6 companies own 90% of media consumed by Americans
The much-admired Supreme Court Justice Hugo Black may be rolling in his grave at the prospect of a merger between 21st Century Fox and Time Warner Inc., which would reduce control of the major Hollywood studios to five owners, from six, and major television producers to four, from five.
“The widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public,” he wrote in the majority opinion that decided a 1945 antitrust case involving major newspaper publishers and The Associated Press. “The First Amendment affords not the slightest support for the contention that a combination to restrain trade in news and views has any constitutional immunity.”
Fox and Time Warner may no longer publish old-media newspapers or magazines, but they certainly disseminate information and opinions that may be even more vital to the “welfare of the public” today than the newspapers of Justice Black’s era. HBO alone, one of Time Warner’s cable channels, produces “Real Time With Bill Maher,” “Last Week Tonight With John Oliver” and acclaimed documentaries like “The Case Against 8,” about the struggle for marriage equality, and the “Paradise Lost” series, which examined the murder convictions of the group of white teenagers known as the West Memphis Three.
Credit Janet Van Ham/HBO, via Associated Press
How many of those would be produced under the ownership of a Rupert Murdoch, or for that matter, any other media mogul who controlled close to 40 percent of all major film production and nearly 20 percent of all television?
“I don’t see a bright distinction between news and entertainment,” said Christopher L. Sagers, an antitrust professor at Cleveland-Marshall College of Law. “One person shouldn’t own all the cultural creativity resources. If one person can limit content, that’s a huge loss to society.”
Advocates for consolidation in media, who include not just Mr. Murdoch, who controls 21st Century Fox, and their allies, but also other big media, cable and telecommunications companies, tend to brush off antitrust concerns when it comes to content creation. (Even Time Warner has been cautious about raising any antitrust defenses, presumably because, should it thwart Mr. Murdoch this time, it may want to acquire its rivals at some point in the future.)
After all, the rise of Netflix and the popularity of YouTube demonstrate that anyone can make successful original programming in the freewheeling digital era. And even as television producers have consolidated, critics have hailed a new “golden age” of television.
But this ignores the fact that in 1983, 50 companies owned 90 percent of the media consumed by Americans. By 2012, just six companies — including Fox (then part of News Corporation) and Time Warner — controlled that 90 percent, according to testimony before the House Judiciary Committee examining Comcast’s acquisition of NBCUniversal.
“The situation is already terrible and this would make it worse,” said Susan Crawford, a visiting professor in intellectual property at Harvard Law School. Coupled with giant cable and Internet distributors, like Comcast and AT&T, “you’ve got two highly concentrated markets that need each other to survive and protect their profits,” Professor Crawford said. “The public interest side of this conversation is hopelessly outgunned.”
Antitrust experts said that a merger of 21st Century Fox and Time Warner posed far more serious regulatory issues than Comcast’s acquisition of NBCUniversal. That’s because Fox and Time Warner are direct competitors in the businesses of film and television production. (Comcast didn’t produce much programming before it bought NBCUniversal.)
“This is quite different from Comcast and NBCUniversal,” said Scott Hemphill, an antitrust professor at Columbia Law School. “It’s a straightforward merger of two competitors.”
These so-called horizontal mergers always reduce competition, the only issue being whether it’s enough to warrant blocking the merger or imposing conditions on it. And both Fox and Time Warner would come under the jurisdiction of the Federal Communications Commission, which is free to take a broader view of the public interest when examining mergers.
“It’s within the F.C.C.’s power as merger overseers to conclude that this merger would impose undue limits on diversity,” Professor Sagers said. “It could block it or it could impose conditions that would ensure diversity.”
A spokesman at 21st Century Fox declined to comment. But a person with knowledge of the company’s strategy said it saw no substantive antitrust issues other than in cable news. On the contrary, this person contended that a merger would encourage competition, because Fox has traditionally been a disruptive rival and innovator. A spokesman for Time Warner declined to comment.