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Antitrust, politics & media
[May 23, 2003]

By S. M. Oliva

On June 2, the Federal Communications Commission plans to vote on a new set of rules for media ownership. These rules dictate how many television stations a single company can own, as well as cross-ownership of newspapers and television stations in the same market. The FCC’s changes won’t repeal the restrictions outright, but they will increase the threshold of permissible market share.

In many circles, the FCC’s plan has been called “deregulation,” which is highly misleading given that the effect of the new rules would be to increase the FCC’s power. After all, raising the media concentration threshold will likely lead to new mergers, which in turn leads to more work for the FCC staff. For every new merger that comes about, you’re likely to see a new FCC settlement imposing restrictions and conditions. That’s hardly what one thinks of when they hear the word “deregulation.”

But even the FCC’s modest re-regulation plan is facing a barrage of criticism, starting on Capitol Hill and working its way down to even nominally pro-individual rights groups like the National Rifle Association. Thus far, the principle argument against even slightly loosening media ownership rules is that it will threaten “diversity.” For those of you who thought diversity was limited to college admissions, it’s also now a code word for violating property rights in the “public interest.” As the diversity theory goes, media companies must not become too big, because then they’ll stifle competition and inhibit the people’s “right” to receive a diverse set of viewpoints.

It’s odd when you hear groups like the NRA making this argument, yet they are. Odd because this diversity paradigm rests on a collective rights interpretation of the First Amendment. The NRA’s own existence is based on opposing the collective rights view of the Second Amendment, yet now they expect us to believe the individual rights spectrum doesn’t include the freedoms of speech and press. Their argument is that “anti-gun” media outlets will consolidate their power and destroy the NRA’s ability to get their message out. Apparently they’ve never heard of the old saying, “freedom of the press belongs to those who own the press.”

Actually, the Department of Justice may not have heard that saying either. Recently the DOJ’s antitrust division coerced a settlement out of Village Voice and New Times Media, two “alternative” newspaper publishers over an alleged market-swapping deal. Despite the plethora of groups dedicated to supporting the FCC re-regulation plan, not a single voice was heard in opposition to the DOJ’s ludicrous antitrust theory in this case—the notion that one could “monopolize” the market for “alternative newsweeklies.” Not a single voice except for mine, that is. I filed two amicus briefs and a public comment letter (which, to be fair, was on behalf of myself and several supporters) in opposition to the Village Voice settlement and the “collective rights” interpretation of the First Amendment peddled by DOJ lawyers.

The government’s theory in Village Voice is particularly obnoxious. In their only reply to my filings, the DOJ said “diversity” trumps individual rights every time:

The First Amendment, far from providing an argument against application of the Sherman Act, here provides powerful reasons to the contrary. That 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, that a free press is a condition of a free society. Surely a command that the government itself shall not impede the free flow of ideas does not afford nongovernmental combinations a refuge if they impose restraints upon that constitutionally guaranteed freedom. Freedom to publish means freedom for all and not for some. Freedom to publish is guaranteed by the Constitution, but freedom to combine to keep others from publishing is not. Freedom of the press from governmental interference under the First Amendment does not sanction repression of that freedom by private interests. 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.

The Village Voice case deals with two newspaper companies that agreed to close their failing newspapers in the other guy’s market. No third party was affected or injured by this transaction. So how then does the government get to claim this case is about the “freedom to combine to keep others from publishing”? The Village Voice settlement, in fact, was about the government taking away private property and giving it to a third party in order to re-open a closed newspaper that could not financially compete in the marketplace. It amounted, in substance, to a regulatory taking, only the government’s action did not benefit the “public” in any tangible way.

On a broader note, the First Amendment does support the right of private parties to “restrain trade in news and views,” so long as no party is coerced. The First Amendment restricts the government’s ability to impose prior restraints on private decision-making regarding the ownership and operation of the press. It most certainly trumps the antitrust laws’ vague and indefinable “public interest” standard, which puts the momentary whims of government regulators over and above the rights of property owners.

