Thursday, May 29, 2003

MEDIA CONSOLIDATION AND SIMPLISTIC THINKING Well, simplistic thinking is what we seem to be getting on the Web, mostly concerned about some abstract notion of diversity of media voices and the conspiracy of AOL Time Warner, Viacom and Clear Channel to tell us what to think by controlling all media. Fine, there are problems with media consolidation (listen to the radio and find anything music remotely interesting), but there are also some sound economic reasons to allow media consolidation or at least allow the cap to be raised a little bit on national ownership and eliminate the limits on television duopolies and media cross-ownership.

For instance, in my practice I have seen numerous occasions where television stations are simply unprofitable in small markets, especially with the requirements for the digital buildout. So, we structure a transaction where one station provides certain services (actually, everything by programming) to another station...from sales to news. The stations don't exactly become co-owned, but the effect on the diversity of voices is really the same. Look at my market, Raleigh-Durham-Fayetteville. "WRAL News" is aired on WRAL (the CBS affiliate) and on WRAZ (the Fox affiliate), yet these stations are licensed to different entities. I suspect that there is a Joint Sales Agreement or Local Marketing Agreement or Shared Services Agreement between the two stations whereby the WRAL owner essentially runs WRAZ, although ultimate control over programming decisions would be left to WRAZ's licensee. The FCC allows this and that's a good thing for us lawyers (maybe that's why John Edwards is against changing the rules).

But it is short-sighted to simply say that we can't have consolidation because diversity is important, when the alternative is de facto consolidation, without which stations would go out of business. It is simply not profitable anymore to independently operate a television station in many mid-sized television markets. Sure, you can make money off of the WB or Pax affiliate in Miami, but how about in Corpus Christi or Shreveport or Fargo? Without co-ownership and taking advantage of economies of scale in these markets, those WB and Pax affiliates will go off the air. Now what's happened to your diversity of voices? Economies of scale is not just about efficiency and profit, but in the TV business, it's about survival.

And its deregulation that saved AM radio, and has caused additional FM station allotments throughout the nation. Sure, Clear Channel owns a lot, and many morning shows are syndicated, but I've noticed that in the middle of John-Boy and Billy, or Bill and Sherri or whoever, you still get local news cut-ins....often from local TV newsrooms...something else that would continue with the lifting of cross-ownership restrictions.

And, I wonder, if local, profitable television stations might attempt to publish a local newspaper if allowed by the FCC? Many cities have only one newspaper -- the other one went out of business years ago, unable to compete. But local television stations have a staff of reporters who could publish a newspaper at a lower cost than the existing monopoly paper. There would then be more than one editorial page in towns like Raleigh or Columbia or Richmond or wherever. But not under the current rules. No, you can't own a TV station if you own a newspaper, according to the FCC.

So, it seems there are a number of ocassions where media consolidation may actually help competition and the diversity of voices. Hmmmm. Heck, even Clear Channel saved stations that would otherwise have gone out of business and programmed them with country or jazz or sports talk -- formats that probably wouldn't have had competition in those markets if not for Clear Channel's expansion. I could go one, but facts are unlikely to sway the sky-is-falling crowd eager to make political hay out of evil Big Business.

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