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Media Consolidation: Made Possible By Disingenuous Deregulation
Since the establishment of the Gutenberg press, Western societies have made impressive leaps in the dissemination of information. Information that was once only accessible to the priesthood and political elites can now be accessed by laypeople of all backgrounds. As the television arrived in the 20th century, the news could be disseminated to millions.
On top of that, people were able to access multiple channels of entertainment during their leisure time. Unprecedented to say the least.
However, markets don’t always develop in a clean or linear manner. There are always hiccups along the way. One troublesome trend that has emerged in the last 50 years is that of media consolidation. This refers to the increased concentration of news ownership in the hands of a small group of corporations.
According to the late journalist Ben Bagdikian, about forty years ago, the majority of U.S. media was in the hands of 50 corporations. In present times, six corporations — GE/Comcast, The Walt Disney Company, News Corporation, Time Warner, Viacom, and CBS— control 90 percent of the media. This marks a rapid consolidation of the media sector during the last few decades.
Many media critics attribute this consolidation to the passage of the Telecommunications Act of 1996, which allegedly deregulated the media sector and allowed corporations to consolidate more easily. However, the deregulatory nature of this legislation is perhaps overstated. Critics like consumer advocate Ralph Nader contended that the legislation represented one of the grossest examples of corporate welfare at the time. In a testimony before the U.S. House Committee on the Budget in 1999, Nader asserted that “the government wrote a $70 billion check to the broadcast industry,” in accordance with the Telecommunications Act of 1996, which “handed over the digital television spectrum to existing broadcasters.”
As Nader explained, “the broadcasters will pay nothing for the exclusive right to use the public airwaves, even though the FCC itself estimated the value of the digital licenses to be worth $11 billion to $70 billion.”
In his testimony, Nader also called attention to the following:
The giveaway was mandated, in part, by the 1996 Telecommunications Act, which prohibited, under demands by the broadcaster lobby, the FCC from auctioning off the airwaves. The Telecommunications Act also required the FCC, if it decided to allocate the licenses, to give them only to incumbent broadcasters.Back in 2001, five years after the Telecommunications Act was passed, Adam Thierer of the Cato Institute aptly noted, “The notion that the telecom industry has been deregulated is a fairy tale.” Thierer described the legislation as “Deregulation Lite,” with “some minor rules and restrictions relaxed.” Thierer noted three developments that should call into question any assertion that there has been wholesale deregulation:
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In August 1996, the Federal Communications Commission (FCC) issued its mammoth 737‐page, 3,200-footnote “Interconnection Order.” The edict, which ranks as one of the longest and most convoluted rules in the history of regulatory policy making, produced a stream of litigation. In fact, the Supreme Court recently decided to hear another round of cases dealing with ambiguous and controversial Telecom Act regulations.
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In May 1997, the agency created the “E‐Rate” program (known in most circles as the “Gore tax”), which unilaterally established a new government bureaucracy to help wire schools and libraries to the Internet. The FCC then decided the American people would pick up the $2.25 billion per year tab for the program by imposing a hidden tax on everyone’s phone bills.
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Finally, since the Telecom Act became law, FCC spending and staffing grew to all‐time highs. Last year, the FCC requested a gross budget of almost $280 million and total staffing of 1,975 people. By comparison, 10 years ago FCC spending stood at $108 million and staffing at 1,734 people. In other words, the FCC’s budget has doubled over the past decade and the agency has hired roughly 250 additional bureaucrats.
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