My Beef With Big Media By Ted Turner

[Guest guest]

http://www.alternet.org/mediaculture/19327/

 

My Beef With Big Media

By Ted Turner, Washington Monthly

 

Posted on July 26, 2004,

http://www.alternet.org/story/19327/

 

In the late 1960s, when Turner Communications was a

business of billboards and radio stations and I was

spending much of my energy ocean racing, a UHF-TV

station came up for sale in Atlanta. It was losing

$50,000 a month and its programs were viewed by fewer

than 5 percent of the market.

 

I acquired it.

 

When I moved to buy a second station in Charlotte –

this one worse than the first – my accountant quit in

protest, and the company's board vetoed the deal. So I

mortgaged my house and bought it myself. The Atlanta

purchase turned into the Superstation; the Charlotte

purchase – when I sold it 10 years later – gave me the

capital to launch CNN.

 

Both purchases played a role in revolutionizing

television. Both required a streak of independence and

a taste for risk. And neither could happen today. In

the current climate of consolidation, independent

broadcasters simply don't survive for long. That's why

we haven't seen a new generation of people like me or

even Rupert Murdoch – independent television upstarts

who challenge the big boys and force the whole

industry to compete and change.

 

It's not that there aren't entrepreneurs eager to make

their names and fortunes in broadcasting if given the

chance. If nothing else, the 1990s dot-com boom showed

that the spirit of entrepreneurship is alive and well

in America, with plenty of investors willing to put

real money into new media ventures. The difference is

that Washington has changed the rules of the game.

When I was getting into the television business,

lawmakers and the Federal Communications Commission

(FCC) took seriously the commission's mandate to

promote diversity, localism, and competition in the

media marketplace. They wanted to make sure that the

big, established networks – CBS, ABC, NBC – wouldn't

forever dominate what the American public could watch

on TV. They wanted independent producers to thrive.

They wanted more people to be able to own TV stations.

They believed in the value of competition.

 

So when the FCC received a glut of applications for

new television stations after World War II, the agency

set aside dozens of channels on the new UHF spectrum

so independents could get a foothold in television.

That helped me get my start 35 years ago. Congress

also passed a law in 1962 requiring that TVs be

equipped to receive both UHF and VHF channels. That's

how I was able to compete as a UHF station, although

it was never easy. (I used to tell potential

advertisers that our UHF viewers were smarter than the

rest, because you had to be a genius just to figure

out how to tune us in.) And in 1972, the FCC ruled

that cable TV operators could import distant signals.

That's how we were able to beam our Atlanta station to

homes throughout the South. Five years later, with the

help of an RCA satellite, we were sending our signal

across the nation, and the Superstation was born.

 

That was then.

 

Today, media companies are more concentrated than at

any time over the past 40 years, thanks to a continual

loosening of ownership rules by Washington. The media

giants now own not only broadcast networks and local

stations; they also own the cable companies that pipe

in the signals of their competitors and the studios

that produce most of the programming. To get a flavor

of how consolidated the industry has become, consider

this: In 1990, the major broadcast networks – ABC,

CBS, NBC, and Fox – fully or partially owned just 12.5

percent of the new series they aired. By 2000, it was

56.3 percent. Just two years later, it had surged to

77.5 percent.

 

In this environment, most independent media firms

either get gobbled up by one of the big companies or

driven out of business altogether. Yet instead of

balancing the rules to give independent broadcasters a

fair chance in the market, Washington continues to

tilt the playing field to favor the biggest players.

Last summer, the FCC passed another round of sweeping

pro-consolidation rules that, among other things,

further raised the cap on the number of TV stations a

company can own.

 

In the media, as in any industry, big corporations

play a vital role, but so do small, emerging ones.

When you lose small businesses, you lose big ideas.

People who own their own businesses are their own

bosses. They are independent thinkers. They know they

can't compete by imitating the big guys – they have to

innovate, so they're less obsessed with earnings than

they are with ideas. They are quicker to seize on new

technologies and new product ideas. They steal market

share from the big companies, spurring them to adopt

new approaches. This process promotes competition,

which leads to higher product and service quality,

more jobs, and greater wealth. It's called capitalism.

 

But without the proper rules, healthy capitalist

markets turn into sluggish oligopolies, and that is

what's happening in media today. Large corporations

are more profit-focused and risk-averse. They often

kill local programming because it's expensive, and

they push national programming because it's cheap –

even if their decisions run counter to local interests

and community values. Their managers are more averse

to innovation because they're afraid of being fired

for an idea that fails. They prefer to sit on the

sidelines, waiting to buy the businesses of the

risk-takers who succeed.

