Whatever Happened to Media Consolidation?

In the latest issue of Heartland’s IT&T News, S.T. Karnick has an excellent article about the decline of media consolidation fears:

Leftist critics complained about the corporatization and consolidation of the media as an unwelcome phenomenon in the ’60s and thereafter, and they were correct to point out there would be deleterious effects. There may indeed have been an initial increase in sameness of movie and TV productions and a loss of creativity and vitality in the book publishing industry, especially in the fiction section.

Market-oriented analysts simply replied by saying the consolidation was good because it was what people wanted and they wouldn’t do it if it didn’t make sense. That was not the correct response, however. People do stupid things, and corporations do stupid things too.

The sensible rejoinder should have been that the media consolidation that began in the 1960s was most likely part of a societal and technological transition that would ultimately work to everybody’s benefit, as free markets typically do over the long term. We had already seen that happen in other industries, and there was no real reason to believe the media and communications industries would be any different.

And that appears to be what has happened and is happening today.

Contrary to the leftists’ claims, competition among media providers actually increased during the period of consolidation, and new technologies forced significant change, as a simple glance at the current media landscape should make abundantly clear. In response to that competition, big media companies are beginning to divest themselves of some of their media holdings in order to make themselves leaner and more effective at responding to competition.

Quite so. As Adam has repeatedly documented on this site, the consolidation of the 70s and 80s proved to be the high-water mark for monolithic media. In the decades since, the trend has been in the opposite direction: more and more media outlets, controlled by more and more organizations, more and more desperate for the consumer’s attention.

I also think his point about acknowledging when corporations do stupid things is an important one. Libertarians don’t believe that markets will produce ideal outcomes in every situation, but rather that in the long run, markets are better than other systems at punishing the bad decisions of market participants. But that means that companies can and will make lots of mistakes. We certainly shouldn’t be suckered in to defending whatever the current market leaders happen to be doing, because often today’s leaders are tomorrow’s also-rans. The AOL-TW deal is a great example of this: at the time it was touted as a model for the 21st century, but in reality, it was the last gasp for a 20th century business model that has been on the decline ever since.

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