Telecommunications Act of 1996:  Legalized Monopoly?

When the U.S. Congress passed the Telecommunications Act of 1996, it was simply following a recipe that has worked for the U.S. economy and others:  free-market capitalism and deregulation is good for what ails you.  As a result of this legislation, the U.S. radio landscape has changed drastically.  Clear Channel Communications and Viacom/Infinity Broadcasting have become the two dominant radio groups in the country.  Clear Channel Communications now owns a quarter of all the U.S. radio stations; its weekly audience reach is 110 million listeners in all 50 states.

The media is part business and part public service (despite the Federal Communications Commission rulings during the Reagan administration).  When it’s in the hands of a few large corporations, everybody pays the price eventually—this is where it becomes a First Amendment issue.  Three incidents served as wake-up calls to the general public and politicians.

Immediately after September 11, Clear Channel Communications allegedly issued a memo to its 1,200 stations suggesting that they avoid a list of 150 songs with references to death, bombs, fire, flying, New York, and so on (John Lennon’s “Imagine” was on the list of "songs of questionable content"—imagine that).  The company claimed the list, which singled out Rage Against the Machine's entire catalog, was compiled by one of its station programmers with no input from headquarters.  Regardless of the sequence of events, the corporate transformation of the radio industry was unmistakable.

The second warning came in January 2002.  Officials in Minot, N.D., were unable to reach local radio stations after midnight to warn residents about a train accident.  Six of the seven commercial stations—all Clear Channel Communications properties—were running automated programs with no operators around.  Unfortunately, few people noticed this incident because of the war on terrorism.

Then came the Dixie Chicks.  After their lead singer made a snide remark about President Bush in March 2003, Cumulus Media, one of the top 10 radio groups, decided to ban the country trio from all 42 of its country stations.  The Dixie Chicks became personas non grata on other country stations as well.  Their former No. 1 country hit “Travelin’ Soldier” (talk about irony) went from No. 3 to No. 31 in one week.  By March 21, 74 of the 148 country radio reporters showed no airplay on any Dixie Chicks song, according to Billboard magazine.  Their crossover hit “Landslide” (more irony) also experienced more than 40 percent decline in airplay on other formats such as mainstream top 40 (15-32), adult top 40 (3-13), and adult contemporary (1-11).

When the radio backlash erupted, sales of their six-month old Grammy-winning album, which had already sold close to 6 million copies, were down 42 percent, a considerably bigger drop than the expected 10 to 12 percent.  The lack of airplay probably hurt their record sales more than any kind of consumer boycott.

While controversial songs and artists have been pulled from playlists before (ask R. Kelly), the Dixie Chicks’ dramatic reversal of fortune must have set some record in the history of radio.  It’s one thing if this boycott was the result of a grass-roots campaign, but when censorship comes straight from the boardroom, it’s a reminder that the media is not just another business.  Some artists sympathetic to the Dixie Chicks were too afraid to speak out lest large radio groups target their records.

Artists should be prepared to face the music if they produce controversial work.  One of the Dixie Chicks’ earlier singles, 1999’s “Goodbye Earl,” proved too much for some country stations.  The distinction in 2003 is that Cumulus Media and other stations banished them because of a mild and inconsequential “political” statement.

You might feel the Dixie Chicks got what they deserved; however, the next target might be someone you agree with.  For example, some people tried unsuccessfully to get Dr. Laura off the air a few years ago.  In today’s radio market, it would only take one skittish corporation that owns a large number of news/talk stations to pull the plug on Dr. Laura (her show is safe for now since it is syndicated by a subsidiary of Clear Channel Communications).

The founder and chairman of Clear Channel Communications said in a Fortune magazine interview one month before the Dixie Chicks incident, “We’re not in the business of providing news and information.  We’re not in the business of providing well-researched music.  We’re simply in the business of selling our customers’ products.”  At least he was honest.  To this day, Cumulus Media remains unapologetic about its decision to censor the Dixie Chicks.  Radio and television companies should be mindful that the people own the airwaves—in spite of the FCC’s elimination of the Fairness Doctrine in 1987.

The specter of monopoly in radio is bad enough, and when free speech is jeopardized, it should be unacceptable to every American.  Perhaps that’s why the FCC faced fierce opposition from the public and an unlikely coalition of diverse political groups in June 2003 when it tried to further deregulate the television industry.

In light of the attempts to deregulate the media and the energy industry, we submit there are some things more important than free markets like keeping the lights on—and free speech and democracy.  Few people would argue for Keynesian-style social planning.  But even F.A. Hayek would agree that some government control might be necessary in certain cases.

With Clear Channel Communications becoming radio’s Microsoft and Cumulus Media thumbing its nose at the critics, some politicians are beginning to rethink deregulation.  Does Congress have the political will to overturn recent rulings by the FCC?  More importantly, will Congress correct what was done in 1996 (only 21 members voted against the Telecommunications Act then)?  Stay tuned.

 

Media Ownership Regulations
Time Line Milestones
1920 Licenses for radio stations
1934 Telecommunications Act of 1934
1941 TV stations reaching up to 35 % of national audience
UHF stations counted as half a station for ownership
1964 1 TV station per market unless there are at least 8 in the market (then only 1 rated in the top 4)
1970 Ban on owning a radio station and a TV station in the same market
1975 Ban on owning a newspaper and a TV station in the same market
Before 1984 Up to 14 radio stations nationwide (7 AM, 7 FM)
Up to 2 radio stations per market (1 AM, 1 FM)
Up to 7 TV stations nationwide
1984-1995 Beginning of deregulation
Removal of guidelines for amounts of non-entertainment programming and advertising (1985)
Removal of “public trustee” status and public service requirement (1987)
Up to 40 radio stations nationwide
1996 Telecommunications Act of 1996
Unlimited number of radio stations nationwide
Up to 8 radio stations per market
(number of Clear Channel Communications stations increases from 43 to 1,240 by 2003; Viacom/Infinity Broadcasting goes from 45 to 180)
2003 TV stations reaching up to 45 % of national audience
Lifting of newspaper/TV cross-ownership ban in markets with at least 9 stations
Up to 2 TV stations in mid-sized markets with 9 to 17 stations
Up to 3 TV stations in large markets with at least 18 stations (then only 1 rated in the top 4)

 

You may want to check out these nonpartisan sites for more information:

  • Center for Digital Democracy (democraticmedia.org)
  • Media Access Project (mediaaccess.org)
  • National Coalition Against Censorship (ncac.org)
  • Future of Music Coalition (futureofmusic.org)

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