Antitrust & the Media - II
by Robert W. McChesney
The Nation magazine, May 22, 2000
First AOL and Time Warner announced their intention to combine.
Then came Time Warner/EMI and Tribune/Times Mirror. Even more
significant, however, has been the speculation that these mergers
have caused: If these transactions are consummated, a large number
of additional media mergers are expected. There is even the possibility
of a nightmare scenario-a wave of media mergers so large that
within a decade most of our information will be supplied by perhaps
six of these huge conglomerates and a fringe of much smaller firms.
It's time to ask two critical questions. Is this kind of media
oligopoly what we, as a society, want. And if not, can the antitrust
laws effectively prevent the threatened merger wave? The answer
to the first question is clear. We do not want a media oligopoly.
The answer to the second question, however, is far less certain.
We should distrust a media oligopoly because it would give
undue control to a small number of individuals. This need not
manifest itself in a price rise for the daily newspaper or AOL's
monthly fee. Rather, it could consist of a change in editorial
viewpoints, a shift in the relative prominence of links to certain
websites or a decision not to cover certain topics, because they
are not "newsworthy." These problems could exist without
any improper intent on the part of the media barons. Even if they
try to be fair and objective, they will necessarily bring their
own worldview to the job. And in time some of these conglomerates
may be controlled by people who are not fair or objective.
At first it might appear that the antitrust laws can be of
little help in grappling with the issues presented by large media
mergers. The anti-merger laws are commonly understood as protecting
price competition, and a relatively small number of firms-to greatly
oversimplify, let's say at most half a dozen-are normally thought
to be enough to keep a market price-competitive. In industry after
industry firms merge until there is only a handful left, and the
antitrust enforcers are normally unable to do anything to prevent
this. (In former years mergers were governed by an "incipiency"
standard that prevented mergers and merger waves well before they
would have led to very large or likely anti-competitive problems.)
Even if a handful of firms are enough to insure effective competition
in most industries, would six conglomerate media firms be sufficient
for the diversity of viewpoints necessary to democracy? Would
we be reassured if they could somehow guarantee that they would
sell their magazines and Internet advertisements at competitive
I am hopeful that the antitrust laws, if correctly and vigorously
interpreted, are adaptable enough to meet this challenge. This
is because antitrust is not exclusively about price. It is essentially
about choice-about giving consumers a competitive range of options
in the marketplace so that they can make their own, effective
selection from the market's offerings. Consumers should be able
to make their choices along any dimension important to them-including
price, variety and editorial viewpoint.
Communications media compete in part by offering independent
editorial viewpoints and an independent gatekeeper function. Six
media firms cannot effectively respond to the demand for choice
or diversity competition by extending their product lines, because
new media products will inevitably bear, to some degree, the perspective
of their corporate parent. For these reasons competition in terms
of editorial viewpoint or gate-keeping can be guaranteed only
by insuring that a media market contains a significantly larger
number of firms than is required for price competition in other,
more conventional markets.
It is unclear, however, whether this interpretation of the
anti-trust laws will be applied by the enforcement agencies and
the courts. What is needed, therefore, is a much more careful
look at the challenges that will be raised by future media mergers.
This could best be accomplished if Congress created a Temporary
Committee to Study Media Mergers and Media Convergence. This committee
could include members of Congress; the heads of the Federal Trade
Commission, the Federal Communications Commission and the Justice
Department's antitrust division; CEOs of media companies; and
representatives of consumer groups. The committee would identify
problems that may be caused by large media mergers and by media
convergence. If the committee concludes that existing antitrust
laws are inadequate, it should recommend to Congress that new
anti-merger legislation be enacted. This may be the only way to
prevent the nightmare scenario of a media oligopoly.
Robert H. Lande is Venable Professor of Law at the University
of Baltimore and senior research scholar at the American Antitrust