Operating in the Public Interest or in Pursuit of Private Profits? News in the Age of Media Consolidation

By Champlin, Dell; Knoedler, Janet | Journal of Economic Issues, June 2002 | Go to article overview

Operating in the Public Interest or in Pursuit of Private Profits? News in the Age of Media Consolidation


Champlin, Dell, Knoedler, Janet, Journal of Economic Issues


The "synergies" created by means of the major media mergers in the United States over the past decade--the combination of massive libraries of content with multiple distribution channels-have been heralded as important benefits for consumers. The mainstream argument is that these mergers over the past decade have greatly increased the volume of available information and greatly decreased the cost of delivering the news to the average citizen. Consumers now can surf the twenty-four-hour news channels and the ubiquitous Internet sites, or opt instead for personalized news, delivered to them daily via email.

Have these synergies really brought about an improvement of consumer welfare? The media are charged with providing an important service to their citizen-consumers--thorough and unbiased information that will aid them in making conscious and conscientious decisions in the voting booth and in other aspects of their consumer and citizen lives. But in the age of media consolidation and cartelization, the quality and even the quantity of news has deteriorated. News divisions have become just another profit center for their conglomerate parents that must yield the same rates of profit as the more lucrative entertainment divisions of these media empires. Whereas broadcast stations still are licensed to operate in "the public interest," news in the age of media empires has become reduced to "info-tainment." This paper will examine the current state of news in our media conglomerate age and consider, from an institutionalist point of view, modern journalism as the ultimate example of making money versus making "goods. "

The Emergence of Media Giants

The past decade has witnessed a trend toward media concentration, accelerated by the passage of the 1996 Telecommunications Act. As various authors have noted, concentration in specific media sectors, already at a high level, increased markedly during the 1990s (see table 1). While this degree of concentration in specific media sectors is both unprecedented and staggering, the concomitant trend in media has been the "conglomeration of media ownership," to use McChesney's term. The alarming trend toward media consolidation and conglomeration has been especially rapid over the past two decades: in 1983, fifty corporations dominated most of the mass media in this country (Bagdikian 1997, xlvi). But today a mere handful of firms dominate our mass media (Bagdikian 2000, xii). The Big Six, as they should be called, include AOL-Time Warner, Disney, Viacom, NewsCorp, Bertelsmann, and General Electric (Bagdikian x). (1) In the largest of all recent media mergers, AOL Time Warner combined AOL's 100 million internet sub scribers with Time Warner's 75 million cable subscribers. AOL Time Warner is also a dominant player in cable programming, magazine publishing, movie production, book publishing, music recording, and other related ventures (McChesney, 92-93; Bagdikian, xi). Each of the other five media giants has substantial market power in most of these same areas (McChesney, 93 ff.). Moreover, the Big Six are intertwined due to ownership of stock in their fellow media empires, joint ventures, and other interlocking devices (cf. Rifkin 2000; Bagdikian; Croteau and Hoynes 2001). To quote TCI chairman John Malone, "nobody can really afford to get mad with their competitors, because they are partners in one area and competitors in another" (quoted in Rifkin 2000, 221). The firms compete vigorously in only one area, the battle for the largest share of advertising revenues (Bagdikian 2000, xxii). Ben Bagdikian predicted in 2000 that the AOL-Time Warner merger would likely bring about other media mergers (Bagdikian 2000, xi). And w e have in fact seen, just in the last few weeks, proposed mergers involving such media powerhouses as Vivendi, Comcast, and AT&T. As Bagdikian warned, "the prospect is for a giantism and concentrated power beyond anything ever seen" (Bagdikian 2000, xi). …

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