There Is No Media Consolidation :: AO

There Is No Media Consolidation :: AO

I have this theory that there is no consolidation of the media.

Check out my article on AlwaysOn — they recently published an article I wrote on my thoughts on why consumers today have more access to different news outlets than at any point in history …

1 thought on “There Is No Media Consolidation :: AO

  1. Jim Coombes

    To start, your point is absolutely correct. You even underemphasize the importance of cable and satellite television, which now provide multiple 24 hour news channels, as well as science, history, and educational networks to put all of that information in better perspective (for those who care to watch).
    I would go a step further and argue that the consolidation of cable television, satellite televsion, and broadcast television companies is actually increasing both the number of voices in the market and the accessibility of those voices. For example, despite the Comcast-AT&T Broadband merger being vilified by consumer advocates, Comcast is now using the negotiating leverage created by its size to push back on programmers (ie, ESPN) that are continually raising prices for TV consumers. The smaller a cable operator, the more ESPN or any cable network can afford to absorb a cancellation of its carriage contract. In fact, if cable operators got together to push back on price increases, they may even be accused of anti-trust violations. But with Comcast speaking for over 20 million customers, networks can ill afford to raise prices beyond a reasonable level.
    Moreover, most media companies benefit from economies of scale, enabling them to lower their cost structures as they get larger. This benefits consumers both directly and indirectly. Directly, in that the operator has a lower cost to cover with subscriber fees. Indirectly, in that the businesses are more profitable and better able to access the capital markets, resulting in greater flexibility to upgrade networks to improve signal quality, provide more channels, and offer better services (such as broadband Internet access).
    To provide another example, when Congress passed a cable rate regulation package in 1994, the values (ie, stock prices) of cable companies went down. At the time, Bell Atlantic and TCI were planning to merge; but after the rate regulation bill, the two were unable to agree on value and the deal fell apart. In the aftermath, TCI cut $1 billion of previously planned capital spending that would have accelerated the development of what was known at the time as nebulous “interactive services”;, but which we now know as the broadband Internet. Many other mergers were scuttled either directly by the FCC and DOJ, or indirectly by onerous regulation, ultimately resulting in a dramatic slowdown in the development of a state-of-the-art broadband communication network. In a nutshell, more consolidation would have speeded the development of advanced networks and lowered prices for consumers. Of course, it would also likely have spawned more competitors to come to the market sooner, f urther improving our access to media.
    I would also point out that the FCC’s existing prohibitions on the mergers of wireless telephone operators such as Sprint, Verizon, AT&T and Cingular, while keeping rates low for consumers in the short term, are inhibiting capital formation and slowing the development of the next generation of wireless services.
    Its important to appreciate the arguments of small television station owners, for instance, who argue that the big networks are developing tremendous negotiating power that will gradually force small station owners to sell out. This would have the negative effect of forcing national programming standards and content on local markets, where tastes and preferences may differ. I certainly understand the perspective of those who argue that national television shows and advertisements that feature sexual situations, violence and harsh language are being forced on local TV stations by national networks, and that this trend will only get worse as consolidation continues. However, there are other solutions to this problem that do not require such onerous government intervention. For example, more rigorous local and FCC enforcement of obscenity (well, ok, censorship) provisions for companies that use public airwaves. Moreover, programming networks are already offering cable chann els targetting families, religious sects, children and others. I’m also in favor of regulations that would require cable and satellite broadcasters to offer family-oriented packages that would permit parents to block out channels that they do not want their children to watch.


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