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Dumb and Dumberer 

Why the FCC shouldn’t consolidate without concessions

Thursday, May 29 2003
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Imagine a movie advertised as a thriller but lacking suspense, with a plot where the bumbling heroes reward the big bad villains in the end. Little wonder that the script for the FCC’s coming attraction this summer — that June 2 meeting certain to relax longstanding ownership restrictions on Big Media so it can become Monstrous Media — is earning a "thumbs down." What was needed to save the day was Indiana Jones; what we got was Dumb and Dumberer.

It didn’t help that, from beginning to end, the Federal Communications Commission’s about-to-be-formalized decision to favor the moguls seemed a foregone conclusion. Or that it was masterminded by The Son Also Rises — a.k.a. Michael Powell, Colin Powell’s son, the former chief of staff of the Justice Department’s antitrust division who sounded at his first congressional hearing not like the head of a regulatory body but, in the words of one Democratic senator, "the executive vice president of the U.S. Chamber of Commerce" representing the five most powerful media companies. Together, AOL Time-Warner, Disney, Viacom, News Corporation and General Electric control nearly 90 percent of the media outlets that Americans watch. Because of Powell’s ideological intransigence, and Republican control of the five-member commission, the major media conglomerates can further consolidate their stranglehold over our local and national airwaves as well as the infotainment industries.

How stupid of us that the mere mention of the FCC has been the discursive equivalent of Sominex. If only the public had stayed alert to the provision of the 1996 Telecommunications Act requiring the commission to conduct a biannual review of the six rules dictating the amount that the national media can be controlled by a single company. Or awake long enough to see the nightmare of a supposedly open process of opinion gathering by an agency which held only one official public hearing (the rest were unsanctioned) and incurred a perfectly legal if ethically lax $2.8 million tab in travel and entertainment expenses over the last eight years paid for by the very industries it regulates (according to the Center for Public Integrity).

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Even the reasons behind this new round of FCC revisions seemed dense. Not just because Powell, whose mantra has been deregulation, is infamous for stating that the "free market is my religion." Not just because some regulations date back to the 1940s. But primarily because two provisions were invalidated by judicial decisions. In February 2002, a U.S. appeals court ordered the FCC to reconsider the National Television Ownership Rule, which restricts a single company from owning television stations that collectively reach more than 35 percent of the American television audience. Then, in April 2002, yet another federal appeals court instructed the FCC to re-examine the Local Television Ownership Rule, which allows an entity to own two television stations in a market if certain conditions are met.

Powell took the opportunity of the court confusion and made it into a mandate to turn common sense on its head and allow more media deregulation, not less. In many circles, he was painted as a boob, or at the very least pigeonholed as a nepotism beneficiary, after he proved unprepossessing during his first mano a mano with the wily Fritz Hollings in the briefly Democrat-controlled Senate. But six months later at another hearing, Hollings confronted a vastly improved Powell. "His presentation was stronger. He was more savvy, thoughtful and reasoned about it. Hollings walked away very impressed," one of the senator’s aides told the Weekly. "But there was also a part of [Hollings] that was obviously frustrated. He couldn’t talk sense to Powell, who’s dead set on blanket deregulation. Hollings hoped to step beyond the staid and stale debate and discuss innovative approaches. There was an impasse. That’s the problem."

The situation stinks. But even more rotten is that Powell’s controversial proposals — among them, to increase the National Television Ownership Rule from 35 percent to 45 percent, and to loosen the Local Television Ownership Rule so Big Media can go on a buying spree — don’t have any strings attached.

The result will be consolidations without concessions. This is the dumberest.

It would be smart to remember that, since the Radio Act of 1927, this country has required broadcasters to serve the public interest in exchange for the privilege of obtaining an exclusive license to use a scarce public resource: the electromagnetic spectrum. To explain this "gift" in dollars and cents, Wall Street analysts estimate that if the airwaves used by the broadcasters were sold at auction in modern-day times — the way the federal government has been auctioning off other portions of the spectrum in the last decade to cellular-phone companies and other wireless-communications firms — it would bring in $367 billion to the deficit-laden U.S. Treasury.

