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Cultural Diversity under Deregulation: Minority Ownership in Broadcast and Cable after the 1996 Telecommunications Act
Cultural Diversity under Deregulation: Minority Ownership in Broadcast and Cable after the 1996 Telecommunications Act
Seung Kwan Ryu
Doctoral Candidate
School of Journalism
Southern Illinois University at Carbondale
Carbondale, Illinois
Mailing Address: 1941 W. Evergreen Dr. #8, Carbondale, IL 62901
E-mail: [log in to unmask]
Phone: 618-351-6291
Submitted for the Annual Convention of the Association for Education in Journalism and Mass Communication (AEJMC)
Minorities and Communication Division
Abstract
This study examines the consequences of cultural diversity in terms of the status of minority ownership in broadcast media and cable after deregulation: How has deregulation affected minority ownership and programming in the cable industry, including the ownership of broadcast media?
First, this study discusses the FCC's minority preference policy. Second, it explores the current status of minority ownership in broadcast media and cable, focusing on period after the 1996 Act. Finally, based on the FCC's policies and current status of ownership, this paper discusses the implications for the minority ownership under the deregulation from the view of political economy.
Cultural Diversity under Deregulation
The Telecommunications Act of 1996[1] (hereinafter, the 1996 Act) was legislated to promote deregulation by opening markets and removing ownership restrictions in broadcasting and telecommunications. The 1996 Act was the first large-scale revision of the American communication industry since the Communication Act of 1934.[2] In addition to the 1934 Communications Act's objectives of operation in the public convenience, interest, and necessity, the 1996 Act had the objective of promoting private investments, stimulating competition, and protecting diversity of voices (Fortunato & Martin, 1999). It is noteworthy, however, that there have been continuing debates in the academic community as to what would be an efficient mechanism - government intervention or the marketplace -- in promoting these important goals.
This study examines the consequences of cultural diversity by investigating the status of minority ownership in broadcast media and cable after deregulation: How has deregulation affected minority ownership and programming in the cable industry, including the ownership of broadcast media? To investigate how much diversity current broadcast media and cable provide, a cultural interpretation of diversity (hereinafter, cultural diversity) was employed in this study. In general, cultural diversity comprises the broad idea of fairness in giving access, attention to opposing political groups and views, and more emphasis on public interest programming.
Defining the Problem and Justification
According to Horwitz (1989) and Aufderheide (1999), transformations in regulatory approach can best be seen as a political process. In this sense, "deregulation is at bottom a political phenomenon. Deregulation is basically a story of political movement from regulatory activism to regulatory reform" (Horwitz, p. 189). "Rewriting the 1934 Communications Act occurred at the crest of a deregulatory ideological tide" (Aufderheide, 1999, p. 22).
The deregulation of U.S. broadcasting, culminating in the 1996 Telecommunications Act, began in the 1970s in the following ways (Bates & Chambers, 1999): (a) a series of court decisions challenged the premises and presumptions providing the theoretical foundation for protective policies (Krattenmaker & Powe, 1995), (b) the Carter Administration's paperwork programs raised the question of whether some regulations were efficient or necessary (Tunstall, 1986), and (c) the argument was raised in the 1980s that, with the growth in the number of radio and television stations, there was sufficient competition in broadcasting in which market forces would sort out station owners and operators to act in the public interest (Kransnow & Stern, 1984). Also, the Federal Communications Commission (FCC) itself played a role in deregulating the mass media industry. For instance, the Reagan-appointed FCC moved aggressively from a social equity to an economic efficiency objective in changing the regulatory environment (Aufderheide, 1999).
On the other hand, critics of the deregulatory policies and public-interest groups argued that the fundamental assumptions underlying the deregulation perspective - that there was sufficient competition and that market forces would compel operation in the public interest - were faulty or problematic. Most of these challenges were that one or more assumptions of deregulation were incorrect or that regulation was needed to achieve desirable social goals. These arguments were combined with calls for the FCC to continue regulation (see e.g., Aufderheide, 1990; Streeter, 1996). The issues that surrounded the 1996 Act thus included the conflict between free market and private sector competition and the role of the government intervention.
Major concerns of public interest advocates such as organizations that represented consumers, children, viewers, disabled persons, civil rights groups, and First Amendment issues argued that deregulation would not work to create more diversity in and access to mass media. In addition, they foresaw threats to the range of services in vulnerable arenas, for instance, children's programming, local public affairs, and minority viewpoints (Aufderheide, 1999).
