Saylor.org's Comparative Politics/Media Ownership and Multimedia Conglomeration

MEDIA OWNERSHIP and DEMOCRACY in the DIGITAL INFORMATION AGE: Promoting Diversity with First Amendment Principles and Market Structure Analysis

by MARK COOPER

PART I: LEGAL PRINCIPLES AND ANALYTIC FRAMEWORK

I. A BOLD ASPIRATION FOR THE FIRST AMENDMENT

OWNERSHIP OF ELECTRONIC MEDIA AND THE FREEDOM OF SPEECH

The Current Debate Over Media Ownership Limits

This book presents a critical view of the current state of commercial mass media in America. It examines the media through the lens of the public policy debates about limits on the number and type of media outlets that a single firm can own. The focal point is the Federal Communications Commission’s (FCC) policy that prevents a television station from owning or being owned by a newspaper in the city in which it holds its broadcast license. Additionally, this book devotes some attention to policies that prohibit television station owners from holding licenses to more than one TV station in a city and limit the number of TV stations they can directly own across the nation.

Some of these policies have been adopted pursuant to explicit Congressional mandates; others have been implemented under the FCC’s broad responsibility to promote the public interest. All of these policies rest on the premise that because the ability to broadcast over the airwaves in an area is limited by interference, most citizens will not have direct access to electronic, broadcast voices. Broadcast frequencies - the limited resource – have been allocated by licenses. Broadcast licenses are severely limited compared to the number of people who would like to be broadcasters. Because electronic voices are so scarce and powerful, the licenses have been subject to limits and obligations. The purpose of ownership limits is to promote diversity and localism in the broadcast media. Other public policies that have been imposed on licenses include obligations to air certain types of programs, like children’s or public affairs programming, and obligations to set aside time or capacity for community programs or political debate.

The ownership limits have recently received considerable attention because the FCC reviewed all of its rules limiting media ownership 1 in the context of what the Chairman of the FCC, Michael Powell, calls a “Copernican Revolution” for media. 2 The Chairman’s colorful comparison is not much of an overstatement. The mass media are the primary means through which citizens gather news and information. TV, in particular, is the primary vehicle for political advertising. At the same time, digital media are at the center of the information economy and the emerging multimedia environment in which consumers and citizens will not only listen and watch, but must also be able to express their opinions and views. The stakes for citizens, consumers and the nation are huge – no less than the viability of democratic discourse in the digital information age.

Some of the limitations on ownership were reviewed because the Appeals Court for the District of Columbia had overturned prior rules.3 This applies to the limit on the number of TV stations a network can own directly nationwide and the number of stations an individual entity can hold a license for in a single market. Other rules were re-examined because of a provision in the Telecommunications Act of 1996 that requires a biennial review of all FCC regulations.4 This applies to rules affecting broadcaster ownership of newspapers and radio licenses. Chairman Powell seized on these as an opportunity to eliminate the rules.5 The “Copernican Revolution” in regulation that he meant to advance reflects his belief that a technological revolution has already transformed the American mass media marketplace. For example, The Washington Post offered the following observation on things to come under the headline Narrowing the Lines of Communications?

It is only a matter of time before nearly all barriers to cross-ownership in the media industry are lifted … In major metropolitan areas it may be possible, even common, for one giant corporation to own the dominant newspaper, the cable television monopoly, a local broadcast station, several radio stations and even the dominant Internet access provider.

The decisions will give added support to FCC Chairman Michael K. Powell, who views such restrictions as anachronisms in an era of Internet, broadband and satellite technology … Any excess concentration, Powell argues, can be handled by the Justice Department in its traditional role as enforcer of the antitrust laws.6 Chairman Powell’s views are only the latest in a long line of efforts to redefine media policy in narrow economic terms and reduce democratic discourse to commercial success and popularity. This book shows that Chairman Powell’s view is wrong on both of its fundamental premises. It is wrong about the state of the media industry and wrong on the purpose of the law he swore to implement.

The Chairman’s view of the industry over which he presides is far off the mark, based more on hope and hype than reality.7 The dissemination of news and information in America, particularly local news and information, is still dominated by local television stations and newspapers. Local media markets are already highly concentrated. Even at the national level, the ownership and control of television programming, especially news dissemination, is concentrated. A relaxation of ownership limits can only make matters worse.

The Chairman’s desire to reduce all matters to antitrust is also off base and reinforced by his disregard for the public interest standard of the Communications Act. He made his dim view of the public interest standard clear in one of his first speeches as a Commissioner when he declared that:

The night after I was sworn in, I waited for a visit from the angel of the public interest. I waited all night, but she did not come. And, in fact, five months into this job, I still have had no divine awakening and no one has issued me my public interest crystal ball.8

The chairman’s desire to transform the public interest under the Communications Act into competition under the antitrust laws ignores half a century of First Amendment law and jurisprudence. As discussed at length throughout this book, the Supreme Court has adopted a broad view of the First Amendment in the age of electronic broadcast media, declaring the goal to be “the widest possible dissemination of information from diverse and antagonistic sources.”9

The goal of First Amendment policy under the Communications Act is broader than the goal of competition under the antitrust laws. In merger review, antitrust laws seek to prevent the accumulation of market power while merger review under the Communications Act seeks to promote the public interest. Media mergers must pass both reviews because Congress and the courts recognize that media and communications industries play a special, dual role in society. They are critical commercial activities and deeply affect civic discourse. They affect both consumers and citizens. While economic competition is one way of promoting the public interest, the Communications Act and the courts identify several others. Under the Act, the needs of citizens and democracy take precedence.

The extremely narrow view that the Commission took in its order is captured in fundamental judgments it made about policy and methodology.

Nor is it particularly troubling that media properties do not always, or even frequently, avail themselves to others who may hold contrary opinions. Nothing requires them to do so, nor is it necessarily healthy for public debate to pretend as though all ideas are of equal value entitled to equal airing. The media are not common carriers of speech…

The decision of whether to do weighting turns on whether our focus is on the availability of outlets as a measure of potential voices or whether it is on usage (i.e., which outlets are currently being used by consumers for news and information). We have chosen the availability measure, which is implemented by counting the number of independent outlets available for a particular medium and assuming that all outlets within a medium have equal shares. In the context of evaluating viewpoint diversity, this approach reflects a measure of the likelihood that some particular viewpoint might be censored or foreclosed, i.e., blocked from transmission to the public. 10

Rather than promote the widest possible dissemination of information from diverse and antagonistic sources, the Powell-led Commission defines its job as merely preventing the complete suppression of ideas. This narrow view of freedom of speech will not support a vibrant democracy and the radical relaxation of ownership limits to which it gives rise will result in concentration of ownership at the local level, consolidation of media into national chains, and conglomeration of different types of media outlets. Concentration of media ownership reduces the diversity of local reporting and gives dominant firms in local markets an immense amount of power to influence critical decisions. Consolidation in national chains squeezes out the local point of view. Conglomeration of media outlets undermines the watchdog role that the print medium plays with respect to television and vice versa.

By combining structural analysis of commercial media markets with qualitative analysis of media market performance, this book demonstrates the misguided nature of the decision to essentially eliminate the limits on ownership. It shows that previous decisions to relax rules led directly to concentration, consolidation and conglomeration, which had harmful effects on the quality of journalism and democratic discourse.

The Expanding Debate Over Media Reform and Justice

For the average citizen, rule makings in Washington are distant and arcane, to say the least, but there are indications that this omnibus assault on media ownership limits may not pass with the public indifference that greets most FCC decisions. The Democratic members of the Commission forced a wider public vetting of the issue by holding public hearings across the country, two of which the Chairman attended. Hundreds of thousands of ordinary citizens took the time to voice their opposition to relaxation of ownership limits.11

Deep concern about the impact of the commercial mass media on American democracy long antedated the change in the rules.12 That concern will only grow as the wave of takeovers and swaps unleashed by the relaxation of ownership limits brings highly visible mergers to cities and towns across America. The official endorsement of concentration, consolidation and conglomeration embodied in the virtual elimination of the public interest standard that has existed for over half a century may mark the start of a vigorous movement for media reform. Ownership limits on commercial mass media are important constraints because people still turn to these outlets overwhelmingly as their primary source of news and information. Thus, the dissemination of news and information to the vast majority of citizens, the blood that flows through the heart of American democracy, will continue to come from the commercial mass media for the foreseeable future. The effectiveness of ownership limits is finite. These limits can place some constraints on the accumulation of media power by individual media owners. They can disperse viewpoints somewhat and preserve the institutional independence of print and TV media. There are limits to the effectiveness of these policies because the commercial mass media are so powerful. Therefore, ownership limits are only part of a much broader media reform that is needed.

A much wider distribution of the right to broadcast through unlicensed use of the airwaves is technologically possible and should be promoted. Giving every citizen an electronic voice through unlicensed use of the broadcast spectrum would lay the base for a truly “Copernican Revolution.”

Public interest obligations should also be imposed on the holders of broadcast licenses to ensure that some of the huge profits created by these licenses are used for informative and high quality content. This would ensure wider distribution of this content and capitalize on the powerful and expansive reach of the electronic media.

Community media, which provides much greater access for and is much more responsive to average citizens, should be developed. Noncommercial outlets and public broadcasting need the resources and independence to provide an alternative channel of high quality, objective content. As community and noncommercial media gain a stronger base, they can take on a key role as a forum for democratic discourse and as a watchdog, checking not only government and corporations, but also the commercial mass media.

OUTLINE

The book is divided into four parts. Part I presents the legal principles and analytic framework. The remainder of this chapter discusses the principles of First Amendment jurisprudence. When the Supreme Court formulated its bold aspiration for electronic speech it explained why democracy needs a media structure that strives for “the widest possible dissemination of information from diverse and antagonistic sources.” Because First Amendment rights are involved, the court is also very careful to explain why the First Amendment and economic rights of media owners must serve the public interest. The chapter contrasts the forthright aspiration embodied in current law to the very narrow view taken by the Chairman of the FCC and the major media companies. It concludes with a review of public opinion about these issues.

Chapter II provides a theoretical explanation of why market forces alone will not create a forum for political discourse that meets our democratic needs. It shows that, left unchecked, key economic supply characteristics of mass media in the electronic age will drive the industry toward large entities in highly concentrated markets. The economic needs of these large national corporations will result in bland, homogenous fare that does not meet the needs of citizens in a large, heterogeneous nation. The chapter reviews a vast body of empirical evidence that supports the deep concerns that over-reliance on unfettered commercial mass media will fail to meet the needs of citizens for democratic dialogue.

Part II presents qualitative analyses of trends in the media – hypercommercialism, concentration, consolidation and conglomeration in the dominant media. These have had a significant impact on democratic discourse in the last two decades of the twentieth century. The qualitative analysis explains why one should care about the ownership structure of the media.

Chapter III reviews some evidence of the qualitative impact on print journalism of mergers across media types as well as the consolidation of ownership of print journalism into national chains. Chapter IV reviews the major electronic media. It begins with the criticism of the role of television in the deterioration of political deliberation in the past several decades. It then reviews the hope and hype surrounding the Internet and discusses the technical, economic and social limitations on the role of the Internet in improving democratic discourse. It concludes with an application of the analytic framework to the coverage of the war in Iraq.

Part III presents quantitative analysis of media markets. While structural limits on ownership must rest on concerns about the qualitative impact of concentration, consolidation and conglomeration in the media, structural policy must also rest on a quantitative assessment of media markets and institutions. Ownership restrictions should be imposed only where there is a reasonable basis to conclude that without such limits democratic discourse will be weakened. Part III takes the view that market structure analysis is a proper basis for ownership policy as long as the analysis is rigorous and the policy rests on high First Amendment standards.

Following the general practice in the antitrust literature, Chapter V starts by defining the space in which news and information are disseminated in terms of its “product” and geographic characteristics. It introduces the formal measures of market structure derived from the field of industrial organization and utilized by antitrust authorities. It looks at the demand side – what consumers watch, read and listen to. The data demonstrates that on the demand side of the market, video, print and audio are distinct media products. They have very different characteristics and usage patterns. It shows that there are distinct national and local markets in which different products are supplied. At the same time, with respect to the production of local news, there are strong similarities between the print and TV markets, so that mergers between firms producing news pose a problem on the supply-side of the market.

Chapter VI reviews the supply side of the market. It examines the revenue and business models for broadcast, cable, newspapers, radio and the Internet. For each industry it applies the formal concepts of market structure analysis to assess the level of concentration in media markets. Applying these concepts, it finds that by routine antitrust standards virtually all of the national and local media product markets are concentrated and most are highly concentrated. The chapter also examines examples of past decisions to relax limits on media ownership to ascertain what is likely to happen should the proposed relaxation of the current rules be implemented. Looking at the relaxation of the TV duopoly rule in the late 1990s, the deregulation of cable in the 1980s, the increase in the radio ownership limits in the Telecommunications Act of 1996, and the repeal of the Financial and Syndication Rules in the early 1990s, the answer is overwhelmingly clear: ‘If you let them, they will merge.’

Part IV presents structural policies for media ownership. Chapter VII proposes an approach to media ownership limits based on rigorous market structure analysis and high First Amendment standards. It adopts the principle that the FCC should not encourage media markets to become concentrated or allow mergers involving TV stations in markets that are highly concentrated. It measures market concentration in traditional antitrust terms and offers methodologies to take account of the impact of each type of media and the audience of every media outlets. These simple principles would allow cross-ownership mergers in only 10 markets where about 20 percent of the national population resides, while allowing TV mergers to take place in about 20 markets.

Chapter VIII presents a critique of the FCC’s proposed rules. By failing to take audience size into account and assigning far too much importance to radio and weekly newspapers, the FCC bases its rules on a completely distorted picture of media markets. In the FCC analysis of New York City, for example, the Dutchess County Community College educational TV station has more weight than the New York Times. After two years of evidence gathering, the FCC appears to have resorted to politically motivated deal making13 for the sole purpose of getting the most deregulation possible from a partisan majority. The FCC order gives blanket approval to newspaper–TV cross ownership in about 180 markets serving 98 percent of the nation. The number of markets in which TV-TV mergers are permitted is tripled from approximately 50 to 150.

NOT A TOASTER WITH PICTURES OR PEANUTS AND POTATOES

Democratic Debate v. Commercial Media Markets

The narrow economic view that Chairman Powell would like to impose on the debate over media ownership and his utter disdain for the public interest standard of the Communications Act14 hark back to Mark Fowler, the first chairman of the Federal Communications Commission in the Reagan administration, who declared that television “is just another appliance … a toaster with pictures.”15

The owners of media outlets and some of their champions would like to reduce the First Amendment to the status of “a toaster with pictures,” and there is no doubt that hyper-commercialism has come to dominate both television and the Internet. Fortunately, neither Congress nor the Supreme Court has accepted that outcome as the best for democracy or as an appropriate reading of the First Amendment in the age of electronic media.

The Federal Appeals Court for the District of Columbia, which has sent the rules back to the Commission for further review and instructed the FCC to provide better justification for its rules, has clearly stated that public policies to promote a more diverse media landscape are constitutional, even if they reduce economic efficiency. The notion that the courts have demanded that the FCC remove or substantially relax media ownership rules is simply wrong. The fact that the Court of Appeals has demanded a coherent analytic framework based on empirical facts does not necessarily indicate that a relaxation of the limits on ownership is warranted. To the contrary, the court recognized that the limits could be loosened or tightened.

The D.C. Appeals Court continues to accept the proposition that “the Congress could reasonably determine that a more diversified ownership of television stations would likely lead to the presentation of more diverse points of view.”16 It went on to outline the logic of ownership limits. “By limiting the number of stations each network (or other entity) owns, the … Rule ensures that there are more owners than there would otherwise be.”17

The court also accepts the trade-off between diversity and efficiency. An industry with a larger number of owners may well be less efficient than a more concentrated industry. Both consumer satisfaction and potential operating cost savings may be sacrificed as a result of the Rule. But that is not to say the Rule is unreasonable because the Congress may, in the regulation of broadcasting, constitutionally pursue values other than efficiency – including in particular diversity in programming, for which diversity of ownership is perhaps an aspirational but surely not an irrational proxy. Simply put, it is not unreasonable – and therefore not unconstitutional – for the Congress to prefer having in the aggregate more voices heard.18

In Fox Television Stations, Inc. vs. FCC, the above reasoning is applied to a rule that increases the number of voices in the nation without increasing the number of voices in a local market. If such a rule can pass constitutional muster, if properly justified, rules that are aimed at increasing local voices, as are many currently under review by the FCC, stand on even firmer ground.

In fact, the aspiration for the First Amendment is much broader than “a toaster with pictures.” It was given its modern formulation by Justice Black in 1945 in the seminal case, Associated Press v. United States.19 He concluded that the First Amendment “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.” For the framers of the Constitution, diversity was a force to be tapped for the strengthening of democracy. Cass Sunstein points out that the uniquely American approach to a republican form of government held the view that “heterogeneity, far from being an obstacle, would be a creative force, improving deliberation and producing better outcomes… Alexander Hamilton invoked this point to defend discussion among diverse people within a bicameral legislature, urging… ‘the jarring of parties… will promote deliberation’.”20

Indeed, the governing Supreme Court decisions make it clear that freedom of information and the press transcend mere economics. Justice Frankfurter put it explicitly in concurring in Associated Press, A free press is indispensable to the workings of our democratic society. The business of the press, and therefore the business of the Associated Press, is the promotion of truth regarding public matters by furnishing the basis for an understanding of them. Truth and understanding are not wares like peanuts and potatoes. And so, the incidence of restraints upon the promotion of truth through denial of access to the basis for understanding calls into play considerations very different from comparable restraints in a cooperative enterprise having merely a commercial aspect.21

Since then, the Supreme Court has reaffirmed this view with respect to newspapers and has unflinchingly applied it to all forms of mass media, including broadcast TV22 and cable TV.23 Simply, the needs of citizens cannot be reduced to the needs of consumers. Therefore, “we should evaluate new communications technologies, including the Internet, by asking how they affect us as citizens, not mostly, and certainly not only, by asking how they affect us as consumers.”24 Competition and economics in the commercial market may help to meet both sets of needs – needs as consumers and citizens. But, when the two come into conflict, citizens’ needs for democratic discourse should take precedence over the commercial marketplace of the mass media.25 The goal of media policy should be to promote a vigorous forum for democratic discourse.

I refer to the “forum for democratic discourse” rather than the “marketplace of ideas,” because the marketplace metaphor is far too commercial. While the basic concept underlying the marketplace of ideas is sound - ideas competing for attention and support in an open public arena - the picture of a marketplace fails to capture the fundamental qualitative difference between the nature of action and interaction in the commercial marketplace and the forum for democratic discourse.26 I want to draw a sharper distinction between democratic discourse and commercial media.

The objective of the commercial marketplace is to exchange goods and services to improve efficiency and produce profit. The objective of the forum for democratic discourse is to promote a “robust exchange of views” that produces “participation, understanding and truth.”27 The aspiration for the First Amendment embodied in contemporary Supreme Court case law provides a properly bold vision. Freedom of the press and a robust exchange of views are complex, qualitative goals, which are inherently less tangible than a simple concept of profit or loss. That they are less precise, however, does not make them less important.28 The fact that the goal is intangible should not prevent us from striving to define it with greater rigor.

Indeed, many of the wounds that the FCC has suffered in the D.C. Court of Appeals are self-inflicted. The Commission has failed to articulate a coherent and consistent vision, letting “a variety of crosscutting objectives…obscure… the most important role that government regulations designed to enhance media diversity can play: thwarting the creation of undue concentration of media power, thereby advancing the project of democratic deliberation.”29 Those who would abandon the goal of promoting diversity in favor of promoting efficiency are misguided.30 Structural limits remain the best means for promoting diversity in civic discourse.

Uncontrolled centralization of media power presents a threat to liberty no less acute than the uncontrolled centralization of political power. Concentrated media power is utterly unaccountable to the citizenry. Similarly put, those who control the electronic media could, with sufficient concentration of media power, effectively displace citizens as the de facto rulers…

Structural regulation – limiting the number of stations that a single entity can control, divorcing ownership of print media from ownership of broadcast media within the same community, limiting the number of stations that a single entity can own or control within a community, or licensing stations on a community-by-community basis… are mechanical in operation… They are also viewpoint-neutral. The Commission is not picking and choosing among potential speakers in drafting or applying these rules.31

Participation in Democratic Debate

The distinction between the commercial marketplace and the forum for democratic discourse becomes readily apparent when we respond to the advice frequently given by the most ardent advocates of pure economics to the complaint of mediocrity in the media. When the poor quality of the media product is brought up, they give a good free market response – “If you do not like what is on the tube, turn it off.” An okay answer for consumers is very bad for citizens. It may be perfectly acceptable for consumers to be forced to vote with their dollars and turn off commercial entertainment, but it is not acceptable for citizens to be turned off by the poor quality of civic discourse, and then have no comparable alternative to which they can turn. As Justice Brandeis explained in his concurrence in Whitney v. California, Those who won our independence believed that the final end of the State was to make men free to develop their faculties; . . . that the greatest menace to freedom is an inert people; that public discussion is a political duty; and that this should be a fundamental principle of American government.32

The desire for active participation and the duty to discuss have important implications. Justice Brandeis’ admonition against turning citizens into passive ‘couch potatoes’ needs to be given its full weight in constructing media ownership policy.

