In his 1941 film, Citizen Kane, Orson Welles painted a dystopian picture of what can happen when a media empire is allowed to grow unchecked. The spectre of Welles’s title character, loosely based on newspaper mogul William Randolph Hearst, once again looms large as America reviews its media regulations regime. At the same time, South African regulator ICASA is faced with its own acquisition-hungry media owners.
Enter, by way of example, Nail CEO Saki Macozoma.
After a year of market speculation about where he plans to spend his R600m stash, Macozoma confirmed in January that he’s eyeing Johnnic’s media assets. While hardly a revelation, the statement will have drawn an anguished sigh from ICASA chairman Mandla Langa, who once again runs the risk of being sandwiched between the strictures of an outdated IBA Act and the interests of a tenacious businessman who is not without friends at Luthuli House.
Johncom, Johnnic’s media wing, counts among its print assets the Sunday Times, a large chunk of Caxton and half of BDFM. Johncom’s lack of radio interests eliminates one of the primary obstacles Nail faced in its bid for Kagiso, but other problems remain.
First, there is an IBA-era law prescribing ownership of a dominant newspaper and a radio station in the same market (Nail controls Jacaranda and KFM). Then there are Nail’s empowerment credentials, which Langa questioned in his rationale for vetoing the Kagiso merger a stance from which it will be difficult to back down now. Absent some deft restructuring antics, Johncom’s empowerment shareholding of around 28 percent would be severely diluted under Nail ownership, whose black empowerment shareholding is just 5 percent.
As he ponders the urgent and daunting task of rewiring South Africa’s media regime, Langa will no doubt be scrutinising the proceedings currently underway at the Federal Communications Commission ICASA’s American counterpart where media diversity lobbyists are pitched in a losing battle against the financial and political muscle of the nation’s media and entertainment megaliths.
The United States has long been at the forefront of a developed-world trend to relax media ownership laws. Indeed, the virtual freedom to gobble and grow has been a critical factor in the domestic and international success of American media corporations over the past fifty years. The trade in media assets is worth billions over 200 television and 800 radio stations have changed hands since 1991, and that was while business was slow: more than 600 television stations were traded between 1995 and 1997.
This staggering traffic in media assets enriches not just media owners, whose investments are as tradable as baseball cards on a school playground, but also for the myriad industries from corporate financiers to consultants involved in each new acquisition.
It should come as no surprise, therefore, that the FCC now plans to relax ownership restrictions even further. In its submission to Congress in March, the agency will probably recommend the lifting of several regulations, including a law that precludes ownership of a newspaper and a television station in the same market, and another that places a cap of 35 percent on any single company’s national television reach.
But while deregulation has proved a winning formula for the conglomerates it helped spawn, serious concerns are beginning to arise as to its impact on content providers and consumers. One company that has become something of a lightning rod for these concerns is Clear Channel Communications Inc.
South Africans know the Texas company for its 2001 purchase of Corpcom whereby it became the country’s largest outdoor player. But aside from 750 000 billboards in 45 countries and a host of concert venues, Clear Channel is the largest owner of radio stations in the United States about 1 200 at last count almost 1 000 more than its nearest rival.
The company’s dramatic growth was facilitated by Congress’s 1996 scrapping of the national cap on radio station ownership a courtesy the FCC now plans to extend to television owners.
Consolidation opponents contend that Clear Channel’s dominance not only diminishes diversity of opinion on the airwaves, but also inflates advertising rates and robs stations of their local character as “local content” is piped halfway across the country from centralised studios.
Clear Channel insists its growth has benefited consumers and artists alike, saving small independent stations from closure, upgrading facilities and providing new avenues for music distribution.
Nevertheless, the Texas company’s burgeoning power worries even FCC Chairman and ardent deregulation advocate Michael K. Powell. The Republican appointee recently admitted to being “troubled by the way our rules work, particularly in smaller markets.”
But such concerns have the ring of a gate clanging shut some six years after the horse has bolted. To bring an empire like Clear Channel to heel would require an effort of similar magnitude to the five-year Microsoft litigation saga (which itself eked only a few cosmetic concessions from the software giant).
Mindful of federal scrutiny, however, Clear Channel recently hired as its full-time political lobbyist a former chief communications advisor to a prominent Republican senator, and has donated some $175 000 to Republican Party causes in past two years.
As I argued last month, Clear Channel is not the only media conglomerate to enjoy cosy relations with the current administration. Given the Republican Party’s pro-business record, coupled with its need for allies in the media, Powell’s concerns about radio consolidation are likely to be relegated to a footnote in the FCC’s recommendations on television regulations.
Back at Pinmill Farm, ICASA is faced with many of the same issues, albeit in a vastly different context. Despite significant liberalisation of media ownership laws since the SABC monopoly era, South Africa’s regulatory environment is still a far cry from the laissez faire American approach. And the need for a vibrant industry with a more liquid market for media assets clearly demands a more relaxed regulatory framework than the IBA Act.
But there exists a concomitant danger of sacrificing the plurality of public discourse on the altar of corporate profits. America’s experience illustrates that once such a sacrifice has been made, the twin forces of deregulation and consolidation can gather a virtually unstoppable momentum of their own.
South Africa’s media regulator has the advantage of hindsight gleaned from other nations’ experiences. Mandla Langa’s job in the coming months is to identify the middle ground between two equally unhappy extremes.
Tim Spira is The Media’s correspondent in New York