Cable provides various types of television programs through many more channels and other media outlets than ever. However, it seems evident that the American mass media are becoming more concentrated and controlled by a handful of companies capable of affecting the country's politics, culture and economics, especially as a result of telecommunications deregulation (Bagdikian, 1997). Accordingly, it can be questioned whether telecommunications deregulation is promoting increased diversity by ensuring minority ownership and programming.
With the advancement of deregulation in telecommunications, there have been many debates and much concern expressed about the relationship between the marketplace and the public interests (e.g., universal access, more choices, and better quality of services with lower prices), especially from economic perspectives (e.g., Litman, 1979; Wildman & Owen, 1985).
It does not appear, however, that much systematic thought and research, using anything other than the economic perspective, has been given to diversity issues. In other words, a cultural interpretation of diversity, embracing broader ideas of public access, such as equitable access and idea (or viewpoint) diversity, has been lacking in this body of research partly because the concept of diversity itself is elusive to define. Also, the relative emphasis of telecommunications deregulation, which arises from the difficulty of regulating each medium due to the convergence among media and strong faith in the function of automatic coordination of the marketplace, contributed to the public viewing deregulation as an inevitable policy trend. In turn, this tendency has contributed to a lack of critical inquiry as to whether telecommunications deregulation supporting the view that diversity can be can be better promoted by the marketplace through free competition
For the proponents of commercial broadcasting, it appears self-evident that a multitude of channels brings about a diversity of programs; however, critics of commercial broadcasting strongly deny the assumption (Sonnenberg, 1993). Relating to cultural diversity, Glasser (1984) pointed out that variety only offers intra-format diversity - variants of the same cultural product, not genuine cultural diversity of the kind which relates the diversity of what is an offer to some external standard of differentiation in the community or society.[3]
The cultural understanding of diversity is rather broad and general. In democratic states, broadcasting has usually been closely connected with the freedom of information and speech. Whether organized as a public corporation or private business enterprise, broadcasting has been seen as a service in the public interest. Accordingly, diverse program content has been required so that no partial interests could take advantage of the social and political power associated with broadcasting.
Method
This study used multiple approaches. This study first employed a critical approach - the political economy of communication-- as its methodological concern from the broad level. The political economy of communication provides the overarching guideline for the analysis of this study, while it also contributes to the theoretical framework. The political economy perspective leads this study to explore the consequences of deregulation on cultural diversity by critically examining several issues. These issues range from the logic underlying the concept of deregulation; the changes in the market structure after deregulation, and the level of cultural diversity in a deregulatory climate. Political economy is an approach to social and communications analysis that stresses the interaction between political factors and economic institutions in determining communications or other processes. Thus, political economy contributes to find the dialectical relationship between deregulation and cult
ural diversity.
In this sense, the theoretical principles of political economy of communication enable this study to investigate how power relations in government and in the marketplace change with telecommunications deregulation and how the relations, which in commercially sponsored mass media, affect cultural diversity - minority ownership and programming -- in this study (See e.g., Aufderheide, 1999; Castells, 1996; McChesney, 1997; Mosco, 1996; Schiller, 1999).
Second, this study used policy research perspective and media performance model[4] was applied as its overarching approach. In policy-making process, politicians and administrators use models to describe and analyze the point of departure and context for their policies. Policy models usually embrace propositions about the factors shaping the future behavior of the policy subject, about end-means relationships and the effectiveness and efficiency of means. "Because of this selection of relevant elements into a model, it always has a subjective undertone. Hence, models for policy making inevitably display a number of normative presuppositions" (Cuilenburg & Verhoest, 1998, p. 172). For this purpose, McQuail's (1992) media performance norms were employed to assess the current status of minority ownership, which are dialectically connected with deregulation.
Third, as for more specific methodological concerns, qualitative methods were employed in this study, including document analysis and personal correspondence. Websites provided by government agencies such as the FCC (Federal Communications Commission), the NTIA (National Telecommunications and Information Administration), and the NCTA (National Cable and Telecommunications Associations) provided primary and secondary materials for the study. The minority ownership was investigated drawing from the definition of the National Telecommunications and Information Administration (NTIA). It was examined by comparing conditions of ownership and problems of carriage of minority-targeted networks before and after passage of the 1996 Act.