In particular, citizens must enter the debate not simply as listeners or viewers, but also as speakers. One goal is to ensure that they are well informed, receiving good, diverse information. Another even higher goal is to have them engage actively as participants in civic discourse.33 The First Amendment implications of policies should not only be about how much citizens have to listen to, but also about their opportunities to speak and be heard. Sunstein puts it as follows: with respect to a system of freedom of speech, the conflict between consumer sovereignty and political sovereignty can be found in an unexpected place: the great constitutional dissents of Supreme Court Justices Oliver Wendell Holmes and Louis Brandeis… Note Brandeis’ suggestion that the greatest threat to freedom is an “inert people,” and his insistence, altogether foreign to Holmes, that the public discussion is not only a right but also a “political duty”… On Brandeis’s selfconsciously republican conception of free speech, unrestricted consumer choice is not an appropriate foundation for policy in a context where the very formation of preferences, and the organizing processes of the democratic order, are at stake.34

In fact, in each of the Supreme Court cases dealing with electronic media, the court has lamented not that there is not enough to hear or see, but that the number of electronic voices possible is far smaller than the number of potential speakers. Starting with an early radio case, National Broadcasting Co. v. United States, the Supreme Court found that “its facilities are limited; they are not available to all who may wish to use them; the radio spectrum simply is not large enough to accommodate everybody.”35 A quarter of a century later, with regard to television, FCC v. National Citizens Commission for Broadcasting again examined the disproportional relationship between potential speakers and electronic voices.

Because of the problem of interference between broadcast signals, a finite number of frequencies can be used productively; this number is far exceeded by the number of persons wishing to broadcast to the public.36

In Red Lion Co. v. FCC, the unique nature of electronic speech was underscored when the court noted that “where there are substantially more individuals who want to broadcast than there are frequencies to allocate, it is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish.”37

In fact, in the Sinclair Broadcast Group v. FCC decision, which dealt with local media markets, the court went to considerable lengths to reject Sinclair’s claim that its First Amendment rights had been harmed by the duopoly rule.

[B]ecause there is no unabridgeable First Amendment right comparable to the right of every individual to speak, write or publish, to hold a broadcast license, Sinclair does not have a First Amendment right to hold a broadcast license where it would not, under the Local Ownership Order, satisfy the public interest. In NCCB the Supreme Court upheld an ownership restriction analogous to the Local Ownership Order, based on the same reasons of diversity and competition, in recognition that such an ownership limitation significantly furthers the First Amendment interest in a robust exchange of viewpoints. The Court states in NCCB that it “saw nothing in the First Amendment to prevent the Commission from allocating licenses so as to promote the ‘public interest’ in diversification of the mass communications media.38

The general principle that First Amendment policy should draw people into civic discourse applies with particular force to minority points of view. In the commercial model, popular, mainstream, and middle of the road ideas will almost certainly find a voice, one that is likely to be very loud. However, the unpopular, unique, and minority points of view will not. Profit maximization in increasingly centralized, commercial media conglomerates promotes standardized, lowest-commondenominator products that systematically exclude minority audiences, eschew controversy, and avoid culturally uplifting but less commercially attractive content. Sunstein makes this point forcefully by noting that a “principle function of a democratic system is to ensure that through representative or participatory processes, new or submerged voices, or novel depictions of where interests lie and what they in fact are, are heard and understood.”39

The idea of a duty to discuss and the need for a vibrant democratic discourse lead Sunstein to warn that the passive satisfaction that the media can induce is not an adequate standard for democracy. He argues that the mere fact that citizens keep watching the available fare with various levels of satisfaction and dissatisfaction does not demonstrate the success of the media market from the point of view of democratic discourse.

Much of the time, people develop tastes for what they are used to seeing and experiencing… And when people are deprived of opportunities, they are likely to adapt and to develop preferences and tastes for what little they have. We are entitled to say that the deprivation of opportunities is a deprivation of freedom – even if people have adapted to it and do not want anything more.40

Similar points hold for the world of communications. If people are deprived of access to competing views on public issues, and if as a result they lack a taste for those views, they lack freedom, whatever the nature of their preferences and choices.41

Information Dissemination, not Entertainment

The narrow economic view of media leads FCC Chairman Powell directly to a failure to recognize the distinction between entertainment and information and between variety and diversity. He has expressed skepticism that there is a viewpoint expressed in most television programming, and accordingly, skepticism as to whether ownership limits serve any public benefit. As the Chairman stated in USA Today, [t]his is some sort of Citizen Kane idea that our thoughts will be directed to particular viewpoints. But the overwhelming amount of programming we watch is entertainment, and I don’t know what it means for the owner to have a political bias. When I’m watching Temptation Island, do I see little hallmarks of Rupert Murdoch?42 Actually, even at the level of entertainment, the Chairman is not entirely correct. The decision of what is entertaining and what values are promoted in society is clearly embodied in the commercial decision underlying “Temptation Island.” It stands for the proposition that paying people money to put their relationships in jeopardy under a voyeuristic lens constitutes good programming. It is highly unlikely that such a view would come from programming on the Pax network, or even on some of Fox’s affiliates, as long as they remain independent and can choose not to air programming that offends their local community values.43

Additionally, what gets seen and not seen is quite clearly reflected in Rupert Murdoch’s values, such as his decision not to include CNN and the BBC in his cable offerings in China because they have, for example, offered unflattering portraits of the Chinese government’s stand on human rights issues. Murdoch understood that his ability to continue broadcasting in China was at stake and made a business decision to exclude such programming,44 just as Comcast chose not to allow antiwar commercials to be aired on its systems.45

The most important point is that even if the economic media marketplaces were composed of significant numbers of small firms competing aggressively with one another, an unfettered commercial mass media market might not lead to the vibrant forum for democratic discourse that our Constitution attempts to promote because diverse sources of information are not the object of commercial competition. It favors entertainment at the expense of information. Owen Fiss articulates this point well when he notes that:

None of this is meant to denigrate the market. It is only to recognize its limitations. The issue is not market failure but market reach. The market might be splendid for some purposes but not for others. It might be an effective institution for producing cheap and varied consumer goods and for providing essential services (including entertainment) but not for producing the kind of debate that constantly renews the capacity of a people for self-determination.46

Concentration of ownership may foster entertainment variety, but it undermines diversity of information and journalistic enterprise.

It is certainly true that a person with two radio stations within the same market will probably select different program formats for each station whereas divided ownership might lead to competition within the same format. Suppose, however, that Disney owned both stations. Would the stations’ news bureau report on Disney misdeeds with the same salacious alacrity of a competing local station unaffiliated with Disney? It seems rather unlikely.47

Limits on Ownership to Promote Diversity

As the D.C. Appeals Court noted, diversity of ownership is a critical aspect of diversity of information. In Associated Press, the Supreme Court also recognized that limitations on private interests to promote freedom of the press were permissible.

Freedom to publish means freedom for all and not for some. Freedom to publish is guaranteed by the Constitution, but freedom to combine to keep others from publishing is not. Freedom of the press from governmental interference under the First Amendment does not sanction repression of that freedom by private interests.48

Democracy theorists and legal scholars have identified a range of benefits of dispersed media ownership including “the salutary effect of ensuring a local media presence… the ancillary effect of dividing up ownership rights to the mass media… and… the effect of dispersing media power among multiple owners.”49 Increasing the number of independently owned media outlets plays a critical role as a deterrent to negative behavior. Edwin Baker argues that,

A society’s capacity to maintain its democratic bearings or its ability to resist demagogic manipulation may be served by a broad distribution of expressive power, especially media-based power. Such a distribution may be harder for a demagogue to manipulate or control or may be better able to deter political abuses because of being more difficult to control. On this account, the value of a wide distribution of media ownership lies not in any particular media product that this ownership produces on a day-to-day basis (such that the value will be reflected in market sales) but the democratic safeguards that this ownership distribution helps provide.50

The antagonism that the bold aspiration for the First Amendment seeks to achieve fosters accountability. As Ronald Krotoszynski and Richard Blailock put it, “[j]ust as divided political power fosters accountability – a central tenet of federalism – so too, divided media power fosters accountability.”51

Baker argues that the promotion of diversity should not simply be applied to owners, but also to forms of ownership. He argues that [O]ur system of free press expression must include a plurality of speaker types, including commercial mass media, government subsidized noncommercial media, independent publishers, political and nonprofit associations, universities and individuals. To some extent, each of these speaker types offsets, complements, and checks the rest.52

In fact, one of the great weaknesses of the simplistic economic approach to media ownership is its failure to recognize that information is not just a commodity in which one source of information from one type of media can substitute for another. Institutional diversity – different types of media with different cultural and journalistic traditions and different business models – plays a special role in promoting civic discourse. Unique perspectives provided by different institutions are highly valued as sources of information.

Judge Learned Hand painted a picture of diversity that was properly complex, noting that a newspaper “serves one of the most vital of all general interests: the dissemination of news from many different sources, and with as many different facets and colors as possible” because “it is only by cross-lights from varying directions that full illumination can be secured.”53 As a recent law review article puts it:

[I]t is problematic, or as Judge Learned Hand asserted “impossible,” to treat different news services as “interchangeable…” A newspaper reflects the biases and views of its writers, editors, and perhaps owners.

One newspaper may downplay and truncate a news wire story, while the other newspaper may carry it as a headline. These are non-fungible commodities. Thus, the marketplace is not about consumers switching from one homogenous product to another. Rather, it is the net increase in consumer welfare from having many competing news sources and editorial voices… Unlike restraints on ordinary commodities (where consumers may turn to less-desirable alternatives but the overall societal impact is not significant), for restraints in the media, the alternative may be inherently unsatisfactory and the costs imposed on society may be significant.54

A narrow view that all media information is fungible fails to recognize the unique role of newspaper reporting as a fourth estate: checking waste, fraud, and abuse of power by governments and corporations. It ignores the difference between national and local news markets and the tendency of nationally oriented media, which maximize profit by presenting programming attractive to national audiences and national advertisers, to homogenize the local point of view out of existence.

These courts have recognized that news comes from many sources: newspapers, television, radio, magazines and more recently the Internet. These sources all arguably compete for the public’s attention. But these courts have found that both the format and nature of information in local daily newspapers distinguish them from news and entertainment provided by other sources. Daily local newspapers provide a “unique package” of information to their readers. National newspapers lack the local news and advertising. Radio and television are primarily dedicated to entertainment and their news content lacks the breadth and depth of daily newspapers.55

The narrow view also fails to recognize the unique importance and role of television in the political process in a different way. Television is special because of its immense power to influence public opinion56 and the role it plays in elections. “Because of the speed and immediacy of television, broadcasters perform these public forum-type functions even more than general interest intermediaries in the print media.”57 The broad language that the Supreme Court used in justifying the imposition of obligations on television, with a direct link back to the admonition of Brandeis, bears repeating. As Sunstein puts it,

[T]he Court said “assuring that the public has access to a multiplicity of information sources is governmental purpose of the highest order, for it promotes values central to the First Amendment.” The Court also emphasized the “potential for abuse of… private power over a central avenue of communications,” and stressed that the Constitution “does not disable the government from taking steps to ensure that private interest not restrict, through physical control of a critical pathway of communications, the free flow of information and ideas.58

An unsophisticated view of media outlets pays no attention to the size of the organizations that produce news and information or their geographic orientation, in the process losing all perspective on citizens’ ability to gain access to the media. As corporate scale dwarfs individual resources, citizens are cut off from the means of communication. Associated Press certainly expressed a concern about the sheer size of news organizations and the influence that could result.59

The narrow view of the public interest taken by Chairman Powell – which concerns itself with the promotion of commercially successful entertainment variety – sells the First Amendment short. The Supreme Court and the founders of the republic had a much bolder aspiration than that. As Sunstein argues, the lifeblood of democracy is the process of participation in the forum of discourse made up of diverse arenas for discussion and debate.

We have seen that the essential factor is a well-functioning system of free expression – the “only effective guardian,” in James Madison’s words, “of every other right.” To be sure, such a system depends on restraints on official censorship of controversial ideas and opinions. But it depends on far more than that. It also depends on some kind of public domain, in which a wide range of speakers has access to a diverse public – and also to particular institutions, and practices, against which they seek to launch objections. Above all, a republic, or at least a heterogeneous one, depends on arenas in which citizens with varying experiences and prospects, and different views about what is good and right, are able to meet with one another and to consult.60

THE NEED TO IMPROVE DEMOCRATIC DISCOURSE

Demographic Changes

There is a final, fundamental way in which the simplistic, strictly economic view that counts only the number of entertainment channels undervalues civic discourse. It fails to consider whether there is a need for a more effective means of public debate. Counting the number of outlets without reference to the population they serve or the issues they must deal with ignores the needs of the citizenry for information. If citizen participation in civic discourse is to continue to be or become more effective, a substantial improvement in the means of communication at the disposal of the public—far beyond commercial mass media influences—must be promoted through public policy. Policy must recognize that this aspiration for civic discourse must be placed in the social, economic and political context in which citizens live.61

While it is certainly true that there is a great deal more information available to more educated citizens today than twenty-five or fifty years ago, it is also true that they need more information. The population has grown in size and diversity. Mobility, globalization of the economy, internationalization of communications, and social fragmentation place greater demands on the communications network to enable citizens to be informed about increasingly complex issues, to express their opinions more effectively in civic discourse and to remain connected to their communities.

The broad parameters of change in American society over the past three decades are so profound that we can safely conclude that a much more diverse set of media institutions and outlets is needed to disseminate information. I focus on the past three decades because many of the rules governing the structure of media ownership were adopted in the early 1970s. For the purposes of this analysis, I start with the household as the consumption unit. TV markets are defined in terms of households. The bulk of newspaper distribution is home delivery.

The number of households has increased by 67 percent in the past two decades. This is twice as fast as the increase in the population (see Figure I-1). This reflects a dramatic change in the composition of households units. The number of married families has declined, while single parent households have increased sharply.

At the same time, there has been a dramatic change in the racial and ethnic make-up of the population. The share of Hispanics and Asian/ Pacific Islanders has doubled. Combining these two trends produces a stunning increase in the diversity of the population.

While the population has become increasingly diverse, it has been drawn more tightly into a more complex world.62 In 1970, exports and imports equaled about eight percent of gross national product. In 2000, the figure was twenty percent. Global financial markets, in which the U.S. is the leading actor, have grown dramatically. In 1970, the goods and services produced by the U. S. economy equaled about fifteen percent of global financial transactions. By 2000, they equaled only two percent.

The most dramatic changes can be seen in the movement of people. In 1970, two percent of the American population traveled abroad. By 2000, that number had grown tenfold to equal twenty percent of the population. Similarly, foreigners traveling to the U.S. equaled two percent of the population in 1970. By 2000, it had increased to equal sixteen percent of the population. Foreign born, non-citizens resident in the U.S. equaled five percent of the population in 1970. Today they equal ten percent and their racial and ethnic make-up has changed dramatically. In 1970, they were predominantly Europeans. Today they are predominantly Hispanics and Asians.

Technological Change

While the demand side of the media market has become much more complex, the supply side has become much more powerful. The power of digital communications is being greatly enhanced by improved video images with impact heightened by real-time interactivity and ubiquitous personalization. Dramatic increases in the ability to control and target messages and track media use could result in a greater ability to manipulate and mislead, rather than a greater ability to educate and enlist citizens in a more intelligent debate. Individual members of society need new communication skills and access to technology to express themselves and evaluate the information presented by more powerful messengers; citizens need a new kind of “media literacy.”

The new technologies of commercial mass media are extremely capital intensive and therefore restrict who has access to them. The size of media organizations presents a growing mismatch between those in control and average citizens.63 A small number of giant corporations interconnected by ownership, joint ventures, and preferential deals now straddles broadcast, cable and the Internet. Access to the means of communication is controlled by a small number of entities in each community and these distribution proprietors determine what information the public receives.

Notwithstanding the growth of new media, the dominant mass media – commercial television – remains extremely scarce in an important sense. The number of channels available is quite small compared to the number of citizens. Sunstein argues that even in cyberspace, where web sites and home pages are extremely plentiful, there is scarcity of another key element of the communications process: attention.64

At this point in time, the hope that new technologies will strengthen civic discourse is just that—a hope. Claims that dramatic changes have already rendered policies to promote diversity obsolete are premature and unsupported by the evidence. There has been far less fundamental change in the forum for democratic discourse than meets the eye.

At the same time, while the Internet has opened possibilities for new avenues of civic discourse, it has not yet even begun to dislodge the commercial mass media from their overwhelmingly dominant role. There is also a strong trend of commercialization and centralization of control over the Internet that may restrict its ultimate impact on civic discourse.65

SELLING FIRST AMENDMENT PUBLIC INTEREST PRINCIPLES SHORT

Chairman Powell’s decision to define his job as promoting economic efficiency and profits in the entertainment industry and reducing the public interest to variety in entertainment programming sells short the aspiration the Supreme Court articulated for the First Amendment.

The broadcast networks embellish these themes, rejecting the scarcity argument declaring that “the ‘scarcity doctrine’ is and always has been a factual and economic absurdity.”66 The “widest possible dissemination” principle of First Amendment jurisprudence is reduced to a shadow of its bold aspiration,

What really matters with ideas from a political point of view is whether they can be suppressed. But given the importance of interpersonal communications, it is extremely difficult to suppress ideas – they can “leak out” even through small or economically minor media outlets.67

This view of civic discourse leads directly to a rather remarkable conclusion: the size of the audience does not matter. As their expert put it, “In short, the audience of a media outlet is unrelated to the outlet’s significance in the marketplace of ideas.”68 The media companies have put forward a remarkably simple strategy for hiding the extremely concentrated condition of media markets; they tell the FCC to simply ignore it. 69

Obviously, if you are a prime time programming giant that reaches into tens of millions of homes each night seeking to eliminate regulations that prevent you from growing larger, it is convenient to claim you have no more significance than the web site of the local astronomical society,70 which gets a handful of hits a month. It may be convenient, but it does not make much sense. Yet, that is exactly how the network broadcasters recommend the FCC analyze media markets. The ability of a citizen to whisper a counter argument over the backyard fence is equal to the powerful electronic media that broadcast the owner’s point of view to millions of viewers.

The media owners’ utter disdain for the First Amendment policy repeatedly enacted by the Congress and supported by the courts is evident in their rejection of the policy to promote localism in the media. As their leading expert puts it, “Why should the government seek to promote local content as opposed to, and especially at the expense of, any other category of ideas?”71

Congress has long recognized that local decisions like school board elections, policing, zoning, refuse collection, and fire and rescue deeply affect the quality of life and need to be aired in the media to have an informed democratic debate. Congressional elections are also local affairs that receive little detailed attention in the national media. The empirical evidence indicates that their concern that national media will neglect local issues is well grounded. The national chains may not like the policy of promoting localism, but it has a sound basis in social reality and law.

The role of the FCC is further restricted in the industry view by insisting that the economic impact on consumers should be the sole focal point of analysis, not the impact on the citizen’s freedom of speech. Whether ownership concentration poses harm to competition or to consumers is precisely the question on which the Commission should focus, and it is exactly the question upon which the antitrust laws and their enforcers focus.72

In the narrow economic view, the importance of ownership disappears since, “it is the tastes and demands of audiences, not the wishes of broadcasters that determine the extent of content diversity in a competitive marketplace.”73 The empirical evidence simply does not support this view. Not only do owners actively take points of view on key issues, but economic processes drive them to under serve and undervalue preference minorities.

Moreover, since the role of citizens and civic discourse are read out of the Communications Act by the broadcasters, we should not be surprised to find that the distinction between entertainment and news and information is eliminated.

[T]he commission’s sometime preoccupation with news and public affairs, as distinct from entertainment programming… makes even less sense than localism. First, broadcast news is entertainment – it has to be, at least in part, in order to attract audiences that can be sold to advertisers.74

In this view of the world, the commercial purposes of the broadcasters overwhelm the role of the media in civic discourse. People cannot possibly watch television to become informed. They can only watch it to be entertained. If the Commission accepts this view of its First Amendment charge under the Communications Act, it should not be surprised to find that it has no role since “it will duplicate the work of the Antitrust Division, which would be a waste of public resources.”75

Although entertainment certainly can contribute to civic discourse and it certainly shapes social and cultural values, news and information provide the critical inputs for public decision making about key public policy issues.

The twisted logic of the broadcast networks stands economic analysis on its head. Rather than count the audience or market share of each firm, they simply equate all outlets, regardless of the disparity in the reach or audience. Proper economic analysis counts these sources according to their market share.

