SEPTEMBER 1987 - VOLUME 8 - NUMBER9
T H E M E D I A M O N O P O L Y
The Media Brokers
Concentration and Ownership of the Pressby Ben Bagdikian
If all major media in the United States - every daily newspaper, magazine, broadcasting station, book publishing house, and motion picture studio - were controlled by one "czar," the American public would have reason to fear for its democracy.
The danger is not that this single controller would necessarily be evil, though this kind of extravagant power has a grim history. Whether evil or benevolent, centralized control over information, whether governmental or private, is incompatible with freedom. Modem democracies need a choice of politics and ideas, and that choice requires access to truly diverse and competing sources of news, literature, entertainment, and popular culture.
Fortunately, no single corporation controls all the mass media in the United States. But something is happening that points in that direction. If mergers and acquisitions by large corporations continue at the present rate, one massive firm will be in virtual control of all major media by the 1990s. Given the complexities of social and economic trends, that is not inevitable. It is, however, quite possible - and serious corporate leaders predict - that by the 1990s a half-dozen large corporations will own all the most powerful media outlets in the United States.
The predictions are not groundless. They are based on extraordinary changes in recent years. At the end of World War II, for example, more than 80 percent of the daily newspapers in the United States were independently owned, but by 1987 the proportion was almost reversed: 72 percent were owned by outside corporations and 15 of those corporations had most of the business. The pace of takeovers by large national and multinational corporations is increasing. In 1981 twenty corporations controlled most of the business of the country's 11,000 magazines, but only five years later that number had shrunk to six corporations.
Today, despite 25,000 media outlets in the United States, 29 corporations control most of the business in daily newspapers, magazines, television, books, and motion pictures.
Few investors be lieve that the process of tightening control will stop soon. An investment banker, Christopher Shaw, chairman of Henry Ansbacher, Inc., has negotiated more than 120 media acquisitions. When asked where it will all stop, Shaw likes to quote a client, saying that by the year 2000 all U.S. media may be in the hands of six conglomerates. Robert Maxwell, a British publisher, said in 1984, "In ten years' time, there will be only ten global corporations of communications. I... would expect to be one of them."
But there is something strange about leaders of the media acquisition drive. Most would agree that one "czar" in control would be disastrous for democracy, yet they praise the march toward that unhealthy end. The media they control take every opportunity to report the beauties of corporate bigness. And while there is much news and commentary about media mergers and acquisitions, it is reported almost exclusively as a financial game without social consequences. The general public is told almost nothing of the dangers.
If executives of dominant media corporations are personally silent about the dangers of concentrated ownership, it is not surprising: the process benefits them. But the media they control also are silent. The silence is not convincing evidence that the media never reflect the corporate and political interests of their owners.
On the other hand, it is unrealistic to expect media leaders to do otherwise. The answer is not a futile plea asking controllers of power to criticize their own power. The answer is to prevent dangerous concentration of power in the first place or, having failed that, to diversify that power.
Compounding the trend has been the practice of companies already dominant in one medium, like newspapers, investing in a formerly competitive medium, like television. In the past, each medium used to act like a watchdog over the behavior of its competing media. The newspaper industry watched magazines and both kept a public eye on the broadcasting industry. Each was vigilant against the other industries' lobbying for unfair government concessions or against questionable business practices. But now the watchdogs have been cross-bred into an amiable hybrid.
Not surprisingly, the giants universally insist that they improve the media they buy. But even if, in an unreal world, all corporate owners universally improved their acquisitions, even if they all made their properties totally open to conflicting news and views, concentrated media ownership would still damage democracy in the United States: concentrated power over public information is inherently anti-democratic.
Today, the chief executive officers of the 29 corporations that control most of what Americans read and see can fit into an ordinary living room. Almost without exception they are conservative Republicans. They can, if they wish, use control of their newspapers, broadcast stations, magazines, books and movies to promote their own corporate values to the exclusion of others. Most say that they would never use that power. But even if sincere, they ignore human nature and they ignore history: when central interests are at stake, available power will always be used.
In a democracy, the answer to great power is accountability to the public. Accountability in business life in some cases requires government regulations to prevent monopoly or to make natural monopolies meet public service standards. But for most commerce, accountability is self-induced because there is enough diversity and competition so that consumers have real choices.
