Keeping politicians' hands off the Net & everything else related to technology
Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.
[cross-posted from the PFF blog]
Last week, Philadelphia released its long-awaited blueprint for a municipal wi-fi project called “Wireless Philadelphia.” This week, Tom Lenard and I have released two studies outlining our reservations about the Philly proposal and municipalization more generally. Here’s Tom’s paper, and here’s mine.
First let me provide a summary of the Philly muni proposal and then outline my specific reservations about the plan.
[[cross-posted from PFF blog]]
Reuters has an interesting report today about the rumors circulating that News Corp. could be the latest media giant contemplating some sort of downsizing. News Corp. Chief Operating Officer Peter Chernin is quoted vigorously denying such rumors, saying: “We don’t believe synergy is dead. We have no intentions to split up.” But if a major media operator’s COO is forced to publicly deny such rumors, there’s good reason to believe that there might be at least a little truth to them.
Any why not? After all, as I’ve noted here, here, and here, media deconsolidation is all the rage these days. The list of high-profile media divestitures and divorces continues to grow: AOL-Time Warner, Disney-Miramax, Cablevision, Viacom, Liberty Media, Sony, and on and on. They all have been pondering or carrying out major spin-offs or restructuring plans in recent months.
Personally, if I had to bet on it, I’d say News Corp. will not be downsizing any time soon. They have many successful and profitable properties and they do seem to do a somewhat better job creating “synergies” among the divergent branches of the firm than many of their competitors.
Nonetheless, don’t be surprised if they spin-off a few assets in the near future. And, like I’ve said in previous posts, don’t be surprised if you hear nothing but silence from the old Chicken Little media crowd about this. They say the whole world is going to hell whenever any media merger takes place, but they are nowhere to be found when the waves of divestitures and high-profile media divorces kick-in.
OK, this whole blogging thing is offically out of control. Tonight, I somehow stumbled upon Pat Sajak’s blog. Yes, that Pat Sajak. Mr. Wheel of Fortune himself.
You think that’s scary? Guess what, Barbra Streisand has one too! Check it out.
Ironically, I stumbled upon these sites while researching claims of media bias on both the Left and Right. Sajak (a diehard conservative) claims the media is full of liberals; Barbra (obviously a Lefty) says that’s nonsense. Maybe we can get these two superstars together for a big debate at PFF’s annual Apsen summit. I think Barbara already lives out there anyway in a big house in the hills. We’ll fly Pat out to meet her and let the sparks fly!
By the way, if you find the Sajak & Streisand blogs a bit dry, head over to William Shatner’s blog. Bill’s a hoot.
According to this Reuters / Hollywood Reporter story, during an address Monday before the National Cable & Telecommunications Association annual conference in San Francisco, Rep. James Sensenbrenner (R-Wisconsin) told cable industry officials that criminal prosecution would be a more efficient way to enforce the indecency regulations. “I’d prefer using the criminal process rather than the regulatory process,” Sensenbrenner told the crowd.
Sensenbrenner apparently said he believes the FCC’s current regulatory process casts too wide a net and that criminal enforcement provides a more efficient solution. “People who are in flagrant disregard should face a criminal process rather than a regulator process,” he said. “That is the way to go. Aim the cannon specifically at the people committing the offenses, rather than the blunderbuss approach that gets the good actors.” He continued, “The people who are trying to do the right thing end up being penalized the same way as the people who are doing the wrong thing.”
[[cross-posted from PFF Blog]]
Legislators and congressional staff were doing lot of huffing and puffing about the cable industry “cleaning up its act” at the NCTA trade show out in San Fran this week. Senate Commerce Committee Chairman Ted Stevens (R-Alaska) was once again leading the crusade for expanding content controls to subscription-based media like cable and satellite TV. Some, like Stevens, favor direct censorship of cable and satellite along the lines of what we already apply to broadcasters. Others favor mandating (or at least strongly encouraging) more parental screening / filtering technologies.
On this latter point, the comment coming out of the event that I found most interesting was from Colin Crowell, an aide to Rep. Ed Markey (D-MA). Crowell argued that “If the industry promoted these parental controls in the same way it promoted a new show, you’d have a consumer acceptance of those technological tools.” In other words, if you mandate it (more parental empowerment tools), they will come (and use them to filter / screen content). Well, maybe. Or maybe not.
It seems like each week brings another report of a major media breakup or divestiture. As I mentioned here and here in previous essays, various media firms have recently been considering, or are engaged in, major divorces or divestitures. In recent weeks or months, Viacom, Liberty Media, Sony, Time Warner, and Cablevision have all been pondering or carrying out major spin-offs or restructuring plans.
This week it’s Disney’s turn. After years of feuding with the Weinstein brothers over in their popular and critically acclaimed Miramax Films studio, the two are calling it quits and filing for divorce. (Can you blame the Weinstein brothers after Disney apparently told them to turn down the production rights for the “Lord of the Rings” movies?!?) Disney will be losing one of the most respected movie studios in the world once the divorce is finalized.
I know I’m starting to sound like a broken record on this issue, but I just have to ask once more: Where are all the media critics now? Whenever two media outlets propose a marriage, the critics lament the supposed coming death of diversity and democracy and all that jazz. But when we find ourselves in the midst of another wave of media DE-consolidation, these Chicken Littles are nowhere to be found.
