Who Owns the Media?

Richard Elam is bucking a trend. He is one of only four independent newspaper publishers along the entire Texas Gulf Coast, from Corpus Christi to the Louisiana line. For hundreds of miles, all the rest of the papers are owned by corporate chains.

In Texas, as in the rest of the region, newspapers and broadcast outlets are increasingly owned by vast media chains like Hearst, Scripps-Howard, and Gannett, as well as by smaller groups like Freedom Newspapers and Harte-Hanks Communications. In the face of such growing corporate control, Elam and his partner Fred Barbee have stubbornly held on to two small-town weeklies — the Wharton Journal-Spectator and the El Campo News-Leader.

It is not because they have no choice. “We have a standing offer” from a chain to buy the newspapers, Elam says. All he has to do is say “yes” and his papers would be gobbled up, too.

The trend toward group ownership is not new. In 1975, when Southern Exposure first looked at media ownership, 65 daily newspapers in Texas were group-owned. Today the number has grown to 72. Over the same period, group ownership of Texas television stations has nearly doubled, from 32 stations to 59.

Other Southern states differ only in degree. From Texas to West Virginia, more and more media outlets have fallen under the control of fewer and fewer corporations. Since 1975, the number of group-owned daily newspapers in the region has grown from 248 to 318 — an increase of 28 percent. The number of chain-owned TV stations has jumped from 126 to 244 — a leap of 94 percent.

Overall, corporate chains now own 70 percent of all daily papers and 54 percent of all television stations in the South. The top 20 corporations alone control more than half of all dailies and 10 percent of all TV stations in the region.

With large corporations in command of the media, industry observers say it should come as no surprise that most news and information is filtered through a probusiness perspective. The result has been a kinder, gentler treatment of corporate America by the media — and an increasing emphasis on making money over informing the public.

“There’s no question that most newspapers have become much more bottom-line oriented — even the ones we think of as quality newspapers,” William Winter of the American Press Institute told the Washington Journalism Review. “We hear a lot of editors talking about staffs being cut back. Editors are having to fight harder to get any kind of increase. All of this is the direct result of the corporatization of American journalism.”

 

Media Barons

Media barons have a long and potent history in the United States. From William Randolph Hearst and Joseph Pulitzer to S.I. Newhouse and Rupert Murdoch, powerful and sometimes ruthless men have started their own newspapers — or simply seized control of those started by others. Their rise began over a century ago, when trains and telegraphs liberated people from the confines of hometowns and created a greater need for news and information.

One of the first to see the money-making potential of the press was J.E. Scripps. In 1878, having turned the Detroit Evening News into a profitable business, Scripps quickly started up a second newspaper in Cleveland. Within two years the Scripps Publishing Co. owned eight newspapers from Buffalo to St. Louis.

John Knight, an Ohio investor, started a series of raids on Southern newspapers in 1937, when he took over the Miami Herald for $3 million. In a front-page column, Knight promised that the paper would serve the public, “uncontrolled by any group.”

But group control of the hometown newspaper is exactly what came to Miami, along with nearly every other city in the country. In 1900 the nation supported 2,042 daily newspapers and 2,023 publishers. Today there are only 1,650 dailies nationwide — and all but 300 are owned by corporate chains.

Indeed, five companies now control more than a third of all newspaper circulation nationwide. Among the modern media barons are Scripps-Howard and Knight-Ridder — the corporate descendants of the earliest entrepreneurs — as well as the Gannett, Newhouse, and Tribune companies.

Such media giants have not been content to merely increase their control of newspapers, however. In recent years, they have extended their reach to radio, television, and cable systems, and are now positioning themselves for the arrival of fiber-optic networks and high-definition television. Consider a few of the mega-deals of the past decade:

▼ Ted Turner, owner of the Atlanta-based Cable News Network and Super-Station WTBS, bought MGM/UA Entertainment in 1985. The studio deal — estimated at $1.5 billion — gave the media mogul what Newsweek magazine called a “diversified entertainment empire.” Turner also tried to take over CBS, but the network raised enough money to fend him off by selling subsidiaries and laying off hundreds of employees.

▼ The following year, Gannett — the largest owner of newspapers in the nation — bought the Louisville Times and Courier-Journal from the Bingham family, which had owned the papers for nearly seven decades. The combined circulation of the two dailies added another 300,000 readers to the Gannett empire.

▼ In 1986, General Electric absorbed RCA and its prize subsidiary NBC for $6.3 billion. For the first time in history, the deal placed the largest electronic media network in the nation under the direct control of a non-journalistic corporation — one that also happens to be the second-biggest supplier of the Pentagon.

