TCS Daily


What Ever Happened to the Big Media Boogeyman?

By Adam D. Thierer - June 20, 2005 12:00 AM

Remember when a handful of media companies were supposedly going to take over the world and program our brains? Back in 2000, for example, a number of folks were running around saying that the media sky would fall after Time Warner and AOL announced their mega-merger. As Reason journalist Matt Welch has noted, when the deal was announced, the Chicken Little crowd came out in full force with claims that the AOL-Time Warner deal represented "Big Brother," "the end of the independent press," and a harbinger of a "new totalitarianism."

But it turned out that AOL-Time Warner was "the Big Brother who never was," as Welch put it. In fact, by April of 2002, just two years after the marriage took place, the firm had reported a staggering $54 billion write-down in the worth of the company's combined assets and a $200 billion loss in stock market value. By September of 2003, Time Warner decided to drop AOL from its name altogether. More recently, Time Warner CEO Dick Parsons has hinted that he would consider entirely spinning off AOL as a separate stock if the division's latest business strategy doesn't work. And what is AOL's latest business strategy? Giving away most of its content. That sounds like the impact of intense competition to me, but some people still claim that Time Warner is part of a "New Media Monopoly."

Two years ago, those same "media monopoly" concerns prompted a great deal of hand-wringing following the Federal Communications Commission's (FCC) revision of its rules governing media ownership. Although the FCC's order only moderately relaxed the existing regulations -- and even retained or strengthened some of the rules under consideration -- many groups and lawmakers mounted a vociferous campaign to overturn the revisions alleging that media ownership liberalization would result in more industry consolidation, less "diversity," the "death of localism," and a "threat to democracy." During the debate on the House floor over the rules, for example, Rep. Lynn Woolsey (D-Calif.) said the FCC's tweaking of the rules was an attempt to impose a centralized "Saddam-style information system in the United States." Other lawmakers expressed their opposition to the new rules by making references to the movie Citizen Kane, or referred to the new rules as "mind control" that would result in Soviet Union-esque control of the media. Things got so out of hand that, at one point, big media cry baby Ted Turner compared the popularity of the Fox News Channel to the rise of Adolf Hitler prior to World War II.

OK, now let's flash-forward to the present. What a difference a few years makes. Today's headlines about the media industry all scream one consistent message: Traditional media providers and outlets are in big trouble. A recent issue of The Wilson Quarterly featured a cover story / symposium on "The Collapse of Big Media." The Christian Science Monitor recently ran a story entitled, "Newspapers Struggle to Avoid Their Own Obit," which was ironic since the CSM is currently undergoing major changes and is rumored to be considering a switch to an all Internet-based format. In an editorial entitled "Death to the Networks," Broadcasting & Cable magazine posits that several of the traditional TV networks may be extinct within the next few years.

What has happened over the past few years to lead to such a stunning reversal of fortunes for traditional media? The Age of Scarcity has given way to the Age of Abundance. The code words for our new media environment are customization, personalization, choice, competition, and, above all, abundance. Citizens now enjoy more news and entertainment options than at any other point in American history or human civilization.

These developments were well underway when the AOL-Time Warner deal and the FCC ownership revisions were announced, but many still feared that the old media giants would just buy up everything in sight and stifle the new forms of competition and choice. That fanciful scenario never developed, of course. Indeed, since the time of AOL-Time Warner, old media operators have done a stunning about-face and engaged in DE-consolidation maneuvers to get back to basics and salvage some value out of deals gone wrong. As a result, beyond the gradual disintegration of AOL-Time Warner, we have seen divestiture moves or spin-off proposals by many large media operators over the past year, including: Viacom, Clear Channel, Disney, Emmis Commnications, Liberty Media, and Cablevision just to name a few.

In some cases, the "synergies" that many media operators hoped for simply did not develop. In other cases, technological change and the rapid evolution of the media marketplace overtook them and nullified any advantages that might have been gained from the mergers.

Regardless, this is an example of a well-functioning, dynamic marketplace at work. Media critics seem to think that any merger or acquisition is all just part of some sort of grand conspiracy to destroy democracy or competition, but in the end, things sort themselves out and we end up with an ever-expanding universe of media options at our disposal. Indeed, ask yourself a simple question: Do you have more media options and outlets at your disposal today than you did 5 to 10 years ago?

It's safe to say that the "mass media meltdown" we are witnessing today will likely continue and perhaps even accelerate. With traditional media operators and industries (books, magazines, newspapers, television, radio, CDs, etc.) experiencing rapidly declining audience share thanks to substitution by new forms of digital media (Internet, blogging, mobile devices, DVDs, video games, i-Pods, satellite radio, etc.), we can be sure that the media environment five years from now will look radically different than it does today.

Of course, that process may be accelerated -- and unfairly so -- by the continued existence of a complex web of FCC regulations that burden just the older media outlets. Thus, old media operators are struggling to reinvent their business models and offer consumers new products and services that fit their more demanding media needs, but they are being forced to make this gut-wrenching transition with one arm tied behind their backs.

The real danger here in not just that asymmetrical FCC regulations will doom old media players to an early extinction, it is that -- in the name of fairness and "leveling the playing field" -- the old rules gradually come to incorporate new media outlets and technologies as well. The current debate about the applicability of campaign finance regulations to the Internet and blogs in particular foreshadows many other debates to come about media policy for the Age of Information Abundance. Do we need children's programming mandates for IPTV (Internet protocol television) operators? How about indecency regulations for satellite radio and cell phones? Should politicians get free airtime for ads and debates on all these new digital outlets? And so on.

Of course, in the Age of Information Abundance, why do we really need any of these rules anyway? The question of who owns what or how much they own is irrelevant in a world of information overload. In such an environment, it is fundamentally unfair to impose asymmetrical regulations and ownership controls on one class of information providers while leaving others completely free to arrange their affairs -- and, by extension, their speech -- as they wish.

Adam Thierer is Senior Fellow at the Progress & Freedom Foundation (www.pff.org) in Washington, D.C. and Director of PFF's Center for Digital Media Freedom. He is the author of Media Myths: Making Sense of the Debate over Media Ownership.

Categories:
|

TCS Daily Archives