if at first you don’t succeed …


Yesterday the New York Times reported that FCC Chairman Kevin Martin is planning on changing media ownership regulations. This is an issue I follow pretty closely since it was the subject of my dissertation and I know a lot of people who care a lot about this issue. I haven’t seen many details on what exactly he is proposing, but it sounds like he’s resurrecting some form of Michael Powell’s 2003 proposal for a “diversity index” (FCC-DI) which would treat different media within a market as fungible and allow diffuse ownership in one medium to balance out oligopoly in another. The main practical impact is that it would make it easier for a single firm to own both broadcasting and print in the same market. (Currently this requires a waiver). The Powell FCC passed the diversity index but it was struck down by the courts, mostly because the FCC-DI didn’t include weights for media outlet size (e.g., some rinky dink UHF station with no ratings would count as much as a network affiliate). There are a lot of interesting angles for orgheads to see in this policy push: the perspective of org theory itself, performativity, and the role of social movements.

Org theory’s perspective on media ownership

Until the 1970s, the sociology of culture was completely dominated by functionalist and Marxist approaches which both mostly amounted to reflection theory. But then organizational scholars like Paul Hirsch, Richard “Pete” Peterson, and Paul DiMaggio began studying popular culture by more or less ignoring meaning and focusing on the processes through which cultural goods are produced. In a seminal 1975 article on how rock and roll replaced tin pan alley, Peterson and Berger found that industrial oligopoly led to creative stagnation and that creativity was only restored when a series of exogenous shocks created opportunities for new market entrants like Chess and Sun to meet unsated demand for more regional and ethnic music. Later the finding was qualified by Lopes and again by Dowd that the effect is ameliorated if the oligopoly decentralizes creative control to low level managers and subcontractors. Thus org theory inspired sociology of culture implies that oligopoly will be bad for the culture if the oligopoly centralizes control. Some research by Eric Klinenberg suggests that this may be the case. The FCC’s main stated goal in local media markets is the integrity of local news. Klinenberg has found that increasingly when a single firm owns multiple news outlets in a single market, it tends to pool journalists across the different operations, which not only centralizes control of the outlets, but creates a convergence of journalism styles. Two co-owned tv stations in LA have even made this the basis of an advertising campaign. Parenthetically, it gives me the creeps that the ad looks like a still from Apocalypse Now. Are they trying to imply that they just strafed the NBC station?

(btw, the org colonization of sociology of culture continues to the present. For the last five years leading economic sociologists like Brian Uzzi, Olav Sorenson, and Ezra Zuckerman have been doing some very cool work using data from the culture industries, and like the earlier generation they bracket the issue of meaning, though unlike them they mostly focus on social networks rather than ownership).


The big deal in media economics is the Hotelling-Steiner effect, which holds that a competitive market will lead to excessive concentration of goods aimed at the median consumer. Imagine that in a market there are two taste groups called A (worth 80% of revenues) and B (20%). If you have two firms serving this market, both will try to serve group A and neglect group B since half of 80% is greater than all of 20%. Ironically, a monopolist with two properties will be better at serving both A and B because by directing one property at A and the other at B is can capture all of both markets. So this leads to the Gekko-esque conclusion that monopoly is good. The FCC takes this theory very seriously in crafting and justifying policy, especially for radio. There has been something of an arms race of studies with first the FCC giving a grant to Joel Waldfogel to demonstrate the effect empirically, then the Future of Music Coalition’s Pete DiCola criticized the first study (basically he demonstrated that there is too much similarity between market positions in radio to call them meaningful variation), and finally the National Association of Broadcasters gave a grant to Andrew Sweeting to replicate the Waldfogel study in a way that was sensitive to DiCola’s methodological critique. (I should note that I think it is entirely ethical to take funding from interested parties so long as there’s no embargo clause and I think all three economists are talented and honorable). In part this is a scholarly debate over theory, but it wasn’t only that, for the funding was motivated by the impact that it might have on policy. Whether the Hotelling-Steiner effect can be demonstrated doesn’t just affect whether an article will get published, but whether some very large corporate mergers can go through.

(FWIW, my own reservation with the Hotelling-Steiner research tradition is that it treats market positions as point masses rather than niches with variable breadth. Therefore even Sweeting’s very sophisticated methods confuse cutting up a field more narrowly with enlarging the scope of the field. In plain English, I think empirically most of what the economists are capturing is that under oligopoly Adult Contemporary stations are splitting into the narrow subformats of Hot AC and Soft AC, which is different from the true increase in diversity implied by the original theory which would be something like the redundant AC stations switching to some completely novel format. My hunch as to why this is so is that a) truly novel market positions are risky and b) the radio chains are more interested in TSL than cume).

The most concrete way that social science has shaped media policy is the Prometheus v FCC case that struck down the original FCC-DI. In the Telecommunications Act of 1996, Congress delegated to the FCC the authority to periodically review media ownership policy and relax constraints that it finds to be inappropriate. Basically, the 3rd Circuit Court interpreted this to mean that the FCC can’t act arbitrarily but must make decisions that are supported by social science. Indeed, the court explicitly said that it was not forever rejecting the FCC-DI, just requiring that the FCC present more social science evidence to justify it. The FCC had in fact presented a batch of studies to justify the FCC-DI and the court found some of them convincing on their own terms, but it found that treating media outlets as equivalent regardless of revenues or circulation was not justified (or even addressed) by the social science evidence. I think the lack of weights might be justified by classic liberal political theory since an option is still an option even if few people avail themselves of it, but the interesting thing is that the court was basically holding that the issue had to be decided by the facts, and the facts had to be decided by economists. This message was heard loud and clear by the media policy community. After Prometheus, the FCC commissioned a new round of studies. On the other side, the Ford foundation gave a decent sized grant to the Social Science Research Council’s program on “Necessary Knowledge for a Democratic Public Sphere” which is an academic program but has a very strong emphasis on policy. For instance, for my own Necessary Knowledge grant I’m not just doing research on payola, but am partnered with the Future of Music Coalition to disseminate the findings and turn them into policy.

