Ownership and Concentration in the US Communications Industry

Investigator: Eli M. Noam, CITI

Underlying much of the discussion over public policy in the communications field is the concern that regulatory liberalization has not lead to openness and competition but to a new level of media concentration. Recent years have witnessed the expansion of large media firms in the United States, primarily through mergers and acquisitions.

This development has led to the concern whether American media are (or would be, if this trend continued), controlled by a mere handful of companies capable of affecting public opinion and the national agenda. Are American media becoming more competitive or more concentrated? The answer to this question suggests which regulatory measures are appropriate. Other countries, too, are watching American media market closely, not only because of the global role of US media firms, but also because US tendencies are often indicators for future developments elsewhere.

Eli Noam is conducting an empirical study evaluating the question whether the American information sector is more or less concentrated since the AT&T divestiture. Using revenue and market share data from the past 20 years, it identifies and interprets concentration trends and related policy issues. It then aggregates the concentration figures for the sub-industries by broader industries such as mass media distribution, computer hardware, and telecommunications services. These figures, in turn, are being aggregated again for the telecommunications, computer and mass media sub-sectors, as well as the information sector as a whole. This effort is unprecedented in its size and scope.

The preliminary results suggest that across this sector, the overall trend is to towards less concentration, despite the recent merger-intensive years. Market power, however, still persists in several markets.

This work was recently presented to the US Senate Commerce Committee.

Should you have any questions, contact CITI at events@vii.org, (212) 854-4222.