Also, this study contacted cable networks to investigate the current status of ownership via e-mail correspondences in October 2001. In addition, this study contacted several persons of the National Association of Minorities in Cable (NAMIC) and National Telecommunications and Information Administration (NTIA) via e-mails to get recent information regarding the minority ownership of cable networks and systems. Other than inquiries with persons of the national cable networks, personal correspondence with following persons was made to verify the information regarding the status of minority ownership: Maureen Lewis, Director of Minority Telecommunications Development Program (MTDP) in the National Telecommunications and Information Administration (NTIA); Kathy Johnson, Executive Director of the National Association of Minorities in Cable (NAMIC).
Regarding minority programming, this study examined the number of minority-targeted cable networks (e.g., BET). This was conducted by investigating the National Cable and Telecommunications Associations (NCTA) website, which listed U.S. national cable networks. This study calculated the number of minority-targeted cable networks and compared the number based on the date the service began.
FCC's Minority Preference Policies
The FCC designed the 1978 broadcast policy statement to promote minority ownership of broadcast services. It authorized the use of comparative hearing preferences favoring minority applicants, the distress sale policy, and the award of tax certificates to owners of broadcast or cable systems who sold to minority-controlled businesses (FCC, 1978a).
The FCC's minority tax certificate and distress sale policies provided incentives to owners of broadcast and cable television properties to sell their stations to minorities. The tax certificate policy enabled the seller of a broadcast station or cable television system to defer the gain realized from that sale if the property was sold to a minority purchaser. The distress sale policy permitted a broadcast licensee whose license has been designated for a revocation hearing to sell its station, after designation for hearing but prior to commencement of the hearing, to a minority-controlled entity at 75 percent or less of the station's fair market value (FCC, 1994a).
When the Broadcast Policy Statement was adopted in 1978, minorities owned approximately .05 percent of the approximately 8,500 broadcast licenses issued by the FCC (FCC, 1995a). Since then, minority ownership in the broadcast industry has grown from less than one percent to a modest three percent of all stations in the United States. However, the percentages of minority ownership over time do not provide a clear picture of the growth in minority broadcast ownership because the number of broadcast stations has more than doubled since 1978. In fiscal year 1978, there were 9,565 broadcast stations in operation (FCC, 1978b). Four tax certificates were issued (FCC, 1994b). Tax certificate program was aimed to help minority-owned companies access capital, by affording broadcast station sellers a capital gains tax deferral if they sold to minority buyers.
In calendar year 1995, 22,685 broadcast stations were in operation including low-power television (FCC, 1996), and 326 tax certificates were issued from 1978 to May 1995 when the FCC discontinued the tax certificate program (FCC, 1995b). Therefore, the FCC's minority ownership policies clearly succeeded in promoting minority ownership because minority ownership in the broadcast sector between 1978 and 1995 tripled on a percentage basis while the total number of stations more than doubled. That is, minority ownership had been increasing from 1978 to 1995. However, it is also noteworthy that the number still fell far behind the percentage of minorities in the nation.
What made matters worse was that the FCC completed a first draft of proposed changes to cable ownership limits, which will work as another barrier for minority ownerships. The FCC was ordered to change its cable ownership rules after federal judges said the current 30% cap on one company's share of pay-TV subscribers nationwide had no justification (McConnell, 2001).
Furthermore, the U.S. Court of Appeals struck down federal rules meant to encourage broadcasters to hire more minorities and women in 1998. The FCC adopted its rules, which apply to broadcasters and cable operators, in 2000 to replace rules struck down in 1998 by the Lutheran Church-Missouri Synod v. FCC.[5] After this earlier decision, the FCC attempted to be no longer making the number of women and minority employees a factor when deciding whether to renew a broadcaster's license. Instead, the FCC gave broadcasters two options unrelated to such renewals to encourage recruiting efforts for job openings. One option required the stations to actively seek minority employees and file an annual report identifying workers by race and sex (Wigfield, 2001, p. 25). The other was to set out to recruit more minorities and women to industry careers, such as participating in job fairs or setting up internships to encourage minorities and women to be hired (Labaton, 2001, p. A16). However, a federal appeals court struck down these rules in MD/DC/DE Broadcasters et al. v. Federal Communications Commission.