The extreme position of the networks leads them to another absurd conclusion. For example, they say that any web site that “could plausibly offer content specific to the Milwaukee DMA”76 counts just as much as the most powerful broadcast station. A cursory glance at the Internet web sites the broadcasters list would no doubt show that the content was not “specific” to Milwaukee. Further, over half of the web sites on the list are, in fact, the web sites of local media outlets. Being the same owners, they bring little new to the table. Virtually all of the remainder is highly specialized, with little capacity or inclination to produce general news and information. None have the ability to announce events with the broad impact of the electronic media.

In their analysis, the network broadcasters equate WTMC, the NBC affiliate in Milwaukee that leads the broadcast market, to the following web sites: Milwaukee Aquarium Society, Milwaukee Astronomical Society, and the Milwaukee Curling Club. Interestingly, Journal Communications, which owns WTMC, the number one TV station, also owns the Milwaukee Journal, the largest newspaper in the Milwaukee DMA, and two of the top radio stations in the Milwaukee area. The failure to recognize any difference between huge media conglomerates and minuscule web sites defies common sense, is inconsistent with economic analysis, and has no basis in media jurisprudence.

This approach to the analysis of market structure in the marketplace of ideas certainly suits the interests of owners of the high-rated prime time shows, but it is simply not a realistic view of the role and function of broadcast TV in contemporary society. One need only observe the behaviors of political candidates to recognize that all media outlets are not equal in democratic discourse. Candidates spend huge sums of resources on TV advertising, which consumes the vast majority of their campaign budgets.

PUBLIC OPINION ABOUT THE MEDIA

Fortunately, it is not only the courts and congress that reject the narrow economic view of the electronic mass media; the public does too. Although the FCC Chairman and the head of the Mass Media Bureau have expressed their disdain for public input on important policy issues,77 as reexamination of the rules governing media ownership and the flow of information over communications networks plays out, it is critical that policy makers recognize that the public has a vision for democratic mass media and advanced communications networks that is much more consumer and citizen friendly than the apparent view of the Chairman and the majority at the FCC. The hundreds of thousands of cards and letters sent to the Commission by concerned citizens indicate a great deal of public interest in preserving ownership limits.78 Public opinion surveys over the past several years demonstrate that the public’s view of media concentration and digital communication networks stands in sharp contrast to the narrow view being pushed by the industry and the Chairman of the Federal Communications Commission.

Ironically, the Lou Dobbs Moneyline show on CNN ran an online poll asking whether “too few corporations own too many media outlets?” Ninety-eight percent said yes.79 Hearst, one of the publishers seeking relaxation of the rules, conducted a poll that asked whether the current times in the Communications Act, the public expresses strong support for public interest obligations for both television and the Internet.

Across a range of questions, public concern over growing media concentration appears to have increased since the mid-1990s when the passage of the Telecommunications Act of 1996 deregulated media and triggered a wave of mergers.81 By a wide margin (70% vs. 30%), survey respondents believe that media companies are becoming too large. This concern reflects their belief that mergers between media companies do not lead to better content and services (58% vs. 41%). They believe that mergers result in higher, not lower, prices (50% vs. 12%) and worse, not better, quality (36% vs. 14%). Consequently, they think it should be harder, rather than easier, for media mergers to be approved (55% vs. 32%). They are strongly opposed to very large mergers, like the AT&T/ Comcast merger (66% vs. 12%).

The public also opposes mergers across media types, such as between broadcast stations and newspapers. Asked whether such mergers would be good or bad for their communities, respondents felt it would be bad by a three to one margin (49% to 17%). Asked whether such mergers would be good or bad for the country, their negative reaction was even stronger. Between 55 and 75 percent of respondents said mergers would be bad, compared to fewer than 15 percent who said mergers would be good. These cross-media mergers are a source of concern because respondents felt there would be less, not more, diversity of editorial points of view (43% vs. 18%) and that diversity of points of view in covering local news would decrease, not increase (39% vs. 21%).

Concern about the impact of mergers on the quality and content of programming reflects a deeply seated concern among consumers. They do not feel that television accurately represents the average consumer (60% vs. 28%). Almost one half (47%) does not trust the information they find in the news. Another Lou Dobbs Moneyline poll a few days later found that 45 percent of the respondents were skeptical of the media, 42 percent were mad as hell about its performance, and only ten percent thought the media did a good job.

Respondents deem it important that shows reflect the cultural and ethnic make-up of the community (very important = 35%, somewhat important = 42%, not important at all = 23%). Similarly, they deem it important to have public affairs programs that discuss local issues (very important = 43%, somewhat important = 43%, not important at all = 13%). rules should be modified.80 The respondents voted almost seven to one in favor of keeping the rules. The paper cautioned that the sample might not be representative, which is true of the Lou Dobbs poll as well. Scientific samples yield similar results.

• In contrast to recent FCC proposals that express little concern about increasing concentration in the media and telecommunications industries, the public is troubled by the growing concentration of the media.

• In contrast to FCC Chairman Powell, who has expressed skepticism over the usefulness of the public interest standard mentioned 112 They find it very important (68% = very, 25% = somewhat) that local news and events are reported.

The public supports a range of public interest obligations. Almost two-thirds of respondents believe that broadcasters will just maximize profits if not directed to air public interest programming (63%). Substantial majorities of respondents believe broadcasters should provide public service programming and services. For example, approximately 70 percent of respondents say broadcasters should be required to provide more educational programming, and that figure rises to 85 percent when the new digital spectrum can be used for this purpose. The public supports a community trust fund to support public programs (very important = 36%, somewhat important = 43%; not important at all = 17%).

The support for community-oriented activities with respect to television has transferred to the new communications media – the Internet. Respondents express support for public interest obligations extending to the Internet. They would like some sections of the Internet to be commercial free (82%) and protected from commercial development (77%). They believe some of the space on the Internet should be devoted to public forums (72%) and non-profit groups (68%). They believe service providers should give free advertising to charities (65%) and regularly post public service announcements (59%).

Thus, the Supreme Court’s bold aspiration for a more diverse media is shared by the public, as is the recognition that the media should bear public interest obligations. This is as far from a toaster with pictures as one could get.

II. MEDIA ECONOMICS AND DEMOCRATIC DISCOURSE

The previous legal discussion sets out the public policy issues by emphasizing the ways in which civic discourse transcends mere economics. This section takes the argument one step farther. It demonstrates why economic characteristics of mass media production result in “market failure.” Even if a marketplace of ideas were all we wanted, the commercial mass media would not produce it. In other words, the problem is not that ‘good’ economics makes for ‘bad’ civic discourse. In fact, vigorous, atomistic competition is generally considered supportive of democracy. The problem is that the structural tendencies of media markets make for ‘bad’ economics, which reinforces the tendency of failure in the forum for democratic discourse.

THE TYRANNY OF THE MAJORITY IN THE MASS MEDIA

Competition, Democracy and the Shortcomings of Mass Media

Vigorously competitive markets are not antithetical to democratic processes. Indeed, economists stress that there are political reasons to prefer atomistically competitive markets. F. Michael Scherer and David Ross, among the most prominent analysts of industrial organization, note that analysis should begin with the political implications of economic institutions.82 Specifically, they ask, “Why is a competitive market system held in such high esteem by statesmen and economists alike? Why is competition the ideal in a market economy, and what is wrong with monopoly?” They provide a series of answers, starting from the decentralized, objective processes that typify atomistically competitive markets and check the power of large entities.

One of the most important arguments is that the atomistic structure of buyers and sellers required for competition decentralizes and disperses power. The resource allocation and income distribution problem is solved through the almost mechanical interaction of supply and demand forces on the market, and not through the conscious exercise of power held in private hands (for example, under monopoly) or government hands (that is, under state enterprise or government regulation). Limiting the power of both government bodies and private individuals to make decisions that shape people’s lives and fortunes was a fundamental goal of the men who wrote the U.S. Constitution.83

Other economic characteristics of atomistically competitive markets that converge with democratic principles are the autonomy and freedom of entry that such markets imply.

A closely related benefit is the fact that competitive market processes solve the economic problem impersonally, and not through the personal control of entrepreneurs and bureaucrats…

[Another] political merit of a competitive market is its freedom of opportunity. When the no-barriers-to-entry condition of perfect competition is satisfied, individuals are free to choose whatever trade or profession they prefer, limited only by their own talent and skill and by their ability to raise the (presumably modest) amount of capital required.84

Thus, atomistic competition promotes individualistic, impersonal decisions with freedom of opportunity and relatively low resource requirements for entry. These are ideal for populist forms of democracy.85 Lawrence Lessig points out that at the time of the framing of the Constitution the press had a very atomistic character.

The “press” in 1791 was not the New York Times or the Wall Street Journal. It did not comprise large organizations of private interests, with millions of readers associated with each organization. Rather, the press then was much like the Internet today. The cost of a printing press was low, the readership was slight, and anyone (within reason) could become a publisher – and in fact an extraordinary number did.86

The problem in contemporary mass media markets is that they have moved quite far from the competitive form of organization. In fact, the pursuit of efficiency through economies of scale and network effects has pushed many contemporary industries toward oligopoly or monopoly.

This is a source of concern and requires constant vigilance in all commercial markets. Efficiency that results from large economies of scale also leads toward small numbers of competitors and can degenerate into inefficient abuse of monopoly power.87 In media markets, where the impact reverberates so powerfully in the forum for democratic discourse, these tendencies must be prevented from distorting civic discourse.

An Economic Theory of Discrimination

It has long been recognized that the technologies and cost structure of commercial mass media production in the 20th century are not conducive to vigorous, atomistic competition. Print and broadcast media have unique economic characteristics.88 To the extent that economics is a consideration, economic competition in commercial mass media markets cannot assure diversity and antagonism.89

The conceptual underpinnings of the argument are well known to media market analysts.90 On the supply-side, media markets exhibit high first copy costs or high fixed costs.91 On the demand-side, media market products are in some important respects non-substitutable or exhibit strong group-specific preferences.92

The “welfare” effect of these characteristics is to cause the market to fail to meet the information needs of some groups in society. This results because groups express strong preferences for specific types of programming or content. Programming that is targeted at whites is not highly substitutable for programming that is targeted at blacks, from the point of view of blacks. If fixed costs and group preferences are strong, producers must decide at whom to target their content. Given the profit maximizing incentive to recover the high costs from the larger audience, they target the majority. The minority is less well served.

Figure II-1 demonstrates the strong differences between blacks and whites in their preferences for programming. Similarly, preferences differ sharply across groups defined by gender, age, race and ethnicity (Hispanic). The Figure shows the ranking among whites and blacks of the top ten shows viewed by whites, the top ten shows viewed by blacks, and the six news shows ranked in the top twenty among whites. In all, we have 25 shows, fifteen that are highly ranked among whites and fourteen that are highly ranked among blacks. There is little overlap between the two groups.

The easiest way to appreciate the difference is to note that nine of the top ten ranked shows among blacks do not even rank in the top fifty among whites. The most popular fifteen shows among whites have an average ranking of 57 among blacks. The top ten shows among blacks have an average ranking of 85 among whites. The difference in preference for the popular news shows is similar. The average ranking for the six news shows analyzed among whites was fourteen; among blacks it was 53.

The tendency to under serve minority points of view springs in part from the role of advertising in the media.93 Advertising as a determinant of demand introduces a substantial disconnection between what consumers want and what the market produces. First, to a significant extent, because advertisers account for such a large share of the revenue of the mass media, the market produces what advertisers want as much as, if not more than, what consumers want. Second, because advertising in particular, and the media in general, revolves around influencing people’s choices, there is a sense in which the industry creates its own demand.94 The tendency to avoid controversy and seek a lowest common denominator is augmented by the presence of advertisers, expressing their preferences in the market.95

As articulated and empirically demonstrated by Joel Waldfogel, this might be termed an economic theory of discrimination “because it gives a non-discriminatory reason why markets will deliver fewer products – and, one might infer, lower utility – to ‘preference minorities,’ small groups of individuals with atypical preferences.”96 Discrimination results not from biases or psychological factors, but from impersonal economic processes.

A consumer with atypical tastes will face less product variety than one with common tastes…. The market delivers fewer products – and less associated satisfaction – to these groups simply because they are small. This phenomenon can arise even if radio firms are national and entirely non-discriminatory.

The fundamental conditions needed to produce compartmentalized preference externalities are large fixed costs and preferences that differ sharply across groups of consumers. These conditions are likely to hold, to greater or lesser extents, in a variety of media markets – newspapers, magazines, television, and movies.97

This poses a fundamental challenge to the validity of the assumption that markets allocate resources efficiently.

Friedman has eloquently argued that markets avoid the tyrannies of the majority endemic to allocation through collective choice. Mounting evidence that minority consumer welfare depends on local minority population in local media markets indicates that, for this industry at least, the difference between market and collective choice allocation is a matter of degree, not kind. It is important to understand the relationship between market demographic composition and the targeting of programming content because related research documents a relationship between the presence of black-targeted media and the tendency for blacks to vote.98

Figure II-2 shows graphically how the tyranny of the majority works in media markets. When there are large fixed costs, a limited ability to cover the market and strong differences in preference for programming, profit maximizers serve the core audience and neglect small preference minorities. The larger the minority group and the closer its taste to the majority, the more likely it is to be served.

The tyranny of the majority in media markets is linked to the tyranny of the majority in politics because the media are the means of political communication.

We present evidence that electoral competition leads candidates to propose policies that are supported by proportionately larger groups and that members of these groups are more likely to turn out if they find the proposed policies more appealing. In addition, we show that candidates find it easier to direct campaign efforts at larger groups because many existing media outlets cater to this audience…

Channels of communication that are used to disseminate political information rarely exist for the sole purpose of informing potential voters. The number of channels that candidates have at their disposal reflects the cost structure of printing newspapers, establishing radio stations, and founding political groups. To the extent that these activities carry fixed costs, channels that cater to small groups are less likely to exist. The welfare implications – if one views the decision to vote as the decision to “consume” an election — are analogous to those of differentiated markets with fixed costs.99

The Impact of Market Failure on Civic Discourse

The impact of market failure is felt in three areas: owner influence, loss of local perspective, and erosion of checks and balances and other positive externalities of vigorous civic discourse.

Baker presents a lengthy discussion of the political implications of the monopolistic media market. The first point is that it results in market power, traditionally measured as monopoly profits.100 For media markets, however, economic profits can be used (dissipated) in another important way. Media monopolists can use their market power to influence content or policy directly.

The weak competition that results from the first copy/nonsubstitutability characteristics allows owners to earn monopoly profits and to use monopoly rents to pursue their personal agendas. The claim that ownership of the media does not matter to the selection and presentation of content is not plausible.101 Whatever their political preferences, media owners are in a uniquely powerful position to influence civic discourse. They can use both the economic resources made available by their market power (as can monopolists in any industry) and the unique role of the media to pursue those preferences.

Nevertheless, within this type of competition, products’ uniqueness or monopoly status often permits considerable margin for variation while still remaining profitable. The “potential” profit of the profit maximizing strategy can be realized and taken out as profit – which is what the corporate newspaper chains are accused of doing. However, the market itself does not require the profit maximizing response as it does in models of pure competition. Rather, the potential profit can instead be spent on indulging (or “subsidizing”) the owners’ choices about content or price.102

One set of behaviors that is particularly problematic involves undemocratic uses of media market power in pursuit of the private interests of owners through manipulation, co-optation and censorious behaviors.103 This can undermine the watchdog role of the press or distort coverage of events, when it suits their interests. The chilling effect need not be conscious or overt. Powerful media owners tend to be very visible figures in their political and policy preferences. Employees and institutions instinctively toe the line and self-censor out of an instinct for self-preservation, which dampens antagonism in the media.104

Even though this is not Waldfogel’s central concern, when he looks at the question of ownership, he finds support for the view that ownership matters beyond “simple” economics. Waldfogel finds in his study of radio markets that “black owners enter in situations that white owners avoid.”105

He continues to consider possible explanations for this behavior and offers a hypothesis that relies on owner preferences,

A second possibility is that black owners enter for “ideological” reasons, which means they are willing to forego some profits in order to provide a particular sort of programming. This hypothesis would rationalize the observation that black-owned and targeted stations have fewer listeners, on average, that [sic] their white-owned counterparts (in markets with both white and black-owned, black-targeted stations).

Black owners’ willingness to accept smaller returns could explain why greater black ownership increases black-targeted programming: additional black owners are willing to enter low-profitability market niches (programming to small black audiences) that whites would not enter.106

Perhaps Waldfogel puts the word “ideology” in quotes to blunt its negative connotation. Baker presents the policy implications in terms that are familiar and relevant to the arena of diversity policy in civic discourse.

Choice, not merely market forces, influences quality. Choice explains the variation both within and between ownership categories. Moreover, quality may provide some efficiencies and management qualities that sometimes increase the enterprise’s potential for profits or quality. However, the incentives for executives (editors and publishers) in chain firms as well as the added pressures of public ownership are likely to be directed toward focusing on increasing profits. Possibly due to price of membership or involvement within a community that leads to dedication or desires to form status in that community, local ownership might be sociologically predicted to lead to greater commitment to and greater choice to serve values other than the bottom line.107

Baker argues that the experiences of civic discourse for minorities and the public at large are deeply affected by ownership. Large, monopolistic structures make it more difficult for opinion leaders within minority or niche communities to gain experience in the industry.

[A] complex democracy may benefit society as a whole… And a complex democracy may require media entities that not only provide particular content but that are experienced as being owned, or at least controlled, by different groups or by people who identify as and are identified by others as being members of or having allegiances to particular groups.

If so, the ownership pattern called for by this democratic theory would have significant positive externalities, but an antitrust analysis would remain blind to the costs of any merger that undermines this distribution.108

Baker links the need to have policies that promote viewpoint diversity to the tendency of the commercial media to under serve the less powerful in society.109 In order for the media to meet the needs of these groups, it must inform and mobilize them.

[P]luralist democracy hopes to generate fair bargains as a result of groups’ pressing their interests. In this process, the media should perform several tasks. First, the press should provide individuals and organized groups with information that indicates when their interests are at stake. Second, the media should help mobilize people to participate and promote their divergent interests… Third, for pluralist democracy to work, information about popular demands must flow properly - that is, given the practical gap between citizens and policy makers, the press should make policy makers aware of the content and strength of people’s demands.110

That these needs have traditionally been centered in localism is understandable. The primary referent for identity and community has traditionally been and remains significantly local.111 The link between localism and de-concentration of the media seems obvious. Changes in electronic media distribution technologies have not significantly altered this fundamental relationship.112 Waldfogel finds important localism effects operating in the media that support this view. He finds that the preference externality operates in non-prime time programming because it is subject to greater local control and therefore can be more responsive to local market conditions.113 Concentration of national and local markets into national chains reinforces the tendencies of media owners to ignore local needs.114

Left unrestrained, the marketplace will produce fewer watchdog activities conducted by less rigorous institutions. The public at large benefits from the watchdog function beyond the value that individual media firms can capture in their market transactions (advertising revenue and viewer payments). Baker uses investigative journalism as an example. Abuses are less likely to be uncovered and more likely to occur because the deterrent of the threat of exposure will be diminished.116

One item both news entities “sell” is expose`s on the content of investigative journalism. Not just the readers or listeners but all members of the community benefit from whatever reform or better government or improved corporate behavior that occurs due to these stories. This journalism can create huge positive externalities. The paper’s limited number of purchasers cannot be expected to pay the full value of this benefit - they have no reason to pay for the value received by non-readers. Even more (economically) troubling, a major benefit of the existence of news organizations that engage in relatively effective investigative journalism is that this journalism deters wrong doing by governmental or corporate actors - but deterred behavior produces no story for the journalism to report and hence for the media entity to sell. The paper has no opportunity to internalize these benefits of its journalism - an economic explanation for there being less of this type of journalism than a straight welfare economics analysis justifies.115

The positive externalities that Baker identifies with respect to the watchdog and experiential functions are part of a larger category of externalities associated with information products, particularly civic discourse content. Information products, to a significant degree, are seen as possessing attributes of public goods. Sunstein makes this broader point in regard to television.

Even if broadcasters did provide each viewer with what he or she wanted, a significant problem would remain, and from the economic point of view, this is probably the most serious of all. Information is a public good, and once one person knows something (about for example, product hazards, asthma, official misconduct, poverty, welfare reform, or abuse of power), the benefits of that knowledge will probably accrue to others.117

Note that two of the central issues mentioned by Sunstein are positive externalities in the political arena on which Baker’s analysis is centrally focused: official misconduct and abuse of power. These are but two of many externalities of information production.118

The central fact that all of these discussions share is that market forces provide neither adequate incentives to produce the high quality media product, nor adequate incentives to distribute sufficient amounts of diverse content necessary to meet consumer and citizen needs. Sunstein states the general proposition as follows:

Individual choices by individual viewers are highly likely to produce too little public interest programming in light of the fact that the benefits of viewing such programming are not fully “internalized” by individual viewers. Thus, individually rational decisions may inflict costs on others at the same time that they fail to confer benefits on others. In this respect, the problem “is not that people choose unwisely as individuals, but that the collective consequences of their choices often turn out to be very different from what they desire or anticipate.”119 To most media analysts in our democracy, institutions play a critical role in mediating between individuals and the political process. Some draw the link between the institution and the investigative role. Democratic governance requires a free press not just in the sense of a diversity of expression. It requires the institution of a free press. It requires media with the financial wherewithal and political independence to engage in sustained investigative journalism, to expose the errors and excesses of government and other powerful political and economic actors…

Our best hope for democratic governance in this world is far messier than the ideal republic of yeomen. It requires mediating institutions and associations, private and public concentrations of wealth and power, and varied mechanisms to maintain multiple balances of power within government, within civil society, and between government and civil society.120

One of the central benefits of promoting deconcentrated and diverse media markets is to provide a self-checking function on the media. The media needs to be accountable to the public, but that function cannot, as a general matter, be provided by government action in our political system. It can best be provided by the media itself, as long as there is vigorous antagonism between sources of news and information.121

Baker finds that one function of structural policy is to promote institutions that have different structures122 and are driven by different institutional imperatives.

