TCS Daily


Murdoch Is No Threat to Democracy, but Media Protectionism

By Karen Horn - December 3, 2007 12:00 AM

Rupert Murdoch's August takeover of Dow Jones prompted a host of panicky
questions: Can we really afford to have someone as politically slanted as the Australian media tsar running the Wall Street Journal? Will Murdoch open the doors to sensationalism, populism, partisanship, and manipulation? And especially: Aren't the news media too important politically to be left to...the media business?

While concerns about the Murdoch deal were understandable, they were vastly overblown.

At root is the unquestioned assumption that Murdoch would sacrifice the depth or objectivity of the Wall Street Journal's esteemed reportage in favor of profits or political bias--and that American Democracy will suffer significantly because of this.

True, a free and vigorous press is paramount to a properly functioning democracy. The media provide citizens with information about policies, politicians, and parties. They are political watchdogs, and they work as multipliers and agenda-setters. Consequently, reporters have long been celebrated in popular culture. But overly mythologizing the media's role in the political process risks provoking a backlash when the public's high expectations aren't met.

Evidence from opinion polls suggests that this already may have begun to occur. A 2006 survey by the BBC, Reuters, and the Media Center found that more respondents distrusted the media (41 percent) than distrusted the government (33 percent). Such dissatisfaction may bode poorly for a free press. According to a 2002 article in American Journalism Review, 42 percent of Americans surveyed believe that the press in the United States has too much freedom.

Granting media outlets special protections from market pressures would be unlikely to restore public confidence. Indeed, it would reinforce perceptions of the media's self-importance--while ossifying the practices that have driven many customers away. On the other hand, keeping the media industry open to takeovers from rivals and upstarts serves to ensure its long-run vitality and esteem.

One source of apprehension about the free market in media ownership stems from a particular economic notion about public goods and "market failure." Allegedly, media companies don't provide society with enough useful information because, as business enterprises, they must offer a profitable mix of information and entertainment in proportions that fail to take the public interest into account. The outcome resulting from a business's bottom-line orientation, however, can't be assumed to be a "market failure."

The reason is that we simply cannot presume to know in advance precisely what kind of information, and how much of it, a media outlet should produce. Market forces of supply and demand, however, can suggest that media owners may be reporting too much or too little--or, as may have been the case with the Wall Street Journal, that they may have fallen behind the technological curve in their delivery of financial information.

Acting on those often subtle signals is a risky endeavour best left to entrepreneurs, not government bureaucrats. To ask government to decide when media markets have failed to give voters and consumers the "right" amount of useful information is to insulate the media from the self-corrective pressures of market forces, leaving them dangerously exposed to political influence.

Government interference to ensure "diversity" in editorial content is not only unwise, it's unnecessary. In a 2002 study for the Federal Communications Commission, University of Wisconsin professor David Pritchard found that integrated news companies such as Murdoch's News Corp. may find it worthwhile to enlarge their publishing program in order to cater to differing needs. In such an instance, variety would increase rather than decrease with concentration of media ownership.

Focusing on the coverage of 17 television channels and newspapers that were owned by the same companies during the 2000 presidential election campaign, Pritchard found that in 50 percent of the cases, the TV channels and newspapers took the same positions. For the other 50 percent, however, Pritchard found diversity, that is, either a noteworthy difference or even explicit opposition in the general slant of the TV channel and the newspaper. This proves that as a rule, media conglomerates don't necessarily manipulate opinions; rather, they follow their respective customers.

Even Rupert Murdoch cannot escape this economic truth. Why would he drive away the demanding, faithful readers of what could become his flagship newspaper? He's an astute businessman, after all. So we shouldn't worry all that much. While readers of the Wall Street Journal may wish to take special notice of what transpires under Murdoch's watch, federal regulators should not. Media markets should be governed by the same rules as any other market. Assuming otherwise is precisely what puts the institution politically at risk.

Karen Horn is the incoming head of the Berlin office of Institut der deutschen Wirtschaft. The article draws from a longer piece she wrote for the Summer 2007 issue of The Independent Review (www.IndependentReview.org), the quarterly journal of The Independent Institute, Oakland, CA.


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27 Comments

Murdoch
I think most of the fuss is because the mostlyleft wing media hates any competition. Look how they hate it that FOX news actually puts liberals and consveratives to discuss an issue. The MSM prefers just the liberal side to be put out there.