 

Unless we have a climate that will allow more

independent media companies to survive, a dangerously

high percentage of what we see – and what we don't see

– will be shaped by the profit motives and political

interests of large, publicly traded conglomerates. The

economy will suffer, and so will the quality of our

public life. Let me be clear: As a business

proposition, consolidation makes sense. The moguls

behind the mergers are acting in their corporate

interests and playing by the rules. We just shouldn't

have those rules. They make sense for a corporation.

But for a society, it's like over-fishing the oceans.

When the independent businesses are gone, where will

the new ideas come from? We have to do more than keep

media giants from growing larger; they're already too

big. We need a new set of rules that will break these

huge companies to pieces.

 

The big squeeze

 

In the 1970s, I became convinced that a 24-hour

all-news network could make money, and perhaps even

change the world. But when I invited two large media

corporations to invest in the launch of CNN, they

turned me down. I couldn't believe it. Together we

could have launched the network for a fraction of what

it would have taken me alone; they had all the

infrastructure, contacts, experience, knowledge. When

no one would go in with me, I risked my personal

wealth to start CNN. Soon after our launch in 1980,

our expenses were twice what we had expected and

revenues half what we had projected. Our losses were

so high that our loans were called in. I refinanced at

18 percent interest, up from 9, and stayed just a step

ahead of the bankers. Eventually, we not only became

profitable, but also changed the nature of news – from

watching something that happened to watching it as it

happened.

 

But even as CNN was getting its start, the climate for

independent broadcasting was turning hostile. This

trend began in 1984, when the FCC raised the number of

stations a single entity could own from seven – where

it had been capped since the 1950s – to 12. A year

later, it revised its rule again, adding a national

audience-reach cap of 25 percent to the 12 station

limit – meaning media companies were prohibited from

owning TV stations that together reached more than 25

percent of the national audience. In 1996, the FCC did

away with numerical caps altogether and raised the

audience-reach cap to 35 percent. This wasn't

necessarily bad for Turner Broadcasting; we had

already achieved scale. But seeing these rules changed

was like watching someone knock down the ladder I had

already climbed.

 

Meanwhile, the forces of consolidation focused their

attention on another rule, one that restricted

ownership of content. Throughout the 1980s, network

lobbyists worked to overturn the so-called Financial

Interest and Syndication Rules, or fin-syn, which had

been put in place in 1970, after federal officials

became alarmed at the networks' growing control over

programming. As the FCC wrote in the fin-syn decision:

" The power to determine form and content rests only in

the three networks and is exercised extensively and

exclusively by them, hourly and daily. " In 1957, the

commission pointed out, independent companies had

produced a third of all network shows; by 1968, that

number had dropped to 4 percent. The rules essentially

forbade networks from profiting from reselling

programs that they had already aired.

 

This had the result of forcing networks to sell off

their syndication arms, as CBS did with Viacom in

1973. Once networks no longer produced their own

content, new competition was launched, creating fresh

opportunities for independents.

 

For a time, Hollywood and its production studios were

politically strong enough to keep the fin-syn rules in

place. But by the early 1990s, the networks began

arguing that their dominance had been undercut by the

rise of independent broadcasters, cable networks, and

even videocassettes, which they claimed gave viewers

enough choice to make fin-syn unnecessary. The FCC

ultimately agreed – and suddenly the broadcast

networks could tell independent production studios,

" We won't air it unless we own it. " The networks then

bought up the weakened studios or were bought out by

their own syndication arms, the way Viacom turned the

tables on CBS, buying the network in 2000. This

silenced the major political opponents of

consolidation.

 

Even before the repeal of fin-syn, I could see that

the trend toward consolidation spelled trouble for

independents like me. In a climate of consolidation,

there would be only one sure way to win: bring a

broadcast network, production studios, and cable and

satellite systems under one roof. If you didn't have

it inside, you'd have to get it outside – and that

meant, increasingly, from a large corporation that was

competing with you. It's difficult to survive when

your suppliers are owned by your competitors. I had

tried and failed to buy a major broadcast network, but

the repeal of fin-syn turned up the pressure. Since I

couldn't buy a network, I bought MGM to bring more

content in-house, and I kept looking for other ways to

gain scale. In the end, I found the only way to stay

competitive was to merge with Time Warner and

relinquish control of my companies.