Finally, the market does not measure preferences for nor produce sufficient amounts of noncommodified media products. Thus, it is likely (but not certain) that self-conscious people would favor rules or subsidies that tilt production toward more diverse noncommodified media…

Thus, media policy should favor structural rules that allocate or encourage the allocation of decision-making control over content creation to people with commitments to quality rather than merely to the bottom line (e.g., the content creators themselves or decentralized control by people involved in the media enterprise). This goal, for example, supports a drastic revitalization of antitrust enforcement in the media area, with the policy being guided by First Amendment concerns that go beyond traditional market analyses. It also supports the following: the long-standing FCC policy of favoring license grants for applicants whose principals live in the community or, even better, whose principals are themselves involved in management; tax policies that favor family ownership rather than sale to conglomerate interests; labor laws that favor a stronger editorial voice for media workers; business organization laws that favor media ownership by workers or non-profit organizations; and access rules or provision of communications facilities (e.g., public-access channels) that provide greater opportunities to communicate for individuals and noncommercial entities.123

OWNERSHIP MATTERS

The empirical evidence available in the academic and trade literatures overwhelmingly supports the concerns expressed about the emergence of a hyper-commercialized, concentrated mass media. Commercialism can easily overwhelm public interest and diverse content.124 Concentration drains resources from journalistic enterprises.125 Empirical evidence clearly suggests that concentration in media markets– fewer independent owners — has a negative effect on diversity.126 The evidence to support this conclusion includes both anecdotal examples and statistical studies. The economic interests of media owners influence their advertising, programming choices, and how they provide access to political information.127

Conglomerates are driven by advertisers, who exercise influence over content.128 Dangerous abuse of this influence ranges from favorable newspaper reviews of a broadcaster’s programming129 or loss of coverage,130 to positive editorials/opinion articles about the business interests of a broadcaster or politician.131 Such favoritism would be more difficult to prevent if cross-ownership were broadly permitted.132 When the two largest sources of news and information – television and newspaper – come under the same ownership roof, there is special cause for concern about business pressures that could undermine the forum for democratic discourse.133

Bias-Bashing Among the Most Prominent American Journalistic Icons

The “biases” of owners are frequently known, as a flap about Rupert Murdoch’s news operations at Fox television attests. The close political connection between Fox’s Roger Ailes and the Republican Party was underscored by his admission that he had sent a public policy memo to the Bush Administration.134 The response from Fox to these “charges” explained in a 2002 best seller by Bernard Goldberg says mountains about the slanting of TV news and commentary across the board.

This is how Roger Ailes… explained it in a New York Times Magazine piece in June 2001: “There are more conservatives on Fox. But we are not a conservative network. That disparity says far more about the competition.” In other words, if Fox is alleged to have a conservative bias, that’s only because there are so few conservative voices on the air at ABC, CBS, NBC, CNN and MSNBC. There certainly is a conservative “attitude” at Fox, a conservative sensibility. 135

Goldberg ends his discussion of bias in the TV media, which begins with and focuses on an op-ed piece about liberal bias in the TV media he had published in the Wall Street Journal, with a discussion of bias in the print media in a second op-ed on the editorial pages of the Wall Street Journal.

Consider this: In 1996 after I wrote about liberal bias on this very page, Dan [Rather] was furious and during a phone conversation he indicated that picking the Wall Street Journal to air my views was especially appalling given the conservative views of the paper’s editorial page.

“What do you consider the New York Times?” I asked him, since he had written op-eds for that paper. “Middle of the road,” he said.

I couldn’t believe he was serious. The Times is a newspaper that has taken the liberal side of every important social issue of our time, which is fine with me. But if you see the New York Times editorial page as middle of the road, one thing is clear: You don’t have a clue. 136

There are many who would debate the “liberal” bias of the New York Times, but it is clear that there is little love lost between the New York Times and Mr. Ailes and his supporters. Within a week of the revelation of Mr. Ailes’ memo to the White House, the New York Times chastised Ailes in an editorial, pointing out that giving advice to the President would be fine, were Mr. Ailes still in the business of advising political candidates, but as a top executive of a news organization he should know better than to offer private counsel to Mr. Bush.

Mr. Ailes’ action seems especially hypocritical for someone who has spent years trumpeting the fairness of Fox and the partisanship of just about everybody in the news business. Fox’s promotional slogan is: “We report, you decide.” But the news channel has a Republican tilt and a conservative agenda.137

In fact, Paul Krugman (certainly a Democrat, if not a liberal) writing in the New York Times, repeated Al Gore’s complaint that the “liberal media” had gone very conservative.

This week Al Gore said the obvious. “The media is kind of weird these days on politics,” he told The New York Observer, “and there are some major institutional voices that are, truthfully speaking, part and parcel of the Republican Party.

The reaction from most journalists in the “liberal Media” was embarrassed silence. I don’t quite understand why, but there are some things that you’re not supposed to say, precisely because they are so clearly true.138

Michael Kelly, a conservative columnist, could not let the Gore/ Krugman complaint pass without comment.139 He cites about a dozen “major surveys on the political beliefs and voting patterns of mainstream print and broadcast journalists” from 1962 to 2001, which show about a three-to-one ratio (46 to 15) of liberals to conservatives. He answers the rhetorical question, “Does a (still) largely liberal news media (still) exhibit a largely liberal bias?” with a resounding “Sure.”140 He cites S. Robert Lichter, president of the independent Center for Media and Public Affairs, who observes that,

[J]ournalists tell the truth – but like everyone else, they tell the truth as they see it. Even the most conscientious journalists cannot overcome the subjectivity inherent in their profession, which is expressed through such everyday decisions as whether a topic or source is trustworthy.

The important and unavoidable lesson is that editorial preferences are deeply embedded in commercial mass media not only on the editorial pages, but also on the news pages. In a sense, this is the essence of the concept of antagonism. Rather than claim that many outlets owned by a single entity will present a neutral, objective, or balanced picture, public policy should recognize that diversity and antagonism of viewpoints comes from diversity of ownership. Indeed, Lichter entered the fray with a letter to the editor pointing out,

In some cases, the coverage of social and political issues clearly coincides with the perspectives of journalists. But such correspondence is not guaranteed, and it cannot be reliably predicted to operate in particular instances.141

Systematic Evidence on Systematic Bias

The demonstration of owner and editorial bias is not only qualitative or anecdotal. An article from the June 2002 American Political Science Review makes it clear that ownership (embodied in the editorial position of the outlet) matters in reporting the news.142

One of the essential elements of an impartial press in the United States is the “wall of separation” between the editorial pages and the pages devoted to the news. While the political beliefs of newspaper owners and editors are clearly articulated on opinion pages, their views are not supposed to infiltrate the reporting of the news. The analysis presented in this paper raises questions about this claim. We examine newspaper coverage of more than 60 Senatorial campaigns across three election years and find that information on news pages is slanted in favor of the candidates endorsed on the newspaper’s editorial pages.

We find that the coverage of incumbent Senators is most affected by the newspaper’s endorsement. We explore the consequences of “slanted” news coverage by showing that voters evaluate endorsed candidates more favorably than candidates who fail to secure an editorial endorsement. The impact of the endorsement decision on voters’ evaluations is most powerful in races receiving a great deal of press attention and among citizens who read their local newspapers on a daily basis. 143

Systematic studies of coverage of local issues found that “objectivity violations in all 20 stories were classified as serving the self-interest of the news organization or its parent corporation.”144 National issues reveal that the interests of the owners influence reporting and editorial position.

A study by James Snider and Benjamin Page looked at the decision to allow TV stations to have additional digital spectrum without paying for it, while other parts of the spectrum were being auctioned for other commercial uses.145 The editorial positions of media corporations that owned newspapers and had significant TV station ownership (at least 20% of revenues from that source) were compared to the editorial stands on the spectrum give-away/auction issue of newspapers owned by companies having little or no TV station ownership. The findings were striking:

The results on editorials are very strong and highly significant [statistically]; in fact, among newspapers that editorialized on the subject, every one whose owners got little TV revenue editorialized against the spectrum ‘giveaway,’ whereas every one with high TV revenues editorialized in favor of giving broadcasters free use of spectrum.146

The dynamics of the newsroom relationships between editors and reporters create a tendency to produce stories that are unbalanced. While partisan balance may have existed over the course of the entire coverage, individual stories were seldom balanced. In fact, the viewer had only a one in four chance of seeing an approximately balanced story, while 40 percent of the time the viewer was likely to see a story that was structurally imbalanced in every measured way. But this research also indicates that this would vary depending on the station and the day the viewer was watching.147

Even if consolidated ownership presents a variety of entertainment, it invariably creates a risk of slant, bias, or tilt in presenting critical issues at crucial moments in time. While a precise prediction of how bias might operate may not be possible, the tendency is clear; it is much more likely to operate in the owner’s interest.148

Direct Financial Interests Affects Coverage

Coverage of the 1996 Telecommunications Act, or lack thereof, leads to a similar conclusion. An analysis of the networks’ coverage was conducted by Dean Alger using the Vanderbilt TV News Archive to assess how the three prime network news shows covered the Telecom Act of 1996 – as a whole, not just the spectrum give-away issue – as it went through the congressional process.149 The analysis found that ABC, CBS and NBC network news combined devoted only 19.5 minutes to the Telecom Act during the entire nine months it was in the process (early May 1995-early February 1996); most of that was focused on the v-chip and the “Internet Decency Act” side issues. Most crucially and tellingly, there was essentially no meaningful coverage of the elimination or reduction of ownership limits and the probable consequences of such actions for more concentrated control of mass media, nor was there meaningful attention given to the give-away of the extra spectrum for transition to digital, high-definition TV.150

Another example is the city of Milwaukee, which has been described as an example of cross-ownership leading to model behavior. A closer examination reveals anything but model behavior, this time involving a publicly financed sports stadium project. Journal Broadcast Corporation operates the Milwaukee Journal Sentinel as well as WTMJ-TV, WTMJ-AM and WKTI-FM in Milwaukee. All are leaders in their service area. In comments to the FCC, the Journal noted that “the radio and television stations have been totally independent from the newspaper in both program and editorial content,” and that the outlets have been critical of each other.151 At a key moment, on an issue of great public importance, which directly involved the private interests of the company, that appears not to have been the case.

There was a move for public financing of a new stadium for the area’s major league baseball team, the Brewers. The Journal Group’s AM radio station has the contract for broadcasting Brewers’ games. In late 1994, the CEO of the Journal Group, Robert Kahlor, became head of the Milwaukee committee championing public financing for the stadium, and even registered as chief lobbyist. This was a much-debated issue. Indeed, when it came to a vote in the state Senate (in fall 1995) it was decided by one vote. How did the Journal Sentinel media cover this big, contentious issue?

“The Journal Company’s newspaper, TV-news shows, and newstalk radio station all marched in lock-step supporting the public financing position.”152 In the case of the newspaper, that avid support appeared from the news pages to sports page columns to editorials. The other two TV stations in Milwaukee, while not such avid boosters, generally reported on the public financing position in a positive fashion. Thus, the citizens of Milwaukee, despite the contentious nature of the issue, did not have antagonistic voices in the main media to rely on. The dominant news outlet, the metro paper, had a financial interest in getting the stadium built, which directed its coverage.

A veteran local media analyst, who had also been a journalism professor for years (David Beckman), noted, “this case is a classic example of how a media monolith defeats the purposes of free and open debate”153 in the main media that people rely on and which dominate the public arena, overwhelmingly defining the public discourse. No coincidence, say local critics, that WTMJ stations also carry Brewers games. “All four Journal media lost almost all objectivity.”154

Another case of a sports team and cross-ownership is telling but with different details. The Dispatch’s Wolff family is part owners of the Columbus, Ohio pro-hockey team. Besides the usual boosterism coverage of the team connected by ownership to the media outlet (that is now too common), there were proposals to build a new hockey stadium. The overt outcome of this was different from the Milwaukee case. Public financing proposals lost twice in ballot measures. The Wolff family and an insurance company financed the building of the stadium itself. But, since then, the city has given land, easements, clean-up, infrastructure and other assistance subsidized to the tune of “at least $80 million,”155 which the alternative weekly (The Other Paper) has documented in what coverage they could muster. Had a family that owned the TV station received such subsidies in a city with an independently-owned newspaper, the investigative juices of the paper’s reporters and editors would have been flowing; front page coverage would have been produced from the one local mass medium that has the resources for in-depth investigation. The Dispatch has not, however, covered this huge subsidy. Instead, it was a cheerleader for the team and the stadium. Once again, a case of a cross-owned newspaper and TV station failed the local democratic process.

Note also that the Dispatch editorialized in favor of the Telecom Act, saying “The telecommunications bill passed by the senate ... is a worthwhile effort at getting government out of the way and letting the affected companies freely reshape their industries.”156 The benefit to the Dispatch/Wolff family’s TV station was not mentioned.

TENSION BETWEEN COMMERCIALISM AND CIVIC DISCOURSE IS CLEAR

Happy News at the Lowest Cost

The pressures on commercial mass media to produce high volumes of “happy” or sensationalized news with the fewest number of reporters to support the interests of advertisers or to attract viewers is well documented.157 As a result, the existence of multiple outlets providing more examples of similar shows does not accomplish the goal of providing greater diversity of points of view.158

For Fox, which appears to be following a strategy that emphasizes duopolies,159 the implications are obvious –

News staffs at both WWOR-TV and KCOP (TV) were told that there are no plans for changes, consolidations or cancellations at present, although some economies of scale seem obvious. “We don’t have to have two news crews at one event,” says a Fox executive.160 Other Fox duopolies exhibit a similar pattern,

“[a]ll departments at the station have been consolidated, all under prior KTTV station leadership… The station’s newscast was switched in June from an hour at 10 p.m. to a half-hour at 11, to avoid direct competition with KTTV and allow KCOP an hour syndicated-sitcom block at 10.161

The problem is compounded by the important role of advertisers in commercial mass media as seen in the results of a “survey of 118 news directors around the country, conducted between June and August 2001 [that] represents a significant proportion of the approximately 850 stations that broadcast news.” The survey found that “[i]t is ‘getting harder every year’ to maintain the wall between sales and news”162 as pressure builds from owners to produce profits, which undermines quality, and from sponsors to slant the news.

To meet profit demands, many news directors report they are having to produce thinner and cheaper product by adding news programs while cutting their budgets….

[M]ore than half, 53 percent, reported that advertisers pressure them to kill negative stories or run positive ones…

News directors also reported their TV consultants (outside companies hired by stations to critique newscasts and improve ratings) issuing blanket edicts about what to cover and what not to cover in order to attract the most advertising dollars.

Together the findings and comments raise questions about the journalistic independence of local television news.

Breaking down the sponsor suggestions more specifically, 47 percent of news directors this year said sponsors tried to get them to provide favorable coverage.

And 18 percent of news directors – almost one-in-five – say sponsors try to prevent them from covering stories, a problem that is more acute in smaller markets.163

Minority Communities and Unpopular Points of View are Under served

The failure of commercial mass media to meet the needs of citizens is nowhere more evident than in minority communities. Waldfogel has presented strong evidence of a kind of a tyranny of the majority in a number of media markets. These findings have been reinforced by recent findings of other scholars, as a 2002 article in the Journal of Broadcasting and Electronic Media makes clear.164

The analyses presented here represent the next step forward in determining the extent to which advertiser valuations of minority audiences affect the viability of minority-owned and minority-targeted media outlets. The results conform to those of previous studies, which found that minority audiences are more difficult to monetize than nonminority audiences…165

Minority-targeted media content suffers from not only the potentially lower valuations of minority audiences but also from the fact that, by definition, it appeals to a small audience. Smaller audiences mean small revenues, particularly when the audience is not highly valued by advertisers…166

Moreover, lower levels of audience size and value both exert downward pressures on the production budgets of minority content, which further undermines the ability of such content to compete and remain viable…

The differential in production budgets may be enough for some minority audience members to find the majority content more appealing than the content targeted at their particular interest and concerns. Such defections further undermine the viability of minority-targeted content… The end result is lower levels of availability of minoritytargeted content.

A long tradition of more qualitative research also supports the conclusion that minority market segments are less well served.167 Greater concentration results in less diversity of ownership, and diversity of ownership – across geographic, ethnic and gender lines – is correlated with diversity of programming.168 Simply, minority owners are more likely to present minority points of view169 just as females are more likely to present a female point of view170 in the speakers, formats and content they put forward.

Concentration and Consolidation of the Media Undermines Localism

The important role of the media in informing citizens about local affairs is well documented.171 Localism suffers a fate similar to diversity at the hands of national chains.172 It is well documented that the dictates of mass audiences create a largest market share/lowest common denominator ethic that undercuts the ability to deliver culturally diverse programming,173 locally-oriented programming,174 and public interest programming.175 News and public affairs programming are particularly vulnerable to these economic pressures.176 As market forces grow, these types of programming are reduced.177 Unfortunately, the coverage that disappears tends to deal with schools, localized government affairs, and other community-strengthening material that enables people to live more secure and educated lives.178

Waldfogel’s findings on localism, derived from the basic economics of the media, cut across each of the major products.

The local data indicate, to a greater extent than the national prime time or cable data, both the distance between black and white preferences and the fact that local programming, far more than national programming, caters to those preferences.179

While the economics of television give rise to strong concerns about localism,180 Waldfogel sees indications of similar localism effects in newspaper markets as well, supporting the conclusion that “content origin matters.”181 He describes localism’s effect on behavior in the preliminary findings of a study on the entry of a national newspaper into local markets as follows:

How does national news media affect local news sources and local political participation?

Preliminary results- Increased circulation of national daily affects:

Local paper circulation – reduced targeted audience readership

Local paper positioning – toward local content

Local political participation – reduces voting, less so in presidential years.182

A recent study of television news provides powerful evidence of this problem noting that “overall the data strongly suggest regulatory changes that encourage heavy concentration of ownership in local television by a few large corporations will erode the quality of news Americans receive.” Among the findings:

Smaller station groups overall tended to produce higher quality newscasts than stations owned by larger companies—by a significant margin.

Network affiliated stations tended to produce higher quality newscasts than network owned and operated stations—also by a large margin.

Stations with cross-ownership—in which the parent company also owns a newspaper in the same market—tended to produce higher quality newscasts.

Local ownership offered some protection against newscasts being very poor, but did not encourage superior quality.183

The growing impact of homogenization in the TV industry, stimulated by the lifting of national ownership limits and restrictions on vertical integration into programming, is also unmistakable.185 Insertion of local programming is restricted or eliminated. Stories of local importance are driven out of the high visibility hours or off the air.186

Pooled news services reduce the ability of local stations to present local stories and eventually erode the capability to produce them. The radio industry, which has been subject to the most unfettered process of “rationalization,” demonstrates how local content can be homogenized off the air.184 Below are two examples.

Radio: “A Giant Radio Chain Perfecting the Art of Seeming Local,” “In the studio with Evan and Jaron,” Mr. Alan began. “How are you guys doing?”

The artists reported that they had just come from skiing at nearby Sun Valley, then praised the local scene … “Yeah, we’ve got some good people here.” Later, he asked Boise fans to e-mail or call the station with questions for the performers.

But even the most ardent fan never got through to the brothers that day. The singers had actually done the interview in San Diego a few weeks earlier. Mr. Alan himself had never been to Boise, though he offers a flurry of local touches on the show he hosts every weekday from 10 a.m. to 3 p. m. on the city’s leading pop station.187

“The Trouble With Corporate Radio: The Day the Protest Music Died” Senator Byron Dorgan, Democrat of North Dakota, had a potential disaster in his district when a freight train carrying anhydrous ammonia derailed, releasing a deadly cloud over the city of Minot. When the emergency alert system failed, the police called the town radio stations, six of which are owned by the corporate giant Clear Channel. According to news accounts, no one answered the phone at the stations for more than an hour and a half.188

THE MASS MEDIA ARE CRITICAL TO POLITICAL PROCESSES

Agenda Setting and Influencing Public Opinion

The fact that owners and editors influence coverage is important because mass media influence the agenda of public policy issues and the public’s perception of those issues. Consider a Spring 2002 article from the Journalism and Mass Communications Quarterly.189

This study examined the attribute agenda-setting function of the media, which refers to significant correspondence between prominent issue attributes in the media and the agenda of attributes among audiences.