The Status of Minority Ownership in Broadcast and Cable
Broadcast Ownership
With respect to ownership limitations, the Telecommunications Act of 1996 removed limits on number of stations, up to 35% of the national audience (47 U.S.C. 202(c)). It is apparent that the recent deregulation trend of the overall telecommunications industry and the resulting trend toward media consolidation has led to a decline in the number of broadcast owners, threatening minority employment opportunities and diversity in the broadcast industry (NTIA, 1998).[6]
Minority owners report that since the passage of the Telecommunications Act of 1996, they have faced increased competition in securing highly ranked syndicated programming, in attracting advertisers and earning advertising revenue, and in hiring and personnel retention (Adelson, 1997).[7]
The National Telecommunications and Information Administration (NTIA), through its Minority Telecommunications Development Program (MTDP), has collected data on minority ownership since 1990, and issued reports annually from 1990 through 1994 and from 1996 through 1998. However, different federal agencies, such as the NTIA, Federal Communications Commission, Small Business Administration, and Congress in legislation have used differing definitions of "minority." According to the 2000 NTIA report, it defined "minority ownership" as:
Analysis of African American, Asian American, Hispanic American, and Native American broadcasters who reported as sole proprietors of commercial broadcast facilities operating in the United States, as owners of more than 50 percent of a corporation's stock, or as having voting control of a partnership that owns such facilities (NTIA, 2000, p. 4).[8]
Drawing from the definition of the National Telecommunications and Information Administration's (NTIA), minority ownership of commercial broadcast stations in 1998 was at a lower level than in 1994 and 1995. In 1994 there were 343 minority-owned stations of 11, 218, and 350 of 11,412 in 1995 (NTIA, 1998).[9] But this number significantly dropped to 322 in 11, 475 in 1996 after passage of the Telecommunications Act that year (NTIA, 1998). The NTIA's 1998 survey of minority ownership of full-power commercial radio and television stations found that 165 minority broadcasters owned 337 of 11, 524 commercial radio and television stations. That means minority commercial broadcast ownership showed a negligible increase of .1%, from 2.8% in 1997 (322 in 11, 475) to 2.9% in 1998, a net gain of 15 stations. However, they had not kept pace with the developments within the industry as a whole. Minority broadcasters were finding it increasingly difficult to compete in the rapidly consolidating
broadcast industry. So although minorities owned 15 more stations in 1998 than 1997, the industry continued to lose minority owners.
Specifically, NTIA's 1998 survey indicated an overall loss of 17 minority owners. That means the number of stations owned by minorities increased because incumbent owners acquired additional properties while some minority owners left the market. In other words, the increased industry-wide consolidation was becoming a factor regarding minority ownership (NTIA, 1998, p.1-4). The report indicated there had been a loss of 15 Hispanic station owners in 1997. One Hispanic broadcaster sold five stations to another Hispanic broadcaster. No new Hispanic station owners acquired stations. There also were 15 fewer black owners. Asian broadcasters lost one of three owners. The three Native American owners from the 1997 report all sold their properties. One owner transferred his station to another Native American who, in turn, acquired an additional station. The nation had only one Native American broadcast station owner in 1998 (NTIA, 1998, p.1-4).
Focusing on the television industry, over the past eight years, minority ownership in commercial TV was at or below 3.2 percent. Since August 1997, three of the largest and most experienced minority television station owners sold all of their stations to non-minority-owned companies. Therefore, the increase in minority ownership in 1998 survey was the result of acquisitions by a small group of existing owners. In fact, the nominal increase noted in this survey was the result of an increase in Hispanic ownership of commercial radio and television stations of 16 stations, from 120 in 1997 to 136 in 1998 (NTIA, 1998, p. 1-4).
The NTIA surveyed minority ownership again in 2000. According to this report, the overall number of minority owners had dropped since the 1998 NTIA survey (NTIA, 2000). Since 1990 when Minority Telecommunications Development Program (MTDP) began collecting data on minority commercial broadcast ownership, African Americans, Asian Americans, Hispanic Americans, and Native Americans have consistently been underrepresented among the nation's commercial broadcast owners. Ranging from a low of 2.7 percent in 1991 to a high of 3.8 percent in 2000, minorities' ownership of commercial broadcast facilities has remained far below their estimated 29 percent representation in the U.S. population (NTIA, 2000, p. 6).
This report indicated modest progress in some areas of minority commercial broadcast ownership. Over the last two years, minorities as a whole have made some gains. In 2000, 187 minority broadcasters owned 449 full-power commercial radio and television stations, or 3.8 percent of the 11,865 such stations licensed in the United States. All minority groups have increased their radio ownership since 1998. These figures represented an increase of 0.9 percentage points of the number reported in 1998. However, the report said that about half of this increase was the result of an improved methodology to identify minority owners (NTIA, 2000, p. 6-7).
