Are Media Conglomerates Bad for Us?

Are Media Conglomerates Bad for Us?

Nov. 30 2004 5:05 PM

Are Media Conglomerates Bad for Us?

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Kurt Andersen
7:41 a.m.  Tuesday  10/22/96 

       Like most generalizations, the putatively inherent evil of the ownership of news organs by increasingly large corporations is both right and wrong. I agree with Walter Isaacson, based on personal experience working for small and smallish and large media proprietors, that the commercial or synergistic or extrajournalistic or otherwise unwholesome pressures felt at Time Inc. are minimal (albeit not nonexistent). But the rather laissez-faire, benign culture of Time Warner is obviously not universal: the shamelessly and explicitly ideological synergy now underway at News Corp.--the New York Post's shilling for Republicanism and for the new Fox News channel--is an equally compelling argument for the anti-corporate case.
       Are the reporters and producers at NBC News looking to broadcast tough stories on General Electric, or CBS News on Westinghouse, or ABC News on Disney? Probably not. But are any of these (speculative, presumptive) instances of self-censorship deeply alarming or significantly damaging to free speech? Probably not. And are the network news divisions or the other mass news organs--the newsmagazines, the New York Times, the Wall Street Journal--in any significant way less aggressive or more corporation-friendly as a result of the media-infotainment conglomeration of the last decade? I doubt it. When journalism is bad, it is bad for its own reasons (local news, for instance), mostly unrelated to corporate giantism. Which doesn't mean that the big national news entities are necessarily doing great jobs, or that media-infotainment conglomeration may not be undesirable on various grounds. But I think that there is as great or greater a diversity of news-and-commentary voices today than at any time in the last half century. And indeed, I'd probably be more inclined to entertain the idea that today's radical diversity, abetted especially by the Internet and talk radio, may well represent more of a danger than the current monopolization of the national media.

W. Russell Neuman
8:06 a.m.  Tuesday  10/22/96 

       I think Andrew is getting us started in the right direction by focusing on the Internet. This is going to come down to a battle between very big companies and very small microchips, and the microchips are going to win.
       Take the celebrated battle in New York between Time Warner and Murdoch over cable access to news channels. It is an interesting case study now because as we move through a technical transition, there is still a bandwidth shortage and a channel mentality. But as we move to an Internet on-demand model for delivery of video, you get what you ask for. The current hoopla over cable modems and Web TV is only the beginning. Someday we'll look back on the fights between broadcasters and cable companies over carriage and over being assigned a "low channel allocation" on the set-top box (presumably easier to find) as quaint and amusing.

Walter Isaacson
8:17 a.m.  Tuesday  10/22/96 

       To clarify our moderator's point: I'm not arguing that media are always independent of the companies that own them. I would argue, however, that media that are owned by big corporations (NBC, Microsoft, Time Warner) are not inevitably more craven or lacking in editorial integrity than those owned by small companies (Henry Kravis's K-III, Mort Zuckerman, Ron Perelman, Martin Peretz, the owners of the New York Observer, etc.) We in the journalism trade have to be vigilant against editorial meddling wherever it comes from, and that includes government. If Murdoch uses his media to push a political or financial agenda, we should criticize it irrespective of whether we define him as a mogul or a conglomerate. The same would be true if Time Warner or Microsoft or Kravis or a local newspaper publisher were to do it, and I hope we'd all yelp every time it happens.
       I also think I'd disagree with Andrew Schwartzman when he says that the Internet is no more or less democratic than other media. I understand his point about reader acquisition costs. But the Internet allows all sorts of folks to put up services, post opinions, or engage in debates in discussion groups like this. This is a pretty major transformation underway, and a great one. It is inherent, I submit, in the nature and technology of the digital age, where distribution and replication costs shrink from huge to almost nil. Sure, forming a "mass audience" will be more difficult than in the days of three networks. But hundreds of new voices, ranging from funky Webmasters to wacky conspiracy buffs to serious analysts are now finding an audience. If digital TV, with 500 or unlimited on-demand channels, ever materializes as promised in the next 10 years, this will be even more true. Already, despite Time Warner cable's controversial fight with Fox news, the age of 70 channels has brought all sorts of new news, business, sports, local access, and talk outlets. This reduces, I think, fears of a declining diversity of media voices.
       As for Andrew's point that the economics of media overlooks the social value of a well-informed populace, and Chris Byron's point that profit pressures lead to schlock: I admit that we at Time sometimes go for a popular cover, though I like to think we've reversed that trend a bit. The newsmagazines still do special issues on Russia and China and the Middle East, serious coverage of the election and issues like affirmative action and campaign finance. And we still sell more copies at a higher price than magazines like People or more schlocky publications.
       And finally, permit me a small polite challenge to a point Chris Byron made, that he also has made in print, about the masthead of Time being a hoax because we list a couple of people who work out of their homes overseas. Yes, James Wilde in Istanbul is a contract writer using a laptop in his home; but he's a veteran, great reporter who was the first to get to the Kurds in their latest uprising and interview Barzani. And Rome is no longer an elegant bureau, but a reporter with a laptop. But we have not engaged in major personnel cutbacks, and next year will have more people covering the world than we have this year. Our profits are increasing, and though we're redeploying resources more efficiently we are not facing budget cutbacks.

