The American Media Baronies, A Modest Atlantic Atlas

Last year, the Atlantic published an article by Federal Communications Commissioner Nicholas Johnson ("The Media Barons and the Public Interest," June, 1968) warning of the dangers of diminished competition in "the marketplace of ideas," and examining the "impact of ownership upon the control of media." As previously promised, we present the Atlantic's atlas of the men, families, and combines who dominate the newspapers, radio, TV, and other media in this country, and trace some of the developments in slowly awakening Washington since Commissioner Johnson's article appeared.

The problem of who owns what facilities for telling us what is going on, and what to think about it, takes a variety of forms. Broadly, there are five types of baronies. However, one baron may be an example of more than one sort of communication power. What follows is a description of each type, with examples. Strange as it may seem, there is no single government agency in Washington which has made it its business to assemble all of the data on the reaches of this country's most powerful communicators in usable form. Only now, and still on an ad hoc basis, has there begun to be even any serious interest in the question.

The Local Monopoly

One owner may dominate a city's media. For example, one man, Donald W. Reynolds, owns Fort Smith, Arkansas's, two newspapers and its only television station. Reynolds is also an example of one man having great impact on entire regions through concentrated ownership of newspapers and/or broadcast properties in Arkansas and Oklahoma and Nevada. In Niles, Michigan, the Plym family owns the only daily newspaper, the only AM radio station, and the only FM station. There is no local television outlet. According to the information supplied by the FCC to the Senate Antitrust and Monopoly Subcommittee, as of late 1967 there were seventy-three communities where one person or company owned or controlled all of the local newspaper and broadcast outlets.

Regional Concentration

'There are a striking number of areas of the country where one media baron may not have a pure monopoly, but can have an equivalent impact through his preponderant interests. A branch of the Booth family, for instance, owns a string of newspapers in Michigan and contiguous areas, as well as an important interest in the company which owns and operates the Detroit News and the NBC TV and radio outlets in that city. Another branch owns several radio and CATV interests in the same region. There are separate companies involved, and the Booth family contends that they are controlled by separate and unfriendly branches of the family tree, and the FCC has accepted this rationale, but not unanimously. The owner of major news facilities in the most important city of a given state usually speaks to the state as a whole, and can constitute an enormous power in the state's affairs. The Mormon Church may be the most extraordinary example of regional power. Through an affiliate, the Bonneville International, the Church of the Latter Day Saints not only has extensive broadcast interests of its own but has negotiated a set of alliances with other Salt Lake City media owners, giving the combined group a mighty voice throughout the mountain states of the West. (The Mormons' interests are not at all confined to broadcasting. They are also reported to have holdings in a beet sugar company, a Salt Lake City department store, two Salt Lake City hotels, life and fire insurance companies, a bookstore, some six hundred farms, a real estate management company, a trucking company, sugar and pineapple plantations, three large Canadian ranches, forty mills, factories, and salvage stores, and substantial land in Florida.)

Relieved of the burdens of running the country, Lyndon B. Johnson has now had time to devote more attention to the family broadcasting collection, accumulated during Mr. Johnson's years in politics. (It was always argued that Lady Bird was the brains behind the whole thing.) The Johnsons own an AM and FM radio station and a TV station in Austin, as well as half a cable television company in that city. They also own 29 percent of a Waco, Texas, AM radio and TV station, which in turn owns a majority of the stock of a number of other radio and television stations in Texas. The former President's media baronial appetites are said to be whetted, not sated.

Multiple Ownership

Anyone who owns more than one of a given kind of medium is, at least, an absentee owner, and at most, a national power. Gannett, Ridder, and Newhouse may not be household words everywhere in the nation, but they are in political circles in Washington, and of course in the many cities throughout the country where each owns frequently the only newspaper. Flourishing publishers are often considered by Presidents to be the sorts of people who ought to be the United States ambassadors abroad. This has been more true recently of Republicans than Democrats; John F. Kennedy showed more affinity for lowly journalists in ambassadorial posts. But mighty publishers have substantial access to the White House. Mr. Nixon recently appointed Walter Annenberg to the American Embassy in London. Annenberg is the owner of two Philadelphia newspapers, and television stations in Philadelphia, Altoona-Johnstown, and Lancaster-Lebanon, Pennsylvania; Binghamton, New York; Hartford-New Haven, Connecticut; and Fresno, California. He also is the proprietor of such variegated magazine properties as Seventeen, TV Guide, and the Morning Telegraph, a racing daily. Queried on whether Mr. Annenberg had to divest himself of his communications holdings now that he was an official servant of the State Department, a Department spokesman said that there were no rules requiring such action and was surprised that the question should even arise.

