THE U.S. POWER STRUCTURE AND THE MASS MEDIA

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Frank Spurgeon Morrow, Jr., B.A., M.A.

DISSERTATION

Presented to the Faculty of the Graduate School of
The University of Texas at Austin\nin Partial Fulfillment
of the Requirements
for the Degree of

DOCTOR OF PHILOSOPHY

Copyright

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DEDICATED TO

My mother and father

My sor

Michael

ACKNOWLEGEMENTS

Dr. Gene Burd, whose steadfast interest and helpful information led me in the right directions, and whose broad shoulders were crucial in keeping me going through some difficult times during the past eleven years.

Dr. Doug Kellner, whose generosity in providing information, interpretations and encouragement have facilitated and enriched this dissertation, and whose efforts on Alternative Views have greatly contributed to the program's success.

Jack Schierenbeck, whose feedback and source material from a Marxian viewpoint broadened my perspective, and whose participation on Alternative Views gave the program depth.

Dr. Alfred Watkins, whose classes in the real world of government and economics provided a wealth of information.

Dr. Warner Severin, whose kind, collegial words and actions helped to keep me aware of the uniqueness and importance of what I was trying to accomplish.

Dr. Rita Atwood, whose warm encouragement and sharp feedback at precisely the right time were so helpful.

F.S.M.

July, 1984

THE U.S. POWER STRUCTURE AND THE MASS MEDIA

Publication No. _____

Frank Spurgeon Morrow, Jr., Ph.D. The University of Texas at Austin, 1984

Supervising Professor: Emile McAnany

There are three basic approaches to the analysis of the U.S. power system. The Power Elitists say there is a small group of people, mainly from the corporate world, which controls the prime decision making positions of the economy and government and which receives the most benefits from the system. The Pluralists claim that power is diffused through many competing individuals and groups. Marxists have traditionally said that the economic system determines the power system, with the controllers of the means of production being the ruling class. They recently developed the concept of hegemony, a means by which the ruling class inculcates its values in the underclasses in order to maintain societal control.

A combination of the Power Elite and Marxist approaches most closely describes the reality of the U.S. power system. This ruling group, which is called the Ruling Cartel, controls the core economic organizations: the largest financial institutions and corporations. It

FIGURES AND TABLES

Chapter 1

OVERVIEW AND STATEMENT OF THE PROBLEM

1.1 PURPOSE

Much of social science is based on observing phenomena and making so called "objective" conclusions. Next, theories are developed which are used to understand and explain the world and its inhabitants and to lay foundations for further research. However, most of this research in the U.S. is seriously deficient, in that it either does not question or tacitly accepts the basic nature and assumptions of Western capitalist society and the power structures which support it and which provide the mechanisms for social control. Without the description and function of the American power structure the nature of the world cannot be clearly ascertained; and without such a picture, social science theory and research is sadly incomplete, even irrelevant in our complex society.

mass media. I will try to describe the American power structure and to ascertain the place and role of the mass media within it. It is very a difficult task for many reasons. First, complete information is not easy to find. Secrecy is a very important part of the maintenance of power and control. Second, social scientists generally do not seem desirous of studying the subject. Third, the super-rich and powerful do not wish that the American people discover how the system is run. And, fourth, the subject is very complex, requiring vast interdisciplinary knowledge.

There are two other reasons for writing on this subject. Assuming that the information contained herein is disseminated more widely, it can serve to open the eyes of the American people as to how their economic and political system really works and the role the mass media play in this. Next, it is hoped that by pointing out the availability of the public access channels of the cable television systems in the country, people might be able to confront the power of the Establishment media monopoly and communicate more directly with each other, thereby democratizing the media to some extent and effecting some degree of delegitimation of the traditional media in the

1.2 RESEARCH PROPOSITIONS

• This ruling class maintains its control over the country through economic, political and social