The Village Voice settlement is useful, however, in that it conclusively demonstrates why the anti-concept of media “diversity” is wholly incompatible with the First Amendment. Which leads us back to the FCC’s looming re-regulation scheme. As noted above, the FCC’s plan will lead to an increased role for FCC regulators in scrutinizing new mergers. This leads to the question of how the FCC will judge these mergers. The political trends suggest the DOJ’s precedent-setting settlement in Village Voice will pave the way for a greater emphasis on “diversity” in even smaller media markets. After all, the DOJ’s position in the Village Voice case was that two newspapers had to be protected from closure because of the political viewpoints they expressed. Once such content-based regulation is permissible, it’s only a matter of time before all kinds of interest groups demand regulators govern the market according to their demands.

Some groups have already started. One of the more noticeable efforts is by an outfit called the National Hispanic Policy Institute, which for the past several weeks has spearheaded a campaign to get the FCC and Congress to derail a proposed merger between radio giant Clear Channel and Univision, a major owner of Spanish-language radio stations. According to NHPI President Efrain Gonzalez, a New York state senator, the government should deny the companies the right to merge on grounds of racism:

If the FCC approves a Clear Channel-Univision merger, independent Hispanic-station owners across the country face a future of being devoured or crushed by a monopoly controlled by two NON-Hispanic media tycoons — Lowry Mays and Jerry Perenchio.

Neither Mays nor Perenchio has seen fir to include a single Hispanic among the top executives of Clear Channel or Univision. Even more disturbing to the Hispanic-American community is that the chairman of Univision is the same Jerry Perenchio who was an active supporter of Governor Pete Wilson, sponsor of California’s anti-Hispanic Proposition 187.

A poll taken by Opiniones Latinas shows that 87% of Hispanic-Americans believe that Spanish-language radio stations owned by Latinos are better able to respond to the needs of Hispanic listeners.

In that same survey, 53% of Hispanics polled said that they would not vote to re-elect their Representative if he or she fails to actively oppose the merger—the same number who say they will not vote to re-elect President Bush if the Clear Channel-Univision merger is approved.

In short, the government should infringe on private property rights because (1) corporations don’t racially gerrymander their executive ranks, (2) the property owners support political candidates who take controversial positions, and (3) a poll says a proposed business act is unpopular among a particular segment of the population.

NHPI’s position should not be considered the ramblings of some radical fringe group. Under the leadership of the Bush administration’s competition czars—the DOJ’s Hewitt Pate, Federal Trade Commission Chairman Timothy Muris, and FCC Chairman Michael Powell—the antitrust laws are being employed in the name of protecting the “public interest,” not the constitutional rights of American businesses. This means that when groups like NHPI complain, the government will listen.

Frankly, it doesn’t matter whether the Republicans or Democrats control the White House, because the intellectual corruption of antitrust is bipartisan. Witness this week’s confirmation hearing of Hewitt Pate (he’s been acting head of the antitrust division since December.) Not one member of the Senate rose to attack the DOJ’s numerous incursions on individual rights, such as the recent Village Voice case. Instead, the members of the Senate Judiciary Committee were incensed that there aren’t more antitrust prosecutions.

Senator Herb Kohl of Wisconsin had the most interesting criticism when, in referring to the looming FCC re-regulation, he called the DOJ the “last line of defense” to prevent unpopular media mergers. The inference here is quite odd: The DOJ should act when the FCC has decided not to. Perhaps this is why there are three agencies charged with enforcing the same laws; competition tends to bring out the best in the FTC, DOJ, and FCC, which means it brings out the worst for property owners and businessmen.

The agencies are, in fact, currently locked into an inglorious race to the bottom, with each agency seeking the quickest way to placate congressional demands to placate interest group demands. If NHPI is unhappy, rest assured there are congressmen who are unhappy, who in turn will demand at least one of the agencies do something. This pattern is seen in dozens of different industries, ranging from health care to glassware, because every aggrieved interest group can find (or buy) a political patron.

What you haven’t seen—until CAC came along—is a group on the other side consistently making the case for individual rights and capitalism in the face of the collective screaming of the interest groups and the politicians. Even interest groups which normally support individual rights, such as the NRA, have their blind spots on issues like media ownership. But ultimately the fight for individual rights is an indivisible battle: an attack on one right is an attack on all rights. Once businessmen and policymakers understand this concept, then the real battle to restore capitalism can begin.

 

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