Disaster and De-Regulation


October 20, 2001


BROOKE GLADSTONE: We're back with On the Media. I'm Brooke Gladstone.

BOB GARFIELD: And I'm Bob Garfield. For decades major broadcasters have lobbied in Washington for de-regulation, especially those regulations limiting a media company's size and market coverage. In recent years in television, radio, cable and wireless those companies have had substantial success. Media ownership is now heavily concentrated among a few giant corporations, and the current Federal Communications Commission has signaled its willingness to loosen the rules still more. Now at least one corporation has found a novel pretext. In a speech to investment analysts at a conference sponsored by Goldman Sachs, Viacom President Mel Karmazin suggested that the first war of the 21st Century spells opportunity.

MEL Karmazin: We need to have some more - and, and those of you that follow the media world know that after the Gulf War in 1991 there was a whole wave of de-regulation starting with radio duopoly to allow two FM's in the same market. You know, then ultimately to the Telco Bill which caused a, a whole lot of relaxation. So we think that there is a, an opportunity for there to be some further de-regulation which will benefit our industry.

BOB GARFIELD:Karmazin also surveyed the economic hardships suffered by smaller media properties and managed to see past the travails of their owners.

MEL Karmazin: If in fact there is a silver lining from a business point of view, it's because, you know, some of our competitors are not as strong.

BOB GARFIELD:Joining us now is Jeffrey Chester. He's executive director of the Center for Digital Democracy in Washington. Jeff we just listened to Mel Karmazin [LAUGHS] at the Goldman Sachs conference. Did he say what I thought he said?

JEFFREY CHESTER: No, he said two things. One, that there's a, a bright side in-- what's happened after September 11th because there's now a downturn in the media economy and there are a lot of media properties out there that could be swallowed up for good prices by a Viacom/CBS, but he also said in order to do so-- the federal government has to-- get rid of all of the remaining ownership safeguards that prevent a Viacom or an AOL from buying up all these properties.

BOB GARFIELD:So opportunity knocks. There's a bunch of bargains out there if only the government would relax the rules allowing companies like Viacom to snap them up. He's not asking for a direct bailout in the way that the government gave tens of billions in cash to the airlines.

JEFFREY CHESTER: Well but what Karmazin is asking for is for the public to award him media properties that in essence are worth many billions more than we've just given the airline industry.

BOB GARFIELD:One thing that Karmazin told his audience was that there is some precedent for the notion of regulatory relief in the wake of war. He said that the previous round of broadcast industry de-regulation happened in the environment immediately after the Persian Gulf War. Is his memory right? Is that how it shook out?

JEFFREY CHESTER: I think we should be glad that Mr. Karmazin is just a broadcast executive and not an historian. He's flatly wrong. There was no relationship between the television's industry [sic] coverage of the Gulf War and the subsequent de-regulation which happened several years later. Clearly in Mr. Karmazin's mind though there needs to be a quid pro quo for the media industry's coverage of this war.

BOB GARFIELD:Isn't there in the whole licensing process though the assumption that broadcast networks as licensees of public airwaves have a responsibility in the first instance to provide some level of public service? Isn't that part of the deal going in?

JEFFREY CHESTER: The bedrock of the Communications Act is that the broadcasters receive this very valuable license to broadcast that literally brings the broadcasting industry 30 billion a year in revenues -- they get these free licenses because they're supposed to serve the public interest, convenience and necessity. And that really boils down for the most part to providing news.

BOB GARFIELD:In terms of getting bailouts or regulatory relief though from Washington, isn't it kind of like take a number -- there's other industries that are far more desperately affected by the post-September 11th environment than the, the TV networks. How much sympathy can these guys generate on Capitol Hill?

JEFFREY CHESTER: I think that they are quite likely to achieve what they hope to get. You have an administration, particularly the new Bush administration Federal Communications Commission chair Michael Powell who is very sympathetic already to further media de-regulation, and now the networks can say look, my God, you know, we've lost money - we're providing an important public service; we ourselves are targets. The communications -the economy is very important in the country. Give us these de-regulatory policies! So I think there's a real danger that we will lose these public interest safeguards, and the industry will be able to walk away with additional billions of dollars!

BOB GARFIELD: Jeff Chester, thanks very much!

JEFFREY CHESTER: Thank you, Bob.

BOB GARFIELD: Jeff Chester is the executive director of The Center for Digital Democracy.