• 1. Control over the nation's economy is effected mainly through the giant Rockefeller-Morgan insurance companies and transnational banks in an intricate web of mechanisms such as stock ownership, interlocking directorates and control of corporate debt.
• 2. Political control is maintained primarily through covert and semi-covert political organizations (such as the Council on Foreign Relations, the Bilderbergers and the Trilateral Commission), and overt organizations and structures such as the U.S. Executive Branch, regulatory agencies, the Federal Reserve System and the police, military and intelligence organizations.
• 4. The prime people in the Ruling Cartel are aware of the twin problems of the contradictions of capitalism and
• • The true nature and operation of the U.S. power system are hidden and obfuscated.
• 7. Control of the mass media is maintained through, (a) concentration of ownership at national, regional and local levels; (b) through political activity in Congress, in the courts and in the Federal Communications Commission; and (c) the nature of the mass media being capitalist enterprises with the attendant requirements of profits, ratings and advertisers.
• 8. Specific methods used to limit information and opinions are gatekeeping, agenda setting, kingmaking, bias and censorship, including self-censorship of suitably socialized staffs.
• • Economic concentration of ownership and control

• is the basis for concentrated political power.

1.3.1 AN OVERVIEW OF THEORY

Every people is governed by an elite, according to 1
Pareto (Garson 1977, 32-36). Yet, the power structure in nations has not been the subject of exhaustive analysis as has other aspects of human social behavior. Most of these studies have been purely theoretical. There has been considerable data produced in the U.S. which could be used for the study of the U.S. power structure, but the material has rarely been employed in an attempt to formulate a

comprehensive description of the power structure, and these studies have been made only in the last half of the Twentieth Century.

Perhaps the earliest writing on power comes from the 14th Century Arab, Ibn Saud. The earliest work which had the greatest impact in the West was that of Machiavelli (Skinner 1981). He was the first to make a completely amoral, realistic description of how a strong leader should run his state, using all his nakedly brutal power to achieve his ends. But he also wrote about how a pluralistic republic could best be organized and run so as to preserve freedom and maintain a vigorous government and body politic. Finally he noted the tensions which developed when powerful rulers and nobles would try to maintain their positions and privileges while the people struggled against being dominated.

With the rise of capitalism Marx offered a new perspective on the use of power: economic determinism, indicating that it is the economic nature of capitalism, and the capitalist ownership class which controls the system, which provide the basis for power and the people who run the economic-political system. The state is run and for their benefit and it is their ideas and culture which are hegemonic.

Lenin (Menshikov 1969) developed Marx' ideas further, making them more complex and introducing empirical observations about the nature of the capitalist ruling class, such as information about the Rockefellers and Morgans in the U.S.. He argues that the capitalist state's democratic political forms are a manipulatable facade shielding a repressive core controlled by the ruling class. Therefore, true democracy cannot be achieved within such a structure.

At the turn of the century and into the 1920s Thorstein Veblen (1948), an economist but drawing from all fields of study, contributed to both economic theory and power studies. Particularly important was his Theory of the Leisure Class which links his economic and political thinking. It describes the way the upper class (of the business-power group) lived and conspicuously displayed its wealth. He then shows how the lower classes identified with the upper class and tried to emulate it, thereby producing social cohesion and control. Veblen's Absentee Ownership comprehensively describes the business system and its use of power.

Meanwhile, non-Marxist political theorists began formulating a position labelled "elite theory," which stated that, regardless of the type of political or economic system which is extant, a few powerful people still would run things. Some of the contributors to this approach, such as Mosca and Pareto, used the theory to glorify the elites as the ideal medium to keep the state out of the hands of the dumb, crude masses (or the scoundrel demogogue around whom the populace would rally.) Ironically, Mosca and Pareto were warm supporters of Mussolini.

American supporters of the elite theory tried to inject a small degree of democratic influence into the process. Although Ortega y Gasset advised against democratic participation, he called for the elites to be democratically influenced by the needs of the masses.

Schumpeter was less democratic: the role of the citizens should simply be to accept their elite leaders, who

In the U.S., Lasswell wrote several books about power and elites, but these were all of a purely theoretical nature containing interesting insights, but mainly irrelevant to the task of brining to light the who-what-where-when-how and why of power in the U.S.. Lasswell (1958) did make an analysis of the use of symbols and ideology used by the dominant elites to keep the masses under control. But, again, this was theoretical.

