Media Diversity in Public and Commercial Broadcast Television

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COMMUNICATION POLICY AND PUBLIC INTERESTS:

MEDIA DIVERSITY IN PUBLIC AND COMMERCIAL BROADCAST TELEVISION

IN THE U.S.

Kim McCann

A Dissertation

Submitted to the Graduate College of Bowling Green State University in partial fulfillment of the requirements for the degree of

DOCTOR OF PHILOSOPHY

December 2007

Committee:

John J. Makay, Advisor

Bill O. Coggin Graduate Faculty Representative

Joseph Oliver Boyd-Barrette

Louisa Ha

Kim McCann

ABSTRACT

Promoting media diversity in a society is imperative for the social benefits that allow citizens to make informed decisions through exposure to a broad range of viewpoints. In spite of its significance, two major hindrances to media diversity identified so far are conceptual disagreement, that renders divergent approaches to the diversity analysis, and market forces, in which media are centered on a profit seeking mechanism.

Responding to these two major issues of media diversity, the study explored the policy effectiveness within the notion of the First Amendment conflict and assessed diversity in both the public and commercial broadcast television industries.

This study proposed the integrated theory of diversity, which could identify multi- indicators of the dimension of the diversity, such as source, content, and audience diversity; thus, it allowed assessment of the multi-levels within political and economic contexts. The application of the public sphere model helped establish public interest criteria and thus could provide more consistent policy goals in promoting media diversity. The structural conduct model allowed assessment of source diversity by identifying the relationship among the market structure of the broadcast television industry, product strategies, and diversity. The application of the public policy model and the program choice model allowed measurement of content diversity distinctively produced by both public and commercial broadcast television by identifying different programming strategies.

The analyses of the study provided three major substantial findings: 1) Conceptual disagreement of media diversity and ineffectiveness of the policies on media diversity largely stemmed from the FCC’s inconsistency in establishing public interest criteria. iv

This inconsistency hindered justification of any regulatory intervention to protect public interest and to effectively respond to market failure in terms of media diversity. 2) The diversity offered by public and commercial broadcast televisions was different in terms of programming strategies, types of programs produced, and both number of channels and diversity level offered. The critical variables influencing the diversity were a moral obligation to serve the public interest in public television and the economics of programming in commercial broadcast television. 3) The expressive function of media diversity, reflecting audience demand on media content, is problematic because it basically obeys a majoritarian rule that satisfies the immediate gratification of as many audiences as possible, and audience gratification in accessing ideas is rarely balanced, nor is it on the basis of rational demands.

ACKNOWLEDGMENTS

The following dissertation, while an individual work, benefited from the insights and direction of several people. Thanks are due first to my Dissertation Chair, Dr. John

Makay, for inspiring and mentoring me with his unlimited support, guidance, perspectives, and sense of humor. My sincere thanks go to Dr. Joseph Boyd-Barrette, who exemplifies the high quality scholarship to which I aspire, providing me insights that guided and challenged my thinking. The author extends sincere gratitude to Dr. Louisa

Ha, who inspired me to embark on the subject of the dissertation and provided me with instructive comments and evaluation that helped me clarify things related to my academic works. In addition, I wish to thank my outside committee member, Dr. Bill Coggin, who devoted time at the later stage of the dissertation process, yet helped me substantially improve the quality of the finished project. I might not have been able to make it without the support of each of these people. Lastly, I would like to thank my husband for providing me with the opportunity to gain this tremendous education and the necessary tools to succeed in life.

TABLE OF CONTENTS Page

ACKNOWLEDGMENTS ...... iiiv

ABSTRACT...... vi

LIST OF FIGURES...... viii

LIST OF TABLES...... ix

CHAPTER

1 BACKGROUND OF THE STUDY...... 1 Media Diversity and Central Issue...... 1 Open Communication System and the Public...... 2 Diversity Standards, Market Force, and Media Policy...... 3 Research Problems...... 5 Research Objectives and Questions...... 10 Significance of the Study...... 12 Organization of the Study...... 12

2 LITERATURE REVIEW...... 18 Media Diversity Approaches...... 18 Supply and Demand Viewpoints: Economic Approach...... 18 Source, Content, and Audience Diversity: Political Approach...... 20 Defining Media Content: Open and Reflective Diversity...... 22 The Impact of Market Forces on Diversity...... 25 Ownership and Content Distribution...... 25 Competition and Concentration in Broadcasting Media...... 26 Media Nature as Profit Maximizing Mechanism...... 28 Different Strategies of Public and Commercial Broadcasters...... 30 Regulation on Concentration...... 32 Policy Effectiveness ...... 35

3 THEORIES AND METHODOLOGIES...... 41 Theoretical Foundation...... 41 Social and Economic Theories...... 41 Proposed Theoretical Framework...... 49 Program Choice and Public Policy Model...... 49 Structure Conduct Performance Model...... 51 Public Sphere Model...... 55 Research Methodology...... 56 Qualitative Methodology...... 59 Quantitative Methodology...... 62

vii

4 FCC, POLICIES, AND MEDIA DIVERSITY...... 68 The Policy Goals and Diversity...... 69 Free market Competition Versus Regulation...... 69 The Government’s Role in Media Regulation,...... 73 Regulating Broadcasting: Establishing Public interest Standards...... 76 Media Policies and Diversity...... 78 Antitrust and Criteria: Regulations on Concentration...... 79 Early Broadcast Ownership Concerns and Issues...... 81 Multiple-Station Ownership Rules...... 83 Ownership Rules under Numerical Limits of Stations...... 83 Consideration of Economic Potentials...... 88 Telecommunication Act of 1996...... 92 Syndication Rules and PTAR...... 95

5 MEASURING DIVERSITY...... 107 The Structure of Broadcast Television Networks...... 107 Diversity in Public Television...... 110 The Impact of Policy Preferences on Ownership Structure...... 112 The Impact of Policy Preferences on Program Content...... 118 Concentration of Suppliers and Program Content Diversity...... 120 Diversity in Commercial Broadcast Television...... 125 Advertiser-Supported Mechanism and Market Concentration...... 126 Measuring Market Concentration...... 129 Measuring Program Content...... 137 Audience Diversity...... 144

6 FUTURE DIRECTION OF MEDIA DIVERSITY...... 151 Discussions and Suggestions...... 153 Policy Goals and Developing Public Interest Standards...... 154 Concentration and Competition in Distribution and Production Systems..... 158 Public Television and Promoting Quality Dimension of Diversity...... 161 Methodological Limitations...... 164

APPENDIX

A CORPORATE OWNERSHIP AND O&O STATIONS...... 168

B PUBLIC TELEVISION PROGRAMMING CONTENT...... 170

C PROGRAM CODES FOR COMMERCIAL BRODCAST TELEVISION...... 171

D COMMERCIAL NETWORK PRIME-TIME TYPES...... 172

REFERENCES...... 174

viii

LIST OF FIGURES Page Figure 2.1 Group Ownership of U.S. Television Stations. 1950-1980...... 19 3.1 Dimensions of Media Diversity...... 44 3.2 Assumptions of the Public Sphere and Market Models...... 47 3.3 The Relationship among Diversity, Policy, and Two Conceptual Paradigms...... 48 3.4 Market Structure Proposed by the Theory of the Firm...... 52 3.5 Typology of Market Structure...... 54 3.6 Proposed Theoretical Framework...... 57 3.7 Methodological Framework: Statistical index and indicators...... 58 5.1 Public Television Channels. 1960-1980...... 113 5.2 Diversity Index of Producer, Distributor, and Program Content in Public Television...... 122 5.3 Network Television Cost: Primetime, Daytime, Early Evening, and Late Evening (Cost per 30 sec). Constant Dollar Base (2007)...... 127 5.4 Herfindahl Index: Concentration based on Number of Affiliates Share by Commercial Television Broadcast Networks, and Non-Networks. 1950-1987...... 130 5.5 Herfindahl Index: Concentration based on Advertising Revenue Share by Commercial Broadcast Television. 1965-2003...... 131 5.6 Advertising Revenue for Commercial Broadcast Television by %. 1965-2003...... 132 5.7 Open and Reflective Diversity in Commercial Broadcast Television. 1965-2002...... 138 5.8 Program Types Supplied by Networks during Prime Time. 2000-2006...... 141 5.9 Herfindahl Index: Audience Diversity. 1965-2003...... 145 5.10 Channels Receivable vs. Viewed. 2005...... 149 6.1 The Integrated Theory of Media Diversity...... 152

LIST OF TABLES

Page Table 4.1 Group Ownership of U.S. Television Stations. 1950-1980...... 87 4.2 Group Ownership of U.S. Television Stations. 1950-1980...... 87 4.3 Group Ownership and Number of TV Groups. 1985-1995...... 89 4.4 VHF/UHF Educational and Commercial Channels. 1985-1995...... 90 4.5 Group Ownership and Number of TV Groups. 1997-2002...... 93 4.6 Four Major TV groups and Corporations Broadcasting in 2005...... 104 5.1 Federal Government Funding for Public Broadcasting Revenue. 1970-2000...... 115 5.2 Public Broadcasting Revenue by Public Television. 1999-2000...... 116 5.3 Public Television Producers and Distributors. 1974-1996...... 117 5.4 Public Television Programming Content by Categories...... 119 5.5 Leading Network Suppliers: Prime Time. 1970 & 1977 Share of Programming...... 134 5.6 Leading Network Suppliers: Prime Time. 1989, 1994, & 2002 Share of Programming...... 136 5.7 Average Network Rating. 1980-2005...... 143 5.8 Audience Rating of Program Content. 1965-2003...... 146 5.9 Number of Channels Available and Viewed in the Average U.S. Home...... 149

CHAPTER 1 BACKGROUND OF THE STUDY

Media diversity has been a central issue reinforced through a demand of media

serving public interest. In spite of its significant role in informing citizens with a wider

exposure to different viewpoints and facilitating the democratic process of citizens’ well-

politicized decisions, a sound guideline for media diversity studies has been lacking in

conceptual agreement, and accordingly, the standard of assessment. My project focuses

on these aspects and attempts to provide a better paradigm for a comprehensive

assessment of media diversity. The following addresses 1) the central issues of media

diversity, 2) the research problems, 3) the research objectives, 4) research questions of

the project, and 5) significance of the study.

Media Diversity and Central Issues

The critical interrelationship between media and democracy in a society has often been debated, primarily due to the presumption that media exercises a critical public role.

It is undeniable that the functions of media communication and media entities are all encompassing and the dominant force in a society. The pervasiveness of mass media in today’s world and its impact on our social life raise concern for the significance of media serving social and political duties; that is in part to provide a basis for citizens to be well politicized and actively participate in the democratic process. In this way, whether or not citizens take an active role in making democratic decisions largely hinges on issues of legitimacy of media and accountability for serving the public interest.

Consistent with the fundamental assumption of media’s essential dependence on a society (see McQuail, 1994 for the critical relationship between media and society), media serving public interest is enforced throughout a system that demands media 2 diversity. Media diversity, according to McQuail (1994), is one of the main issues connected to the principle of media performance that offers maximum diverse content to citizens. Promoting media diversity in a society is imperative for the following social benefits: first, it allows citizens to make informed decisions through exposure to a broad range of standpoints; second, it brings innovative ideas to forums of public debate while critically examining the established consensus; and third, it provides marginalized cultural groups an opportunity to sustain their distinctive identities in a larger society.

Therefore, the inquiries into media diversity relate to the contribution of media to the democratic public life with an effort to increase mutual understanding of conflicting social views (Croteau & Hoynes, 2006; McQuail, 1994; Van Cuilenburg, 1999). To clarify such a democratic function of media, McQuial (1992) states, “ Media diversity contributes to social order by promoting free expression of discontent or disagreement and by offering pathways to compromise” (p.144). Hence, media diversity valorizes the significance of media diversity in serving a vital role of democracy and also provides a sound reflection of public interest to achieve a mutual consensus of conflicting views in a society.

Open Communication System and the Public

The inquiry into media diversity has been forged within the principle of the First

Amendment with freedom as a key concept (Einstein, 2004; McQuail, 1994; Napoli,

1999a); that is, the utilization of an open communication system where diverse opinions are freely expressed and exchanged. Although achieving absolute freedom of public communication shouldn’t be the goal, due to respect for the “public good” of a society (or societal need), the expected freedom in a democratic society mainly concerns media 3 independence from the potential controls of those who are in power and influenced by political or economic interests. Media independence, therefore, functions to stimulate autonomous views including informed, substantive, unbiased, and innovative ideas in a society (Croteau & Hoynes, 2006; Einstein,; McChesney, 2004; McQuail, 1992 & 1994).

These roles of media are considered the key elements for media to fulfill a quality performance in terms of promoting diversity.

Diversity Standards, Market Force, and Media Policy

In fact, striving for media diversity is in part to request quality performance of media, which is mainly linked to the notion of providing social duties and serving the public interest. Although the quality dimension of media performance may seem abstract, it entails “the context of value” (Cavallin, 2000, p. 132), that is, “the ultimate objective of diversity studies.” The quality of diversity, in this way, manifests itself in media’s general responsibility that attempts to provide socially desirable content with a greater substance of cultural/social and political varieties (heterogeneous content) while avoiding duplication of content that only targets mainstream audiences and serves popular demands (homogenized content). In this effort, the quality performance of media can be interpreted as a requirement of media firms to serve social duties grounded in public interests over organizational interests. In other words, to meet diversity standards, media should encourage “independent thoughts and expressions,” “innovative content even if not popular,” and “participation through diverse information” which should be achieved within a self-governed media system. When media do not meet these standards, it is assumed that media diversity has failed. Consistent with the principle of media performance within the European Union (EU), these general standards of media diversity 4 clearly define the meaning of the heterogeneity of media content that meets these principles of media diversity (see Croteau & Hoynes, 2006; D’Haenens et al., 2005; Van

Cuilenburg, 2000 for the principle of media diversity).

Although media performance of promoting diversity should be achieved through media independency, and within a self-governed media system, this role of media has been rigorously contested by many scholars. The fundamental proposition of these inquires challenge whether the current media and media system meet the standards of media diversity. One identified major hindrance to media performance among scholars is the market force, suggesting the imminent need of recognizing the system of media centered on a profit seeking mechanism in the modern capitalist society (McChesney,

1997). The discernment of the impact of market forces on media diversity highlights the current criticisms and issues on media serving a public role in promoting media diversity.

Briefly, first, the media supply (ideas provided by media preferences) equivalent to audience demands (ideas reflecting audiences’ preferences) doesn’t necessarily summon societal standards for media diversity, and second, unregulated markets won’t necessarily formulate a media supply that suitably reflects audience’s demands (Brown, 1996;

D’Haenens et al., 2006). The first concern is related to the criticism of the commercialization of media because media maximizing audience demands on the basis of profit motives won’t necessarily produce socially desirable content. The second concern involves the critical role of the states and regulatory system to protect public interests because the media market is inherently amoral to meet public interest standards.

As scholarly attention is given to the emergent idea of media diversity, the studies have been largely conceptualized within the dimension of content diversity (e.g., program 5 type, format, or genre), source diversity (e.g., ownership and workforces), and access diversity (e.g., audiences’ access to media content) (see Napoli, 1999a, 1999b, & 2005).

The most widely studied focus of media diversity within electronic media, so far, has been the direct investigation on market concentration and competition in relation to content diversity; that is the study of the critical relationship between source and content diversity (e.g., Anderson; Dominick & Pearce; Hellman & Soramaki; Lin; Rothenbuhler

& Dominick; Van Cuilenberg; Van der Wurff, etc.). The dimension of source diversity is often tied to the issue of concentration in the media market, recognized as a major hindrance of media diversity. For that reason, the policy on media diversity in the electronic media has often focused on source diversity with the goal of achieving a plurality of sources (including both concentration of outlet and producer) in the media market environment, in order to ensure a diverse content of media. In this way, the policy, essentially involves government intervention in the media markets, mainly because the media policy established within the European Union (EU) demands media to produce freedoms of communication, media access, and media diversity in their markets

(D’Haenens et al., 2005). If media do not fulfill these demands, it is assumed to be market failure, which essentially justifies regulatory intervention to promote diversity in the media market.

Research Problems

Responding to the current issues and criticisms on media diversity explained above, this project mainly focuses on the impact of the market force on media diversity with its relationship to media policy. The major problems that formulate the purpose of this project are insufficient reviews on 1) whether ensuring the plurality of source under 6

close investigation of market concentration will promise content diversity; thus, source

diversity should be the major foci in developing a coherent body of current media policy;

2) whether developing consistent public interest criteria, the fundamental underpinning of

the diversity standards, will be necessary for implementing adequate policy on media

diversity; and 3) whether divergent approaches to media diversity limit a comprehensive assessment of media diversity.

Regarding the first problem, as previous research has evidenced, the relationship between concentration and content diversity hasn’t been explicitly explained due to the contradictory outcomes of the research. These contradictory outcomes subsequently obfusticate the development of the conceptual paradigm of media diversity as well as a clear direction for implementing media policy. The current suggestion of the media diversity study, the need for a close investigation on contradictory results with an inquiry of various determinant factors for media diversity (see D’Haenens, 2005; Hellman;

2001), mainly corresponds to the concern explained above. The several issues debated within the study, relating to these concerns, were the ineffectiveness of media policy that ignores a specific market condition, and the insufficient examination of source diversity that focuses on a plurality of sources with a lack of concern for market power (see

D’Haenens, 2005; Einstein, 2004a; Napoli, 1999a). Source diversity should entail the assessment of market force in the media environment considering both a high concentration of outlet (e.g., insufficient numbers of media channels) and market power

(e.g., monopolistic control on the basis of market share) in assessing media diversity.

This will challenge the general assumption that plurality of source is a major determinant of maximizing diverse content, or is sufficient enough to explain the critical relationship 7 between source and content diversity. Although ensuring plurality of source is a necessary condition for media diversity, market power based on market shares, and its impact on different market conditions should be additionally investigated in relation to the policy goals for developing a comprehensive assessment of media diversity.

The second problem relates to the inconsistency of developing public interest criteria. Recently, the public interest standards are defined by consumerist values (Van

Cuilenburg & McQuail, 2003) rather than societal values. The ideological shift from collective authority (public sector) to market individualism (private sector) along with the deregulation climate undermines the states’ role to protect public interests. However, several media scholars (e.g., Croteau & Hoynes, 2006; McChesney, 1997; McQuail,

1994, etc.) addressed the critical role of the states and regulatory system to protect public interests because the media market is inherently amoral in meeting public interest standards.

The last problem stems from the divergent approaches to media diversity proposing different standards of assessment as well as media policies relevant to media diversity. Within the EU, market concentration involves the “supply point of view” and

“demand point of view.” The supply viewpoint assesses ownership and editorial concentration in relation to content of media, whereas the demand viewpoint measures audiences’ preferences of ideas and opinions (D’Haenens et al., 2005). In other words, the supply viewpoint emphasizes a critical function of media where content diversity should be achieved through media supplying diverse content for citizens. On the other hand, the demand viewpoint emphasizes an expressive function of media where content diversity should be achieved thorough media reflecting audience demands on media 8 content. These two approaches inherently generate a different direction of media policy either on “regulation” or “free market competition” in achieving media diversity. In general, market proponents stemming from the economic function of media believe that diversity is achieved through free market competition without regulation because the media market will satisfy audiences’ demands for their profit seeking mechanism. In this way, the efficiency of the market system will promise to create diverse voices in society.

However, social scientists stemming from the social function of media believe that intervention is necessary for media diversity to meet the standards of societal needs because media are public resources that should inform citizens helping them to be well politicized and capable of making informed decisions (Einstein, 2004a; McChesney,

1997).

The unparallel approaches, inconsistency of developing public interest criteria, and different outcomes of the impact of market concentration all together challenge the unified assumption of media diversity previously used, and address the imminent need for more flexible, yet coherent standards of media diversity. The current underlying issues on media diversity, which formulate the research questions are first, both regulation policy and market competition have the “law of diminishing return” that requires an optimum balance otherwise it becomes detrimental rather than beneficial

(D’Haenens et al., 2005). For example, although a certain degree of competition is vital to promote diversity (necessity of a certain degree of pluralistic media outlet), excessive competition can be as harmful as a monopoly. Second, an active role of the states to protect the public interest, which necessitates justification of regulatory system, should be achieved though developing consistent public interest criteria that can serve as the 9 yardstick in measuring democratic performance of media diversity. Therefore, media diversity should be defined as “central elements of a healthy public sphere” (Croteau &

Hoynes, 2006, P. 16). The literature building on Habermas’s work on the public sphere has argued that mass media should contribute to democratic processes not by targeting potential consumers but by serving citizens; thus, the media system is central to the constitution of citizenship. As Croteau and Hoynes (2006) state, media are citizen resources, not mere consumer products because the products of media are cultural and political goods, distinguished from many other goods. Therefore, the current public interest criteria defined by consumerist values should be redefined with an effort to constitute citizenship. In this effort, the justification of the regulatory system to protect public interests is critical because media market with a profit-seeking goal tends to be amoral to constitute citizenship (see Croteau & Hoynes, 2006; McChesney, 1997). Third, a rigid application of the one sided approach either on supply or demand, might fail to interpret the impact of market concentration in different market conditions, including both cost structures (supply) and audiences’ expression (demand). When assessment focused on the supply perspective, it only measures ownership and outlet concentration whereas if the focus is on the demand perspective, then, its measurement is limited to audiences’ choices. In other words, combining supply and demand viewpoints reflecting both open and reflective diversity appears to be an ideal assessment of media diversity in terms of the democratic function of media. Finally, the outcomes of concentration and competition strategies largely depend on media organization types (e.g., public or commercial broadcasters) in the media industry (Baker, 2001; D’Haenens et al., 2005).

Thus, the assessment of media diversity requires a more sophisticated and specified 10 measurement, suited to each of the different media market conditions. Brown (1996) addresses the importance of acknowledging distinctive broadcaster types in assessing the impact of the market force on media diversity. He states that public broadcasters may have more intention to provide quality content with elitist programming, yet may be less attractive to larger audiences than commercial broadcasters who aim for profit maximization (referred in Haenens et al., 2005). Hence, different types of broadcasters can initially have different motivations in offering content, which in turn validates the need for an individual assessment of media diversity in different broadcastings.

Recapitulating the foci addressed by the central issues of media diversity, the impact of market forces on media diversity essentially entails a more flexible approach suited to different market conditions as well as organization types.

Research Objectives and Questions

Responding to the central issues of media diversity, my project primarily focuses on the impact of the market force on media diversity in the context of political economy.

More specifically, the project closely investigates the critical relationship between broadcasting policy and media diversity, and measures media market concentration in relation to content diversity in the U.S. broadcast television industry. The rationale for choosing the television broadcast industry is based on the assumption that broadcast television, although new media are widely available, still plays a significant role as being the primary source of news and entertainment in the U.S. (FCC, 1996). Another rationale for choosing the television industry relates to the fact that television is the leading medium subjected by commercialization in the U.S. According to Universal McCann

U.S. advertising report (2005), television has been the top medium for advertising 11 volume among other media outlets. Since my project deals with the market concentration effects on media diversity, the broadcast television market which is often influenced by advertiser- supported mechanism in serving media diversity, would offer me a condition for market analysis.

To achieve the goal of the study, the project takes both supply and demand viewpoints into account in approaching media diversity in commercial broadcast television, and discretely measures media diversity in both public and commercial broadcast television. In this effort, the ultimate purpose of the project is to suggest comprehensive standards of media diversity assessment for a more adequate implementation of media policy suited to today’s complex media market. With the primary inquiry of market concentration in the current U.S. broadcast television industry, the key research questions the project addresses are as follows:

• What role do current broadcasting polices play in media’s current tendency

toward concentration in the U.S. broadcast television market? Do they

hinder/or facilitate media diversity?

• Can developing consistent public interest standards make justification of a

regulatory system and active role of the state to promote media diversity?

• How does media market concentration influence media diversity in different

types of broadcast television in the U.S. (e.g., public and commercial

broadcast television)?

• How does public television differ from commercial television in terms of

serving diversity? 12

• Can the application of the mix of both supply and demand viewpoints to the

diversity assessment satisfy the needs for improvement of the conceptual

framework in a specific media market condition, thus provide grounds for an

adequate implementation of media policy?

Significance of the Study

As my study attempts to respond to the criticism of recent diversity problems raised, it can contribute to a specific significance in the media diversity field. First, with an in-depth analysis of diversity policy goals within the Fist Amendment issue, it explicates the long-term conflict of the notion, a key factor of convoluting media policy as well as media diversity approaches. Therefore, it can possibly provide a clearer guideline for establishing public interest standards, and accordingly, diversity policy objectives which have been suffering from an insufficient review of the First Amendment conflict. Second, with the employment of multimeasure methodologies that allow an assessment of the interrelationship between source, content, and audience diversity, in conjunction with the combination of both supply and demand viewpoints, it can provide a more sophisticated assessment of media diversity. The demand perspective is particularly useful in assessing the diversity of the commercial broadcast television industry, which obeys the economic formula for satisfying audience demands. Media diversity, as

Hellman (2001) points out, is a multidimensional concept that wouldn’t be sufficiently measured by a single method. The overall measure of media diversity should reflect all possible dimensions of media diversity that include influential indicators, such as source and audience diversity, but also how these indicators influence program content (content diversity) that is measured by supply and demand viewpoints. Although, the ultimate goal 13

of media diversity is to achieve diverse media content, analyzing critical relationship

them is equally important to explicate compounding effects of diversity, produced

interdependently. Third, the study can provide useful answers for the rising concern of

reduced-quality programming in commercial broadcast television. The study

distinguishes the diversity objectives between public and commercial broadcast

television, to provide an answer for whether the distinctive nature of each market will

generate a different dimension of media diversity. Thus, it identifies specific motivational

goals or driving forces in the production of programs in each of public and commercial

broadcast television. The attempt to analyze the distinctive nature of each public and

commercial broadcast television will certainly be useful if public broadcasting is proven

to be a factor for increasing the quality programming; which means, sustaining the

presence of public broadcasting which is somewhat free from external market forces, can

be the one possible solution for promoting the quality dimension of media diversity.

Organization of the Study

In brief, the areas covered in the project mainly attempt to answer the research

questions stated above; they are 1) the relationship between media policy and the current

U.S. broadcast television market structure 2) the influences of market concentration in

commercial broadcast TV, and the particular political preferences in public television

based on program content, and 3) the justification of the proposed assessment of media

diversity to the implication of media policy for a future study of media diversity.

Chapter 1: Background of the Media Diversity Study

Chapter 1 addresses the background of the study, which provides a general map

for the project focus. It addresses the central issues of media diversity, which explains the 14 significance of the study, and in turn formulates the research problems. In this chapter, research questions along with research objectives are stated. At the end of the chapter, the organization of the study, accompanied with a brief summary of each chapter, is introduced to clarify the highlight of the study investigated and examined throughout the project.

Chapter 2: Literature Review

Chapter 2 provides a literature review including different approaches to the logic of the market concentration model in broadcasting markets, and research outcomes that measured the relationship between concentration and content diversity. The comprehensive analysis on the raised issues and problems taken from the previous studies are thoroughly examined in terms of media diversity. The impact of market forces, identified indicators of hindrances to media diversity, different strategic concentration in different market conditions, and changing policy objectives in terms of media diversity are addressed in order to provide a comprehensive understanding of media diversity and its foci.

Chapter 3: Theoretical and Methodological Frameworks

Chapter 3 examines the theoretical and methodological foundations of media diversity. Throughout the analysis of existing theories, and practiced methodologies, it also provides a theoretical and methodological framework for the project. In addressing the conceptual development of media diversity, the widely accepted concepts of media diversity, such as open diversity, and reflective diversity, are explained for illustrating the principles of social and economic theories used in media conceptualization and assessments. It also provides justification for integrating the standpoint of both open and 15 reflective diversity in defining media diversity because each model has its own limited approach when applied solely to the assessment of media diversity in the current complex media market condition. In this effort, various models relevant to media diversity grounded in each of social and economic theories are reviewed and examined so as to develop the proposed conceptual framework and methodologies for this study. This attempt is to justify media serving public duties over organizational interests in promoting media diversity that should be conceptualized within a firm establishment of public interest standards.

