How about we just agree to disagree on that topic and go back to discussing the lottery and be friends?
OF COMMISSIONER MICHAEL J. COPPS,
Re: General Motors Corporation and Hughes Electronics, Corporation, Transferors
and The News Corporation Limited, Transferee, For Authority to Transfer
Here we go again. Today the Commission demonstrates how serious -- and
seriously misguided -- it was when it voted on June 2 to eviscerate media concentration
protections. Presented with the opportunity to signal whether it intends to protect the
important goals of diversity, competition, and localism, or to allow instead ever greater
and more threatening levels of media consolidation, the majority flashes the green light
for the next great wave of media consolidation.
News Corp was already a media giant:
• In the U.S., News Corp. owns television stations reaching over 44 percent of
the country. (WNYW-5, New York; WWOR-TV-9, New York; KTTV-11,
Los Angeles; KCOP-13, Los Angeles; WFLD-32, Chicago; WPWR-TV-50,
Chicago; WTXF-TV-29, Philadelphia; WFXT-25, Boston; KDFW-4, Dallas;
KDFI-27, Dallas; WTTG-5, Washington, DC; WDCA-20, Washington, DC;
KMSP-TV-9, Minneapolis; WFTC-29, Minneapolis; WJBK-2, Detroit;
WAGA-5, Atlanta; WUTB-24, Baltimore; KRIV-26, Houston; KTXH-20,
Houston; WTVT-13, Tampa Bay; WRBW-65, Orlando; WOFL-35, Orlando;
WJW-8, Cleveland; KSAZ-TV-10, Phoenix; KUTP-45, Phoenix; KDVR-31,
Denver; KTVI-2, St. Louis; WITI-6, Milwaukee; WDAF-TV-4, Kansas City;
KSTU-13, Salt Lake City; WBRC-6, Birmingham; WHBQ-TV-13, Memphis;
WGHP-8, Greensboro; KTBC-7, Austin; WOGX-51, Ocala).
• In nine markets, it owns more than one television station (New York, Los
Angeles, Chicago, Dallas, Washington, DC, Minneapolis, Houston, Orlando
• It owns a major national broadcast network (Fox).
• It owns numerous cable and DBS channels, including regional sports
networks across the country (among them FX, Fox News Channel, Fox Movie
Channel, Fox Sports, Fox Sports en Espagnol, National Geographic Channel,
• It owns the most widely used electronic program guide for navigating
television content (Gemstar-TV Guide).
• It owns newspapers, magazines, and publishing (including New York Post,
The Weekly Standard and HarperCollins Publishers).
• It owns studios (including Twentieth Century Fox, Searchlight, Fox
Television Studios, Twentieth Century Fox Television).
• It will now own a nationwide multi-channel direct broadcast satellite system
• And it will now also own a major fixed satellite service provider that carries
video broadcast and cable programming for delivery to distribution systems
• This list constitutes News Corp’s major holdings in the United States. This
conglomerate also has massive media holdings in other nations spanning the
When is “Big Media” big enough? With spectrum always scarce and diversity
hanging by a thread, where is the logic -- where is the public interest benefit -- of giving
more and more media power to fewer and fewer players? In the end, it all comes back to
this: to putting too much power in one conglomerate’s hands and creating opportunities
for abuse that accompany such concentrated power. Any public interest benefits that may
potentially come about from this huge consolidation of commercial power are vastly
outweighed by the potential for significant harm to consumers, the industry and the
country. I therefore dissent from allowing this merger to go forward.
The majority seems to recognize that the agreement that the parties presented to
the Commission for approval was seriously flawed. But the majority’s strategy to apply
band-aids in several places to stem what is in fact a public interest hemorrhage did not –
because they could not -- work. This agreement was probably beyond repair. Certainly
the band-aids applied by the majority don’t fix it.
The Applicants point to several claimed public interest benefits of the proposed
merger. Yet, even the majority discounts all but two of these benefits as not supported by
the record. The majority relies on the potential public interest benefits of innovative
services that will be offered under News Corp.’s management and on additional markets
in which DirecTV will provide carriage for local television stations. As to the former, the
majority admits it is difficult to quantify, but points to the innovative service offerings
available on News Corp.’s satellite systems in other parts of the world which include
interactive sports betting and casinos. As to the claimed second benefit, the major DBS
providers have already been increasing their local station carriage for competitive reasons
and, as several commenters point out, DirecTV is altogether able to expand those
offerings without this merger.