Meanwhile, economists were addressing the question of control of the corporation. With the destruction of competitive capitalism and its replacement by a system of giant combinations and trusts as the dominant economic institutions, the answer to the question "who controls?" acquired great importance. Earlier, Marx (Menshikov 1969) said that, with the development of the joint-stock company.

An approach to studying power which gained great

popularity in the 1950s was called group theory, which evolved into the pluralist theory. Started by David Truman in 1951, it claimed that politics was a result of the activity of special interest groups bargaining and applying pressure on the governmental process. By compromise and accomodation, the various groups would be able to achieve some of their goals. Pluralism gained its main adherents in the political science community. This approach specifically eschewed elite theory and either ignored or downplayed the importance of economics. Dahl (1961) is the prime pluralist, especially for community power studies. Rose (1967) wrote a book using the pluralist perspective in an analysis of power in the U.S. at the national level.

What is obvious by now is that we have been talking about researchers observing and theorizing about two phenomena: economic control and political control. No one had looked at both together in a comphensive way at the national level, particularly from the total sociological point of view. Yet, studies of community power had been conducted using this method, starting in the 1920s by the Lynds (1929, 1937). It is in the studies of the local power structures that elite and pluralist theories received their earliest, most comprehensive analyses, with the sociologists on one side espousing the elite approach and the political

1.4 SPECIFIC CONTEMPORARY APPROACHES TO THE STUDY OF POWER

1.4.1 MILLS AND THE POWER ELITE

1.4.2 DOMHOFF AND THE GOVERNING CLASS

When the Power Elite caused such a furor, Domhoff (1968) defended Mills. He also wrote other books (1967, 1971, 1979) to provide more empirical evidence than Mills did, and he modified and extended the power elite theory. Domhoff's conclusion is that there is a governing class in the U.S. which is composed of a social upper class which owns a disproportionate amount of the country's wealth, receives a disproportionate amount of the nation's income and contributes a disproportionate number of its members to the controlling institutions and key decision making groups of the country. Domhoff recognizes that our democracy exists within the range of differences of opinion among the members of the ruling class. Indeed, democracy cannot work without such differences of opinion, no matter how narrow. Even though the upper class is not monolithic or omnipotent,

pluralist activity is: dominated by members of the American upper class and generally stays within limits set by the ruling class. Although the upper class has its antagonisms—mainly ethnic, religious, and new-rich versus old—rich—it is knitted together by such mechanisms as stockownership, trust funds, intermarriages, private schools, exclusive clubs and summer resorts, various social functions, elite political organizations and interlocking corporate boards of directors.

Whereas Mills pictured the people as an almost voiceless, faceless mass, Domhoff, Weinstein (1968), Aronowitz (1973) and Miliband (1969) see the people as being able to wrest some gains from the ruling class, but only after considerable struggle because they are without primary power to implement their desires or to fulfill their needs directly. Although the ruling class responds to these pressures from below, it still controls the institutions of power, and through a combination of propaganda, cooptation, and force and by providing enough positive responses to the popular ferment, it is able to contain the people's aspirations. Meanwhile, the rulers make sure that their dominant position is not seriously challenged and that whatever gains are made by the masses do not come at significant expense to the controlling elite. The latter

The pluralists, particularly Rose (1967), tried to answer the Domhoff-Mills thesis, but the realities exposed by the Johnson-Nixon years caused the prime pluralists to admit that their position was only an illusary goal, not a 3 reality. Additionally, studies such as those made by Knowles (1973) provided incontrovertible evidence of an interconnected power group of upper class individuals and families which, both individually and through their institutions, control the main economic and political institutions in the U.S.