Chapter 4: FCC, Policies and Media Diversity

Chapter 4 is an overview of current media policies relevant to media diversity and their influence on market concentration in U.S. broadcasting. Key media policies, largely implemented by the Federal Communications Commission (FCC), on creating media diversity are also reviewed and interpreted to explain the policy objectives and effectiveness. This effort seeks to learn what public interest standards have been applied in terms of media diversity policies, and what way the policies that shape the broadcast television market system, promote/hinder media diversity. The effectiveness of media policies on diversity is examined and discussed with an inquiry into the conflicting views of the First Amendment in terms of regulation and free market competition. This attempt is to illustrate whether an active role of government promoting media diversity can be made justifiable. Moreover, it attempts to validate the critical relationship between source diversity and content diversity by addressing the significance of investigating source diversity accompanied with relevant media policies in studying media diversity. 16

Chapter 5: Measuring Diversity

Chapter 5 assesses media diversity in the commercial and public broadcast television industry. The different motivational factors influencing programming are addressed and analyzed in each of commercial and public broadcast television. The level of market concentration in terms of advertising revenue, political preferences, and audience preferences are examined in relationship to program content offered by both public and commercial broadcast television networks. The structural inequality (market share), the efficiency of competition (plurality of outlet), and audience ranking are thoroughly examined in response to economic motivation of the commercial television industry while the ownership structure (distributors, and producers), and program content influenced by political shifts are examined in response to the political motivation of government. Lastly, content diversity in each of commercial and public broadcast television is comparatively examined. This attempt is to address the need of developing a more sophisticated approach in identifying determinant factors of program content when applied to different types of broadcast television for the diversity analysis.

Chapter 6: Future Direction of Media Diversity:

Chapter 6 provides the future direction of media diversity in terms of communication policy, areas of focus, and methodological issues, guided by the findings of the study. It suggests how communication policy on media diversity should be achieved, and how regulatory concepts should be defined in response to the outcomes of the study. It addresses that the presence of public television can be a significant alternative to commercial broadcast television in achieving the quality dimension of media diversity. The methodological shortcomings, observed throughout the study, are 17 discussed as a means of suggesting a better way of validating the assumptions proposed within media diversity studies.

CHAPTER 2 LITERATURE REVIEW

Media Diversity Approaches

Supply and Demand Viewpoints: Economic Approach

Media diversity has been widely studied within the notion of media serving the public interest. The common inquires of diversity performance analysis rest on two divergent approaches of media diversity; that are supply and demand viewpoints with different implications developed mainly from economic law (see Brown 1996; Van

Culenburg, 2000; Van der Wurff, 2004a & 2004b). The goal of achieving pluralistic supplies (supply viewpoint) and expressing audiences’ demands (demand viewpoint), if we choose to reflect only one over the other, may have a limited manifestation of media diversity for the following reasons. First of all, even if it is essential to provide various programs (content diversity) ensured by pluralistic suppliers (source diversity) with regulatory control, it is uncertain whether audiences will consume (audience diversity) all the content provided. The effort to provide various programs would be meaningful only if audiences watch them. According to Media Info Center (2006), after reaching the 50- channel level, there is no significant increase in the number of viewed channels even if the average of receivable channels is continually increasing. A similar law applies to the expression of the audiences’ demands. When audiences’ demands are fully reflected in media content, the content does not necessarily meet the standard of diversity requirement because popular demand often relates to the mainstream rather than to the mix of both mainstream and minority that is the tendency toward homogeneous rather than heterogeneous demands. Since both supply and demand viewpoints have their own important standpoints, choosing only one over the other would potentially limit the 19 assessment of the overall effects of media diversity. Figure 1 represents the summary of supply and demand approaches.

Figure 2.1 Supply and Demand Approaches to Media Diversity

Diversity of supply Diversity of Demand

Media diverse supply of content (supply) Audience diverse demand for content (consumption) Diversity as assent Diversity as received

Heterogeneity of program types made Heterogeneity of program types audiences available by broadcasters view Measure ownership concentration, editorial Measure audience preferences plurality, and content diversity

Heterogeneity of content, in general refers to the difference in terms of “one or more specified characteristics” (Van Cuilenburg, 2000, p. 52) or “one or more relevant dimensions” (Van der Wurff, 2004b, p. 216). For example, when media allow citizens to have a wide range of choices in both format and content by providing different kinds of programming, and the extent to which media provide different political orientations or cultural traditions, then, the heterogeneity of content is expressed in media (see Croteau

& Hoynes, 2006; McQuail, 1993; Van Cuilienburg, 2000; Van der Wurff, 2004b). Since both supply and demand viewpoints are equally important, yet opposite approaches to media diversity, developing a new concept of media diversity, viewing supply and demand viewpoints as inclusive rather than competing, can guide a better paradigm for the adequate implementation of the policy. In fact, some current European scholars have developed a new model that reflects this issue. For example, Van Cuilenburg suggested a model that measures media market concentration applying both supply and demand sides

(D’Haenens et al., 2005). This conceptual model allows for not only an evaluation of the 20 effects of ownership concentration on editorial plurality (channel and title plurality) and on media content diversity (program type and genre), but also an analysis of the degree of content diversity reflecting both media supply and demand (D’Haenens et al., 2005).

Source, Content, and Audience Diversity: Political Approach

Similarly, Napoli (1997, 1999a, 1999b, & 2005) also provides a principle of media diversity that is comprised of three major components, source (e.g., ownership of outlet and content, and workforce), content (e.g., program or genre), and access diversity

(audiences’ consumptions or choices). His distinction between source diversity and access diversity is analogous to the relationship between supply and demand viewpoints, where source diversity reflects the supply viewpoint and access diversity reflects the demand point of view. However, he takes a further interrogation on source diversity

(ownership diversity) with serious political implications and their impact on content diversity. With this effort, he provides a critical role of the policy on source diversity, and its implications in promoting content diversity, taking a further interrogation of the political approach to media diversity. He also attempts to connect audience centrality to the diversity issue, arguing that source diversity and audience access are integral parts of media diversity closely related to the freedom of expression. Although his conceptual framework proposing audience diversity as central to promoting media diversity is very useful in media diversity studies, the relationship between content and audience diversity hasn’t been empirically tested yet.

Napoli’s conceptualization of source diversity, particularly ownership of outlet and content, is especially useful for examining the critical relationship between source diversity and diversity policy as well as the effectiveness of the policy because his 21 specification of source diversity is based on the analysis of how policy makers have used these characteristics to change media content. Hence, his further specifications of source diversity can help to evaluate the effectiveness of the policy goals relevant to broadcasting ownership rules; thus, it is certainly useful in providing a more comprehensive theoretical paradigm for the adequate implementation of the policy on media diversity.

In detail, source diversity in his diversity principle is characterized as ownership diversity, and workforce diversity-- here I will detail ownership diversity, which is closely related to my project. Ownership diversity contains subcomponents, content ownership (related to programming production), and outlet ownership (related to distribution). Although separation of content ownership from outlet ownership is somewhat difficult since they often operate mutually inclusive, it is also true that there are multiple levels within these two categories (Napoli, 1999a). For example, the assessment of ownership diversity in cable television entails both the outlet ownership and content ownership because the owners of cable systems are outlets (distribution outlets) at the first level, yet the cable systems additionally carry individual cable channels (content ownership) at the second level, which can produce content. Owners of cable systems (outlets), in this way, can actively control sources of programming (content ownership) that receives distribution. In other words, the availability of content ownership (program ownership) is decided by the ownership outlet (the owner of the distribution outlets). This explains why the FCC traditionally focuses on the final distribution process as concerning source diversity (Napoli, 1999a). Similarly, in the current broadcast television industry, ownership of distribution and production systems 22 are even more convoluted due to the increase of vertical integration, stimulated by the deregulation climate during the 1980s and 1990s. Vertical integration allows television networks (distributors) to control production; thus, they become programming producers as well. Therefore, Napoli’s conceptualization on source diversity will be very useful in examining such complex ownership structures of the broadcast television industry in terms of the policy implications, and their effectiveness. In my study, source diversity refers to ownership of both outlet and content.

Defining Media Content: Open and Reflective Diversity

While the investigation of supply (source of media supply) and demand (audience preferences) viewpoint diversity relates to the attempt to find “influential indicators” of media diversity, measuring content diversity is a “direct evaluation” of media diversity resulting from particular goals of media. Therefore, achieving content diversity directly refers to the ultimate goal of media diversity; that is, the heterogeneity of media content.

In other words, the approaches of supply and demand viewpoints concern how supply of content or demand of content will determine media content while open and reflective diversity are evaluative dimensions of media content. This means that the approaches of supply and demand perspectives render themselves to the measurement of open and reflective diversity on media content.

Open and reflective diversity measure the performance of media reflected on media content in terms of whether the supply matches the types of demand. When program types (media content) fairly match the economic norm (e.g., supply matches population demand-bottom up approach), the degree of reflective diversity is high whereas the program types follow communication norms (e.g., supply matches normative 23 values and minority beliefs, which media should be thought-provoking and objective), then the degree of open diversity is high (see Van Cuilenburg, 2000; Van der Wurff,

2004a). When media content is defined by media’s expression of different ideas in the same proportion with regard for audience preferences, then, media will be reflectively diverse. Justification of reflective diversity stems from the emphasis on users’ media choice, and their actual consumption of media because diversity of content supplied would be meaningful only if audiences actually watch them. On the other hand, when broadcasters attempt to provide various program types in equal proportions and offer the access for reasonable ideas regardless of public support, then media content is openly diverse (Van Cuilenburg, 2000).

Open diversity extends to the dimension that is a “balanced combination of programs including specific proportions of cultural, educational, and informative programs,” (Van der Wurff, 2004a, p. 139). The concern for applying open diversity in measuring content is closely connected to the quality of programming that is essential to the fabric of diversity concept. In the international research on media program, diversity in programming (diversity as supply) is considered as a critical dimension of the concept of quality programming (Hillve et al., 1997). Particularly, in European countries, public service broadcasting contributes a major role in maintaining open diversity rather than commercial broadcasting (Hellman & Sauri, 1994; Hillve et al., 1997; Williams, 1974).

Providing open diversity is lawfully required in European countries. Although the core assumption has been made as stated above, Hellman and Sauri (1994) note that the current studies on public service broadcasting have challenged the role of public broadcasting in maintaining open diversity. The studies claim that the purpose of public 24 broadcasting has changed to entertaining, commercial, and even transnational which resulted from increased competition. However, the opposite claim is also valid, proposing that structures of public broadcasting in Western Europe are quite stable rather than changeable; thus, they still largely sustain to provide open diversity against the tendency toward the convergence between the public and commercial sectors. Van der Wurff’s

(2004a) study on this aspect substantiated the significance of public channels in increasing the degree of open diversity. The current debates on the role of public broadcasting are significant because they suggest the critical analysis of the impact of the market force on media performing a public role of providing media diversity, and whether to determine the need of increasing public broadcasting in promoting the quality dimension of media diversity.

With the concern for emphasizing the complementary function of open and reflective diversity, currently the industrial organization model (IO) has been employed to produce an optimum balance between them (e.g., Van der Wurff, 2001). The core assumption of this model is that media diversity will be best performed when open and reflective diversity are well balanced in media content. Since the economic principle of reflective diversity and critical principle of open diversity are respectively significant, and have necessary goals in communication policy, open and reflective diversity shouldn’t be competing (see Van Cuilenburg in D’Haenens, 2005; Van der Wurff, 2001).

Moreover, the industrial organization model is useful to analyze both the rationale of media industrial actions, particularly in today’s complex media market environment, and broadcasters’ adaptation of different strategies depending on their specific market conditions. 25

The Impact of Market Forces on Diversity

Ownership and Content Distribution

Media diversity and policy mainly revolve around the market forces in the media

industry because a concentration of media ownership is often recognized as a potential

threat to democracy and accordingly in promoting media diversity (D’ Haenes et al.,

2005; Machesney, 1998; Van Cuilenburg, 2005; Van der Wurff & Van Cuilenburg, 2001,

etc.). The relationship between media policy on ownership concentration and media

diversity can be explained by the assumption of the political economy studies positing

that ownership support mechanisms (e.g., advertisement), and media polices are the

major influential factors for media behavior and content (McChesney, 1996). More

importantly, concentrated market structure grounded in the “market share” for media

seeking profit maximization can potentially hinder overall media diversity (Albarran,

2002; Gomery, 1993; Van Cuilenburg, 2000).

Napoli (1999a) further addresses the role of source in content distribution stating,

“ outlets are active programmers who may favor certain program owners over the

others…to a large degree the available diversity in program ownership rests with the

decisions made by the owners of the distribution outlet” (p.12). Many scholars (e.g.,

Bagdikian, Compaine, Nopoli, Sterling, etc.), indeed, have empirically assessed source diversity addressing its central role in promoting media diversity. The emphasis of the critical relationship between source and content diversity helps explain the justification of

media policy focusing on source diversity in promoting media diversity in order to

control the distribution of program content: that is the consideration of source diversity as

a major determinant factor, and being active in shaping types of content. 26

Competition and Concentration in Broadcasting Media

Media markets essentially have a penchant for a concentration due to media seeking profit maximization. Following this assumption, many media scholars have assessed competition and concentration in relation to media content to determine the interrelationship between concentration (competition) and content diversity. The proposed hypotheses of media diversity within the media market environment briefly encompasses, first, more or less competition contributes to greater diversity (Litman,

1979; Van der Wurff & Van Cuilenburg, 2001), and second, market concentration either reduces or increases diversity (Albarran & Mierzejewska, 2004; Dominick, & Pearce,

1976; Hellman & Soramak, 1985; Rothenbuhler & Dominick, 1982).

Since the 1980s, competition in the media market has been the area of focus for regulation by European governments (Van der Wurff & Van Cuilenburg, 2000).

Competition for diversity, as two major divergent approaches to media diversity stated earlier, involves “competition for diversity of supply,” and “competition for a diversity of demands.” One party responding to the competition for diversity of demand (or consumption) proposed that increasing competition would promote greater diversity because media markets will efficiently respond to audiences’ demands. The other party responding to the competition for diversity of supply argues that competition will result in reduced quality, and duplication of content. Regardless of the opposing views, most studies investigating the impact of competition on diversity have so far focused on diversity of supply rather than diversity of demand (Van der Wurff, 2004b).

The competition for diversity of supply assumes that a fair degree of competition between program suppliers is vital to ensure diverse content which audiences can choose 27 from. However, some increasing arguments concern a diminishing return of competition, in which the goal is not to maximize the degree of competition, but to achieve an optimum degree of competition. Not only the degree of competition is arguable, but also achieving the optimum level of competition varies depending on specific market conditions as well as types of broadcasters, such as public and commercial broadcasters

(see Blumler, 1991; Hellman, 2001; McQuial, 1992 for the argument on the strategies in promoting media diversity, used differently in each of public service broadcasting, and commercial based broadcasting). The contradictory outcomes of the previous research on competition/concentration are mainly due to the complexity of market conditions that pursue different strategies to attract audiences or to meet public interest standards. The recognition of distinctive market conditions in relation to media diversity exemplifies the need for developing a specific measurement suited to each different market condition.

The following research and its contradictory outcomes clearly reflect this concern.

Early studies on competition by Dominick and Pearce (1976) confirmed the positive relation between competition and program diversity in television media, concluding that market concentration reduces diversity. Similarly, Litman (1979) also proved the positive relationship between competition, and diversity, in which increased competition produced a greater level of both horizontal and vertical diversity. Horizontal measures the number of types available across all stations in the market for specified prime time throughout the week while vertical diversity measures the average number of program types available during a day on a station (Litman, 1999). Consistent with the outcomes of previous research, Lin (1995) has investigated program types of diversity finding that increased competition from different program sources could result in 28 increased program type diversity. However, the positive relationship between competition and diversity has been contested by several researchers whose outcomes were contradictory to them. For example, Lacy (1987, 1988, & 1999) whose study mainly focused on newspapers concluded that increased competition doesn’t necessarily promote diversity. Correspondingly, scholarly attention has been given to the incongruence of competitions effects on content diversity, addressing the following concerns. First, the media market concentration grounded in the profit seeking mechanism utilizes ruinous competition. Second, the optimum level of competition varies in different market conditions as well as program types.

Media Nature as Profit Maximizing Mechanism

Responding to the first concern of media concentration grounded in its profit seeking nature, Van Cuilenburg (2000) distinguished “moderate competition” and

“ruinous competition”, claiming that only moderate competition will achieve media diversity. His later study (2001) and his current study with Van der Wurff (2004b) examining Dutch broadcasting, reinforced his earlier claim. At this juncture, their distinction between moderate and ruinous competition provides a critical way of reassessing competition as a means of developing a sophisticated measurement of competition. According to them, ruinous competition occurs when competition between large numbers of channels becomes too intense, which causes broadcasters to seek low cost strategies. Low cost strategies include broadcasters’ efforts to avoid risky, or innovative content to target a niche market, while providing duplication of the program that has already proven to be successful. Moderate competition, however, occurs when competition is sufficient enough to encourage broadcasters to provide different channels 29 or programs, fueled by enough revenue to achieve this goal. Subsequently, increased channels produce a high degree of program distinctiveness while reducing duplication of programs (Van der Wurff, 2004a). Their studies also addressed the significance of the impact of market forces in the media industry in assessing media diversity because they identified the profit driven nature of the media industry as a forceful factor in creating excessive (ruinous) competition, which in turn decreases media diversity by producing a sameness of media content (producing homogeneity rather than heterogeneity). In other words, the primary reason that increased competition does not always guarantee media diversity is due to the market penchant for seeking profits grounded in cost strategies rather than public interests. In this way, media competition relies not on content but on the price, producing content mainly for popular demands rather than producing diverse and substantial content for both mainstream and minorities.

In an effort to explain the influence of media profit seeking mechanism on market concentration, media scholars have investigated the structure of the media market that caters to the mass market. The concern for mass markets is closely related to media’s reliance on advertising, targeting mass audiences where producers often accommodate advertiser-desirable audiences, and accordingly limit the diversity of programs (see

Einstein, 2004c; Grant, 1994). Media’s turning to a low cost strategy can be explained by the economic model that has been used to analyze diversity in the media market place for almost 30 years (Dominick & Pearce, 1976; Litman, 1979; Van der Wurff & Van

Cuilenburg, 2001). Because of this economic model (new entrants with lowest cost strategies) that explains the logic of the advertising support mechanism, television 30

produces a need to create programming that works within limited guidelines catering to

mass audiences (Herskovitz, 1997, quoted in Einstein, 2004c).

According to Grant (1994), all advertiser-supported media outlets attempt to

maximize the size of targeting audiences for increasing profits from the advertising

revenue. Van der Wurff (2004b) also notes that the studies of U.S broadcasting networks

(e.g., Collette & Litman, 1997; Thomas & Litman, 1991) show that networks often enter

the market with cheap and popular programs, even if competition was very low in the

market due to their intention of controlling market share while their advertising revenue

is still limited. This tendency is also apparent in Europe where new channels aim to build

up programs with little investment; thus, cheap programs are desirable in offering a good

price to audience ratio (Van der Wurff, 2004b). With a similar concern, Einstein (2004c)

examined diversity of broadcast network programs in prime time in relation to the

changing advertising marketplace and its effect on media diversity. Her finding indicates

that there is a negative correlation between diversity and advertiser dependence,

substantiating that advertising reliance contributes to a decline in diversity. The reason is

that the changing economic environment with the increase of vertically integrated

corporations, facilitates media to compete for advertising dollars, and their response to

demanding shareholders eventually influences programming content. Her finding

substantiates the general decline of media diversity over years, anticipating that the

changing economic environment will continually result in the decline of diversity.

Different Strategies of Public and Commercial Broadcasters

Responding to the second concern of competition and concentration strategies,

Van der Wurff (2004b) provides the characteristics of different types of broadcasters and 31 media market conditions that stimulate different strategic objectives (D”Haenens et al.,

2005). For example, public broadcasters often aim to provide for public interests more than profit maximizing broadcasters; as a result, public channels are expected to be more diverse with a bias towards high quality, elitist programming as opposed to commercial channels (see Brown, 1996; Souchon, 1994; Van der Wurff, 2004b). In this way, the presence of public broadcasters with their moral obligations to serve public interest may function to prevent the ruinous competition resulting from excessive competition for advertising revenue, which in turn can prevent a decline of diversity in the broadcasting industry. Gant’s (1994) study also relates to the significance of the presence of public broadcasters concerning quality programming. Grant’s finding substantiates that public television has more vertical diversity than commercial broadcast television networks.

Although the studies have contended the important role of public broadcasters in terms of quality diverse programming (i.e., open diversity providing balanced combination of programs including specific proportions of cultural, educational, and informative programs), there are two conceivable obstacles to the proposition that the presence of public broadcasters can be an ultimate solution for diversity. In an economic perspective, increasing minority interests provided by public channels based on the logic of choice model will result in less attractive programming than similar minority programs provided by commercial channels (van der Wurff, 2004b). Therefore, public broadcasters’ promoting diversity does not necessarily increase the number of public channels or competition unless some specified regulation on content is required. Second, as Levin’s (1971) collected data indicated, public television has changed since 1969 in its classification, from educational to public television, which might be a sign of essential 32 change in the diversity of programming offered on public television (Grant, 1994). So far, not many scholars have researched public broadcasting and their changes in order to determine their quality programming in terms of diversity. Therefore, the need for the presence of public broadcasters in ensuring the quality dimension of media diversity should take into consideration the potential obstacles noted above, and be studied with other possible factors playing a role in media diversity.

Regulation on Concentration

Although the terms “competition” and “concentration” are often interpreted as simple opposing concepts and used inclusively within source diversity studies, the focus areas differ in that competition refers to pluralistic channels (number of outlet or firms) while concentration involves the ownership that controls competition (size of firms or market power) (Compaine, 2000). Competition in media diversity is concerned with whether multiple channels satisfy the demands of audiences and is also often studied as competition among channels or programs. On the other hand, concentration is concerned with whether ownership of content and pluralistic channels produce tactics for broadcasters to inclusively expand audiences of both the mainstream and minorities, with a careful selection of programs (D’Haenens et al., 2005). Today, many diversity concerns are centered on media consolidation (or media monopolies) and their effects on content diversity. In spite of various views on the impact of concentration on media performance, in general concentration of ownership is considered to be a detrimental factor to media democracy (Albarran, 2002; D’Haenens et al., 2005; McChesney, 1998). However, many scholars have indicated that media markets were more concentrated in the late 1990s.

Several major identified factors for the increased concentration include technological 33 change and liberalization of regulatory policy (Albarran & Mierzejewska, 2004), which need to be critically investigated.

Types of consolidation patterns are characterized as horizontal and vertical integrations. Briefly, horizontal integration refers to a single firm owning multiple entries, yet the integrated firm doesn’t necessarily control different stages of media production. On the other hand, the vertically integrated firm refers to a single firm owning different stages of the production and distribution; therefore, it allows a firm to control these different levels of the production and distribution (Compaine, 2000). This implies that the potential control of media, if concentrated, may deny entry-level access of new independent media firms, using integration as a strategic practice for obtaining a monopoly power.

Most large mergers of the 1990s are characterized as vertical integration including the mergers of Disney with Capital Cities/ABC, which have been major foci to be debated (Compaine, 2000). Traditionally, many media concentration studies and regulation policies have often been focused on horizontal integration rather than vertical integration (Compaine, 2000; Napoli, 1999), which is assessing the number of broadcasting outlets owned by one single firm. However, as emphasized above, the ownership pattern has changed to vertical integration that has the potential of controlling content distribution. A critical inquiry relates to whether it is necessary to change the direction of the diversity study to the concentration issue, questioning the effectiveness of existing laws that account for “the number of outlets” rather than “size of multiple ownership operators.” Responding to this concern, several scholars mainly within the 34

U.S. have focused on market shares, and advertising revenue in order to examine the market power (e.g., Albarran; Campaine, etc.).

Other political economy scholars have been concerned about the impact of the deregulation policy on media ownership that allows the vertical integration of media, which in turn results in a concentration of ownership (e.g., Croteau & Hoynes, 2006;

McChesney, 1997; Compaine & Gomery, 2000; Einstein, 2004, etc). Taking the critics’ general contention, the current market concentration in the media industry is, in fact, a direct corollary of the deregulation policy during the 1980s, and stimulated by the

Telecommunications Act of 1996. Drushel (1998) and Howard (1998) have substantiated an increased level of concentration after the Telecommunication Act of 1996. The core assumption of the deregulation policy is on the basis that it should offer an equal opportunity to all media firms to help their entry into the market. The goal of encouraging competition among industries is rooted in the economic principle, and most importantly, is to promote the diversity of voices with regard to broadcast ownership (see Bates, 1998;

Chon, Choi, Barnett, Danowski, & Joo, 2003; Einstein, 2004). Nevertheless, as the current media market proves, it increased opportunities for more industries to mitigate the monopolistic practices, and inversely stimulated conditions for mounting consolidation across media industries in their strive to maximize profits. The failure of source diversity after implementing the telecommunication act of 1996 proves the reverse effect of the market place idea. The problem lies within the uncounted “structural inequality” in the media market that does not rely on numbers of outlets, but on a “concentrated ownership power” proscribing effective competition to new entrants. This structural inequality of media ownership generates certain privileges to the dominant media, which negatively 35 influences overall media diversity. The ineffectiveness of the policy that resulted in inverse effects against its intention (increasing competition as to reduce monopolistic practice) illustrates the need for an investigation on the critical impact of media policy on market concentration in order to implement an adequate policy in promoting media diversity.

Policy Effectiveness

While much of the scholarly attention is paid to the critical relationship between source and content diversity for an adequate implementation of the policy on media diversity, there is also a view that directly concerns content diversity. This view mainly stems from the mistrust of the effectiveness of policy on source diversity to change content. The policy focusing on source diversity to increase competition is ineffective because the changing market structure that heavily relies on advertising will not promise diversity of content (see the section on Competition and Concentration above). Thus, it suggests that regulatory policy directly controlling media content rather than content providers should be an ultimate goal to achieve diversity. Einstein (2004a & 2004b), for example, points out that content diversity is an underlining goal, with an examination of the ineffectiveness of certain polices that inversely resulted in a decline of diversity.

Einstein (2004b) examined program genre (content diversity) during 1969-1973, and

1989-2002 in order to evaluate the effectiveness of the syndication rules (fin-syn rules) combined with PTAR (Prim Time Access Rule), the rules employed to break up the dominance of broadcasting networks. In her study, Einstein (2004b) indicates the possibility of syndication rules contributing to a decline in diversity. 36

Similarly, Napoli (1999a) highlights the policy objective on media diversity, examining ineffectiveness of regulatory polices on concentration. However, his analysis on policy provides the diversity principle that is broken into three critical components

(source, content and exposure diversity) to make theoretical justification of the diversity policy more clear. In aligning with the FCC’s jurisdiction, his intention is to establish an analytical framework for future diversity research. According to him, the reason for the ineffectiveness of policy is due to insufficient development of the diversity principle, in which the policy often fails to demonstrate the critical relation between source and content diversity. The policy’s focus on source diversity to change content is mostly concerned with the number of outlets rather than market inequality that directly addresses audience exposure (or consumption). Therefore, the policy goal is not sufficient enough to measure all other indicators that influence media diversity (or content diversity). For that reason, he suggests that the policy goal must entail continual monitoring of content diversity with a close investigation of all other diversity components to evaluate the effectiveness of the diversity policy. The FCC’s lack of interest in monitoring the policy effects on content diversity, thus, can be one major attribution to the ineffectiveness of the diversity policy (Napoli, 1999a).

Highlighting the Foci of Media Diversity Studies

In sum, many of the previous studies on media diversity have pointed out conceptual problems of media diversity, and defining diversity of content is not agreeable due to divergent approaches to diversity. With the scholars’ earnest attempt to develop the dimension of media diversity, so far, supply and demand viewpoints were developed with an economic approach. In this way, diversity should be achieved when supply 37 matches demand. However, achieving the diversity goal with supply and demand viewpoints depends on discrete approaches to defining media content. When content diversity is defined by normative values, or communicative norms (open diversity), diversity should be assessed by whether the supplier provides quality content that meets such criteria. However, when content is defined by audiences’ demands or preferences, then diversity should be assessed by whether content reflects audiences’ popular expression. Other scholars also developed a dimension of media diversity that consists of source, content, and audience diversity, claiming source and audience diversity are integral parts that determine content diversity. Both supply and demand viewpoints, and source, content, and audience diversity are similar in that the assessment of media diversity must include the influential indicators of both media supply, and audience demand in terms of content diversity. However, many of the studies so far have focused on the supply viewpoint (the relationship between source and content diversity) in terms of media diversity. This means that diversity assessment has been limited to a partial dimension of media diversity excluding audiences’ demands and their choices. Thus, a more inclusive assessment on media diversity should be used for developing a comprehensive view of media diversity.

Against the grappling task of defining media diversity, one consensus that has been made by media diversity studies was the impact of market forces on diversity. Both diversity studies and policy are mainly centered on market forces in the media industry, and how this market force will influence media performance of promoting diversity.

