american media regulations

8/3/2019 American Media Regulations

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The Information Society, 21: 181204, 2005

Copyright c Taylor & Francis Inc.

ISSN: 0197-2243 print / 1087-6537 online

DOI: 10.1080/01972240490951908

On Media Concentration and the Diversity Question

Robert B. HorwitzDepartment of Communication, University of CaliforniaSan Diego, La Jolla, California, USA

Corporate mergers and the consolidation of ownership in the

American communications arena have long been sources of con-

cern. U.S. regulatory and antitrust policy traditionally attempted

to secure a diversity of voices structurally, largely through rules

regarding ownership. Although the meaning of diversity was al-

ways problematic and undertheorized, the Federal Communica-

tions Commission long set ceilings on the numbers of broadcastoutlets any single person or corporation could own and enacted

cross-ownership rules such as a prohibition against a corporation

owning a newspaper and broadcast outlets in the same market.

These rules, and the FCCs authority to make them, were upheld,

occasionally even compelled, by the federal appellate courts. In

the last 20 years, however, legal trends, in conjunction with po-

litical developments, have undermined the diversity rationales be-

hind ownership rules and associated structural regulations of mass

media. Paradoxically, even as media corporations are becoming

larger and presumably more powerful, ownership regulations are

being rescinded or struck down. This article explains this history. It

concludes with a suggestion that the First Amendment metaphor

of a marketplace of ideas is misplaced, and of how our thinking

about media ownership and diversity might be better served by themetaphor of a mixed media system.

Keywords antitrust, communications, concentration, diversity, FCC,

First Amendment, media corporations, ownership

Corporate mergers and the consolidation of ownershipin the American communications arena have long beensources of concern. The perception of a direct relation-ship between democracy and a vibrant communicationssystem of diverse sources and owners is near universal

(or, at least, is given universal lip service), as is, for themost part, the converse fear that a communications systemthat rests in just a few hands will corrupt the freedom of

Received 11 February 2004; accepted 19 January 2005.

Address correspondence to Robert B. Horwitz, Department of Com-

munication, University of CaliforniaSan Diego, 9500 Gilman Drive,

La Jolla, CA 92093-0503, USA. E-mail: [email protected]

speech, impair the practice of democracy, and impress anideological pall on society. The Supreme Courts reason-ing in the 1945 case of Associated Press v. United Statesexpresses the issue plainly. In language that has since as-sumed a kind of talismanic status in discussions about theFirst Amendment and corporate power, the court statedthat

[The First] Amendment rests on the assumption that the

widest possible dissemination of information from diverse

and antagonistic sources is essential to the welfare of the

public,thatafreepressisaconditionofafreesociety.Surelya

command that thegovernment itselfshallnot impedethe free

flow of ideas does not afford non-governmental combinations

a refuge if they impose restraints upon that constitutionally

guaranteed freedom. Freedom to publish means freedom for

all and not for some. Freedom to publish is guaranteed by the

Constitution, but freedom to combine to keep others from

publishing is not. Freedom of the press from governmental

interference under the First Amendment does not sanction

repression by private interests. (Associated Press v. United

States 1945, p. 20)

Distrust of government control of media is, of course, anelemental principle of American politics, encoded, amongother places, in the First Amendment. But because thepress could itself stifle freedom of speech through its busi-ness practices (in the Associated Press case, restrictivemembership regulations), the First Amendment did notpreclude government from applying the antitrust laws tothat medium. A few years earlier in 1934, apprehensionabout private power in the then new medium of broadcast-ing saw Congress embed within the mandate of the FederalCommunications Commission, broadcastings new reg-

ulatory body, a general command to preserve competi-tion in commerce in the broadcast medium and a spe-cific directive to refuse a station license to any personadjudged guilty of unlawfully monopolizing or attempt-ing unlawfully to monopolize radio communication.Congressional fear of radios potentially dangerous con-centration of political power in part underlay the acts pro-hibition against any joint ownership of radio and wired

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182 R. B. HORWITZ

systems (Communications Act, 1934, Sections 313, 314).In the period immediately following the Second WorldWar, the Commission on Freedom of the Press, proba-bly the most important study of mass media in the UnitedStates (conducted by a distinguished group of intellec-tuals under the leadership of the famed educator RobertMaynard Hutchins), rearticulated these concerns. Seeingin the ownership patterns of the postwar media systema distinct danger of concentration, the Hutchins Com-mission worried that such concentration undermined thepresss crucial roles as conveyer of information, govern-ment watchdog, and educator (Commission on Freedomof the Press, 1947).1 In recent years, many Americans havebecome apprehensive as they watch a cascade of mergersamong already very large media corporations.

In short, while fear of governmental power and gov-ernment control of media is central to American poli-tics, the dismay over the concentration of private powerin media is a very strong undercurrent. U.S. regulatory

and antitrust policy traditionally attempted to address thedangers of concentrated media power by securing a di-versity of voices structurally, largely through rules re-garding ownership. This article examines the history andlogic of media ownership rules in the United States, andanalyzes why, even as media corporations are becominglarger and presumably more powerful, ownership regu-lations are being rescinded or struck down. To this end,the analysis of the concept of diversity is a central focus.The framework of the article is as follows: The first partintroduces the concept of diversity within the frameworkof the First Amendment and examines some of the prob-lems in empirically assessing the efficacy of ownership

rules. The second part presents the lineaments of the re-cent debate over whether media are, in fact, concentrated,and in so doing contrasts the antitrust mandate of the De-partment of Justices Antitrust Division with the publicinterest touchstone of the Federal Communications Com-mission (FCC). The third part displays the main mediaownership rules and their basis in regulatory theory andpractice. The fourth part reviews the historical relationshipbetween the FCC and the federal appellate courts, high-lighting the courts pressure on the FCC to issue morestringent ownership rules, particularly when the linkagewas made between the diversity of voices to issues ofrace. Analysis of the majority and minority opinions in

the important case of Metro Broadcasting v. FCC (1990)is a key focus. The fifth part follows the logic of JusticeOConnors Metro Broadcasting dissent into several re-cent appellate court rulings that have struck down FCCownership rules and, moreover, require the FCC to engagein nonconjectural empirical analysis to support its reg-ulations in the ownership area. The sixth part concludesthe article, ending with a suggestion that the First Amend-ment metaphor of marketplace of ideas is misplaced and

of how our thinking about media ownership and diversitymight be better served by the metaphor of a mixed mediasystem.

DIVERSITY WITHIN THE FIRST AMENDMENTFRAMEWORK

Traditionally, the dangers of ownership concentration inthe communications industry were addressed by a combi-nation of antitrust and regulatory policies that attemptedto attend to the amalgamation of corporate power but, ofcourse, did not question private power itself. The logic ofgovernment policy generally derived from the juxtaposi-tion of the antitrust laws and regulatory practice with freespeech jurisprudence. The First Amendment argumentsare pretty familiar by now: The robust clash of opinionsunimpeded by government is the prerequisite of democ-racy, that is, of self-government; an uninhibited exchangeof diverse ideas yields better public choices, decisions,

and policies; a free press provides a vital checking func-tion on government actions and possible abuses; freedomof expression is a condition of being a human subject,enabling individuals to learn, grow, and realize their au-tonomy; the social system functions better when space ismade for people to dissent or blow off steam publicly.The First Amendment literally forbids government fromabridging the freedom of speech or press (in fact, the lan-guage literally forbids only Congress from abridging thatfreedom). Absent such abridgement, the speech market-place is expected to secure the benefits just listed. Themarketplace of ideas, formulated by Justice Holmes inthe 1919 dissent in Abrams v. United States, typically is

the guiding metaphor in free speech jurisprudence.2

But the concentration of private power in the communi-cations media may skew, if not undermine, the presumedfree marketplace of ideas. To stay with the metaphor, con-centrated media ownership tends to corrupt the market-place and renders it dysfunctional. At the most basic level,concentrated ownership constricts the number and kindsof speakers. Owners of the communication systems thatdeliver content can erect bottlenecks that favor certain con-tent providers and thwart others. In more pointed analy-ses that link the ownership question to the predominantlyadvertiser-supported structure of U.S. media, concentratedmass media are understood to shape content in ways that

reproduce the prevailing structures of power and dominantcultural norms.At theveryleast, a commerciallybased me-dia system is structurally biased toward content connectedto marketable products and services, and, relatedly, is bi-ased away from content valued by the poor. Content thatcannot attract commercial sponsorship tends not to seethe light of day. To rectify these problems, Congress, theantitrust agencies, and the Federal Communications Com-mission (FCC) enacted a set of policies over the decades


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ON MEDIA CONCENTRATION AND THE DIVERSITY QUESTION 183

designed to address media concentration by separatingcommunication industries from each other and restrictingcommon ownership. These policies were pursued underthe general rubric of a concept of safeguarding a diversityof owners or maintaining a diversity of voices. In someinstances, such as those concerning telephone companiesandbroadcast outlets in thesame market, or newspaper andbroadcast outlets in the same market, common ownershipwas directly prohibited. Under the same diversity logic, theFCC also set ceilings on the numbers of broadcast outletsany single person or corporation could own. These limits,and the FCCs authority to make them, were upheld, occa-sionally even compelled, by the federal appellate courts.3

In the early years, diversity was not explicitly articulatedas the theory that legitimated government policy on mediaownership, but the theory always underlay the policy, andin recent decades the word itself has become preeminent.4

In spite of the long-standing concern over the concen-tration of ownership, the efficacy of government interven-

tions in American mass media area is hard to assess. It isdifficult to know whether and to what degree Departmentof Justice (DOJ) or Federal Trade Commission (FTC) an-titrust actions or FCC ownership rules safeguarded or pro-moted a free and diverse marketplace of ideas. A centralproblem here is what is meant by diversity, and how weshould assess it. Should we understand by diversity thenumber of owners of media outlets? Or rather (perhaps inaddition) the number of sources that provide content?5 Bythe number of different perspectives conveyed in informa-tion content? Or, to take the question out of the dimensionof the purely informational and political, by the numberof distinct audience segments or demographics appealed

to by various content providers, a measure that examinesprogram formats? By the varied racial composition of amedia outlets workforce?