An opinion survey on a local issue and a content analysis of a local newspaper revealed that, by covering certain issue aspects more prominently, the media increase the salience of those aspects among audience members. We also found an important outcome of attribute agenda setting, attribute-priming effects. Findings indicate that issue attributes salient in the media are functioning as a significant dimension of issue evaluation among audience members. This study concluded that the media, by emphasizing certain attributes of an issue, tell us “how to think about” this issue as well as “what to think about.”190

Does the agenda setting and influence of perception take place during election campaigns on important issues? An article in the American Political Science Review in 2002 finds evidence to support this effect in one of the most enduring issues in America, race.191

Recent evidence shows that elites can capitalize on preexisting linkages between issues and social groups to alter the criteria citizens use to make political decisions.192 In particular, studies have shown that subtle race cues in campaign communications may activate racial attitudes, thereby altering the foundations of mass political decision making… Results show that a wide range of race cues can prime racial attitudes and that cognitive accessibility mediates the effect. 193

While race may be a particularly prominent case of influence over attitudes and agenda-setting, the media plays a powerful role across a broad range of issues.194

Historically, the press has played two crucial roles during elections.

First, it has been a conduit of information between citizens and candidates. Indeed, most of what citizens know about candidates comes from the news media….195

Second, the press structures the discourse of political campaigns by emphasizing certain topics over others.196

Diversity Is Critical to Supporting Democratic Discourse

As the importance of mass media, particularly TV advertising and news coverage, is affirmed, one may wonder whether diversity is still important to democracy. Diversity promotes democracy by exposing citizens to a broader range of views, as emphasized by Sunstein. Does the mass media play a critical role in promoting this cross-cutting exposure? Recent articles in the American Political Science Review give affirmative answers to these questions.197

Exposure to conflicting political viewpoints is widely assumed to benefit the citizens of a democratic polity… Drawing on national survey data that tap characteristics of people’s political discussion networks, I examine the impact of heterogeneous networks of political discussion on individuals’ awareness of legitimate rationales for oppositional viewpoints, on their awareness of rationales for their owner viewpoints, and on levels of political tolerance… [and] utilizing a laboratory experiment manipulating exposure to dissonant and consonant political views, I further substantiate the causal role of cross-cutting exposure in fostering political tolerance. 198

Furthermore, counter-stereotypic cues – especially those implying blacks are deserving of government resources – dampen racial priming suggesting that the meaning drawn from the visual/narrative pairing in an advertisement, and not simply the presence of black images, triggers the effect.199

Recent evidence supports the more complex concept of democratic discourse, since mere exposure to information is reinforced by interpersonal communication.200

The key role commonly attributed to interpersonal discussion in democratic societies, of course, stems from its direct impact on various forms of participatory behavior. More important, however, this study shows that interpersonal discussion plays a role in the reception and processing of political news when it comes to translating mass-mediated messages into meaningful individual action. Consequently, people who are frequent hard news users are significantly more likely to engage in various forms of political action if they talk these issues through with others that are frequent news users who talk to others less often.201

DIFFERENT ROLES OF DIFFERENT MEDIA

People use different media in different ways to meet different needs. They spend vastly different amounts of time in different media environments, consume services under different circumstances, and pay for them in different ways. In economic terms, these are separate markets with weak substitution effects. They have different content offered by different means and they differ widely in their impact and effect. The various media are based on different business models and address different advertising markets. As a result, competition between the media is muted in the marketplace and the specialization of each is worth preserving because of the unique functions provided in the forum for democratic discourse.

Identifying Media Functions

The two dominant political media – daily newspapers and television – appear to play very different roles. TV, which is, by far, the leading political advertising vehicle, has a special influence on political discourse,202 through its influence on political attitudes and behaviors203 and its prominent place in election campaigns. Television and radio have long been recognized as occupying different product spaces204 although radio’s role may be changing205 and shrinking in importance.206 Broadcast does not compete effectively with newspapers in the news function.207 TV in general, network TV in particular, has become the premier vehicle for political advertising. The differential impact of television advertising is clear.

Clearly, television is a unique communications medium unlike any other, including print, radio, and traditional public address. Unlike most other media, television incorporates a significant nonverbal component, which not only serves to suppress the importance of content but also requires little deliberative message processing…

A number of empirical studies have concluded that reliance on information from television leads to less understanding of policy issues than newspapers. Studies also indicate that when people use television for political news, they emerge less informed than those of equal education and political interest who avoid the medium.208

Newspapers provide a distinct role. Newspapers devote greater attention to local news and provide a distinct role through broad, deep coverage and investigative reporting.209 They provide a different type of information service with different impact. In this they have adapted to a role that is distinct from television.

The news business itself reflects the partitioning in its awards… Pulitzer prizes have been added for criticism, features, and explanatory writing, because those are the aspects of news left for print excellence in television’s wake… For while television editorializing can be intelligent and eloquent, and even promote political change, the star treatment accorded to television news personalities removes them from the civic discourse.210

Print journalists often assert an allegiance to their almost centuryold creed:

I believe in the profession of journalism. I believe that the public journal is a public trust; that all connected with it are, to the full measure of their responsibility, trustees for the public; that acceptance of lesser service than the public service is a betrayal of this trust.211

Television Plays the Central Media Role in Civic Discourse

TV serves a crucial role in providing information. Research attention now focuses on how campaigns affect and are affected by public opinion.212

[V]oters do learn about candidates and their position on issues (policy) from candidate advertising. Research from three presidential campaigns demonstrates that citizens obtain more information from television spots than from the news.213

Television has become society’s primary source of information, and local television news is more likely to be used by viewers than national news broadcasts. Therefore, how such election news is relayed on local television is increasingly important in our political system.214

The impact of television is pervasive throughout all elections.215

Presidential elections are unquestionably the main event in American politics…216 Candidates and campaign consultants believe that television advertising is pivotal to winning a state-level campaign…217

Research confirms that television spots influence election outcomes at all levels.218

Visual images are important in priming the audience; understanding the mechanisms through which the effect operates is growing, as a 2002 article in Journalism discusses.219

Claims by political and news elites about the influence of visual images are far more common than actual evidence of such effects. This research attempts to gain insight into the ‘power’ of visual images, specifically those that accompany lexical-verbal messages in the press… Findings suggest that visual news images (a) influence people’s information processing in ways that can be understood only by taking into account individual’s predispositions and values, and (b) at the same time appear to have a particular ability to ‘trigger’ considerations that spread through one’s mental framework to other evaluations.220

Television impacts not only news coverage, but also, and perhaps even more importantly, advertising and the interaction between advertising and news, as a 2002 article in American Politics Research concludes.221

[T]he author examines whether network news coverage of a campaign advertisement issue can reinforce the ad’s basic message for the public and alter individual candidate assessments… Results show that general campaign coverage of race and crime issues… influenced individual ideological perceptions… [T]his influence was limited to certain individuals within the population, namely, media coverage affects individuals with moderate levels of political awareness who have weaker initial predispositions. Combined, these results demonstrate that media can exert both significantly and substantively significant influence on the public.222

Certainly the huge amounts spent on TV advertising by candidates attests to its importance.223 The audience that is most susceptible to advertising and news coverage by this account is precisely the audience on which general elections focus – the undecided middle – thereby justifying the spending.224 Whereas candidates must focus on the committed, active party base in primaries, they must shift their attention to the less aware, less committed middle of the political spectrum to get elected.225

CONCLUSION

Old Theories that No Longer Apply

The FCC presents two theories that argue concentration of the media is good for consumers: Peter Steiner’s226 argument that concentrated media companies provide greater diversity and Joseph Schumpeter’s227 theory that monopolists produce more innovation. The Commission and industry comments that regurgitate these theories present no economic evidence in support of the arguments. The FCC either misrepresents the original idea, or fails to recognize that the assumptions underlying the theories do not fit the media market reality.228

The critical assumption underlying Steiner’s theory is a relative homogeneity of taste. The theory may have been true when it was first offered fifty years ago, given the make-up of the population and the demographic characteristics of the audience at whom the media were targeted. The empirical evidence of the past decade shows that strong differences in taste result in preference minorities who are under served and undervalued by the commercial mass media. Moreover, as the population becomes increasingly complex, the role of differences in information needs to grow. Even where it can be shown that mergers allow a beat to be added, we find that upscale entertainment is the focus (mining the favored audience) at the expense of news and information.

It is time for the Commission to abandon the theory supporting increased concentration in media markets. It no longer fits the reality of the conditions of civic discourse in America, if indeed, it ever did.

The Commission relies upon the Schumpeterian argument on transitory monopoly power to suggest it should allow or promote concentrated media markets to provide resources for investment. The Commission has completely misinterpreted or misapplied Schumpeter’s argument.229 The FCC seeks to justify market concentration, whereas Schumpeter focused on market size. There is no doubt that the dominant commercial mass media firms are already large enough to possess economies of scale. Concentration that increases market power may undermine Schumpeterian processes because it dulls competition, which was central to his argument.

The monopoly rents earned by the innovative entrepreneur must be transitory, lest they degenerate into plain old antisocial monopoly rents. I have pointed out that media industry moguls look and behave much more like traditional anti-competitive monopolists than innovative Schumpeterian entrepreneurs.230 The underlying technologies have been relatively stable for decades. Strengthening the hand of entrenched incumbents using off-the-shelf technologies hardly seems the way to promote innovation and creative destruction. The Commission’s policies are having the opposite effect.231 Here, as in the case of the Steiner hypothesis, the Commission has simply failed to accept the empirical facts.

Based upon the empirical evidence, the Commission must abandon the Steiner/Schumpeter justification for concentration and monopoly power in media markets. Whether these two arguments articulated over fifty years ago ever made sense for media markets is debatable, but it is overwhelmingly clear they do not fit the facts of 21st century America.

Empirical Concepts of Media Diversity

The FCC has used a variety of concepts of diversity over the years. Diversity and antagonism in civic discourse are complex. Opponents of policies to promote the goals of enriching civic discourse complain that the imprecision of the outcome makes it difficult, if not impossible, to measure success. I believe this reflects the fact that the goal of having an informed citizenry is inherently qualitative and complex. Most social and psychological relationships have numerous highly intertwined causes; there is no reason that knowledge and participation in public policy formation should be otherwise.

The difficulty of defining outcomes in civic discourse is compounded by another important factor. Public policy cannot and should not try to make people listen and learn. The First Amendment properly leans heavily against dictating the content that is made available. Therefore, we cannot direct people as to what they say or restrict their options as to what they can listen to. Ensuring media structures that make voices more accessible is an indirect approach to promoting the goal of minimizing government intervention into content. As Baker puts it, “[S]tructural interventions refer to rules that allocate (or create) authority or opportunities.”232

I define the richness of civic discourse in empirical terms to include viewpoint diversity, source diversity and institutional diversity. Viewpoint diversity focuses on the ownership of outlets.

Independent ownership of outlets is critical because outlets that are commonly owned are less likely to provide diverse points of view. Owners have a tendency to impose their preferences and biases on the media they control.233 They may not do so all of the time or on all issues, but at critical moments, when their interests are at stake, they are more likely to do so. Antagonism in viewpoints is fostered by independence of ownership. The number of independently owned outlets is critical to civic discourse for a variety of reasons. Positive externalities flow from having a larger number of outlets. When media outlets are numerous, they are also more accessible. In addition, independent ownership of outlets should be promoted because ownership influences media organizations’ structure and content.234 Simply put, ownership dictates viewpoint.

When independently owned outlets are numerous, they are more likely to be local, but that is not uniformly so. A large number of nationally owned, independent outlets would not automatically ensure that local points of view would be reflected in the media. The Internet appears to be creating greater availability of national and international information, but not local information. Therefore, recognizing viewpoint diversity, particularly local viewpoints, is a goal of public policy that is distinct from ownership diversity. Concentration is the primary concern that underlies viewpoint diversity.

Although the central focus of structural policy is on viewpoint diversity, which is driven by ownership of outlets, it would be a mistake to neglect the concept of source diversity as an independent factor in the effort to promote and ensure vibrant democratic discourse. After all, the ultimate objective of structural policy is to promote diversity of sources.

The difference between source and viewpoint diversity is the difference between production and distribution. Owners’ viewpoints are expressed in the content they choose to deliver to the public through the outlets they control. The outlet owners may produce their own content or buy it from independent producers. The forum for democratic discourse will be better served by a multiplicity of sources producing content that reflects owners’ points of view. Structural policy can strive to create an environment that promotes independent production by preventing excessive concentration of ownership of distribution or excessive integration between distribution and production. Several of the proceedings ongoing before the FCC (i.e. the national caps on ownership of broadcast TV stations and cable systems) are driven by a major concern over source diversity. Increasing concentration of ownership of outlets and the tendency of outlet owners to also own production companies are threats to the viability of independent sources of content. Concentration interacts with the problem of consolidation into national chains to cause the concern about source diversity.

Institutional diversity reflects the special expertise and culture of certain media, such as the newspaper tradition of in-depth investigative journalism. Institutional diversity is grounded in the watchdog function.235

The quality of investigative reporting and the accessibility of different types of institutions to leaders and the public are promoted by institutional diversity. Institutional diversity involves different structures of media presentation (different business models, journalistic culture and tradition) and these institutions often involve different independent owners and viewpoints across media. To promote institutional diversity, like other forms of diversity, the institutions must be independently owned. Yet even in independently owned conglomerates, the journalistic ethic can be overwhelmed. Institutional diversity is impacted by conglomeration. Institutional diversity is also extremely important for the broader public policy issue of noncommercial sources of news.

These three aspects of diversity in civic discourse sharpen the conclusion that variety does not constitute diversity. As demonstrated, the empirical evidence indicates that gains in variety do not compensate for losses in diversity. The media’s tendency to under serve minority and atypical groups in addition to ownership’s influence over institutional configurations and content demonstrate why the claim that concentration in media markets enhances diversity is wrong, or at best irrelevant. The presumed ability of larger firms to provide a little more variety by covering a new “beat” or offering a hybrid format236 pales in comparison to the much larger loss of diversity and antagonism when media voices merge.

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For the rest of the book, and the bibliography, please click on the following link: http://cyberlaw.stanford.edu/attachments/mediabooke.pdf

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ENDNOTES

1 The ongoing proceedings include Federal Communications Commission, Cross-Ownership of Broadcast Stations and Newspapers, MM Docket No. 01-235; Newspaper/Radio Cross Ownership Waiver Policy, MM No. 98-82; Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, MM Docket No. 01-317. The proceedings were initiated in Federal Communications Commission, Notice of Proposed Rule Making, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01=317, 00-244, September 23, 2002, p. 28 (hereafter, Initial Notice). Limits on the ownership of cable systems are also being reviewed in Federal Communications Commission, In the Matter of Implementation of Section 1 of the Cable Television Consumer Protection and Competition Act of 199; Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996; The Commission’s Cable Horizontal Ownership Limits and Arbitration Rules, Review of the Commission’s Regulation and Policies Affecting Investment in the Broadcast Industry, Reexamination of the Commission’s Cross-Interest Policy, CS Dockets No. 98-82 and 96-85, MM dockets Nos. 92-264, 94-150, 92-51, 87-154 (hereafter, Cable Notice).

2 Chairman Powell used the expression in describing the digital convergence (See “Law in the Internet Age,” D.C. Bar Association Computer and Telecommunications Law Section and the Federal Communications Bar Association, September 29, 1999). The revolution and its implications for the media are woven through his “Broadband Migration” speeches (see “The Great Digital Broadband Migration,” Progress and Freedom Foundation, December 8, 2000; “Digital Broadband Migration: Part II,” Press Conference, October 31, 2001).

3 Fox Television Stations, Inc. v. FCC, 280 F.3d 1027 (hereafter Fox v. FCC); Sinclair Broadcasting, Inc. v. FCC, 284 F.3d 148 (D.C. Circ. 2002) (hereafter Sinclair v. FCC).

4 Telecommunications Act of 1996, Pub. LA. No. 104-104, 110 Stat. 56 (1996), 202(h).

5 While attributing an agenda to the Chairman of the FCC by the press is to be expected, the Chairman’s biases were so blatant that even one of the Appeals Court judges remarked on the futility of sending rules back to an agency that was so hostile to them (see Judge Sentelle, Concurring and Dissenting in Part,” Sinclair Broadcast Group, Inc. v. Federal Communications Commission, April 2, 2002).

6 February 24, 2002.

7 Labaton, Steve, “Give and Take, FCC Aims to Redraw Media Map,” New York Times, May 11, 2003, concludes with a typical quote that points to media developments that are in the future.

8 Powell, Michael K., “The Public Interest Standard: A New Regulator’s Search for Enlightenment,” 17th Annual Legal Forum on Communications Law, American Bar Association, April 5, 1998. The difference between simple economics under the antitrust law and civic discourse under the Communications Act is woven into the fabric of the statutes. Under the antitrust laws, mergers may be “prohibited if their effect may be substantially to lessen competition or to tend to create a monopoly,” or “if they constitute a contract, combination…, or conspiracy in restraint of trade,” or “constitute an unfair method of competition” (U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, 1997 [hereafter Horizontal Merger Guidelines], section 0). The standard under the Communications Act is higher, reflecting the special role of communications and mass media in our democracy. The Federal Communications Commission is charged to transfer cable, broadcast and telecommunications licenses only upon a “finding by the Commission that the public interest, convenience and necessity will be served.” (USC, 47, 310 (b)).

9 Associated Press v. United States, 326 U.S. 1, 20 (1945) (hereafter Associated Press).

10 Federal Communications Commission, “Report and Order,” In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01=317, 00-244 (hereafter, Order), July 2, 2003, at para. 353, 420,

11 Copps, Michael J., “Statement of Commissioner Michael J. Copps, Dissenting,” Federal Communications Commission, June 2, 2003, p. 2.

12 For example, Bagdikian, Ben, The Media Monopoly (Boston: Beacon Press, 2000), which described the concentration of media, was first published in 1983 and Esslin, Martin, The Age of Television (New Brunswick: Transaction, 2002), which raised concerns about the impact of television on civic and political functions, was first published in 1982.

13 Goodman, James, “Statement of James Goodman,” presented at Media Monopoly: Should the FCC Permit the Consolidation of Media Ownership, New America Foundation, May 9, 2003; Labaton.

14 Powell, The Public Interest.

15 Baker, C. Edwin, Media, Markets and Democracy (Cambridge: Cambridge University Press, 2001) [hereafter Media Markets), p. 3; Sunstein, Cass, Republic.com (Princeton: Princeton University Press, 2001), cites this quote in the front matter of the book.

16 Fox v. FCC, pp. 12-13.

17 Fox v. FCC, pp. 12-13.

18 Fox v. FCC, pp. 12-13.

19 Associated Press.

20 Sunstein, Republic, p. 40.

21 Associated Press, p. 17.

22 Red Lion Broadcasting v. FCC, 395 US 367 (1969); FCC v. National Citizens Committee for Broadcasting, 436 U.S. 775 (1978), Sinclair Broadcasting.

23 Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 638-39 (1994) (hereafter Turner I); Time Warner Entertainment Co., L.P. v. FCC, 240 F.3d 1126 (D.C. Cir. 2001) (hereafter Time Warner III).

24 Sunstein, Republic, p. 106.

25 Id, p. 122, concludes a chapter entitled Citizens as follows: “My central claim here has been that the citizens of a democratic polity may legitimately seek a communications market that departs from consumer choices, in favor of a system that promote goals associated with both freedom and democracy. Measures that promote these goals might be favored by a large majority of citizens, even if, in their capacity as consumers, they would choose a different course. Consumers are not citizens and it is a large error to conflate the two. One reason for the disparity is that the process of democratic choice often elicits people’s aspirations.”

26 Id., p. 31, elaborates on the forum concept as follows: “[T]he public forum doctrine promotes three important goals. First, it ensures that speakers can have access to a wide array of people… What is important is that speakers are allowed to press concerns that might otherwise be ignored by their fellow citizens. “On the speakers’ side, the public forum doctrine thus creates a right of general access to heterogeneous citizens. On the listeners’ side, the public forum creates not exactly a right, but an opportunity, if perhaps an unwelcome one: shared exposure to diverse speakers with diverse views and complaints… “Second, the public forum doctrine allows speakers not only to have general access to heterogeneous people, but also to specific people and specific institutions with whom they have a complaint… The public forum ensures that you can make your views heard by legislators, simply by protesting in front of the state legislature itself… “Third, the public forum doctrine increases the likelihood that people will be exposed to a wide variety of people and views.”

27 Id., p. 45, elaborates on the fundamental difference as follows: “Consumer sovereignty means that individual consumers are permitted to choose as they wish, subject to the constraints provided by the prices system, and also by their current holdings and requirements… The idea of political sovereignty stands on different foundations. It does not take individual tastes as fixed or given. It prices democratic self-government, understood as a requirement of ‘government by discussion,’ accompanied by reason giving in the public domain.”