The NTIA's 2000 report also pointed out that minority owned TV stations decreased in 2000. The number of minority-owned commercial television stations dropped to 23 in 2000, 1.9 percent of the country's 1, 288 stations. This is the lowest level since MTDP began keeping track in 1990. That year, minorities owned 29 full-power television stations, compared to as many as 38 during 1995 and 1996. Between 1998 and 2000, there was a loss of five Hispanic-American and four African-American-owned stations, and a new identification of two Asian American-owned stations, for a net loss of seven stations (NTIA, 2000, p. 7). This suggests that consolidation after telecommunications deregulation has threatened the survival of most minority owners, who as mostly single station operators found it difficult to compete against large group owners.
In addition, as part of the Federal Communications Commission's mandate to identify and eliminate market entry barriers for small businesses under Section 257 of the Telecommunications Act of 1996, and its mandate to further opportunities in the allocation of spectrum-based services for small businesses and businesses owned by women and minorities under Section 309(j) of the Communications Act of 1934, the FCC conducted a historical study. This study was investigation concerning barriers to entry into broadcast and wireless licensing experienced by small, minority, and women-owned businesses from 1950 to 2000.
According to this study, minorities made modest gains in broadcast ownership during this period, amidst persistent capital market discrimination and other small business market entry barriers. However, those gains were essentially reversed, in 1995, by both Congress's elimination of the tax certificate program and the Supreme Court's decision in Adarand,[10] which made it significantly more difficult for race-specific rules and policies to be implemented by the FCC (FCC, 2000, p. 2). Also, the study pointed out "the deregulation and the lifting of the ownership caps under the Telecommunications Act of 1996 made these barriers insurmountable for small, minority- and women-owned businesses attempting to survive or even enter the broadcast industry" (FCC, 2000, p. 2).
Cable Ownership and Programming
Regarding the ownership limitations, the restriction of cross-ownership between cable and telephone companies was lifted by the passage of the 1996 Act to ensure competition in multichannel video markets (47 U.S.C. (652; 47 C.F.R. ( 76.501). As of June 30, 1994, of the approximately 7,500 cable operators, 0.2 percent (15) was minority-controlled. Thus, despite the Commission's efforts to increase minority ownership of broadcast and cable facilities, minorities remained significantly underrepresented in the cable industry similar to the situation of broadcast industry (FCC, 1994a).
Minority ownership in cable operators has indeed gone down again. There is only one cable operator (Millennium Digital Media in St. Louis, MO) that has a minority ownership interest among 10,400 cable operators nationwide. Concerning the ownership status of cable networks, there were two minority-owned networks (Urban Broadcasting Company: UBC-TV and Major Broadcasting Corporation Network: MBC) among 217 national cable networks in 2001 (0.9%), while there was only one cable network (Black Entertainment Television: BET) prior to the year of 1996 (0.7%). This is a negligible increase of 0.2%. BET, the only minority-owned network before 1996, however, had been sold to Viacom resulting in loss of one minority owner.
This study calculated the number of minority-targeted networks. As of spring 1996, there were a total of 137 national cable networks, and this number increased 217 as of June 1, 2001 (NCTA, 2001). Among them, minority-targeted networks numbered 23 (10.6%). This is a slight increase of 1.1% considering that there were 13 minority-targeted networks among 137 (9.5%) before the year of 1996. Table 1 and 2 present the national minority-targeted cable networks.
Table 1. National Minority-Targeted Cable Networks (Service Started Before 1996 as of October, 2001)
Network
Content
BET (Black Entertainment Television)
Entertainment and Information for especially African-Americans
CTN (Chinese Television Network)
Mandarin language channel for Chinese Communities
Filipino Channel
Filipino premium channel delivered from Philippines
Galavision
Spanish-language network
GEMS Television
Spanish-language network for Hispanic families
HTV
All-Latin, all-music service
International Channel
Programming from more than 20 Asian, European and Middle Eastern languages
MTV Latin America
Spanish-language music video service
SkyView World Media
Foreign language ethnic programming for a variety of ethnic groups
Sun TV
Quality original programming from the Caribbean, Central and South America. Includes news, sports, entertainment, sitcoms, soaps, talk shows, and tourism-related features
Telemundo
Spanish language broadcast and cable network. Includes dramatic action series, situation comedies, soap operas, talk shows, entertainment and news magazines, sports, musical variety, news, movies, and children's programming
TV Asia
Entertainment and information channel for the South Asian community
TV Japan
Delivered from Tokyo by satellite. Includes life in Japan with its programming from NHK
Source: National Cable and Telecommunications Association (2001), Program Listing. (available at www.ncta.com/industry_overview/programList.cfm), Reorganized by author.