In the media, "real choices" means a rich variety of political and social content in news, entertainment, and other public information, and enough competition in content and prices so that the average consumer has genuine alternatives. It means equitable distribution of economic power in the marketplace so that a few dominant leaders cannot prevent true competition or the reasonable entry of new enterprises. Today the country is losing diversity and competition among its major media and with it, thanks to monopoly and oligopoly, losing not only a variety of political voices but the economic accountability of the marketplace.
Though the media controlled by the dominant corporations do not alert the public to such problems, they do claim that the process is improving the country's media outlets. Their principal claims are that they bring greater resources to improve their new acquisitions, that they have more sophisticated business management skills, that their size makes it easier to fend off government incursions on freedom of expression and improper advertiser influence, and, finally, that if they were tempted to use their power to the disadvantage of the public, the public would not stand for it.
In thousands of media transactions of recent years, some of these claims have been realized some of the time. But at best the record is mixed; most of the time the record is unimpressive or worse.
A few newspaper chains, for example, improved independent papers they acquired, notably Knight-Ridder, Times Mirror, the New York Times Company, and Dow Jones's Ottoway subsidiary. Most have not. In the hundreds of small and medium-sized communities whose fate does not reach commentators in New York and Washington, acquisition of the local paper or television station by a large firm more often is followed by drastic cutbacks in staffs, either in brutal instant firings or more subtly by forced retirements and resignations that are not replaced. Editorial content is cheapened.
Corporations do not purchase local newspapers and broadcast stations for sentimental reasons. They buy them as investments that will yield a maximum return as quickly as possible. When they buy a local monopoly, which is typical of newspapers, or an assured share of the market, typical of television, few investors can resist the spectacular profits that can be made by cutting quality and raising prices. Christopher Shaw, the merger expert, for example, speaking at a session of potential media investors in October 1986, said that a daily monopoly newspaper with a 15 percent annual operating profit, can, within two years of purchase, be making a 40 percent profit by cutting costs and raising advertising and subscription prices.
Shaw's prescription has, in fact, been the history of media acquisitions in hundreds of communities during the past20 years. It is why, with one exception (Knight-Ridder's Philadelphia Inquirer), no contemporary newspaper chain has ever created a distinguished American daily paper. Every other outstanding paper was originally created by an independent, noncorporate owner committed to long-term quality and strength.
The claim that large corporations can better resist incursions of government into freedom of the press can be true. Some-not all - have done so. They can also better afford to fight large libel actions brought for political purposes, though by being large they tend to attract larger lawsuits. Many of the larger media companies - the New York Times, Washington Post, and Gannett, for example - have spent money and energy working for more open meetings of public bodies and resisting White House efforts to weaken the Freedom of Information Act. But when large media corporations have to choose between, on the one hand, candidates who will give governmental favors in corporate taxes and relaxed business regulation, or, on the other hand, candidates who support freedom of the press, the record is not encouraging. The history of relations between big government and big corporations is more of accommodation than of confrontation. Richard Nixon and RonaldReagan, in their first terms in the White House, made the most severe attacks in this century on freedom of the press, but both made extraordinary moves to support corporate expansion in the media; newspaper publishers overwhelmingly endorsed both Nixon and Reagan for reelection.
The claim by corporate owners of greater resistance to advertiser pressures has mixed validity. Greater public sophistication and professional journalistic standards have made ineffective past clumsy interjection of ads into editorial content, though it still exists in many places. But alteration of the basic form and content in newspapers, magazines, and television programs - creating editorial content not for the needs and interests of the audience but to enhance advertising - has become far more intense under corporate ownership.
It is a favorite axiom of large media operators that while they have great power, if they abuse it the public will reject their product. But public choice is inoperative where there is monopoly, which is the case in 98 percent of cities with a daily newspaper, or market dominance by the few, which is the case with television. New corporate owners of newspapers and television stations, for example, commonly reduce staff and news space. Neither newspapers nor broadcasters tell their audience about their staffing and investment in content, except in self-serving promotional terms. If the audience senses a new thinness, they seldom have an alternative.
