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August 27, 2003
Defending media deregulation
John Berlau argues in the WSJ that if Congress overrides the FCC decision to ease media ownership rules that Bush should follow Reagan's example and veto, and I agree with him.
But Mr. Reagan, despite being savaged on the nightly newscasts of the liberal "Big 3" TV networks, stood firm on free-market principle. He vetoed the bill restoring the fairness doctrine on June 19, 1987, and issued this stirring defense of media deregulation in his veto message: "[H]istory has shown that the dangers of an overly timid or biased press cannot be averted through bureaucratic regulation, but only through the freedom and competition that the First Amendment sought to guarantee."
Isn't it a threat to democracy for 3-5 companies to control almost all major TV, radio, and print outlets?
Free-market fundamentalism doesn't seem healthy at all when you're talking about the only industry which is specifically mentioned in the US Bill of Rights as being key for a well-functioning democracy.
Its a myth that large complex industries such as media and energy don't need well-designed rules to ensure competition. For instance, this week's WSJ had an interesting survey on why the energy market failures such as California happened when markets weren't well-structured with rational rules.
In the case of media, the trend for a totally unregulated market is more and more consolidation to enable cross-selling of ad space across media outlets, and ultimately to force advertisers to pay higher prices. The marketplace of ideas suffers since fewer and fewer people then have control over the outlets most people read/hear/watch. I think ClearChannel demonstrates this quite nicely in radio.
No, it's a threat to freedom when the state dictates rules for who can own media. And it's a myth that the government is needed to ensure competition. This is a fantasy that has never been proven by the facts. And don't be fooled, often regulations intended to "preserve competition" are merely sops to corporate constibutors who are trying to buy their way into markets through politicians.
The energy example is a classic one of an industry that has been so screwed over by countless rules and regulations, most of them extracted by politicians conceeded to a multitute of special interests, that is simply CAN'T behave rationally. Why was there a huge blackout on the east coast? The answer seems to lie in the underbuilt transmission system, which is underbuilt precisely because it is the most regulated component and there is no incentive therefore to improve it. Why could Enron "game" the CA electricity market? Because silly rules, such as spot market pricing and consumer price regulation, gave them the tools to do so.
The truth is that conslidating ownership may in fact be the best thing for diversity of content. So often it is taken as a fact that these things are naturally opposed. But the truth is that most local programming stinks because local stations don't have the resources to invested in both local and non-local programming. Consolidating may in fact bring the resources needed to allow richer local programming. Or it may not--no one realy knows, perhaps. And that's the point. We should be free to decide.
In terms of the threat to democracy, as I say only the government can threaten democracy. You always have the right to change the channel, or stop watching TV and listen to the radio, read a paper, or visit with that vast digital ombudsman we know as the Internet.
Do you agree that complete deregulation of the media today would result in a merger spree? We've got ClearChannel in the radio market as a clear example. Its pretty predictable that you'd end up with 4 companies buying up almost every independent newspaper, radio station, and TV station in the country.
I think the media industry is unique in that it shapes public opinion. Letting a handful of companies have that much power just doesn't make sense to me. But then we hav a fundamental disagreement over the issue of whether or not democracy is the only institution that can threaten democracy; I would argue private institutions can also pose a threat to democracy.
Perhaps full media deregulation would result in a merger spree (though that is far from what has been proposed by the FCC.) But it will be impossible to create a defensible media monopoly. Even if local TV and radio were owned by one company (a ludicrous impossibility), you have cable, you have sattelite, and of course just watch rich media on the Internet take off if our traditioal choices become too limited.
However, I'd say that if I'm wrong, if we end up with one or two companies owning EVERYTHING--Internet too--then perhaps some trust busting will be in order. But look--when we were kids there were three TV stations of any reach. Now there are hundreds. Explain to me how we are going in the wrong direction here? It's time for some freedom, not more state control.