it “case-by-case and determine if the cross-ownership would affect the public interest.^[5] The rule changes permitted a company to own a newspaper and broadcast station in any of the nation’s top 20 media markets as long as there are at least eight media outlets in the market. If the combination included a television station, that station couldn’t be in the market’s top four. As it has since 2003, Prometheus Radio Project argued that the relaxed rule would pave the way for more media consolidation. Broadcasters, pointing to the increasing competition from new platforms, argued that the FCC’s rules—including other ownership regulations that govern TV duopolies and radio ownership—should be relaxed even further. The FCC, meanwhile, was there to defend its right to change the rules either way.“^[9] That public interest is what the FCC bases its judgments on, whether a media cross-ownership would be a positive and contributive force, locally and nationally.

The FCC held one official forum, February 27, 2003, in Richmond, Virginia in response to public pressures to allow for more input on the issue of elimination of media ownership limits. Some complain that more than one forum was needed.^[17]

In 2003 the FCC set out to re-evaluate its media ownership rules specified in the Telecommunications Act of 1996. On June 2, 2003, FCC, in a 3-2 vote under Chairman Michael Powell, approved new media ownership laws that removed many of the restrictions previously imposed to limit ownership of media within a local area. The changes were not, as is customarily done, made available to the public for a comment period.

• Single-company ownership of media in a given market is now permitted up to 45% (formerly 35%, up from 25% in 1985) of that market.

• Restrictions on newspaper and TV station ownership in the same market were removed.

• All TV channels, magazines, newspapers, cable, and Internet services are now counted, weighted based on people's average tendency to find news on that medium. At the same time, whether a channel actually contains news is no longer considered in counting the percentage of a medium owned by one owner.

• Previous requirements for periodic review of license have been changed. Licenses are no longer reviewed for "public-interest" considerations.

The decision by the FCC was overturned by the United States Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC in June, 2004. The Majority ruled 2-1 against the FCC and ordered the Commission to reconfigure how it justified raising ownership limits. The Supreme Court later turned down an appeal, so the ruling stands.^[18]

In June 2006, the FCC adopted a Further Notice of Proposed Rulemaking (FNPR)^[19] to address the issues raised by the United States Court of Appeals for the Third Circuit and also to perform the recurring evaluation of the media ownership rules required by the Telecommunications Act.^[20] The deliberations would draw upon three formal sources of input:(1) the submission of comments, (2) ten Commissioned studies, and (3) six public hearings.^[5]

The FCC in 2007 voted to modestly relax its existing ban on newspaper/broadcast cross-ownership.^[21] The FCC voted December 18, 2007 to eliminate some media ownership rules, including a statute that forbids a single company to own both a newspaper and a television or radio station in the same city. FCC Chairman Kevin Martin circulated the plan in October 2007.^[18] Martin's justification for the rule change is to ensure the viability of America's newspapers and to address issues raised in the 2003 FCC decision that was later struck down by the courts.^[22] The FCC held six hearings around the country to receive public input from individuals, broadcasters and corporations. Because of the lack of discussion during the 2003 proceedings, increased attention has been paid to ensuring that the FCC engages in proper dialogue with the public regarding its current rules change.

FCC Commissioners Deborah Taylor-Tate and Robert McDowell joined Chairman Martin in voting in favor of the rule change. Commissioners Michael Copps and Jonathan Adelstein, both Democrats, opposed the change.^[23]

Local content

A recent study found that news stations operated by a small media company produced more local news and more locally produced video than large chain-based broadcasting groups.^[5][24] It was then argued that the FCC claimed, in 2003, that larger media groups produced better quality local content. Research by Philip Napoli and Michael Yan showed that larger media groups actually produced less local content.^[5][25] In a different study, they also showed that "ownership by one of the big four broadcast networks has been linked to a considerable decrease in the amount of televised local public affairs programming" ^[5]

The major reasoning the FCC made for deregulation was that with more capital broadcasting-organizations could produce more and better local content. However, the research studies by Napoli and Yan showed that ones team-up, they produced less content. Cross ownership between broadcasting and newspapers is a complicated issue. The FCC believes that more deregulation is necessary. However, with research studies showing that they produced less local content - less voices being heard that are from within the communities. While less local voices are heard, more national-based voices do appear. Chain-based companies are using convergence, the same content being produced across multiple mediums, to produce this mass-produced content. It's cheaper and more efficient than having to run different local and national news. However, with convergence and chain-based ownership you can choose which stories to run and how the stories are heard - being able to be played in local communities and national stage.

