The Justice Department sent shock waves through the communications industry Monday by suing to block the merger between Time Warner and AT&T. For centuries, government policy has been geared toward nurturing and supporting media companies as they grew larger and more powerful. Now this long-standing political convention, like so many others in the past year, seems headed for extinction.
Opponents of the Justice Department’s move say it is politically motivated — that the Trump administration wants to punish its nemesis CNN, which Time Warner owns. The president denies that, but this month Justice Department officials reportedly said they would approve the merger if Time Warner were to sell off CNN.
Injecting politics into communications policy is nothing new. The difference is that in the past, politics and principle combined to make the American media remarkably rich and influential — for better or for worse.
The Founding Fathers were almost unanimous in their belief that the fledgling national government should subsidize the distribution of newspapers. George Washington wanted the U.S. Postal Service to deliver newspapers free of charge, deeming it essential that “a faithful representation of public proceedings [be] diffused without restraint throughout the United States.” The Post Office Act of 1792, for which Washington and James Madison advocated strongly, didn’t go that far, but it set rock-bottom mailing rates for newspapers, and Congress continued to reduce rates throughout the 19th century.
To be sure, the framers had the nation’s best interests at heart in subsidizing the press. But they also assumed that newspaper coverage of the national government would enhance its leaders’ popularity, as it had done during the American Revolution. To ensure positive coverage, Alexander Hamilton and Thomas Jefferson each bankrolled a newspaper that advanced their political interests.
Indeed, the 19th-century press was highly partisan, and many newspapers depended on government largesse to survive. Upon taking office, politicians rewarded the publishers who had supported them with contracts for printing reams of laws and regulations — a key component of the “spoils system.” That well dried up at the federal level when the Lincoln administration created the Government Printing Office in 1861, but printing contracts could still be had from state and local governments.
By the turn of the 20th century, journalism had become big business, and publishers no longer needed to take on printing jobs for the government or request ever-lower postal rates. Instead, they needed to control costs as their circulation grew, and their biggest costs were labor and newsprint.
Once again government swooped in to help. It exempted newsboys from child labor laws and in 1911, after intense lobbying by American publishers, Congress lifted the hefty tariff on Canadian newsprint (most newsprint came from Canada).
After radio and television came along, they reaped even greater benefits from government action. In exchange for relatively small licensing fees, they got the right to use a public resource — the airwaves — for private profit. Moreover, unlike broadcasting companies in most other countries, they did not have to compete with state-owned radio or TV programming, because until the launch of PBS and NPR in 1970, there was none.
By the end of World War II, big media companies had become so profitable that they had little need for new forms of direct assistance from the federal government (and had little chance of getting them). But the government continued to help in a more subtle way: allowing consolidation. Mergers cannot occur without the federal government’s blessing — and the government has blessed big media consistently through lax enforcement of antitrust laws.
For example, in 1962, the Justice Department approved a deal between two newspaper giants that should have raised numerous red flags. Times Mirror, the parent company of the Los Angeles Times, agreed to fold its struggling afternoon newspaper if the Hearst Corporation folded its struggling morning newspaper — leaving the L.A. Times with a monopoly on the morning market and Hearst’s Los Angeles Herald-Examiner with a monopoly on the afternoon market.
Even Richard Nixon, no friend of the press, supported granting it a major antitrust exemption. In 1970, he signed the Newspaper Preservation Act, which allowed two newspapers in the same area to combine their business operations while keeping their newsrooms separate. Although Nixon’s own Justice Department opposed the law, he got behind it after fielding personal appeals from supporters in the newspaper industry.
The long-term trend is even more telling. Between 1983 and 2004, as the journalist-scholar Ben Bagdikian documented, the number of companies controlling more than half of the country’s media assets shrunk from 50 to five. Media consolidation has continued apace in the years since, most notably with the merger between Comcast and NBCUniversal, which the Justice Department approved in 2011.
Politics has certainly influenced government support for the media — as it does nearly every choice that presidents and legislators make.
The more important question is whether these decisions benefit the public.
In some cases, the answer is simple. Subsidized postal delivery for newspapers in the 1800s helped build cohesive, well-informed, politically active communities. Exempting newsboys from child labor laws, by contrast, benefited only newspaper owners, who didn’t need the help and didn’t pass on the savings they earned by exploiting children to their customers.
In most instances however, it’s harder to determine when government intervention in the media business will serve the public interest. The AT&T-Time Warner merger is one such murky case. On one hand, media power is concentrated in so few hands already that any combination of two giants should give us pause. During the 2016 presidential campaign, both Donald Trump and Bernie Sanders opposed the deal because it represented too great a “concentration of power.”
On the other hand, it is a vertical-integration merger, meaning that the two companies are not in the same line of business: Time Warner creates content, AT&T distributes it. That could raise potential conflicts of interest, if AT&T were to favor Time Warner content (for instance, promoting HBO’s programming rather than Showtime’s), but the Justice Department could have imposed conditions on the deal to prohibit any such behavior, as it did with the Comcast-NBCUniversal merger. Six years on, that deal has had a negligible effect on consumers.
Two other major media decisions are pending in Washington. The Federal Communications Commission is deciding whether to allow the conservative Sinclair Broadcast Group — the nation’s largest owner of local TV stations — to acquire a major competitor, Tribune Media. And in the wake of the 2016 election, Congress is considering new regulations on Facebook, Google and others, to limit the spread of misinformation and foreign influence. Both should be easier calls.
Those who think it is desirable for the nation’s largest owner of TV stations, which promotes a blatantly partisan, conservative slant on the news, to become even bigger, will favor the Sinclair–Tribune merger — and the Republican-controlled FCC has loosened its rules so that the deal can go ahead. Those who disagree will not.
But for those who care deeply about the future of news, the most important decision confronting policymakers concerns the digital duopoly of Facebook and Google. The AT&T-Time Warner deal is primarily about entertainment media (and regardless of the lawsuit’s outcome, CNN will be fine). Sinclair’s reach is limited to local broadcast TV, which has an aging audience and waning influence. Facebook and Google, by contrast, are younger Americans’ leading sources for news, and their dominance in online traffic is exceeded only by their dominance in online advertising.
In part thanks to Democratic insistence, Congress is focused on how Russia used social media platforms to disrupt American politics. Its inquiry should expand to consider the more basic question of whether Facebook and Google have become too powerful. Despite their denials, they are media companies — the biggest media companies in American history, in fact. Challenging them would require true political courage and a willingness to break away from the policies of the past.