SO BIG

Backslapping. Glee. Jubilation. High fives. "A Victory for Viewers," the New York Times headlined its lead editorial. A "landmark" bill, wrote The Wall Street Journal. "This is the first major overhaul of telecommunications law since Marconi was alive and the crystal set was state of the art," trumpeted Thomas Bliley, chairman of the House Commerce Committee. Broadcasters, cablecasters, and telephone executives all declared themselves tickled pink. Four often bitter years of mule-trading, bickering, and take-no-prisoners lobbying by some of the most powerful corporations in America had come to a triumphal end. The architects of the 1996 Telecommunications Act, a trade journal reported, were sure it would create millions of jobs and "unleash a torrent of competition heralding nothing less than the dawn of a new information age." The bill was "the best overall blueprint that any country in the world has ever come up with," said Congressman Edward Markey. President Clinton proclaimed that consumers will enjoy me choice and lower prices and that they'll "continue to benefit from a diversity of voices and viewpoints in radio, television, and the print media. . . . Today with the stroke of a pen, our laws will catch up with the future," he intoned at the signing ceremony on February 8.

 Now, twelve months into the new law's life, seems a good moment to pull into a rest stop off the information superhighway to check our road maps and learn where we've been and where we think we're going and if that highly acclaimed bridge to our telecommunications future is rickety or sound. One veteran observer called the new law "The Full Employment Act for Telecommunications Lawyers," and that tag has proved prophetic, as the massed legal talent of the affected industries, the Federal Communications Commission, the Justice Department, and dozens of consumer activist groups conduct a talmudic analysis to puzzle out how to tilt the statute their way.

At the heart of it is a commendable goal: to haul down the Berlin Wall of barriers that have created de facto monopolies in the cable and telephone industries. It sets the stage for an unbuttoned, free-for-all rivalry between local phone companies, long distance companies, and cable system operators, which holds out the promise, at least, of reducing prices significantly for all three of those services.

 Other parts of the law have drawn fire from independent analysts. For example, it removed all limitations on the number of radio stations one company can own nationally, and allowed up to eight per company locally (instead of only four); relaxed the rules about how many TV stations one company can operate; ordered the FCC to consider easing the rule limiting ownership to one TV station per market, as well as the bar to ownership of a newspaper and a broadcast outlet in the same city; permitted common ownership of cable systems and broadcast networks; ended all rate regulation of smaller cable TV systems and promised the same for large ones later on; extended the license term of TV and radio stations to eight years from four; allowed TV networks to start and own another broadcast network if they choose; required that all TV sets come equipped with a V-chip to help screen out violent and sexually explicit shows; imposed prison terms and fines on anybody who transmits pornography over the Internet. Enough looples and wiggle room were built into the legislation, however, to keep the FCC staff fully engaged for years.

 But far and away the splashiest effect of the new law during the last year has been the historic, unprecedented torrent of mergers, consolidations, buyouts, partnerships , and joint ventures that has changed the face of Big Media in America. A bare few examples:

 --Westinghouse/CBS bought Infinity Broadcasting for $4.9 billion, creating a radio colossus of 77 stations and achieving dominant power in the nation's top ten radio markets, with multiple stations in each.

--Time Warner Inc. and Turner Broadcasting system merged in a $6.7 billion deal that created the world's largest media company.

-- Nynex bought Bell Atlantic for $22.1 billion, making the new entity the largest regional telephone company in the U.S.

-- Two other Baby Bells, SBC and Pacific Telesis, joined forces in a $16.7 million merger.

-- Rupert Murdoch's News Corp. acquired full ownership of New World Communications Group Inc. for $3 billion, making it the nation's leading television-station owner with 22 outlets.

-- U.S. West, a regional Bell company, paid $10.8 billion for control of Continental Cablevision, the third-largest cable operator in the United States.

 -- Tribune Company of Chicago purchased Renaissance Communications for $1.13 billion, making it a 16-station giant with access to a third of America's TV households.

-- Worldcom Inc., the fourth-largest long-distance phone company, bought MFS Communications (the leading provider of alternative local phone service to businesses) for $12.4 billion, creating the first one-stop local/long distance phone company since the Bell System broke up in 1984.

-- The A. H. Belo Corporation of Dallas bought the Providence Journal Company for $1.5 billion, fashioning a media empire of 16 TV stations plus the Food TV Network (a cable network) and such newspapers as The Dallas Morning News and the Providence Journal-Bulletin.

-- Clear Channel Communications boosted its radio station line-up to more than 100 stations, giving it a total audience second only to that of Westinghouse.

