Oligopoly

executives extoll to shareholders the profitability of their growth. But growth carries risks. The bubble of some radio supergroups, like Clear Channel, burst due to overexpansion in a bumpy economy. Once having 1,200 stations, Clear Channel has scaled back to 700. What about the quality of programming? Critics say Clear Channel discourages locally produced programs, which are more labor- intensive and therefore less profitable than centralized programming over all its stations. Such formulaic content reduces local communities’ control and the representation of local communities’ issues, concerns, and interests.

Antitrust laws are also a concern in the ongoing development of media mergers. Antitrust laws were passed in an attempt by the U.S. government to stop unfair business practices that would impede open competition, a necessary factor in a free market economy. Antitrust laws are concerned with predatory business practices, so while some mergers are permissible as they are a normal part of the business environment, excessive mergers that limit competition in the market are not permitted under Antitrust laws.

When 21st Century Fox attempted to purchase Time Warner, Inc. for $80 billion in 2014, it would have reduced the number of major Hollywood production companies from a paltry six to only five, and the number of television production companies would have been reduced from five to four. Time Warner, Inc. is already a multinational company, a product of the merger between Time, Inc. and Warner Communication.

The majority opinion in a 1945 Supreme Court antitrust case involving the merging of multiple newspaper publishers and the Associated Press made it clear that the limiting of diversity of information and opinions as a result of media mergers did not have constitutional immunity. Yet in 1983, 50 companies owned 90% of consumer media in the United States, and by 2012 the number of companies was reduced to 6.

The Federal Communications Commission (FCC), an independent U.S. government agency,is responsible for the regulation and oversight of radio, television, wire, satellite, and cable in the United States and its territories. Although the FCC sets limits on the number of broadcast stations an entity can own as well as broadcast ownership of newspapers, several loopholes have allowed the media consolidation witnessed in the last several decades to bypass federal media ownership laws. An example of a loophole involves a media company to create a shell corporation and then sell off some of their stations or newspapers through “covert consolidation” schemes, such as joint sales agreements and other cross-ownership arrangements. According to Free Press, a media advocacy and watchdog group, when consolidation increases, diversity and competition decrease and barriers are raised making it difficult for small media owners to compete for advertising dollars.

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