For a generation, Barry Diller has been one of the largest of the larger-than-life characters on the U.S. media scene, with a spectacular and successful career running one after another of the giant corporations that have come to dominate the market.
HE WAS A SENIOR manager at ABC, went on to be chairman of Paramount, then chairman of Fox, which he launched and established as the fourth terrestrial network. Until recently he was chairman of the U.S. arm of the European conglomerate, Vivendi. He currently runs USA Interactive.
You might be forgiven for assuming that he would be the last person on the planet to have doubts about the benefits of consolidation and deregulation in the U.S. media industry. But you would be wrong — over the past few weeks he has emerged as his country’s most passionate and articulate critic of further relaxation of the rules.
While the media industry in Britain has been obsessed with the Communications Bill, an important debate about the structure of broadcasting has been taking place on the other side of the Atlantic. Next month, Michael Powell, the chairman of the Federal Communications Commission (FCC), the U.S. regulator, is expected to announce that he will abolish the last restrictions on media consolidation. He faces political opposition from some of his own Commissioners and from the Democrats on Capitol Hill — but Diller’s objections are probably the most damaging, coming from an industry insider.
In a series of speeches and interviews, he has been scathing about the consequences. He argues that there will be a return to oligopoly — where 30 years ago there were three channels dominated by three companies, now there will be five hundred channels dominated by four or five. The relaxation of rules in 1996 has led to the formation of giant, vertically integrated companies. This, he believes, has been a disaster for innovation and ideas.
Diller thinks it would now be impossible for an independent station owner like Ted Turner to launch a new service like CNN — the broadcasters would simply take ownership as the price of offering distribution. He says that the big players want to control every part of the production chain, commissioning programs from their own departments and then distributing them worldwide.
The result is that while 10 years ago, independent producers in Hollywood created 16 new television series a year, last year they were commissioned to make just one. Diller believes the independent production sector is dying on its feet and that quality is suffering. The conglomerates’ own in-house production departments are so far down the chain, he jokes, it’s a miracle that all the shows on air aren’t about rejection.
As well as program quality, regionalism is also under threat, as local broadcasters become little more than the distribution arms of monolithic companies. Diller sees the fate of radio in the U.S. as the canary down the mine. Under the old rules, the top two radio companies controlled 115 stations. They now own 1,400, often with lots of syndicated programming and little local content.
These criticisms of media consolidation in the U.S. come at the moment of truth for the Communications Bill, which is now going through its last stages of approval in the House of Lords. There is food for thought — and ammunition — for both the bill’s supporters and its critics.
For those who believe the British government has gone too far down the road of allowing consolidation and foreign ownership of UK broadcasting, Diller confirms their worst fears about both. The bill would permit U.S. media conglomerates to buy ITV and Five; it would allow the leading U.S. radio company, Clear Channel, to move into the UK radio market in a big way; it would almost certainly substantially reduce the current range of ownership in British broadcasting. The bill’s critics see a loss of plurality and diversity as well as program quality.
For the government, however, there is comfort in Barry Diller’s solution to the problem of over-mighty companies. He believes that what has gone wrong in the U.S. is not so much the emergence of large companies as the lack of effective regulation in the public interest. He argues that the process began in the Reagan era with Mark Fowler, then FCC president, who argued that the market alone should define the public interest; television, he once said, was just “a toaster with pictures”.
Last week’s Westminster Media Forum was one of the last chances to lobby the peers and MPs who, over the next couple of months, will have the final say on the bill. The culture secretary, Tessa Jowell, underlined the government’s belief that in the UK effective content regulation was the key to maintaining quality while allowing a commercial liberalization that would bring investment and competition. She believes this will protect the key areas of UK production, regional output and high quality impartial news.
It is now clear that the government will not willingly make any further significant concessions on the outstanding commercial issues. So U.S. companies will be free to buy ITV; Rupert Murdoch will be free to buy Five; ITV will not be allowed to own the whole of ITN. But there is no doubt that the emphasis on the role of the new regulator Ofcom in maintaining standards has been boosted during the process of parliamentary scrutiny.
The government is resisting a move in the Lords to insist that Ofcom always gives priority to the public interest ahead of commerce. But even the proposed Ofcom regime will be, in theory, far tighter and more effective regulation than the current U.S. system which has so disappointed Barry Diller. The challenge will be to put that theory into practice if greater competition puts pressure on the ability of UK broadcasters to invest in quality; and to deal effectively with some of the world’s biggest, most aggressive and litigious corporations. The Ofcom executives happily moving into their new offices and recruiting key staff are quick to remind you they are still a shadow regulator and therefore only in listening mode. But they know that for them this summer is the calm before the storm. |