Philip Napoli has written astutely on the varieties ofdiversity. In a useful typology, Napoli (1999) identifiessource diversity as encompassingownership (within whichthere is a subset distinction between the ownership of out-lets and the ownership of content, a distinction very per-tinent to cable television, for example, and the basis forthe Financial Interest and Syndication Rules for broad-cast) and workforce composition (the theory, connectedto Equal Employment Opportunity policies, that a diverseworkforce within any given media outlet would inherently

stimulate interactions the effects of which would diversifycontent and viewpoints). Content diversity encompassesformat or program-type diversity, demographic diversity(particularly whether minority groups and other demo-graphic groups are portrayed on television in reasonableproportion to their prevalence in society, a metric that hasnot been central to policymakers, but has been importantto communication studies), and, of course, idea-viewpointdiversity. Exposure diversity, in Napolis view a neglected

dimension, considers the diversity of content as received,in the sense of actual media selection by audiences.6 TheFCC and Congress usually soft-pedaled the conceptualdifficulties associated with diversity, sticking to genericpraise of the policy, and assuming that a diversity of own-ers would translate to a diversity of formats, viewpoints,and audience segments catered to. But the assumption ispart of the problem. Can ownership rules, concentrationlimits, and minority licensing preferences actually bringabout desired changes in media content when they are ap-plied in the context of the broader economic structure andsets of incentives and constraints inherent to an advertiser-supported media system? And if these rules, limits, andpreferences did secure diverse media content, would audi-ences avail themselves of it?

There are two issues here. First, much evidence pointsto the strength of commercially rooted incentives and con-straints. Owners, even diverse owners, may have partic-ular ideological proclivities or programming visions, but

the significant public goods features of media products,the economics of competition (with respect to the numberof outlets and structure of existing audience preferences),and the bias toward content linked to marketable productsand services make it difficult for owners to follow throughwith those proclivities and visions.7 Most empirical stud-ies of the effects of ownership rules and other diversityremedies on media content and format are inconclusive atbesta fact that has always left hopeful media reformerssomewhat disappointed.8 Only the FCCs minority pref-erence rules show some clear relationship between (mi-nority) owners and altered content.9 Conversely, there aresome data that show an increase in diversity at the level

of program formats as a result of deregulation and newentry.10 Theexamplethat many commentatorslike to high-light (to some degree because of its paradoxical nature) isthe Fox television network. Fox, the first new broadcasttelevision network in 50-odd years, was made possible inpart due to the expansion of independent television sta-tions and cost reductions in satellite program distribution,but also ostensibly due to the rollback of FCC rules onvertical integration (the Fin-Syn and Prime Time Accessrules). Discovering an unmet market niche, Fox markedlyincreased the amount of black-oriented entertainment pro-gramming on television (Farhi, 1994).

I referred to a second issue about ownership rules.If pol-

icy remedies are perceived as bringing about the desiredchanges in content, that is, if they are perceived as directlyeffective or even reflect the governments intention to beeffective, do they violate the First Amendments contentneutrality doctrine?11 Because the desire of government tobring direct changes in media content flirts uncomfortablyclose to the possible abrogation of the literal First Amend-ment, the usual phraseology is geared toward the moreabstract and grandiloquent formulation of enhancing the


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marketplace of ideas. Government ownership policies aremeant not to secure specific changes in media content, butrather to alter the structure so that differentkinds of ownershave the opportunity to offer different content.

In the wake of the Telecommunications Act of 1996 andthe wave of mergers subsequent to that legislation, and theexplosive growth of the Internet, the concern about mediaconcentration remains stronger than ever, but there is rea-son to believe that the question of diversity has becomemore complicated than ever. Three interrelated forces areat play. First is the combination of technological conver-gence in communications and the ideological triumph ofliberalization or deregulation. If the traditional regulatoryregime was devoted to the separation of elements of thecommunications industry, defined for the most part ac-cording to medium and technology, digitalization has un-dermined the technical basis of many of those separations.Indeed, a key impetus for the Telecommunications Actof 1996 was the dismantling of regulation-imposed sepa-

rations, and fostering the ability for previously separatedmedia and communications corporations to compete oneach others turfs (see Aufderheide, 1999).12 With tech-nological convergence and liberalization, and the growthof the Internet as an open delivery system, come new ques-tions about the application of conventional antitrust tools,such as the identification of clear-cut product and geo-graphic marketsthe traditional building blocks in thedetermination of whats concentrated or not.13 Some ofthis questioning is statutorily required. The Telecommu-nications Act instructed the FCC to eliminate one owner-ship rule and to revise five others. In view of this changedenvironment, second, the federal appellate courts, increas-

ingly skeptical of congressional or regulatory assertions ofmedia concentration and imposition of specific ownershiprules, insist on a new concentration metric based on non-conjectural empirical evidence of anticompetitive behav-ior and verification of the efficacy of regulatory remedies.Third, this trend in communications law has been abettedby the way that a new conservative formalism in equalprotection law has become attached to First Amendmentjurisprudence. These jurisprudential developments under-score the enduring historical connection between the civilrights movement and media regulation. As has been men-tioned, diversity analysis in mass media has always beena part of the regulatory mandate of the FCC, although in a

general way. Diversity analysis attained significantly morebite when, in the late 1960s, civil rights litigation provideddiversity a much more specific definition. In the mediaownership arena, diversitys star, as it were, got hitched tothe success of the legal logic of civil rights and affirmativeaction. After the 1960s, diversity in broadcasting and othercommunications industries under the authority of the FCCwas assessed essentially by how accessible media wereto minority, particularly racial minority, participation. As

affirmative action and its jurisprudential logic have lostfavor over the past 15 years, the principle of diversity incommunications likewise has come under fire. This is bestseen in a line of cases starting with Justice OConnorsdissenting opinion in Metro Broadcasting v. FCC (1990).In this, the courts brought to the media ownership debatea formalistic reading of the First Amendment, the upshotof which is sympathy for the arguments asserting the free-speech rights of corporations and increasing skepticismof the role of government in promoting diversity in massmedia. Corporations have successfully used the new for-malism to challenge media ownership policies as not meet-ing heightened First Amendment scrutiny.14 So, even asmedia corporations are becoming larger and presumablymore powerful, ownership regulations are being rescindedor struck down.

ARE THE MEDIA CONCENTRATED?

Are American media concentrated, particularly in the lightof the merger activity following the TelecommunicationsAct of 1996? One prominent line of argument respondsin the negative. Although one finds a notable number oflarge mergers and combinations in the communications in-dustry over the past 20 years or so, one also finds tremen-dous overall sectoral growth. EliNoam (n.d.), for example,contrasts the early 1980s, when three television networkscollectively controlled 92% of TV viewership, one com-pany (AT&T) controlled 80% of local telephone serviceand nearly 100% of the long-distance market, and anothercompany (IBM) accounted for 77% of the computer mar-ket, with the mid 1990s, when, after the deregulation of

cable television and the breakup of AT&T, the networksaccounted for barely more than 50% of TV viewership,AT&T served 55% of the long-distance market and hadvirtually no local customers, and no computer manufac-turer supplied more than 12% of the microcomputer mar-ket. Noam explains that the long period of limited media,characterized by few players and government regulationto limit their market power, had given way to a period ofmultichannel communications that greatly expanded theoverall media market. The market for broadcast, cable,print, and content grew from $151 billion in 1979, Noamnotes, to $367 billion in 1993an increase of 21% in con-stant dollars. And if the computer industry is included in

this figure, the market grew from $168 billion in 1979to $615 billion in 199383.5% growth in constant dol-lars. So, while there has been significant merger activity,the huge overall growth of the industry has alleviated anydanger of concentration (also see Waterman, 2000). More-over, the current multichannel communications environ-ment, fueled by a technological juggernaut and now, withthe 1996 Telecommunications Act, a procompetition pol-icy structure, willenable the broadconvergenceof delivery


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platforms for telecommunications, mass media, and com-puter data distribution. Under these conditions, althoughthere are particular, delimited, instances of market power,these will tend to erode as existing firms adapt and newfirms enter the market.