The "Big Six"--NBC, CBS, ABC, RKO, Westinghouse, and Metromedia--are the most striking examples of multiple broadcasting power. Each of the networks, beyond their vast national impact through their hundreds of affiliated stations, owns television stations in several major cities, including the three most important television markets, New York, Los Angeles, and Chicago. There are, as Commissioner Johnson pointed out, "many implications of their power. Groups of stations are able to bargain with networks, advertisers, and talent in ways that put lesser stations at substantial economic disadvantage. Group ownership means, by definition, that few stations in major markets will be locally owned.... But the basic point is simply that the national political power involved in ownership of a group of major VHF television stations in, say, New York, Los Angeles, Philadelphia, and Washington, D.C., is greater than a democracy should unthinkingly repose in one man or corporation."

Multimedia ownership

Men or companies which have collected more than one kind of communications outlet--broadcasting and newspapers and/or magazines--can show up in different sorts of baronies: one with a local monopoly; one with regional concentration; a large company with great competitive advantages and a variety of interests to be served, the public interest being of unknown rank. RCA, for example, is a single company containing subsidiary companies which own a book-publishing company (Random House), radio stations, television stations, a radio and TV network (NBC), a record company, and a major manufacturer of television sets. Time Inc., the Washington Post-Newsweek complex, and the Cowles Communications and the Minneapolis Star and Tribune Company are all large and powerful publishing-broadcasting enterprises.

CBS is one of the more dazzling multimedia owners. Besides its network operations, it owns television stations in five major cities, a record company, musical-instrument manufacturing companies, a book-publishing house (Holt, Rinehart and Winston), educational film producers, CATV systems, Creative Playthings toys, and the New York Yankees.

Conglomerates

RCA and CBS, of course, can also be termed conglomerates. Conglomeration is a two-way street, and just as a number of communications media owners have used their enormous earnings to branch into other unrelated businesses, so have unrelated businesses increasingly eyed broadcasting properties as a means to enhanced power and earnings. (TV stations, on the average, earn nearly 100 percent return on tangible investment.) The worry here, as was brought out in the controversy over ITT's now abandoned attempt to wed ABC, is that there will be almost irresistible pressure and incentive to use the communications subsidiary to promote the corporate interests of the holding company. A conglomerate can be a community affair. Howard Hughes, aside from his other business interests, constitutes a conglomerate in Las Vegas alone: he owns land, hotels, casinos, an airport; and then acquired a television station there. (Having been warded off in his attempt in 1968 to purchase ABC, Hughes did acquire Sports Network, Inc., a significant occasional sports broadcasting network. The widespread assumption is that Hughes plans to build it into a rival television network. This is, by the way, an example of the frying-pan--fire syndrome of media ownership. While critics of the network power would welcome a rival, Hughes is not their idea of Lochinvar. On those rare occasions when a baron's holdings are challenged, it is frequently by another baron.)

Challenges

There are, at last, some indications that official Washington has taken notice of what has been happening to the communications business and is concerned. No one anticipates that the situation will be radically different soon, but it is expected that the gobbling up of papers and channels by the baronies will at least proceed at a slower rate.

The Justice Department in 1967 became deeply concerned at the FCC's disinterest in the consequences of the proposed ABC-ITT merger; the result was the bizarre spectacle of the Department's entering a case called "The United States versus the FCC" as an opponent of a regulatory agency. Ultimately, the proposed merger was dropped.

Thus aroused, the Department then proceeded to enter into a number of other FCC deliberations: a Beaumont, Texas, newspaper owner tried to acquire a TV station in the city. Justice filed a pleading with the FCC saying that it did not believe the purchase should be approved, and asking the FCC to hold a hearing--incredibly enough, not necessarily an FCC practice in such a case--so that it could participate. After the FCC told the applicant that it intended to hold a hearing, the application was dropped. On another occasion, too, Justice felt that it had to prod the FCC into holding a hearing on a case of license renewal (usually a rubber-stamp procedure for the guardians of the public's airwaves). In this instance, the renewal was sought by Frontier Broadcasting, in Cheyenne, Wyoming, which owned the town's only two daily newspapers, its only television station, and its only CATV system. Justice further suggested to the FCC that the company should be ordered to divest some of these properties. The case is still before the agency. In 1963, the Gannett group bought a television station in Rockford, Illinois; in 1967, it bought the two newspapers. At the end of 1967, the FCC, as usual, renewed the TV license. Justice was so disturbed that one year later it obtained a consent decree in which Gannett agreed to divest itself of one or the other of its Rockford properties.

