In a recent article, I discussed the issue of “Net Neutrality,” which up to this point has maintained a level playing field for users of the Internet. That concept is under attack by corporate conglomerates that seek to divide Internet users into categories and be free to charge users arbitrarily. A related issue currently under consideration in Washington is the merger of two large media companies, AT&T and Time-Warner. There are few things on which I agree with President Trump, but on this issue I’m in agreement with him – although perhaps for different reasons. Among other things, Trump says the merger of AT&T and Time-Warner narrows the channels for communication and gives one company way too much power. I have to agree: it’s a most unhealthy situation for the economy, and more importantly, for a democracy. As to why it’s unhealthy, the answer is simple: AT&T already owns Internet distribution media, from wireless to cable to fiber and satellite. Now they’re after the media production generated by Time-Warner’s HBO and other outlets. Of course, they’d add Time Warner’s cable system to their own, too.
The merger would create a megacorporation which will own not only the production companies, but the distribution system. That’s called “vertical integration.” Some vertical integration is good, and Apple Computers does it to maintain strict quality control over their products. But they’ve got very active competition from the large number of Windows-based hardware and software producers. (The history of the competition between Apple and PC-based systems is itself interesting.) When vertical integration creates a situation in which there is a monopoly or a cartel which limits competition, they can set prices without any resistance except for what the traffic will bear. That’s not good for the buying public. That’s why the Supreme Court broke up John D. Rockefeller’s Standard Oil company in 1911. Standard Oil owned the oil wells, the refineries, and the gas stations, and used its economic clout to coerce railroads into giving them better prices than their competitors. In other words, Standard Oil used its power to create a monopoly and block out competition. It’s also a reason why the government broke up the original AT&T’s Bell Telephone Company (“Ma Bell”) into a series of regional telephone companies (“Baby Bells,” like BellSouth.) Now, with rampant deregulation and lax enforcement of anti-trust laws, we’re once again seeing consolidation in many industries, and with it economic power that is uncompetitive and unhealthy for the economy at large.
But beyond pricing, there’s also the very real danger in media consolidation of limiting access to information. Good information, that is; not rumors or outright propaganda. It’s an odd situation: in a time where there are many sources of news, we have to worry about which reports are accurate and which are fake. The only way we can assure that we’ll continue to have access to accurate information is for there to be many competing sources so that we can judge, based on their track records, which sources are accurate and which are not. Media consolidation is equivalent to a few companies buying up all the printing presses and deciding what will be published, and we’d have to trust them to provide accurate news.
One of the things the Communications Act of 1934 did was to control radio broadcasts through various technical means and regulations, like limiting the power, the frequency, and range of transmitters. Before that legislation, broadcasters could build transmitters that were powerful enough to drown out and block other stations across the country, especially at night. The 1934 legislation gave the Federal Communications Commission the power to limit broadcasters to specific levels of power, frequency, and even direction of their signal, and that in turn enabled smaller radio stations to thrive. In addition, the Act limited ownership by one individual or corporation to just 3 media outlets in any given media market: 1 AM station, 1 FM station, and a TV station. Since newspapers and telephone companies were also considered media, they could be part of the mix, but ownership within the market was still limited to just 3.
In 1975, the FCC tightened ownership rules by forbidding ownership of both a radio station and a newspaper in the same market. Nevertheless, the 1934 rules held sway until the Telecommunications Act of 1996, which overhauled the regulation of media distribution and recognized the importance of digital media. Among other things, it expanded considerably the number of radio stations that could be owned within a media market. Another important change was allowing cross-media ownership, which meant that one person or corporation could own multiple media businesses. That move, combined with greatly relaxed anti-trust enforcement, has enabled media conglomerates to form and grab up media outlets of all kinds.
The Internet is new technology by which all sorts of media can be distributed in digital format. Movie theaters that once projected films from reels of 35mm and 70mm film delivered by truck now receive new movies over the Internet and store them on digital devices. Small radio stations now broadcast music, news, talk shows, and even commercials that are sent in digital format and distributed by satellite. Print publishers now send books, magazines, and newspapers in digital format to printers that use computers to prepare and even print materials. Meanwhile, media and telecommunications conglomerates continue to merge to form even larger conglomerates. According to an article in an October 2017 issue of Business Insider, in 1983 50 companies controlled 90 percent of the media. Currently, that number has been reduced to just 6 companies controlling 90% of everything we read, watch, or listen to.
Unbridled business consolidation has not served the American people well in the past. This time, with all media passing through the Internet and fewer and fewer companies controlling more and more of the information flow, our democracy is at stake.