Movers and SHAKERS
The pros and cons of media consolidation
(Note: companies that could be impacted by the content of this article are listed at the base of the story [desktop version]. This article uses third-party references to provide a bullish, bearish, and balanced point of view; sources are listed after the Balanced section.)
Prometheus Radio Project versus the FCC was a series of cases challenging new media ownership rules put forth by the FCC in 2002 easing the limits of cross-ownership of media. Prior to 2002, companies were prohibited from owning television and newspaper stations in the same market, and ownership of television and radio stations was limited. After the ruling, a three-tier system was put in place with more restrictive measures for smaller markets, less restrictive measures for mid-sized markets, and no restrictions for large markets. The Prometheus Radio Project, a non-profit organization advocating for community radio stations to bring about social change, brought a case against the FCC, ultimately resulting in the U.S. Third Circuit Court of Appeals remanding the case back to the FCC. The FCC has petitioned the court for a rehearing. Does the lessoning of media ownership represent a reflection of a changing media environment (Bull Case) or are controls needed to insure a fair and unbiased media (Bear Case)?
The landscape has changed. The number and use of media outlets outside of print, radio, and television have dramatically increased. Media management and media industry representatives argue that increased ownership of media outlets is needed to provide a competitive balance against new media sources.
Consumers may get more choices at lower prices. It is largely assumed that consolidation will lead to fewer choices and higher prices. In this case, however, combining print, radio and media will lead to significant cost savings as content creation is centralized and then distributed across different outlets. These costs will most likely be passed on to customers who are able to choose among different media sources.
Loosening ownership rules will lead to
consolidation and less competition. Lessening ownership restrictions will inevitably lead to mergers and increased ownership concentration. Even advocates of the FCC ruling recognize that. Of greater question is whether increased ownership concentration decreases competition or allows companies to better confront new media outlets (see the aforementioned bull case argument). Aaron K. Perzanowski argues that non-broadcast media is not a substitute for broadcast media given historical habits.
Consolidation will mean fewer competing viewpoints. As the number of media companies decreases in a given market, it stands to argue that the number of competing viewpoints decreases. Fewer reporters will be doing investigative stories, fewer commentators will report differing opinions, and less analysis will be done.
Consolidation will have a significant effect on rural areas and low-income populations. The argument for allowing consolidation is centered on the fact that satellite communication and the internet have changed the way people receive information. While that may be true in many parts of the United States, it is not as true for rural areas that do not have established cable systems and for people who can not afford satellite or internet.Advertisers must buy from fewer sellers.
The consolidation of media outlets will force advertisers to negotiate among fewer sellers of space. This may result in higher advertising prices.
The argument for media consolidation may be more a case of when not if. The argument against consolidation carried more weight in 2002 when the Prometheus Project first began fighting consolidation. Over time, as the influence of non-traditional media sources grows, the arguments become less relevant. It is social media that has brought fire to man, not the Prometheus Project.
http://www.townsquaremedia.com/equity-investors/press-releases/, Townsquare Media Press Release, November 8, 2019
https://www.prometheusradio.org/node/45, The Prometheus Radio Project Press Release, September 4, 2003.
https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=1614&=&context=faculty_publications&=&seiedir=1&referer=https%253A%252F%252Fwww.bing.com%252Fsearch%253Fq%253Dprometheus%252Bradio%252Bproject%252Bv.%252Bfcc%2526form%253DEDGTCT%2526qs%253DAS%2526cvid%253Deee3614eb901459e9efaae82d5461dca%2526cc%253DUS%2526setlang%253Den-US%2526elv%253DAQj93OAhDTi%252AHzTv1paQdni%252AFucm4x1yAbum1GWbtE2NEM%252A1yLhfG%252521t2Bc8ifNW2kRZqh%252AHfE%252521844pWDgoN3aVWH6f%252521NaT7lstvyWlG%252521YhXV%2526plvar%253D0#search=%22prometheus%20radio%20project%20v.%20fcc%22, Aaron K. Perzanowski, 2005.
https://opinionfront.com/pros-cons-of-media-consolidation, Parul Solanki, April 9, 2018