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October 5, 1999

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OBSERVATIONS

THE VIACOM-CBS MERGER
What will it mean for the public?

by Peter Hart

Viacom's planned purchase of CBS -- which, if approved, would be the "biggest media deal ever" -- is getting a lot of coverage as a business story, but very little attention as a public interest issue.

If the merger goes through, it will create the second largest media corporation in the world, worth about $80 billion. Viacom/CBS's holdings would include: the largest television group in the country (the CBS network, plus stations in 18 of the top 20 markets in the U.S.); Paramount Pictures, one of the top four U.S. film studios; Simon & Schuster, the nation's second-largest publishing house; Blockbuster, the preeminent video rental outlet; cable channels like MTV, Nickelodeon, the Nashville Network and Showtime; a majority interest in Infinity Broadcasting Corporation, the nation's largest radio and outdoor advertising company; popular internet sites like marketwatch.com; as well as five theme parks.

Most reporting has focused on the nuts and bolts of the business deal, or the personalities heading the companies (CBS's Mel Karmazin and Viacom's Sumner Redstone). Some of the coverage was downright bizarre; the Los Angeles Times (9/8/99) referred to "secret meetings" between the two, during which Redstone "grew to see the magic of the marriage Karmazin was proposing." The New York Times (9/8/99) quoted Redstone saying of Karmazin: "He is a master salesman, and he began to turn me on." The New York Times also referred to "a marriage that was consummated after a two-year flirtation and a brief but painstakingly intense two-week prenuptial discussion."

While the personal feelings of media executives for one another might seem to be a more enticing story, a merger of this magnitude should ring alarm bells for journalists, raising serious questions about how recent deregulation by the FCC is going to affect the quality and diversity of public information.

Surely, the media can't be accused of ignoring the deal -- the New York Times ran seven stories about it in its September 8 edition alone -- but most coverage has skirted issues that might cast the merger in a bad light. NBC's Tom Brokaw, for instance, was quick to dismiss concerns about the larger implications of the deal (9/7/99): "What does that mean for the average viewer? Well, probably not very much." In a similar vein, the New York Times (9/8/99) dismissed anti- trust concerns as remnants from the "quaint days" when "it bothered people when companies owned too many media properties."

Indeed, the inertia of deregulation and the PR efforts of media giants seem to have convinced some commentators that media consolidation is a natural, inevitable result of changes in the economy, without political implications. One New York Times article (9/8/99) about the Viacom/CBS deal presented this analysis from an NYU Law School professor as though it described a social consensus: "The concentration of power used to be seen in a dark light. Now, the concern is that businesses be free from regulation in order to compete in the global marketplace."

But a long and valuable antitrust tradition prohibits vertical integration of the kind a Viacom/CBS merger represents. Journalists should be the first to recall why rules prohibiting vertical integration were made in the first place - - to support the ideal of the airwaves as a resource for public service and debate, and to prevent them from being reduced to a tool of advertisers. (For more background, read "Media Monopoly: Long History, Short Memories" at http://www.fair.org/extra/9511/monop.html )

Even current FCC regulations, watered down after the Telecommunications Act of 1996, forbid several aspects of this combination: The combined companies control two separate TV networks and reach more than the 35 percent of the national audience with their stations. If the FCC is unwilling to act, then the Justice Department can use its authority to block a merger that threatens competition and harms the consumer.

"If Viacom is allowed to buy CBS," says FAIR program director Janine Jackson, "it will open the floodgates for more giant media mergers, and accelerate the trend of media synchronizing their programming with promotions in television, radio, billboards, books, movies and even theme parks. But what all that 'synergy' means for the public is less choice about where we get our information."

The FCC recently set the stage for media mergers like the Viacom/CBS deal by changing a long-standing policy that prohibited a company from owning more than one television station in a given city. This reversal stands in contrast to recent statements by FCC chair William Kennard at a convention of the National Association of Broadcasters (9/2/99):

"Broadcast ownership rules serve principles that we still cherish -- principles like competition, localism and a diversity of voices.... We can and must do more to make sure that there are a multitude of voices and opinions on the airwaves."

Will more consolidation in the media industry really diversify the voices and views on our airwaves? The press should be at the forefront of encouraging public debate on this question, instead of actively ignoring it.


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