Structural Regulation of the Media and the Diversity Rationale

Structural regulations of the media--such as the multiple ownership rules--play a useful role in media governance in the United States. Under Chairman William E. Kennard, the Federal Communications Commission (FCC) has struggled, in a climate unsympathetic to regulation, to keep the basic core of the multiple ownership rules while substantially modifying their specific applications. Their modification recognizes the emergence of new technologies and new channel capacity, but their basic retention also recognizes the need for diversity in all its meanings. In this paper, I shall argue that the case for structural regulation of the media is stronger now than it has ever been. On August 5, 1999, the FCC relaxed its duopoly rule. Under the original duopoly rule, the FCC did not permit the grant of a license to anyone already holding a license for the same type of facility in the same community. The FCC has modified this rule and declared that it now permits common ownership of two stations in the same market if eight independently owned and operated television stations remain in the same market post merger. One of the merged stations cannot be among the top four ranked stations in the designated market area.(1) The role of media structure in our society has, in view of the revision of the duopoly rule and the subsequent Viacom-CBS merger proven to be a timely choice of topic. On September 7, 1999, Viacom Inc. announced that it would buy CBS in a deal valued at approximately forty billion dollars. At the time of the merger, Viacom properties included nineteen television stations and a controlling interest in a TV network, UPN. Viacom owns cable channels such as MTV, Nickelodeon, VH1, and Showtime pay movie channels. CBS provides programming to its television (and radio) affiliates throughout the nation. CBS itself owns and operates fifteen television stations in major markets and the dominant interest in Infinity Broadcasting, which owns one hundred sixty radio outlets. CBS owns the cable channels, The Nashville Network (TNN) and Country Music Television (CMT), as well as the TV syndication, King World. CBS also has a presence on the Internet.(2) The deal between Sumner Redstone, Viacom's chief executive, and Mel Karmazin, CBS's chief executive, was announced shortly after the FCC relaxed its television duopoly role. The Viacom-CBS mergers results in television duopolies in six markets.(3) Some regulatory obstacles remain. Presently, a single entity may not operate two broadcast networks. Since Viacom already owns fifty percent of UPN (Paramount Pictures) and now would own CBS as well, technically, it would have to divest itself of UPN. The television stations that will be operated by the merged company exceed the rule that no entity may own television stations whose audience reach is greater than thirty-five percent of the national audience. The merged Viacom-CBS entity would reach forty-one percent of all households nationwide.(4) The concentration of ownership within the communications media that the Viacom-CBS merger represents is amazing. Yet, these developments only seem to whet the appetite of the participants for more. Recently, when asked how Viacom-CBS hoped to meet the 35% TV audience reach cap, Mr. Karmazin stated: "We believe that the 35% cap is a very antiquated rule. We believe that the rule will go away."(5) What should the television audience reach TV cap be for a single entity? Mr. Karmazin responded: "a realistic move that politically could make sense is that it would be 50%."(6) A week later, Mr. Karmazin said that the cap has to be at least 49% for the network television business to be viable.(7) An almost centrifugal force now impels media to combine. What motivates this quest to accumulate ever more media power? Does it reflect a desire to control the engines of opinion to spread a particular social or political doctrine? Long-time media critic Ken Auletta responds trenchantly to these questions: "`When [Viacom Chairman] Sumner Redstone and [CBS President] Mel Karmazin sat down to discuss this deal, do you think a major point of discussion was `How do you improve the quality of CBS news? …