Media conslidation debate

Robert W. McChesney

Robert McChesney, Ph. D.

Robert McChesney is an advocate for media reform, and the co-founder of Free Press, which was established in 2003.^[26] His work is based on theoretical, normative, and empirical evidence suggesting that media regulation efforts should be more strongly oriented towards maintaining a healthy balance of diverse viewpoints in the media environment. However, his viewpoints on current regulation are; "there is every bit as much regulation by government as before, only now it is more explicitly directed to serve large corporate interests."^[27] He also believes that; "in the next five to 10 years, if not less, fundamental communication policy decisions likely will be made that will shape our nation for decades, maybe generations. Whether we will even have something remotely close to a credible journalism is very much up for grabs, along with much else. These decisions will be made whether we like it or not, under terms over which we have only a little control. If we elect to sit this one out because we are unable to get the ideal results in the short-term, or because this movement does not score high enough on our checklist of core issues, we “ain't going to make it with anyone anyhow.” We will simply be fools" ^[28] McChesney argued that the future of our journalism will be based more on corporate profits, and what was is most popular to broadcast, then actual true-journalism. The media is a giant conglomerate owned, mostly, by six big corporations that was created to make money. "[T]he American media are dominated by less than twenty firms—and that a half-dozen or so corporate giants hold the commanding positions. These firms use their market power to advance their own and other companies’ corporate agendas. And they increasingly commercialize every aspect of our culture. By any known theory of political democracy, this tightly-held media system, accountable only to Wall Street and Madison Avenue, is a poisonous proposition."^[29]

McChesney also holds the position that the current media outlet form is un-natural, and that most American's are unaware of what is happening and which laws are being passed. "There is nothing natural about the existing corporate media system; it is the result of laws, regulations and extensive public subsidies that have been pushed through by the corporate media lobby with almost no public awareness or participation in the legislative process." ^[30]

McChesney believes that the Free Press' objective is a more diverse and competitive commercial system with a significant nonprofit and noncommercial sector. It would be a system built for the citizen's, but most importantly - it would be accessible to anyone who wants to broadcast. Not only specifically the big corporations that can afford to broadcast nationally, but more importantly locally. McChesney suggests that to better our current system we need to "establish a bona fide noncommercial public radio and television system, with local and national stations and networks. The expense should come out of the general budget" ^[31] Also, "let’s really make some demands on commercial broadcasters, and finally get something in return for letting them become filthy rich using the scarce public airwaves at no charge. Why not insist on eliminating advertising on children’s and news programs, and use five percent of the broadcasters’ revenues to subsidize three or four hours per day of children’s and news shows on every channel? And put the control over these shows in the hands of journalists and creative people, not advertising executives! And why not ban running any political ads as a condition for getting a license to broadcast? "^[31]

Benjamin Compaine

Benjamin Compaine believes that the current media system is “one of the most competitive major industries in U.S. commerce.” ^[32] He believes that much of the media in the United States is operating in the same market. He also believes that all the content is being interchanged between different mediums. "Overall, the media industry -- including broadcasters, newspapers, magazines, book publishers, music labels, cable networks, film and television producers, Internet-based information providers, and so on -- is not substantially more concentrated than it was 10 or 15 years ago. Even after a period of mild deregulation and high-profile mergers, the top 10 U.S. media companies own only a slightly bigger piece of the overall media pie than the top 10 of two decades ago. I compiled data showing that the top 10 media companies accounted for 38 percent of total revenue in the mid-1980s, and 41 percent in the late 1990s. As important, the lists are not filled with the same companies. Meanwhile, the rest of the media universe has continued to expand and diversify: There are more magazine and book publishers than ever, and new categories of vibrant media that were inconceivable just a decade or two ago." ^[33]

