Doors swinging open on media market

As merger trend rises, some worry that news programs and independent voices are being threatened.

Media

March 03, 2002|By David Folkenflik | David Folkenflik,SUN TELEVISION WRITER

Big is big when it comes to television, and it's only likely to get bigger.

A key federal appellate court late last month lifted bans on corporations owning cable and local broadcast properties in the same markets. The same panel of judges strongly questioned the legitimacy of U.S. laws that prevent companies from owning stations that reach more than 35 percent of U.S. television viewers.

And the country's top regulator of the television business -- the chairman of the Federal Communications Commission -- has made it clear he's eager to sweep away what he sees as other archaic rules hampering innovation.

Among those rules likely to receive a skeptical eye: bans on companies owning two stations in smaller cities or owning newspapers and local television stations in the same towns.

"It potentially makes everybody out there either a buyer or a seller," says Mark E. Hyman, vice president for corporate and government relations at the Sinclair Broadcast Group Inc. The Baltimore County-based firm is said by people in the industry to be shopping around some of the more than 40 stations it owns outside Baltimore to larger broadcasters.

Most major industries, such as steel, airlines and banking, have experienced waves of consolidation. Why shouldn't entertainment and television?

Some observers are wary of such a television bazaar. They note that broadcasters and cable station owners aren't simply serving up sitcoms, ballgames and cooking shows. The companies also produce the news programs many Americans depend on for current events.

Impact on newsgathering

Past regulations were created not simply to bust up monopolies but to prevent a single voice from drowning out others in the marketplace of ideas. As these federal regulations are set aside, critics say, the number of local stations with independent news programs will likely shrink. The consolidation of the radio business has led to the dominance of two companies -- Clear Channel and Viacom's Infinity division -- and to deep cuts in locally generated programming and news.

"The First Amendment is meant to assure robust debate, and the limitations on local cross-ownership were written with that objective in mind," Alex S. Jones, director of the Shorenstein Center on Press, Politics and Public Policy at Harvard University's John F. Kennedy School of Government, wrote recently in The New York Times. "On the local level, rolling back those rules will inevitably make that debate more one-sided."

Sinclair has already eliminated news programs at several of its lower-rated stations outside Baltimore. It is currently in the planning phases of creating a news center at its headquarters to serve many stations around the country.

At a corporate level, the continued expansion of communications giants AOL / Time Warner, Disney, General Electric, the News Corp. and Viacom (owners, respectively, of CNN, ABC, NBC and MSNBC, Fox and Fox News Channel, and CBS) will further diminish the influence of their once-mighty news divisions.

Viacom, for example, is not only the owner of CBS, but also the corporate parent of BET, MTV, UPN network, the Showtime cable channel, Paramount Pictures, Paramount Studios theme park and Infinity radio stations. Competitors such as Disney and AOL / Time Warner also possess movie studios, cable channels, publishing houses, major sports teams and theme parks, and use their news divisions to promote their entertainment properties. News values and editorial independence can be left behind, critics say.

"You have these two cultures at war here," says longtime media writer Ken Auletta of The New Yorker. "That will become more pronounced."

It hasn't uniformly worked that way, however. Critics at Entertainment Weekly, for example, have often panned films made by corporate sibling Warner Bros., although both are owned by AOL / Time Warner. Similarly, anchors for the Tribune Co.'s KTLA morning program have angrily denounced Howard Rosenberg, the television critic for The Los Angeles Times, which, like The Sun, is owned by Tribune.

Major deals doubted

In addition, some media analysts discount speculation about any new major consolidations, such as a takeover of Disney by one of its even larger competitors, or an AOL / Time Warner purchase of Tribune.

Such market-shaking deals require a lot of money, says Rick Gensler, who manages T. Rowe Price's media and telecommunications mutual fund portfolio. Many of the big-ticket transactions have already occurred, he says, pointing to the union of America Online with Time Warner, and the purchase of AT&T's cable division by Comcast.

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