Meanwhile, the Marxists have been developing their theories of power and the state. There are several varieties. The instrumentalist approach, as represented by Miliband, is similar to that of Domhoff but in a Marxian economic and class perspective. Another analysis is the

4

The next school of thought is the Hegelian-Marxist. It

Gold, Lo and Wright believe that all the above approaches are inadequate: the Instrumentalist because there is more to the state than the conscious decision making of ruling class office holders; the Structuralist because it does not explain the social mechanisms which produce a class policy that is compatible with the requirements of the system; and the Hegelian-Marxist, because it is too abstract for application to a specific situation and because it does not adequately consider the economic bases of Marxist theory.

More recent attempts at further analysis have been by Offe, Habermas (1973), O'Connor (1973) and Wolfe. They deal in different ways with what they call the legitimation crisis. The capitalist system must have accumulation (basically, producing an increasing amount of capital, or, more simply, increased profits) and legitimation (basically, mass loyalty and acceptance). To maintain security, harmony

and cooperation, the state must perform a mixture of repression and mystification. Being in control of the capitalist ruling class, the state naturally is also of prime significance in fostering accumulation. But because increased accumulation comes at the expense of the people, and because it becomes more and more apparent to the people that the state is not neutral or democratic but actively supports the ruling class, a legitimation crisis appears. People quit believing the myths and start seeing the reality. Ruling class begemony is questioned.

Offe shows how the various selections processes take place to ensure that capitalist personnel, subjects and decisions are maintained. He looks at times of crisis when the inner mechanisms of the state and system are exposed, showing the contraditions of the system and the way the state handles them. Offe says that the state is incapable of handling all the contradictions as well as the assumption of a continuously growing role in the accumulation process.

O'Connor has developed a more empirical basis for the theory, based on the budget required by the state, particularly in the U.S.. In the accumulation process there are contradictions and incompatibilities among the three basic economic sectors of society: the monopolistic, the competitive and the state. Additionally, the state becomes

Wolfe attempts to blend the Structuralist and the Hegelian-Marxist traditions. He states that politics is alienated from the people just as work is. There is a basic contradiction between "liberalism," which supports the governmental role in ensuring capitalist accumulation and control, and with "democracy," with its participatory and egalitarian facets. This also leads to the legitimation crisis. Wolfe also believes that the shape of the state is a result of class struggle.

Each of these approaches has various aspects which seem to be pertinent in developing a theoretical framework for studying the U.S. power system and its mass media. All of them have something to contribute and are correct for

The capitalist system must be considered before anything else, because that is the basis for everything else. Marx stated that the capitalist values and structures are dominant (just as "socialist" values are dominant in the Soviet Union). The dominant ruling institutions are capitalist and are controlled by the capitalist ruling class. Hegemony over the masses is maintained through a combination of repression and control over the prime media of knowledge and ideology, rendering anything to the contrary as not legitimate.

The power of the state is used primarily to support the capitalist process of accumulation and legitimation—creating in the masses an acceptance of the system. The primary function is control; with control, all else is much more simple. This is true whether we are looking at the top level of the state or at the stratum of monopolists trying to rationalize their business situations in order to maximize profits and to create a greater degree of certainty.

system at work.

There also is activity of a pluralist nature which goes on every day at a circumscribed, lower level of authority and control, but always under the watchful eye of the power structure at each level of activity. This is tolerated (even when opposed) by the ruling class and power elite at the local and national levels so long as it does not get into areas of basic control and direction and so long as it does not represent a serious, or potentially serious, challenge to the bases of the American capitalist system.

This pluralist activity is indispensable to the ruling class because it saves it the time and effort of performing some of the less significant, day—to—day details of the running of a complex society. Of prime significance is that it is a good way to focus the attention of the American people away from the basic centers of control and onto the noisy sideshow of lower levels of authority. It acts as a display piece to show the people that they do, indeed, live in a democratic society, thereby perpetuating the myths. It also is of significance in that, to realize any gains at all, the people must struggle mightily at this lower level of power, thereby dissipating time and energy which could be used for achieving more basic and permanent change. And, finally, it provides some of the mechanisms, not only

through which the differences within the capitalist class can be resolved, or at least accomodated, but also where the economic and political spoils can be fought over and divided by the capitalists themselves.