28 Krotoszynski, Ronald J., Jr. and A. Richard M. Blaiklock, “Enhancing the Spectrum: Media Power, Democracy, and the Marketplace of Ideas, University of Illinois Law Review, 2000, p. 860: “It is not possible to offer up a specific formula to determine how many media outlets are sufficient to safeguard meaningful democratic deliberations. Even so, the consequences associated with the absence of a sufficient number of independently owned media outlets are sufficiently unappealing to justify rules incorporating a healthy margin of safety.”

29 Id., p. 814.

30 Id, pp. 833-834: “This linkage between media power and political power gives rise to a compelling need to check media power to avoid disruption of the electoral process. Just as unchecked political power presents an unacceptable threat to liberty, so, too, unchecked media power requires structural controls to maintain a viable marketplace of ideas. To the extent that the Commission’s diversity policies have as their objective dividing and checking media power, those policies serve a critical function. Critics of the Commission’s policies who advocate sole reliance on market forces to protect diversity have simply failed to consider the importance of maintaining structural diversity among the electronic media as a means of enhancing democracy.”

31 Id., pp. 872…873-874.

32 274 U.S. 357 (1927).

33 Sunstein, Republic, p. 110, argues that “[T]he right of free speech is itself best seen as part of the project of helping to produce an engaged, self-governing citizenry.”

34 Sunstein, Republic, pp. 46-47.

35 National Broadcasting Co., Inc. et al. v. United States, et. al., 319 U.S. 190 (1943] 70.

36 436 U.S. 775 (1978), 95.

37 395 U.S. 388 (1969).

38 Sinclair v. FCC, p. 15.

39 Sunstein, Republic, p. 115

40 Id., p. 40.

41 Id., Republic, p. 108.

42 Davidson, Paul, “FCC Could Alter Rules Affecting TV, Telephone, Airwaves,” USA Today, February 6, 2002.

43 Goodman, Media Monopoly, points to his decision not to air Married by America, which he maintains offends his local community’s values by denigrating women and devaluing the institutions of marriage, and to strip network commercials from World Series advertising, which he felt were too violent or had too much explicit sexual content to be aired in the midst of family programming like the World Series.

44 Ching, Frank, “Misreading Hong Kong,” Foreign Affairs, May 1997.

45 Anon, “Comcast Rejects Antiwar TV Spots,” Washington Post, January 29, 2003, p. A7.

46 Fiss, Owen, “Essays Commemorating the One Hundredth Anniversary of the Harvard Law Review: Why the State?” Harvard Law Review 100, 1987.

47 Krotoszynski and Blaiklock, p. 868.

48 Associated Press.

49 Krotoszynski and Blaiklock, p. 867.

50 Baker, Media, Markets, pp. 297-307; Baker, C. Edwin, “Giving Up on Democracy: The Legal Regulation of Media Ownership,” Attachment C, Comments of Consumers Union, Consumer Federation of America, Civil Rights Forum, Center for Digital Democracy, Leadership Conference on Civil Rights and Media Access Project, (before the Federal Communications Commission, In the Matter of Cross Ownership of Broadcast Station and Newspaper/Radio Cross-Ownership Waiver Policy, MM Docket No. 01-235, 96-197, December 3, 2001) [hereafter, Democracy].

51 Krotoszynski and Blaiklock, p. 868.

52 Baker, Media Markets, p. 120.

53 Associated Press, 52 F. Supp. p. 372.

54 Stucke, Maurice E. and Allen P. Grunes, “Antitrust and the Forum for Democratic Discourse,” Antitrust Law Journal, 69, pp. 282-283.

55 Id., p. 273.

56 Krotoszynski and Blaiklock, pp. 832…876: “The owners of a television or radio station possess a unique ability to influence the direction of public affairs through selective coverage of contemporary events and candidates for public office… “As noted earlier, television plays a unique role in contemporary American society. Accordingly, concentration of media ownership that encompass television stations represent a tangible threat to the marketplace of ideas than other kinds of concentration of media power. Under this reasoning, it might be acceptable to permit multiple ownership of some media assets within a single marker and not permit multiples or cross-ownership of other media assets.”

57 Sunstein, Republic, p. 35.

58 Sunstein, Republic, p. 184.

59 Stucke and Grunes: “Nor did the majority of the justices jump through the typical hoops of defining a relevant market, determining market share and the restraints’ impact on price and examining issue of entry or expansion by the other news wire services. Rather the majority was satisfied that AP was sufficiently large to impact the forum for democratic discourse, in that it was “a vast, intricately reticulated, organization, the largest of its kind, gathering news from all over the world, the chief single source of news for the American press, universally agreed to be of prime consequence.”

60 Sunstein, Republic, pp. 201-202.

61 Lessig, Lawrence, Code and Other Laws of Cyberspace (New York: Basic Books, 1999), Chapter 9, calls this translation.

62 U.S. Bureau of the Census, Statistical Abstract of the United States: 2001 (U.S. Department of Commerce, 2001), Table 1, 647, 1258, 1259, 1297; Statistical Abstract of the United States: 1986, p. 406, 407.

63 Sullivan, Lawrence, “Economics and More Humanistic Disciplines: What are the Sources of Wisdom for Antitrust,” University of Pennsylvania Law Review, 1977, p. 125: “Americans continue to value institutions the scale and workings of which they can comprehend. Many continue to value the decentralization of decision making power and responsibility. Many favor structures in which power in one locus may be checked by power in another.”

64 Sunstein, Republic, pp. 185-190.

65 Although Lessig, Code, extols the virtues of the Internet, noting that “When the Constitution speaks of the rights of the ‘press,’ the architecture it has in mind is the architecture of the Internet,” he is also profoundly pessimistic about the prospects for maintaining that architecture in the face of commercialization: “Now we are changing that architecture. We are enabling commerce in a way we did not before; we are contemplating the regulation of encryption; we are facilitating identity and content control. We are remaking the values of the Net, and the question is: Can we commit ourselves to neutrality in this reconstruction of the architecture of the Net? “I do not think that we can. Or should. Or will. We can no more stand neutral on the question of whether the Net should enable centralized control of speech than Americans could stand neutral on the question of slavery in 1861. We should understand that we are part of a worldwide political battle; that we have views about what rights should be guaranteed to all humans, regardless of their nationality; and we should be ready to press these views in this new political space opened up by the Net. (p. 200) “The decision then is not about choosing between efficiency and something else, but about which values should be efficiently pursued. To preserve the values we want, we must act against what cyberspace otherwise will become. The invisible hand, in other words, will produce a different world, and we should choose whether this world is one we want.” (p. 209)

66 Owen, Bruce M., “Statement on Media Ownership Rules,” Attachment to Comments of Fox Entertainment Group and Fox Television Stations, Inc., National Broadcasting Company, Inc. and Telemundo Group, Inc., and Viacom, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01=317, 00-244, January 2, 2003, p. 5.

67 Owen, Statement, p. 10.

68 Owen, Statement, p. 9.

69 Comments of Fox Entertainment Group and Fox Television Stations, Inc., National Broadcasting Company, Inc. and Telemundo Group, Inc., and Viacom, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003 (hereafter Fox, et al.), pp. 59-63; Comments of Sinclair, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003, pp. 31-33 {hereafter Sinclair); Comments of Media General, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003 (hereafter Media General), p. 4; Comments of Hearst, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003, p. 3; Comments of Clear Channel, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003 (hereafter Clear Channel), pp. 5-6.

70 Owen, Bruce and Kent W. Mikkelsen, “Counting Outlets and Owners in Milwaukee: An Illustrative Example, Economic Study F: Attachment to Fox,” et al., Table F-8.

71 Owen, Statement, p. 10.

72 Owen, Statement, p. 1.

73 Owen, Statement, p. 6.

74 Owen, Statement, p. 11.

75 Owen, Statement, p. 10; Fox et al., pp. 27, 47, 49, 57, 58, 64; Sinclair, pp. 18- 20, 46; Gannet, p. 18; Belo, In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003, p. 25; Media General, p. 4; Clear Channel, p. 8.

76 Owen and Mikkelsen.

77 Chairman Powell has expressed his doubts about the ability of the public to understand the issues (Jurkowitz, Mark, “FCC Chairman: Consolidation Hasn’t Inhibited Variety, Fairness,” Boston Globe, April 17, 2002): “The Citizen Kane anxiety… could be genuine in some instances. But it is very difficult to discern what exactly are these viewpoints that are eking through that we’re worried about… I think to the average consumer this is too sublime a concept for a lot of them to get agitated by.” Kenneth Ferree, head of the Media Ownership Task Force appointed by the Chairman dismissed the idea of holding public hearings with the claim that they would be “an exercise in foot stomping,” (Labaton, Stephen, “A Lone Voice for Regulation at the F.C.C.” New York Times, September 30, 2002). Another aide to Chairman Powell argued that “What the head of the PTA in Kansas City has to say about the issue isn’t going to add anything that’s not already in the record” (Boliek, Brooks, “FCC’s Copps to Conduct Hearings,” Hollywood Reporter, November 22, 2002).

78 McConnell, Bill, “Deregulation Foes Plan to Fight On,” Broadcasting and Cable, June 2, 2003.

79 Referred to by Senator Olympia Snowe, Senate Commerce Committee, May 13, 2003, and Commissioner Jonathan Adelstein, “Big Macs and Big Media: The Decision to Supersize,” Media Institute, May 20, 2003.

80 Seattle Post Intelligenser, PI-Daily Poll, May 2003.

81 Digital Media Forum, Survey Findings on Media Mergers and Internet Open Access, September 13, 2000. Consumer Federation of America, Media Policy Goals Survey, September 2002; Consumer Federation of America and Center for Digital Democracy, Mergers and Deregulation on the Information Superhighway: The Public Takes a Dim View: Results of a National Opinion Poll, September 1995; Project on Media Ownership, People for Better TV, Findings of a National Survey, Lake Snell Perry & Associates, May 1999.

82 Scherer, F. Michael and David Ross, Industrial Market Structure and Economic Performance (New York: Houghton Mifflin Company, 1990), p. 18: “We begin with the political arguments, not merely because they are sufficiently transparent to be treated briefly, but also because when all is said and done, they, and not the economists’ abstruse models, have tipped the balance of social consensus toward competition.”

83 Id., p. 18.

84 Id., p. 18.

85 Lessig, Code, pp. 166-167: “Relative anonymity, decentralized distribution, multiple points of access, no necessary tie to geography, no simple system to identify content, tools of encryption – all these features and consequences of the Internet protocol make it difficult to control speech in cyberspace. The architecture of cyberspace is the real protector of speech there; it is the real “First Amendment in cyberspace,” and this First Amendment is no local ordinance… “The architecture of the Internet, as it is right now, is perhaps the most important model of free speech since the founding. This model has implications far beyond e-mail and web pages.”

86 Lessig, Code, p. 183.

87 Cooper, Mark, “Antitrust as Consumer Protection: Lessons from the Microsoft Case,” Hastings Law Journal, 52, 2001.

88 Berry, Steven T. and Joel Waldfogel, “Public Radio in the United States: Does it Correct Market Failure or Cannibalize Commercial Stations?,” Journal of Public Economics, 71, 1999, point out free entry may not accomplish the economic goals set out for it either. There is evidence of the anticompetitive behaviors expected to be associated with reductions in competition, such as price increases and excess profits. Wirth, M. O., “The Effects of Market Structure on Television News Pricing,” Journal of Broadcasting, 1984; Simon, J., W. J. Primeaux and E. Rice, “The Price Effects of Monopoly Ownership in Newspapers,” Antitrust Bulletin, 1986; Rubinovitz, R., Market Power and Price Increases for Basic Cable Service Since Deregulation, (Economic Analysis Regulatory Group, Department of Justice, August 6, 1991); Bates, B. J., “Station Trafficking in Radio: The Impact of Deregulation,” Journal of Broadcasting and Electronic Media, 1993.

89 Ray, W. B., FCC: The Ups and Downs of Radio-TV Regulation (Iowa: Iowa State University Press, 1990); Hopkins, Wat W., “The Supreme Court Defines the Forum for Democratic Discourse,” Journalism and Mass Communications Quarterly, Spring 1996; Firestone, C.M. and J. M. Schement, Toward an Information Bill of Rights and Responsibilities (Washington, DC: Aspen Institute, 1995); Brown, Duncan H., “The Academy’s Response to the Call for a Marketplace Approach to Broadcast Regulation,” Critical Studies in Mass Communications, 11: 1994, 254; Benkler, Yochai, “Free as the Air,” New York University Law Review, 74, 1999.

90 Baker, Democracy, p. 42.

91 Waldfogel, Joel, Who Benefits Whom in Local Television Markets? (Philadelphia: The Wharton School, November 2001) (hereafter Waldfogel, Television), p. 1. Other papers in the series of studies of “preference externalities” were made a part of the record in conjunction with Joel Waldfogel’s appearance at the FCC Roundtable, including, Preference Externalities: An Empirical Study of Who Benefits Whom in Differentiated Product Markets, NBER Working Paper 7391 (Cambridge, MA: National Bureau of Economic Research, 1999); with Peter Siegelman, Race and Radio: Preference Externalities, Minority Ownership and the Provision of Programming to Minorities, Advances in Applied Microeconomics, 10, 2001; with Felix Oberholzer-Gee, Electoral Acceleration: The Effect of Minority Population on Minority Voter Turnout, NBER Working Paper 8252 (Cambridge, MA: National Bureau of Economic Research, 2001); with Lisa George, Who Benefits Whom in Daily Newspaper Markets?, NBER Working Paper 7944 (Cambridge, MA: National Bureau of Economic Research, 2000); as well as the statement Comments on Consolidation and Localism, Federal Communications Commission, Roundtable on Media Ownership (October 29, 2001) [hereafter, Localism); with Felix Oberholzer- Gee, Tiebout Acceleration: Political Participation in Heterogeneous Jurisdictions (NBER, 2001) (hereafter Participation).

92 Baker, Democracy, p. 43.

93 Waldfogel, Television, p. 1.

94 Sunstein, Republic, discusses the implications for democracy, pp. 108-109.

95 Baker, Democracy; Baker, C. Edwin, Advertising and a Democratic Press (Princeton: Princeton University Press, 1994). Krotoszynski and Blaiklock, p. 831: “The larger the audience the station generates, the higher the station’s potential advertising revenues. Broadcasters, therefore, attempt to find and air programming that will appeal to the largest possible audience. In doing so, broadcasters necessarily air programming that is likely to appeal to most people within the potential audience – that is they air programming that appeals to the majority culture’s viewpoint.”

96 Waldfogel, Preference Externalities, p. 27.

97 Waldfogel, Preference Externalities, pp. 27-30.

98 Waldfogel, Television, p. 3; Baker, Democracy, p. 80.

99 Oberholzer-Gee and Waldfogel, Participation, pp. 36-37.

100 Baker, Democracy, pp. 43-44: “Monopolistic competition theory applies to media goods. They… characteristically manifest the ‘public good’ attribute of having declining average costs over the relevant range of their supply curves due to a significant portion of the product’s cost being its ‘first copy cost,’ with additional copies having a low to zero cost. There are a number of important attributes of monopolistic competition that are relevant for policy analysis and that distinguish it from the standard model of so-called pure competition, the standard model that underwrites the belief that a properly working market leads inexorably to the best result (given the market’s givens of existing market expressed preferences and the existing distribution of wealth). The first feature to note here is that in monopolistic competition often products prevail that do not have close, certainly not identical, substitutes. Second, this non-substitutability of the prevailing monopolistic product will allow reaping of potentially significant monopoly profits.”

101 Krostoszynski and Blaiklock, pp. 832…833: “The owners of a television or radio station possess a unique ability to influence the direction of public affairs through selective coverage of contemporary events and candidates for public office…. “To be sure, concentrations of political power present a more direct kind of threat to democracy than do concentrations of media power. That said, it is possible to use media power as a means of channeling, if not controlling the flow of political power. The owners of a television or radio station have a unique opportunity to influence the outcomes of electoral contests – both by reporting on candidates favorably and unfavorably and through benign (or malign) neglect. Media exposure is like oxygen to candidates for political office, particularly at the federal level. If a television station pretends that a candidate does not exist, her chances of election are considerably reduced.”

102 Baker, Democracy, p. 43. Krotoszynski and Blaiklock, p. 875, put it as follows: “There is simply no reason to believe that someone like Ted Turner or Rupert Murdock will consistently seek to maximize economic returns rather than use media power to influence political events in ways he deems desirable.”

103 Baker, Democracy, p. 73.

104 Krotoszynski and Blaiklock, p. 867: “Employees are unlikely to criticize their employers, and this truism holds true for the fourth Estate.”

105 Siegelman and Waldfogel, p. 23.

106 Id., p. 25.

107 Baker, Democracy, p. 47.

108 Id., pp. 67-68.

109 Baker, Media Markets, pp. 96-97: “Thus, from the perspective of providing people what they want, media markets are subject to the following criticisms. They provide much too much “bad” quality content – bad meaning content that has negative externalities. Media markets also may produce a wasteful abundance of content responding to mainstream taste. Otherwise, the main problem is underproduction. Markets predictably provide inadequate amounts and inadequate diversity of media content. Especially inadequate is their production of “quality” content – quality meaning content that has positive externalities. Production of civically, educationally, and maybe culturally significant content preferred by the poor is predictably inadequate. Smaller groups will often be served inadequately, either in relation to democracy’s commitment to equally value their preferences or due to the consequences of monopolistic competition.”

110 Baker, Democracy, p. 16.

111 Rifkin, Jeremy, The Age of Access (New York: J.P. Tarcher, 2000).

112 Krotoszynski and Blaiklock, p. 866: “The Commission historically has placed a high value on local control of broadcasting on the theory that local control would result in the provision of programming that better meets the needs of the community of license… “A quick perusal of cable programming practices demonstrates the veracity of the proposition. With the exception of PEG channels and leased-access channels, cable programming presents very little programming responsive to the needs, wants, and desires of local communities. If you want the prized hog competition at the state fair covered live, you need a local media presence. Elections for city, county and even state officers might go uncovered if left to the networks or national cable news channels. Although alternative sources of information exist, including the Internet and local newspapers, most Americans continue to rely upon local and network television for their news programming. With respect to local news, local broadcasters are effectively the only game in town.”

113 Waldfogel, Television, p. 13; Waldfogel, Localism, p. 9.

114 Krotoszynski and Blaiklock, pp. 871…875-876: “The Commission’s efforts to preserve localism as a feature of the broadcast media will be effectively thwarted if large, corporate entities are permitted to amass large station holdings and use central programming techniques to achieve economies of scale and scope… “Common ownership of media outlets is not conducive to competition in news and other local content programming. Consolidated news department, like consolidated marketing departments, are a common feature of multiple station groups. Divided control of media outlets within a community creates a healthy competition among news and programming sources.”

115 Baker, Democracy, p. 64.

116 Id., p. 64: “Consider the merger of two entities that supply local news within one community – possibly the newspaper and radio station... Presumably the merged entity would still have an incentive to engage in at least a profit-maximizing amount of investigative journalism. But how much is that? The amount spent in the pre-merger situation may have reflected merely an amount that the media entity’s audience wanted and would pay for (either directly or indirectly through being “sold” to advertisers). Alternatively, the pre-merger profit maximizing level for each independent entity may have reflected a competitive need to compare adequately to a product offered by its competitor. In this second scenario, competition may have induced increased but still inefficiently small expenditures on investigative journalism. “Given the first scenario, if the provision of investigative journalism and exposes was satisfying an audience demand, there would be little necessity for the two media entities to supply different sets of exposes to the two audiences. Presumably the merged enterprise could share the results of its investigative journalism, now supplying to each entity’s respective audience (customers) only the amount previously supplied by the larger of two investigative units… What is from the perspective of the merged entity a profitable ‘synergy’ is from the perspective of the community an inefficient loss of positive externalities.”

117 Sunstein, Cass, “Television and the Public Interest,” California Law Review, 8, 2002, p. 517.

118 As the works of Benkler and others have shown, the public good quality of information production goes well beyond the realm of the media and civic discourse and is especially critical to a period that is called an information age. See Benkler, Yochai, “Intellectual Property and the Organization of Information Production,” International Review of Law and Economics, 22, 2002; “Coase’s Penguin, or Linux and the Nature of the Firm,” Yale Law Journal, 112, 2002; “The Battle Over the Institutional Ecosystem in the Digital Environment,” Communications of the ACM, 44:2, 2001; “From Consumers to Users: Shifting the Deeper Structure of Regulation Toward Sustainable Commons and User Access,” Federal Communications Law Journal, 56, 2000. Lawrence Lessig’s analysis of the impact of communications structures on innovation is another body of work that focuses on the nexus between choices about economic/institutional structures, public goods, and political action (see Code and The Future of Ideas: The Fate of the Commons in a Connected World (New York: Random House, 2001)). The narrow focus here on media and civic discourse reflects the nature of this proceeding and in no way is intended to belittle the broader public goods concerns.

119 Sunstein, Television, p. 517, citing Frank, Robert H. and Phillip J. Cook, The Winner Take All Society (1999), p. 191, as well as Bourdieu, Pierre, On Television (New York: The New Press, 1998), and Baker, C. Edwin, “Giving the Audience What it Wants,” Ohio State Law Journal 58, 1997.