The Order is even more telling in its handling of potential harms emanating from
this transaction. The majority finds that News Corp. has market power in its
programming services, that this transaction increases its ability and incentive to use its
market power to raise programming costs, and that these increases would ultimately be
passed on to consumers. All of the Commissioners appear to agree that, as proposed by
the Applicants, the harms of this transaction outweigh the benefits. In addition to my
belief that the conditions imposed in this Order are not adequate to address the harms
acknowledged by the majority, I am further concerned that the majority fails to
acknowledge other real and potential harms associated with the merger. These include:
• Media Concentration: Although the majority at least attempts to address the
harms of vertical integration, it dismisses outright horizontal integration harms
that can arise from allowing one company to own broadcast outlets across the
country and a nationwide multi-channel distribution system – an
unprecedented level of consolidation. Instead, the majority concludes that
broadcast outlets do not serve the same market as cable and DBS. The
majority further discounts any harms to localism or diversity, finding instead
that market forces will ensure adequate sources of information. To trust that
in the unforgiving environment of the market, the public interest will
somehow magically trump the urge to build power and profit is a leap of faith
that this Commissioner, for one, is unprepared to take. The majority ought to
know better. This is the same flawed logic we saw in the Commission’s June
2 decision. In addition, the majority fails to analyze the impact of this merger
on ensuring independent and diverse programming. Alleged economies of
scale do precious little to nurture program or viewpoint diversity.
Given the majority’s analysis, I am concerned that this merger is merely the
beginning of another wave of consolidation. News Corp. has indicated it may
continue growing by acquiring additional television duopolies and other
properties. Indeed, the majority apparently presumes that additional News
Corp. acquisitions of television stations, radio stations, and newspapers is in
the public interest under the Commission’s new bright-line media ownership
rules. And other Big Media conglomerates, encouraged by today’s decision,
will now feel emboldened or compelled to consolidate further. My service as
a Commissioner has taught me that the response to one company’s acquisition
is almost invariably another company’s request to grow bigger so that it can
“compete” and “survive.”
The majority’s conclusion that broadcast stations do not compete in the same
market as cable and DBS, along with its unwillingness closely to examine
harms to diversity and localism, make clear that this Commission has no
intention to slow, or even critically to examine, cross-platform mergers
between broadcast stations and cable or DBS systems.
• Community Standards and Indecency: Some have suggested that there may
be a link between increasing consolidation and increasing indecency on our
airwaves. As I traveled across this country holding hearings and attending
forums earlier this year, I heard time and again that ownership matters when it
comes to what is offered up to viewers and listeners, particularly to our
children. I am troubled that today’s decision comes on the heels of complaints
that News Corp. aired indecent material on the 2003 Billboard Music Awards
just last week. This is not the first instance of such viewer complaints against
News Corp. Many of the indecency complaints I have seen come into the
Commission involve stations owned by large media companies. I raise the
issue here not because of any specific broadcast program, but because the
Commission has refused to study the possible relationship between indecency
and media concentration. I believe such a study is relevant to decisions such
as the one we make today and that, indeed, we should not be making these
decisions until we have credibly considered the matter. As we allow media
conglomerates to grow ever larger, many Americans are concerned that the
race to the bottom will accelerate and that broadcaster consideration for local
community standards will continue to erode.
Yet, today, before we even consider these complaints or address the impact of
increasing consolidation on increasing indecency, we reward News Corp. with
a nationwide programming distribution system. And what will be the effect?
Will we see even more attempts to air progressively coarser content? As we
move towards more interactive programming, will we see gambling intrude
itself into our homes on DirecTV as News Corp. provides on its overseas
satellite system? Will we see wider distribution of shows that continue to
push the envelope of outrageousness even further?