In all these functions the mass media play a critical role: setting the limits of "responsible" and "legitimate" debate; hiding the realities of how the country is run and the bases for the rulers' powers; focusing on the pluralistic activity in government; perpetuating the myths, including the one that the media are the watchdogs of the system; downgrading or ignoring the potential powers and some of the successful struggles of the people; not providing positive information about alternative ways of establishing and running a just, humane society; and, finally, hiding from the public the true ownership and control of the media themselves and their real function within the power structure.

1.6 METHODOLOGY

Relevant information was sought in all fields which have touched on the subject: government, economics, sociology, history, communications and law. The sources range from professional journals to popular "men's magazines," from the Left Wing press to the Right Wing press, from the business press to small publications of local activist groups and from written sources to television programs—all the while keeping in mind the various theoretical approaches. I have tried to analyze the information and to synthesize the data into a comprehensive picture of what the American power structure seems to be and the place and role within it of the mass media. It is only after this has been accomplished that relevant theory development can begin. Without this large first step, we are working in a vacuum.

1.7 SUMMARY OF DISSERTATION MATERIAL

Next is shown the various political organizations which the top power group—called the Ruling Cartel—uses to maintain control and to develop and effect policy. Of particular importance are the Council on Foreign Relations,

The next step in control is in the determination of idea and culture formation. We see how the most significant foundations, think tanks and universities are firmly in Cartel control in an interlocking relationship, not only among themselves, but also with the government, military, the corporate world and the elite political organizations.

In Chapter III we look extensively at the nature of the media ownership. The owners and managers are scrutinized from various aspects, including their place and function in the local power structures. The effects of media concentration in local monopoly and oligopoly situations are analyzed. The role of advertising is also looked at from this perspective, noting the contribution to further

Public access to the mass media is the focus of Chapter V. We chronicle the history of the long struggle of people and organizations to gain an audience via the media and the response of the government to these efforts, either by thwarting them or weakening them. Also noted is the governmental role performed by the police agencies, such as in the FBI's COINTELPRO operation against the dissident press. Public access on cable TV is discussed, particularly its revolutionary, experimental nature which could present a potential threat to the existing Establishment media if access is allowed to develop freely and if the people use the new medium to its fullest capability. Realizing the potential of the new medium, attacks are being made on access by politicians, the courts, governmental bodies and the cable industry at both the national and local levels.

Finally, in this chapter an example of an extremely successful access program is noted—a weekly alternative news magazine show in Austin, Texas. The large audience elicited by this program in the city and the positive reaction received, not just in Austin, but in many parts of the country and even in Europe, indicate that a large number of people are eager to receive information which is not found in the traditional media.

Chapter VI is an interpretive section of the material previously presented. The problems of maintaining control of society by the Cartel are analyzed, pointing out the many instabilities in the system and "leaks" in the framework of control where the struggles of the people can fruitfully take place. The divisions and instabilities within the international capitalist system itself also create problems of control. The role of the mass media in the US in maintaining ruling class hegemony is also made difficult by trying to live up to their self-proclaimed myth of being "objective" and performing the role of watchdog of the system and by having to respond to situations and subjects which they and their controllers would prefer to leave

The second half of the interpretations chapter is a review of various theoretical approaches to power and the media in light of the material previously presented. It shows that parts of many theories are relevant, but that the Mills-Domhoff and Marxian approaches seem to be the most useful, particularly when these ideas are formulated by using the material presented in this dissertation. This section mainly indicates that, now that a more thorough and realistic presentation of the American power system and the mass media has been provided. relevant theory making can

Chapter 2

THE AMERICAN POWER STRUCTURE: METHODS OF CONTROL

2.1 ECONOMIC CONTROL AND CONCENTRATION

In the capitalist system economic power results in political power. We must therefore look at the bases of the economic power of the American ruling class. Various studies clearly show that the largest financial institutions control the major corporations in the U.S. through a combination of stock ownership, interlocking directorates, marriage alliances, joint ventures, debt holdings and other banking functions (Blair 1972, 1978; Menshikov 1969; Dowd 1974; Brandeis 1914; Securities and Exchange Commission 1941; Knowles 1973; U.S. Congress 1913, 1941, 1963a, 1963b, 1963c, 1966b, 1967a, 1968, 1974, 1977, 1978a, 1978c).