Large media corporations are the primary shapers of American public opinion, and through that, they are a major influence on government. Whether politicians are elected or reelected and whether their issues are publicized, depends on their treatment in the news. Consequently, government leaders tend to be extraordinarily attentive to the corporate wishes of the media.
(It is not accidental that one factor stimulating the growth of newspaper chains was a favorable government tax ruling. A company's accumulated annual profits enjoy a forgiving tax rate if the profits are for "a necessary cost of doing business," usually assumed to mean contingencies for future problems. But the Internal Revenue Service decided that a newspaper using its accumulated profits to buy another newspaper is "a necessary cost of doing business.")
Media outlets can be purchased to pursue the political promotion of the owner when the owner lusts after high office. Hearst wanted to be president. James M. Cox, publisher of a paper in Ohio, became Democratic candidate for president in 1920, only to be defeated for the presidency by another Ohio newspaper, publisher, Warren Gamaliel Harding.
Today, the primary political advantage of concentrated media power is no longer to gain high political office for the media executive. The primary danger of excessive media power is not promoting candidacies of the anonymous men and women who run corporations, but of promoting the politics and economics of the corporate world.
The desire of most corporate leaders is not to become president of the United States, but to influence the U.S. president.
The desire for governmental favors is not limited to large media corporations. That was just as true of independent local owners. The difference is in the magnitude of desire and the magnitude of power. Many media owners are substantial defense contractors and are affected by success or failure of disarmament, by the size of defense budgets, by public versus private sector spending, by the level of social programs, by involvement of the United States in foreign countries where American corporations have heavy investments - all the components of a force changing the shape of American society that President Eisenhower called "the military-industrial complex." The potential conflicts of interest in the new corporate domination of the mass media involve the essence of the country's public policy.
The new media-industrial corporations also want quite specific actions from govemment, such as government contracts, relaxed application of antitrust laws, deregulation of business, elimination of limits on corporate profits, and corporate tax loopholes.
For example, when General Electric bought RCA in 1986 (and with it NBC news), it combined its media power with its other industrial and financial interests. General Electric is a major defense contractor, it manufactures and sells electronic, electrical and nuclear systems worldwide, produces aircraft and spacecraft components, and is in the insurance and banking business, with sales exceeding $28 billion a year. Its multinational operations are sensitive to both domestic and foreign policy.
In 1986, the Wall Street acquisition expert, Christopher S haw, listed for the benefit of potential media buyers the reasons one should buy newspapers, magazines, broadcast stations, or book publishing firms. The first reason was "profitability," the next reason was "influence."
It is possible that large corporations are gaining control of the American media because the public wants it that way. But there is another possibility: the public, almost totally dependent on the media to alert them to public problems, has seldom seen in their standard newspapers, magazines, or broadcasts anything to suggest the political and economic dangers of concentrated corporate control. On the contrary, for years, the media have treated mergers and acquisitions as an exciting game that poses no threat to the national pattern of news and information.
It is also possible that the public image of owners' selfish use of their media power is obsolete, based on the historical notoriety of the crudities of nineteenth-century "yellow journalism."
Most owners and editors no longer brutalize the news with the heavy hand dramatized in movies like "Citizen Kane" or "The Front Page." More common is something more subtle, more professionally respectable, and, in some respects, more effective: the power to treat some subjects accurately but briefly, to treat other subjects accurately but in depth, or in the conventional options every medium has of taking its own initiatives, carefully avoiding some subjects and enthusiastically pursuing others.
Other evidence of the welcome departure of the large-scale shrillness of a century ago and of the newer subtleties is the appearance in the standard media, every day, of news that does not reflect owners' private values and may be offensive to them. With few exceptions, major media owners are conservative Republicans but they still carry the news when liberal Democrats are elected and when legislatures impose environmental regulations on reluctant industries. Most of the time, professional journalistic standards and public sophistication are high enough to make gross suppression of dramatic developments ineffective.
But there are two kinds of impact on public opinion, one brief and superficial, the other prolonged and deep. The first is the single, isolated item, one of dozens reported on any given day in newspapers, radio, and television. That item and its other daily companions are followed the next day with dozens of new ones, each day tending to obliterate the impact of what went before.
