US Media Markets: Is Continued Regulation Still Necessary?

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US Media Markets Is Continued Regulation Still
Necessary?

• Dr. Anna P. Della Valle
• Columbia University
• Presented at the
• 15th International Conference of the ACEI
• Boston, June 13-15, 2008

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On December 18, 2007, the FCC gave
US Broadcasters a gift
Relaxation of media cross-ownership rules
and cable television owners a lump of coal
No change in cable ownership rules
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Cross-ownership not permitted
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Rules Loosened for Top 20 Markets
1. New York 2. Los Angeles 3. Chicago 4.
Philadelphia 5. Dallas-Ft. Worth 6. San
Francisco-Oakland-San Jose 7. Boston 8.
Atlanta 9. Washington, D.C. 10. Houston 11.
Detroit 12. Phoenix 13. Tampa-St. Petersburg,
Fla. 14. Seattle-Tacoma 15. Minneapolis-St. Paul,
Minn. 16. Miami-Ft. Lauderdale 17.
Cleveland-Akron 18. Denver 19. Orlando-Daytona
Beach, Fla. 20. Sacramento, Calif.
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Cross-ownership rules unchanged since 1975
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Exceptions to the Media Cross-Ownership Rules

• Grandfathering
• Financial distress

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Rationale for US Media Cross Ownership Rules

• Pursuant to the 1934 Communications Act, the FCC
  is required to ensure that licenses to public TV
  and radio broadcasters are granted in the public
  interest and necessity to promote diversity and
  localism.

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Concerns Re. Localism and Diversity

• Arguments against
• Homogenization of programming
• Evidence from radio
• Loss of localism
• Empirical evidence
• Effect on marketplace of ideas.

• Arguments for
• Need to give viewers, listeners, readers what
  they want
• Cost efficiencies
• Change in media landscape
• Availability of other sources
• Internet as citizen media

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Cable Television Ownership
Cannot reach more than 40 of US cable households
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Rationale for the Cable Ownership Ruling

• Undue market power over

Content
Prices
Buying power over Independent programming
Availability of alternative means of program
distribution satellite, telephone, other cable
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Exercise of Market Power Over Content

• Arguments for
• Need to give viewers what they want.
• Increased efficiency from vertical integration
• Availability of other media sources

• Arguments against
• Buyers market power over independent programmers
• Sellers market power from premium services
• Incentives to favor own programming and content
• Empirical evidence

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Anecdotal Evidence
This idea that the cable companies don't
discriminate is ridiculous. That's what they do.
They're the gatekeeper of the platform. They
decide whether you get the golf channel or the
food channel, and, you know, if they're part
owner of you, your odds of getting on tend to be
a little higher, but I mean that's exactly
precisely what they do.
Jerry Levine, Chairman, Time Warner, Transcript
of AOL/Time Warner FCC Hearings
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Anecdotal Evidence
If the rules (allowing increased consolidation of
cable companies) had been in place in 1970, it
would have been virtually impossible for me to
start Turner Broadcasting or, 10 years later, to
launch CNN.
Ted Turner, ex-chairman Turner Broadcasting
Washington Post, 05/30/2003
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Experience in Other Countries
Rupert Murdoch
Silvio Berlusconi
Emilio Azcarraga