Compaine believes due to convergence, two or more things coming together, the media has been saved. Because of the ease of access to send the same message across multiple and different mediums the message is more likely to be heard. He also believes that due to the higher amount of capital and funding, the media outlets are able to stay competitive because they are trying to reach more listeners/readers by using newer mediums. Also, because of more money pumped into each individual media outlet, consolidated media outlets are higher ranked than smaller and independent stations; "Studies by the FCC's Media Ownership Policy Working Group found that the local television stations owned by the large broadcast networks receive awards for news excellence at three times the rate of stations owned by smaller groups, and produce nearly 25 percent more news and public affairs programming than non-network-owned affiliates. Television stations owned by enterprises that also own newspapers have higher news ratings, win more news awards, and offer more news shows than non-newspaper affiliates. And in 10 cities where the newspaper and a TV station had common ownership, half of the combinations had a similar editorial slant in the 2000 presidential election, while the other half had divergent slants." ^[34]

Benjamin Compaine's main argument is that the consolidation of media outlets, across multiple ownerships, has allowed for a better quality of content. He also stated that the news is interchangeable, and as such, making the media market less concentrated than previously thought. The idea being that since the same story is being pushed across multiple different platforms, then it can only be counted as one news story from multiple sources. Compaine also believed the news is more readily available and making it far more easier for individuals to access than traditional methods. "I have never heard a convincing argument that any individual in the United States in 2003 cannot easily and inexpensively have access to a huge variety of news, information, opinion, culture, and entertainment, whether from 10, 50, or 3,000 sources. If that is what passes for media concentration, we should consider ourselves pretty lucky." ^[35]

