Rich Media, Poor Democracy

Communication Politics in Dubious Times

Robert W. McChesney

• Publisher: The New Press
• Year: 2016
• ISBN:
  9781620970706
• Topic: Social Sciences
• Subtopic: Media Studies
• Index: Social Sciences

An updated edition of the "penetrating study" examining how the current state of mass media puts our democracy at risk (Noam Chomsky). What happens when a few conglomerates dominate all major aspects of mass media, from newspapers and magazines to radio and broadcast television? After all the hype about the democratizing power of the internet, is this new technology living up to its promise? Since the publication of this prescient work, which won Harvard's Goldsmith Book Prize and the Kappa Tau Alpha Research Award, the concentration of media power and the resultant "hypercommercialization of media" has only intensified. Robert McChesney lays out his vision for what a truly democratic society might look like, offering compelling suggestions for how the media can be reformed as part of a broader program of democratic renewal. Rich Media, Poor Democracy remains as vital and insightful as ever and continues to serve as an important resource for researchers, students, and anyone who has a stake in the transformation of our digital commons. This new edition includes a major new preface by McChesney, where he offers both a history of the transformation in media since the book first appeared; a sweeping account of the organized efforts to reform the media system; and the ongoing threats to our democracy as journalism has continued its sharp decline. "Those who want to know about the relationship of media and democracy must read this book." —Neil Postman "If Thomas Paine were around, he would have written this book." —Bill Moyers

part one

POLITICS

CHAPTER 1

U.S. MEDIA AT THE DAWN OF THE TWENTY-FIRST CENTURY

The United States is in the midst of an almost dizzying transformation of its media system. In this chapter 1 address the main trends, the real trends, in U.S. media at the dawn of the twenty-first century. These are corporate concentration, conglomeration, and hypercommercialism. I argue that the U.S. media system is an integral part of the capitalist political economy, and that this relationship has important and troubling implications for democracy. I then discuss the flip side of hypercommercialism, which is the decline, if not elimination, of notions of public service in our media culture. In particular, I concentrate upon the corruption and degradation of journalism, to the point where it is scarcely a democratic force. Moreover, I analyze the undemocratic and corrupt manner in which the core laws and codes regulating communication, most notably the Telecommunications Act of 1996, have been enacted. The system I describe does not exist as a result of popular will, nor is it by any means a “natural” occurrence. The media system exists as it does because powerful interests have constructed it so that citizens will not be involved in the key policy decisions that have shaped it. In chapters 2 and 3 I extend the discussion to the globalization of the commercial media market in the 1990s, and then to the rise of the Internet and digital communication networks. In those chapters I ask what is the relationship of globalization and the Internet to the trends toward concentration, conglomeration, and hypercommercialism.

The Corporate Media Cartel

The striking structural features of the U.S. media system in the 1990s are concentration and conglomeration. It may seem ironic that these are the dominant structural features when, to the casual observer, the truth can appear quite the opposite. We seem inundated in different media from magazines and radio stations to cable television channels and, now, websites. But, in fact, to no small extent, the astonishing degree of concentrated corporate control over the media is a response to the rapid increase in channels wrought by cable, satellite TV, and digital media. Media firms press to get larger to deal with the uncertainty of the changing terrain wrought by new media technologies. “If you look at the entire chain of entities—studios, networks, stations, cable channels, cable operations, international distribution—you want to be as strong in as many of those as you can,” News Corporation president Peter Chernin stated in 1998. “That way, regardless of where the profits move to, you’re in a position to gain.”¹ Yet, any explanation of media concentration and conglomeration must go beyond media technologies. They also result from changes in laws and regulations that now permit greater concentration in media ownership. But the bottom line, so to speak, is that concentrated media markets tend to be vastly less risky and more profitable for the firms that dominate them.