Benjamin Compaine (2000) makes a similar argument.Notwithstanding recent megamergers, such as AOLTimeWarner and ViacomCBS, media markets are in fact nomore concentrated, according to traditional antitrust mea-sures, than in previous decades. When the standardHerfindahlHirschman Index (HHI) of industry concen-tration is applied to the media industry, the change inconcentration between 1986 and 1997 is trivial.15 In fact,in some media subsectors, such as television broadcast-ing, the HHI was lower in 1997 than in 1994before thewave of mergers commenced. Arguingthat the appropriateunit of analysis for concentration measurement purposesis now the media industry as a whole rather than con-stituent market segments, Compaine (2000, pp. 560561)

finds that its HHI score of 268 reveals a remarkably uncon-centrated industry. The shift to viewing the industry as awhole reflects the fact that changing patterns in technologyand consumer media uses complicate the traditional geo-graphic and product market distinctions pivotal to antitrustanalysis. The Justice Department, FCC, and the appellatecourts have now largely accepted the concept of substi-tutes, that the product offered by, say, cable television,broadcast television, and video cassette rentals is essen-tially the same. Thus, under many circumstances, compa-nies previously understood as individual media segmentsoperating in separate product markets in fact compete andtherefore should be included in the same product market

for antitrustpurposes.16

When theproduct market is under-stood in that fashion and the communications industry isevaluated as a whole, the industry does not appear concen-trated; indeed, despite mergers there is more competitionthan ever before. Finally, changes in delivery systems, inparticular the nature and growth of the Internet, enable lo-cal radio and local newspapers to be delivered anywhere.Compaine and others argue that the Internets capacity toerode old bottlenecks and blur lines between traditionalmedia further complicates the traditional antitrust think-ing about geographical markets, and thus requires us tomove toward evaluating the media industry as a whole.

The overall growth of media (and the particular growth

of the Internet) has important bearing on how to thinkabout diversity and regulation. Economic models showthat as thenumber of substitutable outlets increases, theau-dience fragments, and minority-interest content becomeseconomically viable, a fact that is borne out empiricallywhen the programming of, for instance, large cable televi-sion systems is monitored. In a limited media system, suchas the old broadcast system, it might make sense to regu-late vertically, that is, require that any individual outlet air

a broad and diverse mix of programming; in an extensivemedia system, doesnt it make sense to look at the diver-sity question horizontally, that is, across all substitutableoutlets? If so, and that market shows no troublesome con-centration, government intervention is not needed and is,in fact, pernicious. Simple vigilance on the antitrust frontwill safeguard diversity.

Opposed to this relatively sanguine position on me-dia concentration is a critique that rests less on conven-tional ownership concentration ratios per se than, rather,the recognition that the media are situated within the widerrelations of power. In particular, the analysis of mergers isembedded within a critique of the commercial structure ofAmerican media. Ben Bagdikian (1983/1997), perhaps thedean of contemporary critics of media concentration, in-sists that the great mergers of communications firms overthe past two decades have grave effects on the type anddiversity of information available. Writing in 1983 in thefirst of several editions ofThe Media Monopoly, Bagdikian

argued that not only do a smaller number of owners havepossession of larger and larger numbers of media proper-ties, but for the first time in the history of American jour-nalism, news and public information have been integratedformally into the highest levels of financial and nonjour-nalistic corporate control. In Bagdikians analysis, mediamergers have reduced the number of controlling corporateplayers from approximately 50 in 1984 to 10 in 1996. Inan age when face-to-face communication is far less im-portant for politics than mass-mediated communicationand information, media power is, baldly, political power.Bagdikian (1983/1997, p. ix) writes in the 5th edition,The communication cartel has exercised stunning influ-

ence over national legislation and government agencies, aninfluence whose scope and power would have been con-sidered scandalous or illegal twenty years ago. As com-munication scholar James Curran (2000) succinctly putsit, the issue is no longer simply that the media may becompromised by their links to big business; the media arebig business. This makes the old democratic watchdogon power claim rather time-worn. The concentration ofmedia ownership has led to more controlled information,fewer and less diverse sources of information, and thus lessreal information despite a purported information over-load. The ownership of communication media by largecorporate conglomerates creates greater likelihood that the

old firewalls between news and advertising, between newsand entertainment, and between entertainment and rankproduct placement, erode. Conglomerated corporate own-ership also means treating communication media as eco-nomic properties pure and simple, without the traditionalconflicted balance between profit and public service ex-perienced by stand-alone publishers or broadcast groups.That balance may have been a piece of self-legitimatingideology of traditional news organizations, but the very


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existence of the discourse meant that there were groundsfor criticism and sites through which to exercise pressureboth within and without media organizations. The highprices paid for media properties in this most recent waveof acquisitions means heavy financial pressures for eachmedia property, including news and journalism outlets, tobe profitable. Thewidely noted cutbacks in broadcastnewsdivisions and instances of commercial conflicts of interestat even quality newspapers in the 1990s would appear toconfirm Bagdikians point (see Downie & Kaiser, 2002;Hamilton, 2004).

Edward Herman and Robert McChesney(1997), amongothers, expand Bagdikiansargument to a worldwide focusand examine the remarkable vertical integration of inter-national media holdings that has occurred over the last fewyears. The vaunted synergies of such integration, wherea large national cable system operator may combine witha movie production studio, which already has televisionstation holdings in several nations, magazine publishing,

and an Internet portal, result in packaged news and enter-tainment product characterized by self-promotion and thecelebration of the capitalist system of which they medi-ate. For Herman and McChesney, this isnt just transna-tional control over exported media content (the earlierform of Western media hegemony) so much as increas-ing transnational corporate control over media distribu-tion and content within nations, in which formerly publicmedia systems are transformed into commercial systemsbased on advertising. This ownership structure has unmis-takable consequences on media content: a concentrationof attention on the stock market rather than poverty and in-equality, on business rather than labor, on celebrity rather

than social movements and pressing social problems.17

Advertising values, for the most part, rule over media con-tent, imparting an ethic of consumption and hedonism.The market generally underproduces certain kinds of con-tent, pointedly including content with positive external-ities, such as investigative journalism and public affairsanalysis, whose watchdog impacts affect far more peoplethan actually consume the specific media product (Baker,2002). As has been noted for decades, the market ordi-narily fails to represent and serve minorities. Contrary tothe canard of the liberal media, mainstream commercialmedia generally avoid presenting political viewpoints ofthe left, largely due to the lefts intrinsic critique of com-

mercialism and corporate power. Synergies of commonownership, especially when they are news outlets, becomethe vehicle for the outlets to promote, not compete with,the other outlets. Notwithstanding that there may be morecommunication outlets than ever before, the critics argue,more is actually less. It is not the total number of outletsthat matters, but the number of owners (see Cooper, 2003).

Exacerbating these trends is a propensity of industrycompetitors to enter into cooperative agreements regard-

less of ownership, and the fact that consolidations of dis-tributors and content creators invariably lead to concen-trated information systems (see Benkler, 1999; Tunstall& Machin, 1999; Hill & Landro, 2000; Wysocki, 2000).The Internet, for all its wonders, is at risk of being domi-nated by the same entities that dominate other media andthat threaten to destroy its open architecture (see Lessig &Lemley, 1999; Bar et al., 1999).18 Finally, contrary to theargument that more outlets create substitutes, in actualitysubstitution effects are rather weak because people valuecontent differently, especially with regard to news and in-formation. Relying simply on antitrust to safeguard mediadiversity is misplaced, because for antitrust purposes theproduct market for (much) media is advertising, whereasthe underlying basis of diversity revolves around content.19

The advertising market thus cannot be a simple surrogatefor content, because the concern about ownership con-centration in media cannot rest on just possible economicharm and the ability to practice price discrimination; the

concern about media concentration focuses on the accessto receive and produce information. Hence any antitrusttheory that focuses solely on market power over pricingwill be too limited in its consideration of the negative fea-tures of media concentration (see comments of ConsumersUnion et al., 2002; Baker, 2002; Cooper, 2003). Concen-trated ownership in the communications media yields di-minished editorial voice, the decline of journalistic values,diminution of the presss watchdog function, and reduc-tion in thediversityof ideas, and, as a consequence, thwartsdemocratic deliberation.