They also have this stupid notion of newspapers having some sort of social responsibility, a vague notion to promote their own biases. But I think it was the WSJ, about 20 or 30 years ago already, I remember them having the same debate and they bravely came out and said the only responsiblility they had was to make their customers happy and make money, since unlike an organ of the goverment like PBS, BBC etc. the WSJ is actually..... heavens above......a business.

RIP, WSJ
The concern here is that the WSJ will get dumbed down.

Murdoch has quite a track record for dumbing down those media vehicles he buys. And at present the WSJ is, editorially speaking, an intelligently capitalist voice. What many are worried about is that it will turn into an ignorantly right wing voice, a la FoxNews.

Equally grave is the potential for damage to their news division. The WSJ is unparalleled for the depth and accuracy of their new section. If any harm comes to this, we all suffer. All of us, at least, for whom access to actual facts is important.

The industry-wide pattern we have seen in this latest wave of for-profit newspaper consolidation is that the new publisher gives the editorial staff a mandate to cut costs above any other value. That means the roster of reporters is trimmed, and good reporters get put on the street. The fewer column inches of actual news that results are filled in with fresh advertising-- so the paper can do what all companies are supposed to do, and somehow show an increase in profits each quarter.

This kind of thinking has destroyed a lot of good papers-- the LA Times springs to mind. And no person in the publishing world is more associated with this kind of dumbing down than is Rupert Murdoch.

It's sad-- the WSJ was always a fine newspaper.

Market demands objective news
Anyone that can be a source of objective news and maintain a reputation for such objectivity will have a large market share.

translation
companies bought by Murdoch have on occasion, become less strident in their liberalism. Which according to liberal dogma, is equivalent to becoming dumbed down.

I'm glad you think...
... the Wall Street Journal will become less strident in its liberalism.

What I was thinking of was fewer column inches of news.

Party Discipline
It's not the populism that gives me the willies- that's advertising demographics at work.

It's the bust of Lenin that graced Rupert's college shelves

What's the difference between MarkTheGreat and MarkTheAdequate?
...

the problem is
you think that propaganda is news

MarkTheAdequate is another of eric's split personalities
...

dumbing down?
Do you mean as much as he dumbed down the London Times?

What an asinine thing to say
So you think the news division of the Wall Street Journal is giving us propaganda?

Support that statement.

A fair question
I've never read the Times, either before or after 1981. So I wouldn't be able to say.

This author, however, seems to think quality and objectivity were unchanged:

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/non-fiction/article784725.ece

I find it amusing that people care who owns the WSJ?
This is the age of new media COMMONLY CALLED THE INTERNET!!!! Old media is still trying to find a place for itself. This is especially true for news providers as they have been hardest hit by the advent of internet news.

Enter a genius like Murdoch who has unique talents in the area of managing news, sports and entertainment companies, especially old media type companies.

Murdoch would not have bought the company if he did not think he would make money on the deal. And more importantly, old media is changing no matter what the regulators or wishes want. So in a few years the WSJ would not be the same as it is now reguardless of what Murdoch does.

please try to read what was written roy, and don't let your prejudices get in the way again
I never said that the current output of the WSJ is propaganda.

I said that you believe that liberal propaganda is the equivalent of news.

It's right there, a 3rd grader could have figured it out.

Fox News as opposed to CNN?
So if a news agency presents any view other than the liberal agenda it is a ignorant right wing agency AKA Fox? As opposed to CNN which plants Clinton supporters to ask questions at a Republican debate or the softball fluff asked of the Democrats by the unbiased MSM? As opposed to the NY Times which is losing both money and readers because of the absolute blatent bias?

I read the WSJ everyday. I do not expect any changes.

Really?
Have not seen Leeming lately, did he tire of being sexually abused?

We don't
Only the left does. Like any media enterprise, liberals cannot compete in the arena of ideas and thus they are afraid that they will lose more of there once monopolistic grip on what Americans think.

The greatest fear of the left is people who think for themselves.

Think I am kidding? Why the rise of Fox and Radio? Seen any liberals on talk make it?

I disagree
"A 2006 survey by the BBC, Reuters, and the Media Center found that more respondents distrusted the media (41 percent) than distrusted the government (33 percent)."

That is surprising. I would bet the incessant attack on media by the right-wing is a big reason. Just read through these posts above and count how many times people whine about liberal MSM. Conservatives are thoroughly programmed to bash the media as liberal and slanted. I bet if they segmented that sample by political ideology the number would be 95% of conservatives distrust the media. The sheep are lined up neatly on this message.

I'd love to see some comparisons of national media outlets with local outlets, including locally owned versus corporate-owned, and see what the numbers show. It'd be very different I'd guess.

