Pretty Good Rulemaking

27 October 2003


Diller Warns on Media Concentration

Barry Diller is not the sort of fellow who says stupid things off the top of his head. When he speaks to the business community, he has thought things out and is taken seriously. So when he announced that regulators should establish guidelines to prevent excessive consolidation in the media, Wall Street took notice.

Mr. Diller spoke last week at the Magazine Publishers of American conference and said, "To be against consolidation and concentration, when it's the way of the world, is ridiculous." Yet, the market needs "pretty good rulemaking that sets up appropriate safeguards for independent voices." He went so far as to suggest that 20-30% of the media should not be in the control of major corporations.

There is, of course, an economic argument here as well as the standard, leftish "corporations are bad" rant. Bandwidth, airwaves and paper are finite commodities. If the "oligarchs" [Mr. Diller's term], have all of it, there will be less opportunity for innovation. In addition, it will ensure that competition persists, the cornerstone of capitalism. Oligopoly is not much better than monopoly.

Naturally, Mr. Diller is more interested in e-commerce than entertainment and news dissemination, but the interest to which he admitted is a compelling argument. If e-commerce is to fulfil its promise, it cannot be subject to the vagaries of a few carriers. Such regulation of one industry will benefit a great many others. It may be inconvenient, and possible damaging on an earnings per share basis, but in the end, it works better for the economy as a whole.

It might be appropriate to consider such requirements in other industries. And where natural monopoly or oligopoly exists, some other restraints on the potential abuse of market influence may be needed. Competition, however, is the preferred method, even if it is occasionally enforced through regulation.

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