Table 2. National Minority-Targeted Cable Networks (Service Started After 1996 as of October, 2001)
Network
Content
BET Gospel
Gospel Programming especially for African-American
Black Starz
Entertainment programming for African-American
CNN En Espanol
Spanish-language news network
Discovery En Espanol
Spanish-language entertainment and information
Fox-Sports Latin America
Spanish-language pay TV sports network
HBO Latino
Spanish-language movies
MBC Network
Comprehensive programs for African-American families
MTV "S"
Spanish-language music network
Puma TV
Music channel by Hispanics for Hispanics
UBC (Urban Broadcasting Company)
Multicultural programs
Source: National Cable and Telecommunications Association (2001), Program Listing. (available at www.ncta.com/industry_overview/programList.cfm), Reorganized by author.
It is worth noting, however, that most minority-targeted cable networks have been going through similar difficulty in finding cable systems to carry their network programs. Relating to this point, one example shows the troubling status of a minority-targeted cable network. African-American start-up MBC (Major Broadcasting Cable) Network, did not get approval from AT&T to sign up its individual cable systems. This network has about 1 million subscribers, mostly from Comcast. The network targets African-American families, older demographic than the one served by BET (Black Entertainment Television), the only widely distributed African-American network in which AT&T owns its interest through Liberty Media (McAdams, 2000).
Minority Ownership From the View of Political Economy
A political economic approach contributes to figure out how deregulation works for the direction of increasing or decreasing cultural diversity, such as minority ownership, at a societal level. First, this can be possible by exploring: how government agencies such as the FCC, Congress, and courts interacted with mass media and cable industry, and ultimately how the outcome arose from these interaction has been justified for whose interests.
Also, what Krasnow, Longley, & Terry (1982) earlier presented regarding the relations and interactions in decision-making of telecommunications policy is noteworthy in this regard. They pointed out that the FCC, Congress, and mass media industry are the major players that affect broadcast policy-making. In addition, they suggested that the interaction among the three institutions is more important than that of the White House, courts, and civil groups, which are also influential in making telecommunications policy. From this perspective, it seems that the telecommunications policy is the outcome of interaction and conflicts among those institutions.
Given the current status of minority ownership in broadcasting and cable, first, the legislation of the 1996 Act has been working in a negative way for the minority ownership. Second, the policies of the FCC that were intended to foster the minority ownership were abolished by a series of court decisions. It was partly because of very narrow reading of empirical evidence regarding the nexus between the ownership and programming, which resulted in the continuous decline of minority owners in broadcast and the cable industry. The court decisions that supported to invalidate the minority preference policies also appear to be slanted to the social and political atmosphere of deregulation without much considering the broad picture of minority ownership, which is seriously devastated.
For instance, the decision (MD/DC/DE Broadcasters et al. v. Federal Communications Commission), which struck down the latest affirmative-action rules, was written by Judge Douglas H. Ginsburg and joined by Judges David B. Sentelle and Karen L. Henderson of the United States Court of Appeals for the District of Columbia Circuit. Judges Ginsburg and Sentelle were appointed by President Ronald Regan; Judge Henderson was appointed by President George Bush, whose policies were more pro-deregulation (Labaton, 2001).
This situation might be getting worse because of the appointment of new FCC Chairman, who is a free-market enthusiast because the FCC itself plays a role in deregulating the mass media industry. Mr. Michael Powell, a new Republican Chairman of the FCC, voiced skepticism about many kinds of affirmative-action programs. He expressed that insufficient evidence exists to show a connection between diversity in employment and diversity in content in broadcast and telecommunications (Labaton, 2001). In this situation, what is most missing and suffering is the interests of minority owners and ultimately the general public who have a compelling interest as well as important right to view and access to diverse programs from electronic media. Meanwhile, what is promoted best is the interests of few conglomerates in broadcast and cable industry and those of some politicians because it seems clears that the 1996 Act was passed by the close connection with several politicians and a few leaders of mass media and telecommunications industry.