Far more effective in creating public opinion is the pursuit of events or ideas until they are displayed in depth over a period of time, until they form a coherent picture and become integrated into public thinking. It is this continuous repetition and emphasis that creates high priorities among the general public and in government. It is in that power - to treat some subjects briefly and obscurely but others repetitively and in depth, or to take initiatives unrelated to external events - where ownership interests most effectively influence the news.
Because these discriminations are normal and necessary, it is difficult for the public (and often for individual journalism professionals) to detect when ownership interests become a problem. Ownership biases usually are not obvious because they are part of normal daily rapid decision-making and rarely is the owner personally present.
Fifty years ago, executive editors spoke openly to their staffs about owners' sensibilities. Today most editors do not. It is ironic confirmation of raised professional standards that today it is too embarrassing. When protection of owner interests intrudes into news decisions, other professionally acceptable reasons are given. And in most news organizations, there is no absolute barrier against all developments that will embarrass the owner. Over time, with some kinds of items entering the news easily and others with difficulty, the total news picture of society is skewed in favor of corporate interests. The special values of the owning corporation, along with professionally respectable ones, flow quietly and anonymously into the convention of what is "news."
There are 15 dominant companies that have half or more of the daily newspaper business, six in magazines, three in television, 10 in book publishing, and four in motion picture production, making a total of 38 firms. But some corporations are dominant in more then one medium. For example, Newhouse and Thomson are dominant in newspapers, magazines, and books; Time Inc. and McGraw-Hill in magazines and books; Capital Cities/ABC in newspapers and television; and Gulf + Western in books and motion pictures. Because of the multiple dominance of some firms, the total number of corporations dominating all major media is 29.
In 1981, there were 46 corporations that controlled most of the business in daily newspapers, magazines, television, books and motion pictures. Five years later the number had shrunk to 29.
Like other large media companies, General Electric presents yet another complication that differs from small, local companies: it has, through its board of directors, interlocks with still other major industrial and financial sectors of the American economy, in wood products, textiles, automotive supplies, department store chains, and banking.
Under law, the director of a company is obliged to act in the interests of his own company. An unanswered dilemma is what happens when an officer of Corporation A who sits as a director on the board of Corporation B has to choose between acting in the best interests of his own company or of the one on whose board he sits.
What is the proper behavior of a banker who is a director of General Electric, owner of NBC, if he hears that the network is about to produce a documentary highly embarrassing to the banking industry? It could be in the best interests of NBC News to attract an audience with a documentary on what could be a compelling public issue. Yet such a documentary might not be perceived as being in the best interests of the banks.
The emergence of major national and multinational corporations as controllers of most of the country's media has enormously complicated the potential conflicts of interest in, among other things, interlocked boards of directors.
A study by Peter Dreier and Steven Weinberg in 1979 found interlocked directorates in major newspaper chains, for example. Gannett shared directors with Merrill Lynch (stockbrokers), Standard Oil of Ohio, 20th Century Fox, Kerr-McGee (oil, gas, nuclear power and aerospace), McDonnell Douglas Aircraft, McGrawHill, Eastern Airlines, Phillips Petroleum, Kellogg Company, and New York Telephone Company.
The most influential paper in America, the New York Times, interlocked with Merck, Morgan Guaranty Trust, Bristol Myers, Charter Oil, Johns Manville, American Express, Bethlehem Steel, IBM, Scott Paper, Sun Oil, and First Boston Corporation.
Time, Inc. has so many interlocks they almost represented a plenary board of directors of U.S. business and finance, including Mobil Oil, AT&T, American Express, Firestone Tire & Rubber Company, Mellon National Corporation, Atlantic Richfield, Xerox, General Dynamics, and most of the major international banks.
Louis Brandeis, before joining the Supreme Court, called this linkage "the endless chain." He wrote: "This practice of interlocking directorates is the root of many evils. It offends laws human and divine ...It tends to disloyalty and violation of the fundamental law that no man can serve two masters ... It is undemocratic, for it rejects the platform: A fair field and no more favors."
