Diller and Turner join call for new media regulation

David D. Kirkpatrick, New York Times, June 3, 2003

Each time federal regulators loosen restrictions on big media companies in the United States, consumer advocates like Ralph Nader warn that democracy is in danger. But this time around, Nader has some surprising allies: prominent media executives like Ted Turner and Barry Diller.

Just what mix of altruism, self-interest and sour grapes has motivated Turner and Diller to speak out against the industry consensus is a matter of some debate on Wall Street and in Washington. But they are not alone.

Recently, even at the biggest conglomerates, where deregulation is an article of faith, some executives have professed nostalgia for a more restrictive era. From the libertarian-minded media investor John Malone to Donald Graham of The Washington Post Co., executives in television, radio, music, newspapers and cable television have started to talk about the unintended consequences of two decades of deregulation and to ask for new rules, setting the stage for battles in Congress and the courts.

The sweeping package of regulatory changes that the Federal Communications Commission approved Monday is going to affect local TV stations, radio stations and newspapers.

The breadth of the proposed changes has aroused a wider debate. Backers of deregulation cite a growing number of media outlets, but critics say that a few companies own most of them.

Diller, a former chief of Paramount Studios, a founder of Fox Network and now chairman of USA Interactive with control over a big stake in Vivendi Universal SA, has spoken widely on the matter, beginning at a broadcasters' convention two months ago. "We need more regulation, not less," he said then.

He argues that the five largest media companies own channels that draw 70 percent of the prime-time television audience. In radio, the largest chain, Clear Channel Communications Inc., attracts more than 25 percent of national listeners, and in some cities the top four station groups have more than 70 percent. Six cable operators have 80 percent of subscribers.

"Frankly, I don't care about what is a puny piece of deregulation, although I think it is unwise on its own," Diller said Sunday.

The problem, he said, is that a decade of "thoughtless deregulation" has yielded a small group of "oligarchs" - media giants like Comcast Holdings Corp., AOL Time Warner Inc., Walt Disney Co., Viacom Inc. and News Corp. that largely control which programs reach viewers. Most of these own the studios that produce programs and the cable, satellite and broadcast outlets that carry them. They have dominant roles as gatekeepers, controlling what will reach consumers, and they often own or control the studios that produce the programs.

The top companies need one another for programming or distribution, but they put everyone else at a disadvantage, Diller said. "These people essentially only accommodate each other," he said. "There is no way in anymore."

He is calling for a return of the rules that prohibited the networks from producing their programs. For decades, independent producers like Lorimar and MTM flourished supplying shows to the networks, but the 1995 lifting of the prohibition largely eliminated that role. Mergers followed between major networks and studios. Diller favored a new version of the old rules extended to cable and satellite companies.

Turner founded Turner Broadcasting and CNN and remains a major shareholder and director of AOL Time Warner, now Turner Broadcasting's parent. He declined to comment for this article, but he reprised his views in an opinion article published on Friday in The Washington Post. The proposed changes, he wrote, "will extend the market dominance of the media corporations that control most of what Americans read, see or hear" and "give them more power to cut important ideas out of the public debate."

Independent cable television programmers also miss the old rules. Leo Hindery Jr., a former top executive at a cable operator and now chairman of the Yankees' YES Network, recently told Congress that giant cable operators favor their channels to the detriment of others and called for new rules to protect independents.

Malone, the chairman of Liberty Media Corp., has suggested rules limiting the fees charged to cable operators for sports and other channels.

Executives at all the major record labels, including the music divisions of AOL Time Warner and Vivendi, said privately that the consolidation of ownership of radio stations after deregulation in 1996 narrowed playlists, making it harder and costlier to promote new performers. Music industry trade groups have sought new rules to address the issue.

Libertarians think this is a good idea (from "Libertarian Solutions"):

. . . eliminate the Federal Communications Commission (FCC). A remnant of the New Deal era, this bureaucracy is in charge of licensing TV and radio companies, and regulating them in the name of the "public interest."

I'm mentally unstable.