Manufacturing Consent_ The Political Economy of the Mass Media - Edward S. Herman [253]
20. The Reagan administration strengthened the control of existing holders of television-station licenses by increasing their term from three to five years, and its FCC made renewals essentially automatic. The FCC also greatly facilitated speculation and trading in television properties by a rule change reducing the required holding period before sale of a newly acquired property from three years to one year.
The Reagan era FCC and Department of Justice also refused to challenge mergers and takeover bids that would significantly increase the concentration of power (GE-RCA) or media concentration (Capital Cities-ABC). Furthermore, beginning April 2, 1985, media owners could own as many as twelve television stations, as long as their total audience didn’t exceed 25 percent of the nation’s television households; and they could also hold twelve AM and twelve FM stations, as the 1953 “7-7-7 rule” was replaced with a “12-12-12 rule.” See Herbert H. Howard, “Group and Cross-Media Ownership of Television Stations: 1985” (Washington: National Association of Broadcasters, 1985).
21. This was justified by Reagan-era FCC chairman Mark Fowler on the grounds that market options are opening up and that the public should be free to choose. Criticized by Fred Friendly for doing away with the law’s public-interest standard, Fowler replied that Friendly “distrusts the ability of the viewing public to make decisions on its own through the marketplace mechanism. I do not” (Jeanne Saddler, “Clear Channel: Broadcast Takeovers Meet Less FCC Static, and Critics Are Upset,” Wall Street Journal, June 11, 1985). Among other problems, Fowler ignores the fact that true freedom of choice involves the ability to select options that may not be offered by an oligopoly selling audiences to advertisers.
22. CBS increased its debt by about $1 billion in 1985 to finance the purchase of 21 percent of its own stock, in order to fend off a takeover attempt by Ted Turner. The Wall Street Journal noted that “With debt now standing at 60% of capital, it needs to keep advertising revenue up to repay borrowings and interest” (Peter Barnes, “CBS Profit Hinges on Better TV Ratings,” June 6, 1986). With the slowed-up growth of advertising revenues, CBS embarked on an employment cutback of as many as six hundred broadcast division employees, the most extensive for CBS since the loss of cigarette advertising in 1971 (Peter Barnes, “CBS Will Cut up to 600 Posts in Broadcasting,” Wall Street Journal, July 1,1986). In June 1986, Time, Inc., embarked on a program to buy back as much as 10 million shares, or 16 percent of its common stock, at an expected cost of some $900 million, again to reduce the threat of a hostile takeover (Laura Landro, “Time Will Buy as Much as 16% of Its Common,” Wall Street Journal, June 20, 1986).
23. In response to the Jesse Helms and Turner threats to CBS, Laurence Tisch, of Loews Corporation, was encouraged to increase his holdings in CBS stock, already at 11.7 percent. In August 1986, the Loews interest was raised to 24.9 percent, and Tisch obtained a position of virtual control. In combination with William Paley, who owned 8.1 percent of the shares, the chief executive officer of CBS was removed and Tisch took over that role himself, on a temporary basis (Peter Barnes, “Loews Increases Its Stake in CBS to Almost 25%,” Wall Street Journal, Aug. 12, 1986).
24. The number would be eight if we included the estate of Lila Wallace, who died in 1984, leaving the controlling stock interest in Reader’s Digest