As media conglomerates have become larger, they have integrated into the higher levels of American banking and industrial life as subsidiaries and interlocks within their boards of directors. Half the dominant firms are members of the Fortune 500 largest corporations in the country. They are heavy investors in, among other things, agribusiness, airlines, coal and oil, bank ing, insurance, defense contracts, automobile sales, rocket engineering, nuclear power, and nuclear weapons. Many have heavy foreign investments affected by American foreign policy. It is normal for all large businesses to make serious efforts to influence the news, to avoid embarrassing publicity, and to maximize sympathetic public opinion and government policies. Now they own most of the news media that they wish to influence.
The dominant 29 corporations are:
The motion picture industry has always been volatile in its corporate convolutions, but through it all the major studios, in one incarnation or another, have remained dominant. A welcome development has been the growth of independent producers with a parallel increase in films of more than routine quality and interest. But the independents most often work through the major studios and other associated agencies, with the result that though the top studios differ in ranking from year to year, depending on how their films do at the box office, the major companies are still familiar names.
In 1985, in terms of box-office grosses for their films, there were four firms with the most business: Warner Communications (Warner Brothers), Gulf + Western (Paramount Pictures), Universal-MCA, and Coca-Cola (Columbia Pictures).
The 15 corporations that dominate the daily newspaper industry have all become larger in the last five years. The largest company, Gannett, increased from 88 papers to 93, its total circulation rose from 3,751,000 to 6,101,000. Though in those five years total national circulation for all 1,676 papers has risen slightly from 61 million to 62.8 million, the number of dominant corporations has shrunk from 20 to 15, and the number of daily papers in the country continued to diminish.
The 15 at the end of 1986, in order of their total daily circulation were:
Tightening concentration was most dramatic in magazines, which from 1981 to 1986 went from 20 dominant corporations to six. The chief cause was further enlargement of Time, Inc. which, despite some failed attempts at starting new magazines, acquired other magazine groups to give it 40 percent of all U.S. magazine revenues. The six dominant corporations, in order of annual revenues, are:
Book publishing, less profitable than newspapers and broadcasting, and less driven by the commanding force of mass advertising on which newspapers, magazines, and broadcasting depend, is still highly concentrated, given the large number of individual publishers. The 2,500 companies that issue one or more books a year are dominated in revenues by 10 corporations that grossed more than half of the almost $10 billion in book revenues in 1985.
In books, as in other media, there is a growing presence of corporations that dominate in other media. Of the 10 dominant firms in publishing, five are in other media where they also are among companies with half or more of the business. The other five are highly active in other fields but are not top leaders.
The ten companies are:
The three networks-Capital Cities/ABC, CBS, NBC-despite mergers, attempted takeovers, extreme corporate turbulence, and declining prime-time viewing, still dominate thefield. Cable and home ownershipof VCRs has grown, but the three networks still have three-quarters of the prime time market.
Powerful as the networks have always been, they, too, felt the forces of merger and consolidation. Right-wingideologues, led by Senator Jesse Helms, attempted to takeover CBS; they failed, and a newcomer to network television, Ted Turner, made a largely paper attack that also failed. Though CBS fought off the hostile takeovers, the financial battle led to heavy debt and an internal power struggle. The result was draconian cost-cutting, decimation of staffs in every network and their wholly owned stations, including CBS documentary and news operations, which for decades had been the best in broadcasting.
Capital Cities/ABC and NBC also went through drastic cost-cutting and managerial changes in an attempt to increase profits. ABC was bought by Capital Cities, a rich but undistinguished newspaper chain. General Electric, the tenth largest corporation and a major defense contractor, bought RCA, owner of the National Broadcasting Company (NBC). NBC's purchase by General Electric was the latest acquisition of a major news medium by a global corporation that has always had highly political overtones. The purchase price was also a reminder of the escalation of financial stakes in the media. In 1979 when Gannett Company bought Combined Communication Corporation (billboards, newspapers, and broadcasting) it was the largest amount of money ever involved in a media acquisition at that time - $340 million. Seven years later General Electric bought RCA for $6.3 billion.
Ben Bagdikian is the author of The Media Monopoly first published by Beacon Press in 1983. This article is excerpted from the second edition which will be published in November 1987.