▼ In 1989, Time, Inc. bought Warner Communications, Inc. for $9 billion. Overnight, the deal created the largest media and entertainment empire in the nation — a corporation that controls a movie studio, a television studio, 24 publications, 6.3 million cable subscribers, two book publishers, and the largest record company and pay-TV network in the nation.

The year-end deal startled even the most jaded observers, prompting worldwide concerns about corporate media control. “On that December afternoon,” wrote the Italian paper La Republicca, “a little piece of the legendary American press freedom died.”

 

Heading South

As such deals indicate, there has been a lucrative media explosion since Southern Exposure first surveyed regional ownership of newspapers and television stations in 1975. As the Southern population boomed and industry moved to the region in search of cheap labor and lax regulation, big media chains joined other Northern companies in their quest to profit from Southern markets. They have been aided by new technologies like computers and satellites, as well as by the deregulatory stance of the Reagan administration, which removed many barriers erected to prevent undue concentration of media ownership.

The media explosion was also fueled by the grandchildren of the 19th-century media barons, who began facing stiff taxes on their inheritances during the 1960s. To raise capital, they sold their newspapers to chains or allowed shares of their companies to be traded on stock markets. Because their newspapers had been privately held for generations, outsiders had never known exactly how much money was involved. But as soon as investors learned that pre-tax profits on many papers regularly top 30 percent, corporate buyers quickly entered the picture.

Nowhere has the rapid media growth been more apparent than in the South. Since 1975, the number of television stations in the region has nearly doubled, and Southern newspapers increased their numbers slightly as dailies elsewhere declined. From CNN in Atlanta to USA Today in Fairfax, Virginia, the region and its institutions have been at the center of the corporate struggle to reshape the media.

To better understand who is behind the changes, SE recreated its 1975 survey of media ownership in the region. The survey looked at every chain that owns television stations and daily newspapers in each of the 13 Southern states. Among the findings:

▼ In the past 17 years, the Canadian-based Thomson Newspapers has moved south in search of new markets, establishing itself as the owner of more Southern dailies than any other chain. Since 1975, Thomson has increased its string of newspapers in the region from eight to 33, including the Daily-Mail in Charleston, West Virginia.

Thomson, which now controls dailies in every Southern state except Tennessee, has long been among the most profitable — and the most ruthless — of newspaper chains. According to reporter Jonathan Kwitny, the late Lord Roy Thomson once remarked that he “began to get a twinge of conscience” that he was ill-serving a community only when his profit margins exceeded 40 percent. ▼ Although Thomson owns the most newspapers, it ranks eighth in overall circulation with 570,000 readers. Knight-Ridder is first with 1.6 million, followed by Gannett, Cox, the Tribune and New York Times chains, Scripps- Howard, and Newhouse.

▼ Newspaper ownership in Alabama, where 84 percent of all dailies are controlled by chains, is the most concentrated in the region. Chains also own more than three fourths of all daily papers in Florida, South Carolina, Texas, and Virginia.

▼ North Carolina experienced the most rapid rise of chain ownership in the region since 1975, with media groups more than doubling their control. Chains also increased their share of newspapers by 71 percent in Virginia, 67 percent in West Virginia, and 53 percent in Georgia.

▼ Never content to limit themselves to newspapers, media groups have nearly doubled the number of television stations in their Southern portfolios since 1975. The change has been most dramatic in Florida, where the number of chain-owned TV stations has soared from 14 to 33.

▼ Chains now own at least three TV stations in more than a dozen Southern cities, including Little Rock, Miami, Atlanta, Louisville, New Orleans, Jackson, Charlotte, Knoxville, Houston, Richmond, and Charleston, South Carolina. In Birmingham, all five channels are tuned to a chain: ABRY Communications owns WTTO, Park Communications owns WBMG, Great American Broadcasting owns WBRC, Krypton Broadcasting Group owns WABM, and Times Mirror owns WVTM.

▼ Many corporations now own both radio and television stations in several Southern states. Among the multimedia, multi-state owners is Adams Communications, which controls TV stations in West Virginia, Texas, North Carolina, and Tennessee, as well as radio stations in Texas and North Carolina.

Taxes and Technology

What is new and different about the modem media barons is the increasing variety and complexity of their empires. Knight-Ridder, for example, owns 30 newspapers, including a dozen in the South, as well as the massive Dialog information system of database files. Viacom Cable reaches 1.1 million cable subscribers nationwide and also owns four AM, 10 FM, and five television stations, including KSLA in Shreveport, Louisiana.

The Washington Post Co. owns two newspapers, Newsweek magazine, four television stations (including stations in Miami and Jacksonville), and cable television systems that reach half a million subscribers, including viewers in Gulfport, Mississippi and Sherman, Texas.

