Cross Ownership: 1 + 1 + 1.1

The FCC has been asked to review cross ownership restrictions between various mediums a number of times over the last few years. The dual trends of media outlet proliferation and media conglomerate concentration has made this a contentious and politicized issue and as a result there has been no changes in the standing rules barring cross ownership. I applaud Kevin Martin for trying to expedite matters but his proposal strikes me as more of an effort to just get something, anything done and perhaps an effort to facilitate the Tribune transaction, rather than one which would actually bridge the concerns of the various constituencies.

What problem is he trying to solve? Newspapers economic challenges have more to do with the Internet and the loss of classified ads than competition from other media. In order to stage a competitive challenge, newspapers would need to have far more dominance than they currently do and more than they would by owning a television station in the market. The television station that is owned by a newspaper could emerge from the crowd as that ownership would render it unique in market; in fact, television stations owned by newspapers tend to have improved local coverage.

From an economic perspective, it is fairly straightforward. There is only one major daily paper in most cities. There tend to be a handful or more television stations. Cross ownership could modestly reduce competition in a market, but only modestly. The newspaper typically spends more on news than the stations combined. Allowing a newspaper to buy a television station does not result in material cost savings. It does create cross promotional opportunities both for news and on behalf of advertisers. For example, the on-air weather personality could pen the newspaper column on weather. The on-air personality could promote that day's article on the current weather and note their sponsor, a nursery, and its timely coupon in today's paper. The number of opportunities such as that are few are far between. There is no question that being able to leverage knowledge of a market over more than one asset is valuable and being able to offer an advertiser a wider breadth of solutions is also a positive, but the economic benefits of cross ownership are not overwhelming.

Comments

[paulcrawford]

You missed the point completely. The question we need to ask ourselves is, "Do we want more media conglomeration?" You assume that we do and you talk about the economic benefits. But why does the American citizen want their news media coming from capitalist corporations?

[mjjcpa]

What about their lousy product?

Talk radio is booming.

I canceled my NY Times subscription years ago because of Krugman and Rich. I canceled HBO because of Bill Maher. I rarely go to movies because I can't stand the hypocrites in Hollywood who fly around the world and want me to bike to work.

C-SPAN RULES!

[electroglodyte]

"The FCC has been asked to review cross ownership restrictions between various mediums a number of times over the last few years."

Unless you're talking about psychics, the plural of medium is media.