[[cross-posted from PFF Blog]]
Last week, I blogged about how the media industry is in the midst of a major shakeup and de-consolidation craze, but few seem to notice or care. I noted how even a whisper about a potential media merger or joint alliance garners front-page headlines, replete with numerous quotes from the Chicken Little media critic crowd about how the whole world is going to hell. But when the opposite is occurring, and firms are getting smaller or selling off assets, you don’t see or hear a word about it.
Today, however, the Washington Post’s Frank Ahrens, one of the best media beat reporters out there, proved to me that at least one person in the press is taking notice. In a fine piece entitled, “Media Firms Piece Together New Strategies,” Ahrens notes that: “After a decade of growth by acquisition, media conglomerates such as Viacom, Sony Corp. and Time Warner Inc. are beginning to reconfigure, pushed by new technologies and changing consumer habits. At the same time, the 1990s cookie-cutter model of a media giant–take one television network, add a movie studio, theme parks, music company and maybe a pro sports team–is falling from favor, as companies settle on their core identity, analysts say.”
In addition to the examples I cited in my post last week, Ahrens provides many other examples of media providers scrambling to come up with new strategies to meet the growing competition from new technologies and media outlets. In many cases, these old giants are shedding properties and taking a “back-to-basics” approach to meeting this challenge.
Again, as I asked last week: Where are all the media critics now?
P.S> Chapter 3 of my forthcoming book “Media Myths” contains an extensive discussion of how the media industry often goes in waves or cycles like this, with: (1) consolidation being in vogue for a few years as firms seek out “synergies,” but then many of those investments don’t pan out or the synergies never materialize, and then (3) a wave of divestitures ensues as firms scramble to get back-to-basics and focus on their core competencies. This is called the marketplace, folks. Media critics think it’s all some sort of grand conspiracy to destroy democracy or competition, but in the end, we end up with a ever-expanding universe of media options at our disposal. In sum, despite what the Chicken Littles predict, the sky never falls.
The radio industry is commonly cited by many media critics as a poster child for the supposed evils of media consolidation. While it is true that a large number of acquisitions took place in the radio market following relaxation of the radio ownership rules back in 1996, the reality is that the radio marketplace–properly defined–is very competitive and nowhere near being the “monopoly” that some critics claim.
Take, for example, all the hand-wringing over every media critic’s favorite villain: Clear Channel Communications. If you believed the rhetoric spouted by the critics, you’d guess that Clear Channel, which now owns over 1,200 stations nationwide, has a stranglehold on this marketplace. OK, now here’s a quick reality check: Clear Channel’s 1,200 stations represent less than 10 percent of all radio stations in the America. That’s right, less than 10 percent. Does that sound like a monopoly to you?
“[T]he Scarcity Rationale for regulating traditional broadcasting is no longer valid.” So begins a stunning new white paper from the Federal Communications Commission. In the paper, “The Scarcity Rationale for Regulating Traditional Broadcasting: An Idea Whose Time Has Passed,” author John Beresford, an attorney with the FCC’s Media Bureau, lays out a devistating case against the Scarcity Rationale, which has governed spectrum & broadcast regulation in the United States for over seven decades.
Calling the Scarcity Rationale “outmoded” and “based on fundamental misunderstandings of physics and economics,” Beresford goes on to show why just about everything the FCC every justified on this basis was misguided and unjust. He points out what countless economists have concluded through the years, namely that:
(1) the scarcity the government complained of was “largely the result of decisions by government, not an unvoidable fact of nature.” In other words, the government’s licensing process created artificial scarcity.
(2) a system of exclusive rights would have ensured more efficient allocation of wireless resources.
(3) even if there ever was anything to the Scarcity Doctrine, there certainly isn’t today in our world of information abundance.
Have you ever noticed how media critics claim the world is going to end whenever two media companies propose any sort of merger or partnership, but when the opposite is taking place these people are nowhere to be found? Indeed, we are in the midst of another wave of media DE-consolidation with numerous media companies exploring divestitures or break-ups, but few seem to notice or care.
Consider today’s announcement that media giant Viacom is preparing to split itself in two firms: the old broadcast radio and TV properties would go into one company; the cable and movie studio holdings into another. Viacom has spent the last decade amassing as many media properties as they could get their hands on, but like many companies these days, they have come to believe that it probably makes more sense to avoid spreading themselves too thin and instead are refocusing their efforts on doing just a few things very well.
Liberty Media is doing the same thing. John Malone’s continuing push to break apart the firm into smaller, independent media operations has generated little media attention, but there’s no doubt he’s on the way to breaking up his company into smaller units.
Same goes for Cablevision. In late 2003, the firm announced that it was spinning-off its satellite and national programming arm into an entirely new, distinct company, Rainbow Media Enterprises. And recently there’s be a move by the board to get rid of its “VOOM” high-def satellite service.
Isn’t is funny how you don’t hear much about this in the press, (unless you’re a nerd like me that relishes the business stories buried deep in the back pages of the Wall Street Journal and business magazines)? I guess this really isn’t all that surprising. As Ben Compaine, co-author of the brilliant Who Owns the Media?, correctly observes, “Break-ups and divestitures do not generally get front-page treatment.” Too true. By contrast, however, if Cablevision, Liberty, or Viacom were proposing acquisitions right now instead, we’d see front-page coverage in every paper complete with numerous quotes from the Chicken Little crowd about how the end times were near.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