 

Today, the only way for media companies to survive is

to own everything up and down the media chain – from

broadcast and cable networks to the sitcoms, movies,

and news broadcasts you see on those stations; to the

production studios that make them; to the cable,

satellite, and broadcast systems that bring the

programs to your television set; to the Web sites you

visit to read about those programs; to the way you log

on to the Internet to view those pages. Big media

today wants to own the faucet, pipeline, water, and

the reservoir. The rain clouds come next.

 

Supersizing networks

 

Throughout the 1990s, media mergers were celebrated in

the press and otherwise seemingly ignored by the

American public. So, it was easy to assume that media

consolidation was neither controversial nor

problematic. But then a funny thing happened.

 

In the summer of 2003, the FCC raised the national

audience-reach cap from 35 percent to 45 percent. The

FCC also allowed corporations to own a newspaper and a

TV station in the same market and permitted

corporations to own three TV stations in the largest

markets, up from two, and two stations in medium-sized

markets, up from one. Unexpectedly, the public

rebelled. Hundreds of thousands of citizens complained

to the FCC. Groups from the National Organization for

Women to the National Rifle Association demanded that

Congress reverse the ruling. And like-minded

lawmakers, including many long-time opponents of media

consolidation, took action, pushing the cap back down

to 35, until – under strong White House pressure – it

was revised back up to 39 percent. This June, the U.S.

Court of Appeals for the Third Circuit threw out the

rules that would have allowed corporations to own more

television and radio stations in a single market, let

stand the higher 39 percent cap, and also upheld the

rule permitting a corporation to own a TV station and

a newspaper in the same market; then, it sent the

issues back to the same FCC that had pushed through

the pro-consolidation rules in the first place.

 

In reaching its 2003 decision, the FCC did not argue

that its policies would advance its core objectives of

diversity, competition, and localism. Instead, it

justified its decision by saying that there was

already a lot of diversity, competition, and localism

in the media – so it wouldn't hurt if the rules were

changed to allow more consolidation. Their decision

reads: " Our current rules inadequately account for the

competitive presence of cable, ignore the

diversity-enhancing value of the Internet, and lack

any sound bases for a national audience reach cap. "

Let's pick that assertion apart.

 

First, the " competitive presence of cable " is a

mirage. Broadcast networks have for years pointed to

their loss of prime-time viewers to cable networks –

but they are losing viewers to cable networks that

they themselves own. Ninety percent of the top 50

cable TV stations are owned by the same parent

companies that own the broadcast networks. Yes,

Disney's ABC network has lost viewers to cable

networks. But it's losing viewers to cable networks

like Disney's ESPN, Disney's ESPN2, and Disney's

Disney Channel. The media giants are getting a deal

from Congress and the FCC because their broadcast

networks are losing share to their own cable networks.

It's a scam.

 

Second, the decision cites the " diversity-enhancing

value of the Internet. " The FCC is confusing diversity

with variety. The top 20 Internet news sites are owned

by the same media conglomerates that control the

broadcast and cable networks. Sure, a hundred-person

choir gives you a choice of voices, but they're all

singing the same song.

 

The FCC says that we have more media choices than ever

before. But only a few corporations decide what we can

choose. That is not choice. That's like a dictator

deciding what candidates are allowed to stand for

parliamentary elections, and then claiming that the

people choose their leaders. Different voices do not

mean different viewpoints, and these huge corporations

all have the same viewpoint – they want to shape

government policy in a way that helps them maximize

profits, drive out competition, and keep getting

bigger.

 

Because the new technologies have not fundamentally

changed the market, it's wrong for the FCC to say that

there are no " sound bases for a national

audience-reach cap. " The rationale for such a cap is

the same as it has always been. If there is a limit to

the number of TV stations a corporation can own, then

the chance exists that after all the corporations have

reached this limit, there may still be some stations

left over to be bought and run by independents. A

lower limit would encourage the entry of independents

and promote competition. A higher limit does the

opposite.

 

Triple blight

 

The loss of independent operators hurts both the media

business and its citizen-customers. When the ownership

of these firms passes to people under pressure to show

quick financial results in order to justify the

purchase, the corporate emphasis instantly shifts from

taking risks to taking profits. When that happens,

quality suffers, localism suffers, and democracy

itself suffers.