Concentrated market structure, motivated from profit maximizing goal and advertiser- supported mechanism, has been one of the major foci to explicate its hindrance to media 38 diversity. The critical relationship between source diversity and content diversity, in this way, has been studied by numerous media scholars. However, the study outcomes explaining the relationships between competition/concentration and content diversity were contradictory, which further confuses the future research foci on media diversity as well as policy making. As the previous studies prove (provided throughout this chapter), not only does increased competition not always guarantee diverse content, but also the concentration of ownership and outlets doesn’t always hinder media diversity.

Responding to these contradictory outcomes, scholars’ using the application of the economic model attempts to delineate what causes such contradictory outcomes. One conceivable attempt is distinguishing ruinous competition and moderate competition claiming that only moderate competition can promise diversity. Such a distinction explains the hyper-commercialized media market that tends to compete for advertising revenue rather than competing for content. In this perspective, the presence of public broadcasters who have a moral responsibility to serve public interest might be a solution to prevent ruinous competition as well as ensure quality content. Such an assumption provides justification for the need to investigate specific market conditions where different programming strategies are used. Chapter 5 dealt with this issue, examining media diversity in each of the public and commercial broadcast television industries with the application of multiple measurements necessary for assessing various dimensions of media diversity.

The previous studies on media diversity have also paid attention to the regulatory policies on concentration and their effectiveness as to whether they reflect the changing media environment, and accordingly, changing pattern of ownership. The increase of 39 consolidation in media markets, in this way, becomes a heated issue in terms of media diversity. The rapid increases of integration both horizontally and vertically after the telecommunication act of 1996 has created a great concern as to whether such a change will influence media diversity. In spite of its significance of investigating changing ownership concentration from horizontal to vertical integration and its effect on media content, it is difficult to measure vertical integration. Consequently, the policy on media diversity has been focusing on horizontal integration in its implementation (e.g., restrictions on the number of broadcasting stations under a single owner).

Finally, the issue regarding concentration of media market lends itself to the need of close investigation of not only competition between outlets that provide sufficient numbers of outlets, but also structural inequality (or monopolistic power) in terms of source diversity. The studies of structural inequality explain commercialized media behaviors that tend to compete for advertising revenue rather than competing for content, which may cause a decline in diversity. These studies show the need for investigating a more complex dimension of source diversity while the diversity polices should take into consideration policy effectiveness on content diversity. Some other studies even take further steps, suggesting direct control over content diversity due to the ineffectiveness of regulatory policies on source diversity. Since diversity polices focusing on increasing competition to enhance content diversity don’t guarantee what they promised due to ruinous competition, controlling content to promote diversity might be the ultimate solution. However, this suggestion directly conflicts with the First Amendment. The justification of the censorship on media content, in this way, must be thoroughly reviewed, interpreted, and examined as a means of establishing consistent public interest 40 standards or diversity criteria. Chapter 4 dealt with the First Amendment tradition in relation to media diversity, and examined the effectiveness of diversity policies on source diversity in order to provide a comprehensive understanding of the public interest criteria, needed for investigating the critical relationship between media policy and source diversity.

CHAPTER 3 THEORETICAL AND METHODOLOGICAL FRAMEWORKS

Theoretical Foundation Social and Economic Theories

The theoretical foundation that informs this study is drawn from two major traditions of media study, social and economic theories, to elicit the fundamental relationship between media policy and economy, which in turn shape the dimension of media diversity. The social theory validates a norm to be applied in a particular national media system; thus, it manifests the critical relationship between media and society. The proposed framework of the social theory provides “the normative principles” for a media system and its behaviors due to the presumption that media are expected to serve the general benefit of society, particularly political and social/cultural goals over their professed organizational goals (McQuail, 1994). Therefore, media performance in promoting diversity should be measured in terms of whether media facilitate independent thoughts, diversity, information quality, and the social/cultural order in society.

On the other hand, economic theory justifies the economic goals of media and their industry actions. The core principle of the economic theory centers on the notion of a “free market” in which “the media are conceptualized as primary competitors in this marketplace” (Croteau & Hoynes, 2006, p.16). Since most media firms are commercial entities, the economic theory claims that the primary function of a media corporation is to create profits for owners and shareholders; thus, the success of media should be assessed by profit maximization. For that reason, advertising revenue and profits become core measurements. It concerns the advantages of economic efficiency in which media 42

responsiveness to an individual consumer is for their profit-seeking goal, while

promoting efficiency, and innovation.

Both theories, however, have their own limitations for the practical implication of

media diversity. The perfect implication of the social theory, to assess media diversity

and policymaking, involves some cautions. Media diversity principles stem not from a

single, but multiple accounts grounded in various constitutive cultural/social, and

historical context. In this way, the oversimplified normative standard applied to the

assessment of media diversity and the policy might not be a satisfactory solution for

promoting media diversity. The economic theory, on the other hand, can potentially

dismiss the cultural/social, and political significance of media (Croteau & Hoynes, 2006).

Media differs from other business entities in the way of its “commodity.” The product of

media is information, or ideas that can potentially shape social/cultural and political values, beliefs, and attitudes, and accordingly democratic decisions of citizens in society.

Therefore, both a disagreement and common consensus of the standard of social and economic theories in terms of media diversity should be abridged and highlighted to provide a starting point for the issue of media diversity. Although, this project is mainly guided by a sociological paradigm in defining the concept of diversity, it also concerns economic theory because economic theory can help understand media industrial actions, and market behaviors in which most current debated issues of media diversity are grounded. Hence, an analysis of the rationale of the media industry action, rooted in a profit seeking nature, is essential to this project in investigating the impact of market concentration on media diversity.

Theoretical foundation of Open and Reflective Diversity

The theoretical conceptual framework of open diversity fairly reflects the social theory because it matches the core assumption of the social theory. Open diversity assumes that media have considerable influence on society and people’s opinions, and accordingly the formulation of public opinions; thus, media content should express diverse opinions in an equal manner to ensure unbiased public opinions, such as political, cultural, and other societal interests (Cuilenburg, 1999). Along with the core assumption of medias influence on people’s preferences, the dimension of open diversity is defined by the following characteristics: Normative approach to diversity (top down approach), qualitative diversity assessment, and focusing on cognitive content dimensions that do not necessarily account for actual media use. In other words, it attempts to ensure that no preferences in the population attain broader media coverage than any other preferences; thus, equal access for ideas to society’s communication system is an ultimate goal

(Cuilenburg, 1999). In this effort, media diversity is often conceptualized within the realm of media policy, focusing on “how media supply will provide diverse content” that are desirable for societal, cultural, and political needs, and ensuring that the content meets theses goals of open diversity.

On the contrary, reflective diversity basically reflects the economic theory that supply should match audience demands. In reflective diversity, media’s seeking profits is justified because their industrial action of seeking profit will eventually satisfy audience demands, and consequently will promote media diversity by fairly reflecting the population’s opinions and interests. This model assumes that population preferences influence media, and diversity of program types in media content is demanded by 44 audiences’ preferences. With this assumption, the dimensions of reflective diversity entail the empirical approach (bottom up approach), quantitative diversity assessment, and focus on expressive content dimensions. In other words, reflective diversity defines media content as media to express population preference contributing to media content that lies within the realm of audiences’ actual use of media. Therefore, the ultimate goal is to provide equal access for people or consumers. More importantly, this model explains the media market behavior targeting popular demands, and the significance of popular expressions influencing media content, over elitism that concerns minority beliefs, attitudes and conditions necessary for critical functions of media performance

(Cuilenburg, 1999). See Figure 3.1 for dimensions of open and reflective media diversity.

Figure. 3.1 Dimensions of Media Diversity

Open diversity: Reflective diversity: Top down approach Bottom up approach Assumes media’s influence on people’s Assumes people’s preferences influence preference media diversity Normative approach to diversity Empirical approach to diversity

Qualitative diversity assessment Quantitative diversity assessment

Focus on cognitive content dimension Focus on expressive content dimension reflecting rationality reflecting popular demands Access of ideas for different content Access for people

Source. Modified from reflective diversity vs. open diversity (Cuilenburg, 2000)

Theses two major theoretical paradigms utilize a different assessment of media content, depending on what the national media policy emphasizes. If the media policy emphasizes the expressive function of media, then diversity can be assessed in terms of the reflective dimensions of media diversity. On the other hand, if the media policy 45 stresses the critical political function of media role, then it requires a diversity assessment in terms of the cognitive quality dimensions of media content; that is the dimension of open diversity. This substantiates the critical relationship between media policy and the assessment of media diversity, in which the assessment varies depending on a distinctive political emphasis. Moreover, a sole approach of either open or reflective diversity might have its own limit, and may even be potentially detrimental rather than beneficial for the following reasons: 1) Perfect openness (maximum open diversity or maximum openness on media content offered by suppliers following open diversity criteria) may harm majority opinions in favor of minority beliefs, 2) the perfect reflection of popular demands (maximum reflective diversity or maximum reflection of audience demands on media content) may harm a great variety of social positions and opinions (see Van

Cuilenburg, 1999 & 2000). The assumption that media perform best when these two perspectives are balanced further justifies the methodological approach of my project including both supply and demand points of view in assessing media diversity.

The Public Sphere Model and Market Model

The public sphere model originally developed by Jürgen Habermas also fairly reflects the core assumption of the social theory, and is useful in conceptualizing public interest criteria, such as media diversity. Habermas (1991) distinguishes “public sphere” from “private realm,” and “sphere of public authority” in which the private realm refers to civil society (e.g., community exchange), the sphere of public authority as to state

(e.g., political realm), and public sphere as to intersected sphere of political realm (state), world of letters (media press), and market of culture (civil society). The public sphere in the political realm, evolved from the public sphere in the media press, and through the 46 medium of public opinion, it puts “the state in touch with the societal needs.” More importantly, the public sphere functions on a critical argument, based on rationality where citizens’ critical debate on politics can be transformed to social integration with state power and market economies.

According to Croteau and Honynes’ (2006) brief summary of the public sphere model in relation to media performance, the model assumes that media are public resources serving public interest rather than just a profit seeking mechanism of large conglomerates; therefore, media should promote active citizenship via information, education, and social integration. Within the assumption, audiences are conceptualized as

“citizens” rather than “consumers.” More importantly, the model suggests that the role of media diversity is central to media duties of representing the diverse range of public views. Finally, it views regulation as a useful tool in protecting public interest (Drale,

2004; Croteau & Hoynes, 2006); thus, it justifies state intervention when media industry action harms public interest. The core assumption of the public sphere model, in deed, can provide an underpinning of establishing consistent public interest standards, thus can guide policy objectives in terms of media diversity.

On the other hand, the market model conceptualizes media as private companies that sell products; thus, information produced by media is considered to be a commodity.

This means that media audiences are viewed as consumers rather than citizens, and are encouraged to consume the media products. This model also justifies the media industry generating profits for owners and stockholders because the primary purpose of the media is to maximize profits. The market model conceptualizes public interest as whatever is popular where the role of diversity is viewed as an industrial strategy for reaching new 47 niche markets (Croteau & Hoynes, 2006). In other words, the market model assumes that media’s satisfying popular demands for a profit seeking mechanism will consequently generate media diversity. In this respect, the market model is closely linked to the reflective dimension of media diversity, and provides the justification of the media market seeking profits as promoting media diversity (see Figure 3.2 for core assumptions of public and market models).

Figure 3. 2 Assumptions of the Public Sphere and Market Models

Public Sphere Model Market Model

The role of diversity and Central role of media A strategy for reaching new innovation Providing diverse range of niche markets public views and tests Innovation as a threat to Innovation as key factor for profit standardized citizens mechanism; and as a key factor for attracting audience attention, satisfying needs Purpose of media Promoting active citizenship Producing profit for media via information, education, firm owners and and social integration stockholders Definition of audiences Citizens Consumers

Concept of public interest Diverse, substantive, and Popular demands innovative content, not necessarily always popular Perception of regulation Useful tool to protect the Interference to market public interest processes Accountability The public, and the public Owners and stockholders interest Measurement of success Serving public interest Maximizing profit

Source. Modified from summery of media models (Croteau & Hoynes, 2006)

My project inclusively reflects open and reflective theoretical paradigms, particularly for the assessment of media diversity in commercial broadcast television. An 48

examination of the commercial media industry requires an approach of the market model

mainly because their primarily strategies for content programming are heavily influenced

by audience demands, directly to the primary goal of profit maximization. In this effort,

open and reflective diversity can help assess media industry actions in promoting media

diversity in a more comprehensive way. At the same time, the public sphere model guides

the conceptualization of media diversity, directing it to the particular philosophical

underpinnings of a social function of media in serving public interest, while the market

model helps analyze the U.S. broadcasting market behavior in terms of market

competition/concentration and media policy within the current market environment.

Figure 3.3 explains overall relationship among diversity paradigms, and policy goal.

Figure 3.3 The Relationship among Diversity, Policy, and Two Conceptual Paradigms

Open Diversity Reflective Diversity (Top down approach) (Bottom up approach)

• Media’s influence on • People’s preferences people’s preference influencing media • Content reflecting diversity reasoned values • Content reflecting • Access of ideas for popular demands different content • Access for people

Media Diversity Regulation (Public interests) Deregulation

Policy Policy demanding Societal Individual demanding critical political needs needs expressive role of media role of media

The Public Sphere The Market Model Model Promoting consumption power Promoting active citizenry 49

Proposed Theoretical Framework:

Developing a Multi-measure of Media Diversity

Program Choice and Public Policy Model: Assessment of Content from Supply and

Demand Viewpoints

The program choice model, mainly developed within the field of economics (e.g.,

Noll et al., 1973; Own et al., 1974; Steiner, 1952; Wiles, 1963), often concerns reflective

diversity, which rationalizes commercial media structures attempting to maximize

audience preferences. Hence, media content is defined largely by audience choices. The

program choice model posits that the diversity of supply can be achieved when programs

supported by advertiser-supported broadcasting markets are increased (see Bae, 2000; De

Jong & Bates, 1991; Hillve et al., 1997; Van der Wurff, 2004a). The rationale behind the

assumption is that audience distribution is equal over similar channels; therefore, the

overall increase of mainstream programs permits the condition for decreased audiences

on a per program basis due to sharing the same audience distribution. This condition

subsequently stimulates broadcasters to specialize programs with a strategy aimed at

targeting niche markets to attract minorities instead of duplicating mainstream programs

(D’Haenens et al., 2005). More importantly, this model justifies media industrial action,

investigating viewer behaviors in determining program types for maximizing profits with

the proposition that goods (or products) are freely exchanged between viewer preferences

and media content. Hence, the program types should be evaluated on the basis of viewer

preferences of program choices.

Although the program choice model expects media diversity with the assumption

that increased numbers of channels will result in differentiating channels for the demand 50 of niche programs, some scholars (e.g., Picard, 2001; Van der Wurff, 2004a, etc.) provide an alternative perspective. Because the overall size of audiences is not necessarily altered, increased channels will result in the decline of the average audience size per program.

Subsequently, the decline of the audience size per program reduces advertising revenues per program (Picard, 2001), which motivates commercial broadcasters to duplicate programs for cost effective strategies. Hence, the diversity in media content decreases in return. The program choice model is important to understand media performance in promoting diversity grounded in the economic principle, especially for today’s media market which is subjected to market forces.

The public policy model reflecting open diversity has guided European public service broadcasters. The public policy model assumes diversity to be a normative standard of quality. It suggests that the policy goals of aiming for pluralism allows equal access to the multiple sectors of society to serve the diverse audience types, and provides a wide range of choices in program content (Blumler, 1991; Hellman, 2001; McQuial,

1992). The public policy model argues that the hyper commercialized broadcasting market reduces the quality of programming. The lowest cost competitive strategy addressed by Van der Wurff (2004b) manifests such a notion concerning the need of increasing public broadcasters to provide open diversity. Van der Wurff (2004b) notes that the lowest cost strategies of media firms stimulate excessive competition for advertising and views markets rather than content competition, thus, it eventually contributes to the decline of media diversity. When increased channels reduce revenues, and financing differentiation of programs is difficult to maintain, new entries lead to ruinous competition. Therefore, it assumes that the obligation of the public broadcasters 51

to offer informative and educational programs with quality content (e.g., offering high

open diversity) can prevent a decline of diversity caused by ruinous competition among

commercial broadcasters (Brown, 1996; Van der Wurff, 2004b).

Structure Conduct Performance Model: Assessment of the Relationship Between Source

and Content Diversity

The industrial organization model (IO) developed within the economic field, basically explains a causal relationship between market structure, conduct, and performance. The characteristics of market structures include market concentration, product differentiation, and barriers to entry that directly influence the conduct of firms.

The conducts are “pricing behavior,” “product and advertising strategies,” and “research and development,” which in turn shape the overall performance of a firm. The main characteristics of performance include productive efficiency (output is produced at minimal total cost), equity of fairness (income distribution effects whether producers prosper at the expense of consumers), cultural (media are cultural industries), and diversity views (democratic function of media) (Hoskins, McFayden, & Finn, 2004). The study of market forces on media diversity has adopted this theory as a basic template to the analysis of media markets in terms of media diversity.

The usefulness of IO in analyzing media industrial action in terms of media diversity is exemplified by McQuail’s (1982) introduction of the Structure Conduct

Performance model (SCP); Cuilenburg’s (2000) use of SCP for developing the concept of media competition; Hopkins et al. (2004) proposing the Theory of the Firm; and Wurff’s

(20004b) application of the IO in measuring competition in broadcasting. In building a theory relevant to media diversity, the structure conduct performance model (SCP) can 52 provide a major theoretical guidance for the project, which takes the primary assumption that “market structure” (competition and concentration) is a major determinant to

“product strategies” (conduct), and consequently of “media diversity” (performance).

According to this model, competition has both structural and behavioral dimensions found in media markets. The major variables of marketing strategies are product, distribution, promotion, and price, which are often blended to satisfy the targeted consumers (Cuilenburg, 2000). The theory of firm (Hopkins, et al., 2004), also grounded in IO, distinguishes major market structures, which delineate types of competition that are perfect competition, monopolistic competition, oligopoly, and monopoly (see Figure

3.4 for the major market structure and product differentiation).

Figure 3.4 Market Structure Proposed by the Theory of the Firm

Market structure Number of suppliers Product Barrier to entry

Perfect Many Homogeneous No competition Monopolistic Many Heterogeneous No competition Oligopoly Few Usually Yes heterogeneous Monopoly One Not applicable Yes

Source. Modified from the theory of the firm (Hoskins, McFayden & Finn, 2004)

In brief, perfect competition occurs when there are many numbers of firms and products are identical; monopolistic competition occurs when there are many numbers of firms and products are differentiated; oligopoly competition occurs when there are few numbers of firms and products are usually differentiated; and monopoly occurs when only one firm 53 controls the industry, and product differentiation is not applicable. Based on this theory, perfect competition produces homogenous products whereas monopolistic competition produces heterogeneous products. The structures of both perfect competition and monopolistic competition, however, are not considered as barriers to entry because in these structures, competition occurs among “many numbers of firms.” On the other hand, oligopoly and monopoly become barriers to entry due to a lack of competition between firms resulting in dominance of either a few or a single firm (size of firms). More importantly, it assumes that the oligopoly structure usually differentiates products while the monopoly is not applicable to determine types of products produced. Put differently, this assumption doesn’t consider oligopoly and monopoly as hindrances to media diversity (differentiation of the products) as opposed to the classical economic theory that assumes oligopoly and monopoly as a major hindrance to media diversity.

Scherer (1996) following SCP provided different characteristics of product strategies produced by oligopoly and monopoly structures. Scherer’s typology of market structure differs from the assumption of the theory of the firm in that the types of market structures are further categorized into six different market structures including, monopoly, multi product monopoly, homogeneous oligopoly, differentiated oligopoly, full (perfect) competition, and monopolistic competition (see Figure 3.5 for the typology of market structure). As Figure 3.5 shows, in this model, monopoly and multi product monopoly are characterized when there is one supplier. However, monopoly generates homogeneous products while multi product monopoly produces heterogeneous products; homogenous oligopoly, and differentiated oligopoly are characterized as the competition between few large suppliers. 54

Figure 3.5 Typology of Market Structure

Market structure Number of suppliers Product Barrier to entry

Perfect (full) Many small Homogeneous NA competition Monopolistic Many small Heterogeneous NA competition Homogeneous Few large Homogeneous NA oligopoly Differentiated Few large Heterogeneous NA oligopoly Monopoly One Homogeneous NA

Multi-product One Heterogeneous NA monopoly

Source. Modified from typology of market structure (Scherer, 1996) NA: Not Applicable

However, homogenous oligopoly produces homogeneous products whereas a differentiated oligopoly facilitates heterogeneous products; full (perfect) competition and monopolistic competitions occur where there are many small suppliers, but full competition generates homogeneous products whereas monopolistic competition generates heterogeneous products. According to Scherer, monopoly, homogeneous oligopoly, and full (perfect) competition produce homogeneous products while multi product monopoly, differentiated from oligopoly and monopolistic competition produce heterogeneous products.

Although both the theory of firm and Scherer’s typology of market structure are on the basis of IO, Scherer’s market structure is more useful for analyzing competition

(concentration) and media diversity for the following reason. This structural model challenges the general assumption that all oligopoly structure hinders product differentiation. As some researchers proved (e.g., Van Cuilenburg) oligopoly under some 55 conditions actually facilitates product differentiation (diversity) if the competition is in moderation, and is based on “content” rather than “price” (see, the section on Media

Nature as Profit Maximizing Mechanism in Chapter 2 for a detailed explanation of the distinction between moderate and ruinous competition). Inversely interpreting, not all full competitions facilitate product differentiation; if the competition is too excessive, and is based on price, full competition actually produces the sameness of the product

(homogenous media content) while only monopolistic competition satisfies the condition for product differentiation. Scherer’s further specification of monopoly, oligopoly, and full competition, in fact, explains different product strategies even within the same categories of both oligopoly, and monopoly market structure. The assumption of different products (either homogeneous or heterogeneous products) produced by an oligopoly is useful to understand the contradictory outcomes of the previous research finding, which increased competition does not always guarantee diversity of media content. The further specification of oligopoly that requires different strategies will certainly justify my research question of different market conditions in the U.S. broadcasting market that is characterized as oligopoly competition.

Public Sphere Model: Assessment of the Quality Dimension of Media Diversity and

Policies

The social theory has historically evidenced its effectiveness when it concerns both quality and pluralism in the field of broadcasting media (Cavallin, 2000). Although diversity is conceptualized differently in the public sphere and market model respectively, the public sphere model principle, with its proposition of media providing public goods, can adequately manifest the concept of diversity and accordingly of the 56 policy implementation. Since media diversity reflects the quality performance of media that serves public interest (see Hillve at al., 1997; McQuail, 1992), the public sphere model grounded on social theory could guide the general direction of my project as well as advocating a particular policy on media diversity. In this model, public goods are determined not by expression of personal interest (or utilitarian purpose), but by rationally motivated communicative action (or procedural purpose) that requires

"fairness” (equal access to information), “equality” (disregard of hierarchical rank), and

“reasonableness” (rational debate) (Drale, 2004). Therefore, government must support this procedure because the media market is amoral in meeting such required standards

(Croteau & Hoynes, 2006). Indeed, in Western Europe, the state takes an active role, which is considered necessary for the democratic function of media in the broadcasting field (Cavallin, 2000). The state role in shaping media’s democratic function in the U.S. is, however, questionable due to the First Amendment conflict, which in turn favors certain policy of media diversity. The detailed policy and government role in promoting media diversity will be discussed in the following chapter. For the proposed theoretical framework of the project, see Figure 3.6.

Research Methodology: Multi-Measure Methodology

Consistent with the theoretical framework, and to answer the research questions, the major areas investigated and assessment include 1) the relationship between the current broadcasting ownership rules and market concentration, 2) the relationship among the ownership structure, market concentration, and content diversity in the U.S. broadcast television market including both public and commercial broadcasters, and 3) application of both supply and demand perspectives, which measures content by the level of both 57 open and reflective diversity (see Figure 3.7 for the specific indicators & statistical index for the methodological approach of this project).

Figure 3.6 Proposed Theoretical Framework

Audience Diversity

• Audience Selection

Public Program Policy Choice model model

Content of Content Diversity Content of Supply Demand • Open Diversity • Reflective Diversity

Structure Conduct Performanc e model

Source Diversity

• Competition • Concentration

Public Sphere model

Media Policy Public Interest Standards

• Regulation • Free market Competition

Figure 3.7 Methodological Framework: Statistical index and Indicators

Supply Demand

Source Content Concentration & Audience

Competition Program types Distribution of preference

• Production • Program genre • Media consumption • Distribution • Open Diversity • Herfindahl Index • Herfindahl Index • Reflective • Editorial concentration Diversity • CR4 & CR8

Media Polices Overall measure of (regulation/ Media Diversity deregulation)

The primary methodological approach in this project is integrative in its nature,

combining qualitative with quantitative methods to achieve a methodological

triangulation. The integrative method can allow an in-depth understanding and

meaningful analysis of the complex motivational context of political and economic

implications to the study of media diversity; at the same time, it increases the validity of

the outcomes of the investigation. With the qualitative approach, the current regulatory

policies relevant to the particular ownership concentration will be analyzed. The

quantitative approach is used to show the structural analysis of ownership mergers and

integration, measuring the level of market concentration and program content diversity in

U.S. television broadcasting. The detailed methodological approaches are explained in

the following.

Qualitative Methodology: Analysis of Media Polices on Broadcasting Ownership

The examination of the diversity policy goals and the effectiveness of the implementations of broadcasting rules entails a close interpretation of specific problems stemming from the rhetorical strategies discretely used by each of the parties; the two major rhetorical strategies examined here include first, government intentions which stand for political interest, thus, propose the need of collective authority to protect public interest; and second, the market proponents who stand for economic interests, thus embrace a notion of market individualism. Discourse analysis with a multivalued methodological view is useful to recognize the condition behind the problems and enable us to understand the essence of the existing problems. With an effort to make the assumptions of their rhetorical strategies explicit, the discourse analysis, directed by the multivalued view, will answer the specific problems, as well as provide possible 60

resolutions for the direction of future foci in studying media diversity in terms of the

media policies and assessment. The basic theoretical paradigm analyzing public interest

criteria, such as media diversity, critical for policy goals, is the public sphere model that

justifies a significant role of the states in protecting public interest.

Multivalued Methodological View: Integration of Social and Economic Values

The qualitative approach used for this project broadly embraces the multivalued

methodological view. The multivalued methodological view of this project concerns the

implicit political and social values in examining “media policy in relation to media

ownership structure” (e.g., examining antitrust as applied to media integration).

Therefore, it provides a certain criterion for evaluating the concentration on social and

political implications. This multivalued approach, advocated by Bagdikian, justifies the

role of the state, which wishes to avoid both “economic and social harms” from media

concentration (Compaine, 2000). It clings to the idea that the sufficiency of competition

is achieved through controlling the degree of concentration, which is directly linked to

the regulatory system, thus, can consequently maximize media performance in promoting

media diversity. By using the multivalued approach as the criterion for examining the

broadcasting ownership rules and market concentration in the U.S., the study can identify

both regulatory and economic hindrances to media diversity, and how media policy

shapes the concentration of ownership in a particular way (Compaine, 2000). Therefore,

with the application of this approach, the effectiveness of the regulatory policies implemented in the U.S. broadcasting industry is analyzed. 61

Methods To analyze the use of rhetorical strategies of the particular policy goals by the

FCC, and interpretation of the effectiveness of the policies, the study mainly conducted an explanatory paradigm that combines documentary analysis with rhetorical analysis

(discourse analysis). The time period for the analysis of the broadcasting rules covers

1950 to 2002 to demonstrate the changing policy goals, and development of ownership rules during this period. The effectiveness of the policies is analyzed, and interpreted with an effort to provide possible resolutions for media diversity foci. The data used and interpreted for that purpose are mainly taken from both primary data and secondary data sources. The primary data include documents, statements, annual reports from 1939 to1998 made by the Federal Communication Commission (FCC), and government officials; and secondary data include the relevant articles that consist of the critics of the diversity policy goals, and the broadcasting rules. For the interpretation of the logic of regulation, and free market competition, the study primarily used academic articles, government officials, and FCC documents and statements that review the notion of freedom of speech in terms of public interest, and how the diversity policies and their goals revolve around such a notion. For the analysis of particular broadcasting ownership rules and their effects on media diversity, the study mainly used FCC annual reports, and existing data from the relevant research on media diversity.

• Discourse Analysis- Interpreting political, social and economic goals:

The discourse analysis used for this project is mainly to make the existing

problems, such as establishing public interest criteria, explicit in order to increase

the understanding of the underlying assumptions of the policy goals. This method

is also used for interpreting the effectiveness of the policies in order to provide 62

possible resolutions to media diversity issues in the U.S. television broadcasting

industries. Within this line, the project analyzes the rhetorical strategies used

within changing public interest standards, and policy goals to the debate over

media concentration, and de/regulation in terms of media diversity. Moreover, it

shows their particular advocacy of the logic of a market concentration paradigm

to contest their positions. Thus with this method, the problems, raised from the

inquiry of the policy goals and effectiveness of broadcasting rules, are interpreted

and analyzed.

