Saturday, March 30, 2002

Big media consolidation does not matter This sincere diatribe against the evils of media consolidation reflects how the "Left" can often be it's own worst enemy. The argument is that single ownership of multiple distribution networks and content will lead to less diversity in media. Apart from the empirical fact that diverse content has been exploding in every channel since the 70s, there are also simple economic truths behind what's going on and why the end result will not be bad.

Firstly, there are economies of scope in owning multiple channels because then you can re-purpose content. The only reason this hasn't happened already is the certificate of convenience and necessity regime cooked up by the government and radio monopolies as they made their migration to TV after World War II. Deregulation allows these economies and will result in more, cheaper content.

Secondly, there's no reason a vertically integrated content producer and distributor should exclude rival content or refuse to license it's own content to other distributors. Once you factor in opportunity costs it really makes no difference one way or the other (unless the distributors do some important local marketing, in which case consumers benefit from that integration). Media companies are not out to control the world, they just want to make as much money as possible.

And thirdly, these soft-headed whines ignore how the power shifts from one part of an industry to another. ClearChannel is a popular bete noir because it toasts small local stations. But small local stations are in a poor bargaining position against the recording industry cartel, and ClearChannel can do a much better job of negotiating better terms from them. This helps consumers.

Most amusingly, the authors don't recognize how Fritz Hollings' (D-South Carolina and wholly owned subsidiary of Disney, Inc) actions against FCC deregulation protect the very media cartels they excoriate. FCC regulations maintain the high federally mandated barriers to entry the incumbents currently enjoy, and deregulation would lower them. (via Rebecca Blood)


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