In fact, media concentration is not a new phenomenon. Classically, it has assumed the form of horizontal integration, where a firm attempted to control as much of the output in its particular field as possible. The ultimate form of horizontal integration, therefore, is monopoly. Horizontal integration has two great benefits for firms. First, as firms get a bigger share of the market it permits them to have lower overhead and to have more bargaining power with suppliers. Seagram, for example, estimates cost savings of $300 million for its music division from its purchase of PolyGram in 1998.² Second, as a firm gets a larger share of a specific market, it gains more control over the prices it can charge for its products.³ Firms operating in oligopolies—meaning markets dominated by a handful of firms each with significant market share—tend to do what monopolists do: they cut back on output so they can charge higher prices and earn greater profits. Hence, when Bertelsmann bought Random House for $1.4 billion in 1998 to become the dominant U.S. book publisher, fears of canceled authors contracts spread throughout the literary community.⁴ Stable oligopolies are very desirable for large firms, because despite their potential for profits, it can be quite difficult for a new player to enter an oligopolistic market. All of this not only drives the firms to use mergers and acquisitions to get bigger and more powerful but it also drives them to lobby for ownership deregulation and to generate new technologies that make concentration more feasible.

The U.S. mass media industries have been operated along noncompetitive oligopolistic lines for much of the twentieth century. In the 1940s, for example, broadcasting, film production, motion picture theaters, book publishing, newspaper publishing, magazine publishing, and recorded music were all distinct national oligopolistic markets, each of them dominated by anywhere from a few to a dozen or more firms. In general, these were different firms dominating each of these industries, with only a few exceptions. Throughout the twentieth century there have been pressing concerns that these concentrated markets would inhibit the flow and range of ideas necessary for a meaningful democracy.⁵ For a variety of reasons, however, these concerns rarely spilled over into public debate.⁶ In particular, the rise of the notion of professional journalism in the early twentieth century—which became widespread, even dominant, by mid-century—attempted to disconnect the editorial process from the explicit supervision of the owners and advertisers of the mass media, thus making the editorial product seem more credible as a “public service.” To the extent that this process was seen as successful, the corporate commercial domination of the media seemed a less pressing, perhaps even insignificant, matter.⁷

Concentration has proceeded in specific media markets throughout the 1990s, with the proportion of the markets controlled by a small number of firms increasing, sometimes marginally and at other times dramatically. The U.S. film production industry has been a tight-knit club effectively controlled by six or seven studios since the 1930s. That remains the case today; the six largest U.S. firms accounted for over 90 percent of U.S. theater revenues in 1997.⁸ All but sixteen of Hollywood’s 148 widely distributed (six hundred or more theaters) films in 1997 were produced by these six firms, and many of those sixteen were produced by companies that had distribution deals with one of the six majors.⁹ The newspaper industry underwent a spectacular consolidation from the 1960s to the 1980s, leaving a half-dozen major chains ruling the roost.¹⁰ The emerging consolidation trend in the newspaper industry is that of “clustering,” whereby metropolitan monopoly daily newspapers purchase or otherwise link up with all the smaller dailies in the suburbs and surrounding region.¹¹ Clustering permits newspapers to establish regional and/or broadly metropolitan newspaper monopolies and is quite lucrative. In 1997 it accounted for 25 percent of the record $6.2 billion in U.S. newspaper transactions.¹² Two major 1998 deals further concentrated U.S. book publishing and music production. With Bertelsmann’s purchase of Random House, the U.S. book publishing industry is now dominated by seven firms.¹³ And with Seagram’s $10.4 billion purchase of PolyGram, the five largest music groups account for over 87 percent of the U.S. market.¹⁴

Media sectors that were once more competitive and open have seen the most dramatic consolidation in the past decade. In cable television systems, six firms now possess effective monopolistic control over more than 80 percent of the nation, and seven firms control nearly 75 percent of cable channels and programming.¹⁵ As Time Warner’s Ted Turner puts it, “We do have just a few people controlling all the cable companies in this country.”¹⁶ Variety notes that “mergers and consolidations have transformed the cable-network marketplace into a walled-off community controlled by a handful of media monoliths.”¹⁷ Radio station ownership, which I return to at the end of this chapter, has gone through a stunning transformation in the late 1990s, leaving four newly created giants with one-third of the industry’s annual revenues of $13.6 billion.¹⁸ With no small amount of irony, even the “alternative” weekly newspaper market—which was established to provide a dissident check on corporate media and journalism—has come to be dominated by a few chains.¹⁹

