Testimony before the Subcommittee on General Oversight and Minority Enterprise, Committee on Small Business

by James N. Dertouzos

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Provides a structural overview of concentration and crossownership of media industries, giving attention to public policy issues. The daily newspaper industry has shown a steady trend over several years toward noncompetitive markets and chain ownership. The tendency of one newspaper to gain size advantage and capture a market explains the first aspect; tax advantages (rather than cost advantages) may explain the second. In media industries overall, conglomerates are becoming increasingly prevalent because of the attractiveness of corporate growth and risk spreading and, possibly, of tax benefits. The potential dangers of media crossownership led to the 1977 FCC ban on joint television station-newspaper ownership in the same town. Further study of crossownership will be needed to weigh the difficulties of such forced divestiture of holdings against the implied benefits of a more competitive market.

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