Even when strings are attached, they’re not enforced. Case in point: In 1996, Congress agreed to "loan" each television broadcaster an additional six MHz of prime spectrum to make it easier to convert to digital television, supposedly so vital to the future of the industry. Republican Senator John McCain subsequently dubbed this "The Great American Rip-Off" — and the extent of the heist became clear when the vast majority of commercial broadcasters (77 percent, according to official figures) failed to meet the May 1, 2002, deadline. Reports say that, at the current pace, broadcasters will be able to keep all of their spectrum, digital and analog, in perpetuity while at the same time thumb their noses at Congress and the American people. Do we really need to see the sequel?

The time to get tough is now. Here are the concessions which the government should demand of Bigger Media to ensure they remain competitive, accessible and responsible.

 

No More Collusion

One minute Disney and Paramount, or News Corp. and AOL Time Warner, or NBC and CBS are bitter enemies. The next, they’re best friends. Teeth have to be put into efforts to ensure Big Media’s members compete and not collude. We can’t depend on voluntary compliance. There was the Paramount consent decree. Then the breakup of MCA. And, of course, probes of the music industry.

Now, the Justice Department has been endlessly investigating the mega-business venture by five major Hollywood studios to distribute films digitally, directly to consumers. Government officials must intensify their antitrust examination of Movielink (previously named MovieFly), the joint initiative of Sony Pictures Entertainment, Warner Bros. Pictures, Paramount Pictures, Universal Pictures and MGM Studios. From the looks of it, this so-called partnership fits the textbook definition of a cartel.

But Big Media need to get a clue. It may have made sense 30 years ago for Universal and Paramount to start their international theatrical distribution arm together, UIP (United International Pictures). But that was before Paramount was bought by Viacom, then combined with Infinity and CBS. Nor is there a need for MGM to sub-distribute outside North America all its theatrical movies through Fox. Right now, there are other joint projects needing to be separated, from cable-channel partnerships to co-financing motion pictures to you-keep-mine, I’ll-keep-yours prime-time programming. End them now.

 

Stop the Violence

As Americans contemplate the causes and effects of a popular culture that seems to constantly seek the lowest common denominator, Hollywood denizens churn out an unending stream of pervasive and gratuitous violence. It was only after Columbine exposed the two student shooters as warped by the violent subculture purveyed in too many movies, music and electronic games that President Clinton ordered the Federal Trade Commission to study whether the entertainment industry intentionally sells violent material to youngsters. The answer was an unequivocal yes.

The FTC found that Hollywood engages in aggressive marketing of R-rated movies intended for adults to children under 17, and of PG-13 movies to children under 12. The studios not only advertised these films in teen magazines, in video arcades and on TV shows like Dawson’s Creek and Buffy the Vampire Slayer, but they include kids as young as 10 in their market research and focus groups for R-rated films.

It’s disgusting, and the studios know it. Which is why eight Hollywood moguls were hauled before Congress in an unprecedented appearance in September 2000, only to express shock, shock, at some of the marketing methods of their own media companies.

This summer, five pictures rated "R" on the basis of pervasive violence are positioned as big teen attractions. Washington must find a way to fight this without trampling on the First Amendment.

 

More Independent Content

Nowhere do the FCC changes make less sense than in Hollywood’s creative community. This week alone, Larry Gelbart, Richard Dreyfuss and Diane English related firsthand experiences of how "expanding network power limits diversity, stifles creativity and deprives the American television viewer of quality programming." It’s even created strange bedfellows, teaming veteran screenwriter Lionel Chetwynd, a well-known Hollywood Republican and appointee to the President’s Committee on the Arts and the Humanities, with producer Norman Lear, a leading liberal Democrat.

To sum up their position, the content should be king, not the synergy.

