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Posted by on Dec 8, 2009 in Media | 4 comments

Murdoch Wants Cross-Ownership Rules Relaxed

In an op-ed at his flagship Wall Street Journal today, News Corp chief Rupert Murdoch rehashed some of his recent barbs (such as claims of fair use abuses) while wrapping News Corp. with the American flag. Those prior public statements now seem part of a regulatory “reform” strategy as he adds a call for relaxing media cross-ownership rules to the litany of remedies needed to maintain the News Corp. oligopoly.

The government has a role here. Unfortunately, too many of the mechanisms government uses to regulate the news and information business in this new century are based on 20th-century assumptions and business models. If we are really concerned about the survival of newspapers and other journalistic enterprises, the best thing government can do is to get rid of the arbitrary and contradictory regulations that actually prevent people from investing in these businesses.

One example of outdated thinking is the FCC’s cross-ownership rule that prevents people from owning, say, a television station and a newspaper in the same market. Many of these rules were written when competition was limited because of the huge up-front costs. If you are a newspaper today, your competition is not necessarily the TV station in the same city. It can be a Web site on the other side of the world, or even an icon on someone’s cell phone.

These developments mean increased competition, and that is good for consumers. But just as businesses are adapting to new realities, the government needs to adapt too. In this new and more globally competitive news world, restricting cross-ownership between television and newspapers makes as little sense as would banning newspapers from having Web sites.

Murdoch’s assessment of the direction of the threat to incumbent media companies is spot on. The future delivery channel for “newspapers” and “TV’ and “radio” wil be the Internet. However, I disagree with his proposed remedy. This is not the time to feather the nests of corporate titans, especially at a time when as much as 90 percent of what Americans read, hear and watch is controlled by five corporations (Bagdikian, 2004). We need to hasten the fragmenting of these oligopolies, not allow them to become more tightly integrated. Moreover, relaxing cross-ownership rules could jeopardize fledgling neighborhood (hyper-local) news efforts by allowing incumbent interests to consolidate and wield even more market power than they do today.

For the record, News Corp is the world’s second-largest “media” conglomerate (number one, Disney). It’s no wonder that Murdoch champions additional consolidation.

For additional analysis of this op-ed, which is based on testimony at an FCC workshop last week, see WiredPen: Rupert Murdoch: Journalism and Freedom – A Rebuttal.