From The Nation
Antitrust & The Media - II
First AOL and Time Warner announced their intention to combine. Then came Time Warner/EMI and Tribune/Times Mirror. Even more significant, however, has been the speculation that these mergers have caused: if these transactions are consummated, a large number of additional media mergers are expected. There is even a possibility of a nightmare scenario-that there could be a wave of media mergers so large that, within a decade, most of our information will be supplied by perhaps six of these huge conglomerates and a fringe of much smaller firms.
Now is the time to pause and ask two critical questions. Is this kind of media oligopoly the place where we, as a society, want to end up? And if not, can the antitrust laws effectively prevent the threatened merger wave? The answer to the first question is clear. We do not want a media oligopoly. The answer to the second question, however, is far less certain. We should distrust a media oligopoly because it would give undue control to a small number of individuals. This need not manifest itself in a price rise for the daily newspaper or AOL's monthly fee. Rather, it could consist of a change in editorial viewpoints, a shift in the relative prominence of links to certain web sites, or a decision not to cover certain topics because they are not "newsworthy." In each of these ways a wave of media mergers could significantly undermine the diversity of offerings.
These problems could exist without any improper intent on the part of the media barons. Even if they try to be fair and objective they will necessarily bring their own worldview to the job. And in time some of these conglomerates may be controlled by people who are not fair or objective. Which brings us to the antitrust laws.
At first it might appear that the antitrust laws can be of little help in grappling with the issues presented by large media mergers. The antimerger laws are commonly understood as protecting price competition, and a relatively small number of firms-to greatly oversimplify, let's say at most half a dozen-are normally thought to be enough to keep a market price-competitive. In industry after industry firms merge until there is only a handful left, and the antitrust enforcers are normally unable to do anything to prevent this. (In former years mergers were governed by an "incipiency" standard that prevented mergers and merger waves well before they would have led to very large or likely anticompetitive problems. The incipiency concern, however, has faded dramatically in recent years.)
Even if a handful of firms is enough to ensure effective competition in most industries, would six conglomerate media firms be sufficient for the diversity of viewpoints necessary for a democracy? Would we be reassured if they could somehow guarantee that they would sell their magazines and Internet advertisements at competitive prices?
I am hopeful that the antitrust laws, if correctly and vigorously interpreted, could be adaptable enough to meet this challenge. This is because antitrust is not exclusively about price. It is essentially about choice-about giving consumers a competitive range of options in the marketplace so that consumers can make their own, effective selection from the market's offerings. Consumers should be able to make their choices along any dimension important to them-including price, variety and editorial viewpoint.
Communications media compete in part by offering independent editorial viewpoints and an independent gatekeeper function. Six media firms cannot effectively respond to a demand for choice or diversity competition by extending their product lines because the new media products will inevitably bear, to some degree, the perspective of their common corporate parent. For these reasons competition in terms of editorial viewpoint or gatekeeping can be guaranteed only by ensuring that a media market contains a significantly larger number of firms than is required for price competition in other, more conventional markets.
Is it unclear, however, whether this interpretation of the antitrust laws will be applied by the enforcement agencies and the courts. What is needed, therefore, is a much more careful look at the challenges that will be raised by future media mergers.
This could best be accomplished if Congress created a Temporary Committee to Study Media Mergers and Media Convergence. This Committee could include Members of the Congress, the heads of the FTC, FCC and DOJ Antitrust Division, CEOs of media companies and representatives of consumer groups. The Committee would identify problems that may be caused by large media mergers and by media convergence. If the Committee were to conclude that the existing antitrust laws are inadequate, it should recommend to Congress that new antimerger legislation be enacted. This may be the only way to prevent the nightmare scenario of a media sector oligopoly. Robert H. Lande
Robert H. Lande is Venable Professor of Law at the University of Baltimore and Senior Research Scholar at the American Antitrust Institute.