Second, the current market structure needs to be discussed from the idea of commodification, which is the important concept that the political economic approach explores. Commodification process means that the public can have and access to media products (e.g., services and video programs) only by market exchanges, which was ever available for free or less costs. In this process, information and media products is regarded as commodity like any other commodity. More importantly, this commodification, thus provides a great motive for media industries to consider people primarily as consumers and audiences so that mass media companies concentrate on gaining more profits. As Garnham (1986) noted the reason why cultural (or informational) goods and common goods should be distinguished arose from the fact that their use value of cultural goods is almost limitless, which cannot be easily destroyed or consumed by use, unlike other common goods.
With this nature of cultural goods in the marketplace in mind, "more programming means more variety, not more diversity" and "variety refers to more choices within a relatively narrow set of market-determined formats" (Horwitz, 1989, p. 280). In a similar vein, over-reliance on market forces, which would cater more majoritarian views because of their profitability, would not operate to provide the sort of subtle and complicated diversity of the First Amendment requires because less popular or controversial viewpoints might be excluded from programming by their sheer unprofitability (Gauger, 1989). In other words, because of this nature of the mass media and telecommunications market, while the programming that appeals to the lowest common denominator can be more popular, the minority oriented programming, which presumably can be more produced from minority owners, tends to be marginalized if there is no government intervention.
Also, as McQuail (1994) presented "the degree of diversity is limited by media channel capacity and by editorial selections which have to be made" (p. 144). Accordingly, the more that mass media are proportionally reflective of society, the more likely it is that minorities will be effectively exclusively from mass media because catering for dominant and consistent expectations and tastes in mass media limit the chance to offer a wide choice.
In addition, advertising plays a crucial role in mass media and cable industry. Relating to commercialization of mass media propelled especially by rampant consolidation and conglomeration, this process was aided by corporations that view the production of cultural goods as the appeal and the advertising revenue of mass media. In other words, broadcast media and cable sell audiences to advertisers for their profits. This thought parallels with what Smythe (1977) noted to address the economic contradiction arising from the nature of cultural commodities: the creation, packaging and sale, not of cultural goods to consumers, but of audiences to advertisers.
Third, the current status of minority ownership in broadcast and cable needs to be discussed from the role of a government/state and its relationship with the public interests. The government agencies seem to be abusing a market theory in the U.S. telecommunication industry in exchange for the interests of the few mass media conglomerates rather than those of the public. Thus, deregulation can be viewed as a transition of primary forms of governance from government to market. As Melody (1994) pointed out, the government advocacy of free trade (free trade seems to be also closely related to the commodification in the domestic level, which changes cultural goods to commodity) is designed to open markets for some industries such as the computer, telecommunications, and information-content industries.
This approach reflects a change in the role of government from adopting policies designed to stimulate the marketplace environment toward adopting more focused polices designed to assist specific companies. Hence, antitrust policies and pro-competitive domestic policies become less important, and monopoly and cartel behavior are accepted as tolerable (Melody, 1994, p. 26). This argument implies the government itself is promoting the interests of the mass media and telecommunications industry by supporting them rather than those of the public, which shows a clear example of a nation or state interests are different from the public interests that most political economists argue about.
Political economy is centrally concerned with the balance between the capitalist enterprise and the public intervention. In the case of the cultural industry, the political economy perspective is particularly concerned to trace the impact of economic dynamics on the range and diversity of public cultural expression, and its availability to different social groups (Golding & Murdock, 1997). From this perspective, the current status of minority ownership shows the distortions and inequalities of market systems, which these deficiencies need to be rectified by public intervention.
In sum, the mass media and cable companies' dependence on and ties with government for more general policy support resulted in corresponding relaxation or loosening of law enforcement which benefited the media companies. As a consequence, the industry's motive for maximizing profits, aiming for the largest audience, led to the decrease of minority ownership in cable and broadcasting, which then neglects unprofitable programming for minorities.
Conclusion
It is widely recognizable that the American media are becoming more concentrated and controlled by a handful of companies capable of affecting politics, culture, and economics. Minority ownership of commercial broadcast stations was at a lower level in 1998 compared to 1994 and 1995. Minority broadcasters were finding it increasingly difficult to compete in the rapidly consolidating broadcast industry. Even though minorities owned 15 more stations in 1998 than 1997, the industry continued to lose minority owners compared to the number of 1994 and 1995. The NTIA's 2000 survey corroborated this trend again. More importantly, minority owners' share of the commercial television market decreased in 2000.