Quantitative Methodology: Measuring Supply and Demand Side

Monitoring media concentration involves both supply and demand sides. The attempt to combine both supply and demand relates to the effort of measuring both content diversity choices and audiences’ preferences to the content. As emphasized earlier, the sole approach to either supply or demand often limits a comprehensive measure of overall media diversity, and the relation between them. When assessing media content from a supply viewpoint, the diversity index includes both openness and reflection. On the other hand, the demand viewpoint measures media time consumption as to indicate audiences’ preferences of the content (see Van Cuilenburg, 2005). The basic theoretical paradigms that guide these assessments include public policy, program choice, and the structure conduct performance model (SCP). In analyzing how the supply of diversity influences open diversity, it follows the logic of the public policy model with the assumption that public broadcasters provide open diversity. On the other hand, analyzing how audience demands influence reflective diversity follows the logic of the program choice model with the assumption that commercial television networks will 63 provide reflective diversity to maximize profits. The analysis of the specific market structure that influences media behavior in distributing content will follow the logic of the SCP model with the assumption that market concentration, and excessive competition based on market share (advertising revenue, and audience share) reduces content diversity.

Methods

I. The units of analysis include 1) market concentration (advertising revenue, and

affiliate share) of the commercial broadcast television suppliers, and the

concentration of distributors and producers of public television, 2) program content

supplied by commercial and public television broadcasters 3) audience viewing of the

programs supplied by commercial television networks during primetime.

II. Data: The data used are compiled from various sources, including The Complete

directory to prime time network and cable TV shows: 1946-present (2003), The

broadcasting year book, FCC annual reports and other financial data, Corporation

annual reports, financial analysis of Universal McCann and Nielson Media research,

and Corporation for Public Broadcasting, published in Media info Center, Television

Bureau of Advertising TVB Online, and U.S census, and other miscellaneous sources,

including CRS reports, Media Bureau Staff Research Papers published in FCC, etc.

III. Variables and Statistical Index:

Supply Side: On the supply viewpoint, the study measures “source diversity”

(ownership concentration) and “content diversity” (Open Diversity for public

television and both Open and Reflective Diversity in commercial broadcast

television). 64

• Variables for public broadcast television: Policy Preferences in a particular era,

Concentration of Distributors, and Producers were analyzed as independent

variables, and Diversity in Program Content was analyzed as dependent variable.

- Eight different program categories were initially developed from those

used in the Corporation for Public Broadcast television, and then collapsed

to seven categories. A list of seven categories includes; 1) News/Public

affairs, 2) Information/Skill, 3) Cultural, 4) Children/Youth, 5) Sesame

Street, 6) Others, and 7) Instructional.

- Time period examined was from 1974 to 1996.

• Variables for commercial broadcast television: Market concentration based on

advertising revenue share, Competition Industry based on affiliate share were

analyzed as independent variables, and Diversity in Program Content that is

supplied and viewed was analyzed as an dependent variable.

- For Program categories, twenty-one different categories were initially

developed (this coding is modified from twenty-five different program

categories formerly used by the Federal Communications commission),

and then collapsed to seven categories, including; 1) Variety, 2) Drama, 3)

Movie, 4) Situation Comedy, 5) Quiz/Panel, 6) News/Information, and 7)

Others (children, sport, & reality)

- Time period examined was from 1965 to 2002.

- Prime time was defined mainly as 8:00-11:00pm from Monday to

Saturday, and 7:00 to 11:00 pm on Sunday

• Herfindahal Index (HHI)- market share based on advertising revenue:

The HHI market share is developed from the concern for the conventional

standards of antitrust law (Compaine, 2000). The effects of market concentration

are measured by the amount of advertising revenue. The measure of ownership

concentration explains the power inequality of the media market share that leads

media competition to be ineffective. HHI is one widely used method because “it

reflects… the number and size of distributions of media firms in a market

industry, as well as the concentration of output (Rhodes, as quoted in Compaine,

2000, p.558). In this study, HHI is calculated by summing the square of the

percentage of a firm's market share of both number of outlets, and advertising

revenue in commercial broadcast television, and the percentage of distribution

share of producers and distributors for public television (not the whole numbers;

i.e., 0.1% indicates 100). The higher HHI means a higher market concentration.

The formula for HHI is as follows:

Where N=Number of firms, S = Percentage of each firm's market share (advertising revenue share for commercial television and distribution of producers and distributors for public television) * Data used for advertising revenue share is from Universal McCann.

• Editorial Concentration: Editorial concentration is measured by counting the

number of outlets in a broadcast television. This method allows assessing plurality

of channels of each of public and commercial television broadcasters.

• Profusion Index:

The Profusion Index allows for the measuring of the homogeneity of media

content reflecting both open (OD) and reflective diversity (RD). It also measures

the quantity of content supply. When ideal diversity is to match OD and RD that

is the perfect balance between the goals of providing content based on the

normative value that matches the desire of reflecting audiences’ preferences or

demands. The original formulas for OD and RD used in this study are mainly

from Cuilenburg (2000), yet variables are modified suited to the study. They are

as follow:

- OD=1-Σ│yi│/ 2

0 (closeness) ≤ OD ≤ 1 (maximum openness)

Where OD=open diversity, yi= is the difference between the actual

proportion of broadcasting time devoted to program type i and the norm

for program type i in a situation of maximum openness (i.e., 1 divided by

the number of content types categories).

- RD=1-Σ│zi│/ 2

0 (minimum reflection) ≤ RD ≤ 1 (maximum reflection)

Where RD=reflective diversity, zi=difference between the actual

proportion of content type I and the norm for content types I given

audience demand.

Demand Side: On the demand side, audience preferences are assessed. The top 35 audience rating (ranked by audience size) of the programs is used as an indicator of 67 audience demands for content. The audience rating was calculated from the report of

Nielson Media Research.

• Herfindahl Index (HHI): HHI measures concentration of audience consumption in

selecting programs where HHI is the sum of squares of the audience shares of

programs (i.e., each program ranked by audience size)

CHAPTER 4 FCC, POLICIES, AND MEDIA DIVERSITY

During the last seven decades, the Federal Communications Commission (FCC) has regulated broadcast services to ensure that the allocation of broadcast licenses serve the public interest with an aim to promote competition, diversity and localism, which are vital to American democracy (Committee on Commerce, Science, and Transportation,

2003). The central policy objectives on media diversity are centered on outlet diversity

(source diversity), particularly at the final stage in the distribution process, in order to ensure content diversity. Along this line, the Commission has focused on restraining broadcast station ownership for the purpose of increasing effective competition by breaking up broadcast monopolies. The emphasis on the diversity policy goal, as Napoli

(1999a) points out, “grows directly out of the First Amendment tradition that stresses the widest possible dissemination of information from diverse and antagonistic sources” (p.

9). Policy goals in promoting media diversity, however, are not clear-cut, for censorship to media content is in direct conflict with the notion of the freedom of press, protected by this First Amendment right. As explained in the previous chapters, the insufficient definition of media diversity mainly stems from this conflict, resulting in discrete policy goals, enforcing either “regulation” or “free market competition.” Consequently, the effectiveness of the media policies is assessed differently depending on whether the emphasis is either on the economic or social/cultural function of media. When media diversity is assessed by economic function, the efficiency of the market system becomes a primary goal; thus, promoting an open market should be taken into consideration for the effectiveness of the policy. On the contrary, when media diversity is assessed by the social/cultural function, providing societal needs, such as creating informed citizens, and 69

teaching and educating children with quality content (or normative concern), is critical. In

order to achieve this goal, regulation is necessary, for media markets are often amoral in

meeting such criteria. With this concern in mind, this chapter mainly examines 1) the

diversity policy goals within the First Amendment of the constitution in order to establish

“public interest standards” in terms of media diversity, and 2) broadcasting rules on

ownership concentration (source diversity) in order to demonstrate “the effectiveness of

the policy” on media diversity. The broadcasting ownership rules, syndication rules, and

the prime time access rules (PTAR) implemented by the Federal Communications

Commission (FCC), along with the current deregulatory climate, are reviewed and

interpreted to explain the policy objectives and effectiveness, and whether they functioned to promote or hinder the ultimate goal of media diversity. The effectiveness of media policies on diversity is examined and discussed with an inquiry of the conflicting views of the First Amendment in terms of regulation and free market competition. The objectives of these attempts are to provide an answer for the following inquiries: First, whether an active role of government promoting media diversity can be made justifiable, and second, whether the diversity policies focusing on source diversity can be validated in demonstrating the critical relationship between source diversity and content diversity in achieving the ultimate goal of media diversity.

The Policy Goals and Diversity

Free Market Competition versus Regulation

Due to the discrete assessments of diversity, achieving coherent media policy

goals seems rather formidable, unless coherent and synthesizing goals, embracing both

perspectives are proposed and proven to be successful. Recently, policy has followed the 70 logic of the free market notion, and the public interest standards are rather defined by economic considerations and consumerist values (Van Cuilenburg & McQuail, 2003).

The regulatory philosophy has shifted in responding to a changing competitive environment in the media industry, as unregulated markets in the 1980s, and, as no regulation in the 1990s. Correspondingly, the ideological shift from collective authority

(public sector) to market individualism (private sector) along with the deregulation climate further facilitates an economic approach to media diversity. Wide acceptance of free market competition, undermining the government’s role in regulation, is reflected in the following statement in Address to Media Institute, made by the current chairman of the FCC, Kevin J. Martin:

And therein lies the most important premise underlying all of the government’s

role in media regulation: while the First Amendment protects one’s right to speak,

it does not guarantee that you will be listened to [Italics added], and competition

among voices is ultimately the best method of ensuring that the most unique and

important information is ultimately heard… we need to critically evaluate our

traditional thinking on how ownership consolidation affects localism and

diversity. For instance, evidence suggests that consolidation actually enhances

program diversity by encouraging owners to create programming [Italics added]

that targets niche markets, rather than producing bland programming that has the

greatest chance of capturing the greatest number of viewers or listeners. (Martin,

FCC, 2001)

Martin’s intended message highlights two major issues; first, they are defining a notion of the First Amendment within a particular advocating policy, free market competition, 71 which protects the freedom of press (e.g., right to speak) over audiences (e.g., will be listened). In other words, the current policy tends to define public interest as the free speech right of broadcasters who deliver information to audiences who access the information. Second, the dramatic changes in the marketplace over years in which broadcasting is “no longer situated as to be un-deserving of full first Amendment protections” (Martin, 2001, p. 4); as some researches have proven, consolidation doesn’t necessarily hamper promoting media diversity. For that purpose, reexamination of the ownership rule with an aim toward a deregulatory policy should be taken into consideration for full competition in the media industry.

At this juncture, the consolidation effects that Martin addressed require more discussion. Traditionally, many researchers have empirically assessed source diversity by focusing on the number of outlets. Operationalizing source diversity in term of the number of market participants (plurality of outlet) is useful to indicate the degree of diversity of the information sources available, but it is not sufficient to assess diversity.

Examining source diversity in terms of market share along with the plurality of outlets will be more useful in indicating structural inequality (or market power), which often hinders effective competition in promoting media diversity (Napoli, 1999a).

In contrast to Martin’s statement that seems to reflect economic perspectives in regulatory policy, the former chairman of the FCC, Reed E. Hundt (1997) addresses the significance of government’s role in protecting public interests from the possibility of unethical market practice. In his speech to the Commission Staff, the essentiality of intervention is illustrated as 72

Our digital era philosophy relies on markets to allocate goods efficiently and to

produce innovation, consumer choice, lower prices and better services; but where

the market does not generate goods the public rightly insists on, we respond with

clear and enforceable rules directly tailored to the public interest and necessity

[italics added]. This is a trust-but-verify philosophy. Government should trust

markets, but verify that they are truly serving the interests of communities,

citizens, children. Where they are not, government should intervene with laser-

like precision to promote public needs [Italics added]. (FCC, 1997)

Hundt’s statement implies the FCC’s critical role in protecting public interest, and the need for regulatory intervention, if the market doesn’t guarantee the public needs, public safety, and public benefits simply due to the markets nature of seeking profit maximization. More importantly, unlike Martin’s view on the First Amendment as

“freedom of press,” Hundt’s view on the First Amendment is rather defined as “freedom of communication” that includes “the recipient’s right to information and to be protected against unwanted messages” (Cuilenburg, 1999, p. 202). His emphasis on demanding media to serve public interests of communities, citizens, and children defines public interests as recipients’ (or citizens) right to hear media messages (i.e., freedom of communication) over a speaker’s right to send a message (i.e., freedom of press); thus the recipient can be protected by unwanted messages (or harmful to public) produced by media. The statement also implies that the nature of the market is not a natural system in achieving public interest goals, but a self-interest mechanism within the commercialized system. Such a media system inherently requires an active role of government in protecting public goods, ensuring that media provide quality content to inform citizen and 73 educate children. In this way, his statement reflects the concern for citizens over consumers.

The Government’s Role in Media Regulation and the First Amendment Conflict

Although the effectiveness of media policy and its goal in promoting diversity are arguable due to the First Amendment conflict, the necessity of government’s active role in shaping media content has been proposed by many media scholars (see Cavallin, 2000;

Cuilenburg & McQuail, 2003; McChesney, 1997; Croteau & Hoynes, 2006, etc.). Their suggestion stems from the significance of states’ role in protecting public interest by securing the essentiality of media’s social responsibility. Van Cuilenburg and McQuail

(2003) further address the active role of government in protecting public interest, arguing that, the state has been the effective guarantor of freedom in important respects throughout the constitutions although it has been professed as the barrier to the freedom of individual expression. In order to make this argument clear, the provision against any state restraints on freedom of speech (or expression) deserves more attention for gaining an in-depth insight of the notion of public interest and media diversity.

The freedom of expression is an essential form and system of the right to achieve the democratic function of communication. The concept of public interest and the policies in promoting diversity are closely intertwined with society’s review of this notion. According to Habermas (1980), non-excludability is one key dimension in forming an ideal public sphere that can discard hierarchy in obtaining accessibility to information; thus, citizens should transfer their views to a rationally motivated consensus without any coercive forces in the process. In this statement, non-excludability not only implies media’s freedom of press (autonomy/independence of media), but also citizens’ 74 equal access to the information through an open communication system, which subsequently directs them to “public” rather than “private interests.” Therefore, the state role is essential in ensuring the necessary condition for citizens to have equal access to information, and equal participation to political debates; that is states’ critical role of insuring citizens’ access in receiving a diverse range of ideas.

In order to understand the essentiality of the states’ role in democratic communication, and media diversity, it is important to discern the current system of media and policies in relation to the First Amendment. Winseck (1997) notes that the

First Amendment in the U.S. is viewed as partial democratic communication that often restricts the states’ right to protect citizens over corporate media. Partial democratic communication refers to the view of the state role as a coercive obstacle to democracy, developed from the belief that the self-interest of the administrative system restrains the freedom of press/expression, thus, may not assure public good. However, this view lacks the recognition of the current media market where concentrated media power controls the supply of information. The corporate media power, in this way, can be a potential threat to serving public interest by excluding citizens’ right to receive a diverse range of ideas and access to information. Stated differently, partial democratic communication can provide a shield for exclusive benefits to corporate media which enjoys the First

Amendment right with little restriction from the state. Winseck (1997) further notes the problem with the negative freedom; that is the inability of distinguishing between corporate media (i.e., corporate right) and citizens (i.e., human right) in relation to the state role: The distinction between private people (citizens’ rights), and private corporate

(corporate media rights) coming together as public. 75

The concern of negative freedom relates to the assumption that public interest goals are optimally achieved when “state,” “capital,” and “civil” take balanced integral parts in shaping democratic communication. As a concentration of administrative power

(state) can potentially threaten the open communication system by imposing totalitarian ideology, a concentration of corporate power can also be detrimental to the democratic communication process by controlling the access of public information based on their organizational interests (e.g., maximizing profits). Therefore, the partial relationship between corporate media and state, excluding citizens’ rights to access a diverse representation of independent voices and political/cultural opinions, raises the need for a reexamination of the state role within the scope of the First Amendment to protect public interest. The freedom of press can be protected only if media fulfill a democratic function, which is to provide diverse ideas and equal access to civil society against potential abuse of administrative controls. Croteau and Hoynes (2006), however, question the role of media as a “watchdog of government” (p. 9). The problem stems from our lack of discerning where the media system fits into the capitalist structure of society and how economic forces have changed the role of media. In practice, with the culmination of hyper-commercialization the media have indulged the self-interest mechanism of creating profits (see Albarran, 2002; Cavallin, 2000; Croteau & Hoynes, 2006; Gomery, 2000;

McChesney, 1998 & 2004a, etc.), and in turn encourage consumption instead of informing citizens. Although the roles, and relationships among State, Capital, and Civil have been changed, corporate media still enjoy the freedom of press that protects the media goal to maximize profits. This explains the main focus of the regulatory issue relating to the underlying concern for the demands of an adequate level of states’ 76

intervention rather than states’ hands off positioning, in order to protect public interest.

Hence, the question of states’ intervention concerns what to regulate, and in what degree

rather than involvement or noninvolvement of the state in terms of media serving

diversity. This provides the justification of regulation when media don’t meet societal needs.

Regulating Broadcasting and Establishing Public Interest Standards

The social theory, validating the normative principles for a media system and assuming media serving the general benefit of society, provides the rationale for the assumption that proposes defining public interest by government role rather than by free market competition in the broadcast industry (see Chapter 3 for a detailed explanation of the core assumptions of the social theory). The social theory premises regulation as a necessary tool for improving the industry performance of media in order to avoid market failure, and to protect public interest. The four widely accepted criteria for determining market failure, and justifying regulatory intervention are “broadcasters as monopolist,”

“the pervasiveness of broadcast programs,” “insufficient diversity,” and “access to a scarce resource” (see Krattenmaker & Pow, 1994).

The first promise, broadcasters as monopolists, is concerned with market power that exercises certain control over the industry. It also assumes that each broadcaster has an obligation to its audiences because broadcasting is the major source for audiences to access information, including both news and entertainment. The second promise, the pervasiveness of broadcast programs in society, concerns the significance of broadcast effects on society due to its pervasive presence in society. Broadcasting, particularly

“broadcast television plays a major role in the everyday lives of Americans and is the 77 primary source of news and entertainment for most households,” (Hundt, 1996), which essentially involves other serious social considerations being at work. Thus, if broadcasters do not serve public interests (or societal needs), they can potentially harm society with their great influence. Since the second promise assumes media influence on societal/political values, it essentially justifies media serving social duties. This assumption also closely connects to quality content providing diverse cultural and social viewpoints throughout educational, and informational programs that must benefit society.

This view relates to media diversity shaped within social and political perspectives.

The third promise, insufficient diversity, assumes that competition based on the economic principle doesn’t satisfy the diversity goal which is achieving diversity of programming. This is mainly because media productions are information, which can’t simply be measured by the economic standard of competition. Competition in the broadcast industry is largely determined by profit maximization, thus, is often amoral.

Therefore, regulation will be needed to promote diversity. The fourth promise, access to a scarce public resource, assumes a social duty of media due to broadcasters’ free access to scarce resources. Since broadcasters are granted, at no cost, the exclusive use of a scarce public resource, they should be obligated to return social goods not social harms in a socially responsible manner (see Krattenmaker & Powe, 1994). All of these promises provide justification for the regulation against market failure. More importantly, they provide the foundation for establishing public interest standards on the basis of medias serving a public role.

These promises provide a general guideline in defining public interest standards, and accordingly policy goals in promoting media diversity. In fact, establishing general 78 public interest standards is critical and necessary for the foundation of media’s democratic performance. The arbitrary and capricious broadcasting rules in promoting diversity throughout history (Napoli, 1999a) explain the government’s ineffective response to market failure, which in turn fails to justify regulatory intervention in the media market. And this failure can be attributed largely to the inconsistency of defining public interest standards. In other words, the policies should be consistent with public interest standards (i.e., philosophical underpinning of policy goal), yet at the same time should consider specific market conditions (i.e., practical implementation of policy to a specific market). The examination of broadcasting rules in the following section will explain such aspects in terms of the relationship between media policy and source diversity.

Media Policies and Diversity

Regardless of contradicting goals in achieving diversity, the regulation of the U.S. government has often focused on competition in the media market, which is the concern for ensuring pluralistic outlets of media. As far as broadcasting is concerned, the FCC has authority through the demand to protect public interest while the Federal Trade

Commission (FTC) has statutory authority over antitrust. The question that has been raised in terms of media policies on diversity is whether to determine regulation either on the number of group owners and outlets (source diversity) or market concentration based on their market share, in conjunction with a concern for the degree of regulation in terms of specific market conditions. Another major concern is whether the regulation goal should involve the requirement of quality programming, including public affairs, and 79

educational programming over the plurality of program choice as far as content diversity

is considered.

Antitrust and Criteria: Regulations on Concentration

One major policy relevant to diversity is antitrust, through which the government attempts to breakup market concentration or industrial monopolies. Antitrust law explains government’s effort in creating effective competition by controlling ownership. This policy tool has a long history, traced back to the Sherman Antitrust Act. The Sherman

Act is intended to protect the public from control of economic power in a highly concentrated industry. In brief, the Act restricts monopoly ownership as unlawful to protect the public. When unfair advantages of major owners in a highly concentrated industry, granted by exercising power in determining distribution prices, harms the development of new products or related industries, it is considered as violating the law.

The specific implication of the antitrust law, and its applications, however, are not clear- cut, which raised heated debates on the relevant cases among policy makers and scholars.

The problem that both the policy makers and scholars have faced is difficulty in defining a monopoly and identifying what aspects of the monopoly practice are harmful to the public, and what are the unfair advantages. For the most part antitrust cases are convoluted in fact-finding, negotiation, trial, and appeals that involve long periods of time (Compaine, 2000). All these explain that not only antitrust law has been suffering from insufficiency of defining public interest standards, but also antitrust is to be understood on a case-by-case basis with the consideration of a particular condition.

The most well known antitrust activity that had an impact on the broadcasting industry was the Paramount case, which was against the motion picture monopoly of the 80

1940s (1938-1949). During that time, the movie industry was dominated by five vertically integrated firms, MGM (Loew’s), RKO (Radio-Keith-Orpheum), Fox, Warner

Brothers, and Paramount. The U.S. justice department was concerned that such dominance provided an unfair privilege to them by letting them have complete control over production and exhibition in the industry. Consequently, such control was considered as hindering independent theaters at entry level by fixing prices for firms. The

Sherman Act was a direct corollary of this concern, attempting to break up the vertical integration by enforcing a price-fixing combination as a violation of the law. The public interest criterion behind this Act was the application of the First Amendment right of citizens to have access to diverse ideas. In fact, this antitrust criterion reflects the notion of the First Amendment upholding citizens’ rights to receive information over media’s right to produce and distribute content.

This antitrust action successfully broke up the monopoly of the Hollywood studio system, and has had a continual impact on the television industry in later years. For example, television networks were prohibited from owning programs with the aim of breaking a monopoly of television production and exhibition in the 1970s and 1980s

(Croteau & Hoynes, 2006). However, with the deregulation policy implemented in the

1990s, both movie studios and television networks went back to the position of owning distribution channels and programming respectively. Beyond the implementation of antitrust law to break up monopolies, media policy also faces the difficulty of providing a way to best serve diversity within the notion of public interest.

Early Broadcast Ownership Concerns and Issues

Concerned with promoting content diversity, the FCC has followed a policy that regulates the ownership of broadcasting services in part to change content. Campaign et al., clearly address the FCC’s effort to promote content diversity by controlling source diversity noting, “ in the volumes of FCC hearings and reports on questions of ownership, a key and constant element is use of term “diversity.” It is repeatedly asserted that diversity of media control is in the public interest … but because such ownership will be more likely to provide a broader variety of content choices to the public” (1979, p. 74).

The state’s effort to protect the public interest can be traced to the

Communication Act of 1934, which provides the fabric of broadcast diversity policies. It espoused the right of citizens (audiences) over broadcaster in interpreting the notion of public interest. The Act, in which the jurisidiction over radio licensing transferred from the Federal Radio Communication to the FCC, contained existing provisions of the Radio

Act of 1927. The initial regulation that has a major impact on broadcasting was the Radio

Act of 1912. The regulation of radio communication mainly originated from the need of controlling airwaves when the government found it difficult to transmit government messages due to the chaotic mix of airwaves during that time (Einstein, 2004a). In breif, the Act is stated as

This was the first domestic law for general control of radio communication…The

Radio Act regulated the character of emissions, transmission of distress calls, set

aside certain frequencies for government use, and placed licensing of wireless

stations and operators under the Secretary of Commerce and Labor, now

responsible for the licensing of radio stations and operators. The actual licensing 82

process began in 1912. This law governed the regulation of radio, including the as

yet little-known concept of broadcasting until 1927. (FCC, 2006)

The Radio Act of 1912 provides at least two key issues; first, government controls airwaves through licensing (i.e., control of information throughout media ownership), and second, the radio spectrum is provided on the basis of government provision (see

Krattenmaker & Powe, 1994; Einstein, 2004a). The reasons for the failure of the Act are briefly explained as the rapid growth of radio broadcasting, convoluted with the technology issue, in which government wasn’t prepared to effectively control. In other words, the existing technology couldn’t allow audiences access the abundant information and ideas available from many sources including government, universities, corporations, and amateurs. Einstein (2004a) gives a clear description of the technology issues that caused the failure of the Radio Act of 1912 in terms of creating diversity:

Regulations were based on spectrum allocation, that is issuing licenses to

broadcasters allowing them to use a segment of the radio spectrum on which they

can send their signal through air. Underlying the need to mete out this resource is

the concept of “spectrum scarcity.”… As early as the mid-1920s, technology

existed that would overcome the perceived shortage in spectrum. Seventy years

latter, technology had increased so that only a limited part of the spectrum was

allocated to broadcasting. In 1983, Pool explained, “only about 2 percent of that

spectrum is now devoted to broadcasting for both radio and television, but of the

frequencies that policy makers considered in the 1920s, as much as half was

dedicated to radio broadcasting. (pp. 10-11) 83

The underlying issue of the Radio Act of 1912 beyond its lesson from failure is first the government’s application of the public interest criteria was on the basis of the states priority of use (e.g., for the purpose of transmitting military and government messages) over societal needs. Second, the government wasn’t prepared to adequately control the airwaves, and decided the need of allocating licenses to broadcasters mainly because of an insufficiency of recognizing the particular radio market condition (e.g., the government belief in spectrum scarcity with little regard to the technology issue).

Unfortunately, the spectrum allocation, on the basis of the government’s belief in spectrum scarcity, proved to be a benefit for major broadcast networks because limited spectrum and the need to avoid interference among stations allowed few networks (three large corporations) to dominate broadcasting; that is, in fact, a restraint of competition and diversity. Correspondingly, concentration of broadcasting stations whether through group ownership, cross ownership, or duopoly ownership has been a serious concern as well as a controversial issue since the 1920s. Followed by the passage of the Radio Act of

1927, and enactment of the Communication Act of 1934, ownership control of the broadcast service has been a major issue. And even today, six decades after its first media ownership order, the FCC is still struggling with regulating multiple ownership to both duopoly and media cross ownership, in an effort to make monopoly ownership unlawful.

Multiple-Station Ownership Rules

Ownership Rules under Numerical Limits of Stations

Although multiple station ownership was presented in the late 1920s, shortly after radio broadcasting was authorized, and extensively discussed with the enactment of the

Federal Radio Act of 1927 and the Communication Act of 1934, the first regulations 84 limiting the extent of station ownership were introduced in 1940. These rules, known as

Rule 4.77 and 3.228, limited TV and FM radio stations by establishing “an upper limit of three experimental TV stations and six frequency modulation stations under common control” (Howard, 2006, p.14). The FCC’s first regulation that affects the dual operation of two standard (AM) broadcasting stations in the same market area was issued in 1941.

The rationale behind the issue was to relax the control of two major broadcasting networks, NBC and CBS, thus eliminating dual operation of broadcast services at both the national and local levels. At the time, however, specifying the limit of television ownership was seen as somewhat inappropriate, for only eight stations had been licensed to operate nationally, and three of those were not even fully operational (Gelman, 1963, quoted in Howard, 2006). As a result, anti-duopoly prohibition and an upper limit of five

TV stations, which used be limited to three stations, were enacted in response to the issue of serious expansion in the television industry. 48 % (24 stations) of all operating TV stations (50 stations) were part of multiple-station organizations in 1949.

