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Diller: 'Big Four' are `oligopoly' - Broadcasting & Cable

Diller: 'Big Four' are `oligopoly'

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About those huge vertically integrated media companies that Barry Diller
spent most of his career working for -- he wants you to know that they're not evil.
They just need to be regulated. In some cases, "tightly" regulated.

That was Diller's message to National Association of Broadcasters convention
attendees who listened to his keynote speech Monday morning at the Las Vegas
Hilton.

"We need more regulation, not less," he said, arguing that the 35 percent
ownership cap of TV stations ought to stay in place. Raising it "is not good for
the industry or the public," he added.

Diller also said that the reinstatement of "some form
of financial-interest rules" for the media conglomerates would be good
for both the industry and the public.

And "tight" ownership and financial interest rules for the "completely
consolidated cable and satellite business is mandatory," he said.

Diller argued
that deregulation has achieved "the exact opposite of what it intended to
do."

He said the "Big Four" networks (ABC, CBS, Fox, NBC) "have reconstituted
themselves into the oligopoly that the FCC originally set out to curb."

Throw AOL Time Warner Inc. into the mix, he added, and you've got "five corporations
with their television and cable networks now on the verge of controlling the
same number of households as the 'Big Three' did 40 years ago.'

The difference is that back then, there was "this real scary regulation" to
keep them in line, he said.

"They might have controlled 90 percent of what people saw, but they operated
with a sense of public responsibility that simply doesn't exist with these
vertically integrated giant media conglomerates driven only to fit the next
piece of their puzzle for world media dominance," Diller added.

With five big companies basically calling the shots in media today, in an
unregulated environment, Diller argued that it's highly unlikely that diversity,
localism or competition would be promoted in the marketplace.

These companies act with each other to the exclusion of others,
with "everything interrelated. They only have to do favors for each other. They only have to accommodate each other. No one else matters. They're on
both sides of virtually every transaction," he said.

"The program departments of these businesses are now so far down on the chain
of life in these giant enterprises that it's a miracle that all shows on the air
aren't about rejection," he added.

It's basically a commodities game with the big five, Diller charged.

"Conglomerates buy eyeballs and that's it. They leverage their producing
power to drive content' their distribution power, such as retransmission consent
to drive new services; their promotion power to literally obliterate
competitors."

He continued, "Creativity is ephemeral -- it's hard to capture, and bottle and market in the
form of successful content."

Diller said, it's even more difficult "without the pride and passion of the boss on the
line and engaged."

And forget about the
independent route, he said. Going back 10 years ago, independent producers produced 13 new
series for network television. Last year, they produced just one, Diller said.

"The independents are dying in droves," he added.

As
for localism, that's dying, too. "The canary in the coal mine is radio," he
said.

Oligopolies now control a majority of radio markets. It used to be that the
top two station owners had 115 stations between them. "Now, they've got 1,400," Diller said.

In many markets, he added, they control 80 percent of the
listenership with programming originating hundreds of miles away.

"A disc jockey in Cincinnati broadcasting to Atlanta ain't very local,"
Diller said.

As for competition, the barrier to entry is now so high as to be "practically
nil," he said. The possibility of some independent entity launching a new TV
network is "nonexistent," he added.

Diller harkened back 20 years to the
Federal Communications Commission headed by Mark Fowler under the Reagan administration,
which, he said, essentially chucked the doctrine of broadcaster-as-community-trustee out the window
in favor of viewing broadcasters as
"marketplace participants."

Diller said Fowler's view that TV is a "toaster with pictures" should not be
allowed to stand.

The word broadcaster "used to carry with it special obligations and historic
public-interest responsibilities," he added/

When Diller worked at ABC 25 years ago, he said, the
network's founder, Leonard Goldenson, and other industry leaders understood those
obligations and fulfilled them.

That outlook, he concluded, should not be allowed to "become a
relic."

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