Communication Breakdown: How St. Louis’s Healthy Media Market Declined

In June 1934, Franklin D. Roosevelt signed the Communications Act, a bill that prohibited radio, telephone, and other media companies from owning more than one broadcast license in a single community. A more diverse set of owners, stations, and channels, Roosevelt reasoned, would yield a wider set of program and service viewpoints, and would protect against the concentration of speech and economic power.

The result was that locally owned radio stations, locally owned newspapers, and, later, locally owned TV stations flourished across America. In St. Louis, the largest radio stations—such as KMOX and KWK—produced live programming of such high quality, often with full-studio orchestras, that their shows were broadcast nationally in the 1940s and ’50s.

In combination with the era’s “fair trade” and anti-chain-store legislation, these policies also benefited local ad agencies and sustained local media outlets. Competition among local businesses meant more advertising dollars, money that was then distributed among the city’s many local radio and TV stations, which, in turn, supported programming and operational expenses. Over the next half century, a virtuous cycle of money and voice took hold, with local companies hiring local agencies to advertise on local media stations.

In an era when national broadcasting in other countries dominated—like the BBC in England—this media environment also democratized public speech. It provided local alternatives to the “national” networks NBC, CBS, and, later, ABC. In 1975, the FCC bolstered these ownership laws, and banned a media company from owning both a newspaper and a broadcast station in the same community.

In the early 1980s, however, changes in antitrust enforcement set in motion a series of mergers and acquisitions. These deals saw the growth of large retail discount chains that either purchased or elbowed past locally owned stores. In cities across the U.S., this reduction in competition diminished local spending on advertising, and reduced the amount of money available for local programming.

The Telecommunications Act of 1996, championed by the Clinton administration, dealt the next big blow to a vibrant local media environment. Proponents of Clinton’s bill argued that the ownership rules ossified competition and prevented the entry of new firms into both the telecommunications and broadcasting businesses. “We will help to create an open marketplace,” Clinton said during the bill-signing ceremony, “where competition and innovation can move as quick as light.” Indeed, a handful of upstart Internet and cable providers joined the fray, but when George W. Bush took office in 2000, his administration’s FCC issued new enforcement measures. One of these guidelines dismantled the very provision that incentivized telecommunications companies to provide open access to their infrastructure. As a result of this change, the upstart firms, as quickly as they entered the business, went bankrupt.

In an equally important rule change, the 1996 law also relaxed local media ownership provisions. It removed the limit on the number of stations a broadcast network could own, and instead instituted a 35 percent national audience-reach cap (the share of individuals exposed to a company’s programming). It also removed the ban on radio and broadcast TV cross-ownership.

The result was less competition, greater levels of consolidation, and a shift away from a system composed mainly of locally owned media companies, to a collection of a few nationally owned media giants. Time Warner gulped down Turner Broadcasting System Inc., and then bought out Ted Turner. Westinghouse purchased CBS, and swallowed the radio station giant Infinity Broadcasting Corp. (When asked about that latter deal, Infinity founder Mel Karmazin said, “It’s like combining two ocean-front properties.”) Rupert Murdoch’s News Corp. added New World Communications to its Fox roster.

In 2003, the FCC, as part of a biennial review mandated by the Telecommunications Act, further relaxed cross-ownership rules. Agency officials raised the national audience-reach cap to 45 percent. The FCC also lifted the ban on companies owning both a newspaper and a TV station in the same market. Lastly, the agency permitted companies to own up to two TV stations (up from one) in medium-sized markets, and to own up to three stations (up from two) in markets like New York and Los Angeles.

The final act in the unraveling of an environment designed to protect local media ownership in America played out in 2005, right in St. Louis. That year, the department store chain Federated, based in Cincinnati, bought St. Louis-based May Company, bringing more than 950 department stores under the control of a single corporation. At the time, the two companies were the nation’s tenth largest advertiser combined; they collectively spent some $1.3 billion per year on radio, TV, and newspaper promotions. In defense of this fact, Federated executives told investors that they planned to cut $450 million in overall spending.

Strangely, few other media outlets—with the exception of the St. Louis Post-Dispatch, which railed against the deal—complained about the potential loss of advertising revenue. Yet, by 2008, Federated executives had slashed the company’s advertising budget by 51.4 percent, far more than originally expected. The merger further starved the small newspapers, radio broadcasters, and television stations that relied on local and regional department stores’ ad budgets to support reporters and programming expenses.

Today, six media companies control 90 percent of the market in the U.S., down from fifty companies in 1983. In St. Louis, the NBC and ABC affiliates have entered a news-share agreement and now broadcast the same local news shows. And of the top twenty St. Louis radio stations, only two—KLJY and KWMU—are now locally owned.

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Brian S. Feldman

Brian S. Feldman is a researcher-reporter with the Open Markets Program at New America and a graduate of Washington University in St. Louis.