The FCC’s serious concern for public interests and its effort to promote diversity were reflected in the first comprehensive rules of multiple station ownership issued by the Commission in 1953 (FCC 1953). The purpose of the rules is stated as

the multiple-ownership rules is to promote the diversification of ownership in

order to maximize diversification of program [italics added] and service

viewpoints, as well as to prevent any undue concentration of economic power

contrary to public interest [italics added] and thus to carry out the underlying

purpose of the Communications Act to effectuate the policy against 85

monopolization of broadcast facilities and the preservation of the broadcasting

system on a free competitive basis. (FCC, 1953, p. 1563)

This statement explains the FCC’s commitment to promote program diversity by ensuring diversity of ownership (source diversity) with the recognition of the significant role of the multiple ownership that plays in the national broadcast service. Moreover, it highlights promoting diversity as a key dimension of serving public interest and the FCC believed that specifying the number of stations allowable could prevent concentration as well as protect public interest. Under the purpose of serving public interest, the comprehensive rules were specifically developed from the concern for the competitive imbalance between VHF (very high frequency) and UHF (ultra high frequency) stations, in which UHF was unable to get network affiliations. The attempt to allocate VHF and

UHF bands in a fair and equitable TV channels was the groundwork of the rules for an efficient and competitive Nation-wide television service. More specifically, the purpose of utilizing both VHF and UHF was for a “partial lifting of the freeze under certain conditions, and the reservation in specific communities of television channels for noncommercial educational use” (FCC Annual Report, 1950, p. 180). The rule proposed to promote UHF was the adoption of the rule of seven. These rules limited a single owner to seven stations, and a maximum of five TV stations of VHF facilities, seven FM stations, and seven AM stations (FCC, 1953). The rule of the numerical limit of multiple ownership, shortly after the UHF modification extension in 1954, had remained the same over three decades.

Recapitulating the major argument regarding the first comprehensive rules, the rules were designed to prevent undue concentration, and provide diversity of both sources 86 and program, range of program sources, ideas, and viewpoints. However, as Howard

(2003 & 2006) argues, the rules where the FCC sets numerical limits of broadcast stations effectively authorized group ownership, which becomes the foundation for the broadcast industry structure in the following years. Stimulated by the condition of limiting ownership by the Commission, during the 1950s, most independently owned stations were sold gradually to the groups. Consequently prices for stations with desirable locations were increasing. In acquiring TV stations within the numerical limit of seven stations, owners buy large market stations, and sell those stations in smaller markets, called the “trading up” process (Barrett, 2003; Howard, 2006). The result shows the failure of the FCC’s strive for concentration control to promote diverse opinions because, in practice, the rules of seven actually promoted the development of group ownership in the broadcast industry. The ineffectiveness of these rules is attributed to the ignorance of economic potentials, in which the FCC counted concentration on the basis of the number of stations (plurality concern or concern for maximizing the number of separately-owned media outlets) without accounting for owners’ potential audience coverage (market power). Therefore, “it encouraged owners to buy large market stations and sell those in smaller markets routinely as they sought to fill their ‘quotas’ with increasingly profitable stations” (Howard, 2006, p. 30). See Table 4.1 for the change in group ownership. Table

4.1 indicates that group ownership from the Pre-Freeze to 1980 has greatly increased from 37 % to 68.3 % due to acquisitions and mergers. Consequently, the concentration of networks, and their growth of power in the television network became a great concern of the FCC in responding to protecting public interest relating to diversity issues.

Table 4.1 Group Ownership of U.S. Television Stations. 1950-1980

Year No. Total No. % Group owned Stations Group owned 1950 40 108 37.0 1960 294 523 56.2 1970 440 677 65.0 1980 506 741 68.3

Source. Data complied from Howard (1983, 1995, & 2006)

However, as the Commission was premised to increase educational channels by facilitating more use of UHF, the relative percentage between educational and commercial channels shows a rapid increase of educational channels while commercial channels are decreased competitively from 1950 to 1984. Thus, the first comprehensive rules utilized increased educational channels although they effectively provided a foundation for group ownership structure in the broadcast industry. Commercial versus the educational channels and comparative percentages until the ownership rule adoption in 1984 are represented in Table 4.2.

Table 4.2 Group ownership of U.S. Television Stations. 1950-1980

Year VHF UHF Commercial Educational % % Total Total TV TV (PBS) Commercial Educational (on air) (on air) TV TV 1950 NA NA 104 0 100 0 1955 NA NA 458 11 97.7 2.3 1960 346 76 579 47 92.5 7.5 1965 468 92 589 92 86.5 13.5 1970 597 297 691 190 78.4 21.6 1975 607 332 706 243 74.4 25.6 1980 639 493 746 267 73.6 26.4 1984 649 531 893 297 75.0 25.0

Source. FCC annual reports. NA: not available

Consideration of Economic Potentials: Numerical Limits of Stations and Audience Reach

The FCC has limited the national ownership of television broadcast stations since

1941. The rules were modified several times in the mid 1980s, primarily caused by changed market environments in broadcasting. In 1983, the FCC re-examined multiple ownership mainly due to increasing numbers of broadcast stations, cable TV services, and other nontraditional broadcast-like services (Howard, 2006). Responding to the change in the media market environment, the substantial expansion of media choices, the

FCC noted that the potential for national ownership concentration which might threaten diversity had been reduced. In 1984, a new approach to national ownership was instituted by the FCC as a six-year transitional ownership of 12 television stations nationwide (12- station limit); that is the expansion of the numerical limits of stations from 7 to 12. On reexamination of the ownership rules, in 1985, the FCC adopted additional ownership limits based on “audience reach” which allowed an entity to acquire interests in television stations as long as the combined reach of those stations didn’t exceed 25 % of the nation’s television households (i.e., national audiences) as determined by market ranking

(Goldfarb, 2006; Committee on Commerce, Science, and Transportation, 2003). Thus, briefly defining the adaptation of the rules, National Television Ownership, in practice,

“applies to the major broadcast networks, limiting them to ownership and operation of local broadcast stations which reach the prescribed percentage, in total, of U.S. television households.” (CRS Report for Congress, 2006, CRS-16). The FCC’s accounting of the audience reach for the ownership rules in addition to the numerical set of stations, in fact, shows their acknowledgement of audience coverage for a group owner, valuing economic potentials. Under the 12 and 25 % rule, retaining numerical limits of 12 stations could be 89

interpreted as the FCC’s effort to prevent acquisition of the number of stations in smaller

markets while the institution of 25% rule apply to the potential economic value of

stations (FCC, 1984). In applying this 25 % cap, group owners’ audience reach

(estimation of households) along with their location of stations owned by groups, became

a critical factor for utilizing local television market research. In brief, the rules can be

characterized as a compromise between the issues of numbers of ownership (e.g.,

pluralistic competition) versus market potentials (e.g., concentration of market power) in

reaching audiences for an assessment of the monopoly threat to the diversity issue.

Soon after the rule, 12 stations and 25% went into effect, the broadcast industry

underwent significant structural changes, in which there had been more consolidation

from 1985 to 1995 by providing the condition for group owners to obtain more station

holdings as other individual stations fell under the influence of mergers, acquisitions,

takeovers, and some other form of integration (Howard, 2006). See Table 4.3 for group

ownership and numbers of group ownership from 1985 to1995.

Table 4.3 Group Ownership and Number of TV Groups. 1985-1995

Year % No. Multiple % Total stations Group owned station TV groups No. Multiple TV stations groups 1985 73.0 180 27.3 660 1990 77.2 207 24.1 843 1995 77.6 210 23.4 898

Source. Data compiled from Howard (1983, 1995, & 2006)

From the data, the percentages of group owned stations increased while the percentages

of numbers of multiple TV groups declined from 1985 to 1995. This indicates that both 90 numbers of the TV groups and group owned stations were declining during these years.

Although the number of multiple TV groups increased from 180 in 1985 to 210 in 1995, the average percentage of numbers of the TV groups declined from 27.3 % in 1985 to

23.4 % in 1995, as total stations have increased more than the number of groups.

The rapid increase of stations and steady growth of group owned stations during that time were the corollary of the success of the UHF channels. When applying economic values to the ownership rules, such as accounting for audience reach, the FCC also provided a 50% UHF discount for the purpose of developing the UHF stations. It was recognized that UHF stations are incompatible to VHFs in their technical coverage- the higher power requirements, and greater expenses than VHFs. Thus, the 50% UHF discount was inevitable in removing the competitive handicap, warranting a discount to all UHF outlets (see Table 4.4 for the UHF/VHF channels from 1985 to 1995).

Table 4.4 VHF/UHF Educational and Commercial Channels. 1985-1995

Year No. No. No. No. % % VHF UHF VHF UHF Commercial Educational Commercial Commercial Educational Educational 1985 541 379 113 186 75.4 24.6 1986 547 435 111 192 76.4 23.6 1987 542 463 115 203 76.0 24.0 1988 543 506 119 214 76.0 24.0 1990 552 560 125 228 76.0 24.0 1991 556 572 125 233 76.0 24.0 1994 559 598 123 240 76 24 1995 559 620 123 240 76 24

Source. FCC annual reports

As shown in Table 4.4, UHF outlets had rapidly increased from total stations of 565 (379 commercial & 186 educational channels) in 1985 to 860 (620 commercial & 240 educational channels) in 1995 while VHF stations have remained at a similar rate of growth. At this juncture, it is important to review the FCC’s original purpose of increasing UHF stations; as stated earlier in this chapter, the purpose of developing UHF stations was to promote diversity under public interest criteria, and increase educational channels in program content. It is apparent that the increase of UHF channels indeed provided more educational channels from 1950 to 1984 as Table 4.2 evidences. However, the percentage of increased educational channels during that period (an average of 25 %) has remained somewhat similar from 1985 to 1995 although there was an astonishing growth of UHF channels. It was mainly because the growth along with the UHF discount was largely in commercial channels rather than in educational channels.

The UHF discount is justified by the belief of the importance of traditional broadcasting, in which UHF stations have greater difficulty in reaching audiences who do not obtain local television stations over a cable television system, counted as roughly one third of American viewers (FCC, 2000). However, the 1998 Biennial Regulatory Review explains the potential abuse of this policy that might go against its intended purpose:

As Univision points out in its comments, if there were no competitive disparity

between VHF and UHF television, we would expect group owners to take

advantage of the UHF discount by selling their VHFs and buying UHFs. The fact

that few, if any, group owners have used this strategy suggests that the market

recognizes a continuing competitive disparity between the two services. 92

Accordingly, we cannot say the discount is no longer in the public interest as a

result of competition. (1998 Biennial Regulatory Review, 2000, sec IV)

This statement provides some important aspects related to the diversity issue. If increasing the UHFs didn’t satisfy the purpose of balanced source diversity, and thus balanced program content, then it might need a re-examination of this rule with a closer interrogation on whether there was potential abuse of the policy in terms of the diversity issue. This also points out the need for the FCC’s close monitoring of content diversity in relation to source diversity in order to critically examine the effects of source diversity on content because, as noted earlier, the ultimate purpose of diversity, and the reason for preventing any undue concentration of economic power (controlling source diversity) is to maximize diversification of program (content diversity).

The Telecommunication Act of 1996

The 1984 and 1985 broadcast ownership rules had remained the same until the

Telecommunication Act of 1996 was passed. Under section 202 of the

Telecommunication Act 1996, the FCC adopted a 35% cap and eliminated the numerical limit of 12 stations nationwide; that is in fact the elimination of both duopoly (e.g., one to a market rule), and cross media ownership (e.g., ownership of newspapers and a TV station in a common market condition). More specifically, the rules reflect the FCC’s concern for effective competition by eliminating the numerical limits of stations.

The Act intended to protect consumers against monopolies and to guarantee the diversity of voices, and viewpoints, and to prevent undue concentration in television and radio ownership (Clinton, 1996; Gore, 1996). However, as the limits on stations’ ownership were lifted by the Act of 1996, acquisitions and mergers were rapidly increased. Croteau 93

(2003), in his remarks on the Federal Communications Commission Broadcast

Ownership EN BANC, identified the failure of the deregulation policy as

Unfortunately, relaxation or elimination of existing ownership regulations would

move us in exactly the wrong direction. While increasing the profits of major

media conglomerates, such changes would, in all likelihood: promote further

concentration of media ownership, thereby undermining competition; reduce the

already limited diversity in commercial media content; and reduce the quality, and

sometimes the quantity, of locally produced media content. None of these are

good for our country or for our democracy. (p. 1)

As Drushel (1998) found, horizontal concentration of the top radio market has almost doubled as major conglomerates, such as Disney (ABC) and CBS have acquired individual stations along with other group owned stations. Likewise, Howard (1998 &

2006) indicated that group owned TV stations rapidly increased whereas the number of group owners declined due to merger activities. The group ownership and the number of groups from 1997 to 2002 are represented in Table 4.5.

Table 4.5 Group Ownership and Number of TV Groups. 1997-2002

Year % No. Multiple % Total stations Group owned TV groups No. Multiple TV stations groups 1997 84.6 184 15.5 1,189 2002 85.9 142 10.6 1,338

Source. Data from Howard (2006)

Table 4.5 indicates that the percentage of group owned stations in 1997 reached 84.6 %,

and in 2002, it increased to 85.9 %, while the percentage of numbers of multiple TV

groups has significantly decreased from 15.5 % in 1997 to 10.6 % in 2002. When

compared to the condition before the Act of 1996 was passed, such as in 1995 (see Table

4.3), these changes were rather dramatic. The percentage of group owned stations jumped

from 77.6 % to 85.9 % while the percentage of numbers of multiple TV groups declined

from 23.4 % to 10.6 % during 1995 to 2002 (see Table 4.3). The premise of promoting

diversity and breaking monopolies through the Telecommunication Act of 1996, in this

sense, has failed due mainly to the FCC’s ignoring the factor of market power, and

focusing on the plurality aspect of concentration in controlling source diversity.

The new television ownership rules of 1996 that the combined potential audience

coverage does not exceed 35 % the national cap, consequently allowed broadcast groups

to own an unlimited number of TV stations in different markets. This was providing a

condition of increased mergers stimulated by vertical integration that would include a

broadcast network and a program production studio under the same corporate entity.

Thus, the profits and expenditures keep circulating under the same corporation roof. The

vertical integration directly influenced duopoly rules that have long been prohibited in television industry. In 1999, under the influence of the Telecommunication Act of 1996, the FCC modified the local television ownership rules eliminating the duopoly rule in some markets under certain conditions, allowing station groups to own two television stations in a common market. Obviously, permitting duopolies would result in a consolidation of the broadcasting industry. The merger between CBS and Viacom in

1999, Fox’s acquisition of WPWR, a Chicago television station in 2002, and NBC’s 95 merger with Telemundo in 2002 are examples of giving the companies duopolies, and accordingly concentration. The expectation is that more duopolies will be created in medium to small markets and networks will continue to acquire as many stations as possible under the rules, facilitating more consolidation including both horizontal and vertical integration. In other words, it provides a license for large stations to get larger networks and to have more control over the distributions of their business (Einstein,

2004).

Syndication Rules and PTAR

The FCC’s effort in breaking up the networks’ dominance (e.g., ABC, CBS, &

NBC) over the television broadcasting service is also apparent when the Commission institutes syndication rules (fin-syn), in conjunction with PTAR (Prim Time Access

Rules) in 1970. The purpose of the syndication rules are stated as

The fin/syn rules, which were adopted in 1970 to limit network control over

television programming [italic added] and thereby foster diversity of

programming through the development of diverse and antagonistic programming

sources, restricted the ability of the three established networks (ABC, CBS, and

NBC) to own and syndicate television programming. (Review of the Syndication

and Financial Interest Rules, 1995, para 3)

These rules reflect the policy goals that control source diversity (in this case, producer of programming, not the media outlet) to achieve content diversity (in this case, program diversity). The FCC’s focus on source diversity to achieve content diversity is a direct corollary of the First Amendment conflict where content diversity, the ultimate goal of media diversity, was never achieved by the FCC’s direct control over content. Although 96 the policy goals of cross ownership rules, and syndication rules are the same in breaking the broadcasting monopoly, and regulating source diversity in controlling content diversity, the syndication rules are specifically designed for increasing “independent producers” to enhance content diversity during network prime time hours. This attempt indicates that the FCC’s shifting focus to source diversity (ownership diversity) from the distribution system to production system with an assumption that controlling producers of programming rather than increasing the number of outlet sources would more effectively increase content diversity. With an effort to define source diversity (ownership diversity) by separating program ownership from outlet ownership, the FCC provides a specific concern for content diversity (diversity of prime time program), which had been previously ignored by the FCC’s strait focus on ensuring outlet diversity with little intention of monitoring content. The FCC’s effort to define source diversity, and specific concern for program diversity (content diversity) and the specific focus area of PTAR are reflected in Hundt’s (1996) expressed concern for broadcasting diversity:

The Commission seems to be interested in at least four different notions: outlet

diversity, source diversity, voice diversity, and program diversity. "Outlet

diversity" [italic added] is relatively straightforward -- the Commission would like

to maximize the number of separately-owned media outlets. "Source diversity"

was invoked to promote the development of a number of upstream programming

producers and was the justification for the Fin/Syn and Prime Time Access Rules,

also known as PTAR [italic added]. "Voice" diversity -- or viewpoint diversity --

describes, in my opinion, editorial perspective… "Program diversity" is more

complicated, but perhaps most important [italic added]. Program diversity means 97

that it is a good thing if lots of different types of programming are shown on

television. (FCC, 1996, para 6-11)

As the statement indicates, the implementation of Fin/Syn and PTAR is to enhance prime time program diversity by increasing competition of programming producers (not distributors or outlets). More importantly, it shows the Commission’s attempt at separating the distribution (called outlet diversity in the statement) from production system (called source diversity in the statement) as an affective means of controlling source diversity (ownership diversity-the general terms used in my study, including both outlet and program ownership) to actively shape content. However, this statement also explains the FCC’s true measure of source diversity (diversity of program producer) on the basis of the number of program producers rather than inequality of market power based on market share, in which the justification of the rules was made for increasing a number of independent programming producers. Assessing source diversity in terms of number of participants (i.e., producers), although it “provides the degree to which a diversity source of information is available,” still limits accounting for “the possibility that the market is structured in a way that prevents all sources from having reasonable access to the audience” (Napoli, 1999a, p. 12). In other words, the indication of possible structural inequality can be more effectively identified by distribution of market shares

(audience shares).

More specifically, the syndication rules and PTAR were meant to prevent the networks’ dominance by limiting financial interests in programming produced by external producers. The PTAR “prohibits television states affiliated with ABC, CBS, or

NBC network programming in the top 50 prime time markets from broadcasting more 98

than three hours of network programming or off-networks programming (i.e., returns of programs formerly shown on the networks) during four hours of prime time” (FCC

Repeals PTAR Rule, 1995, p.1). In other words, the PTAR is a restriction of network programming production that local television stations owned by (or affiliated with) a network could air during prime time. These rules were further solidified in 1977 with the consent decrees executed by the Justice Department. By providing greater access to off- network programming and facilitating the growth of independent stations, the

Commission hoped to promote diverse program choices during the whole of prime time.

The justification of these rules can be related to forestalling networks’ vertical integration (the control of production, distribution, and exhibition processes) that inherently facilitated the dominance of networks with their increasing economic power

(McAllister, n.d.). By eliminating the incentives for the networks to produce programs during prime time hours, these rules could separate ownership production from ownership distribution, and, consequently hinder the networks to be vertically integrated.

As a result, these rules offered benefits for independent television stations from the separation of the networks from syndication, or from removing networks’ financial interests in programming production.

In spite of the justification of the rules, the critics raise the questions that the syndication didn’t provide the solution for the intended problem. The intended purpose of the rules as stated earlier is to enhance content diversity by encouraging effective competition in television programming. However, as FCC chairman Hundt (1996) admitted, the intended purpose of promoting program diversity certainly wasn’t achieved:

The Commission says it has an interest in fostering broadcast "diversity." 99

However, the Commission has not always been very clear about what "diversity"

means… Structural rules promoting outlet and source diversity, however, do not

necessarily give us either voice or program diversity. (Hundt, 1996, para 6 & 17)

Two reasons that the rules were not clearly evaluated were first the inconsistent measurement of concentration in programming caused by the FCC’s insufficient defining of diversity, particularly source diversity (ownership diversity). As Hundt states, the FCC broadly refers to source diversity as measuring the number of program producers while outlet diversity is referred to as measuring the number of independent outlet sources delivering programs with a clear distinction between them. However, the indicator for assessing ownership diversity is rather complex, and distinction between ownership of content producers and distributors seems somewhat artificial because they often operate simultaneously. Napoli (1999a) provides serious shortcomings of definition problem of source diversity (program diversity) that the FCC defines in the following statement:

Under the executive producer measurement methodology, concentration the

program production industry appeared to have declined over the years. In

contrast, under the copy-right holder methodology, concentration had increased.

Thus, under one measurement standard, the Fin-Syn rules had been effective in

achieving one of their primary goals-reducing ownership concentration in the

program production industry. According to another measurement standard, the

Fin-Syn rules had been a failure. (p. 13)

The FCC ultimately relies on copyright holder methodology (the number of different copyright holder) in assessing program sources (FCC 1993). Such contradictory methodological standards and the FCC’s ultimate support for one over the other 100 methodology explain the imminent need of developing a carefully planned assessment from the beginning which can be applied effectively in a consistent manner over time.

Second, the FCC’s failure of demonstrating the critical relationship between source diversity and content diversity caused by a lack of intention to monitor content.

Developing the most effective assessment of diversity can be facilitated only when the

FCC strives to continually monitor content diversity (ultimate goal of diversity) and identify what indicators of source diversity actually influence content diversity. Along with the methodological contradiction due to the FCC’s insufficient defining of source diversity, the inquiry of the effectiveness of these rules requires a close investigation of the critical relationship between source and content diversity. As Napoli (1999a) notes, the policies often fail to demonstrate the assumed relationship between source and content diversity. Although the syndication rules were to enhance content diversity during prime time by controlling source diversity (number of program producers), the

FCC lacked in monitoring content diversity in relation to source diversity and “provided no information to alleviate this skepticism” (Napoli, 1999a, p. 17).

Current Diversity Issues and Policy Concerns

The analysis of diversity policies tells that the FCC’s effort in promoting content diversity through controlling source diversity faces significant challenges. One major challenge for justifying regulatory policy when market failure occurs is to establish consistent public interest standards in terms of media diversity. The inconsistency of establishing public interest criteria hinders not only on defining what constitutes media diversity, but also implementing adequate policies on media diversity. Consequently, 101 ineffectiveness of polices focusing on source diversity does not satisfy the ultimate diversity goal, which is achieving content diversity.

The diversity policy goal that focuses on source diversity to shape content was a direct corollary of the First Amendment conflict, which restricts the states from directly regulating content. Regarding source diversity, the policies on multiple station ownership are considered failing in achieving their objectives, which was demonstrated by the result of increasing group ownership where independent stations tended to be owned by major station groups. Likewise, the rationale for the syndication rules along with prime time rules were convoluted due to contradictory measurements in evaluating the policies in spite of their success in encouraging the competition of independent producers. More specifically, according to the critics, the ineffectiveness of the policies can be contributed to the FCC’s attempt to measure source diversity by plurality of ownership (including both content and outlet ownership) rather than market power, and failure of monitoring content diversity in terms of source diversity. The FCC’s focus on increasing the number of media outlets to promote diversity is reflected in the CRS Report for Congress (2006):

The FCC doesn’t intend to apply the Diversity Index to any specific proposed

change in media ownership. Rather, it used the Diversity Index (calculated for

sample markets by assuming that each media outlet within the same media

category, for example, television stations, has the same “diversity market share”)

as the basis for setting the maximum number (or combination) of media outlets

that any provider could own in a market. A proposed media merger then would be

approved or disapproved based on the number (or combination) of media outlets 102

the post-merger company would have in the market, regardless of its actual post-

merger diversity market share. (CRS 13)

This statement implies that the FCC ignores existing market power, heavily relying on the number of media outlets in applying diversity polices on source diversity. At this juncture, Glasser’s (1984) distinguishing the term “variety” from “diversity” is very useful in understanding the difference between plurality and diversity. The variety only concerns the number of outlets whereas diversity concerns both choice of content and differences between them in terms of content and ownership characteristics (quoted in

Napoli, 1999a). Of course, a certain degree of variety is critical and required to create diversity, but the concern for variety is not the same concern for creating diversity. What this implies is that when determining policy objectives, the government should take into consideration market power based on the existing market share, not mere consolidation, for effective monitoring of the relationship between source and content diversity.

Moreover, the assessment of the effectiveness of policy further convoluted from divergent policy goals stemmed from either political or economic goals that measure the effectiveness of the policy differently. Theoretically, when economic goals are emphasized, deregulation should be favored to increase competition, thus increasing the number of channels would be the primary goals. On the other hand, when political goals are emphasized, regulation is needed to insure the quality of content (socially desirable) and that the concentration of market power would not hinder such a goal. The divergent approaches to the policy goals raise the critical question as to what media’s role actually is, and what the state’s role should be in considering the democratic function of media.

This concern indeed necessitates establishing a firm public interest standard with a 103 revision of the First Amendment of the constitution. Media as a private corporation should be distinguished from civil society; therefore, the state’s role which is viewed as a coercive obstacle to democracy, should be reinterpreted as necessary to protect citizens from corporate media by assuring citizens’ rights to access and to receive diverse and socially/culturally desirable content. Therefore, as far as the state’s role is concerned in protecting public interest (promoting media diversity), the focus is not the hands off position of the state, but the degree of regulation, and effectiveness of the specific policies.

Correspondingly, the media diversity scholars have questioned whether various channels will provide a great range of choices for viewers. That is the inquiry of how the

FCC’s polices on source diversity (particularly focusing on the plurality aspect of ownership of content and outlet) has an impact on content diversity. However, it might be possible that a great number of program producers and outlets can produce a paucity of voice when the quality of programming is not guaranteed. More importantly, the question is whether serious concentration in the media industry under the deregulation climate, and their economic power, will influence content diversity. Concerning the current deregulatory climate, particularly from the elimination of the financial interest and syndication rules, Croteau’s (2003) remarks on Federal Communications Commission

Broadcast Ownership EN BANC: Richmond, Virginia provide the empirical evidence from the studies that indicate public interests and diversity are not served by a concentration of ownership:

The broadcast networks owning nearly 80% of their prime-time programming—

four times as much as they did when the rules were in place. This has clearly 104

discouraged the development of programming from multiple, independent

producers. The Project for Excellence in Journalism has recently released the

most comprehensive study of its kind finding, among other things, that smaller

TV station groups tend to produce higher quality newscasts than stations owned

by larger companies, thus contradicting the claim that the deep-pockets of major

conglomerates inevitably help news and public affairs. They present nuanced data

and conclude that “regulatory changes that encourage heavy concentration of

ownership in local television by a few large corporations will erode the quality of

news Americans receive. (p. 2)

These empirical evidences in terms of the elimination of syndication rules along with the

deregulatory climate question the direction of the diversity policies on ownership

concentration. Parallel to the old concern, the Golden Age of television three broadcast

networks (ABC, CBS, & NBC) produced the sameness (Blevins, 2002), Khan (2003) also provides a concern for the current concentration of the broadcasting industry where five media companies, General Electric (NBC), Viacom (owner of CBS), Corporation News

(FOX), Disney (ABC), and AOL Time Warner control approximately a 75 percent share of production of prime time viewing (see Table 4.6 for big four TV groups and stations holding).

Table 4.6 Four Major TV groups and Corporations in Broadcast in 2005

TV group Owned by No. Affiliates No. Stations Revenues owned (in Billion) CBS Viacom 200 39 4.67 NBC General Electric 230 29 3.9 FOX News Corporation 200 35 2.62 ABC Walt Disney 225 10 3.91

Source. Data compiled from Broadcasting & Cable (2006), & CorpWatch 105

Much effort in protecting public interest and current debates on ownership rules have been about the best way to promote media diversity. Nevertheless, the current ownership rules raised critical questions on what policy goals should be, and how adequate policy implementation should be made. In an economic realm, the inquiry of policy goals and their effectiveness underlies whether relying on general competition laws will prevent further concentration, second consideration of specific rules along with the rigorous investigations of different market conditions, and third determining key factors that influence market behavior in creating media diversity. In the political realm, the inquiry of policy goals and effectiveness underlies whether antitrust policy on media diversity can actually achieve the ultimate goal, content diversity. The arbitrary and capricious ownership rules should be resolved by the FCC’s effort to establish public interest criteria and demonstrate the critical relationship between source diversity and content diversity by continual monitoring of the policy effects on content diversity.

Addressing the concern for content diversity, the justification for the need of content control might be possible by increasing the effectiveness of the policies. This suggestion comes from voiding the critical relationship between source diversity and content diversity and from the belief that the policy objective of increasing source diversity will not guarantee content diversity. This suggestion, however, seriously conflicts with the

First Amendment right, and critical rationale for content control must be proven to be effective.