"Such dissatisfaction may bode poorly for a free press. According to a 2002 article in American Journalism Review, 42 percent of Americans surveyed believe that the press in the United States has too much freedom."

Too much freedom?? Thats perplexing.


"Granting media outlets special protections from market pressures would be unlikely to restore public confidence. Indeed, it would reinforce perceptions of the media's self-importance--while ossifying the practices that have driven many customers away."

Thats very misleading. I don't see any comment that all the takeovers and mergers are a reason for the public's drop in confidence of the media. Five or six years ago the discussion was about how consolidation was pushing original content generation out the door in favor of wire services and canned news reporting. How can someone write a serious article about this subject and not even mention that fact? That is the biggest criticism there is for more media consolidation.

"On the other hand, keeping the media industry open to takeovers from rivals and upstarts serves to ensure its long-run vitality and esteem."

Except that takeovers have led to the decline in esteem. Vitality has more to do with new media and fragmentation of audiences. Why mention upstarts? They have no hurdles that would be removed by allowing more cosolidation.


"One source of apprehension about the free market in media ownership stems from a particular economic notion about public goods and "market failure." Allegedly, media companies don't provide society with enough useful information because, as business enterprises, they must offer a profitable mix of information and entertainment in proportions that fail to take the public interest into account. The outcome resulting from a business's bottom-line orientation, however, can't be assumed to be a "market failure.""

Thats also misleading. Bottom-line orientation IS a problem for an organization that performs as a public watchdog. It is a conflict of interest. But media has done very well over the decades at striking a balance between those functions. It was easy because media companies were awash with cash well into the 90's, especially in the 90's. But then cable tv went from 40 channels to 150, digital cable, satellite cable, satellite radio and the internet- all those things came into their own and audiences have continued to fragment ever since. It got tougher for media to maintain the bottom-line, so consolidation kicked into gear to find efficiencies and get the profits back.

Thats reality. I wouldn't call it a "market failure" and I've never heard anyone else refer to it that way. Its become easier to scrutinize media because the balance has tilted because media isn't the cash cow it used to be. The bottom-line is more of a focus now, consolidation is a result of that focus, the quality of traditional news has declined as a result. The main reason people read newspapers is for local news. When a local newspaper is bought out by a national corporation they cut expenses, they use wire services more and do less original reporting. Thats how the quality declines.


"Government interference to ensure "diversity" in editorial content is not only unwise, it's unnecessary. In a 2002 study for the Federal Communications Commission, University of Wisconsin professor David Pritchard found that integrated news companies such as Murdoch's News Corp. may find it worthwhile to enlarge their publishing program in order to cater to differing needs. In such an instance, variety would increase rather than decrease with concentration of media ownership."

So a study finds a corporation would find it worthwhile to enlarge their publishing program in order to increase diversity. Yet in reality when a corporation increases its publishing program (buys more media companies), it leads to less diversity. ... So go with the theory to support your position? Thats such a right-wing thing to do.


"Even Rupert Murdoch cannot escape this economic truth. Why would he drive away the demanding, faithful readers of what could become his flagship newspaper?"

He wouldn't. They're already going away to get what they want on the internet. What you'd see is fewer WSJ reporters and more stories directly from Fox News going into the WSJ. You'll see more slant and less original reporting. Thats how media owners improve the bottom line. The growth has to come from somewhere, its not coming from growth in audience.


I don't like the idea of the government putting limits on the market, but in this case I think we've seen enough evidence in reality to support keeping the rules as they are. The market has changed, allowing more consolidation would speed the trouble traditional media faces in staying profitable. Traditional media is responding to market changes on its own, albeit slowly, limits on consolidation give them some breathing room to respond AND is whats best for consumers.

And others may disagree with me, but I value private ownership more than corporate ownership. A privately owned local newspaper or tv station are better products and better media companies than large, corporate-owned media companies.

typical liberal perspective
The problem is not that most people see the media as liberal and therefore untrustworthy. No, it's that those evil rightwing guys have been badmouthing the press.

Fact is
the editorial hole is likely to shrink. It's happened in every other paper Murdoch's taken over. Generally he doesn't mess with the editorial content very much; much less so than some press barons like Conrad Black. So it's not likely that the WSJ will change it's outlook very much, only the amount that it produces.

