US Media Markets: Is Continued Regulation Still Necessary? Dr. Anna P. Della Valle Columbia University Presented at the 15 th International Conference.

US Media Markets: Is Continued Regulation

Still Necessary?Dr. Anna P. Della ValleColumbia University

Presented at the 15th International Conference of the ACEI

Boston, June 13-15, 2008

On December 18, 2007, the FCC gave:

Relaxation of mediacross-ownership rules

No change in cable ownershiprules

US Broadcasters a gift

and cable television owners a lump of coal

Cross-ownership not permitted

Rules Loosened for Top 20 Markets1. New York2. Los Angeles3. Chicago4. Philadelphia5. Dallas-Ft. Worth6. San Francisco-Oakland-San Jose7. Boston8. Atlanta9. Washington, D.C.10. Houston11. Detroit12. Phoenix13. Tampa-St. Petersburg, Fla.14. Seattle-Tacoma15. Minneapolis-St. Paul, Minn.16. Miami-Ft. Lauderdale17. Cleveland-Akron18. Denver19. Orlando-Daytona Beach, Fla.20. Sacramento, Calif.

Cross-ownership rules unchanged since 1975

Exceptions to the Media Cross-Ownership Rules

• Grandfathering

• Financial distress

Rationale for US Media Cross Ownership Rules

• Pursuant to the 1934 Communications Act, the FCC is required to ensure that licenses to public TV and radio broadcasters are granted “in the public interest and necessity” to “promote diversity and localism.”

Concerns Re. Localism and Diversity

Arguments for:• Need to give viewers,

listeners, readers what they want

• Cost efficiencies• Change in media

landscape– Availability of other sources– Internet as “citizen media”

Arguments against:• Homogenization of

programming• Evidence from radio• Loss of localism• Empirical evidence• Effect on “marketplace of

ideas.”

Cable Television Ownership

Cannot reach more than 40% of US cable households

Rationale for the Cable Ownership Ruling

Undue market power over:

Prices Content

Buying power overIndependent programming

Availability of alternativemeans of program distribution: satellite, telephone, other cable

Exercise of Market Power Over Content

Arguments for:• Need to give viewers

what they want.• Increased efficiency

from vertical integration

• Availability of other media sources

Arguments against:• Buyers’ market power

over independent programmers

• Sellers’ market power from premium services

• Incentives to favor own programming and content

• Empirical evidence

Anecdotal EvidenceThis idea that the cable companies don't discriminate is ridiculous. That's what they do. They're the gatekeeper of the platform. They decide whether you get the golf channel or the food channel, and, you know, if they're part owner of you, your odds of getting on tend to be a little higher, but I mean that's exactly precisely what they do.

Jerry Levine, Chairman, Time Warner, Transcript of AOL/Time Warner FCC Hearings

Anecdotal Evidence

If the rules (allowing increased consolidation of cable companies) had been in place in 1970, it would have been virtually impossible for me to start Turner Broadcasting or, 10 years later, to launch CNN.

Ted Turner, ex-chairman Turner Broadcasting Washington Post, 05/30/2003

Experience in Other Countries

Rupert Murdoch Silvio Berlusconi Emilio Azcarraga