 

Loss of Quality

 

The Forbes list of the 400 richest Americans exerts a

negative influence on society, because it discourages

people who want to climb up the list from giving more

money to charity. The Nielsen ratings are dangerous in

a similar way – because they scare companies away from

good shows that don't produce immediate blockbuster

ratings. The producer Norman Lear once asked, " You

know what ruined television? " His answer: when The New

York Times began publishing the Nielsen ratings. " That

list every week became all anyone cared about. "

 

When all companies are quarterly earnings-obsessed,

the market starts punishing companies that aren't

yielding an instant return. This not only creates a

big incentive for bogus accounting, but also it

inhibits the kind of investment that builds economic

value. America used to know this. We used to be a

nation of farmers. You can't plant something today and

harvest tomorrow. Had Turner Communications been

required to show earnings growth every quarter, we

never would have purchased those first two TV

stations.

 

When CNN reported to me, if we needed more money for

Kosovo or Baghdad, we'd find it. If we had to bust the

budget, we busted the budget. We put journalism first,

and that's how we built CNN into something the world

wanted to watch. I had the power to make these budget

decisions because they were my companies. I was an

independent entrepreneur who controlled the majority

of the votes and could run my company for the long

term. Top managers in these huge media conglomerates

run their companies for the short term. After we sold

Turner Broadcasting to Time Warner, we came under such

earnings pressure that we had to cut our promotion

budget every year at CNN to make our numbers. Media

mega-mergers inevitably lead to an overemphasis on

short-term earnings.

 

You can see this overemphasis in the spread of reality

television. Shows like " Fear Factor " cost little to

produce – there are no actors to pay and no sets to

maintain – and they get big ratings. Thus, American

television has moved away from expensive sitcoms and

on to cheap thrills. We've gone from " Father Knows

Best " to " Who Wants to Marry My Dad? " , and from " My

Three Sons " to " My Big Fat Obnoxious Fiance. "

 

The story of Grant Tinker and Mary Tyler Moore's

production studio, MTM, helps illustrate the point.

When the company was founded in 1969, Tinker and Moore

hired the best writers they could find and then left

them alone – and were rewarded with some of the best

shows of the 1970s. But eventually, MTM was bought by

a company that imposed budget ceilings and laid off

employees. That company was later purchased by Rev.

Pat Robertson; then, he was bought out by Fox. Exit

" The Mary Tyler Moore Show. " Enter " The Littlest

Groom. "

 

Loss of localism

 

Consolidation has also meant a decline in the local

focus of both news and programming. After analyzing

23,000 stories on 172 news programs over five years,

the Project for Excellence in Journalism found that

big media news organizations relied more on syndicated

feeds and were more likely to air national stories

with no local connection.

 

That's not surprising. Local coverage is expensive,

and thus will tend be a casualty in the quest for

short-term earnings. In 2002, Fox Television bought

Chicago's Channel 50 and eliminated all of the

station's locally produced shows. One of the cancelled

programs (which targeted pre-teens) had scored a

perfect rating for educational content in a 1999

University of Pennsylvania study, according to The

Chicago Tribune. That accolade wasn't enough to save

the program. Once the station's ownership changed, so

did its mission and programming.

 

Loss of localism also undercuts the public-service

mission of the media, and this can have dangerous

consequences. In early 2002, when a freight train

derailed near Minot, N.D., releasing a cloud of

anhydrous ammonia over the town, police tried to call

local radio stations, six of which are owned by radio

mammoth Clear Channel Communications. According to

news reports, it took them over an hour to reach

anyone – no one was answering the Clear Channel phone.

By the next day, 300 people had been hospitalized,

many partially blinded by the ammonia. Pets and

livestock died. And Clear Channel continued beaming

its signal from headquarters in San Antonio, Texas –

some 1,600 miles away.

 

Loss of democratic debate

 

When media companies dominate their markets, it

undercuts our democracy. Justice Hugo Black, in a

landmark media-ownership case in 1945, wrote: " The

First Amendment rests on the assumption that the

widest possible dissemination of information from

diverse and antagonistic sources is essential to the

welfare of the public. "

 

These big companies are not antagonistic; they do

billions of dollars in business with each other. They

don't compete; they cooperate to inhibit competition.

You and I have both felt the impact. I felt it in

1981, when CBS, NBC, and ABC all came together to try

to keep CNN from covering the White House. You've felt

the impact over the past two years, as you saw little

news from ABC, CBS, NBC, MSNBC, Fox, or CNN on the

FCC's actions. In early 2003, the Pew Research Center

found that 72 percent of Americans had heard " nothing

at all " about the proposed FCC rule changes. Why? One

never knows for sure, but it must have been clear to

news directors that the more they covered this issue,

the harder it would be for their corporate bosses to

get the policy result they wanted.

