The Dynamics of Mega-Mergers
and their Effect on
Creativity and the Marketplace

Broadcasters, cable, and direct broadcast satellite are all controlled by the FCC, Congressional legislators or the courts. They are always lobbying all of them.

Major entertainment production/distribution companies - many of whom are also in broadcasting, cable or DBS, and now also mega-companies - lobby to continue to reduce regulations. The abolishment of the Financial Interest Syndication Rule (FISR), and the loudly acclaimed modifications to the Communications Act of 1934 are the result of favorable treatment by our government.

Politicians need them all to reach their constituents and get their message out to the people, corporations and other government offices.

One congressman told me that at Committee hearings on revising the 1934 Act there was such a crowd of lobbyists from these groups that their message was all that was ringing in their ears when they went into Committee. Lobbyists were literally stuffing notes in the pockets of legislators and hanging on their coat tails "like a dog on a bone."

So what has happened? All of these folks have been scratching each other's back for favorable treatment. "Let's create competition and diversity of programming and deliver lower prices to the public for our services," they say. But it doesn't work.

And now, a year later, legislators are saying, "Let's revisit this mess we have created. These gargantuan companies are so large they can't be charted in a book of legal pages unless you use a magnifying glass."

Do these people at the top really care about the creative process? About the audience? About the thousands of people who create the programming? About the producers, writers, directors, actors, technicians without whom Ted Turner and Rupert Murdoch would not be butting their heads and "wishing for the other to die?" That's really the type of competition deregulators wanted. Right?

“Cut" to the Coliseum to watch Rupert and Ted fight to their death. Who has the box seats? Clinton and Gore, Hundt, Lieberman, McCain, Markey! All of whom are pulling for the one who will give them free air-time to run their negative campaign spots, or the one who agrees to be the highest bidder for digital television. And who is the most generous man in providing advisories to the audience on sex, violence and language? Rupert would give you three minutes of advisories and 20 minutes of entertainment if it got him more favors in Washington.

This is all about money and power. Oft times the only issue is about so-called shareholder value and how much of my company stock do I control and how will it all reside in the family trusts. Redstone owns over 70 percent of the voting stock of Paramount. Murdoch's family controls a heap and Turner is the biggest shareholder in Time Warner. Also, Bronfman, Levin, Eisner. . . these are the names that make the news and the papers.

You used to hear about Norman Lear and Sheldon Leonard, David Dortort, Leonard Stern and Bill Paley-the creative voices. Now you read that the Home Improvement team is going to court to prove that there is no competition within the halls of the Disney/ABC Mega-Merger. And broadcasters are complaining about cable because Warner's is selling movies to Ted Turner in the halls of the Turner/Time Warner Mega-Merger.

Are the creative voices being heard? Yes, in the courts. They will spend their creative time reading and writing briefs, stipulations, depositions and whatever else the legal profession requires to run up the bill. Yes, that's where all the creativity ends up. In the hands of the legal profession.

The final winners in the battle of New York, a battle for shelf space between two mega-mergers, Levin and Turner/Time Warner and Murdoch/Fox News, will be the lawyers. Who can afford all these legal manipulations for shelf space without raising prices?

Now broadcast groups can control 35 percent of the U.S. television market. That makes it a lot easier to put on a syndie show when you've got a big chunk of shelf space. Of course they argue their station managers have independence and pick their own programs. Networks say they will always put on the best show not just the ones they own. That of course gets easier and easier as the mega-company owns more and more of the shows on their air.

We want regulations that create a level playing field. Why are we going back to the days of the big barons: Rockefeller, J.P. Morgan and all the others? That's what the abolishment of FISR and the rewrite of the 1934 Act may have created. The same type of barons with different names.

A recent article on Russian democracy spoke about how their free market was destroying the economy and the asset values of the Russian people. It went on to say the government must follow U.S. models of regulation or they will go down. We deregulate and they need regulation. Explain that!

The American dream of a creator/entrepreneur controlling his/her own destiny and library is now more like an obstacle course than a super highway. They can't do it as easy as Sheldon Leonard, Aaron Spelling, Norman Lear, Chuck Fries or Hanna Barbera. Yes, producers can garner mega dollars from a successful show, but that's not owning the film. In this day, very few people will own their films or a library. Those will be owned by the mega-company and profits to tie the creative community and will be defined under those well known Definitions of Proceeds. A Library of product generates power. Deregulation, which created the mega-company, gave the library power to all the mega-companies. Not to the independents.

Mega-companies argue that it's important for them to be in the multi-national game of communications. But what is the engine that drives that gate? It's the creative process. Read about countries trying to protect their culture from the onslaught of America's creativity. Of course, it's usually the elitists and producers of the country that the politicians are trying to please. The people in these countries love our entertainment. Not because of mega-mergers but because of the creative power of our producers, writers, directors, actors and our technological expertise.

So it's time for the creative community to speak up. Now they are going to listen in Washington. They are now concerned that they may have gone too far with deregulation. It has generated a new group of mega-companies that are gobbling up product for their libraries, squeezing the independent producers/creators and mismanaging the marketplace.