Whether the diversity policies focus on political or economic goals, the major issues on the current policy tend to emphasize the significance of content diversity.

Content diversity, in fact, extends its meaning to reflecting both open diversity (i.e., 106 quality content) and reflective diversity (i.e., audience demand), and how source diversity, both plurality and marker inequality of ownership, would affect overall media content in different media market conditions. The next chapter will assess content diversity applying the criteria of both open (normative dimension of content diversity with an emphasis on the political and cultural function of media) and reflective diversity

(expressive dimension of content diversity with an emphasis on the economic function of media) discretely in commercial and public television broadcasting; that is taking the consideration of concentration impact (both pluralistic sources and outlets, and market share) into different broadcast market conditions to measure media content with supply and demand viewpoints.

107

CHAPTER 5 MEASURING DIVERSITY

The Structure of Broadcast Television Networks

The political economy perspective, in striving to promote media diversity, often attempts to provide the need for a connection between media economics and normative concerns (Gomery, 1993). With a concern for how market structure (i.e., monopoly, oligopoly, etc.) influences corporate conduct, this perspective takes corporate ownership as one part of the analysis. Consistent with the assumption of political economy studies, this chapter examines the structure of the television industry and analyzes how the particular market structure of television broadcasting influences media conduct in terms of media diversity. The supply viewpoint, including both concentration (based on market share) and competition (plurality of outlets) in U.S. broadcast television (commercial and public broadcasting) is measured in relation to effects on content diversity; yet at the same time, media supply of content which matches audience demands is additionally measured to reflect the demand viewpoint that has been largely absent in media diversity assessment of content diversity. The analyses follow the assumptions guided by the proposed theoretical framework discussed in Chapter 3. These are 1) due to its obligation to serve the public interest, public television would aim to contribute more to Open

Diversity than commercial broadcast television (public policy model), 2) commercial broadcast television would maximize audience preferences, but the decline of the audience size as a result of increased channels would motivate the broadcaster to duplicate content for cost effective strategies (program choice model), 3) in general, market concentration in the broadcast television industry would hinder promoting diversity in program content; yet the heterogeneous oligopoly structure would promote 108 diversity in program content whereas the homogenous oligopoly structure would hinder diversity (SCP model proposed by Scherer, 1996).

Networks and Distribution System

The discussed principal areas of multiple station ownership and financial interests, along with prime-time access, traditionally governed by the FCC, are closely related to the network issues on a system of distribution (see Chapter 4). In the 1980s, with changes in the laws regarding sale (transfer) of broadcast stations, individual television stations became subjects to be sold and changed hands more often than before

(Blumenthal & Goodenough, 1994). The introduction of a new television network, FOX, built by an acquisition of independent stations was the result of such entrepreneurship. By the mid 1990s, many network affiliates (local stations carrying network programming) in the markets had been sold or traded due to the changes in regulations on the percentage of audiences that could be reached and on cross media ownership. The changes in the distribution system closely relates to the development of commercial network television that supplies a schedule of programming to television stations owned by and affiliated with the network.

U.S. television networks were mainly composed of three national networks, NBC

(National Broadcasting Company), CBS (Columbia Broadcasting System), and ABC

(American Broadcasting Company). Today, more than 20 national networks exist, along with network affiliates, independent stations (without network affiliation), and public television stations (PBS: non commercial national broadcasting network). Notably, FOX,

MyNetwork TV, and The CW (formerly UPN and WB) are today often considered major networks along with the three traditional major networks. The national distribution of 109 television programming is the broadcast network where station groups own the affiliates.

The networks usually function to transmit programming and then distribute it to affiliates by reducing the cost of programming to an individual station. Without networks, a station could take two possible processes, producing its own, or buying programming, depending on an individual station’s capability of producing programming. Either way, without the networks, the cost to produce quality programs (e.g., those that have the potential mass appeal to attract large audiences backed by superior financial resources) is enormous.

Thus, the individual station often compensates for the burdensome cost of programming with the majority of its advertising income during the hours of programs produced by the networks, in order to sell it to national advertisers (Einstein, 2004a). This implies that independent stations would have to pay much higher programming costs than the affiliates. Consequently, this might result in the station buying cheap (or usually low quality) programming to reduce its average cost of programming. In this way, the network powers with their superior financial resources can be a barrier to the independent station, which may hinder effective competition. This economic perspective works to the advantage of the network system grounded in efficient program distribution. Many of the debated inquiries in terms of media diversity stem from the networks’ significant control over their distribution to the commercial networks, whose major role is to serve mass audiences for the advertisers while maximizing profits. Put simply, the debated inquires of media diversity stem from the fear that the “public” can be manipulated by a handful of executives in a few network corporations who compete intensely for “advertising dollars” rather than “programming content.” This study is not an exception; it is in part to demonstrate how market forces influence program content in the broadcast television 110 industry. Yet it extends the analysis by distinguishing the nature of public and commercial broadcast television. This attempt is to answer whether the presence of public television can be a significant alternative in preventing the decline of diversity.

Diversity in Public Television

Development of Public Television

The advent of non-commercial television can be traced back to 1953 when KUHF went on the air. The view of non-commercial television as an educational concept was reformed as public television within the Public Broadcasting Act of 1967. The establishment of the new public television manifested its service to an “improved form of instructional television” during the day, and “high quality” general interest programs in the evening (Blumenthal & Goodenough, 1998). The existing non-commercial stations were also recommended to join a network supported by federal funds at the beginning of the development of public television.

The Corporation for Public Broadcasting (CPB) was created by the Act of 1967, by which the Public Broadcasting Service (PBS) was developed. With a closer relationship between the federal government and public television, CPB has the responsibilities for encouraging diverse program suppliers and sustaining a high quality of program standards. The basic duties of the CPB to ensure these standards are as follows: “reporting on controversial topics, interconnecting stations in a network that allows stations to program and schedule in accordance with local desires, nurturing new station development, conducting research and training, and operating a program archive”

(Blumenthal & Goodenough, 1998, p. 47). The CPB, with the responsibilities listed 111 above, is the primary funding source for public television programming in the subject areas of news, public affairs, cultural and children’s programs, drama, and arts.

A public corporation in the media industry is nonprofit with nonpolitical characteristics, which implies an ideal form for media, unrestrained by political and economic forces in performing its democratic functions. Unlike the commercial television broadcast networks, in which advertising influences the affiliates in exchange for local programming, public broadcast programming is somewhat aloof from these economic forces. Such functions of public television explain why media scholars propose the presence of public broadcasting as a solution in promoting the quality dimension of media diversity. The nonprofit and nonpolitical nature of the corporation is clearly stated in the Public Broadcasting Act of 1967 under Sec.396. Corporation for Public

Broadcasting:

(1) The Corporation shall have no power to issue any shares of stock, or to declare

or pay any dividends. (2) No part of the income or assets of the Corporation shall

inure to the benefit of any director, officer, employee, or any other individual

except as salary or reasonable compensation for services. (3) The Corporation

may not contribute to or otherwise support any political party or candidate for

elective public office. (p. 3)

With the goal of serving the public interest and the nonprofit and nonpolitical nature, the underlying assumption is that public broadcasters provide positive externalities that are not effectively retained by the traditional economic model (Napoli, 2004). Public broadcasters have specific duties to provide minimum proportions of cultural and informative programs and to serve citizens with high quality programs at prime time 112

(Brown, 1996; Van der Wurff, 2004b). Therefore, it was anticipated that public broadcast television would offer informative, distinctive, and innovative content, which in turn would contribute to Open Diversity (see Chapter 3 for the concept of Open Diversity).

Thus, the presence of public broadcasters could prevent the emergence of excessive competition for price that reduces the quality of content in low cost strategies of programming (see Chapter 2 for a detailed explanation of ruinous competition, in which media compete not for content but for price).

The Impact of Policy Preferences on Ownership Structure

In public broadcasting as a public organization, changes in the ownership structure are mainly determined by product of policies that mandate to serve the public interest, convenience, and societal needs. In fact, “Congress acted as though the small sums appropriated to CPB funding gave Congress the right to dictate content” (Sterling &

Kittross, 2002, p. 631). This obligation manifests itself in public broadcasting’s close relationship with policy goals to achieve diversity in programming. Therefore, policy preference can be a critical element for determining product decisions. The idea that the product is somewhat detached from the commercial purpose that uses audience consumption as an advertiser support mechanism explains that public broadcasting is somewhat free from external market forces in producing media content. As Blumenthal and Goodenough (1998) state, public television is non-commercial, so audience ratings do not guide programming decisions. This fact is critical in analyzing media diversity because the market force has been considered a major hindrance in promoting media diversity. Analyzing the significance of ownership structure of public television, therefore, entails changes in policy preferences, not consumer preferences. 113

During 1963-1968, under the Johnson administration, the Public Broadcasting

Service (PBS) was developed by the CPB to distribute national programs through the system. PBS thus functions like a network, yet it doesn’t own stations. With the passage of the Public Broadcast Act of 1967, public broadcasting licensees were charged to encourage programming which would be responsive to the interests of people, which constitutes an expression of diversity and excellence (Public Broadcasting Act, 1967).

The policy goal of the act is to mandate that each public broadcasting license sustains to serve the public interest, convenience, and necessity (Lashley, 1992). Since the enactment of the 1967 act, the number of public stations has greatly increased (see Figure

5.1 for the increase of public television channels).

Figure 5.1 Public Television Channels. 1960-1980

Public Television Stations

300 277 266 252 250 241 213 200 200 180

150 126 101 100 75 51 50

0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980

Source. Data compiled from Status report on public television (1973) & FCC records. 114

Figure 5.1 shows a noticeable increase between the years of 1966 and 1968, where the

number of television stations jumped from 126 to 180 with a steady increase in the

subsequent years. This demonstrates the effect of the 1967 act on source diversity

(number of stations) in public television. Along with the increasing numbers of public

stations, during the Johnson era, public television, in fact, had significant achievements in

programming that provided substantial, innovative, educational, scientific and cultural

programs, which are absent from commercial broadcasting. For example, The Great

American Dream Machine, Washington Week in Review, Sesame Street, Soul and Black

Journal, and Nova were examples of fulfilling the mission of programming that meets the quality dimension of diversity listed above. Some of the programs developed during this era still continue today. Public television in this sense has become an informational, educational, and cultural forum through which adults and children are educated, and audiences are culturally informed.

However, public television has undergone fundamental changes in its organization and programming, along with the policy shift from the Johnson to the Nixon administration. Their production and distribution of controversial news and public affairs programming was recognized as irresponsible journalism, departing from the concept of localism and diversity, and the programs critical of government performance were

“judged to be anti-administration by the Nixon’s White House” (Lashley, 1992, p. 781).

Consequently, increased and long term federal funding for the CPB was difficult to anticipate. Moreover, continual funding cuts in the 1980s by the subsequent administrations of Reagan and the first Bush eventually diminished federal support for public television, which had been the major province of the CPB. 115

Table 5.1 represents federal government funding for public broadcasting from 1970 to

2000. The table illustrates the heavy cuts of federal funding for public broadcasting right after 1980 from 27 % to 16 %. This reduction hasn’t been restored in subsequent years.

Table 5.1 Federal Government Funding for Public Broadcasting Revenue. 1970-2000

Year % Federal Gov $ Total from Federal Gov Constant dollars (in millions) (in millions) 1970 15 23 122 1975 25 93 355 1980 27 190 473 1985 16 175 334 1990 17 269 422 1995 18 345 465 2000 16 352 420

Source. Data compiled from Corporation for Public Broadcasting, published in Stay Tuned (Sterling & Kittross, 2002), & CPB annual reports.

In looking at Table 5.2, the current funding sources of public television from 2000 to

2005 are largely from non-federal sources, including local and state governments, universities and colleges, business and industries, foundations, auctions, and so on; which make up an average of 80%. What this means is that their funding sources are restricted and long term funding is not secured by government support, in which public television would be vulnerable to political influence in decision making. Such funding restrictions caused public television to seek funding from commercial firms, which in turn diminishes the distinction between public and commercial broadcasting.

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Table 5.2 Public Broadcasting Revenue by Public Television. 1999-2000

Source of Revenue 2000 2001 2002 2003 2004 2005 % % % % % % Federal 16.4 17.9 18.8 20.7 21.2 21.9 CPB 13.9 15.4 16.1 16.8 17.4 12.4 Federal Grants 2.5 2.6 3.4 5.3 3.8 3.7 Non Federal 83.6 82.1 81.2 79.3 78.8 78.1 Local/States Gov 21.5 21.5 21.0 21.5 20.3 21.4 Colleges & Universities 8.4 8.4 9.6 8.8 9 8.4 Foundations 5.5 6.1 6.4 7.8 7.1 6.7 Auctions 0.9 0.7 0.7 0.6 0.7 0.6 Business/Industries 39.6 37.2 38.3 36.0 36.6 36.2 All others 7.7 8.2 5.2 4.6 5.1 4.7

Source. Corporation for Public Broadcasting annual reports

As shown in Table 5.2, large amount of funding is from business and industry sources.

This condition critically questions whether public television, attacked by commercial interruption, has influence on program content.

The policy preferences of the Nixon administration that perceived news/public affair programs on public television as biased and irresponsible journalism in fact initiated the decentralization of the network power while strengthening the individual station. In this way, public television became a membership organization where programs are mostly produced by member stations.

Table 5.3 represents public television producers and distributors from 1974 to

1996. The data suggests a general tendency of a decentralized system of production while maintaining a highly centralized system of distribution. A closer inspection of the data indicates that the decentralized system of production is substantiated by a decline of producers from public sources, from 45% to 35 % during 1974 –1996.

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Table 5.3 Public Television Producers and Distributors. 1974-1996

Item 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 Producer 100 100 100 100 100 100 100 100 100 100 100 100 Local 11 10 8 7 7 6 5 5 5 4 5 5 Public TV 45 48 52 46 46 44 38 27 32 31 33 36 U.S. Coproduct 3 2 2 3 3 3 3 10 10 6 6 6 Children's TV 22 19 17 17 16 16 29 16 15 14 12 9 Workshop Independent 6 6 5 8 11 9 5 (1) 19 19 25 26 27 Foreign 6 8 9 13 10 13 15 14 12 11 10 10 Coproduct Commercial 2 3 3 3 4 3 6 4 4 5 5 4 Other 5 5 4 4 4 5 4 4 3 4 4 4 Distributor 100 100 100 100 100 100 100 100 100 100 100 100 Local 11 10 7 7 6 6 5 6 6 5 4 5 PBS 62 69 72 70 67 65 64 62 59 63 63 63 Regional public 10 6 5 8 11 13 14 18 24 23 23 25 Other 17 15 16 16 16 16 17 14 11 9 9 8

Source. Corporation for Public Broadcasting, published in U.S Census Note. (I). Independent producer included with Children's TV Workshop for 1986.

The sharp decline of producers from public sources after 1978 from 52% to 46 %, with a great increase of foreign producers from 9% to 13% is in part due to the effect of The

Public Broadcasting Telecommunications Financing Act (1978) under the Carter administration. The act emphasizes public broadcasting’s diversity mission, allocating funding for source diversity of the work force, in which facilities are available to be operated and owned by minorities. The noticeable increase of independent producers in

1988, from 5 to 19 percent, could be the corollary of the Public Broadcasting

Telecommunications Financing Act (1988). With the passage of the Act, Congress removed programming from the discretion of the corporation’s internal budget and 118 approved additional direct line-item allocations to independent producers. Therefore, a new entity, the Independent Production Service (IPS), and Minority Programming

Consortia (MPC) were authorized to award grants directly to smaller independent and minority producers. The IPS was encouraged to produce programs by minorities as well as innovative and diverse programming geared to the child as well as adult audiences. In spite of a tendency of a decentralized system of production in public television, the system of distribution appears to be highly centralized which is evidenced by a high proportion of public broadcast services in distribution that take up over a 60% average over years. This tells the fact that PBS still maintains a major role in distributing programs to public television stations.

The Impact of Policy Preferences on Program Content

The policy preferences not only decentralized the role of the CPB, but also modified the program content in public television. The impact of the policy preference on content programming can be closely related to the government’s funding for this type of programming in public television. For example, Nixon discontinued funding for public affairs programming after 1972 when news and public affairs programs were judged to be too critical of government performance by the Nixon’s White House. This resulted in the mandate for public television to promote objectivity and fairness and program modification in all public affairs programming. Moreover, Reagan’s funding cut for children’s categories resulted in a program content change (see Table 5.4 for public television content changes).

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Table 5.4 Public Television Programming Content by Categories

General Instructional

News/ Information/ Sesame Youth/ Children Adult Year Public affair Skills Street Children

1964 13 Na 10 41 5 1966 13 Na 10 34 9 1968 14 Na 10 42 8 1970 18 Na 20 32 5 1972 19 Na 21 25 4 1974 13 16 11 21 17 1976 12 20 10 18 17 1978 11 24 9 16 15 1980 12 23 9 16 14 1 1982 12 25 8 15 13 1 1984 14 26 8 15 12 1 1986 16 30 7 11 15 1988 16 32 6 12 16 1990 18 32 6 11 14 1992 17 29 15 11 12 3 1994 19 27 20 9 9 3 1996 19 29 20 8 8 3

Source. Data compiled from Corporation for Public Broadcasting, published in U.S Census on Allcountries, & Stay Tuned (Sterling & Kittross, 2002).

Table 5.4 illustrates that from 1972 to 1974, News and Public affairs programs

greatly declined after 1972, from 19 % to 13 %, and remained at a low percentage until

1986. However, programs such as Information and Skills have proliferated since 1974,

showing continual growth from 16% to 29%. The reason for the increase of Information

and Skills programs, along with a decrease of News and Public Affairs programs, relates

to the particular policy in which public television has continued to broadcast politically

neutral programs that are safe, not to be judged as irrational journalism in response to the

mandate for promoting objectivity and fairness. Likewise, the overall children’s 120

programming, including General Children, Sesame Street, and Instructional Children, has

declined steadily. General Children programming fell from 11 % to 6 % during 1974-

1990, Sesame Street dropped from 21% to 8 % during 1974-1996, and the overall tendency of Instructional Children programming declined. The overall decline of children’s programming also suggests the changes in content, largely influenced by

Regan’s budget cuts in the children category, which also caused the cease of the Sesame

Street production altogether in 1981.

Measuring Concentration of Suppliers and Program Content Diversity

Closer inspection of the impact of political preferences on ownership structure

and program content suggests a further analysis of the relationship between the

concentration of suppliers and program content in order to examine the overall diversity

of public television. For that purpose, the Herfindahl Index (HHI) was computed to

measure the concentration of producers and distributors, and Open Diversity (OD) was

computed for program content diversity in public television. The higher HHI represents a

higher concentration of producers and distributors, thus less diversity of suppliers. Higher

OD represents higher content diversity. Although many methods for measuring “content

diversity” are available, including probability, logarithm, and rank based measures (see

McDonald, 2003 for diversity measurement), computing OD is especially beneficial

because it accounts for both time proportion and numbers of program content, measuring

the variance of individual program content by subtracting each from the norm of all

categories. In this way, it can effectively reflect not only the number and size distribution of a type of program content, but also individual variance of each category. Reflective

Diversity (RD) wasn’t computed for public television diversity, following the assumption 121 that programming decisions of public television are not guided by audience ratings due to its non-commercial nature (Blumenthal & Goodenough, 1996). Thus, public television programming content shouldn’t be slanted to benefit commercial interests. More importantly, in the public television realm, public interest motivation defines diversity to be a normative standard of quality (see Open Diversity and public policy model in

Chapter 3). In other words, the assumption is that public television programming need not pursue a large audience at whatever cost to programming, but should serve an audience that would be neglected (or underrepresented) otherwise. In this effort, the audience is defined, not by consumers whose demands are influenced by advertiser support mechanisms, but by citizens whose viewpoints are based on rational decisions and thus are suited to the top down approach in defining diversity.

The initial code for the program categories was borrowed from the previously established categories provided by the CPB, which includes News/Public affairs,

Information/Skill, Cultural, Children/Youth (general), Sesame Street, Others, Youth

(instructional), and Adult (instructional). These categories are then collapsed to a list of seven categories: 1) News/Public affairs, 2) Information/Skill, 3) Cultural, 4)

Children/Youth, 5) Sesame Street, 6) Others, and 7) Instructional.

Figure 5.2 provides an illustration of the overall concentration of distributors and producers and Open Diversity in public television over some years. A visual examination of these figures suggests changes in the concentration of distributors and producers. In general, overall concentration of producers has maintained a much lower level, ranging from 0.23 to 0.32 than those of distributors.

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Figure 5.2 Diversity Index of Producer, Distributor, and Program Content in Public Television

Content OD Producer HHI Distributor HHI

1.00

0.85 0.90 0.83 0.83 0.83 0.82 0.81 0.80 0.77 0.76 0.76 0.80 0.75 0.74

0.70

0.60 0.55 0.51 0.53 0.49 0.47 0.46 0.46 0.46 0.47 0.50 0.44 0.44 0.42

0.40 0.32 0.29 0.27 0.27 0.27 0.25 0.30 0.24 0.24 0.23 0.19 0.20 0.17 0.20

0.10

0.00 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996

This suggests that the system of program producers is much more decentralized than those of distributors in public television. As analyzed earlier, a lower concentration of producers verifies the impact of the policy goals that attempt to decentralize network power by strengthening individual stations. Hence, programs are mostly produced by member stations, other domestic and international broadcasters, and independent producers. On the other hand, the overall system of distributors is highly concentrated, ranging from 0.44 to 0.56 over years. This illustrates a centralized distribution system where PBS takes the role of the foremost distributor.

However, both, in spite of the different levels of concentration, show a similar pattern, indicating a strong positive relationship between them. The concentration of both greatly increased from 1974 to1978, showing the tendency of the centralized system, yet 123 then declined steadily until 1988. The only difference was right after 1988 when the concentration of distributors and producers went to opposite direction. Not only are the patterns similar to each other, but also the degree of change is very similar, demonstrating the strong relationship between the concentration of distributors and producers in public television. On the other hand, the average of content diversity has maintained a high level with less fluctuation (the range between the minimum and maximum of OD is 0-1) although the concentration of producers and distributors has oscillated greatly. In general, the irregular patterns of the relationship between the concentration of suppliers and the

OD weaken the assumption that the concentration of suppliers has an impact on program diversity. For example, the overall system of diversity appears to decline from 1974 to

1978, a time period coinciding with an increase in the concentration of both producers and distributors. However, while the overall concentration of both producers and distributors began a downward trend during 1978-1988, the OD level also appears to be in a decline during the same period, except in 1984. Thus, the analysis leads to an interpretation that the concentration of suppliers in public television doesn’t seem to have an impact on the diversity of program content due to the irregular relationship between them. This explains that the ownership structure in public television is not a major determinant in shaping program content diversity.

The weak relationship between the concentration of ownership structure (both distribution and production systems) and content diversity can be interpreted as first, a monopolistic distribution system in public television doesn’t involve an economic competitive environment simply because there is lack of motives to introduce economic considerations into the programming policy. Unlike commercial networks that have great 124 control over programming, PBS (a major distributor) doesn’t get deeply involved programming decisions, but ensures that the stations follow the guidance for a general policy (Blumenthal & Goodenough, 1998). Second, public television programming, following the national standards of the common carriages demanded by the policy, helps public television maintain high OD in spite of the fluctuation of ownership concentration.

It is true that public television as to serve public interests, the policy demands that a certain proportion of educational and children programs are included. Another reason for maintaining high OD can be in part attributed to the decentralized system of production that reflects localism, which is evident from the low concentration level of producers. In this way, PBS, as a main distributor, distributes programs variously produced by member stations. In other words, the weak relation between ownership concentration and content diversity in public television explains the ineffectiveness of the economic model in public television where market competitiveness is largely ignored by the public interest obligation due to its noncommercialism. Particular attention needs to be paid, however, to the overall tendency of content diversity to decline over the years from 0.85 to 0.74 although the average OD level is high. This suggests a critical need for a continual study of content diversity in public television to determine whether the decline is significant in more current years, and what possible indicators contribute to such a decline.

In sum, the analysis of public television diversity substantiates the initial assumption that public television can contribute to Open Diversity with the evidences of the type of program content it provides, decentralized system of production, and level of

OD which has remained high over the years. The programs offered by public television are mostly informational, educational, cultural, and instructional, which defines the 125 concept of a television broadcast as a public good (see the categories of program content examined above). Public television content, distinct from mostly entertainment content offered by commercial broadcasters, at least provides a possibility for public television to fulfill diversity goals. Moreover, station scheduling autonomy is apparent in the public television production system. As the analysis demonstrates, PBS has limited capacity to control program scheduling produced by stations. Such a decentralized system of production implies that public television could fulfill a principle of localism on the basis of community service. In addition, regardless of the changes in concentration levels of producers and distributors, the average OD level appears to be high, ranging from O.74 as the lowest, to 0.85 as the highest. Therefore, the presence of public broadcasters may function to prevent the decline of the quality dimension of diversity due to their moral obligation to serve public interest. Their providing more diversity, a bias toward high quality, elitist programming, as opposed to commercial channels, is further substantiated comparatively by the analysis of commercial broadcast television.

Diversity in Commercial Broadcast Television

The large commercial television networks in the U.S. broadcasting industry are

NBC, CBS, and ABC, with three newer networks, FOX, PAX, UPN, and WB (now UPN and WB become MyNetwork TV, and The CW). The operations of NBC, CBS, and ABC are nearly identical, organized along similar lines through specific purpose, procedures, and structures (Blumenthal & Goodenough, 1998). These networks share a primary goal with other commercial entities, supplying the largest possible mass audiences to the advertisers; therefore, they increase revenue from advertising and ensure funding for the program. Fox, UNP, and WB, however, differ from these three networks in that they 126 were built by accumulating unaffiliated independent stations. None of these networks has yet offered the same full range of programs as NBC, CBS, and ABC although FOX is now considered a major network along with NBC, CBS, and ABC. The addition of a fourth network to the three traditional ones explains a general tendency of increased competition in the oligopoly of the broadcast television industry. Nevertheless, whether such changes in the oligopoly structure from new competitors would enhance program diversity in commercial broadcast television still remains one of the major questions.

Advertiser Support Mechanism and Market Concentration

Concerning the impact of market force on media diversity, the major issue regarding commercial television networks stems from the real product of these networks, which is mainly the “audiences,” not the “program,” in which the networks increase profits by providing the largest possible number of viewers desirable to advertisers.

The possible implication of the adviser-supported mechanism may be a distortion of the market where viewers’ choices are limited. The simple economic formula in the broadcasting television market is that more desirable viewers generate higher advertising rates. This economic perspective suggests an alternative to the assumption that a heterogeneous oligopoly enhances diversity; that is, a prediction that the reduction of audience size caused by increased competition may turn networks to cost effective strategies, thus duplicating programs.

Each broadcast network supplies its own stations and affiliates with a regular schedule, which is divided into primetime programming (8:00 to 11:00 pm), daytime programming (1:00-4:30 pm), early evening news (6:00 to 7:00 pm), and late evening programming. Primetime programming is particularly more expensive than the others 127

simply due to its great potential in generating advertising dollars based on the CPM (the

cost of advertising per thousands of potential customers or a certain demographic). The

key factor determining advertising price is audience ratings and marketplace, in which

advertisers pay for a commercial according to the rating multiplied by the CPM.

According to Nielsen Media Research (2006), total advertising supported broadcast

accounts for 348 of the top 349 programs among households during the 2005-2006

television season, delivering a combined 34.5 primetime HH rating over the season. This

report demonstrates that broadcast dominated the primetime program rankings due to the

ability of TV networks to locally insert ads. The highest average cost of a prime time

show compared to the others explains the logic of the networks competing for advertising

revenues. See Figure 5.3 for network television cost.

Figure 5.3 Network Television Cost: (Cost per 30 sec). Constant Dollar Base (2007)

day time prime time early evening late evening

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0 1975 1980 1985 1990 1995 2000 2005

Source: Nielson Media Research, February each year, published in Television Bureau of Advertising. TVB Online. 128

Figure 5.3 represents average network cost per 30 sec for prime time, daytime, early evening, and late evening, calculated on the current Constant Dollar base (the year of

2007). As the Figure demonstrates, the average cost of network television for primetime has been much higher than those of daytime, early evening, and late evening, which reflects the high cash value of the prime time. Overall, the gradual increases of the average cost for prime time and early evening shows might be in part attributed to the fundamental changes of the network distribution system, along with the FCC’s lifting of several restrictions with the recognition of increased potential audiences in the television industry in the early 1980s. However, the average cost for all these shows sharply declined after the 1990s, which implies a decline in the advertising values in the broadcast television networks. This is mainly due to diminishing audiences, caused by more alternative forms of entertainment mediums (e.g., Videogames appeared on a TV set, VCR, & a dozens of cable networks) available to audiences where broadcast network ratings have been falling over the last two decades. The changes in network costs for the programming demonstrate a general system of relationship among programming cost in a particular time spot, advertising dollars, and audience rate. In general though, television network costs are very high; however, the networks offer a centralized source for national television advertising by distributing nationally (Einstein, 2004a). The networks’ monopoly on advertising largely ensures their profits from advertising revenue, with accounting advertising as a primary revenue source.