-- Chancellor Broadcasting Co. bought twelve radio stations from Colfax Communications for $365 million, giving it 53 stations in 15 markets.

-- Gannett acquired Multimedia Entertainment for $1.7 billion, thereby gaining 10 newspapers (for a total of 92), 5 TV stations (new total: 15), 2 radio stations (for a chain of 13), and a cable operation with subscribers in 5 states.

Factor into those deals the famous $18 .5 billion sale of Cap Cities/ABC to the Walt Disney Co.; Westinghouse's $5.4 billion takeover of CBS Inc.; Viacom's ingestion of Paramount Communications (which earlier had absorbed Simon & Schuster); and Rupert Murdoch's swallowing up of Twentieth Centu ry Fox, HarperCollins, and TV Guide. And to that add the largest and most dramatic foreign takeover of any American company: the $23 billion buyout of MCI by British Telecommunications announced in November, which will give the U.S. long-distance company a pocketful of cash to lay siege to local phone companies, which is now allowed under the 1996 act.

Virtually all the coverage of this unprecedented deluge of consolidations appeared on the business pages of newspapers (if it appeared at all) and on cable channels (CNBC, CNNFN) devoted to business news, and thus flew under the radar of most Americans -- even though collectively the deals have a prodigious impact on most people's lives and change irrevocably the very shape and texture of the nation's media. While the new law was making its way through Congress to the president's desk, the word "competition," like a Tibetan mantra, was a thunderous accompaniment to the negotiations. President Clinton threatened to veto it because, he insisted, instead of promoting "competition it promotes mergers and concentrations of power." Congress tweaked the bill to get his OK, but it's still the most potent instrument in legislative history for promoting megamergers and consolidations, and for fostering giantism in media companies by relaxing ownership rules and hauling down barriers to inter-industry matrimony.

Thus the question presents itself like a Japanese koan (the scrupulous contemplation of which may or may not lead to enlightenment): how is it possible for fewer and fewer owners to generate greater and greater competition?

And the implications for journalism: how much news will be suppressed and self-censored by news executives and reporters reluctant to invoke the wrath (or even the raised eyebrow) of their corporate overseers who don't want eager-beaver newspeople mucking around in the dealings of the parent companies? Would CBS News give full play to any malfeasance by Westinghouse in a disaster at the power-generation plant in Shanghai, China, where Westinghouse owns a $100 million, 35 percent interest? It's doubtful, since the Chinese government is famously sensitive to criticism. In August NBC abjectly apologized to China after sportscaster Bob Costas in his on- air commentary at the Olympics referred to "problems with human rights, property rights . . . and the threat posed to Taiwan," as well as to the well-documented use by Chinese athletes of performance-enhancing drugs. NBC parent GE, one needs to know, has huge investments in China (lighting, hospital equipment, plastics), and NBC operates a pair of satellite channs (NBC Asia and CNBC Asia) which aspire to serve the whole Chinese mainland; and GE has an agreement with China Telecom to build a data transmission network. "We didn't intend to hurt their feelings," an NBC vice president explained meekly, in justifying the apology. One trade journal wondered: since when does a network have to apologize for reporting the truth? The answer: ever since news departments have become smaller and smaller potatoes in an ever larger mulligan stew of corporate expansionism. In late November, China threatened to ax all of the Disney company's massive business interests in China if it went ahead with plans to distribute a Martin Scorsese movie about Tibet's spiritual leader, the Dalai Lama. Disney sells toys, clothing, and other Disneyana in China, and exhibits films such as Toy Story and Jumanji. "If Disney distributes [the movie called Kundun], China won't be happy and that means Disney's business in China will be terminated," warned an official in Beijing. "It's very serious." Disn, to its credit, decided that it would indeed distribute the film. But we may confidently predict that neither ABC, CBS, NBC, nor Fox -- nor any cable network connected with them -- will ever broadcast a tough documentary on China's brutal treatment of Tibet or its ruthless suppression of the Tiananmen Square democracy movement or its sale of nuclear materials to rogue nations or its expected crackdown on democracy in Hong Kong when it assumes control there on July 1.

