Institute Cautions FCC on Consolidation: Rules Change May Harm Consumers, Competition, and Could Create “Information Divide”

The Information Policy Institute yesterday filed comments to the Federal Communications Commission strongly urging the Commission to forestall any intended relaxation of existing media ownership rules. The Institute warned that a substantial relaxation of these rules could yield results that are contrary to the public interest.

“This Commission is about to throw the media and communications industries off the cliffs of competition into the abyss of consolidation,” said Institute President and Senior ScholarĀ Dr. Michael Turner. “The only beneficiaries of further media consolidation will be the mega-media giants such as Disney, Viacom, Newscorp and their shareholders. By contrast, the average consumer, who relies on a variety of media outlets for news and entertainment, will get stuck holding the bag – paying more for less,” Turner argued.

“Consumers are harmed in two arenas,” said Turner. “Consolidation will lead to less viewpoint diversity in media, undermining the quantity and quality of information available to the public with harmful consequences for our nation’s democratic discourse. Increased concentration also means higher subscription rates, which could deny many Americans access to a full range of news and information sources. In such a world, we fully anticipate the emergence of an ‘Information Divide,'” added Turner.

“We commend the Commission for raising important issues and demonstrating a capacity for creative thinking,” added Turner. “We don’t see any good coming out of increased media consolidation. Already, in local markets for radio and cable television, there is increasing evidence of abusive and anticompetitive behavior. Should the Commission move forward and relax existing ownership rules, we fully expect more of this type of behavior,” said Turner.

The Institute’s comments also take issue with both the theoretical and empirical support for relaxing the ownership rules contained in the Commission’s Notice of Proposed Rulemaking. “The Commission is justifying a regulatory regime change for the ‘New Economy’ based upon two 50-year old theories – one of which has been empirically discredited and the other misrepresented,” added Dr. Turner. The referenced theories are, respectively, from economists Peter O. Steiner and Joseph Schumpeter.

Many of the FCC’s Media Ownership Working Group studies, initiated by the Commission to guide its decision-making on the four media ownership rules currently under review, are analyzed and critiqued in the Institute’s comments. In general, the Institute’s analysis found these studies inconclusive, highly speculative, and occasionally contradictory. The Institute’s comments also point out that, in at least some cases analyzed by the Media Ownership Working Group, consumer welfare is clearly harmed by increased media consolidation.