What’s scaring them is the widespread prediction that, once the networks begin buying additional TV stations, the market for independent programming will grow smaller, the opportunities for syndication scarcer and the impulse for re-purposing stronger. "The consequences of this new factor in our industry are — and this is no exaggeration — potentially catastrophic," the Caucus for Television Producers, Writers & Directors said in a letter to Powell.

Hollywood’s creative community claims its concern about the impact of media consolidation is in America’s interest. Others see it as self-interest. Members obviously covet the opportunity to convince Congress to reinstate "Fin-Syn," the financial interest and syndication rule repealed in the early 1990s. Once prohibited from having a financial stake in the programming it airs, the networks now pack their prime times with only shows they own or co-own. The Hollywood creative community wants at least 25 percent of a network’s prime-time lineup set aside for independently produced shows. As John Wells, the writer-producer of ER, The West Wing, Third Watch and China Beach, recently wrote Congress: "Without such a rule, competition and diversity will become a fiction."

 

Independent News Departments

Owning media means answering to a higher authority. It makes no sense to expect The New York Times to uphold journalistic standards if the increasingly influential Fox News Channel is allowed to get away with the reportorial equivalent of murder. It’s just ethically wrong for Big Media to remake their news departments as outlets of propaganda for themselves, their business partners or their political pals.

Then there’s the fact that the more corporate takeovers of the media, the less curious those same media become of their owners. The trend is for Big Media conglomerates to fail to accurately or extensively cover themselves. After buying ABC in 1995, Disney’s Michael Eisner declared on the record, "I would prefer ABC not cover Disney." Within days, ABC news boss David Westin killed a 20/20 story critical of the parent company.

Fifteen years ahead of his time, writer-director Jim Brooks got it right in his movie Broadcast News. Then, as now, Big Media’s machinations focused on making money, and their manipulations fooled the First Amendment. When TV producer Jane has the proof that star reporter Tom violated newsroom ethics, she fumes, "You totally crossed the line."

"It’s hard not to cross it," Tom replies. "They keep moving the little sucker, don’t they?" Time to set it in concrete.

 

More Accessible Moguls

Nobody knows the moguls better than we who work in or around Hollywood, which is why familiarity breeds contempt. Like Kubla Khan building a stately pleasuredome and Citizen Kane erecting Xanadu, today’s Big Media bosses also build monuments to their egos, or, in this case, their conglomerates.

The reason is obvious: Network TV ownership is the most public face of today’s giant media corporations, not only on Wall Street but also on Main Street. But these influential men remain enigmas, able to restrict their public exposure to five-minute interview segments with overtly friendly anchors of TV business shows.

For example, it was important to know that, early in Jeffrey Immelt’s career, the chairman of NBC’s parent company helped organize a massive recall of GE appliances. As a result, it came as no surprise that he treated the world’s best war correspondent like a malfunctioning toaster oven. Repairing the problem of Peter Arnett was not much different from removing a dangerous product from public shelves as quickly as possible.

Yet, asked last fall what concerned him most about the impending war in Iraq, Immelt showed far worse judgment than Arnett when opining it was a GE business opportunity. "We built about a billion-dollar security business that’s going to be growing 20 percent a year, so we’ve been able to play into that," Immelt told CNBC.

It’s increasingly clear that to understand the mindset of the new military-infotainment complex, you’ve to get inside the heads of the people who run it. Once upon a time, the people who masterminded our wars came from the Fortune 500. Today, the people who mouthpiece our wars come from the cable industry. It was no coincidence that Clear Channel Communications, the radio giant that pulled the Dixie Chicks from the playlists of its country-music stations, is headed by a George W. Bush contributor and crony. The U.S. invasion of Iraq showed us that most media moguls believe in the free-market economy but not in the free market of ideas. It’s high time we call them on it.

 

Free Political Airtime

In his quixotic mission to level the electoral playing field, John McCain, the ranking member of the Senate Commerce Committee, continues to call on broadcasters to meet their public-interest obligation by providing free air time for political candidates. This is an idea whose time has come, even more crucially now that the courts have crucified the Bipartisan Campaign Reform Act.

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