Christopher Byron
9:11 a.m.  Tuesday  10/22/96 

       The issue as framed by Walter Isaacson is, I think, somewhat misleading. SLATE and Time magazines are hardly comparable publications--and one need not belabor the obvious to see it. Nor are their parent companies similar in any way.
       Time Warner Inc. is a classic media conglomerate. It is held together by more than $17 billion in debt--the acquisition of which (and the payment of interest upon) has totally devastated shareholder value in the company. Anyone unfortunate enough to have invested $10,000 in the company's stock a decade ago would today be holding shares worth less than $20,000--a barely 7 percent annualized rate of return that is no better than one could have done by simply leaving his money in the bank.
       No matter how one looks at the company, Time Warner in 1996 is a corporate mess. Its financial filings with the SEC are so complicated that not even Wall Street's experts can understand them. There are 17 different trenches of debt on the balance sheet, along with a bewildering array of hybrid securities like so-called Lyons and Piks.
       Time Warner holds interests in cable systems ... in cable programming for those systems ... in Hollywood movie making ... in music recording and distribution ... in magazine and book publishing ... and, until recently, even in theme-park entertainment. But the company's management has completely failed to pull these disparate divisions together into a smoothly functioning system. As a result, corporate politics runs riot throughout the organization--even to such petty levels as the refusal of Warner Bros. Studios, I am told, to license to Time magazine's Pathfinder online service the right to use the "Roadrunner" cartoon character as a promotional image.
       By contrast, Microsoft Corporation is totally and completely debt-free, and is tightly focused on the software core of its business, which it is now developing and extending into various fields of the media. Microsoft is a superbly well-managed company, and anyone who invested $10,000 when Microsoft went public in 1986 is today holding stock worth $700,000. To compare the two companies is simply wrong; they have almost nothing in common at all.
       Nor does it get Walter very far to claim, as he does, that Time magazine has editorial integrity and freedom because it was able to refer recently to the company's own stock as a "dog." The real question is why the stock has performed so badly--and though the story Walter refers us to in last week's Time magazine is refreshingly candid about the situation and gives Levin some much-deserved criticism on the stock-price and management fronts, it goes no where nearly far enough to give readers a true understanding of the mess that Time Warner has become.
       I don't blame Time magazine for not covering the matter, and frankly, I don't expect the magazine to do so, either. These are subjects that would inevitably cast the company's current corporate management in an absolutely horrific light--as would, for example, what they are doing doling out stupefying Golden Good-byes to every divisional boss who either quits or is fired, while the company itself careens out of control. This is self-enrichment on a Bourbonesque scale, and it is shameful. But, frankly, I do find it a bit disingenuous of Walter to claim, as he does, that Time magazine is somehow free of editorial meddling from above, and can sound off on whatever it likes. It can't, and Walter knows it.
       In any event, the peril in this whole situation goes far beyond the inability of a company's publication to hector and nag its own corporate bosses. The real issues here are (1) the Ozymandian waste and misallocation of capital that have resulted from the media merger frenzy, and (2) the self-imposed censorship and self-editing that inevitably seeps into more and broader areas of constitutional freedoms than are possible with more narrowly structured companies. Those are the issues here--not whether Time magazine can report that Time Warner's stock is a "dog."

Andrew Schwartzman
9:27 a.m.  Tuesday  10/22/96 

       In the 1996 Telecommunications Act, Congress rejected my preferred solution-strong structural safeguards against predation during the transition to technologies than can provide effective competition.
       Now we have to hope that competition will develop before the big fish swallow the minnows.
       The Committee's mistrust of government and Shafer's ignorant screed are especially ironic, since in recent years government has actually done quite well in adopting to changing technologies (DBS, cellular, microwave TV, Internet) and promoting competition (AT&T divestiture, pre-empting restrictive local ordinances, Bell Atlantic/Paramount, TCI/TimeWarner/Turner). The new law generally promotes media monopoly, e.g., radio megaownership. Shafer wallows in ancient history while the broadcasters end-run regulators by getting Congress to give them $40 billion worth of new spectrum. Stein is also wrong; the law closes off any possibility that franchise renewals can be denied.
       Isaacson wouldn't swear on Henry Luce's grave that there has never been interference at Time. Time won't go into the tank, but few Time Warner/Turner properties are so punctilious. What would People do to get the pictures of Baby Madonna Ciccone? Did Isaacson watch Larry King and CNN executive Lou Dobbs sucking up to their new boss when the merger was announced? Self-censorship is a big problem; people want to please the boss.

Herb Stein
2:37 p.m.  Tuesday  10/22/96 

       It seems to me that we have two aspects of the "independence" question here. One is, how independent are writers (do we now call them "content providers"?) of the enterprises that employ them? On this some disagreement remains, and probably none of us is an independent witness on that subject. The other question is, how numerous are the independent enterprises? I suppose that even if all the writers were as independent as we can imagine of the employing enterprise, we would not be happy if there were only one enterprise. And even if we were not so confident of the independence of the writers, we might be comforted by the existence of a number of independent, competing enterprises. In that sense the problem, if any, is not in the existence of media conglomerates, but in the existence of too few of them.
       Some people have brought up the point that the conglomeration of media is unlikely to go much further because the previous ventures have been financially unsuccessful. I wonder about that now. The fact that the ventures were financially unsuccessful does not demonstrate that there were no net efficiency gains. It only demonstrates that the efficiency gains were not big enough to justify the prices paid and debt incurred in the acquisitions. Byron says that thousands of jobs were lost in these conglomerations. That sounds like an efficiency gain, unless there has been a reduction in the output, which no one has claimed.
       Could someone comment on the question of whether there has been a decline in the availability of independent sources of information? Schwartzman asks us to raise our eyes beyond the media centers to the small communities, where he says the specter of media monopoly is more real. Is that a problem?
       The discussion reminds me of the former president of Columbia University who said that no system of education had yet been developed that would keep an intelligent, eager student with an access to a library from getting a good education. Can something like that be said about the media and the citizens?