To some degree, thestark differences between these per-spectives on media concentration reflect a long-standing

divergence among scholars and lawyers regarding the pur-pose of antitrust laws, and, more generally, a marketeconomics versus social value perspective on communi-cations policy. Media mergers, like all industrial com-binations, require scrutiny by the Department of Justiceand Federal Trade Commission. Section 7 of the ClaytonAntitrust Act (1914) requires the DOJ and FTC to evalu-ate the anti-competitive ramifications of mergers, but alsotheir potential efficiencies as well in terms of bringingeconomies of scale, lower transaction costs, and techno-logical synergies, etc. An exclusively economic focus onallocative efficiency, the societys total wealth, is fairlycharacteristic of the Chicago School approach to antitrust.

The dominant concern is that mergers should not be per-mitted to create or enhance market power or to facili-tate its exercise by enabling firms to impose at least asmall but significant and nontransitory increase in price.In this view, the purpose of antitrust is to promote eco-nomic efficiency, not equitable distribution, making results(not actions) the criteria for legal judgments. But antitrustlaw also encompasses other than economic concerns, in-cluding, for instance, preventing the loss of communities


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local economic independence to large absentee corpora-tions, protecting small business, and preserving the socialand civic ties that bind communities, as embodied in theCellerKefauver Amendment (1950) to the Clayton Act.This emphasis on the social and political values of an-titrust law is championed by the Multivalued approach toantitrust.20 Those values are part and parcel of the Fed-eral Communications Commissions charge. Because ofthe special role that the communications media play in ademocracy, especially, perhaps, at the local level, mediamergers must be approved by the Federal CommunicationsCommission. In light of the Justice Department and Fed-eral Trade Commissions proclivity toward looking pri-marily at efficiency concerns, the FCC in many respectshas a broader charge in the media merger area. The FCCmust determine whether a proposed merger is consistentwith the public interest, convenience, or necessity, whichtraditionally has been interpreted as, among other things,whether the merger promotescompetition and the diversity

of voices, and whether it poses special dangers to diversityin the local setting. Indeed, the public interest standard inprinciple compelled the FCC to act in advance of specificantitrust problems. If, generally speaking, the aim of an-titrust is to prevent restraint of trade, a principal aim ofthe 1934 Communication Act came to be interpreted bythe FCC as the prevention of restraint of trade in ideasover the airwaves. The FCCs policy of promoting diver-sity is distinct from the goal of promoting competition.21

It may be too strong to state that the Noam and Compaineposition is tied to the Chicago School of antitrust and themarket economics perspective on communications policy,whereas the Bagdikian and Herman/McChesney position

is tied to the multivalued antitrust approach/social valueperspective on policy, but the proclivities of the formerto economic efficiency and the proclivities of the latter tosocial and political values seem pretty clear.

MEDIA OWNERSHIP RULES

Let us proceed by returning to fundamentals. As has beenmentioned, Congress and the FCC typically addressed an-titrust issues by separating communication industries fromeach other and restricting common ownership. One of themost important separations, enacted at the beginning offederal regulation, was that between broadcast and com-

moncarrier. A broadcaster could notoperate as a telephoneprovider, and, effectively, could not own the delivery sys-tem that linked broadcast stations in a network. The broad-caster was explicitly responsible for the content aired overthe station. Telephone companies provided access to thewired delivery system on a nondiscriminatory basis, and,as common carriers, were not responsible for the contentsent over the system. This essentially encoded into lawand policy a division of industry hammered out among the

principal corporate players in 1926 (Barnouw, 1966). TheFCC endeavored to foster diversity and forestall monopo-lization in broadcasting by a series of (vague) content andbehavioral regulations that, in the wake of the Report onChain Broadcasting (1941), were augmented by structuralregulations. Structural regulations established ceilings onthe number of broadcast stations an entity could own na-tionally, forbade (in theory) the dominance of a local mar-ket through cross-ownership restrictions and a rule that anentity could own just a single outlet in a local area, and ef-fectively dictated that broadcast networks must be ownedby different entities. Some structural rules were designedto enhance competition and cultivate new programming.The 1970 Financial Interest and Syndication Rules, whichbarred television networks from owning the firms that pro-vided their programming, were enacted in an attempt toincrease programming diversity by separating productionfrom distribution in broadcast television. The Prime TimeAccess Rule, also enacted in 1970, cleared out an hour of

television prime time from network control so that localstations would air their own programming. Specific con-tent rules, such as the Fairness Doctrine and associatedrules of section 315 of the Communications Act, wereenacted to ensure that broadcasters would present issuesof concern and controversy in their programming, guar-antee access to stations by candidates for political office,and ensure that informational/editorial programming wasaired with a degree of fairness and balance. Other con-tent rules included various regulations against indecentprogramming. The FCC also developed more specific be-havioral rules, such as requiring that broadcasters meetwith community groups in their broadcast market to as-

certain their concerns and interests. The public interestunderstood in terms of the maintenance of diverse view-points, some degree of local control and local programorientation, a general balance of programming (includingof controversial topics), and equitable treatment of politi-cal candidateswas the ultimate linchpin of oversight.

The main ownership rules in electronic mass mediawere historically:

r Dual network rule prohibited broadcast stations from affiliating with any entity that maintainedmore than a single network. One of the earliestrules on ownership, the rule grew out of the FCCs

investigation on chain broadcasting and was ap-plied to radio in 1941, then to television in 1946.The rule was eliminated with regard to radio in1977. The Telecommunications Act of 1996 re-vised therule fortelevisionto prohibita party fromaffiliating with an entity if that entity controlledmore than one of the four largest networksABC,CBS, Fox, and NBCor with an entity that con-trolled one of these four networks and either of


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two emerging networks (UPN and WB). In 2001the FCC amended the rule to permit one of thefour major television networks to own, operate,maintain, or control the UPN and/or the WB net-work.

r One-to-a-market rule prohibited the commonownership of a radio and a television station serv-ing substantial areas in common (though waiverswere routinely granted). Waivers were routinelygranted in part because in the early years of televi-sion, theFCC encouraged radio licenseesto obtainTV licenses in order to spur the growth of the newmedium. Only later did the FCC see a problem incommon ownership. Since 1989 the FCC gener-ally waived the rule in the top 25 markets if, afterthe combination, there remained at least 30 sepa-rately owned independent voices (including radioand TV stations, and certain local newspapers andcable stations) in the market.

r

Television duopoly rule prohibited common own-ership or control of television stations with over-lapping Grade B signal contours, dating from1964. As a rule, the FCC considered anyone withan interest of at least 5% in the media company asan owner. (But local market agreements, throughwhich an owner turned over programming to otherbroadcast owners, undermined the rule.) The rulewas replaced in 1999 so that a company may owntwo television stations in the same Nielsen desig-nated market area (deemed more appropriate thanthe Grade B signal contour measurement) if one ofthe stations is not among the four highest ranked

stations in the market, and as long as eight inde-pendently owned, full-power, operational televi-sion stations remain in the market after the merger.

r National multiple ownership rules limited the to-tal number of television and radio stations an en-tity could own nationally, irrespective of location.As originally promulgated in the early 1940s, therule prohibited common ownership of more thanthree television stations. Between 1953 and 1985the number was seven AM radioseven FM radioseven television stations (with a maximum of fivein the VHF band). In 1984 the FCC increased theceiling to 121212, and in 1992 the FCC raised

the national radio ownership limits to 30 AM and30 FM. The rise in ownership caps in part accom-panied expansions in the bands and in the numberof licensed stations. The Telecommunications Actof 1996 repealed all national ownership limits forradio; locally a company may now own five toeight radio stations in a single market, dependingon the size of the market. The act also repealed the12 station national cap for television, although a

single company may not own stations that reachmore than 35% of the nationwide television audi-ence.

r Television networks could not own shares of thefirms that provided their programming (FinancialInterest and Syndication Rules). The FCC im-plemented the rule in 1970 in an attempt to in-crease programming diversity by separating pro-duction from distribution in broadcast television.The FCC relaxed theFin-Syn rules in 1991 andap-peals courts later relaxed the rules even further, inessence eliminating all traces of Fin-Syn by 1995.

r Cable horizontal ownership: Pursuant to the re-quirements of the Telecommunications Act of1996, the FCC adopted rules prohibiting any oneentity from having an attributable interest in cablesystems reaching more than 30% of cable homes

passed nationwide.The FCC changed the methodby which the horizontal ownership cap was to be

calculated in 1999, effectively raising it from 30%to 36.7%. The cap in general was found not suit-ably justified in Time Warner v. FCC (2001).

r Cable vertical ownership: Pursuant to the require-ments of the Telecommunications Act of 1996, acable company could not have any ownership af-

filiation with more than 40% of the programmingthat it carried on any of its cable systems withup to 75 channels. On systems with more than75 channels, 45 channels were required to be re-served for nonaffiliated programming. This capwas found not suitably justified in Time Warner v.FCC(2001).

r Broadcast/newspaper cross-ownership rule: Al-though concern over such combinations surfacedat the FCC as early as the 1930s, an appellatecourt decision declared in dicta that the commis-sion could not prohibit newspaper publishers, asa class, from receiving licenses to operate broad-cast stations (see Stahlman v. FCC, 1942, p. 127).

