July 09, 2003  Copyright Mediaware Infotech Pvt Ltd

On June 2, 2003 (after months of deliberation) the U.S. Federal Communications Commission (better known as FCC) voted to effect major changes in U.S. Media Ownership Laws. One month later, FCC has published its recommendations in full.

Similar attempts by the U.K. Government to introduce the U.K. Communications Bill are currently facing rough weather in Parliament with major modifications suggested - the most notable being the "media plurality test". (This acid test is to be applied to any proposed change in media ownership to determine whether plurality concerns are significant enough to block the proposed change.)

And in another continent (Australia), the Government's attempts to relax media ownership laws were thwarted after it failed to gain senators' support. (The Govt. has declared its intention to present the controversial bill in Parliament a second time around.)

The Media Business
As with most other businesses, the media business has evolved into a high technology, high investment business. (Gone are the days of newspapers 'dedicated to public interest' !) For Example, change over from analogue to digital involves massive investments which are amortised over many years. In such a scenario, it makes commercial sense to merge media companies to create mega media companies, capable of large investments for long periods. For example, the Japanese Government's plan to switch over from analogue to digital television in 2010 is essentially based on large investments from their media companies. Naturally, media owning companies expect permission to merge with foreign companies to create large entities which can weather the large investments required.

But since mass media is used for mass influencing, our forefathers felt that safeguards were required against any single entity controlling national mass media - to ensure diversity (what the English lawmakers have termed as "media plurality") .

It is these two 'opposite' factors that lead to a conflict of interest.

U.S. Media Laws - yesterday & tomorrow
To illustrate the nature of the media ownership restrictions, we take the U.S. example. Most changes proposed by U.S. FCC pertain to relaxation of restrictions in media ownership, allegedly in favour of big media networks. (Some critics have gone so far as to suggest that the infamous "embedded" journalism displayed by major American media in the recent Iraq War was in return for relaxations in media ownership laws.)

Here is a partial list of the original restrictions along with the new relaxations:

Note:
Markets have been categorised on the basis of no. of existing TV Stations:
* A market is considered small if the no. of TV Stations catering to it does NOT exceed 3
* A medium-sized market is one which has upto 8 TV Stations
* Any market which has more than 8 TV Stations is a large market

Final word
Global consolidation of media is a reality. Mega media groups already control bouquets of TV Channels from U.S.A. to Australia across Europe & Asia. Sharing of content for commercial efficiency is a business strategy.

Besides, there is a huge mass influencing factor that is inherent in the media business. And the temptation to influence masses by controlling content goes well beyond exploiting business synergies of shared content. (We have seen examples in the recent Iraq war.)

And remember that digital television offers Governments the unparalleled opportunity to access each household. Directly, at low cost. Making it in the interest of Government to promote digital television platforms. Typically through privately-owned media companies.

To upgrade to new technology platforms like digital television, media businesses of the future will need to carry huge investments for years. This will make mega mergers the preferred route, provided the Governments permit it, hopefully keeping in mind all concerned factors.

In the light of all these, changes in media ownership laws assume great significance.