Concentration arguably has been most dramatic in the 1990s at the retail end of the media food chain. In motion picture theaters, for example, the era of the independent or even small chain theater company has gone the way of the passenger pigeon. In 1985 the twelve largest U.S. theater companies controlled 25 percent of the screens; by 1998 that figure was at 61 percent and climbing rapidly.²⁰ The largest chain, co-owned by the leveraged-buyout firms Kohlberg, Kravis, Roberts and Co. and Hicks, Muse, Tate and Furst, controls around 20 percent of the nation’s movie screens.²¹ U.S. book retailing has undergone a revolution to such a degree that more than 80 percent of books are sold by a few huge national chains like Borders and Barnes & Noble.²² The share of books sold by independent book dealers fell from 42 percent to 20 percent from 1992 to 1998.²³

But concentrating upon specific media sectors fails to convey the extent of concentrated corporate control. The dominant trend since the 1970s or 1980s, which has accelerated in the 1990s, is the conglomeration of media ownership. This is the process whereby media firms began to have major holdings in two or more distinct sectors of the media, such as book publishing, recorded music, and broadcasting. So it is that each of the six main Hollywood studios are the hubs of vast media conglomerates. Each of the six owns some combination of television networks, TV show production, television stations, music companies, cable channels, cable TV systems, magazines, newspapers, book publishing firms, and other media enterprises. The vast majority of the dominant firms in each of the major media sectors are owned outright or in part by a small handful of conglomerates. And this has all come about seemingly overnight. Published in 1983, Ben Bagdikian’s seminal, even shocking, The Media Monopoly chronicled how some fifty media conglomerates dominated the entirety of U.S. mass media, ranging from newspapers, books, and magazines to film, radio, television, cable, and recorded music. Today that world appears to have been downright competitive, even populist. After the massive wave of media mergers and acquisitions since 1983, Bagdikian has reduced the number of dominant firms, until the most recent edition of The Media Monopoly in 1997 put the figure at around ten, with another dozen or so firms rounding out the system.²⁴

The “first tier” of media conglomerates includes Time Warner, Disney, Viacom, Seagram, Rupert Murdoch’s News Corporation, and Sony, all connected to the big six film studios. The remaining first-tier media giants include General Electric, owner of NBC, and AT&T, which in 1998 purchased TCI, the cable powerhouse with vast holdings in scores of other media enterprises.²⁵ GE (1998 sales: $100 billion), AT&T-TCI (1997 sales: $58 billion), and Sony (1997 sales: $51 billion) all are enormous firms, among the largest in the world. Their media holdings constitute a distinct minority of their assets.

These media empires have been constructed largely in the 1990s, with a rate of growth in annual revenues that is staggering. In 1988 Disney was a $2.9 billion per year amusement park and cartoon company; in 1998 Disney had $25 billion in sales. In 1988 Time was a $4.2 billion publishing company and Warner Communications was a $3.4 billion media conglomerate; in 1998 Time Warner did $28 billion in business. In 1988 Viacom was a measly $600 million syndication and cable outfit; in 1998 Viacom did $14.5 billion worth of business. The figures are similar for the other giants.²⁶ In chapter 2 I provide a detailed list of the media holdings of News Corp., Time Warner, and Disney, the most important media conglomerates in the world. For present purposes, consider the holdings of Viacom to get a sense of how one of these giants looks. Viacom owns Paramount Pictures, Simon and Schuster book publishers, Spelling Entertainment, MTV cable network, VH1 cable network, Nickelodeon cable network, TV Land cable network, Showtime cable network, eighteen U.S. television stations, the UPN network, the Blockbuster video rental chain, five theme parks, retail stores, and a vast movie theater empire outside of the United States.

The “second tier” of U.S. media giants includes the great newspaper-based conglomerates like Gannett, Knight-Ridder, and the New York Times Company, cable-based powerhouses like Comcast and Cox Enterprises, as well as broadcast-based powers like CBS. These fifteen or so “second-tier” firms are all conglomerates, but they are smaller than the first-tier firms, with annual sales rangin...