Adopted in 1975, the FCC prohibited the samecompany from owning a newspaper and a broad-cast station in the same market. The FCC grand-fathered almost all historical combinations.

r Broadcast networks/cable systems cross-ownershiprule: Adopted in 1970, theFCC prohib-

ited the same company from owning a broadcast-ing network and a cable system. Relaxed in 1992,the rule was eliminated by the 1996 Telecommu-nications Act.

r Broadcast/cable cross-ownership rule: Adoptedin 1970, the FCC prohibited the same company

from owning a cable system and a broadcasttelevision station in the same local market.Congress codified the policy in 1984. The 1996


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Telecommunications Act eliminated the statutorycross-ownership restriction but retained the FCCrule. Thus, cross-ownership is at the FCCsdiscretion.

r Cable/telephone cross-ownership rule: Adoptedin 1970 with the intention to protect cable televi-sion from telephone companies, the FCC prohib-ited thesamecompany from owninga cable systemand a telephone system in the same market. Therule was eliminated by the 1996 Telecommunica-tions Act.

r Finally, the Telecommunications Act of 1996 (Sec.202[h]) requires the FCC to review each of itsownership rules every 2 years to determinewhether any of such rules are necessary in the

public interest as a result of competition, direct-ing the Commission to repeal or modify any reg-ulation it determines to be no longer in the publicinterest.

The legitimation of most of the FCCs structural andmany of its behavioral and content rules weaved in andaround a diversity rationale that was itself premised uponthe proper role of government in licensing applicants of ascarce public resource. The scarcity theory, that broadcastfrequencies were inherently physically (or naturally)scarce and thus required government to assign themthestandard accepted constitutional basis for the regulation ofbroadcastinghas come under considerable fire in recentyears. Many courts and commentators have cast doubt onthe continued relevance of the scarcity rationale, partic-ularly given the recent growth of the medium.22 But the

rationale for the regulation of broadcasting, as C. EdwinBaker (1995) and others have argued, was never premisedsimply on the basis of natural scarcity, but of scarcity en-sconced within a problem of the commons and a fear ofradios potential to focus political power. As every stan-dard history of broadcasting recounts, before the licensingof frequencies in 1927, interference plagued the airwaves.The limited availability of a valuable resource, combinedwith the absence of some form of governmental or so-cial allocation of usage rights, resulted in overuse, mak-ing the resource worthless to everyone. Natural scarcityexists when there is no legal definition of rights. In thelanguage of the Court of Appeals in National Citizens

Committee for Broadcasting v. FCC (1977, p. 948), Theneed for some regulation of the airwaves became clearin the 1920s when there was none. With everybody onthe air, nobody could be heard [quoting National Broad-casting Co. v. FCC, 1943]. In order to ensure the publicsability to hear some speakers, the rights of other poten-tial speakers were curtailed. The hard choice was betweenforcing free speech to bend or watching it break. In otherwords, the private system of allocation was unable to solve

the problem of the commons. The government respondedwith a licensing regime that, because licenses were givenaway without charge, inevitably created a second scarcity.Could/should the government have created a standard, ex-clusionary private property right in the spectrum? Again,as any standard broadcast history will tell, that possibil-ity was recognized and rejected in 1927 as embedding aright of selfishness in the medium (Red Lion Broadcast-ing Corp. v. FCC, 1969, p. 376, n. 5, quoting the Housesponsor of the 1927 Radio Act, Representative Wallace H.White). The reasons for rejecting private property rights inthe spectrum were unanimously affirmed by the SupremeCourt in Red Lion. Noting broadcasters claim to have un-limited choice in respect to the use of their licenses, thatis, their ability to treat the license like private property, the

Red Lion (p. 392) court cited Associated Press (1945) thatthe First Amendment does not sanction repression of thatfreedom by private interests. The court rejected the printmodel of private First Amendment rights for broadcast-

ing. In C. Edwin Bakers (1995, p. 104) words, the courtin Red Lion essentially held that the government has thepower to structure the media in a manner that the govern-ment thinks will promote the best communications envi-ronment. Whether or not this is the courts understandingof itself, when presented an explicit opportunity in 1994to repudiate the scarcity doctrine, the court declined toquestion its continuing validity (Turner Broadcasting v.FCC, 1994, p. 638).

The diversity argument essentially flowed from thislogic. Through the licensing process government grantsbroadcast frequencies to private parties. To make sure thata robust marketplace of ideas prevails in the broadcast

medium, the government set limits on how many stationsa single private entity may own, made sure, for example,that a single voice would not monopolize a local com-munity through the common ownership of broadcast andnewspaper, and required a broadcast licensee to open upits frequency to other viewpoints. This set of interventionshad its limits, of course. Government could not censorprograms and government could not direct content. In-deed, the Fairness Doctrine, adopted in 1959 to formalizethe expectation that broadcasters should air contrastingviewpoints, vested in the broadcaster the power to initi-ate debate and to select the mode for producing viewpointbalance. It was these fundamental limits on government

that prompted the FCC to pursue its primary strategy forfostering diversity through ownership regulations.

Diversity was always a concern of the FCC, though inthe early years it was implicit, wrapped within the prob-lem of getting broadcasters to fulfill their public inter-est responsibilities. The public trustee status of broad-cast licensees meant that they were to serve a public,rather than a purely private, function, which, in turn, meantthat they were in principle obliged, within reason, to air


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a varied set of programs, including news, religious pro-grams, weather, and other types of local productions, toa range of audiences. This was what we now call for-mat diversity, understood vertically, that is, within eachbroadcast outlet. It must be acknowledged, of course, thatthis regulatory effort was undertaken within an advertiser-supported broadcast structure and in a political contextsubject to the exigencies of institutional bias and influencepeddling, in which various incarnations of the FCC issuedlicense grants to commercial/corporate broadcasters in theearly years and to political cronies in succeeding years(see, among others, Rosen, 1980; Schwartz, 1959). Whenthe Federal Radio Commission (FRC) and FCC werentgiving away frequencies to favored constituents, the com-missions struggled, contrarily and with limited success,to formulate policies that would encourage broadcastingin the public interest against the strong constraints es-tablished by a commercially-based broadcasting system.As the consequences of broadcastings commercial struc-

ture and the commissions largely corporate license grantsbecame clear, the FCC initiated some structural policiesto deal with what was then termed the problem of mo-nopolization (Report on Chain Broadcasting, 1941), andbehavioral policies to induce broadcast licensees to air,among other things, more public affairs, educational, andlocally oriented programming (Network Programming In-quiry, 1960). In 1953, the commission promulgated thefirst of its multiple ownership rules on the logic that thefundamental purpose of the rules was to promote di-versification of ownership in order to maximize diver-sification of program and service viewpoints (Amend-ment of Sections 3.35, 3.240, and 3.636 of Rules and

Regulations Relating to Multiple Ownership of AM, FM,and Television Broadcast Stations, 1953). A 1964 amend-ment to those rules stated that the greater the diversityof ownership in a particular area, the less chance there isthat a single person or group can have an inordinate ef-fect in a . . . programming sense, on public opinion at theregional level (Amendment of Sections 73.35, 73.240,and 73.636 of Commissions Rules Relating to MultipleOwnership of AM, FM, and Television Broadcast Stations,1964, p. 1482). Diversification of ownership was one ofthe comparative criteria used by the commission to as-sess applicants competing for a broadcast license (PolicyStatement on Comparative Broadcast Hearings, 1965).

Diversity per se became a more explicit concern ofthe commission as broadcasting issues and the African-American civil rights struggle intermingled. The famousWLBT case, whose political import was the expansionof the legal doctrine of standing (thus opening up regu-latory agencies and courts to parties without direct eco-nomic interest in any given controversy), illustrated thatbroadcasters were not just ignoring huge portions of theiraudience, but in that instance routinely aired racist

programming and practiced workplace discriminationas well (Horwitz, 1997). The Kerner Commission Reporton the causes of the racial unrest of the 1960s noted thatAmerican media presented an almost totally white world(National Advisory Commission on Civil Disorders, 1968,p. 210). The broadcast reform movement of the 1960s,very often linked to and fueled by the civil rights strug-gle, challenged broadcasters to air content pertinent tominority audiences and to hire minorities at the stations,and pressed the FCC to enforce the public interest stan-dard of the Communications Act (Fife, 1984). The FCCaccommodated some of these demands under the con-ceptual rubric of diversity. The negligible presence ofminority and ethnic groups in broadcastingwhether inownership, programming, or station employmentwas amajor element behind the commissions behavioral reg-ulations such as the requirement for licensees to ascer-tain the communities to which they broadcast and to airprogramming relevant to these ascertained local commu-

nity concerns (Chapman Radio and Television Co. 1970;Primer on Ascertainment of Community Problems byBroadcast Applicants, 1971). The FCCs promulgationof equal opportunity regulations in station employmentwas another example of the influence of the civil rightsmovement on the commissions agenda (Petition forRulemaking to Require Broadcast Licensees to ShowNondiscrimination in their Employment Practices, 1968;Nondiscrimination in the Employment Policies and Prac-tices of Broadcast Licensees, 1976).23 By the 1970s thismovement began to affect policy on ownership as well,largely via pressure from the courts.

