Diller Wants More Regulation

Networks have turned into an 'oligopoly,' he laments

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

That was the message of the former Paramount CEO, Fox Studios president and Vivendi Universal Entertainment CEO to NAB convention attendees at the Las Vegas Hilton last week. "We need more regulation not less," he said, arguing that the 35% cap on TV-station ownership ought to stay in place. Raising it "is not good for the industry or the public."

Diller also said that the reinstatement of "some form of financial-interest rules" for media conglomerates would be good for both the industry and the public. "Tight" ownership and financial-interest rules for the "completely consolidated cable and satellite business is mandatory."

He argued that deregulation policies written into the Telecommunications Act of 1996 has achieved "the exact opposite of what it intended to do." Dereg was supposed to increase competition. Instead, 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 Time Warner into the mix, he said, and you've got "five corporations with their TV 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 ABC, NBC and CBS in line. "They might have controlled 90% 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."

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

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."

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

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." In many markets, he said, they control 80% of the listenership, with programming originating hundreds of miles away. As for competition, the barrier to entry is now so high as to be "practically nil."

Diller harked back 20 years to the FCC headed by Mark Fowler under the Reagan administration. Fowler, he said, essentially chucked the doctrine of broadcaster-as-community-trustee in favor of viewing broadcasters as "marketplace participants."

The word broadcaster
"used to carry with it special obligations and historic public-interest responsibilities," he opined. When he worked at ABC 25 years ago, Diller 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."