 This year's merger of Time Warner Inc. and Turner Broadcasting System Inc. has boosted to a whole new level the concerns about how consumers can be caught in the crossfire between emerging media behemoths. That's been dramatized, entertainingly, in New York City recently, where Time Warner (the second biggest cable operator, nationally) is the gatekeeper to the hearts and minds of most cable subscribers. From the moment the TW-Turner nuptials won the blessing of Washington, Time Warner refused to carry Rupert Murdoch's newly minted 24-hour Fox News Channel on its New York City system. Ted Turner in his new seat of power as vice-chairman of TW -- so the very logical supposition goes -- wanted no further competition for his own all-news channels (CNN, CNNFN, Headline News) and certainly none from Murdoch, whom he loudly and obsessively disdains. One need not be an admirer of Rupert Murdoch to find something "bothersome" in all this, as Mark Cooper of the Consumer Federation of America puts it. No new entry in cable programming can be fully successful nationally without acceptance by both TW and the number one cable giant, TeleCommunications Inc. (which owns 9.9 percent of TW), since together they control access to almost half of all cable subscribers in the U.S. Their interlocking ambitions create "a chilling concentration of common economic interests," Cooper points out. "On the one hand the public understands that concentrated ownership creates problems. On the other, it doesn't know what it's not getting. So when it doesn't receive an additional news channel, it doesn't complain. The difficulty of proving a negative creates a problem for public policy."

 Ruminating on the TW-Turner versus Murdoch shootout in an editorial on October 24 ("Mr. Murdoch's Rage"), The New York Times decided: "It is unsettling enough to contemplate a world dominated by a few giant media companies without imagining them being run by spiteful egomaniacs" -- calling to mind Murdoch's own history of exclusionary practices: he cancelled the BBC from his Hong Kong-based Star satellite network to appease Chinese bureaucrats who w ere annoyed with its coverage and has kept CNN off Star as well. On November 10, the Times wrote that the TW/Murdoch sideshow proves that the government "has little chance of controlling -- or even fully understanding -- the newly deregulated communicatio ns industry."

Constructing lists of what might be called "hypothetical unethicals" by emerging mega-media is a new parlor game, and a too-easy one. Will TW's Sports Illustrated write favorably about any players' strike, now that that lucrative Atlanta Braves franchise is a new member of the family? Will the Providence Journal-Bulletin in reviewing The Food TV Network write that its recipes are tasteless and boring, at the risk of annoying the A. H. Belo parent of both of them? Now that Westinghouse owns both all-news radio stations in New York (WCBS and WINS), will it eventually merge their newsrooms to save money, thus neutralizing those historically hotly competitive stations and denying New Yorkers one of their sources of news? one of those things -- and plenty more like them -- may ever happen. But for the first time the fields are now tilled and fertilized to make the growth of such weeds not only possible but likely. "What scares me most," says Gene Kimmelman, co-director of the Consumers Union in Washington, "is th eventually we may have most of the big players in cahoots with each other and there will be no one who has a major ownership stake in dissemination of information with a market incentive to criticize. Who's going to blow the whistle? The way the public gets its information will be predominantly controlled by those who are benefiting from a monopolistic environment." William Small, the Larkin Professor of Communications at Fordham (and former president of NBC News) says that, during the act's first year, he has seen no "horrendous examples" of news suppression growing out of the consolidations. "But self-censorship is always the greatest concern. If you're an investigative reporter or producer do you hesitate to do piece on GE's dealings with the Pentagon? Do you say: why should I get GE mad at the news division, or at me? We'll never know."

 Time magazine went out of its way in October to acknowledge this minefield in a prologue by managing editor Walter Isaacson to an article about "the strains" caused by TW's union with Turner. Since Time Inc.'s original merger with Warner seven years ago, wrote Isaacson, (which, he confessed, the magazine "initially failed to cover") Time faces "a lot more suspicions....[B]ut we learned our lesson quickly..." He went on:

 "Among the trends in the media world is consolidation, with sprawling corporations owning news organizations and raising the specter of conflicting interests and a less diverse babble of journalistic voices. . . . [I]ndividual press baron[s] can be insidious meddlers. . . . If any readers or watchdog groups discern a pattern of dishonest judgments, they can (and should) flail us. . . . But we promise that the mistakes we make will be due to our editorial fallibility rather than to corporate kowtowing."

