Break Up Voter News Service, column by AAI Senior Research Scholar Robert H. Lande

FTC:WATCH #557

Break up the Voters News Service

Robert H. Lande

On January 18, 1982 the lead pilot of the Thunderbirds, the Air Force precision aerial demonstration team, was unable to pull out of a difficult dive due to a mechanical failure. Three other pilots, who had been trained to copy his every action, were flying beside him. Within seconds they all followed him, tragically, to the ground. It was the worst mistake in the history of the precision military flying teams.

One of the reasons why the nation is in such a ferment over the Florida election results is a mistake made by an organization called the Voter News Service. At almost the same time, around 8:00 p.m. election night, every major network declared that Vice President Gore had won the Florida primary. Within the next two hours all had withdrawn their predictions and declared the state "too close to call." Very early Wednesday most declared Governor Bush the winner. Then came the final mass switch back to "too close to call." The networks called it wrong twice: once for each candidate.

Why the uniformity of (wrong) results? This can be explained by a lack of competition. All the "competing" major networks are actually colluding with one another, and they call their collusion the Voter News Service. Since they all relied upon the same pooled data, naturally they all made the same error.

Until the 1964 election, the major news organizations did their own exit polling and made their election predictions independently. They subsequently combined more and more of their operations until, in 1990, the six major TV news organizations -- ABC, CBS, NBC, Fox, CNN and the Associated Press -- decided to combine the entirety of their exit polling and news prediction operations. Their motivation was, of course, to save money. Today there is still some room for interpretation on the margin of the results and predictions made by the Voter News Service. But all six organizations use the same data and the same models. Instead of six independent organizations trying their best to figure out how to predict election results accurately, now there is essentially only one. It follows that the six major news services all make the same predictions. And the same mistakes.

If the six largest manufacturers of aluminum, canned food, or paper decided to close existing operations and pool resources to save money, the Antitrust Division would be after them instantly. Whether they called their project a joint venture, merger, or consortium, it would be scrutinized carefully under the antitrust laws. Why should the Voter News Service be any different? If anything, the antitrust laws should be applied more strictly when the media are involved. We can live with too few manufacturers of aluminum, canned food, or paper better than we can live with too few independent sources of news. Free and full competition in the news market is fundamental to a democracy.

Under the recently issued federal Antitrust Guidelines for Collaborations Among Competitors, the legality of the Voter News Service essentially would be judged under the rule of reason, an analysis that considered all of its benefits and costs. The Defendants would point out that the anticompetitive harm from most cartels is higher prices, but that they did not raise prices to anyone. All they did was save costs.

But they also lowered consumer choice. Competition does not only lead to lower prices. It also leads to innovation and higher quality. It leads to different varieties of products from which consumers can choose. When we are considering the prospect of too little competition in the news market, the defense that the colluders (or, of you prefer, joint venture partners) will save money should be given very little weight.

The Voter News Service might point out that in 1945 the Supreme Court held that it was legal for dozens of newspapers to help form and participate in the Associated Press. But the Associated Press is able to do a large number of crucial things (i.e., send reporters to the far corners of the globe) that few individual newspapers can do by themselves. While it often is legal for newsgathering organizations to work together, this defense would not apply to the Voter News Service because, before its formation, each of the major news organizations had been able to make independent election predictions.

If there were today six truly competing organizations they might come up with any number of innovative election prediction techniques. Instead of (as is sometimes alleged) only competing to be the first to call a state, they might also compete to be the most accurate. They would certainly have an increased incentive to do so. If only one of the networks had made a seriously wrong prediction they would risk becoming the butt of Jay Leno, "Dewey defeats Truman" jokes for months. Since they all erred equally, however, no one network will suffer very much. They know they have not been hurt relative to their competitors, and this is what they care about most.

Firms in the media sector have announced an alarming number of huge mergers in recent years, with AOL/Time Warner being the largest. As each large media merger is announced, we wonder whether this crucial sector is getting so concentrated that the variety of independent sources of news is too low. The Voter News Service fiasco makes us wonder whether things have gotten to the point where a mistake or bias will not be corrected by the normal give and take of competition among media firms. There is, however, a solution that will at least move us in the right direction. If they do not agree to dissolve it voluntarily, the antitrust enforcers should file suit to break up the Voter News Service.