NCPA - National Center for Policy Analysis

A Free Market in the Media Industry

March 21, 2011

Media companies buy or produce "content" such as television and radio programs, comic strips or news coverage.  The problem, of course, is that the TV program market is not free and competitive, partly because of rules promulgated by Congress or by the Federal Communications Commission (FCC) itself.  These rights yield no productive value for the economy, but merely transfer profits from one industry group to another in a way that is costly to consumers.  The rules create rather than correct a market failure, says Bruce M. Owen, director of the public policy program at Stanford University.

  • The problem is that industries faced with acute pressure from competition and technological changes often seek assistance from the government.
  • By its nature, the demand for protection originates from the established firms who aim to stop or at least attenuate inroads by new entrants and new technologies.
  • New entrants and technologies threaten established firms precisely because they offer more or better services and lower prices to consumers.
  • Government protection for the established suppliers often works by depriving consumers of such benefits.
  • Protection for established firms is therefore likely to be harmful to the public, keeping prices high and slowing the availability of new products and services.

Many FCC rules and regulations arise from these impulses to manage competition, though they are often papered over with attempts at public interest rhetoric.  Let a competitive market in TV programming operate free of regulatory intervention.  But first, create a truly free market by repealing artificial and unproductive legacy rights, which are no longer needed -- if ever they were -- in today's competitive communications marketplace, says Owen.

Source: Bruce M. Owen, "The FCC and the Unfree Market for TV Program Rights," Free State Foundation, March 2011.

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