THE FCC, MINORITY OWNERSHIP POLICIES,AND THE FEDERAL COURTS

While the diversification of ownership was one factor ofseveral in the mix of elements considered by the FCC incomparative hearings for broadcast license applicationsbefore 1973, minority ownership was not. The FCC, argu-ing that the Communications Act was colorblind, wouldtake an applicants race into account only to the extent thatthe applicant could show that his or her race would likelylead to better, more diverse programming in the particu-lar instance. In 1973 in a case called TV9, Inc. v. FCC,the D.C. Circuit Court of Appeals ruled that the racial

identity of an African-American applicant for a radio li-cense was a relevant consideration in choosing betweenand among applicants. There was no justification of mi-nority preference as remedial to past discrimination; thecourt reasoned that minority ownership could result in di-verse programming. In the wake of the TV9 decision, thecommission formulated a policy that gave evaluation en-hancement in comparative hearings to minority ownershipand participation in station management by members of


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minoritygroups.24 The FCCs ReviewBoard subsequentlyextended this enhancement to women (Gainesville Media,Inc.. 1978). However, womens enhancement was less thanthat of racial minorities, because women, in the commis-sions view, have not been excluded from the mainstreamof society due to prior discrimination (a statement that didinsert a notion of minority preferences as remedial, but ina general way, not specific to broadcasting) (Mid-FloridaTelevision Corp., 1978, p. 652). Included in the FCCsStatement of Policy on Minority Ownership of Broad-casting Facilities (1978) were a minority tax certificateprogram (which provided incentives to owners of existingbroadcast properties to sell their properties to minorities)and a distress sale program (which allowed a broadcast li-censee whose license had been designated for a revocationhearing to sell his or her station to a minority-controlledentityat 75% or less of the stations fair-market value). Thetax certificate program allowed the seller to defer any gainrealized on the sale if the property was sold to a minority

purchaser, and the gain was rolled over into a qualifiedreplacement broadcast property.In 1984 the D.C. Circuit Court of Appeals affirmed the

legality of the minority preference in comparative hearingsunder the Communication Acts public interest standard.The court argued that the TV9 decision required the FCCto assume that black owners would present distinctive pro-gramming valuable not just for black audiences but for allaudiences by exposing them to new ideas and points ofview. Proof of actual connection between minority or fe-male ownership and diversity in program content was notrequired (West Michigan Broadcasting Co. v. FCC, 1984).And in 1985 the commission amended its multiple owner-

ship rules, allowing a nonminority owner to take a noncon-trolling interest in an additional two minority-controlledtelevision stations, making for a TV ownership limit of 14stations (in contrast to the then normal limit of 12), if theaggregate audience of all its stations did not exceed 30%of the national audience. The aim was to foster minorityownership (Amendment of Section 73.3555 of the Com-missions Rules Relating to Multiple Ownership of AM,FM, and Television Broadcast Stations, 1985).

The legitimation of these policies was premised on thepresumed connection between ownership diversity and theprogram and viewpoint diversity it would bring. Full mi-nority participation in the ownership and management of

broadcast facilities results in a more diverse selection ofprogramming. In addition, an increase in ownership by mi-norities will inevitably enhance the diversity of control of alimited resource, the spectrum, wrote the FCC in its State-ment of Policy on Minority Ownership of BroadcastingFa-cilities (1978, p. 981). The expected viewpoint diversitywas woven into a broader argumenton theparticularly ben-eficial consequences of equal employment opportunitiesin the broadcast industry, which could contribute signif-

icantly toward reducing and ending discrimination in otherindustries because of the enormous impact which televi-sion and radio have upon American life ( Metro Broad-casting v. FCC, 1990, p. 555, quoting Nondiscriminationin the Employment Policies and Practices of BroadcastLicensees, 1976). Roughly similar preference programswere applied to cable television and enacted in wirelessspectrum lotteries and auctions, for which Congressionallegislation directed the FCC to give minority groups andwomen bidding credits (Policies and Rules RegardingMinority and Female Ownership of Cable TelevisionFacilities, 1994). In the wireless area, the viewpoint di-versity argument was not relevant, of course. The biddingcredits policy partook of the general affirmative actionlogic of ensuring that minority groups and women wouldnot in any way be excluded from the competitive biddingprocess for spectrum.25

It is probably the case that viewpoint diversity was al-ways the ultimate aim in these broadcast ownership poli-

cies from the 1970salthough other manifestations of di-versity, such as source, format, workforce, and audience(or demographic) diversity, assumed both independent andinstrumental importance, especially because of the inter-section of civil rights and broadcasting. In some of itsdocuments the FCC directly stated that the diversity ofownership of outlets and sources was merely means to pro-mote the diversity of viewpoints (see, e.g., Review of theCommissions Regulations Governing Television Broad-casting: Further Notice of Proposed Rulemaking, 1995).It is viewpoint diversity that lies at the heart of the pro-found national commitment to the principle that debateon public issues should be uninhibited, robust, and wide-

open, embodied in First Amendment jurisprudence andfamously articulated in New York Times v. Sullivan (1964,p. 270)itself a case rooted in the civil rights struggle. Butbecause any direct pursuit of viewpoint diversity butts upagainst First Amendment content neutrality doctrine andthe provision against censorship in the CommunicationsAct, a more indirect set of strategies, calling upon assumedand logically linked, but often unproved, assumptions, wasemployed. In this regard, the diversity of ownership wasassumed to translate into format, demographic, and, downthe line, viewpoint diversity. The train of logic went some-thing like this: Putting a ceiling on the ownership of sta-tions not only safeguarded the broadcast medium from

being dominated by a single or a few owners, but alsoensured the likelihood that different owners would havecommitments to distinct broadcast formats and thus reachdifferent audiences. The diversity of owners and formatswould translate into a diversity of viewpoints. Similarly,the diversity of broadcast station workforces was expectedsomehow to infuse the content and viewpoint of broad-cast stations. This was understood as especially true in thecase with racial minority groups, inasmuch as minority


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audiences, a series of FCC studies concluded, were notprogrammed to by traditional (white) station owners andtheir white employees (Public Service Responsibility ofBroadcast Licensees, 1946; Office of Communications ofthe United Church of Christ v. FCC, 1966; Ascertainmentof Community Problems by Broadcast Applicants, 1976).

In general, the diversity rationale received strong ap-proval in both judicial and congressional forums for theroughly 20 years between 1970 and 1990. InNational Cit-izens Committee for Broadcasting v. FCC (1977, p. 946,quoting Second Report and Order, 1974), for instance, theCourt of Appeals upheld an FCC rule forbidding the futureformation or transfer of colocated newspaperbroadcastcombinations. The court restated with vigor the commis-sions assertion that If our democratic society is to func-tion, nothing can be more important than insuring thatthere is a free flow of information from as many divergentsources as possible. Indeed, in this case the court vacatedand remanded the portion of the FCCs rule that limited

divestiture to egregious cases of effective monopoly essen-tiallyon thegrounds that the limitation erodedthe diversitymotive. The court, in short, considered the FCCs divesti-ture policy too meek. We believe precisely the oppositepresumption is compelled, and that divestiture is requiredexcept in those cases where the evidence clearly disclosesthat cross-ownership is in the public interest (p. 966).Congress acknowledged the link between minority own-ership and diversity in programming in 1982, when it di-rected the FCC to employ a minority-ownership preferencein the newly authorized lottery program for the selectionof applicants for any medium of mass communications(House of Representatives Conference Report, 1982).

The minoritypreferencediversitylogic reached its high-water mark in a Supreme Court ruling upholding the con-stitutionality of the FCC minority preference policies incomparative hearings and the minority distress sale pro-gram in broadcastingbut by a narrow 54 margin cob-bled together by Justice Brennan. Metro Broadcasting v.FCC(1990) found that programming diversity representedan important governmental interest and that the FCC mi-nority preference policies were substantially related to theachievement of that objective. In First Amendment terms,this meant that the affirmative action regulations triggeredonly intermediate scrutiny, because

benign race-consciousmeasures mandatedby Congress

even if those measures are not remedial in the sense of be-

ing designed to compensate victims of past governmental or

society discriminationare constitutionally permissible to

the extent that they serve important governmental objectives

within the power of Congress and are substantially related

to achievement of those objectives. ( Metro Broadcasting v.