As far as considering the influence of the networks on the commercial broadcast television industry and media diversity, the network can “use their clout as program providers and as station operators to force programming into the marketplace” (Einstein, 129

2004, p.119). In this way, commercial television networks became the gatekeepers for both information and entertainment for the public with their ability to control “program selection” primary program developers, with distribution as national program developers.

Measuring Market Concentration in Commercial Broadcast Television

The nature of the commercial broadcast television industry provides an insight that changes in the ownership structure are largely determined by profitability In this way, advertising revenue becomes a primary factor for analyzing the commercial television industry and its impact on content diversity along with the size of affiliate share. HHI is computed for measuring concentration of both the number of affiliate shares and advertising revenue shares in the commercial television market. Figure 5.4 indicates the general structure of commercial television. The overall structure of commercial television based on the number of affiliates appears to be highly concentrated. However, a detailed analysis indicates that there is a sharp decline of the concentration of affiliate shares in 1954, from HHI 0.46 to 0.34. This can be attributed in part to the effect of the first comprehensive rules of multiple station ownership in 1953

(see Chapter 4 for a detailed explanation of this policy) in which the FCC set numerical limits on station ownership. After 1956, the concentration steadily declined until 1985.

This steady decline of the concentration in terms of affiliate shares is also a continual effort to restrict ownership by setting numerical limits of multiple stations that had remained the same over almost three decades since 1954.

130

Figure 5.4. Herfindahl Index: Concentration based on Number of Affiliates Share by Commercial Television Broadcast Networks, and Non-Networks. 1950-1987 0.50 0.45 Network affiliates HHI 0.45

0.40 0.42

0.35

0.30 0.34 0.28

0.25 0.26 0.20

0.15

0.10

0.05

0.00

0 2 4 6 8 0 2 6 8 0 2 5 7 5 5 5 6 6 7 8 8 8 8 95 95 968 970 972 974 97 1 1 19 19 19 19 19 1964 1966 1 1 1 1 1 19 19 19 19 19

Source. Data compiled from FCC, and Sterling (1984), published in Stay Tuned (Sterling & Kittross, 2002). FOX included from 1986.

However, the concentration after 1970 has remained at a similar level, and after 1983 it has increased from 0.25 to 0.28 showing a tendency of increasing concentration. This tendency can be in part caused by the deregulation policy; the institution of a six-year transitional ownership of 12 television stations in 1984, and the expansion of the numerical limits based on audiences reached in 1985. However, it is obvious that the overall concentration level from 1950 to 1988 had declined, demonstrating the trend of increasing competition over the years in the commercial broadcast television industry.

Not only was a decline of the concentration of number of affiliate shares apparent between 1950 and 1988, but also in general, the level of concentration of advertising revenue shares from programming declined from 1965 to 2003. 131

Figure 5.5 shows that the concentration of the market based on advertising

revenue has been steadily declining over the years, from 0.39 to 0.30. This suggests

increasing competition over time in the commercial broadcast television industry, mainly

due to a general decline of advertising revenue shares from networks with an increase of

advertising revenue shares from syndication and local spots.

Figure 5.5 Herfindahl Index: Concentration based on Advertising Revenue Share by Commercial Broadcast Television. 1965-2003

0.45 Ad revenue share HHI 0.39 0.40 0.36 0.35 0.35 0.30 0.31 0.30 0.25

0.20

0.15

0.10

0.05

0.00

5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 6 6 6 7 7 7 7 7 8 8 8 8 8 9 9 9 9 9 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2

Figure 5.6 represents the detailed changing environment of commercial television competition for the advertising revenue share of programming.

132

Figure 5.6 Advertising Revenue for Commercial Broadcast Television by %. 1965-2003 60 network spot-national spot-local syndication

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

Source. Universal McCann, published in Television Bureau of Advertising. TVB Online.

As shown in Figure 5.6, the syndications and local spot television have shown a gradual increase while the percentage of advertising revenue shares of the networks and national spot television has declined. Particular attention needs to be paid here to the advertising revenue from syndicated programs that are distributed to individual stations. As explained in the previous chapter, the Prime Time Access Rule (PTAR), in conjunction with Syndication Rules adopted in 1970, is closely related to the FCC’s effort to change the television structure by paying attention to market potential (or financial interest) and extends the policy’s focus on program suppliers (or producers). More specifically, it attempted to break up the dominance of the three major networks, ABC, CBS, and NBC, in program production. As Figure 5.6 demonstrates, the rules actually helped reduce the 133 network dominance in producing programming; that is, at least a reduction in the networks’ advertising revenue share from network programs.

However, the decrease of the networks’ advertising share doesn’t necessarily lead to a conclusion of an actual increase of independent producers (or program suppliers).

The decrease in advertising revenue of network programs seemingly explains the simple economic relationships among program producers, networks, and local affiliates: As a profit maximizing entity, commercial broadcast television will use programming desirable to advertisers by having the potential to attract audiences. Put differently, commercial television networks do not necessarily have an incentive in the production of programming if acquiring programming from independent program producers provides more profits. Whether a network produces programming within its internal system or acquires it from independent programming producers depends on the motivation to increase the value of audiences for advertising dollars; that is the network’s primary concern for supplying programming on the basis of minimizing costs and maximizing profits. The PTAR that attempts to increase opportunities for independent producers to sell programming to the top 50 market network affiliates for prime time broadcasters is based on such an assumption and seemed to work when networks’ revenue share decreased, as is evident from Figure 5.4. However, this interpretation has limits in analyzing the market power based on vertical integration, as well as the actual share of programming from independent suppliers.

For a detailed analysis of the changes in network program suppliers (producers) and whether the PTAR had an actual effect on the structure of independent producers, the leading network suppliers during prime time in 1970, 1977, 1989, 1994, and 2002 were 134 analyzed. Because the data for total numbers wasn’t obtained for this study, CR4 and

CR8 are computed for measuring the concentration of programming share by suppliers instead of using HHI. If the top four are higher than 50 percent, and the top eight are higher than 75 percent, then the market is considered to be highly concentrated.

Table 5.5 shows the share of programming by prime time suppliers in the pre

PTAR year, 1970, and immediate post PTAR year (1977).

Table 5.5 Leading Network Suppliers: Prime Time. 1970 & 1977 Share of Programming

1700 1977 Suppliers Share of Suppliers Share of Programming (%) Programming (%) Universal 12.8 Universal 18.4 Twentieth-Century 7.3 Warner 6.7 Fox Paramount 6.4 Spelling Goldberg 6.1 Columbia 6.1 Lorimar 5.4 MGM 4.5 MTM 5.3 Filmways 3.6 Columbia 3.6 ITC 3.0 MGM 3.5 Harbour 2.6 Paramount 3.5 Spelling/Thomas 2.3 Aaron Spelling 3.2 Talent 2.2 Towntieth-Century 3.2 Fox Teleklew 2.0 Walt Disney 2.9 CBS 1.9 Tandem 2.9 Walt Disney 1.9 Quinn-Martin 2.7 Leonard Freeman 1.8 Tat 2.4 NBC 1.8 Toy 2.2 Sullivan 1.8 CBS 2.0 Peekskill 1.7 Four D 2.0 Xandu 1.7 Whacko 1.7 Van Bernard 1.5 Schick-Sunn 1.6 Classics Glendo 1.5 David Gerber 1.6 Total 68.4 Total 80.9 CR4 32.6 CR4 36.6 CR8 46.3 CR8 52.5

Source. Federal Trade Commission (1995) 135

The CR4 and CR8 indicate a slight increase of concentration, from CR4 32.6 and CR8

46.3 in 1970, to CR4 36.6 and CR8 52.5 in 1977. Although the concentration level increased right before and after the rule, there is an obvious indication of structural change during these years. In 1970, before the PTAR, the major suppliers, such as

Universal, Twentieth-Century Fox, Paramount, and Columbia, held the top positions in share of programming. This tendency, however, changed in 1977 when independents, such as Spelling Goldberg, Lorimar, and MTM, moved up to higher positions in the top twenty leading suppliers. More importantly, about 60 % of the top leading suppliers were independent producers in 1977. This demonstrates the significant effect of PTAR that attempted to increase independent producers in the immediate post PTAR year.

However, the programming share by suppliers has been even more concentrated during the recent post PTAR years, 1989, 1994, and 2003 (see Table 5.6 for leading network suppliers in 1989, 1994, & 2002). As Table 5.6 evidenced, the concentration has rapidly increased, in which the CR4 and CR8 reached 73.5 and 84.8 in 2002 respectively.

The increasing concentration level substantiates the consolidating tendency among major suppliers over independents. For example, in 1994, the ABC productions and ABC sports, CBS Network productions, and NBC television mostly held the top positions in sharing programming, taking up 42.59 percent among leading suppliers, and in 2002, their collective shares were even higher, reaching 63.6 % of the whole prime time programming share. While the concentration level has increased with the consolidation of large firms, the share of independent suppliers has declined during these years due to the vertical integration of these same large firms.

136

Table 5.6 Leading Network Suppliers: Prime Time. 1989, 1994, & 2002 Share of Programming

1989 1994 2002 Suppliers Programming Suppliers Programming Suppliers Programming share (%) share (%) share (%) Lorimar 12.9 ABC 17.59 CBS 28.0 CBS 7.6 Warner 14.81 ABC 21.2 Brothers Columbia 7.6 CBS 13.89 NBC 14.4 Universal 6.8 NBC 11.11 Warner 9.9 Brothers Warner 6.8 Universal 11.11 Universal 6.8 Brothers ABC 6.1 Disney 5.56 20th Century 1.5 Fox MGM 4.5 20th Century 4.63 Bochco Prod 1.5 Fox Paramount 4.5 Columbia 3.70 Endemol Ent 1.5 Tristar Stephen J. 4.3 Alliance 1.85 Hallmark Ent 1.5 Cannel Prod Disney/Tough 3.8 Carsey 1.85 Next Ent 1.5 stone Werner 20th Century 3.8 Cosgrove 1.85 Fox Meurer NBC 3.0 Paramount 1.85 Viacom 3.0 Stephen 1.85 Bochco Productions Carsey- 3.0 Silverrman 1.85 Werner Co./Viacom New World 2.3 Witt Thomas 1.85 Castle Rock 1.5 Castle Rock 0.93 Productions Cosgrove/Mu 1.5 Mozark 0.93 erer Prods GTG 1.5 Shukovaky 0.93 Productions English Entertainment Alien 0.8 Spelling 0.93 Productions Steven 0.8 Wind Dancer 0.93 Brocho Prods Total 86.1 Total 99.6 Total 87.8 CR4 34.56 CR4 57.4 CR4 73.5 CR8 56.8 CR8 82.39 CR8 84.8

Source. Data compiled from Federal Trade Commission (1995) & Einstein (2004)

137

As evident from Table 5.6, the extreme high concentration occurred between

1994 and 2003. This result can be attributed in part to the effect of the 1996

Telecommunication Act that allowed vertical influence over production. It is true that

independent producers which used to produce no more than 15% of the prime time

programs a decade ago, are now controlled or owned by networks (Alexander et al.,

2004), in which, the independents become merged with the network to become a

vertically integrated corporation.

Measuring Program Content: Open and Reflective Diversity

In order to examine whether the changes in commercial television structure

analyzed above have actually had an influence on content programming, the program

content diversity supplied by the networks during prime time was analyzed. To measure

program content diversity, both Open Diversity (OD) and Reflective Diversity (RD) are

computed. As explained, when measuring public television diversity, the higher OD represents higher diversity in the supply perspective. The higher RD, on the other hand, represents a higher reflection of audience preferences on its media content. Unlike public television, in the commercial broadcast television industry, audience rankings or consumers’ choices are critical factors in shaping program content due to the advertiser- supported mechanism. In that way RD is useful to analyze how program content reflects audience choices. The network television prime time program types are analyzed in response to the effects of the changing structure of commercial broadcast television. A general program type scheme developed for commercial broadcast television diversity was different from that of public television simply because they offer different content types. However, to standardize D, the same number of program type categories between 138 public and commercial broadcast television was made for the comparison of overall OD between them. The initial code for the commercial television program includes 21 categories: Special/Varied, Comedy, Country/Western, General talk, General drama,

Women’s serials, Actual adventure, Crime/Detective, Suspense, Western drama,

Animated cartoon, Movie, Situation comedy, Quiz/Panel, Newscasts, Forum/Interview,

Documentary, Children show, Sports, and Reality. These categories are then, collapsed to

7 categories; 1) Variety, 2) Drama, 3) Movie, 4) Situation Comedy, 5) Quiz/Panel, 6)

News/Information, and 7) Others (children, sport, & reality). The RD is calculated on the basis of the 35 top-rated programs by audience, following the same categories used for

OD.

Figure 5.7 Open and Reflective Diversity in Commercial Broadcast Television. 1965-2002

1.00 OD RD 0.90

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001

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Figure 5.7 indicates that the changes in the supply of prime time programs (OD) are somewhat in conformity with audience demands. This tendency is even more apparent from 1973-2002. In other words, commercial television broadcasters tend to supply content that reflects audience’s demands. Nevertheless, both OD and RD levels are in general low, ranging from 0.47 to 0.70 (public broadcast television provides OD ranging between 0.63 and 0.83). What this implies is that the supply, attempting to satisfy audience demands, doesn’t necessary provide a high level of diversity in general because audience demands are not diverse. This result explains that the relationship between OD and RD is somewhat reciprocal. If diversity of content is not supplied, audiences’ choices are narrowed, simply because their demands for content are limited within that supply.

Inversely, if audience demands are not diverse, as shown in Figure 5.8, the changes of supply that attempt to be in line with audience demands consequently wouldn’t provide content diversity. The tendency of the change of supply lining up with audiences’ demands can be explained as commercial television broadcasters’ advertiser support mechanism that provides content to increase advertising dollars.

The OD remained at a somewhat higher level during 1965-1970, ranging from

0.60 to 0.63; then it dropped down after 1974. However, it had been recovering diversity again after 1974 and reached its highest with an OD of 0.66 in 1980. During 1980 and

1987, OD had again turned into a downward trend, and finally, it reached the lowest diversity level in 1987. In analyzing the impact of market concentration on content diversity during those years, based on the number of affiliates,, the initial assumption is that increased concentration would result in a decline of OD and vice versa.

Remembering the previous analysis of market concentration based on the number of 140 affiliate share, the concentration level sharply declined until 1975; thus, it is expected that the OD during 1965-1975 should have increased. However, as Figure 5.7 shows, the OD had a downward trend during those years. Moreover, while the concentration level of affiliate share maintained a somewhat similar level during 1975-1987, the OD during these years shows a great fluctuation from an upward to downward trend. In general, in spite of the overall decline of the concentration level, thus providing an increased environment of competition, overall diversity hasn’t increased much over the years as expected. This result explains that the concentration of number of affiliate share has not had much impact on overall Open Diversity.

Moreover, the changes in the structure of programming share by producers don’t seem to have an impact on overall Open Diversity. For example, previous analysis evidenced the increased independent programming producers in1977, immediately after the PTAR, yet the concentration level has rapidly increased with the decline of independent producers throughout 1989, 1994, and 2002. From this perspective, the level of OD would be expected to be high around 1977 and low in 1989, 1994, and 2002 respectively. However, the general trend of OD has been increasing since 1987-1993, and

1997-2000. Although a direct comparison between these two variables should be avoided due to the incomplete data for the programming share by producers, it at least implies a weak relationship between these two. This result is unexpected, which leads this study to further analysis on OD and program changes, which occurred from 2000 to 2006. OD was also calculated to determine content diversity. However, the program type categories at this time were developed differently from the previous one analyzed above, in which

“Reality” is created as an additional category due to its rapid increase during the current 141

years. In other words, the proportion of Reality programs during the current year is too

large to be included in the category of Others.

Figure 5.8 Program Types Supplied by Networks during Prime Time. 2000-2006

variety drama movie sitcom quiz news reality others

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% 2000 2001 2002 2003 2004 2005 2006

2000 2001 2002 2003 2004 2005 2006 OD 0.61 0.59 0.58 0.62 0.66 0.57 0.48

Figure 5.8 shows the proportion of programs offered by commercial networks during prime time from 2000 to 2005. In general, Drama takes up a major proportion throughout all of the years followed by Situation Comedy and Reality, according to their average, although Situation Comedy has declined while Reality has increased. Movie and

News also has declined throughout recent years. In 2005, it is obvious that Drama and

Reality account for a major proportion, taking up about 75 % of all programs. Figure 5.8 142 also demonstrates a great decline of diversity in 2005 with an OD of 0.48. The increase of content diversity from 2003 to 2004 is largely attributed to the increase of Reality programs. This tendency in part demonstrates a notion of ruinous competition, in which competition is based on price over content in order to minimize cost. Although total prime time program hours have been increased over years with the entry of new networks such as FOX, UPN, PAX, and WB, they provided a combination of cheap and popular programs. A disproportionately high amount of Drama, Reality, and Situation Comedy, as is evident from Figure 5.8, demonstrates that commercial networks use cost effective strategies, competing for price while duplicating programs. According to the FCC (2003), advertisers pay a premium for a spot advertising on situation comedy while paying a discount for advertising on the news. Similarly, the respectively high proportion of

Dramas and an increasing amount of Reality programming are related to the commercial broadcasters’ cost minimizing strategy. The average production cost of drama and reality programs is relatively inexpensive compared to the other programs (see Einstein, 2004a;

Sterling & Kittross, 2002).

Thus far, the analysis of content diversity during 2000-2006 has shown a significant duplication of programs among commercial broadcast networks. The duplication of programs in spite of increased competition, with the entrance of new broadcast networks to the commercial television industry, in part verifies the assumption that due to reduced audience size share, commercial television networks turn to cost effective strategies, thus increasing competition results in less diversity.

Although commercial broadcast television remains the best medium for mass advertising in the U.S., the decline of audience size and prime time audience viewing in 143 the commercial broadcast television industry is apparent, primarily caused by the advent of new alternative forms of entertainment and the development of the newer broadcast networks. In the early 1970s, CBS, NBC, and ABC attracted more than 90% of all viewers, dominating audience share, but by the early 2000s, their collective share of prime time viewing had dropped to 50 percent (Eastman & Ferguson, 2006). The diminishing of audiences in the broadcast television industry over two decades is represented in the Table 5.7.

Table 5.7 Average Network Rating. 1980-2005

Year NBC CBS NBC FOX WB UPN Total 1980-81 18.0 19.0 17.2 54.2 1985-86 14.3 16.0 17.1 47.4 1990-91 12.0 11.7 12.5 36.2 1995-96 10.5 9.6 11.6 7.3 2.4 3.1 44.5 2000-01 8.4 8.6 8.0 6.1 2.5 2.4 36.0 2004-05 6.4 8.4 6.6 5.3 2.4 2.3 31.4

Source. Media Programming: Strategies and Practices (Eastman, & Ferguson, 2006). Note. Estimates based on fall 2004 seasons

Table 5.7 indicates average broadcast network ratings that have been falling over the years. Not only each network rating is declining but also the combined networks rating is falling. The combined ratings for all networks, was less than 32 in 2004-05, which means that less than two thirds of people are not watching any of these networks during the prime time television season. Consequently, as the result indicates, the networks turned to cost effective strategies and tended to homogenize content by offering cheap and similar programs.

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Audience Diversity

Several scholars have attempted to measure audience diversity, connecting audience centrality to the democratic ideal of diversity in media (i.e.Napoli, 1997). The democratic ideal of media diversity fairly explains the expressive function of media that emphasizes the media’s reflection of audience demands (often called exposure diversity).

The centrality of audience diversity has been examined within the notion of the marketplace idea, “the assumption that audience provided with a diversity of content options will consume a diversity of content” (Napoli, 1997, p. 63). Therefore, audience diversity entails the notion of inclusiveness of all ideas expressed by people (an exchange of all ideas in open media forum). The attempt to create a well-functioning marketplace idea, however, is often frustrated when the following assumptions are true: When audience preferences or demands for program content are unbalanced, homogeneous, and more importantly, subject to being a key factor for influencing advertising prices. Put differently, in order to account for audience diversity as a democratic ideal, or to emphasize the expressive dimension of media diversity, the diversity of audience choices must sufficiently satisfy the following criteria: audience demands in selecting programs

(or expressions) are based on the rational (or balanced) selection and are less critical in influencing advertising prices. Simply put, in spite of the importance of reflecting audiences’ demands in media content in terms of public interest motivation, if their choices are unbalanced and their demands are primarily used to fulfill the profit seeking mechanism, then content diversity attempting to satisfy their demands will not fulfill the diversity goal, that is innovative, substantive, and heterogeneous and thus is considered quality content. In this way, the notion of market failure applies not only to the supply 145 perspective, but also to the demand perspective, which is the possibility of consumption failure in demanding a particular content.

To demonstrate the trend of diversity in audience demands, the study examined programs rated top by audience during 1965-2003. The Top 35 audience rated programs reported by Neilson Media Research were examined. The Herfindahl Index (HHI) was used to measure concentration of size distribution by audience choices by calculating each program type’s shares (by percentage) of the total ratings points. The higher HHI represents the greater concentration of audience selection on the programs, thus, less audience diversity. “The Nielsen rating is the percent of all TV-equipped homes tuned to the programs on an average night…the percent of all homes that had a TV were tuned on” (Brooks & Marsh, 2003, p. 1455). The program categories developed for the measurement of audience diversity are the same as used for program content. See Figure

5.9 for the audience diversity.

Figure 5.9 Herfindahl Index: Audience Diversity. 1965-2003 0.50 Audience Diversity HHI 0.44 0.45 0.41 0.40 0.36 0.35

0.30 0.33

0.29 0.25 0.27 0.25 0.20

0.15

0.10

0.05

0.00

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

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Table 5.8 Audience Rating of Program Content: Top 35 Audience Rated Programs 1965-2000

Variety Drama Movie Sitcom Quiz/Panel News/Info Other Year % % % % % % %

1965 0.16 0.34 0.00 0.47 0.03 0.00 0.00 1966 0.17 0.37 0.00 0.43 0.03 0.00 0.00 1967 0.26 0.28 0.12 0.35 0.00 0.00 0.00 1968 0.29 0.31 0.13 0.28 0.00 0.00 0.00 1969 0.33 0.30 0.00 0.38 0.00 0.00 0.00 1970 0.37 0.27 0.09 0.27 0.00 0.00 0.00 1971 0.23 0.42 0.15 0.19 0.00 0.00 0.00 1972 0.16 0.44 0.13 0.24 0.00 0.00 0.03 1973 0.10 0.44 0.18 0.26 0.00 0.00 0.03 1974 0.09 0.35 0.18 0.34 0.00 0.00 0.03 1975 0.12 0.47 0.03 0.38 0.00 0.00 0.00 1976 0.13 0.29 0.07 0.51 0.00 0.00 0.00 1977 0.06 0.30 0.13 0.44 0.00 0.03 0.03 1978 0.03 0.41 0.09 0.40 0.00 0.04 0.03 1979 0.00 0.34 0.06 0.53 0.00 0.04 0.03 1980 0.00 0.36 0.03 0.50 0.00 0.04 0.07 1981 0.00 0.41 0.06 0.43 0.00 0.07 0.03 1982 0.00 0.39 0.07 0.40 0.00 0.07 0.07 1983 0.00 0.43 0.09 0.35 0.00 0.07 0.06 1984 0.03 0.46 0.13 0.31 0.00 0.04 0.03 1985 0.06 0.48 0.06 0.33 0.00 0.04 0.03 1986 0.00 0.32 0.09 0.51 0.00 0.04 0.03 1987 0.00 0.33 0.09 0.51 0.00 0.04 0.03 1988 0.00 0.25 0.09 0.59 0.00 0.04 0.03 1989 0.00 0.25 0.12 0.56 0.00 0.04 0.03 1990 0.04 0.25 0.03 0.58 0.00 0.04 0.07 1991 0.07 0.19 0.03 0.63 0.00 0.04 0.03 1992 0.06 0.12 0.09 0.56 0.00 0.14 0.03 1993 0.00 0.00 0.25 0.12 0.43 0.17 0.04 1994 0.00 0.30 0.12 0.44 0.00 0.10 0.04 1995 0.03 0.16 0.14 0.54 0.00 0.09 0.04 1996 0.00 0.20 0.06 0.55 0.00 0.15 0.04 1997 0.00 0.22 0.08 0.52 0.00 0.14 0.04 1998 0.00 0.28 0.06 0.44 0.00 0.18 0.04 1999 0.00 0.32 0.09 0.35 0.00 0.21 0.04 2000 0.00 0.34 0.08 0.31 0.15 0.09 0.04 2001 0.00 0.40 0.02 0.21 0.25 0.03 0.09 2002 0.00 0.48 0.00 0.33 0.00 0.12 0.06 2003 0.00 0.43 0.00 0.29 0.00 0.03 0.25

147

Figure 5.9 represents the overall trend of audience selection of programs over years while

Table 5.8 represents audience rating of program content based on top 35 rated programs.

Figure 5.9 demonstrates a high concentration of audience choices in its average, which is even lower than HHI, 0.25 throughout whole years. This result leads to an interpretation of less audience diversity with an unbalanced consumption. In detail, audience diversity in the early years starts with a high level of concentration as evident from the HHI, 0.36 in 1965. As Table 5.8 evidences, the lack of audience diversity in this year is mainly due to the absence of their choices in Movie, News and Others (children, sports, and reality) whereas Drama and Situation Comedy were enthusiastically consumed by audiences.

This tendency is closely related to content supplied during that year where Dramas dominate the lineups, comprising 44% of the programs, followed by 21% Variety, 16 % each of Movie, and Situation Comedy, and only 3 % the other three categories. In other words, the concentration of program supply could in part lead to the unbalanced consumption. However, the concentration level reached a lower point in 1968 with HHI

0.26. This result is mainly caused by audiences’ extended selection of Movie programs that were once widely available to audiences during the 1970s and early 1980s. In 1991, the concentration reached its highest level with HHI 0.44. This is mainly due to their preference for Situation Comedy that takes up 63% of their whole selections of programs.

Although the supply of program content in this year was almost equally proportioned with Drama at 29%and Situation Comedy 32%, audience diversity was much less diverse than content diversity. In 2002, audience diversity had somewhat increased with a lower concentration of preferences in all programs except Variety. The general trend of preference, however, shifted from Situation Comedy to Drama. This result reflects the 148 supply of programs that provided a large proportion of Drama, which increased from

29% in 1991 to 42 % in 2000. As Figure 5.9 shows, the audience diversity (or audience selection of programs) in the most current year, 2003, has declined again with increased concentration with HHI 0.33. This tendency stems from their unbalanced selection of

Drama, Situation Comedy, and Others (children’s program, and sports) with the absence of the other four. The extinction of Variety and decline of Movies in supply during current years, and noticeable increase of consuming Reality programs (belonging to

Others) have not only narrowed audience choices, but also led to the failure of audience balanced consumption.

The general tendency of lack of audience diversity can lead to at least two possible interpretations. The first is the idea that their choices are narrowed simply due to an insufficient supply of program content (not the number of channels, but program types). As previous analysis evidenced, program content supplied by networks was concentrated on Drama, and Situation Comedy, and now, Reality programs. Another interpretation is that audience consumption, regardless of the availability of content, is inherently unbalanced due to their tendency to demand certain program types. The second assumption in fact demonstrates the failure of consumption regardless of the availability of various choices simply due to a lack of audiences’ rational choices in selecting programs. This assumption also partially explains the notion of diminishing return, in which the supply of wider program channel choices does not necessarily lead to diversity of consumption. See Table 5.9 and Figure 5.10 for TV channels available and actually viewed by audiences.

149

Table 5.9 Number of Channels Available and Viewed in the Average U.S. Home

Year Average # TV Channels Average # TV Channels Total # Commercial Receivable Viewed TV Channels 1995 41.1 10.1 1,161 1999 62.0 13.1 1,216 2000 74.6 Na 1,248 2001 89.2 Na 1,302 2002 102.1 Na 1,303 2004 92.6 15.0 1,341 2005 104.2 15.4 1,361 2006 104.2 15.7 1,375

Source. Data complied from A.C Nielson Co., in annual issues of Television audience published in Stay tuned (2002), ITFacts General, Nielsen Media Research, & Television & Cable Fact Book, published in Television Bureau of Advertising. TVB Online.

