Remarks of Charles M. Firestone at the Media Institute Cornerstone Project National Symposium

St. Regis Hotel, Washington, DC
November 16, 2001

Certainly, the events of September 11 have called everything in question. At the least we view our actions and our values in a new light. Here is how I see the issue of diversity in light of these developments.

As I see it, the rest of the world has a love hate relationship with the United States. They love the values of freedom, opportunity and diversity that we stand for, but they dislike the dominance in commerce and military might that we hold.

The first, symbolized by the Statue of Liberty, sees America as a land of freedom and opportunity, tolerance and diversity. Refugees throughout the world see the Statue as a welcoming gesture to the world's downtrodden; protesters march behind a likeness of the Statue in Tienanmen Square to symbolize their demand for greater freedom. It is America's most appealing beacon, its greatest export, a set of ideals and values.

This is the same country that also fosters an economic/military meme that scares much of the world. Symbolized by McDonald's arches or the once gleaming World Trade Towers, it is a meme of economic prowess, of the Washington "consensus" on privatization and free trade, and of the primacy of the almighty dollar. Consumers in other parts of the world may eat Le Mac or wear Levis, but perceive American values as efficiency without morals, materialism without spiritualism, and consumption, consumption, consumption.

What I think Sept. 11 tells us is to promote and emphasize the image of the first over the image of the second in how we portray ourselves to the rest of the world. If that is the case, then we should be careful to enhance those underlying values symbolized by the Statue of Liberty: freedom, tolerance, opportunity and diversity.

Of course the First Amendment speaks to all of these values, but most particularly freedom and diversity.

Our moderator set forth the Diversity Principle. Let me give a broader quote:

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. The First Amendment affords not the slightest support for the contention that a combination to restrain trade in news and views has any constitutional immunity.

This Diversity Principle as articulated by the Supreme Court in Associated Press, has been cited and affirmed unanimously in the Supreme Court in Red Lion in 1969, in National Citizens Committee for Broadcasting in 1978. We can all agree on this as an ideal.

Clearly, we want diverse and antagonistic news and information sources. Remember the reporting of the 2000 presidential election, when all the networks used the same news source, and each was embarrassed by its mistakes? Again, if anything, the importance of diversity is exacerbated by the September 11 attack. We need a variety of news sources, perspectives, and opinions to chart our future course as a republic.

How does this relate to media concentration rules at the FCC?

First off, I think that relaxing the national ownership rules actually led to increasing diversity at the national level. We now have five or six networks where we had three, and cable networks obviously increase the diversity of opinion on national issues as well.

But the local market is different, and the newspaper-broadcast cross-ownership rules in place are intended to foster diversity of the major sources of local information: television and newspapers. Certainly, we do not want a monopoly of all major media in a single market. It is contrary to the antitrust laws, and would contravene the Diversity Principle stated above. Yet we all know that there is increasing consolidation in the mass media industries. We also know that some of the very best journalistic materials emanates from large, consolidated enterprises.

The issue is, at what point should consolidation be prevented? And on what premise?

Clearly the antitrust laws apply to local markets, and that is a current limit on the extent of concentration. Should the FCC go any further, or should the diversity principle of the First Amendment be enforced solely by the Justice Department on economic grounds? And if the FCC does go further, how should it approach the issue?

Let me get right to the heart of the problem with concentration. It is not that the companies that are big are bad journalists; often they are the best. The problem with combinations of eight radio stations and two television stations under common ownership in a single market, as is the case, for example, in Jacksonville, Florida, is that it becomes harder and harder for the little guy, that additional voice of diversity, to compete with the consolidated actor. Markets are premised on new entry. That is already restricted by limited licensing of broadcast stations, but to have a dominant actor in the market further with several of these tightly controlled stations in combination intimidates potential investors in a new entrant. Diversity is a goal we want to pursue. At some point, concentration of control diminishes that goal.