FCC, 1990, pp. 564565)

Relying on Justice Powells formulation in Regents ofthe University of California v. Bakke (1978, pp. 311, 313)

that a diverse student body contributing to a robust ex-change of ideas is a constitutionally permissible goalon which a race-conscious university admissions programmay be predicated, the court majority inMetro Broadcast-ing determined that the diversity of views and informationon the airwaves serves important First Amendment values.The intermediate scrutiny standard was consistent withprevious decisions involvingaffirmative action plans spon-sored by the federal government under Congresss powersin accordance with paragraph 5 of the 14th Amendment(Fullilove v. Klutznick, 1980).26 The minority ownershippolicies primarily reflected Congress and the FCCs goalsto promote programming diversity, said the majority in

Metro Broadcasting (1990, p. 566, quoting H.R. Conf.Rep. 1982), but it also indicated that the policies had someremedial purpose (Congress found that theeffects of pastinequities stemming from racial and ethnic discriminationhave resulted in a severe underrepresentation of minoritiesin the media of mass communications). But there is no

factual record that the underrepresentation of minorities inbroadcasting was due to discrimination on the part of theFCC, an important distinction in equal protection claimsagainst government. In keeping with prevailing doctrineon judicial review, particularly when a program employ-ing a benign racial classification is adopted by an admin-istrative agency at the explicit direction of Congress, thecourt majority found that Congresss fact-finding and theFCCs expertise on the nexus between minority ownershipand programming diversity should be given great weight.The Metro Broadcasting (1990, p. 570, n. 16) majorityfavorably quoted the FCC to the effect that ownershipcarries with it the power to select, to edit, and to choose

the methods, manner and emphasis of presentation. Andin the majoritys judgment, those data showed a substan-tial relationship between broadcast diversity and minoritypreferences.27

It may be, however, that the real importance of MetroBroadcasting was Justice OConnors strong dissent, asthat opinion laid out the jurisprudential framework for theseries of cases reversing minority preferences and cast-ing doubt on the logic of the diversity rationale in broad-casting. In fact, OConnors dissent in Metro Broadcast-ing reflected a battle that had been simmering throughoutthe 1980s between an FCC now reflecting Reagan admin-istration ideology and a more liberal Congress, and be-

tween judges of the District of Columbia Circuit Court ofAppeals (itself part of the battle between liberal and con-servative jurists in that circuit over the nature of judi-cial review of regulatory decisions; see Horwitz, 1994).In Steele v. FCC (1985), for example, a three-judge panelstruckdownthe FCCs genderenhancementpolicy in com-parative license hearings. The majority argued that therewas no evidence that women owners would manifest adistinctly female viewpoint (raising questions about what


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a female viewpoint is and underscoring the problematicessentialism that sometimes pervades the analysis of dif-ference), and, further, implied that the governments as-sumption that a station owners heritage will determinehis or her interests was to engage in the kind of stereo-typing that the law forbade. The case subsequently washeard by the D.C. Circuit en banc, which vacated thepanels opinion and judgment. In supplemental briefs, theFCC (1984), then dominated by Reagan appointees un-der the chairmanship of Mark Fowler, claimed that thelink between its preference schemes and increased diver-sity of viewpoints had no factual support, and declaredthat the race and gender preference policies were con-trary to both the Communications Act and the Constitu-tion. When the commission initiated an inquiry callingfor public comments on the preference policies, Congressordered it to desist (and even forbade the FCC to ana-lyze the data it had gathered in its effort to scuttle theminority preference rules) in a rider to the Continuing Ap-

propriations Act for Fiscal Year 1988 (1987). A dividedappellate panel from the D.C. Circuit struck down thecommissions distress-sale program as unconstitutional inShurberg Broadcasting, Inc. v. FCC (1989), while a di-vided panel upheld the commissions comparative licens-ing program for racial and ethnic minorities on statutoryand constitutional grounds in Winter Park Communica-tions, Inc. v. FCC (1989).

These issues came to the Supreme Court in MetroBroadcasting, and the opinions in that case reflected theconflicts that had been churning in the D.C. Circuit. Jus-tice OConnors dissent in Metro Broadcasting pivoted onthe level of scrutiny required of racial preferences. She

argued that intermediate scrutiny would not do. All racialclassifications, even benign ones, required the court toapply a strict standard of scrutiny, because such classifi-cations inherently endorse race-based reasoning and theconception of a Nation divided into racial blocs, contraryto the Constitutions guarantee of equal protection thatGovernment must treat citizens as individuals, not assimplycomponents of a racial, religious, sexual or nationalclass (1990, pp. 602, 603). Indeed, she argued that a be-nign racial classification is a contradiction in terms, be-cause there is no way to determinewhich classifications arebenign and which are motivated by illegitimate notions ofracial inferiority (p. 609). Thus, only congressional mea-

sures that seek to remedy identified past discrimination donot presumptively violate equal protection.

As for the FCCs minority preference policies,OConnor argued, these were not designed as remedialmeasures and were in no sense narrowly tailored to rectifyidentified discrimination. In OConnors view, not onlydoes the Metro majoritys assertion of diversity as an im-portant government interest not rise to the proper levelof scrutiny, but the very assumption that minority broad-

cast station owners will engage in minority programmingor viewpoints itself constitutes an impermissible supposi-tion equating race with thoughts and behavior. The poli-cies impermissibly value individuals because they pre-sume that persons think in a manner associated with theirrace (p. 618). And atthe same time, ina kindof damnedifyou do, damned if youdont observation,Justice OConnorasserted that the FCC presented no credible evidence thata nexus exists between the owners race and resulting pro-gramming. Although her argument focused on the spe-cific question of the nexus between the owners race andprogramming, it clearly cast doubt on the general long-standing logic of an assumed relationship between a di-versity of ownership and a diversity of viewpoints. Be-cause the market shapes programming to a tremendousextent, the diversity logic has a fatal flaw (p. 626). TheFCC cannot direct viewpoints; it can shape the structureof broadcasting to encourage a general diversity of view-points. Yet the FCC is unable to show empirically that

there in fact is a viable connection between ownershippolicy and actual viewpoint diversity. Although the courthas recognized an interest in obtaining diverse broadcast-ing viewpoints as a legitimate basis for the FCC to adoptmeasures designed to increase the number of competinglicensees and encourage licensees to present varied viewson issues of public concern, the court, according toJustice OConnor, has never upheld a measure designedto amplify a distinct set of views or the views of a partic-ular class of speakers (p. 617). Moreover, the dissentingopinion in another closely divided case, Turner Broadcast-ing v. FCC(1994), shows that at least four members of thecourt believe that government regulation designed to en-

sure access to a multiplicity of voices is based on contentand is thus constitutionally suspect.Justice OConnor essentially suggested that if the FCC

wanted to pursue diversity(givenher equalprotection anal-ysis, its doubtful she would even contemplate a categoryof minority programming), the commission should re-turn to its old methods: develop an effective ascertainmentpolicy, or evaluate applicants upon their ability to provide,and commitment to offer, whatever programming the FCCbelieves would reflect underrepresented viewpointsbutdo so on a race-neutral basis (Metro Broadcasting v. FCC,1990, p. 623). Of course, there is widespread agreementthat these methods didnt really work in the past. And the

closer the FCC gets to requiring broadcasters to programspecific material, the closer it gets to violating the FirstAmendments content neutrality doctrine.

COURT RULINGS SUBSEQUENTTO METRO BROADCASTING

Justice OConnors Metro Broadcasting dissent in effectprovided a wedge for the conservatives on the D.C. Circuit


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to attack FCC minoritypreferenceand diversity policies byway of the new equal protection analysis. In Lamprecht v.FCC(1992), a divided panel again struck down the FCCsgender enhancement policy in the comparative licensingprocess. (The gender policy had not been an issue beforethe court in Metro Broadcasting.) In Lamprecht, the D.C.Circuit majority (in the last opinion written by ClarenceThomas before he was elevated to the Supreme Court)ruled that the FCCs gender preference was not substan-tially related to achieving the diversity of viewpoints be-cause there was no evidence offered to demonstrate a linkbetween ownership by women and any type of underrep-resented programming. Moreover, reasoned the majority,an assumed nexusunsupported by evidencebetweenwomen owners and a female viewpoint engaged in aform of stereotyping normally denounced by the SupremeCourt.

By 1995, in Adarand v. Pena, the reasoning in JusticeOConnors Metro Broadcasting dissent had become the

majoritys opinion. Adarand concerned a subcontractorcompensation clause in federal agency contracts, whichgave a prime contractor a financial incentive to hire sub-contractors certified as small businesses controlled by so-cially and economically disadvantaged individuals. Thepolicy required the contractor to presume that such indi-viduals include minorities or any other individuals foundto be disadvantaged by the SmallBusinessAdministration.Adarand Constructors, which submitted the low bid on aDepartment of Transportation project but was not a certi-fied business, filed suit claiming that the race-based pre-sumptions used in the subcontractor compensation clausesviolated the equal protection component of the Fifth

Amendments due process clause. The court agreed. Writ-ing for a 54 majority, Justice OConnor expanded on thelogic of her Metro Broadcasting dissent, arguing that allracial classifications, including benign ones, imposed bywhatever federal, state, or local government actor, mustbe analyzed under strict scrutiny. To the extent that Metro

Broadcasting was inconsistent with that holding, and tothe extent that its embodiment of a different standard ofreview for federal, as opposed to state and local, racialclassifications placed the law in an unstable condition,it was overruled. But, while Adarand overruled the in-termediate scrutiny standard used in Metro Broadcasting,the Court did not address whether the diversity rationale

of Metro Broadcasting was still permissible. Read nar-rowly, Adarand did not undermine either the importanceof the policy goal of viewpoint diversity from a consti-tutional perspective, or non-race-based ownership regula-tion as a means to achieve that goal. But between JusticeOConnors opinions in Metro Broadcasting and Adarandthe question was implicitly raised about how non-race-based diversity policy would be treated, especially giventhe dismissal of the data asserting a nexus between own-ership and viewpoints.

