Media monopoly for the new millennium

By Edward Wasserman

Week of February 6, 2006

Last spring the press was all aflutter with news that big media companies were actually getting smaller. “The media moguls built them up, and now they are breaking them apart,” Business Week reported. After a “decade of unprecedented consolidation” the conglomerates that dominate the news and entertainment industries supposedly realized that their bulk might be keeping them from getting richer. Sometimes, a really fat guy has trouble reaching over the buffet table.

Financial writers nationwide were talking deconcentration: Instead of fewer and fewer companies controlling more and more of the media, these bloated businesses was spawning smaller, better focused and more sharply competitive companies.

It was a good story, a nice change from the dark warnings of monopoly from commentators on the right and left we’d been hearing. Those alarms had churned up an unparalleled wave of public anger that broke over the Federal Communications Commission in 2003, in opposition to FCC proposals to weaken limits on how much audience share a single broadcast owner could control and when companies could own both newspapers and broadcasters in the same place.

Instead, media were scaling back all by themselves. What a relief. One influential Merrill Lynch stock analyst declared that after all, Wall Street preferred spry little companies with clear focus: “What's working right now are the pure plays like Pixar,” Steve Jobs’ animation boutique.

Actually, evidence of downsizing was sparse. The news peg was that Viacom, the number 3 U.S. media owner, would split in two, with go-go M TV and Paramount Pictures on one side and boring old CBS and the radio business on the other. Beyond that, there were little more than hints that Time Warner and AOL might divorce, and that Disney might sell some of its vast holdings.

None of that happened, and some of us were skeptical that the trend was real, and if so, that it meant anything. Simply because companies stuffed into cumbersome conglomerates don’t play well together doesn’t mean they won’t end up reconfigured into equally mammoth clusters that do just fine. Monopolistic control would be shifted, not eased. We’d end up with another wave of consolidation.

Sure enough: Now Viacom is spinning off UPN, its youth-oriented cable network, so it can merge with WB, Time Warner’s youth-oriented cable network, to create a bigger youth-oriented cable network, to be known as CW. (Speculation is that this may be a prelude to a much bigger deal in which CNN and CBS News merge.) DreamWorks SKG, the studio co-founded by Steven Spielberg, is being bought by Viacom, and Disney just gobbled up independent filmmaker Miramax, its erstwhile partner.

And remember Pixar, the “pure play” Wall Street was drooling over? Disney’s buying it for $7.4 billion, creating an unassailable dominatrix in animated entertainment.

So media owners are back to buying up and bulking up. Traditional media aren’t shrinking after all.

But never mind that. Connoisseurs of monopoly need to shift their attention to the Internet, where we’re on the brink of a concentration of media control that a few years ago would have been unimaginable. Consider this: Roughly one-fifth of the human race, the 1.3 billion people of China, have been denied access to huge areas of critically important information about their own country  such as the annihilation of the 1989 democracy movement  thanks to the self-serving complicity of just three U.S. companies: Yahoo, Microsoft and Google.

Now that’s concentrated power.

And it’s just the start. Most of us see Yahoo and Google as mere search engines, tools for browsing the Internet. Forget that. That’s nothing. Within a few years we will depend on these immensely rich companies or their close cousins for most all of our media  TV, movies, games, newspapers, blogs, e-commerce, e-mail, interactive advertising, phone service  and conduct ever-expanding realms of our daily affairs, personal and professional.

And they aren’t just conduits. These are no reborn phone companies. Increasingly they’re getting into producing content of their own, parleying their astonishing control over audience access into power over content and other content providers.

Worse, they don’t just distribute and produce content; they preside over a two-way street. They compile information  most of it about us. Witness the current dustup in which Google is resisting pressure from federal prosecutors to hand over information about searches for sex sites. Turns out these guys know quite a lot about what you’ve been poking around in, and this is information they can trade, sell and use.

No, the problem of media concentration isn’t over. It hasn’t even begun. Technological advances have moved us way beyond quaint issues of how many obsolescent TV stations one company should own. The same Internet that promises empowerment and unprecedented informational abundance has made possible a depth of control that the most visionary tyrant of the past would not have dared aspire to.

Are you ready to do the news? - 8/7/2006

The costs of keeping broadcasting decent - 07/24/2006

Secrecy and its limits - 07/10/2006

Protecting sources who need exposing - 06/12/2006

In defense of telling secrets - 05/28/2006

Is ‘convergence’ the next media disaster? - 05/22/2006

What the Pulitzers ought to be - 05/01/2006

Cutting deals isn’t just for gossip mongers - 04/17/2006

A public trust with no public and less trust - 03/20/2006