The WSJ is most likely to follow the flagship model under Murdoch ownership. When he took control of the London Times, he didn't dumb it down. He shrank the newshole somewhat, increased its advertising and got it mostly out of the red. The real moneymakers remained trash tabs like the Sun. Same here. Prestigious papers like the WSJ lend respectability to an empire that makes most of its money from things like the NY Post, which by itself is far more respectable than the tabloids in Britain.

Thing to remember about Murdoch is that he has a consistent business model which he applies or tries to apply in every market he's in. Can probably expect to see much more on-line presence from Dow Jones and much more material in some of his other pub's from WSJ.

Not really
See my reply to Mark. Murdoch doesn't dumb down his flagships. And no, Dietmar is wrong about the Times being dumbed down. Fact was in the early 80s the Times was unbearably elitist and massively losing readership. What Murdoch did was to try to get back for the Times the role of leading national newspaper which it had been losing to the Guardian and the Telegraph (left and right, respectively).

Murdoch is most resented not because of dumbing down publications (the British tabloids were repulsive long before Murdoch came along), but for his breaking the British letterpress union (a long overdue comeuppance).

Not quite the point
The public distrusts the media not just because of perceived ideological bias. They distrust the media because to an increasing extent it is that the media is incapable of providing accurate reporting based on fact. People do have an understanding of the difference between fact and opinion. The failing of the mass media in recent years has a number of roots, too much focus on "human interest", and an increasing number of reporters who have no background in the material they cover (mostly a result of shrinking newsrooms and increased number of general reporters rather than long beat coverage). Because of this lack of capacity on the part of reporters, they tend to cover personality and politics because it's a quicker and glitzier hit than the hard and tedious work of plowing through issues.

The public wants coverage on issues and so it's been turning elsewhere. Perceived political bias is a part of the disenchantment but a lesser part.

Private vs. corporate ownership? Sometimes yes, sometimes no. The Telegraph in Britain was utterly elitist and almost unreadable unless you were a member of the privileged class. Getting private ownership out was the only thing that saved it. There's really no useful generalizing here.

Good point ColinH
I think you're right. Thats a point I missed. And the author for that matter.

But I do differentiate between small and large newspapers on this point. Small newspapers have an audience that wants the parochial stuff, the human interest stories. They don't read the small local paper for hard news. But the bigger papers, and maybe this is a factor of big cities, most surely suffer from the point you make. People do read the big papers for hard news, I'd agree more focus on opinion and human interest has hurt their appeal.

I do think perceived political bias has been very instrumental also. Its a part of American culture now that MSM is liberally biased. Its repeated SO, SO often, people who don't care a lick about it even have that perception. It is probably THE most common message spread by people of a right-wing mindset. The power of that shouldn't be taken lightly.


"They distrust the media because to an increasing extent it is that the media is incapable of providing accurate reporting based on fact."

I see consolidation as a major factor contributing to this. Media doesn't spend the time and resources to get the facts because they're understaffed, because they cut staff to improve the bottom line. Not that it ONLY happens within consolidation. Almost always, when a privately owned newspaper is purchased by a corporation, its generally the first thing to happen. Cut staff, cut back on original reporting.


I think the example of The Telegraph in Britain is an exception more than the rule. It sounds like it was a niche publication more than a mass media product.

Thats an understatement
You got it partly right.

A few things
About the Telegraph, the newspaper world in Britain is quite different than that of the US. The Telegraph was and is Britain's leading national conservative newspaper. In Britain however, that means a newspaper that plays to the upper classes and propertied rural types. It reflected a Britain where aristocracy still mattered. It operated on a mass market basis but was seriously out of touch with most of those who read it.

It's still Britain's leading conservative paper, but it's come much more into the mainstream than from 20 years ago.

With respect to the US, there is a perception of left wing bias, and to a certain extent that may be true at least anecdotally. The Dan Rather affair didn't help matters. What's really the point however is the growth of bias of any fashion. The public wants information, and they expect to find commentary on the editorial page, not riddled throughout the news columns. The newspapers have been driven to this in part by television which packages up opinions because in a 30 second clip you can't convey useful information.

To a certain extent then, this is only partly a left-right bias issue. More extensively, its how the electronic media, particularly television and talk radio have degraded news gathering and dissemination, forcing newspapers to follow suit.

to Colin re not really.
No, you didn't understand, I was being, what is it, fecetious or whatever you call it. But seems like Roy understood, and I meant the London Times was NOT dumbed down.

About
the sarcasm, I appreciate that now Dietmar. I admit I was fooled, your delivery in your original post was so deadpan. I think we both agree that Murdoch doesn't dumb down his flagship publications, he does that with the trash tabs which are the real moneymakers.

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