The post-Adarand rulings on race-based remedies areslightly mixed, although they mostly follow the logic thatonly policies addressing past governmental discrimina-tion meet the strict scrutiny test.28 And where the issueof media diversity was considered directly, in LutheranChurch-Missouri Synod v. FCC (1998), the Court ofAppeals held that the FCCs equal employment oppor-tunity (EEO)-related diversity rules did not rise to thelevel of a compelling governmental interest. The FCCfound that the Lutheran Church, licensee of two radiostations in Clayton, MO, had not abided by EEO regu-lations that forbid stations to discriminate in employmentand require stations to adopt an affirmative action programtargeted to minorities and women. The stations, one witha noncommercial religious format, the other a commercialclassical music format with some religious programming,hired few minorities because their hiring criteria stipulatedknowledge of Lutheran doctrine and classical music train-ing, thusnarrowingthe local poolof available minorities.29

The FCC, identifying diversity of programming as theinterest behind its EEO regulations, found the churchshiring preferences too broadthat it was not necessaryfor receptionists, secretaries, engineers, and business man-agers to have knowledge of Lutheran doctrine. The churchfiled suit, arguing that the FCC violated both its religiousfreedoms and the equal protection component of the FifthAmendment.

Following Adarands stipulation of strict scrutiny ofracial classifications, the court sided withthe church. Apartfrom Adarand doctrine, the court delved into the FCCslogic and found it both contradictory and objectionable.The commission had argued that the church could not pre-

fer Lutheran to non-Lutheran secretaries because low-levelemployees would have little or no effect on the broadcastof religious views, yet the commission defended its af-firmative action recruiting policy by arguing that all em-ployees affect a stations programming. How, the Churchasks, can the FCC maintain that the religion of a secre-tary will not affect programming but the race of a sec-retary will? After all, religious affiliation, a matter of af-firmative intellectual and spiritual decision, is far morelikely to affect programming than skin color (LutheranChurch-Missouri Synod v. FCC, 1998, p. 350). Relying ex-tensively on Justice OConnors Metro Broadcasting dis-sent, the court argued that encouraging the notion that mi-

norities have racially based views is antithetical to equalprotection and antithetical to our democracy. Finally, thecourt chastised the FCC for never defin[ing] exactly whatit means by diverse programming, yet suggested thatany real content-based definition of the term may wellgive rise to enormous tensions with the First Amendment(p. 354).

Perhaps this is illustrative as to just how much burden

the term diversity has been asked to bear in the latter part

of the 20th century in the United States. It appears to have


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been coined both as a permanent justification for policies

seeking racial proportionalityin all walks of life(affirmative

action has only a temporary remedial connotation) and as a

synonym for proportional representation itself. It has, in our

view, been used by the Commission in both ways. (Lutheran

Church-Missouri Synod v. FCC, 1998, p. 356)

In sum, the court verged on attacking the diversity ra-tionale in toto.

What is striking in this rehearsal of court cases is howstrongly FCC policies were affected by the civil rightsmovement, to the extent that the traditional, relativelydesultory diversity policy took on much sharper focus inthe 1970s on issues of racial and ethnic representation inthe media. The conjoining of minority ownership policieswith broadcast diversity policies clearly energized the lat-ter. Diversity was no longer a matter of a broadcast stationairing a catholic mix of programs or of the FCC prevent-ing a corporation from operating more than one broadcastnetwork, but of licensees representing minority commu-

nities/audiences in programming, hiring, and ownership.Indeed, minority ownership was valued as a way to securethe diversity of programming and viewpoints. But did it?A central question was whether racial diversity in mediaownership enhances political viewpoint diversity, whichis, after all, the real concern of Bagdikian, Herman andMcChesney, and other critics of American media.

This question was addressed obliquely at first, thenhead-on in the courts. As the Reagan revolution made itsway through appellate court appointees, the attack on af-firmative action by way of equal protection clearly beganto confront the new diversity logic, to the extent that verylittle of the supposed nexus between ownership and pro-

gramming or viewpoint will be taken on faith, yet whenthat nexus is asserted, it risks judicial denunciation as aninvidious stereotype if racially based, and may raise FirstAmendment content neutrality problems if the nexus ap-pears too strong. This has led to hard questions for me-dia diversity policy in general. At the risk of numbingthe reader with another litany of cases, it is worth brieflynoting recent cases in which the longtime premises of di-versity policy have been met with a distinct lack of judi-cial sympathy. In Schurz Communications v. FCC(1992),the Court of Appeals for the 7th Circuit struck down theFCCs revised Fin-Syn rules as arbitrary and capricious,in large part because the commission did not explain how

the rules would accomplish the stated goal of enhancingdiversity in programming. In an opinion written by notedlaw and economics proponent Judge Richard Posner, theopinion evinced strong skepticism that increases in sourcediversity could be presumed to lead to increases in pro-gram diversity. By the time the Court of Appeals heard anon-broadcasting but diversity-related ownership limita-tion case, the attack on diversity took on a knife-like em-pirical edge. In Time Warner v. FCC (2001), the Court of

Appeals struck down FCC regulations that had preventedthe largest cable companiesfrom growing larger and book-ing more of their own networks and programs. Congresshad directed the FCC in the Cable Television ConsumerProtection and Competition Act of 1992 to set two typesof limits on cable operators in order to promote diversityin ideas and speech and to preserve competition. Accord-ingly, the FCC enacted a horizontal rule imposing a 30%limit on the number of subscribers that could be servedby a cable multiple system operator, and a vertical rulethat reserved 60% of channel capacity for programmingby non-affiliated firms. Because, according to the court,the promotion of diversity and preservation of competi-tion were statutorily intertwined, the FCC had to defendits rules with evidence supporting a nonconjectural riskof anti-competitive behavior in the horizontal limit. En-gaging an antitrust-based economic modeling logic, thecourt ruled that the FCC had not done so. With regard tothe vertical limit, the court ruled that the FCC failed to

justify the rule as not burdening substantially more speechthan necessary under intermediate scrutiny. The rules thusviolated the companys First Amendment rights to reachnew audiences and to control its programming speech.

In Fox Television Stations v. FCC (2002), the Court ofAppeals vacated the cable/broadcast cross-ownership ruleand remanded to the FCC the national television stationownership (NTSO) rule for further consideration. In thecase of the cross-ownership rule, the court claimed thatthe FCCs diversity rationale for retention of the rule wasso woefully inadequate that it accepted the petitionersarguments in toto and vacated the rule. With regard tothe national television station rule, the court asserted that

although the rule was not unconstitutional, the FCCs de-cision to retain it was arbitrary and capricious because thecommission failed to give an adequate reason for its deci-sion. In remanding the rule, the court wrote forcefully thatthe commission had adduced not a single valid reason tobelieve the NTSO Rule is necessary in the public interest,either to safeguard competition or to enhance diversity.Similarly, in a case that challenged the FCCs televisionduopoly ruleallowing common ownership of two tele-vision stations in the same local market if eight indepen-dently owned television stations remain after the merger(referred to afterward as the eight voices exception)the Court of Appeals remanded the exception because the

commission failed to demonstrate that its exclusion of non-broadcast media from the exception is necessary for ensur-ing the appropriate level of broadcast diversity (Sinclair

Broadcast Group v. FCC, 2002).The new Bush administration FCC, under the chair-

manship of Michael Powell, seemed to have entered into akind of alliance, even one-upmanship, with the Districtof Columbia Circuit Court of Appeals in paying obei-sance to corporations First Amendment rights and


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196 R. B. HORWITZ

removing traditional ownership limitations. Because thesocial science data on the nexus between ownership poli-cies and programming are weak, most ownership or struc-tural regulations were being read as violations of thespeech rights of corporations. In December 2001 the FCCpermitted Comcast to purchase AT&Ts cable holdings,giving Comcast 20% of the nations cabled homes. Thecommission amended the old dual network rule, permit-ting one of the four major television networks to own,operate, maintain, or control the UPN and/or the WB tele-vision network (Amendment of Section 73.658[g] of theCommissions RulesThe Dual Network Rule, 2001). InSeptember 2002, the commission announced a Notice ofProposed Rulemaking (2002) on six ownership rules.30 A

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