• Increasing Consumer Rates: Applicants cite economic efficiencies that will
result from their agreement and claim that the merger will give them the scale
and scope to compete more effectively. There may well be some such
efficiencies, although the baleful tale of many recent high visibility corporate
mega-mergers does not provide much proof of commercial success. Be that
as it may, Applicants did not demonstrate that any of these alleged savings
would be passed on to consumers nor did they evince great enthusiasm for so
doing. It is telling that Applicants produced so little data as to how this
transaction could possibly discipline rising cable rates. The likelihood of its
doing so is so remote as to be invisible. Interestingly, just today news reports
tell us that our cable bills will be going up again on January 1, rising on
average 6.5 percent – this when the nation’s inflation rate is 1.8 percent!
Lower prices seldom ensue from industry combinations. When we approve a
transaction that further increases concentration in programming production
and distribution, it is reasonable to assume that we are setting the stage for
upward pressure on cable rates. An entirely plausible outcome of this
decision is escalating consumer rates for multi-channel services from both
cable systems and DirecTV. When faced with a similar scenario, the Federal
Trade Commission in the Time Warner/Turner merger adopted a benchmark
price index mechanism. Here, the majority dismisses such an approach,
adopting instead so-called baseball arbitration. I am not convinced that
arbitration has succeeded in bringing down costs in baseball. More to the
point, this is not baseball and it is surely not a game. Although the majority
allows the Commission to review the arbitration decisions, it then ties the
Commission’s hands by requiring us to choose between each party’s final
offer. This reduces the Commission’s obligation to protect the public interest
to a multiple choice test. Let’s be clear here: what the arbitrators will most
often be arbitrating are two companies’ proposals to raise rates. The only
question to be decided is how much rates will increase. Payment for higher
programming license fees will be borne, of course, by consumers.
Moreover, although the majority seems to recognize the possibility of
increased consumer rates from this level of consolidation, it inexplicably
provides a sunset for these conditions of six years. This sunset is adopted
without any explanation of why the majority expects these harms to be
resolved within that timeframe.
I am troubled by other aspects of this decision.
I am troubled by the lack of analysis on the foreign ownership implications of the
transaction. In section 310(b) of the Act, Congress adopted a broad provision that limits
the ability of foreign entities to own or operate parts of our communications system. This
foreign ownership restriction applies across a broad range of communications services.
For decades, the Commission applied these restrictions to DBS. Last year, with
inadequate justification, the Commission determined that the foreign ownership
restrictions in 310(b) should not apply to DBS. As a result, the majority, in approving
this deal under which News Corp., an Australian company, purchases control of a U.S.
DBS licensee, concludes that it need not consider the foreign ownership implications.
I am troubled by the majority’s failure to consider the impact of this merger on
minority communities. The Congressional Hispanic Caucus in a recent letter raised
numerous serious issues related to the negative impact of this merger on the Latino
community, on minority-owned independent programmers and on local and Latinofocused
programming. The majority fails to do justice to these concerns.
I am troubled that the Commission is approving this merger without resolving
issues specific to the Applicants that have been raised regarding service in Alaska and
Hawaii. Parties have filed complaints that DirecTV fails to provide reasonably
comparable packages of services to Alaska and Hawaii, as required by our rules. If these
companies are violating Commission rules, we should address these issues as part of our
public interest analysis.
Finally, I am troubled by the failure to clarify that DirecTV, or any other DBS
provider, may not discriminate against some local broadcasters by requiring consumers to
obtain a second dish to receive those broadcasters. In 1999, Congress passed the Satellite
Home Viewer Improvement Act (SHVIA). That Act required that, if a provider carries
any local broadcast signals, it must carry all local broadcast signals, and must do so at a
nondiscriminatory price and in a nondiscriminatory manner. In 2002, Commissioner
Martin and I issued a joint statement making clear our view that a plan to require
consumers to obtain a second dish to receive only some of the local broadcast stations in
a market did not comply with the statute or Commission rules.
In sum, I simply cannot support the level of concentration by a single owner that
will result from this merger absent compelling public interest circumstances.
Unfortunately, I do not find that the potential public interest benefits of this transaction
outweigh the real and potential harms. This decision is the wrong decision – wrong for
the media industry, wrong for consumers, wrong for democracy in America.