References

1. ^ Ownership Chart: The Big Six. (2009) Free Press. Retrieved from http://www.freepress.net/ownership/chart/main
2. ^ The Telecommunications Act of 1934, 4 & 47 U.S.C. 154 Retrieved from http://www.fcc.gov/Reports/1934new.pdf (2011)
3. ^ "Communications Act of 1934". http://www.fcc.gov/Reports/1934new.pdf. Retrieved 2011. 
4. ^ Robb, Margo. "Community Radio, Public Interest". http://www.prometheusradio.org/sites/default/files/margorobb.pdf. 
5. ^ ^{a b c d e f g h i} Obar, Jonathan (2009). "Beyond cynicism: A review of the FCC’s reasoning for modifying the newspaper/broadcast cross-ownership rule". Communication Law & Policy 14 (4). http://www.allacademic.com//meta/p_mla_apa_research_citation/2/9/9/5/0/pages299506/p299506-1.php. 
6. ^ "The Communications Act of 1934 ." United States Public Law.
7. ^ "[Thomas I. Emerson, The System of Freedom of Expression (New York: Vintage Books, 1970), p. 654-655 ]." Thomas I. Emerson
8. ^ Amendment of §§73.34, 73.240 and 73.636 of the Commission’s Rules Relating to Multiple Ownership of Standard, FM and Television Broadcast Stations, 50 F.C.C. 2d 1046 (1975).
9. ^ ^{a b} FCC’s review of the Broadcast Ownership Rules. (2011) FCC. Retrieved from http://www.fcc.gov/cgb/consumerfacts/reviewrules.pdf
10. ^ "The Telecommunications Act of 1996". http://www.fcc.gov/Reports/tcom1996.pdf. Retrieved 7 May 2011. 
11. ^ "Adbusters : The Magazine - #72 The Fake Issue / Fighting For Air: An interview with Eric Klinenberg". http://adbusters.org/the_magazine/72/Fighting_For_Air_An_interview_with_Eric_Klinenberg.html. Retrieved 2007-06-29. 
12. ^ Fairness & Accuracy in Reporting (3/9/2003). "Speak Out for Media Democracy: Why isn’t the FCC doing its job?". Fairness & Accuracy in Reporting. http://www.fair.org/index.php?page=1823. Retrieved 10 October 2009. 
13. ^ Shah, Anup. “Media Conglomerates, Mergers, Concentration of Ownership.” Global Issues, Updated: 02 Jan. 2009. Accessed: 21 Mar. 2011. <http://www.globalissues.org/article/159/media-conglomerates-mergers-concentration-of-ownership>
14. ^ Press Release, Federal Communications Commission, FCC Initiates Third Biennial Review Of Broadcast Ownership Rules: Cites Goal Of Updating Rules To Reflect Modern Marketplace (Sept. 12, 2002), available at http://fjallfoss.fcc.gov/edocs public/attachmatch/DOC-226188A1.pdf
15. ^ See Prometheus Radio Project, 373 F.3d 372, 386 (3d Cir. 2004).
16. ^ For example, the local television multiple ownership rule and the national television ownership cap (among others). See R&O/NOPR 2003,supra note 21, at 3-4.
17. ^ Casuga, Jay-Anne. Not Enough: FCC public hearing allows only one hour for citizen input (Richmond.com)
18. ^ ^{a b} Labaton, Stephen. "Plan Would Ease Limits on Media Owners." The New York Times, 18 Oct 2007. Retrieved on 10 Dec 2007.
19. ^ Federal Communications Commission, Further Notice of Proposed Rulemaking(2006), available at http://hraunfoss.fcc.gov/edocs public/attachmatch/FCC-06-93A1.pdf [hereinafter FNPR]
20. ^ Pub. L. No. 104-104, §202(h), 110 Stat. 56, 111-112 (1996)
21. ^ FCC's Review Of Broadcast Ownership Rules. 2007. Retrieved from http://www.fcc.gov/cgb/consumerfacts/reviewrules.html
22. ^ "Chairman Kevin J. Martin Proposes Revision to the Newspaper/Broadcast Cross-Ownership Rule." FCC. Press Release, 13 Nov 2007.
23. ^ "FCC Votes to Relax Cross-Media Ownership Rule" Associated Press, 18 Dec 2007. Retrieved on 18 Dec 2007.
24. ^ David K. Scott, Robert H. Gobetz & Mike Chanslor, Chain Versus Independent Television Station Ownership: Toward An Investment Model Of Commitment To Local News Quality, 59 COMM. STUDIES 84 (2008).
25. ^ Philip M. Napoli & Michael Z. Yan, Media Ownership Regulations and Local News Programming on Broadcast Television: An Empirical Analysis, 51 J. OF BROAD. & ELEC. MEDIA 39 (2007).
26. ^ An Interview with Free Press Founder Bob McChesney (2010) Retrieved from http://www.internetsavingsaccounts.org/resources/an-interview-with-free-press-founder-bob-mcchesney
27. ^ McChesney, Robert (2009). "Understanding the Media Reform Movement". International Journal of Communication 3. http://ijoc.org/ojs/index.php/ijoc/article/view/442/299. 
28. ^ McChesney, Robter (2009). "Understanding the Media Reform Movement". International Journal of Communication 3: 51. 
29. ^ McChesney, Robert. "The U.S. Left and Media Politics". http://monthlyreview.org/1999/02/01/the-u-s-left-and-media-politics. 
30. ^ McChesney, Robert. "The U.S. Left and Media Politics". http://monthlyreview.org/1999/02/01/the-u-s-left-and-media-politics.  para.31
31. ^ ^{a b} McChesney, Robert. "The U.S. Left and Media Politics". http://monthlyreview.org/1999/02/01/the-u-s-left-and-media-politics.  para.33
32. ^ Baker, Edwin (2002). "Media Concentration: Giving Up On Democracy". Florida Law Review. 839 54. 
33. ^ Compaine, Benjamin. "Domination Fantasies". http://reason.com/archives/2004/01/01/domination-fantasies. Retrieved 3 May 2011. 
34. ^ Compaine, Benjamin. "Domination Fantasies". http://reason.com/archives/2004/01/01/domination-fantasies. Retrieved 3.  May 2011. p.2, para.9
35. ^ Compaine, Benjamin. "Domination Fantasies". http://reason.com/archives/2004/01/01/domination-fantasies. Retrieved 3.  May 2011. p.3, para.16