Academic journal article Stanford Journal of Law, Business & Finance

The Diversity Paradox: Media Ownership Regulation and Program Variety

Academic journal article Stanford Journal of Law, Business & Finance

The Diversity Paradox: Media Ownership Regulation and Program Variety

Article excerpt

I. Introduction

The Federal Communications Commission's decision to relax restrictions on media ownership didn't fuel a "Copernican revolution," as Commissioner Michael Powell once suggested, but the new rules certainly sent critics into orbit.1 Approved by the Commission in June 2003, the rules ignited a firestorm of criticism from both sides of the political fence. The National Organization for Women and the National Writers Guild allied in opposition with strange bedfellows, including the National Rifle Association, the Parents Television Council, and the United States Conference of Catholic Bishops. Meanwhile, the Newspaper Association of America and the National Association of Broadcasters fought to preserve the rule revisions. The resulting conflict sparked one of the fiercest lobbying battles of the last Congressional session, with opponents lodging more than one million complaints with the FCC and Congress.2 Employing a rare parliamentary device, the Senate passed a resolution to repeal the FCC rules. It was only the second time the Senate had passed a so-called "resolution of disapproval" to censure a federal agency. Noting the controversy, the federal courts enjoined implementation of the rule changes; in one case, the Third Circuit did so just a day before the rules were to take force.3

Despite the hysteria, the FCC's actions were modest: the FCC merely relaxed prior rules, and did so after significant prodding from the legislature and the federal bench. The most important changes permitted media owners to expand their national reach, own a few more outlets within local markets, and "cross-own" different media. For example, the nation's four largest television networks would be allowed to own stations reaching 45% of households rather than 35%. Within local markets, some media firms would be able to own three television stations instead of two. In most markets, media companies would be able to own a television station and a newspaper, subject to significant restrictions.

The controversy offers an ideal opportunity to revisit the theoretical underpinnings of media ownership restrictions. Those arguing for stricter ownership limits assert that the rules serve as a last defense against increasingly concentrated and powerful media interests. Such commentators predict dire consequences if the FCC severs the regulatory leash. For instance, in no fewer than seven editions, one author suggested that media firms would practically subjugate the American consciousness.4 More moderate proponents of stricter ownership limits argue that multiple-outlet owners exercise market power in the marketplace of ideas; that is, these firms capture monopoly rents by cutting program quality, reducing program diversity and excluding media rivals. Because large firms so dominate the Miltonian marketplace,5 they may disseminate substandard content without competitive ramification. In antitrust parlance, these firms engage in unilateral anticompetitive behavior. Such behavior, in turn, imperils the "marketplace of ideas" in which diverse ideas clash and correct principles emerge.

An open marketplace of ideas is often thought essential to an informed electorate and participatory democracy.6 It is little wonder that this metaphor has been a staple of First Amendment jurisprudence; as Justice Holmes wrote in his famous dissent in Abrams v. United States:

[W]hen men have realized that time has upset many fighting faiths, they may come to believe even more than they believe the very foundations of their own conduct that the ultimate good desired is better reached by free trade in ideas-that the best test of truth is the power of the thought to get itself accepted in the competition of the market ... That at any rate is the theory of our Constitution.7

Limit advocates further argue that ownership restrictions best preserve First Amendment values by removing obstructions to the free flow of diverse ideas. …

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