Media Regulation

“Clear Channel to Dismantle Media Empire.” That’s the headline from pg. B1 of today’s Wall Street Journal. In the article, Sarah McBride reports that the media giant plans to spinoff its entertainment division “in the latest example of a media company deconstructing an empire built during the late 1990s.”

As I’ve noted in previous posts, 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. As McBride reports in the Journal today, “Clear Channel is following a media-industry trend of deconsolidation that has picked up steam recently.”

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My latest C:\Spin article, The Public Interest Tax on Communications, corresponded with last week’s National Association of Broadcasters show in Vegas. In this article I go after a weighty subject that is somewhat abstract but directly relevant to today’s communications industry – the “public interest” legal standard. Regulations predicated upon the public interest are essentially proxies for the public’s own taste and preferences. If there was a need for this requirement early in the days of broadcasting, today’s new technologies make it unnecessary and a costly way to regulate.

The public interest standard is overly subjective for a legal standard, which results in too much political pork and special interest hijacking. Consumers would be better off if we removed this language from our communications law. My article:

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As I’ve mentioned in previous posts (here and here), the potential for cell phone content regulation is something worth monitoring. There have been some rumblings in Washington already about the need for the wireless industry to take steps to shield children from potentially objectionable material even before it hits the market. And you’d have to be a fool not to realize that at some point very soon, technological & media convergence is going to bring adult-oriented fare to mobile devices. The question is, once that happens, will regulatory convergence follow technological convergence? More specifically, will broadcast TV and radio “indecency” controls be imposed on wireless content in coming years?

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[[cross-posted from the PFF Blog]]

There’s a crowd of people out there who still think that nothing has changed in our modern media world. They think that the same old newspapers, television, and radio outlets that dominated the media marketplace 30 years ago are still the only media outlets of importance today.

For example, Farhad Manjoo of Salon claims that “it’s hard to find anyone in the media world… who can furnish proof that new technologies are shaking the foundations beneath entrenched media giants. If anything, the Web and cable and satellite have expanded the reach of media conglomerates.” Using similar conspiratorial rhetoric, FCC Commissioner Michael Copps argues that “those who believe the Internet alone will save us from this fate should realize that the dominating Internet news sources are controlled by the same media giants who control radio, TV, newspapers, and cable.” And the ever-pessimistic Mark Cooper of the Consumers Federation of America has complained that “the Internet has not lived up to its hope or hype. It has become more of an extension of two dominant, 20th century communications media [television and telephony] than a revolutionary new 21st century technology.”

To these critics, left me just respectfully say, get a grip! Wake up and take a whiff of reality because the media world has already changed in amazing ways and the Internet and cyberspace ARE shaking the foundations of traditional media.

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As I mentioned in a previous post, cellphone television is coming and that raises the interesting question of whether cellphone censorship will follow.

The New York Post has a short article today about the new race to develop a standard for cellphone video transmission. The article quotes Neil Strother, an analyst with In-Stat, a Scottsdale, Ariz., tech research firm, saying: “It’s a technology that’s here. But I think it’ll be about four years before it becomes mainstream.”

So cellphone video is coming quicker than anyone expected and the question now is whether the government will attempt to expand “indecency” regulations to cover it, much as they are currently trying to do for cable and satellite television.

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So I drove over to CompUSA late last night for a special 10-till-Midnight sale. (Yes, I’m that big of a dork… but hey, I needed a new laptop and they had some good sales).

When I walked through the door, there was a mob standing around a giant bin fighting each other for a chance to grab one of the DVD players inside. After the commotion died down and all of the DVD players were picked over, I went over to see what the big deal was. Incredibly, CompUSA was selling brand new progressive scan DVD players for $29.99.

Now to explain to you how incredible this was to me, you have to understand that I’m one of those idiots called an “early adopter.” Yes, I’m the guinea pig who buys every new technology right out of the gates for outrageous prices just so I can be the first kid on the block with the hot new toy in town. Back in 1993, I was one of the first people to buy Onkyo’s hot new laser disc player–you remember those old discs that were as big as LP records and that you had to flip them over to continue to watch even short movies? Well, I threw down $1000 bucks on one of those suckers. It was rendered obsolete by the rise of DVDs just a few years later, and yes, I bought one of the first DVD players to hit the market too. This one was around $1000 bucks as well. And later this year I plan to throw down even more insane amounts of cash to be one of the first to grab a Blue-Ray high-def DVD player. So I’m not just the sucker that’s born every minute, I’m a reborn sucker every few years. The industry loves spend-happy idiots like me.

So, anyway, there I am in CompUSA late last night staring at the empty big of $29 DVD players and thinking to myself just how amazing that was. Not just because I paid so much more for my first one a few years ago, but also because of how fast the market had brought the price of these devices down below the cost of a good steak at Morton’s. (I had had a steak at Morton’s earlier in the day that cost $34 bucks. It was the cheapest one on the menu!)

Moreover, at a price of $29, that means that DVD players are now almost as inexpensive as the DVDs that they play! In fact, on a rack right next to this bin of $29 DVD players was a stack of “Lord of the Rings” special edition DVDs that actually cost more than the DVD players. (Also, in another bin, CompUSA was selling brand new LCD computer monitors for $120 bucks. Insane!)

Am I the only person that finds this absolutely amazing? I wonder what all those people who complain about a “digital divide” in this country would say about this.

P.S. Proving yet again what an idiot I am, I bypassed all the great sales on sub-$800 computers last night and shelled out over $2000 bucks on a state-of-the-art new Toshiba multimedia laptop. I’m sure the same model will be selling in a bin next year for $400 bucks. Somewhere in Tokyo, an account executive is laughing about people like me right now.

Who competes with whom in today’s communications world? Most policymakers today are just now coming to grips with the fact than old-fashioned wired telephones compete with wireless telephony, and that broadcast TV stations compete with cable and satellite providers. But maybe they should be thinking even more broadly. As reported Wednesday’s Financial Times, BBDO–the world’s third largest ad agency–says that cellphones and other wireless devices may soon overtake television as the biggest advertising medium. Andrew Robertson, BBDO’s CEO, says that the increasing ability of consumers to avoid TV commercials–combined with the tremendous growth of wireless–makes the shift likely. Just one more bit of evidence convergence is real, and that choice and competition is coming from more quarters than we imagine. The development should put paid to any notion that there is any undue market power wielded broadcasters in advertising, and eliminate that as an argument for ownership controls. On the glass-half empty side, it could lead Congress to include cellphones in its ever-expanding plans for indecency restrictions. Stay tuned, this should be fun.

[[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.

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.