So how does concentration - or synergy - work? Let's take today's debut of Harry Potter.

Ken Auletta in the New Yorker, October 29, tells us:

The Harry Potter books have already sold about one hundred and twenty million copies worldwide, and AOL Time Warner is poised to capitalize on that beginning. America Online connects half of all American Internet users from the homes, and its subscribers - they number thirty one million-will be led to various links, including those to Harry Potter merchandise that the company licenses and sells. Moviefone, which AOL Time Warner owns, will promote and sell tickets. The magazine division, with more than one hundred sixty titles, among them Time, People, Entertainment Weekly, Fortune, and Sports Illustrated, will feature ads and contests and innumerable cover stories. Warner Bros. Studio, which made the move, will advertise on Time Warner cable systems, which reach about twenty percent of American homes wired with cable television, and on Turner Broadcasting, which owns four of the top ten cable networks, and will air promotions for the movie. Warner Music Group will produce the soundtrack and sell the CDs and tapes. The company's ad-sales people sold the exclusive global rights to promote the film (and its sequel) to Coca-Cola for one hundred fifty million dollars. And AOL members, who last year spent twenty billion dollars in online purchases, will have the opportunity to buy merchandize ranging from toothbrushes to T-shirts. In all, AOL Time Warner's one hundred thirty-seven million subscribers - twice the combined total of its two nearest competitors, News Corp. and Vivendi - will find it impossible to avoid that bespectacled lad Harry Potter.

I realize that this is a media conglomerate that would not be affected by the local cross-ownership rules. And indeed I personally admire the leadership of that company, and nothing that I mentioned is wrong. It is good business. Just try competing against it. What happens when such synergies are applied to competition in the local market?

Here is an indication of what could come. In each case, the action is legal, and in fact, good business. But in each case, imagine how a slight twist could impact diversity:

Broadcasting Magazine reported on September 10 that Fox, which owns the Fox O&Os in New York and Los Angeles and also the Chris-Craft Stations in those two cities, is airing the Montel Williams Show on both stations in the market in order to gain "great leverage with advertisers." Advertisers aren't crazy about the clout of duopolies, but "This is how it is."

The twist: the company uses same news team for both stations, just airing at different times on each station - lessening the number of newscasts than would otherwise have reached the audience.

Immediately after September 11, Clear Channel Communication, owner of 1170 (over 10% of the nation's) radio stations, and many TV stations,created a list of musical pieces that might be inappropriate for playing after the disaster - one of which was John Lennon's "Imagine." This was not imposed on station managers, but …

The twist is it that one company can legally impose restrictions in music or news policies on all of their stations. When you have several in the market, such dictates can restrict the diversity available to the audience.

Let's remember that in another era, before the cross-ownership rules were adopted, it was not beyond one major media company, which owned a daily newspaper and network affiliated TV station to use the TV station in support of its corporate efforts to gain local cable franchises in the area. [Chronicle Broadcasting Co.]

So my question is, what's the advantage of fostering greater consolidation - which is the inevitable result of lifting the rules? Will it lead to greater diversity or less diversity?

Well, in fact, what happens is that those who acquire a company have to find synergies and other ways to cut costs to pay the premium price of these properties. In the past, media companies such as the broadcast networks have cut costs by closing down foreign bureaus, and closing down news bureaus in state capitols. These are the areas where we as citizens need to know what is going on in order to act responsibly as citizen-sovereigns.

We need strong significant media who have the heft to field bureaus around the world, in the state capitols, and elsewhere. We need companies strong enough to stand up to government, to scrutinize, to criticize, and to inform constructively. But we need these companies to compete at all levels, locally as well as nationally and internationally. I don't think that eliminating the concentration of ownership rules will help that competition; it will only hurt.

Back to the Diversity Principle: "to some it is and will always be folly but upon it we have placed our all." Judge Learned Hand in United States v. Associated Press in 2d Circuit.