Some of the most worrisome fallout of the 1996 act is occurring in the radio industry, where all limitations on how many stations one company can own nationally have been repealed, and the local cap increased to eight. In Memphis, Clear Channel Communications Inc. (which now operates 121 stations nationwide) owns seven outlets, and four of those are targeted at the city's predominantly African-American listeners -- giving them a near monopoly voice to that segment of the local population. Art Gilliam, president of WLOK-AM in Memphis (a black-oriented station and one of the few remaining independents in the city), complains he's being squeezed out. "The old Communications Act mandated service to the community by station owners. Local ownership is more likely to provide good community service because those owners are more familiar with their communities and have a vested interest in them. The big change with the new act is in the philosophical approach to what best serves a local community." In Rochester, New , the American Radio Systems Corp. (ARS) was ordered by the Justice Department in October to slash its ownership from eight stations to four, thereby reducing its stranglehold on the city's radio advertising revenues. That came as a great relief to Andrew Langston, owner of a small, independent African-American-oriented station (WDKX-FM) which he and his wife started from scratch in 1974. The big conglomerated radio chains make it extremely hard "for folks who are black and Hispanic to have a place in radio," he maintains. "Large corporations like ARS are such a dominant force that they can eliminate the small entrepreneur." The Justice Department is embarked on a nationwide review of how mammoth radio chains are exploiting the new law to grab a preemptive share of local radio ad revenues -- and forcing divestitures where anti-trust violations seem apparent.

A contrarian view has it that one company owning eight radio stations in a single city can be good for radio news. How's that? Well, says David Bartlett, president of the Radio-Television News Directors Association, an affluent string of stations in the same town creates a deep pool of cash that can be tapped for news and public affairs programs. "There's no shortage of interest on the part of the audience in radio news. But there have been very few stations big enough to afford it," he claims. "I'd much rather have a good news operation that serves six or eight stations in the same city than have none of those stations doing any news because they're owned by separate owners and can't afford to do it. So you may discover in the short and medium term that consolidation may actually lead to a revival of radio news, and that's much to be wished."

 Or, another scenario, offered by an urban radio reporter: "If you're a newsperson in, let's say, Kansas City, would you prefer that your owner be the big local fatcat, or a station group with headquarters a thousand miles away -- which would give you more freedom to cover local news? It depends on who the local fatcat is and how committed he is to independent news. A lot of local owners don't want their golf pals, who run the city, covered in a bad light."

 But of all the provisions of the 1996 Telecommunications Act, the one that seemed most promising for consumers at the outset is now the one most in tatters. At the very core of the act was the so-called "two-wire world": no longer would cable TV and regional telephone companies have monopolies, respectively, on video service and local phone service into the home. In a gesture of thrilling aggiornamento, the act allowed cable to supply phone service and phone companies to deliver cable programs -- so that the resulting hot competition nationwide would drive down the prices of both. But -- except for test runs in places like Dover Township, New Jersey, and Alexandria, Virginia -- no such boon to consumers is visible anywhere on the horizon. In fact, astonishingly, it never was on the horizon, according to a Clinton administration official who spoke to CJR on condition of anonymity:

"One of the real dilemmas we had while this act was being debated was: 'At what point do we admit that the notion of cable and telephony attacking each other's markets is bullshit?' We knew, because we study these things, that this was a lie. It wasn't going to happen. The costs on both sides, and the technological hurdles, are too high. Oh, maybe twenty years from now, but probably not even then. This bill was supposed to promote competition now, not twenty years from now. My point to you is that everybody in Washington so badly wanted this to happen that they didn't ask the cable and phone companies: 'How much is this going to cost you? How do you plan to finance the crushing costs? How will you conduct a business about which you now know nothing?'" That was the big story that never got written, the source insists. "Everybody missed it. I never saw an article that said categorically, 'This bill is based on a two-wire world and it's not going to happen.' In fact, it was supposed to bring more competition, l prices, and more services. But so far we've seen more consolidation, higher prices, and no new services."

 The handwriting finally appeared on the wall in October when Gerald Levin, the Time Warner c.e.o., told investors that -- after spending billions gearing up for telephony -- his company was "not interested" in the phone business anymore. A few Wall Streeters are guessing that Time Warner will, in fact, eventually sell off all or parts of its cable TV holdings to reduce its $17.5 billion debt. And TCI's fabled c.e.o. John Malone is also thinking the formerly unthinkable, according to reports: He "has made the decision that the cable business is not where he wants to be," a Schroder Wertheim analyst told Business Week in October. Meanwhile, the phone companies, in spite of grandiose announcements, show zero progress in invading cable's turf. Their proudest initiative was a joint venture of Nynex, Bell Atlantic, and Pacific Telesis, to cobble together a new entity called Tele-TV and to hire away Howard Stringer, CBS's top broadcast executive, to run it and teach them how to get into television. But so far thatndstand play has shown no visible results, and the chances of consumers ever receiving news broadcasts and sports and Seinfeld from their local phone companies grow ever slimmer. Nonetheless, some experts continue to believe that cable and telephony will go after each other's business. Greg Simon, chief domestic policy adviser to Vice President Al Gore, told CJR that it's going to happen -- eventually -- but not as fast as many imagined when the act was in preparation.