Social movements

It’s an understatement to say that concentrated media ownership is unpopular. At both public meetings and in correspondence the FCC has gotten a huge volume of complaints that is literally 99% opposed to media conglomeration. The interesting thing is that these complaints mostly come from the left but a nontrivial fraction are from the social conservative right. My intuition is that for people with very strong views about politics, the media serves as an all purpose whipping boy to explain their own political failure by recourse to a version of false consciousness theory. This sentiment is captured in the media reform movement’s proverb that whatever your issue is, your other issue is the media. I think this the only way to explain the coalition of the progressive left and the social conservative right to both oppose concentrated media ownership since it doesn’t seem like they could both be right about the consequences of reform for their chances on other issues.

There’s actually a traveling road show of sorts where you can witness this. After the FCC-DI debacle the FCC commissioners have traveled around the country several times to have open mic public meetings. Theoretically these are to learn what the public is concerned about with media but as demonstrated by Martin’s resurrection of cross-ownership deregulation there is very obviously no impact on policy whatsoever. Rather the real function is some kind of medieval-style penitence where the commissioners atone for their sins by traveling from city to city and allowing aggrieved commoners to verbally flagellate them for hours on end. Last year I attended the road show engagement at USC and it was fascinating. It was held in the middle of a workday but it managed to completely fill a huge auditorium to standing room only as well as much of a close-circuit tv overflow room. (And despite being at a school, very few of the people there were students). At the line to get in, there were media reform activists passing out forms to structure your open mic testimony that basically read “Hi my name is (X) and I represent (insert ethnic or other identity group here). I’m here to tell you how big media corporations are hurting my community ….” As an elitist technocrat of the sort that Prometheus implied should be setting policy, I’ll be blunt, many of the complaints were totally crazy. A fairly typical bit of testimony is one guy told the FCC a story about how he spent a few weeks traveling across the state trying to raise awareness of some obscure issue but not a single reporter showed up to any of his events. It is my professional opinion as a media scholar that the reason nobody covered this guy’s road trip is because it wasn’t newsworthy and this would be the same even if the media were all run by journalist soviets instead of Rupert Murdoch. On the other hand, many complaints voiced against media concentration were extremely rational. For instance, at the same FCC open mic thing there were a couple dozen people from Hollywood demanding that the FCC restore a version of fin-syn so as to reduce vertical integration between studios and networks and allow television producers more bargaining power vis-a-vis the conglomerates.

The bottom line

The devil is in the details, but in principle viewing conglomeration at a market level rather than a market-medium level makes a certain amount of sense — it all depends on how the index is calculated and what thresholds are set as policy triggers. However viewing it purely as a political matter, there is too much grassroots and Congressional opposition to anything that smells like allowing media concentration for it to work. I mean, a Congress that has flirted with restoring the fairness doctrine (which would effectively censor Rush Limbaugh), is hardly going to be receptive to gutting the remnants of media antitrust policy. I imagine at the very least Congress will hold hearings opposing Martin’s proposal and very possibly outright reverse it through legislation freezing current ownership policy. They wouldn’t have a veto-proof majority though and lately Bush hasn’t been too concerned about whether his vetoes will be popular. If the FCC does pass it, and if Bush does veto a Congressional reversal, there’s still the issue of the courts. If the new proposal includes weights for ownership size it will probably be allowed by the courts, though it’s just as likely that they would issue a stay for about a year while they ruminate on it. In the meantime we’ll have an election and the FCC may very well reverse itself or Congress can pass a re-regulation bill again without getting vetoed.

Written by gabrielrossman

October 19, 2007 at 5:29 pm

3 Responses

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  1. This is an epic crash course of the soc of cultural production. I’d say it was Omarian in scope and execution!!


    Fabio Rojas

    October 19, 2007 at 7:55 pm

  2. Nice post Gabriel. But I’m more skeptical than you that Congress will reverse the Martin decision. Congress has been very friendly to big-media over the last couple of years, and I don’t see a lot of evidence that they are really listening to the grass roots movements that would resist media conglomeration. The war, medical care, and immigration are all issues that seem to have pushed communications policy out of the public spotlight. There wasn’t even a huge public outcry a couple of weeks ago when the RIAA successfully sued a single mother for using a P2P file-sharing network.



    October 20, 2007 at 2:52 pm

  3. brayden,
    it’s true that Congress is busy and the news hole is very full but i think there are two reasons to expect them to oppose Martin. first, there’s a lot more grassroots demand for media antitrust than for intellectual property reform. second, democrat elites themselves believe that IP is politically neutral but conglomeration gives an advantage to the Republicans so fighting Martin gives them a long-term tactical advantage. given that one of the first things they did in the new session was push for “card check” i could easily see them pushing for this. (just as the Republicans were enthusiastic about voter fraud and redistricting when they held Congress).
    in any case, my expertise is on the consequences, rather than the politics, of media ownership so i admit that my last paragraph was only marginally informed speculation.



    October 20, 2007 at 9:11 pm

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