Figure 5.10 Channels Receivable vs Viewed. 2005

# channels 120+ 157.8 20

111-120 115.9 16.5

101-110 105.8 16.3

91-100 95.4 14.6

81-90 84 16.9

71-80 75.5 15.6

61-70 67.1 15.4

51-60 56.2 14.4

41-50 45.1 12.5 # channel receivable # channel viewed

31-40 35 9.3

21-30 24.9 6.6

20- 15.7 5

0 20 40 60 80 100 120 140 160 180 200

Source. Nielsen Media Research, National People Meter Sample, Aug. 29 - Sept. 4, 2005, published in Media Info Center 150

Table 5.9 comparably represents average receivable channels and average channels viewed by audiences along with the total number of commercial television stations over the years. It indicates that the average viewed channels by audiences have maintained steadily low levels, ranging from 10.1 to 15.7 although the average number of TV channels receivable has greatly increased, from 41.1 to 104.2, with the enormous availability of commercial channels that are over 1,000. An increasing competition among channels in this way does not necessarily lead to increased viewership. Figure

5.10 provides a general fact of the relationship between availability of channels and viewership by audience. In recent years, an increase in the number of channels available to a TV household doesn’t seem to have the effect on the number of channels viewed. As evident from Figure 5.10, after reaching the 50-channel level, there is no significant increase in the viewership, which remains between the 15 and 19 channel range. Even when more than 158 channels are available, the average number viewed only reaches 20 channels. This clearly demonstrates the notion of the diminishing return in terms of competition among number of channels, where increasing competition in pursuing pluralistic channels does not produce an increase of audience diversity although sufficient levels of competition are necessary.

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CHAPTER 6 FUTURE DIRECTION OF MEDIA DIVERSITY

As media diversity continues to be a central concern in communication policy and research, scholarly attention to the concept of diversity and its assessment are critical for an adequate implementation of the policy. This study provides a number of substantial findings that have implications for constructing diversity principle and its assessment, as well as communication policies on media diversity. As the critics suggested, diversity as understood in the mainstream of the recent research literature focusing narrowly on one aspect of program diversity would not be satisfactory. Responding to this concern, this study attempts to penetrate the multiple dimensions of variety that constitutes diversity by examining the following aspects (see Figure 6.1 for the theoretical underpinnings applied to the study).

(ownership diversity) by identifying the relationship among the market structure

(concentration & competition) of the broadcast television industry, conduct (product strategies), and performance (diversity). The application of the public policy model and the program choice model allowed measurement of content diversity distinctively produced by both public and commercial broadcast television by identifying different 152 programming strategies. See Figure 6.1 for logic of the integrated theory of media diversity proposed by and applied to the study.

Figure 6.1 The Integrated Theory of Media Diversity

Audience Diversity

• Audience Selection

Public Program Policy Choice model model

Content of Content Diversity Content of Supply Demand • Open Diversity • Reflective Diversity

Structure Conduct Performanc e model

Source Diversity

• Competition • Concentration

Public Sphere model

Media Policy Public Interest Standards

• Regulation • Free market Competition 153

This study also found that the different strategies used in each of public and commercial broadcast television industries, in turn produced different levels of diversity

(i.e., quality and quantity). Such discrete level of diversity raises a concern for the need of developing a more specific assessment of diversity in a different market condition. All these findings challenge the current foci of media diversity, and suggest an extended study of media diversity as a means of developing an application of the most rigorous and longitudinal analysis for future media diversity studies.

This study attempted to provide an ideal measurement of content diversity combining supply (open diversity) and audience demand (reflective diversity) perspectives, particularly in the commercial broadcast market where audience demands are central in achieving economic goals. Yet, more importantly, the study found that in reality, audience diversity (or ideal of expressive dimension of diversity) is abused by media’s commercial purpose (e.g., advertiser-supported mechanism & cost effective strategies), and also by audiences’ unbalanced selections of media content. This questions the existing theory of the centrality of audience as to fulfill localism in promoting diversity. Throughout the analyses on source, audience, and content diversity with an application of the supply and demand perspective, the study suggests the needs for critical inquiries in the following aspects.

Discussions and Suggestions

First of all, media diversity analysis in communication policies is inherently flawed due to the FCC’s unclear definition of diversity, which in turn forestalls establishing consistent policy goals in conjunction with monitoring policy effectiveness.

Second, public and commercial broadcast television fundamentally differ from each other 154 in developing their programming strategies, types of content, and level of diversity.

Third, audience demands are unbalanced and homogeneous; therefore, they insufficiently fulfill the goal of connecting audience centrality to the democratic ideal of media diversity (expressive diversion of media diversity). Finally, assessment of media diversity entails a careful analysis of various dimensions that constitute media diversity. This diversity is not a mere reflection of variety in media content because media principles stem from multiple accounts of the historical root interrelated with social, political, and economic variables. In this respect, neither the oversimplified approach of social theory nor economic theory with a sole approach of either only qualitative or quantitative measurement in determining content diversity would adequately explicate complex dimensions of media diversity. Therefore, both disagreement and common consensus of the standard should be abridged and highlighted to provide a more comprehensive assessment for media diversity. The following suggestions for future media diversity studies detail these four aspects.

Policy Goals and Developing Public Interest Standards

The study addresses that the FCC’s lack of establishing consistent public interest standards is one of the major hindrances in terms of communication policies on media diversity. Regulatory concepts (or philosophy) shifted when the public interest in societal needs weakened as the basis for government decision making. The deregulation policy during the 1980s, stimulated by changing competitive landscape of media industry, led to almost no regulation in the 1990s. No programming requirement for public affairs and educational programming that was once imposed by the FCC to inform citizens during the past, explicitly demonstrate the FCC’s confidence in the belief that free market ideal 155 will meet diversity goals. However, with the vague ideals of the 1996 Act, “the FCC continues to arbitrarily regulate and deregulate the telecommunication industries”

(Chambers, 2003, p.43).

Media diversity as fulfilling a part of public interest goals accordingly suffers from an ambiguous concept, assessment, and implementation of the policy. This suggests a critical need for defining government’s role in communication policy on media diversity in order to protect the public interest on the basis of what might most benefit to public (or civic), not private (or market individualism). With the clear establishment of public interest standards for regulation, the FCC’s continual effort in monitoring policy effectiveness, in conjunction with changes of content diversity, is critical as a justification for implementing adequate regulatory policy on media diversity. Put differently, establishing coverage areas that maximize the public good (societal demands over private interest) should be the primary underpinnings for an implementation of communication policies in terms of promoting media diversity.

The public sphere model, in this way, is very useful for developing a consensus on public interest standards such as media diversity for regulation because this model recognizes the fact that societal needs can’t be entirely met through a market system where consumers’ purchasing power continues to be economically viable. As the study exemplified, the advertiser-supported mechanism primarily operates the system of distribution and production in the commercial broadcast television industry, and audiences are mainly considered to be consumers instead of citizens. Consequently, this mechanism hinders media from promoting the quality dimension of media diversity. As this study evidenced, content became not only seriously homogenized in the most current 156 years, but also cheap and low quality programs, such as drama and reality increasingly appear in the commercial broadcast program content. In this way, the core assumption of the public sphere model anticipating the amoral practice of markets is validated to be used as the chief guidance in establishing public interest criteria, such as media diversity.

As the public sphere model implies, the necessary and active role of government in protecting public interest can be justified when government attempts to ensure that media meet the needs of citizens, not consumers. Therefore, government regulatory concepts in protecting public interest and promoting media diversity can be valorized only if public interest motivation provides solid standards in serving the public good. Otherwise, the same problem recursively occurs, albeit with justification of media industrial action that abuses the expressive function of media (media reflects audience demands) for commercial practices.

Furthermore, this study opens a discussion for the possibility of direct content control in achieving the content diversity goal when the media market seriously hinders media serving a public role. Since the ultimate goal in promoting media diversity is to achieve diversity in the content, it is plausible to argue that regulating content is the most effective means of achieving this goal. Nevertheless, it is also true that directly regulating program content always faces onerous obstacles much more than regulating ownership due to the First Amendment conflict, and this institutional system is barely challenged in the U.S. However, when media market failure seriously threatens public interest and antitrust policies alone don’t appear to be effective, then direct content control might be inevitable in promoting diversity as a means of protecting public interests. 157

In fact, some Western European countries have implemented policies that

directly control content by demanding certain proportions of each program type. Einstein

(2004a) provides ample examples substantiating this content regulation in Western

European countries:

In the Netherlands, 25% of programming is dedicated to culture, 25 % to

information, 25 % to entertainment, and 5 % to education…In Germany, the two

public channels and regional channels are required by law to offer comprehensive

and integrated programs that is politically balanced… In Ireland, radio stations are

required to program news and current affairs as20% of their programming…

England also has some restrictions on programming in that regional companies

have to air programming all of the following categories: drama, entertainment,

sports, news, factual, education, religion, arts, and children. (Einstein, 2004a, pp.

211-212)

While America’s media system regulating content within a democracy (understood as

facilitating freedom, yet freedom of whose perspective is not quite defined) wouldn’t be

the same as other European countries, there is evidence of content regulation in children’s programming, which has been successfully done in terms of promoting content diversity.

The Children’s Television Act “guarantees at least three hours of education TV every week from every TV station” (FCC News Release, September 2, 1997). This three hour guideline, indeed, replaced vague children’s educational TV rules with a clear rule to enforce the statutory requirement that broadcasters serve the public interest. As Hundit

(1997) states, it is important to understand that broadcasters are public trustees and they are mandated to serve the public. As the statutory requirement of children’s programming 158 has proven to be successful in promoting diversity, specific content control in other areas in which broadcasters seriously harm the public might be taken into consideration.

Concentration and Competition in the System of Distribution and Production

In general, the logic of the classical economic market theory, a high level of concentration ownership implies less pluralistic suppliers, reduces diversity of content; however, as examined throughout the study, this negative correlation between high concentration with less supply, and diversity of content is not always straightforward as expected. It might be possible that large corporations may produce innovative and diverse content better than small independent producers, and vice versa. Any contradictory outcomes in this way will raise an endless debate on the effectiveness of diversity policies on ownership and their relation to content diversity. In fact, as this study attempts to argue, the dimension of media diversity is rather complex, influenced by multiple factors. Any specific media market can support only a certain level of supply, which raises concern in terms of not only numbers of producers (or suppliers) and the market power if concentrated, but also how these suppliers will represent types of content that satisfy various demands from different perspectives. Therefore, the variables that influence media diversity should reflect the complex interrelationship among source, content, and audience diversity (or supply and demand perspectives) with respect to specific market conditions. Such attempts may entail investigation in the size of the market, number of media suppliers, consolidation of resources available within a particular market, and diversity of content that reflects the objectives of social demands as well as the economic competitiveness of media firms. In other words, media diversity 159 should be assessed as compounding the effects of the various determinants listed above for an adequate implementation of the policy on media diversity.

Throughout the analysis on diversity in commercial broadcast television, this study suggests the economics of programming as a critical variable. Accounting for the economics of program production as a key determinant in commercial broadcast television entails a careful monitoring of programming strategies. Monitoring these programming strategies may involve selecting content that targets a desirable audience for the advertiser, determining reasonable costs for program types and time slots, and evaluating the competition to determine scheduling strategies. The programming strategies of commercial broadcast television largely rely on a simple economic formula based on minimizing costs, and maximizing advertising dollars. To maximize the size of the audience, the programming for advertiser-supported television is substantiated by offering content that largely conforms to audience demands. Besides, in spite of increased competition, the fact that the commercial networks provide similar content that is relatively inexpensive exemplifies their program cost strategies based on the economics of programming. This programming strategy will continue to shape content as less diverse by targeting a mass audience, even if competition is increased. The major reason for the negative relationship between competition and content diversity is verified by the fact that the total average audience within a specific media market is rather fixed; therefore, an increase of competition causes more fragmentation of audience share by each firm. The study shows that as the general collective share of prime time viewing in broadcast television has been declining so have advertising dollars. Therefore, it is 160 anticipated that more increased competition would motivate commercial television networks to turn to cost effective strategies.

Furthermore, this study suggests a closer investigation of vertical integration where networks can control production, distribution, and marketing system for profit.

Vertical integration explains the new media environment where networks were sold to, and themselves were taken over by giant corporations (e.g., Viacom, Time Warner,

Disney, etc.). This vertical integration was mainly stimulated by broadcasters’ survival strategies against diminishing broadcast ratings during the 1980s and 1990s. Since the deregulation in the early 1980s, media competition has changed dramatically. A market with a large number of different owners transformed a smaller group of similar owners using corporate programming strategies to sustain a large share of the audience where networks actually own the programs they broadcast. What this means is that the system of production and distribution is operated, and controlled by the same giant companies who own the networks.

As far as considering the corporate programming motive in commercial broadcast television, whether networks produce programs, either internally, or externally by acquiring them from independent producers, depends on profitability over quality content. As the study analyzed, the primarily incentives for supplying programs largely hinge on the network’s programming strategies aimed at minimizing costs and maximizing profits by increasing the value of audiences for advertising dollars. This assumption raises a critical question whether independent producers can actually produce diverse programs by separately examining programs produced internally and externally.

If significant differences are dictated between them, then, it will strengthen the 161 establishment of the critical relationship between vertical integration and program diversity, as to verify the assumption that vertical integration as a major culprit (or indicator) hinders program diversity in the commercial broadcast television industry.

Therefore, the study suggests further interrogation on the differences of program content, produced internally and externally for examining the effect of vertical integration on program content. For that reason, the study has no intention to address the idea that the distribution system should no longer be contributing to the flux of program diversity although it failed to demonstrate a critical relationship between them. It rather suggests the development of a sophisticated assessment that can closely interrogate the interrelation among distribution, production, and market sale strategies. Although the study finds that serious program duplication from 2000- 2006 is primarily caused by cost effective strategies, this serious decline of diversity might be in part related to the effect of vertical integration. Therefore, a closer inspection of the networks’ profit motives in producing programming should continue to be one of the main indicators that hinder media diversity.

Public Television and Promoting Quality Dimension of Diversity

The proposition of public television as a significant alternative to commercial television in promoting diversity relates to an attempt to provide diverse content accepted by the public; thus it works best for society. This proposition starts with an assumption on the basis of the public policy model that social (or civil) forces have been marginalized.

The attempt to meet social demands and to inform citizens, in fact, is to define diversity as quality (or diversity) to be optimized over quantity (variance) to be maximized. The study demonstrates that diversity in public television follows the public policy model 162

(diversity as a normative criterion of quality) grounded in social theory, whereas diversity in commercial broadcast television follows the program choice model grounded in economic theory, or marketplace idea (diversity as expressive criterion). The major difference between public and commercial broadcast television is apparent in terms of the drives in programming, types of programs produced, number of channels offered, and diversity level offered. The public interest motivation in public television is strengthened with its non-commercialism, moral obligation to serve the public interest, and decentralized system of programming. As the study demonstrates, the types of programs offered by public television are mostly informational, cultural, educational, and instructional, which is largely absent in the content offered by commercial broadcast television. According to Einstein (2004b), the quality dimension of diversity in general refers to diversity of important shows, including categories such as children’s, public affairs, arts, and nature programming, as well as documentaries, all of which public television primarily offers. On the other hand, it is very true that commercial broadcast television offers a variety of entertainment content with a large number of channels. As this study indicates, there are over 20 categories of program content types, with over

1,000 channels. However, program types are highly disproportioned in prime time, with three or four program types dominating over the years, and the types of content mostly provided (drama, reality, and situation comedy) are far from meeting diversity standards that offer substantive and innovative content and encourage independent thought, even if not popular. Instead, their offering of program content merely responds to the satisfaction of large audiences. 163

Although the marketplace idea attempts to define diversity as fairness in giving access to audiences (expressive function of media), the problem is that it basically obeys a majoritarian rule that satisfies the immediate gratification of as many audiences as possible (Hellman, 2001). More importantly, audience gratification in accessing ideas is rarely balanced, nor is it on the basis of rational demands. The study’s attempt to propose an idealistic evaluation of content diversity, combining both the critical and expressive functions of media with the application of open and reflective diversity, is mainly frustrated by the reasons stated above. All this proved that commercial broadcast television grounded in the marketplace idea only meets “variety,” not “diversity.” This assumption is further substantiated by different levels of Open Diversity (OD) where public television tends to maintain higher level of OD than commercial television with the higher Standardized D in a number of categories. In other words, the study suggests that the diversity concept, the heterogeneity of content, must be defined by quality over quantity to meet diversity standards. And obviously, public television can provide a quality dimension of media diversity mainly because the nature of public television follows the core assumption of the public policy model that clearly meets the quality dimension of diversity as proposed.

However, this study suggests additional interrogation on the gradual decline of

Open Diversity in public television in conjunction with their commercial involvement, that is signaled by increasing revenue sources from business industries. In spite of the fact that the overall OD has remained high from the 1970s to the 1990s, the decline trend was apparent over the years. This implies the possibility that this trend might be significant after 2000 up to the most current year. Restricted funding from the federal 164

government, and minimal support from school districts and universities could direct

public television to become involved in commercialism. For example, public television

stations, after federal funding cuts in the 1980s, were allowed to give underwriting and

enhanced underwriting credits, which were virtually indistinguishable from commercials

(Sterling & Kittross, 2002). The assumption that maintaining high quality programming

is primarily due to its noncommercial principle in this way might be seriously weakened

by commercial interruption. In other words, the introduction of commercial

considerations to public television programming means a process of convergence of

content of public and commercial channels, which will certainly modify the content that

is offered by public television. Some specific examples related to this issue are, “a few

public stations seeking broader audiences at lowest cost, began to provide reruns of

former commercial fare” (Sterling & Kittross, 2002, 521), and National Geographic

Specials and Smithsonian appeared on higher-paying commercial network. Therefore, a continual monitoring of public television programming strategies that include commercial interests should be taken into consideration as to strengthen the proposition of public television as a solution for promoting the quality dimension of media diversity.

Methodological Limitations

This project suffered from serious methodological shortcomings in the areas of

measuring concentration, content, and audience diversity, particularly in quantitative

approaches. The quantitative methodological approach used in the project is descriptive

in nature, following the same indices previously constructed in media diversity studies.

Although this project attempts to go beyond the quantitative descriptive approach in order

to explicate diversity in varying conditions along with the qualitative descriptive 165 approaches, it seems important to address the methodological shortcomings the author faced during the analyses. Doing so may help future media diversity studies develop a more comprehensive assessment of media diversity.

Virtually all of the quantitative descriptive approaches used in the measurement of concentration, content, and audience diversity in this study have been limited by a lack of appropriate statistical tests simply due to the nature of the data. The sample sizes are insufficient to test the statistical significance and thus can’t report significant differences with theoretically driven hypotheses as to be predictable. Consequently, the validity of assumptions tested through the descriptive quantitative approach remains open to questions. For that reason, it suggests a need for development of statistical assessment that can go beyond descriptive. So far, media diversity studies have been largely descriptive as opposed to predictive, and there have been a few which combined statistical tests with their descriptive approaches. The statistical test is critical to verify the assumptions, and to attribute variation in diversity to specific conditions.

Another methodological shortcoming relates to the Diversity Index that measures content diversity. Any quantified content diversity measurements are not designed to adequately assess the quality dimension of diversity. Although mathematical summary indices could facilitate a better comparison of trends in programming overtime (e.g.,

HHI, Simpson’s D, etc.), theses methods can only measure the concentration of programming across genres). In other words, they are more suitable to examine variety across the types of programs by counting percentages or proportions of different categories offered by each network. Although the Open Diversity Index provides a more sophisticated assessment of content diversity than others, it still has a limitation in 166 accounting characteristics of the programs because it, just like other content diversity methods, only accounts for different types of programs. The production quality and overall sensibility critical to the quality dimension won’t be clearly seen, but can be assumed from the types of categories provided. For example, the practice whereby programs are frequently repeated, or genres, such as Reality Shows, associated with the lowest standards in commercial television, might be enhanced by public television, can be clear examples of inadequacy of the Diversity Index measuring the quality dimension.

Developing General Properties of Quality Content Criteria

The inquiry of the quality dimension of media diversity renders itself to developing a general property of an outcome of a measurement along a scale of assessment. However, the specific scale of assessment in terms of the quality dimension hasn’t been fully developed in spite of rigorous debates on the quality and its essentiality in the field of media diversity. The proposition of open diversity, in fact, was one major attempt to define the quality assessment of media diversity, which conceptualizes media diversity from the supply perspective. With the core assumption of media influence on society, open diversity allows the measurement whether media content expresses different opinions in an equal manner and in a sound way (Van Cuilenburg, 2000).

Nevertheless, as this study exemplified, the measurement didn’t sufficiently provide the quality dimension explained above.

The quality is in need of further specification in order to be meaningful or to be a useful concept. The suggestion for developing consistent public interest criteria is closely related to this effort. Due to the inconsistency in establishing public interest criteria, the quality criteria in the media diversity study has been audience share criteria normally 167 advanced by private commercial broadcasters (see Cavallin, 2000). As Cavallin notes,

“the trouble is that the specification of quality encounters a host of philosophical difficulties, near or even superior to the notion of content” (p. 133). With the proposition of one of the critical roles of media and media diversity as serving social duties (or public benefits), this study finally suggests a critical need for the establishment of a quality measurement in need of specification. The indicators for the specification of quality, as mentioned above, broadly include the measurement of production quality and overall sensitivity of programs, which may be further specified by several variables. The possible variables to specify the indicators may include the measurement of the level of creativity, fairness, accuracy, credibility, thoroughness, technical virtuosity, balance, artistry, and innovation which all may tell content ability to stimulate, educate, inform, challenge, and entertain (see Public Broadcasting Service, 2007, for editorial standards). The continual effort to operationalize all these indicators will certainly help extend the quality measurement within the diversity study as well as the establishment of quality criteria.

168

APPENDIX A Corporate Ownership and Owned and Operated (O&O) Stations

NBC Ownership Operated as a unit of RCA until 1985, and RCA was sold to General Electric (GE). GE maintains ownership of NBC.

O&O Stations WNBC (New York), KNBC (Los Angeles), WMAQ (Chicago), WCAU (Philadelphia), WRC (Washington, DC), WVJ (Miami), KNSD (San Diego), WNCN (Raleigh-Durham, NC), WCMH (Columbus, OH), WJAR (Providence, RI), & WVTM (Birmingham, AL)

CBS Ownership Laurence Tisch owned the company in 1986, and sold off assets unrelated to broadcasting (CBS). CBS Records was sold to Sony in 1988 (CBS, Inc). Westinghouse owned it 1996 (CBS Corporation).

O&O Stations WCBS (New York), KCBS (Los Angeles), WBBM (Chicago), KYW (Philadelphia), KPIX (San Francisco), WBZ (Boston), WWJ (Detroit), WCCO (Minneapolis), WFOR (Miami), KCNC (Denver), KDKA (Pittsburgh), WJZ (Baltimore), KUTV (Salt Lake City), & WFRV (Green Bay, WI)

ABC Ownership Capital City and ABC joined in 1985 with its merger. Capital City/ABC became part of Disney in 1996, holding ownership of the ABC television, radio networks and stations, and cable ownership in ESPN.

O&O Stations WPIV (Philadelphia), WABC (New York), KABC (Los Angeles), WLS (Chicago), KGO (San Francisco), KTRK( Houston, TX), WTVD (Raleigh- Durham, NC), KFSN (Fresno, CA), WJRT (Flint, MI), & WTVG (Toledo, OH)

FOX Ownership The Fox Broadcasting Company (FBC) is part of Fox television, a division of New Corp. FBC owned network itself. Sister companies operate Fox Television Stations (the station group), Twentieth Century Fox (the movie studio), Twentieth Television (the television production operation).

169

APPENDIX A (continued) O&O Stations WNYW (New York), KTTV (Los Angeles), WFLD (Chicago), WTXF (Philadelphia), WFXT (Boston), WTTG (Washington, DC), KDFW (Dallas), WJBK (Detroit), & WAGA (Atlanta).

170

APENDIX B Public Television Programming Content by Categories: 1974-1996

News/ Information/ Children/ Sesame Public Cultural Others Instructional Year Skills Youth Street affairs % % % % % % % 1974 0.13 0.16 0.18 0.11 0.21 0.04 0.17 1976 0.12 0.20 0.21 0.10 0.18 0.04 0.16 1978 0.11 0.24 0.22 0.09 0.16 0.05 0.15 1980 0.12 0.22 0.21 0.09 0.16 0.06 0.15 1982 0.12 0.25 0.23 0.08 0.15 0.05 0.14 1984 0.14 0.25 0.20 0.08 0.15 0.06 0.13 1986 0.16 0.29 0.21 0.07 0.11 0.02 0.15 1988 0.16 0.32 0.18 0.06 0.12 0.01 0.16 1990 0.18 0.32 0.19 0.06 0.11 0.01 0.14 1992 0.17 0.28 0.17 0.15 0.11 0.01 0.12 1994 0.19 0.27 0.16 0.20 0.09 0.01 0.09 1996 0.19 0.28 0.17 0.20 0.08 0.01 0.08

Source. Data complied from Corporation for Public Broadcasting, Washington, DC, Programming, published in U.S Census, and Stay Tuned (2002)

171

APPENDIX C

Program Codes for Commercial Broadcast Television

Variety Special/Varied Comedy Country and Western General talk Music Drama General Women’s serials Action/adventure Crime/detective Suspense Westerns Animated cartoon Motion Picture (Movie) Situation Comedy Quiz and Panel (Audience participation) News and Information Newscasts Forum/Interview Documentary/Information Others Children show Sports Reality*

Note. *Reality program was independently created for the analysis of the content diversity during 2000-2006.

172

APPENDIX D

Commercial Network Prime-Time Program Types: 1965-2002 (by 30 minutes per week)

News/ Year Variety Drama Movie Sitcom Quiz Others Total Info

1965 31 66 24 24320150 1966 27 69 28 21320150 1967 26 70 24 20242148 1968 31 64 28 22220149 1969 29.5 44.5 27 22320128 1970 35 55 27 24224149 1971 15 49 36 22004126 1972 16 48 35 21024126 1973 12 47 39 24004126 1974 6 68 33 15004126 1975 10 72 26 20004132 1976 19 57 34 16034133 1977 14 66 22 24024132 1978 18 58 32 17034132 1979 8 60 28 24084132 1980 12 54 24 24 0 14 4 132 1981 9 60 20 29 0 10 4 132 1982 4 52 36 28084132 1983 3 58 20 21084114 1984 7 76 20 21044132 1985 7 78 20 19044132 1986 1 70 24 29044132 1987 0 80 18 36044142 1988 7 66 24 34084143 1989 2 68 22 38 0 10 10 150 1990 2 64 24 49089156 1991 6 46 28 50 0 12 14 156 1992 0 65 24 50 0 10 11 160 1993 5 52 28 47 2 20 8 162 1994 0 66 28 41 0 18 9 162 1995 2 72 28 54 0 20 8 184 1996 3 72 28 61 2 16 6 188 1997 6 74 16 62 0 22 8 188 1998 11 80 20 55 0 26 12 204 1999 10 93 22 43 2 26 12 208 2000 6 87 32 41 8 20 14 208 2001 10 96 18 42 13 12 17 208 2002 9 98 24 41 0 16 20 208

173

APPENDIX D (continued)

Variety Drama Movie Sitcom Quiz/Panel News/Info Others % % % % % % %

21 44 16 16 2 1 0 18 46 19 14 2 1 0 18 47 16 14 1 3 1 21 43 19 15 1 1 0 23 35 21 17 2 2 0 23 37 18 16 1 1 3 12 39 29 17 0 0 3 13 38 28 17 0 2 3 10 37 31 19 0 0 3 5 54 26 12 0 0 3 8 55 20 15 0 0 3 14 43 26 12 0 2 3 11 50 17 18 0 2 3 14 44 24 13 0 2 3 6 45 21 18 0 6 3 9 41 18 18 0 11 3 7 45 15 22 0 8 3 3 39 27 21 0 6 3 3 51 18 18 0 7 4 5 58 15 16 0 3 3 5 59 15 14 0 3 3 1 53 18 22 0 3 3 0 56 13 25 0 3 3 5 46 17 24 0 6 3 1 45 15 25 0 7 7 1 41 15 31 0 5 6 4 29 18 32 0 8 9 0 41 15 31 0 6 7 3 32 17 29 1 12 5 0 41 17 25 0 11 6 1 39 15 29 0 11 4 2 38 15 32 1 9 3 3 39 9 33 0 12 4 5 39 10 27 0 13 6 5 45 11 21 1 13 6 3 42 15 20 4 10 7 5 46 9 20 6 6 8 4 47 12 20 0 8 10

174

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