One big roadblock to cable and long-distance getting into the vastly profitable $100 million local phone business has been the so-called "interconnection" controversy: namely, how far can the Baby Bells go in blocking those two giant potential competitors from hitchhiking on the local phone lines into consumers' homes? Outfits like AT&T and Sprint need that access -- as the law permits -- if they are ever to compete for local phone customers. But the Bells have resisted, and it's now in the lap of the courts. It's a rumpus that the public is virtually totally ignorant about, even though, as Andrew Jay Schwartzman of the Media Access Project puts it: "The interconnection is the single most important internal building block of this whole telecommunications transformation, and dramatically affects the rate at which a lot of this change will take place."

With the Republicans once again in control of Congress, a new phase begins in teasing out the 1996 act's ramifications for consumers. Among the large open questions: should common ownership of a newspaper and a broadcast station in the same market be permitted (except for already-existing situations, e.g., the Chicago Tribune-WGN and the New York Post-WNYW); and should any one entity be allowed to own more than one TV station in the same area? The White House and the Democratic minority will publicly resist any such liberalizations as tending to concentrate more media influence in fewer hands. But one administration insider, speaking off the record, mused that blanket newspaper/broadcasting restrictions are "a totally counterproductive idea" because they prevent a thriving radio or TV station from buying a sickly newspaper and restoring it to health. That could be crucial in a two-newspaper town, the source argues, "where there's one dominant paper and another on its last legs. The rule as it stands contributo the death of small papers and the creation of newspaper monopolies." Similarly -- so goes the theory -- there's a potential silver lining in changing the rules to allow one entrepreneur to own two TV outlets in the same market, if that owner promised (for example) to format his second channel as a local all-news station for C-SPAN-like coverage of community affairs, along with live town hall meetings and free political time for office seekers.

 As the new telecommunications law blows out the first candle on its birthday cake, the payout benefits are still a mixed bag and its ultimate net rewards for consumers are visible only through a glass darkly. George Gerbner, founder and chairman of the newly formed Cultural Environment Movement, complains that the act passed "in virtual secrecy, without any discussion of its long-range consequences." It "legitimizes monopolies" and "unleashes them on a global market," he insists. Television journalism has become "an adjunct of marketing and thus must be more entertaining and more adjusted to the fantasy world of drama and fiction." Jeff Chester, director of the Center for Media Education, says: "We really have to look at this as rebuilding the communications system from the ground up. It's going to be dominated by a handful of very large, powerful players." Among big players who own news organizations, the focus "is going to be more on merchandising and entertainment than news." And the stage is set, more san ever in U.S. media history, for corporate bosses to suppress unwelcome news and otherwise meddle in editorial decisions. The American Society of Magazine Editors meeting in Bermuda in October issued a policy statement -- after alleged intrusive actions by owners -- declaring that "editors need the maximum possible protection from untoward commercial or other extra-journalistic pressures. It seems appropriate now to make that standard explicit and precise." Broadcast and newspaper journalists are in need, more than ever, of similar explicit and precise assurances.

 If there is bad and ambiguous news imbedded in the act, there's good news as well.

 -- The new law affirms the rights of citizens, as well as schools, hospitals, museums and libraries, to have affordable access to these emerging advanced communications networks.

 -- Digital broadcasting -- which will drastically expand the number of TV signals in every community -- holds out at least the promise of vastly greater diversity from our television service.

 -- Local and long distance phone rates will decline eventually as companies like AT&T, the newly-forged MCI-British Tel and the regional Bells gird for battle against each other.

 In truth, diversity of choice for consumers is coming from technology and marketplace forces as much as from governmental tinkering. The direct broadcast satellite industry (DBS), for example, is emerging as the main competitor of cable; from a standing start barely eighteen months ago it now has 5 million subscribers and will have about 20 million soon after the year 2000. And the Internet continues as the most varied and democratic medium yet invented.

Meanwhile, the revolutionary Telecommuni-cations Act of 1996 is being massaged, tickled, vivisected, and anatomized by the administration, Congress, the courts, the Justice Department, and the FCC to discover how its (often very unspecific) provisions ought to work out in the real world. That involves a lot of heavy lifting. In early November, Broadcasting & Cable magazine editorialized that nine months after passage of the Act, "the new landscape looks remarkably moribund. . . . All the competition that was to ensue from the most ambitious rewriting of communications law has yet to occur. . . . That's not to say that competition won't come along, but . . . by then today's marketplace may be unrecognizable."

All those high-fives of last February were way premature.

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