120 Netanal, Neil, Is the Commercial Mass Media Necessary, or Even Desirable, for Liberal Democracy, TPRC Conference on Information, Communications, and Internet Policy, October 2001, pp. 20-24.

121 Krotoszynski and Blaiklock, pp. 867-868: “Accordingly as fewer and fewer entities control more and more broadcast outlets, the incentive to expose disinformation or to correct for under coverage of a particular story decreases. If Ted Turner enjoyed a media monopoly, would CNN and Time have fallen upon their swords so quickly in the aftermath of the Operation Tailwind story scandal? It seems highly unlikely. The pervasive, negative attention brought to bear on CNN’s and Time’s conduct in reporting this story forced Time Warner to take aggressive corrective action…. “The project of outlet diversity bears a clear relationship to the project of maintaining a viable, participatory democracy. To the extent that the ownership rules and policies divide and subdivide media ownership, it does the public a service. Moreover, this service is independent of antitrust concerns regarding price fixing or undue market power. The commission’s pursuit of diversity in the context of media regulation relates to fostering accountability to the public.”

122 Shah, Rajiv, J. Jay and P. Kesan, The Role of Institutions in the Design of Communications Technologies, Telecommunications Policy Research Conference, Conference on Information, Communications, and Internet Policy, October 2001.

123 Baker, Media Markets, p. 120.

124 Rifkin, The Age of Access, pp. 7-9.

125 Layton, Charles, “What do Readers Really Want?”, American Journalism Review, March 1999, reprinted in Roberts, Gene and Thomas Kunkel, Breach of Faith: A Crisis of Coverage in the Age of Corporate Newspapering (Fayetteville: University of Arkansas Press, 2002); McConnell, Bill and Susanne Ault, “Fox TV’s Strategy: Two by Two, Duopolies are Key to the Company’s Goal of Becoming a Major Local Presence,” Broadcasting and Cable, July 30, 2001; Trigoboff, Dan, “Chri- Craft, Fox Moves In: The Duopoly Marriage in Three Markets Comes with Some Consolidation,” Broadcasting and Cable, August 6, 2001; Trigoboff, Dan, “Rios Heads KCOP News,” Broadcasting and Cable, October 14, 2002; Beam, Randall A., “What it Means to Be a Market-Oriented Newspaper,” Newspaper Research Journal, 16, 1995; “Size of Corporate Parent Drives Market Orientation,” Newspaper Research Journal, 23, 2002; Vane, Sharyn, “Taking Care of Business,” American Journalism Review, March 2002; The Business of News, the News About Business, Neiman Reports, Summer 1999.

126 Levin, H. J., “Program Duplication, Diversity, and Effective Viewer Choices: Some Empirical Findings,” American Economic Review, 1971; Lacy, Stephen, “A Model of Demand for News: Impact of Competition on Newspaper Content,” Journalism Quarterly, 1989; Johnson, T. J. and W. Wanta, “Newspaper Circulation and Message Diversity in an Urban Market,” Mass Communications Review, 1993; Davie, W. R. and J. S. Lee, “Television News Technology: Do More Sources Mean Less Diversity,” Journal of Broadcasting and Electronic Media, 1993, p. 455; Wanta, W. and T. J. Johnson, “Content Changes in the St. Louis Post-Dispatch During Different Market Situations,” Journal of Media Economics, 1994; Coulson, D. C., “Impact of Ownership on Newspaper Quality,” Journalism Quarterly, 1994; Coulson, D. C. and Anne Hansen, “The Louisville Courier-Journal’s News Content After Purchase by Gannett,” Journalism and Mass Communications Quarterly, 1995; Iosifides, Petros, “Diversity versus Concentration in the Deregulated Mass Media,” Journalism and Mass Communications Quarterly, Spring 1999; Lacy, Stephen and Todd F. Simon, “Competition in the Newspaper Industry,” in Stephen Lacy and Todd F. Simon, [eds] The Economics and Regulation of United States Newspapers (Norwood, NJ: Ablex, 1993).

127 Soloski, John, “Economics and Management: The Real Influence of Newspaper Groups,” Newspaper Research Journal, 1, 1979; Bennet, W. Lance, News: The Politics of Illusion (New York: Longmans, 1988); Busterna, J. C., “Television Ownership Effects on Programming and Idea Diversity: Baseline Data,” Journal of Media Economics, 1988; Edwards, E. S. and N. Chomsky, Manufacturing Consent (New York: Pantheon, 1988); Glasser, Theodore, L. David, S. Allen and S. Elizabeth Banks, “The Influence of Chain Ownership on News Play: A Case Study,” Journalism Quarterly, 66, 1989; Katz, J., “Memo to Local News Directors,” Columbia Journalism Review, 1990; McManus, J., “Local News: Not a Pretty Picture,” Columbia Journalism Review, 1990; Price, Monroe E., “Public Broadcasting and the Crisis of Corporate Governance,” Cardozo Arts & Entertainment, 17, 1999.

128 Just, Marion, Rosalind Levine and Kathleen Regan, “News for Sale: Half of Stations Report Sponsor Pressure on News Decision,” Columbia Journalism Review-Project for Excellence in Journalism, November/December 2001, p. 2.

129 Strupp, Joe, “Three Point Play,” Editor and Publisher, August 21, 2000, p. 23; Moses, Lucia, “TV or not TV? Few Newspapers are Camera Shy, But Sometimes Two Into One Just Doesn’t Go,” Editor and Cable, August 21, 2000, p. 22; Roberts, Gene, Thomas Kunkel, and Charles Clayton (eds.), Leaving Readers Behind (Fayetteville: University of Arkansas Press, 2001), 10.

130 Belo, pp. 8-9; Karr, Albert, “Television News Tunes Out Airwaves Auction Battle,” Wall Street Journal, May 1, 1996, p. B1.

131 See Quincy Illinois Visitors Guide, 2001 edition; McConnell, Bill, “The National Acquirers: Whether Better for News or Fatter Profits, Media Companies Want in on TV/Newspaper Cross-Ownership,” Broadcasting and Cable, December 10, 2001.

132 Kunkel, Thomas and Gene Roberts, “The Age of Corporate Newspapering; Leaving Readers Behind,” American Journalism Review, May 2001. On coverage of the 1996 Telecommunications Act see Gilens, Martin and Craig Hertzman, “Corporate Ownership and News Bias: Newspaper Coverage of the 1996 Telecommunications Act,” Paper delivered at the Annual Meeting of the American Political Science Association, August 1997, p. 8.

133 Davis, Charles and Stephanie Craft, “New Media Synergy: Emergence of Institutional Conflict of Interest,” Journal of Mass Media Ethics, 15, 2000, pp. 222- 223.

134 The story “broke” in the Washington Post with the publication of a segment of Bob Woodward’s Bush At War (New York: Simon and Schuster, 2002), p. 207, which Ailes disputed (see Grove, Lloyd, “The Reliable Source,” Washington Post, November 19, 2002). The incident reinforced the perception of Fox News as “The Most Biased Name in News: Fox Channel’s Extraordinary Right-wing Tilt.” Ackerman, Seth, The Most Biased Name in News (FAIR, August 2002), a bias that is embodied in the “format, guests, expertise, topic and in-house analysts.” Cable News Wars: Interviews (PBS, Online Newshour, March 2002), p. 2.

135 Goldberg, Bernard, Bias (Washington, DC: Regnery, 2002), p. 190.

136 Goldberg, p. 222, citing “On Media Bias, Network Stars Are Rather Clueless,” Wall Street Journal, May 24, 2001.

137 Anon, “The Fox News Presidential Advisor,” November 21, 2002, Washington Post, p. A36.

138 Klugman, Paul, “In Media Res,” New York Times, November 29, 2002, p. A39.

139 Kelly, Michael, “Left Everlasting,” The Washington Post, December 11, 2002, p. A33.

140 Kelly, Michael, “Left Everlasting (Cont’d),” The Washington Post, December 18, 2002, p. A35.

141 Lichter, S. Robert, “Depends on How You Define ‘Bias’,” The Washington Post, December 18, 2002, A19.

142 Kahn, Kim Fridkin and Patrick J. Kenny, “The Slant of News: How Editorial Endorsements Influence Campaign Coverage and Citizens’ Views of Candidates,” American Political Science Review, 96, 2002, p. 381.

143 Additional sources cited in support of this proposition include Page, Benjamin I., Who Deliberates (Chicago: University of Chicago Press, 1996); Rowse, Edward, Slanted News: A Case Study of the Nixon and Stevenson Fund Stories (Boston: Beacon, 1957).

144 McManus, J., “How Objective is Local Television News?”, Mass Communications Review, 1991.

145 Snider, James H., and Benjamin I. Page, “Does Media Ownership Affect Media Stands? The Case of the Telecommunications Act of 1996,” Paper delivered at the Annual Meeting of the Midwest Political Science Association, April 1997.

146 Id., pp. 7-8.

147 Carter, Sue, Frederick Fico, and Joycelyn A. McCabe, “Partisan and Structural Balance in Local Television Election Coverage,” Journalism and Mass Communications Quarterly, 79, 2002, p. 50.

148 The FCC’s minimal effort to address the issue of bias (Pritchard, David, Viewpoint Diversity in Cross-Owned Newspapers and Television Stations: A Study of News Coverage of the 2000 Presidential Campaign (Federal Communications Commission, September 2002), involved a very small number of observations and no effort to introduce a comparison group. It found that half of the newspapers and television stations that were cross-owned shared a bias. On re-examination, Baker, Dean, Democracy Unhinged: More Media Concentration Means Less Public Discourse, A Critique of the FCC Studies on Media Ownership (Washington, DC: Department of Professional Employees, AFL-CIO, December 2002), p. 6, concluded that “seven of the ten combinations had a common slant, and only three had a different slant in their coverage.” This is a remarkably high bias and, in our view, only underscores the problem of ownership across the media.

149 Alger, Dean, MEGAMEDIA: How Giant Corporations Dominate Mass Media, Distort Competition and Endanger Democracy (Lanham, MD: Rowman & Littlefield, 1998), Chapter 6; Alger, Dean, The Media and Politics (New York: Wadsworth Publishing, 2nd edition, 1996). Alger provided analysis for “Initial Comments of Consumer Federation,” et al., Cross Ownership of Broadcast Stations and Newspapers, MM Docket No. 01-235, December 4, 2001 (hereafter, Alger, CFA).

150 Also see Karr.

151 Journal Broadcasting Corporation, “Initial Comments of the Journal Broadcasting Corporation,” In the Matter of Cross Ownership of Broadcast Stations and Newspaper; Newspaper/Radio Cross-Ownership Waiver Policy (MM Docket Nos. 01-235, 96-197), December 4, 2001, p. 2.

152 Cited in Alger, CFA, p. 63.

153 Cited in Alger, CFA, p. 63.

154 McConnell.

155 Cited in Alger, CFA, p. 64.

156 Cited in Alger, CFA, p. 64.

157 Beam, 1995; Beam, 2002; Vane; Just, Levine and Regan.

158 Evidence that increasing variety does not increase diversity can be found in Dejong, A. S. and B. J. Bates, “Channel Diversity in Cable Television,” Journal of Broadcasting and Electronic Media, 1991; Grant, A. E., “The Promise Fulfilled? An Empirical Analysis of Program Diversity on Television,” The Journal of Media Economics, 1994; Hellman, Heikki and Martii Soramaki, “Competition and Content in the U.S. Video Market,” Journal of Media Economics, 7, 1994; Lin, C. A., “Diversity of Network Prime-Time Program Formats During the 1980s,” Journal of Media Economics, 8, 1995; Kubey, Robert, Mark Shifflet, Niranjala Weerakkody, and Stephen Ukeiley, “Demographic Diversity on Cable: Have the New Cable Channels Made a Difference in the Representation of Gender, Race, and Age?,” Journal of Broadcasting and Electronic Media, 39, 1995. For other nations see Deakin, Simon and Stephen Pratten, “Reinventing the Market? Competition and Regulatory Change in Broadcasting,” Journal of Law and Society, 26, 1999; Li, Hairong and Janice L. Bukovac, “Cognitive Impact of Banner Ad Characteristics: an Experimental Study,” Journalism & Mass Communication Quarterly, 76, 1999; Kilborn, Richard W., “Shaping the Real,” European Journal of Communication, 13, 1998; Blumer, Jay G. and Carolyn Martin Spicer, “Prospects for Creativity in the New Television Marketplace: Evidence form Program-Makers,” Journal of Communications, 40, 1990, p. 78.

159 McConnell and Ault.

160 Trigoboff, 2001.

161 Trigoboff, 2002.

162 Just, Levine and Regan, p. 2.

163 Just, Levine and Regan, p. 2.

164 Napoli, Philip, “Audience Valuation and Minority Media: An Analysis of the Determinants of the Value of Radio Audiences,” Journal of Broadcasting and Electronic Media, 46, 2002, pp. 180-181.

165 The author notes agreement with Ofori, K. A., When Being No. 1 is not Enough: The Impact of Advertising Practices on Minority-Owned and Minority-Targeted Broadcast Stations (Civil Rights Forum on Communications Policy, 1999); Webster, J. G. and P. F. Phalen, The Mass Audience: Rediscovering the Dominant Model (New Jersey: Erlbaum, 1997); Baker, C. Edwin, Advertising and a Democratic Press .

166 The author cites Owen, Bruce and Steven Wildman, Video Economics (Cambridge, MA: Harvard University Press, 1992); Waldfogel, Preference Externalities.

167 Hamilton, J. T., Channeling Violence: the Economic Market for Violent Television Programming (Princeton: Princeton University Press, 1998); Wildman, Steven, “One-way Flows and the Economics of Audience Making,” in J. Entema and D.C. Whitney (eds.), Audiencemaking: How the Media Create the Audience (Thousand Oaks CA: Sage Publications, 1994); Wildman, Steven and T. Karamanis, “The Economics of Minority Programming,” in A. Garner (ed.) Investing in Diversity: Advancing Opportunities for Minorities in Media (Washington, DC: Aspen Institute, 1998); and Owen and Wildman.

168 Fife, M., The Impact of Minority Ownership on Broadcast Program Content: A Case Study of WGPR-TV’s Local News Content (Washington: National Association of Broadcasters, 1979); Fife, M., The Impact of Minority Ownership on Broadcast Program Content: A Multi-Market Study (Washington: National Association of Broadcasters, 1986); Congressional Research Service, Minority Broadcast Station Ownership and Broadcast Programming: Is There a Nexus? (Washington: Library of Congress, 1988); Hart, T. A., Jr., “The Case for Minority Broadcast Ownership,” GannettCenter Journal, 1988; Wimmer, K. A., “Deregulation and the Future of Pluralism in the Mass Media: The Prospects for Positive Policy Reform,” Mass Communications Review, 1988; Gauger, T. G., “The Constitutionality of the FCC’s Use of Race and Sex in Granting Broadcast Licenses,” Northwestern Law Review, 1989; Klieman, H., “Content Diversity and the FCC’s Minority and Gender Licensing Policies,” Journal of Broadcasting and Electronic Media, 1991; Collins-Jarvis, L. A., “Gender Representation in an Electronic City Hall: Female Adoption of Santa Monica’s PEN System,” Journal of Broadcasting and Electronic Media, 1993; Lacy, Stephen, Mary Alice Shaver, and Charles St. Cyr, “The Effects of Public Ownership and Newspaper Competition on the Financial Performance of Newspaper Corporation: A Replication and Extension,” Journalism and Mass Communications Quarterly, Summer 1996.

169 Empirical studies demonstrating the link between minority presence in the media and minority-oriented programming include Fife, 1979; Fife, 1986; Congressional Research Service; Hart; Wimmer; Evans, Akousa Barthewell, “Are Minority Preferences Necessary? Another Look at the Radio Broadcasting Industry,” Yale Law and Policy Review, 8, 1990; Dubin, Jeff and Matthew L. Spitzer, “Testing Minority Preferences in Broadcasting,” Southern California Law Review, 68, 1995; Bachen, Christine, Allen Hammond, Laurie Mason, and Stephanie Craft, Diversity of Programming in the Broadcast Spectrum: Is There a Link Between Owner Race or Ethnicity and News and Public Affairs Programming? (Santa Clara University, December 1999); Mason, Laurie, Christine M. Bachen and Stephanie L. Craft, “Support for FCC Minority Ownership Policy: How Broadcast Station Owner Race or Ethnicity Affects News and Public Affairs Programming Diversity,” Communications Law Policy, 6, 2001.

170 A similar line of empirical research dealing with gender exists. See Lacy, Shaver and St. Cyr; Gauger; Klieman; Collins-Jarvis; Lauzen, Martha M. and

David Dozier, “Making a Difference in Prime Time: Women on Screen and Behind the Scenes in 1995-1996 Television Season, Journal of Broadcasting and Electronic Media, Winter 1999; O’Sullivan, Patrick B., The Nexus Between Broadcast Licensing Gender Preferences and Programming Diversity: What Does the Social Scientific Evidence Say? (Santa Barbara, CA: Department of Communication, 2000).

171 Kim, Sei-Hill, Dietram A. Scheufele and James Shanahan, “Think About It This Way: Attribute Agenda Setting Function of the Press and the Public’s Evaluation of a Local Issue,” Journalism and Mass Communications Quarterly, 79, 2002, p. 7; Chaffee, Steven and Stacy Frank, “How Americans Get Their Political Information: Print versus Broadcast News,” The Annals of the American Academy of Political and Social Science, 546, 1996; McLeod, Jack M., Dietram A. Scheufele, and Patricia Moy, “Community, Communications, and Participation: The Role of Mass Media and Interpersonal Discussion in Local Political Participation,” Political Communication, 16, 1999.

172 Waldfogel, Television; Waldfogel and George; Waldfogel, Comments on Consolidation and Localism.

173 Stone, V. A., “Deregulation Felt Mainly in Large-Market Radio and Independent TV,” Communicator, April 1987, p. 12; Aufderheide, P., “After the Fairness Doctrine: Controversial Broadcast Programming and the Public Interest,” Journal of Communication, 1990, pp. 50-51; McKean, M. L. and V. A. Stone, “Why Stations Don’t Do News,” Communicator, 1991, pp. 23-24; Stone, V. A., “New Staffs Change Little in Radio, Take Cuts in Major Markets TV, RNDA, 1988; Slattery, K. L. and E. A. Kakanen, “Sensationalism Versus Public Affairs Content of Local TV News: Pennsylvania Revisited,” Journal of Broadcasting and Electronic Media, 1994; Bernstein, J. M. and S. Lacy, “Contextual Coverage of Government by Local Television News,” Journalism Quarterly, 1992; Carrol, R. L., “Market Size and TV News Values,” Journalism Quarterly, 1989; Scott, D. K. and R. H. Gopbetz, “Hard News/Soft News Content of the National Broadcast Networks: 1972-1987,” Journalism Quarterly, 1992; Ferrall, V. E., “The Impact of Television Deregulation,” Journal of Communications, 1992; pp. 21... 28... 30.

174 Slattery, Karen L., Ernest A. Hakanen and Mark Doremus, “The Expression of Localism: Local TV News Coverage in the New Video Marketplace,” Journal of Broadcasting and Electronic Media, 40, 1996; Carroll, Raymond L. and C.A. Tuggle, “The World Outside: Local TV News Treatment of Imported News,” Journalism and Mass Communications Quarterly, Spring 1997; Fairchild, Charles, “Deterritorializing Radio: Deregulation and the Continuing Triumph of the Corporatist Perspective in the USA,” Media, Culture & Society, 1999, 21; Layton, Charles and Jennifer Dorroh, “Sad State,” American Journalism Review, June 2002; Olson, Kathryn, “Exploiting the Tension between the New Media’s “Objective” and Adversarial Roles: The Role Imbalance Attach and its Use of the Implied Audience,” Communications Quarterly 42:1, 1994, pp. 40-41; Stavitsky, A. G., “The Changing Conception of Localism in U.S. Public Radio,” Journal of Broadcasting and Electronic Media, 1994.

175 Bagdikian, Media Monopoly, pp. 182...188; Clarke, P. and E. Fredin, “Newspapers, Television, and Political Reasoning,” Public Opinion Quarterly, 1978; Pfau, M., “A Channel Approach to Television Influence,” Journal of Broadcasting and Electronic Media, 1990; Cundy, D. T., “Political Commercials and Candidate Image,” in Lynda Lee Kaid (ed.), New Perspectives in Political Advertising (Carbondale, IL: Southern Illinois University Press, 1986); O’Keefe, G. J., “Political Malaise and Reliance on the Media,” Journalism Quarterly, 1980; Becker, S. and H. C. Choi, “Media Use, Issue/Image Discrimination,” Communications Research, 1987; Robinson, J. P. and D. K. Davis, “Television News and the Informed Public: An Information Process Approach,” Journal of Communication, 1990; Voakes, Paul S., Jack Kapfer, David Kurpius, and David Shano-yeon Chern, “Diversity in the News: A Conceptual and Methodological Framework,” Journalism and Mass Communications Quarterly, Autumn 1996; Bishop, Ronald and Ernest A. Hakanen, “In the Public Interest? The State of Local Television Programming Fifteen Years After Deregulation,” Journal of Communications Inquiry, 26, 2002.

