Diller disses deregulation

At NAB, exec urges renewed independence

LAS VEGAS — Barry Diller, who has helped amalgamate and run some of the biggest entertainment congloms, now says he’s dead set against D.C.’s push to further deregulate the TV biz and give a handful of media titans unlimited reach.

Delivering the opening keynoter Monday at the annual confab of the National Assn. of Broadcasters in Las Vegas, Diller embraced a counter-movement afoot in Hollywood that wants the government to revive strong limits on the financial interest that networks, cable operators and satcasters can have in companies that produce entertainment.

“Ten years ago, independents produced 16 new shows (for network primetime),” said Diller, chairman-CEO of USA Interactive. “Last year, they produced just one.”

Limits on financial interest in production are needed for networks and should be mandatory for the cable and satellite businesses, which Diller said were already far more concentrated.

Indies shrinking

Since the elimination of the financial interest and syndication (fin-syn) rules in the early 1990s, indie producers have become an endangered species, with most shuttering and the remaining few allying themselves with one or another of the congloms.

“The barrier is so high that the ability of new entrants to go into the market has been eliminated,” Diller said. “The possibility of a new Fox network today is nonexistent.”

Diller won a big round of applause from broadcasters in the audience when he said the Federal Communications Commission should keep in place an ownership cap that bars any one broadcaster from reaching more than 35% of the national audience.

In June, FCC chair Michael Powell — long considered a friend of deregulation — is expected to call a vote on whether to loosen key ownership regs, including the national cap. Other rules up for review include bans on owning a TV station and newspaper in the same major market and on owning multiple media outlets in one market.

“The conventional wisdom is that consolidation is the only economic model,” Diller said. “And the enabling grease in the works is continued deregulation.”

But he said the conventional wisdom is wrong.

Opposite results

Deregulation efforts in the past 30 years have left the level of media concentration roughly where it was back when three networks dominated. Deregulation was supposed to encourage diversity, localism and competition, but Diller said the opposite has happened.

“The big, bad truth is that the Big Four networks reconstituted themselves as an oligopoly like what the government tried to break up in the 1960s,” he said. “Five corporations are now on the verge of the same reach that those three networks had back then.”

Diller’s comments should draw a response today, when Powell headlines an NAB breakfast session. The four other FCC commissioners also are in town for various panels and appearances, both at NAB and at a concurrent investors conference sponsored by AG Edwards.

In other remarks, Diller said he would not force Vivendi Universal to buy his 1.5% stake in Vivendi Universal Entertainment in May by exercising his put option. Diller obtained his personal stake in VUE, currently valued at $275 million, when he sold USA’s cable assets to Viv U, under former chairman Jean-Marie Messier, for $10 billion.

A clause negotiated during that deal stipulates Diller can put his stake to Viv U beginning May 7. But Diller apparently is inclined to wait a year until he can realize full long-term capital gains.

Having recently resigned from his post as chairman-CEO of VUE, Diller reiterated his intention to concentrate on operations at USA Interactive.

The morning session at NAB also featured a short speech by ABC News analyst Cokie Roberts, who received NAB’s Distinguished Service Award for her contributions to broadcasting.

Local focus

Roberts called on broadcasters to highlight the community contribution of local heroes, not just while they’re serving in the Iraq war but when they’re making life better in their hometowns.

“A reporter embedded in the Boys & Girls Club is probably a pretty good idea in any given week,” Roberts said.

She also took a shot at critics of the process of assigning war correspondents to specific military units. A number of journalists have already died while covering the war, she said, including a NBC news correspondent she knew personally. But embedding journalists has allowed viewers to get a better picture of what’s going on, while reducing the ability of either side’s propaganda machine to fog up reality.

“I think the argument about embedded reporters is a ridiculous one,” Roberts said. “I was embedded at the Capitol for decades, and I don’t think the members of Congress thought I was giving them any breaks.”

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