Turning to cable industry, the result was almost the same. While the number of minority-owned cable operator has significantly dropped from 15 to 1, the minority-owned cable networks have increased very slightly by 0.2%. Looking at the programming side, the number of minority-targeted cable networks has been slightly increased by 1.1%.
Market forces alone are not able to provide sufficient diversity for minorities. Also, one hundred channels do not necessarily guarantee diverse programming leading to viewpoint diversity if only commercially based media are focusing on providing the mass appeal formats. Therefore, the FCC's minority preference policy will work as a safety lock by providing both diversity of neglected minorities and pluralistic viewpoint, or against monopoly.
In conclusion, based on these facts and reasoning, the current status of minority ownership needs to be seen from the perspective of McQuail's third and fourth norm: mass media industries ought to distribute their products and services to rich, poor, and all those of in between; mass media should facilitate free speech and political discussion.[11] Because of the market structure in which minority ownership is growing minimal significantly, broadcast media and cable industry are not considered to promote for minorities to equally and fairly access to the media. Also, current broadcast media and cable do not appear to be promoting free speech of the general public, which is composed of diverse individuals and groups. Rather, they seem to merely reflect the voices of the dominant or of those who represent the majority for their profit-maximization.
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[1] Telecommunications Act of 1996, Public Law No. 104-104, 110 Stat. 56 (1996).
[2] Communications Act of 1934, Pub. L. No. 104-104, 110 Stat. 139 (1934).
[3] In accordance with this view, Le Duc (1982) commented that increased channel choice resembles the degree of diversity in dining opportunities experienced when a McDonalds restaurant begins business in town already served by a Burger King.
[4] Gomery (1993) presented the example of the structure-conduct-performance (S-C-P) model by applying the McQuail's framework. He suggested media economics should move into the center of communications study by offering the S-C-P paradigm.
[5] Lutheran Church-Missouri Synod v. FCC, 141 F.3d 344 (D.C. Cir. 1998).
[6] See National Telecommunications and Information Association (NTIA) (1998). Minority Commercial Broadcast Ownership in the United States, NTIA Report, available at .
[7] According to Adelson (1997), "The Telecommunications Act of 1996 set off a flood of mergers in the radio industry by relaxing the limits on radio ownership to as many as eight stations in a single market. Radio giants quickly emerged, such as Westinghouse's combination of CBS Radio with Infinity Broadcasting. Also, two of the largest minority-owned radio groups. U.S. Radio Inc. of Philadelphia and Lombard/Nogales Partners of San Francisco, which together had 35 stations, were sold. Those two deals reduced to 300 the number of broadcast properties controlled by minority owners. That number represents only 3 percent of the nation's 11,400 stations" (p. D9).
[8] For more detail about this definition, see National Telecommunications and Information Association (NTIA) (2000). Changes, challenges, and charting new courses: Minority commercial broadcast ownership in the United States, NTIA Report, available at .
[9] See National Telecommunications and Information Association (NTIA) (1998). A five-year comparative analysis: Total of minority and non-minority owned commercial broadcast stations licensed in the United States in 1993-1997. NTIA Report, available at .
[10] Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).
[11] It is at the level of performance analysis that communication scholars need to foster a connection between media economics and the long-time concerns of the field, whether this deals with questions of how best to promote diversity or how best to foster freedom of speech (McQuail, 1992). McQuail (1992) suggested six media performance norms in this regard. That is, 1) media industries should not waste resources; they should be as efficient as possible. Monopolies were resources to maintain their position of power. Then what about control by a few firms? Many argue that this is just as bad because media industries regularly cooperate through powerful trade associations and thus hardly represent lean and mean business operations; 2) media industries ought to bring new technologies to the marketplace as quickly as possible. It has long been known that monopolies and collusive oligopolies resist the innovation of new technologies to protect their highly profitable status quo posit
ions; 3) media industries ought to distribute their products and services to rich, poor, and all of those in between. For example, broadcast television has long been widely available to the poorest members of society. However, access is becoming more and more restrictive as a larger share of the mass media go to direct payment. If television is an important link in our democracy, how will our process of government change as those who do not have access to cable?; 4) the mass media ought to facilitate free speech and political discussion; 5) the mass media ought to facilitate public order; 6) the mass media ought to protect and maintain cultural quality, and offer to play some role in education. For example, many suspect that advertising-generated-revenue companies tend to stick to more sensationalism to capture more viewers' attention (Gomery, 1993; 1998).