Despite these and other actions, the Justice Department under the Democratic Administration was less than breathtakingly vigorous in its antitrust pursuits. The new group at Justice has already shown that it would do more, in particular, against the rampant conglomerates. At this writing, a major conglomerate merger involving extensive communications holdings is pending at Justice: Metromedia with Transamerica, a $3 billion financial and real estate conglomerate. Conglomerates are unpopular in Washington these days; they have now come under the critical scrutiny of not only the Justice Department but also the Congress, the Federal Trade Commission, the Securities and Exchange Commission and even the FCC.

The FCC's signs of life in the question of media ownership have been caused by a variety of stimulants: the Justice challenges to it to do its job, the criticism of outsiders, court rulings, and the persistent efforts of Commissioners Johnson and Kenneth Cox, and some of the Commission staff. As a result, if there is follow-through, it has taken some initial steps which could be of long-range significance. Also of critical importance will be Mr. Nixon's choice of a successor to Commission Chairman Rosel Hyde, whose term runs out this June 30, and who is expected to retire.

In perhaps its most significant move--and the first of its kind--the Commission on January 23, 1969, voted to take Channel 5 in Boston away from the Boston Herald-Traveler, which also has CATV interests, and give it to an independent group which filed for the license. Since then, competing applications have been filed in the cases of a few other renewals.

In March, 1968, the Commission proposed a new rule to prohibit in the future any single entity from having an interest in more than one broadcasting property in a single community. In August, the Justice Department proposed that the rule be broadened to include consideration of ownership of a newspaper and broadcasting property in the same community, and asked the FCC to consider ordering divestiture of excessive interests when the broadcast license came up for renewal, as all do every three years. The ruling is now only under consideration, and it can take the FCC years to decide whether to issue such a policy, and then of course it can get overturned by Congress. Sometimes the Commission does not wait for Congress to vote to prevent its issuing a new rule; mere sounds of displeasure from important congressmen can be sufficient to persuade the Commission to retreat. As of now, comments on the new rule have been filed, and it is up to the Commission to act.

In late March, the Commission ordered hearings--that is, withheld routine approval--on the renewal applications for TV stations owned by the Chronicle Publishing Company in San Francisco, and by Midwest RadioTelevision, Inc., in Minneapolis, controlled in turn by two supposedly rival newspaper publishing groups, Cowles and Ridder. In San Francisco, there were questions of concentration of control raised before the Commission, but also charges that the television had "managed" news programs for the larger corporate benefit, in particular the coverage of newspaper strikes and consolidation of the newspaper business. In Minneapolis in addition to owner concentration, there was a charge to the Commission that the station had used its newspaper connections to secure radio broadcasting rights for professional sporting events in the area. At the same time, the Commission proposed a new rule which would make it substantially more difficult for the public to participate in license-renewal proceedings.

In 1967 and 1968, the Senate Antitrust and Monopoly Subcommittee, headed by Senator Philip A. Hart (Democrat, Michigan), held extensive hearings into the interlocking ownerships of the communications media, and its seven-volume transcript provides ample ammunition for opponents of the media barons. The takeoff point for the hearings was legislation introduced in Congress, the so-called "failing newspaper" bill, to permit joint operating agreements between a city's newspapers, one of which is deemed to be "failing." Under such agreements, the newspapers' owners might agree to fix advertising prices, and pool profits, and agree not to compete any further for circulation.

Hart's hearings were effective in killing off such legislation last year. In March of this year, the United States Supreme Court sustained an antitrust judgment against two Tucson, Arizona, newspapers which had established such "failing newspaper" joint operating agreements. The Court ruled that the "failing newspaper" doctrine could serve as a defense only if it could be shown that the paper was about to go out of business, and there was no other purchaser available. Forty-four newspapers in twenty-two other cities have joint operating agreements, a number of which could now be covered by the new decision. However, several congressmen rushed to introduce new bills to overturn that decision