176 McManus, J. H., “What Kind of a Commodity is News?”, Communications Research, 1992; Olson.

177 Bagdikian, pp. 220-221; Paletz, D. L. and R. M. Entmen, Media, Power, Politics, (New York: Free Press, 1981); Postman, Neil, Amusing Ourselves to Death: Public Discourse in the Age of Show Business (New York: Penguin Press, 1985); Lacy, Stephen, “The Financial Commitment Approaches to News Media Competition,” Journal of Media Economics, 1992.

178 Bass, Jack, “Newspaper Monopoly,” in Gene Roberts, Thomas Kunkel, and Charles Clayton (eds.), Leaving Readers Behind (Fayetteville: University of Arkansas Press, 2001); Gish, Pat and Tom Gish, “We Still Scream: The Perils and Pleasures of Running a Small-Town Newspaper,” and Shipp, E. R., “Excuses, Excuses: How Editors and Reporters Justify Ignoring Stories,” in William Serrin (ed.), The Business of Journalism (New York: New Press, 2000). Complaints about the failure to cover larger national and international stories also abound (see Phillips, Peter and Project Censored, Censored 2003 (New York: Seven Stories, 2002); Borjesson, Kristina, Into the BUZZSAW (Amherst, New York: Prometheus Books, 2002)).

179 Waldfogel, Television, p. 13.

180 Krotoszynski and Blaiklock, pp. 866: “Given economies of scale, it might be inefficient to cover the hog competition at the state fair. Perhaps Jerry Springer or Montel Williams would generate higher ratings or cost less to broadcast. From a purely economic point of view, covering a debate between candidates for local office might be a complete disaster. Many local television and radio stations nevertheless provide such coverage on a voluntary basis. Perhaps local commercial television broadcasters do not provide such coverage solely out of the goodness of their hearts or a keen sense of civic responsibility. Nevertheless, the fact remains that a national television channel generally would not cover the lieutenant governor’s race in South Dakota absent the most extraordinary and unlikely of circumstances.”

181 Waldfogel, Localism, p. 9.

182 Id., p. 9.

183 Project for Excellence in Journalism, Does Ownership Matter in Local Television News: A Five-Year Study of Ownership and Quality, February 17, 2003, executive summary.

184 Fairchild, pp. 557-559; Bachman, Kathy, “Music Outlets Tune in More News Reports,” MediaWeek, October 29, 2001.

185 Network Affiliated Stations Alliance, “Petition for Inquiry into Network Practices,” Federal Communications Commission, March 8, 2001 (hereafter NASA, Petition).

186 Lacy, Stephen, David C. Coulson, and Charles St. Cyr, “The Impact of Beat Competition on City Hall Coverage,” Journalism & Mass Communication Quarterly, 76, 1999.

187 Mathews, Anna Wilde, “A Giant Radio Chain is Perfecting the Art of Seeming Local,” Wall Street Journal, February 25, 2002, p. A1.

188 Staples, Brent, “The Trouble with Corporate Radio: The Day the Protest Music Died,” The New York Times, February 20, 2003 p. A30.

189 Kim, Scheufele and Shanahan, p. 7.

190 In support of the proposition that media plays a key role in informing the citizenry about local issues, the authors cite, Chaffee and Frank; McLeod, Scheufele and Moy. In support of the more specific agenda setting functions the authors cite Scheufele, Dietram A., “Agenda-Setting, Priming and Framing Revisited: Another Look at Cognitive Effects of Political Communications,” Mass Communications & Society, 3 (2000) and McCombs, Maxwell and Donald L. Shaw, “The Agenda-Setting Function of Mass Media,” Public Opinion Quarterly, 36, 1972.

191 Valentino, Nicholas A., Vincent L. Hutchings, and Ismail K. White, “ Cues that Matter: How Political Ads Prime Racial Issues During Campaigns,” American Political Science Review, 96, 2002, p. 75.

192 The references cited in support of this proposition include Edsall, Thomas B. and Mary D. Edsall, Chain Reaction: The Impact of Race, Rights and Taxes on American Politics (New York: Norton, 1991); Jamieson, Kathleen Hall, Dirty Politics: Deception, Distraction and Democracy, (New York: Oxford University Press, 1992); Gilens, Martin, “Race Coding and White Opposition to Welfare,” American Political Science Review, 90, 1996; Mendelberg, Tali, “Executing Hortons: Racial Crime in the 1988 Presidential Campaign,” Public Opinion Quarterly, 61, 1997; Mendelberg, Tali, The Race Card: Campaign Strategy, Implicit Messages and the Norm of Equality (Princeton: Princeton University Press, 2001); Valentino, Nicholas A., “Crime News and the Priming of Racial Attitudes During the Evaluation of the President,” Public Opinion Quarterly, 63, 1999.

193 The references cited in support of this proposition include Mendelberg, 2001; Coltrane, Scott and Melinda Messineo, “The Perpetuation of Subtle Prejudice: Race and Gender Imagery in the 1990’s Television Advertising,” Sex Roles, 42, 1990; Entman, Robert M., and Andrew Rojecki, The Black Image in the White Mind: Media and Race in America (Chicago: University of Chicago Press, 2000); Gray, Herman, Watching Race Television and the Struggle for Blackness (Chicago: University of Chicago Press, 1995); Dixon, Travis L. and Daniel Linz, “Overrepresentation and Underrepresentation of African Americans and Latinos as Lawbreakers on Television News,” Communications Research, 50, 2000; Gilliam, Franklin D., Jr., and Shanto Iyengar, “Prime Suspects: The Influence of Local Television News on the Viewing Public,” American Journal of Political Science, 44, 2000; Peffley, Mark, Todd Shields and Bruce Williams, “The Intersection of Race and Television,” Political Communications, 13, 1996.

194 Kim, Shefuele and Shanahan, p. 381.

195 The sources cited in support of this proposition include, Graber, Doris, Mass Media and American Politics (Washington, DC: Congressional Quarterly, 1997); Paletz, David L., The Media in American Politics: Contents and Consequences (New York: Longman, 1999); Just, Marion R., Ann N. Crigler, Dean F. Alger, Timothy E. Cook, Montague Kern, and Darrell M. West, Crosstalk: Citizens, Candidates and the Media in a Presidential Campaign (Chicago: University of Chicago Press, 1996); Kahn, Kim F. and Patrick J. Kenney, The Spectacle of U.S. Senate Campaign (Chicago: University of Chicago Press, 1999).

196 The sources cited in support of this proposition include Iyengar, Shanto and Donald R. Kinder, News That Matters: Television and American Opinion (Chicago: University of Chicago Press, 1987); McCombs and Shaw.

197 Mutz, Diana C., “Cross-Cutting Social Networks: Testing Democratic Theory in Practice,” American Political Science Review, 96, 2002, p. 111.

198 Mutz, identifies rich traditions in political philosophy and social psychology as general support for this view and offers a long tradition of empirical research bearing directly on the relationship, including Stouffer, Samuel, Communism, Conformity, and Civil Liberties (New York: Doubleday, 1955); Nunn, Clyde Z., Harry J. Crockett and J. Allen Williams, Tolerance for Nonconformity (San Francisco: Josey-Bass, 1978); Sullivan, John L., James Pierson, and George E. Marcus, Political Tolerance and American Democracy (Chicago: University of Chicago Press, 1982); Marcus, George E., John L. Sullivan, Elizabeth Theiss-Morse, and Sandra L. Wood, With Malice Toward Some: How People Make Civil Liberties Judgments (New York: Cambridge University Press, 1995); Altemeyer, Bob, The Authoritarian Specter (Cambridge, MA: Harvard University Press, 1997); Gibson, James L., Social Networks, Civil Society, and the Prospects for Consolidating Russia’s Democratic Transition (St. Louis: Department of Political Science, Washington University, 1999).

199 Valentino, Hutchings and White, p. 75.

200 Scheufele; Geiger, Wendy, Jon Bruning and Jake Harwood, “Talk About TV: Television Viewer’s Interpersonal Communications About Programming,” Communications Reports, 14, 2001.

201 The author underscores the significance of this process by reminding the reader (p. 57) that de Toqueville offered the “notion that political talk is the soul of democracy.”

202 Albarran, Alan B. and John W. Dimmick, “An Assessment of Utility and Competitive Superiority in the Video Entertainment Industries,” Journal of Media Economics, 6, 1993; Bennett, W. Lance and Regina G. Lawrence, “News Icons and the Mainstreaming of Social Change,” Journal of Communication, 45, 1995; McLeod, Douglas M., “Communicating Deviance: The Effects of Television News Coverage of Social Protests,” Journal of Broadcasting & Electronic Media, 39, 1995; Dimmick, John B., “The Theory of the Niche and Spending on Mass Media: The Case of the Video Revolution,” Journal of Media Economics, 10, 1997; Sparks, Glenn G., Marianne Pellechia, and Chris Irvine, “Does Television News About UFOs Affect Viewers’ UFO Beliefs?: An Experimental Investigation,” Communication Quarterly, 46, 1998; Walma, Julliete, H. Tom H. A. Van Der Voort, “The Impact of Television, Print, and Audio on Children’s Recall of the News,” Human Communication Research, 26, 2001.

203 Wilkins, Karin Gwinn, “The Role of Media in Public Disengagement from Political Life,” Journal of Broadcasting & Electronic Media, 44, 2000.

204 Clarke and Fredin; Robinson, John P. and Mark R. Levy, “New Media Use and the Informed Public: A 1990s Update,” Journal of Communications, Spring 1996.

205 The role of radio talk shows is the new development. Johnson, Thomas J., Mahmoud A. M. Braima, and Jayanthi Sothirajah, “Doing the Traditional Media Sidestep: Comparing Effects of the Internet and Other Nontraditional Media with Traditional Media in the 1996 Presidential Campaign,” Journalism & Mass Communication Quarterly, 76, 1999, find that nontraditional media do not have an impact on a variety of measures of knowledge and perceptions about the 1996 presidential campaign and to the extent they do, it was specifically radio talk shows, influencing views of Clinton negatively (see also Moy, Patricia, Michael Pfau, and LeeAnn Kahlor, “Media Use and Public Confidence in Democratic Institutions,” Journal of Broadcasting & Electronic Media, 43, 1999); Johnson, Thomas J., Mahmoud A. M. Braima, Jayanthi Sothirajah, “Measure for Measure: The Relationship Between Different Broadcast Types, Formats, Measures and Political Behaviors and Cognitions,” Journal of Broadcasting & Electronic Media, 44, 2000, juxtapose the earlier finding of a lack of influence for radio with more recent findings that radio talk shows have an impact. See also Stamm, K., M. Johnson, and B. Martin, “Differences Among Newspapers, Television and Radio in their Contribution to Knowledge of the Contract with America,” Journalism and Mass Communications Quarterly, 74, 1997.

206 Berkowitz, D. and D. Pritchard, “Political Knowledge and Communication Resources,” Journalism Quarterly, 66, 1989; Chaffee, S. H., X. Zhao and G. Leshner, “Political Knowledge and the Campaign Media of 1992,” Communications Research, 21, 1994; Drew, D. and D. Weaver, “Voter Learning in the 1988 Presidential Election: Did the Media Matter?” Journalism Quarterly, 68, 1991.

207 Stepp, Carl Sessions, “Whatever Happened to Competition,” American Journalism Review, June 2001: “Wasn’t it television and radio that were going to kill newspapers? ‘I don’t really consider them competition in that old-school way,’ stresses Florida Sun- Sentinel editor Earl Maucker. ‘They reach a different kind of audience with a different kind of news…’ “Publisher Gremillion, a former TV executive himself, seconds the point, ‘I don’t believe people are watching TV as a substitute for reading the newspaper…’ “…Many newspapers are increasingly writing off local TV news as a serious threat, treating local stations instead as potential partners who can help spread the newspapers’ brand name to new and bigger audiences.”

208 Sinclair, Jon R., “Reforming Television’s Role in American Political Campaigns: Rationale for the Elimination of Paid Political Advertisements,” Communications and the Law, March 1995.

209 Coulson, David C. and Stephen Lacy, “Newspapers and Joint Operating Agreements,” in E. David Sloan and Emily Erickson Hoff, (eds.) Contemporary Media Issues (Northport: Vision Press, 1998); Lacy, Coulson and Cyr.

210 Cornfield, Michael, “What is Historic About Television?”, Journal of Communications, 21, 1994, pp. 110-111.

211 Kunkel and Roberts, citing Walter Williams, “The Journalist’s Creed” (1914).

212 Hansen, Glenn J. and William Benoit, “Presidential Television Advertising and Public Policy Priorities, 1952–2002,” Communications Studies, 53, 2002, p. 285.

213 The studies cited in support of this proposition include Patterson, T. E., and R. D. McClure, The Unseeing Eye: The Myth of Television Power in National Politics (New York: Putnam Books, 1976); Kern, M., 30 Second Politics: Political Advertising in the Eighties (New York: Praeger, 1988); Brians, C.L. and M. P. Wattenberg, “Campaigns Issue Knowledge and Salience: Comparing Reception for TV Commercials, TV News, and Newspapers, American Journal of Political Science, 40, 1996.

214 Carter, Fico and McCabe, p. 42.

215 Brazeal, LeAnn M, and William L. Benoit, “A Functional Analysis of congressional Television Spots,” Communications Quarterly, 49, 2001, pp. 346-437.

216 In support of this proposition the authors cite Zhao, X. and G. L. Bleske, “Measurement Effects in Comparing Voter Learning From Television News and Campaign Advertisements,” Journalism and Mass Communications Quarterly, 72, 1995; Zhao, X. and S. H. Chaffee, “Campaign Advertisements Versus Television News as Sources of Political Issue Information,” Public Opinion Quarterly, 59, 1995; Patterson and McClure;, Kern; Brians and Wattenberg.

217 In support of this statement the authors cite campaign spending numbers on the order of a quarter of a billion dollars per election. See Jenkins, K., “Learning to Love those Expensive Campaigns,” U.S. News and World Report, 122, 1007; Sinclair.

218 In support of this statement the authors cite Joslyn, R., “The Impact of Campaign Spot Advertising Ads, Journalism Quarterly, 7, 1981; Mulder, R., “The Effects of Televised Political Ads in the 1995 Chicago Mayoral Election,” Journalism Quarterly, 56, 1979; and Pfau, M., and H. C. Kenski, Attack Politics (New York: Praeger, 1990).

219 Domke, David, David Perlmutter and Meg Spratt, “The Primes of Our Times? An Examination of the ‘Power’ of Visual Images,” Journalism, 3, 2002, p. 131.

220 The authors present a detailed social psychological and even neurological discussion of the reasons why and ways in which visual images have a greater impact, but the politically oriented research that they cite as consistent with their findings include Krosnick, J. A. and D. R. Kinder, “Altering the Foundation of Support for the President Through Priming,” American Political Science Review, 84, 1990; Pan, Z. and G. M. Kosicki, “Priming and Media Impact on the Evaluation the President’s Performance,” Communications Research, 24, 1997; Just, M. R., A. N. Crigler and W. R. Neuman, “Cognitive and Affective Dimensions of Political Conceptualization,” in A. N. Crigler (ed.) The Psychology of Political Communications (Ann Arbor: University of Michigan Press, 1996); Iyengar and Kinder.

221 Gwiasda, Gregory W., “Network News Coverage of Campaign Advertisements: Media’s Ability to Reinforce Campaign Messages,” American Politics Research, 29, 2001, p. 461.

222 Sources cited in support of the subtle interaction between advertising and coverage of advertising include: Kaid, L. L., et al., “Television News and Presidential Campaigns: The Legitimation of Televised Political Advertising,” Social Science Quarterly, 74, 1993; Ansolabehere, Stephen and Shanto Iyengar, “Riding the Wave and Claiming Ownership Over Issues: The Joint Effect of Advertising and News Coverage in Campaigns,” Public Opinion Quarterly, 58, 1994; Lemert, James B., William R. Elliott, and James M. Bernstein, News Verdicts, the Debates, and Presidential Campaigns (New York: Praeger, 1991).

223 Gwiasda, p. 461; Hansen and Benoit, p. 284.

224 While Zaller, J. R., The Nature and Origins of Mass Opinion (New York: Cambridge University Press, 1992) is cited as the origin of the hypothesis on effect, the author does note that Joslyn, M. and S. Cecolli, “Attentiveness to Television News and Opinion Change in the Fall of 1992 Election Campaign,” Political Behavior, 18, 1996, find that the most attentive are most influenced.

225 Benoit, William L. and Glenn Hansen, “Issue Adaptation of Presidential Television Spots and Debates to Primary and General Audiences,” Communications Research Reports, 19, 2002.

226 Federal Communications Commission, Initial Notice.

227 Notice, p. 32, provides the innovation discussion. “Further Notice of Proposed Rulemaking.” In the Matter of Implementation of Section 11 of the Cable Television Consumer Protection and Competition Act of 1992, Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, The Commission’s Cable Horizontal and Vertical Ownership Limits and Attribution Rules, Review of the Commission’s Regulations Governing Attribution Of Broadcast and Cable/MDS Interests, Review of the Commission’s Regulations and Policies Affecting Investment In the Broadcast Industry, Reexamination of the Commission’s Cross-Interest Policy, CS Docket No. 98-82, CS Docket No. 96-85, MM Docket No. 92-264, MM Docket No. 94-150, MM Docket No. 92-51, MM Docket No. 87-154, September 13, 2001, Para 36, issued on the same day as the original notice in the media ownership proceedings makes reference to Schumpeter in this discussion. The Chairman had made similar references to monopoly and innovation in his Broadband Migration speech and the argument appears word for word in the FCC’s draft strategic plan (October 1, 2002).

228 Information Policy Institute, “Comments of the Information Policy Institute,” In the Matter of 2002 Biennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Cross Ownership of Broadcast Stations and Newspapers, Rules and Policies Concerning Multiple Ownership of Radio Broadcast Stations in Local Markets, Definition of Radio Markets, MB Docket No. 02-277, MM Dockets 02-235, 01-317, 00-244, January 2, 2003 (hereafter, Information Policy Institute), pp. 53-59.

229 Id., pp. 46-52.

230 Consumers Union, et al., “Initial Comments of Consumer Federation,” et al., Cross Ownership of Broadcast Stations and Newspapers, MM Docket No. 01-235, December 4, 2001.

231 Cooper, Mark, Cable Mergers and Monopolies: Market Power Digital Media and Communications Networks (Washington, DC: Economic Policy Institute, 2002).

232 Baker, Media Markets, p. 120.

233 Baker, Democracy, p. 75, describes the loss of valuable content as the result of mergers as follows: “The idea is, for example, that the merged entertainment company can benefit by presenting the same highly promoted fictional character in new mediums – in a theatre released movie, a television show, a book, a magazine excerpt, a musical CD based on the movie sound track, and especially in the case of children oriented media, as material representations or as characters in computer games. By clever placements, the enterprise can cross promote its various products – the broadcast news division or the magazine can do stories about the release of the enterprise’s outstanding new movie or television show, or do in depth reports about the program’s star characters, or about the Oscar or Academy award competitions, or other related matters of “great public concern.” Or the combined local broadcast station and newspaper can share reporters, thereby reducing the outlays necessary to report on local affairs, or can at least require its reporting staffs to cooperate, thereby reducing the cost of each entity doing the reporting from scratch. “Profitable, however, does not mean in the public interest. Often these ‘synergies’ or efficiency ‘gains’ occur by creating market-dominating media goods that, although profitable for the firm, may provide less value to the public than would the media goods they drive out of existence. In other cases, these synergies result from eliminating alternative pre-merger productive activities that provided significant positive externalities.”

234 Id., p. 85: “To perform these, different societal subgroups need their own media. Admittedly, these subgroups (or their members) may not necessarily need to own or control their own independent media. Avenues of regular and effective media access might suffice. Still, much greater confidence that the media will serve the democratic needs of these groups would be justified if ownership or control was so distributed.”

235 Id., p. 87: “This plurality of media structures may provide security in that neither corruption that comes from government nor corruption that comes from the market is likely to be equally powerful within or equally damaging to all the organizational forms. For this reason, such a plurality of organizational structures will likely advance the media’s checking function. Moreover, this diversity of media structures is likely to enable the media to better perform its multiple democratic assignments.”

236 Berry, Steven and Joel Waldfogel, Mergers, Station Entry, and Programming Variety in Radio Broadcasting (Washington, DC: National Bureau of Economic Research, 1999); George, Lisa, What’s Fit to Print: The Effect of Ownership Concentration on Product Variety in Daily Newspaper Markets (unpublished manuscript, University of Michigan, 2001). The Berry and Waldfogel analysis shows that radio market suffered a much larger loss of owners than they gained in formats and the gain in formats were hybrids (close to existing formats). There was no increase in listening. Similarly, the loss of owners exceeds the gain in variety in the newspaper markets with a very small increase in circulation. The variety gains in the newspaper study appear to have been limited to the largest, least concentrated markets.