Perhaps the best example of the scope of the modem media empire is Capital Cities, which bought the ABC television network for $3.5 billion in 1986. The corporation delivers news and entertainment programming to more than 225 ABC affiliates across the country. In addition, Capital Cities owns and operates eight of those affiliates, including KTRK in Houston and WTVD in Durham, North Carolina, along with 21 radio stations. On top of that, Capital Cities owns a majority interest in the cable sports channel ESPN and holds substantial interests in cable programming services like Lifetime Cable and Arts & Entertainment. It sells home videos worldwide, owns the Ft. Worth Star-Telegram and seven other daily newspapers, and publishes 78 weekly newspapers and 42 shopping guides. No matter where readers and viewers turn, they are bound to encounter Cap Cities.

As media takeovers in the region have multiplied, the lines between the South and the rest of the nation have blurred. The hometown paper is likely to be owned by a global conglomerate like Cap Cities, while a homegrown entrepreneur like Ted Turner cashes in on the nationwide cable industry and the Virginia-based USA Today remakes the front pages of newspapers across the country. Southern media increasingly reflect the standards and practices of their national counterparts — and they increasingly help set those standards for the nation as a whole.

Not all the effects of such concentrated media ownership have been salutary, however. For Richard Elam, who has held on to his two weekly papers in Texas, the trend toward group ownership has meant unfair competition. Elam says group owners operate with economies of scale that make production more efficient and less costly. In addition, many chains use their far-flung networks of newspapers and TV stations to offer major retail chains more advertising for less money.

The flow of advertising dollars has also shifted as large retail chains — themselves group-owned — have moved into small Southern towns over the past decade. “The effect is to put some of the local retail merchants out of business and reduce the number of people who advertise in the newspaper,” says Elam.

Elam, who teaches media at the University of North Carolina, says group owners enjoyed a boost from new technologies like computers and the commercial offset press. Both innovations were costly at first, so only groups could afford them, but their impact has been widespread. Large chains used the technologies to eliminate people from the workforce and cut costs. “The International Typographic Union just disappeared,” Elam says.

Fewer jobs for workers has meant greater profits for owners. At a time when most major corporations count themselves lucky to collect 10 percent of their revenues as pre-tax profits, most daily newspaper publishers expect pre-tax profits as high as 40 percent. And how better to shelter those profits, Elam says, than by spending them to buy new media outlets?

“Federal tax rulings in recent years have encouraged a great number of newspaper corporations to buy other newspapers,” Elam says. “The government has essentially encouraged groups to spend their new profits or pay more taxes on them.”

 

“So Much Power”

Independent publishers are not the only ones hard hit by the increasing concentration of media ownership. According to Ben Bagdikian, author of The Media Monopoly and a professor at the University of California, the public has also felt the effects.

Bagdikian observes that the profit motive pushes media companies to shape information to attract the most appealing demographic audiences. “It is normal for all large businesses to make serious efforts to influence the news,” says Bagdikian. “Now they own most of the news media that they wish to influence.”

Like most large corporations, Bagdikian notes, media owners are geared toward short-term profits rather than long-term development. In the competition to expand their empires, he says, news executives are under pressure to “design the product to make quick cash flow.” The emphasis on profits accounts for “the remarkable sleepiness on the part of most of the news media during the Reagan years when all these political disasters were occurring and they simply didn’t get reported.”

Even industry leaders acknowledge that the slumping economy has made media owners bend over backwards to accommodate advertisers. According to McCann-Erickson Worldwide, 1990 was the worst year for newspaper advertising since 1961.

“Editors are tending to listen more to ad department concerns,” David Berry, past president of the Association of Newspaper Classified Advertising Managers, told the Washington Journalism Review. “We are all realizing it’s a hurting market. Why shoot ourselves in the foot?”

For the most part, the federal government has come to the aid of large media owners. Alfred Sikes, chair of the Federal Communications Commission, has not only loosened restrictions on the number of broadcast stations one company can own in a given market, he has also pushed to allow telephone companies to enter the field of video technology. Sikes and other advocates of deregulation are also working to hand over the lucrative field of high-definition TV to major corporations.

The media barons who emerge over the next decade are likely to control even more complex networks of television programming, pay-per-view services, interactive fiber-optic cable systems, computer services, cellular phones, and fax machines. Such advances in communication technology create all the more cause for concern about who will control such powerful resources. With a dwindling handful of media barons controlling nearly all the data and entertainment that travel by phone, cable, computer, and satellite, citizens who need diverse information to function effectively in a democracy are already increasingly limited to the transmissions of corporate media.

“In a country as large and as diverse as we are, it is dangerous for so few organizations to control so much power,” says Ben Bagdikian. “We all know how resistant news organizations are to bad news about themselves. With the media in the hands of a handful of corporations, how will the average person even know that a social problem exists?”