 

A few media conglomerates now exercise a near-monopoly

over television news. There is always a risk that news

organizations can emphasize or ignore stories to serve

their corporate purpose. But the risk is far greater

when there are no independent competitors to air the

side of the story the corporation wants to ignore.

More consolidation has often meant more news-sharing.

But closing bureaus and downsizing staff have more

than economic consequences. A smaller press is less

capable of holding our leaders accountable. When

Viacom merged two news stations it owned in Los

Angeles, reports The American Journalism Review,

" field reporters began carrying microphones labeled

KCBS on one side and KCAL on the other. " This was no

accident. As the Viacom executive in charge told The

Los Angeles Business Journal: " In this duopoly, we

should be able to control the news in the

marketplace. "

 

This ability to control the news is especially

worrisome when a large media organization is itself

the subject of a news story. Disney's boss, after

buying ABC in 1995, was quoted in LA Weekly as saying,

" I would prefer ABC not cover Disney. " A few days

later, ABC killed a " 20/20 " story critical of the

parent company.

 

But networks have also been compromised when it comes

to non-news programs which involve their corporate

parent's business interests. General Electric

subsidiary NBC Sports raised eyebrows by apologizing

to the Chinese government for Bob Costas's reference

to China's " problems with human rights " during a

telecast of the Atlanta Olympic Games. China, of

course, is a huge market for GE products.

 

Consolidation has given big media companies new power

over what is said not just on the air, but off it as

well. Cumulus Media banned the Dixie Chicks on its 42

country music stations for 30 days after lead singer

Natalie Maines criticized President Bush for the war

in Iraq. It's hard to imagine Cumulus would have been

so bold if its listeners had more of a choice in

country music stations. And Disney recently provoked

an uproar when it prevented its subsidiary Miramax

from distributing Michael Moore's film Fahrenheit

9/11. As a senior Disney executive told The New York

Times: " It's not in the interest of any major

corporation to be dragged into a highly charged

partisan political battle. " Follow the logic, and you

can see what lies ahead: If the only media companies

are major corporations, controversial and dissenting

views may not be aired at all.

 

Naturally, corporations say they would never suppress

speech. But it's not their intentions that matter;

it's their capabilities. Consolidation gives them more

power to tilt the news and cut important ideas out of

the public debate. And it's precisely that power that

the rules should prevent.

 

Independents' day

 

This is a fight about freedom – the freedom of

independent entrepreneurs to start and run a media

business, and the freedom of citizens to get news,

information, and entertainment from a wide variety of

sources, at least some of which are truly independent

and not run by people facing the pressure of quarterly

earnings reports. No one should underestimate the

danger. Big media companies want to eliminate all

ownership limits. With the removal of these limits,

immense media power will pass into the hands of a very

few corporations and individuals.

 

What will programming be like when it's produced for

no other purpose than profit? What will news be like

when there are no independent news organizations to go

after stories the big corporations avoid? Who really

wants to find out? Safeguarding the welfare of the

public cannot be the first concern of a large publicly

traded media company. Its job is to seek profits. But

if the government writes the rules in a way that

encourages the entry into the market of entrepreneurs

– men and women with big dreams, new ideas, and a

willingness to take long-term risks – the economy will

be stronger, and the country will be better off.

 

I freely admit: When I was in the media business,

especially after the federal government changed the

rules to favor large companies, I tried to sweep the

board, and I came within one move of owning every link

up and down the media chain. Yet I felt then, as I do

now, that the government was not doing its job. The

role of the government ought to be like the role of a

referee in boxing, keeping the big guys from killing

the little guys. If the little guy gets knocked down,

the referee should send the big guy to his corner,

count the little guy out, and then help him back up.

But today the government has cast down its duty, and

media competition is less like boxing and more like

professional wrestling: The wrestler and the referee

are both kicking the guy on the canvas.

 

At this late stage, media companies have grown so

large and powerful, and their dominance has become so

detrimental to the survival of small, emerging

companies, that there remains only one alternative:

Bust up the big conglomerates. We've done this before:

to the railroad trusts in the first part of the 20th

century, to Ma Bell more recently. Indeed, big media

itself was cut down to size in the 1970s, and a period

of staggering innovation and growth followed. Breaking

up the reconstituted media conglomerates may seem like

an impossible task when their grip on the

policy-making process in Washington seems so sure. But

the public's broad and bipartisan rebellion against

the FCC's pro-consolidation decisions suggests

something different. Politically, big media may again

be on the wrong side of history – and up against a

country unwilling to lose its independents.

 

© 2004 Independent Media Institute. All rights

reserved.

View this story online at: http://www.alternet.org/story/19327/