Media Ownership Rules and Antitrust Laws
Antitrust laws are designed to boost competition by forbidding monopolies and similar concentrations of business ownership, as well as practices such as price fixing that are associated with them. Probably the most famous federal antitrust laws are the Sherman Antitrust Act of 1890 and the Clayton Antitrust Act of 1914. In the media industry, antitrust restrictions on ownership interact in distinctive ways with the constitutional right to freedom of speech.
The First Amendment of the Constitution prevents restraints on the freedom of the press. This principle has spurred the vision of a "marketplace of ideas," in which a diverse range of opinions can compete for public attention and help sustain a healthy democracy. If a handful of people or entities control most of the media, this could undermine the marketplace of ideas. The goals of the First Amendment thus align to some extent with the goals of antitrust law. For example, in a 1945 decision involving the Associated Press, the Supreme Court determined that the Sherman Act prevented the AP from imposing limits on new members and forbidding AP members from selling AP news to non-members. The Court argued that this result protected the marketplace of ideas.
Half a century after the AP decision, the Supreme Court reviewed a challenge to the must-carry requirement in the 1992 Cable Act. This federal law required cable operators of a certain size (more than 12 channels and 300 subscribers) to allocate up to one-third of their channels to local commercial broadcast stations. The Court upheld the must-carry rule, finding that the government had an important interest in ensuring diversity of opinion. As with the AP decision, the dissenting justices feared that the majority had allowed the government to interfere with the press in violation of the First Amendment.
Media Mergers and Cross-Ownership Rules
Concerns regarding media ownership concentration have resulted in rules specific to this industry. Section 7 of the Clayton Act generally prevents a business from acquiring or purchasing the stock of another business if this would greatly reduce competition. Under the Celler-Kefauver Act, this rule applies even if businesses are not direct competitors. The Federal Communications Commission (FCC) built on these antitrust laws with a cross-ownership ban that barred media companies from owning a daily newspaper and a radio or television station in the same market. The FCC also limited cross-ownership of radio and television stations in the same market. Echoing its earlier decisions, the Supreme Court found that the cross-ownership rules furthered First Amendment goals.
The Telecommunications Act of 1996 directed the FCC to review its media ownership rules every four years. The FCC sought to loosen its restrictions in 2002 and 2006, but a federal court struck down the revised rules. In 2017, though, the FCC revoked the cross-ownership rules. Limits on ownership of local television stations also were loosened. The FCC noted the decline of the newspaper industry and the expansion of non-traditional media outlets, including the Internet, in explaining its decision. While a federal court initially wiped out the repeal, the Supreme Court unanimously reversed in April 2021 and allowed the cross-ownership rules to end. However, the FCC has returned to Democrat control under President Joseph Biden, which could lead to another shift in the rules.