These institutional investors—mainly banks and insurance companies, along with their allied investment banks—are also interlocked in the same way with each other. As a result of this and the merger movements which

have occurred over the years, the most basic economic decisions affecting the country (indeed, the world, considering that these corporations are generally large, multinational conglomerates and transnational banks) are made by a few hundred people at the most (US Congress 1978c). Because concentration of control of the economy is so central to political control of the country, we must make an assessment of total economic concentration. This must be viewed within the history of the merger movements which have radically transformed the economy of the U.S. and which have resulted in concentrating economic power—and with it political power—in fewer and fewer hands (Blair 1972, 257; Dowd 1974).

2.1.1 MERGER MOVEMENTS

The third movement commenced after World War II, accelerated greatly in the late 1960s and has continued to the present. This period was marked by (1) the continuing absorption of small and medium—sized companies by larger ones, (2) the many acquisitions by major oil companies, including the expansion into other energy areas, and (3) the creation of huge holding companies called conglomerates. In recent years the most significant activity has been the acquisition of huge corporations—even conglomerates—by even larger corporations. Since 1980 we have seen the biggest acquisitions in history in terms of assets and money paid. There seems to be no end in sight to the continuation of increase in size and scope of this phenomenon: Texaco bought Getty Oil, and Standard Oil of California purchased Gulf Oil in 1984 for 10.1 and 13.4 billion dollars, respectively, in early 1984 (DeCormis 1984a).

A result of these merger movements can be seen by looking at the increase of aggregate concentration over the years. Berle and Means (1932) estimated that the top 200 manufacturing corporations controlled approximately 33% of the assets of all non-financial corporate corporations in 1905, but by 1930 it was 50%. By 1968 it had risen to 60.4% (Blair 1972, v., 64). In 1977 it was estimated to be 65% (Mueller 1970). The share of assets of the top 100 manufacturing corporations rose from 35.6% in 1925 to 53.9% in 1931 (Blair 1972, 266). By 1968 the largest 100 had a greater share of all manufacturing assets than the 200 largest did in 1950, and the top 100 controlled the same share of assets as the 1,000 largest in 1941 (Green, M.J., 1972, 9).

Another way to look at it is to assess the share of stocks and bonds held by the most affluent one percent of adults. In 1922 for corporate stock it was 61.5%; in 1953 it was 76%. For state and local bonds it had grown from 88% in 1922 to 100% in 1953. The percentage of ownership for all other bonds in the hands of the top one percent rose from 69.2% to 77.5% in the same period. A Senate committee estimated in the late 1950s that one percent of the families owned over 80% of all publicly held industrial stock. Harvard economists estimated that 0.2% of the "spending units" had 65-70% of stock that was publicly held (Domhoff 1967, 45).

2.2 METHODS OF ECONOMIC CONTROL

Assessing total concentration is only the start of observing how control of the U.S. economy and political process is concentrated, because these business institutions are themselves interlocked with each other in a web of stock ownership, interlocking directorates, joint ventures, the sharing of law firms, bankers and accountants, debt holdings and other banking functions, and with a framework of sociological interlocking of private schools, social clubs, marriage alliances and various political, civic, charitable, educational and cultural organizations (Domhoff 1967, 1979; Knowles 1973). The structure which emerges I will call the

2.2.1 STOCK OWNERSHIP

The Metcalf Committee in Congress (1978a) reported that the 122 largest firms from the financial, industrial, transportation, utility and retailing sectors of the economy are controlled via stock ownership by 21 institutional investors. These 122 firms have 2,259 subsidiaries and affiliates. To concentrate this power further, these financial institutions form an interlocking community of interest through a combination of ownership of each other's stock and of interlocking directorstes. In the case of large funds like TIAA-CREF the control is in the hands of the bank administering it through its trust department and by th interlocking of members of the fund's executive committee with the bank (US Congress 1978a, 1978c).

2.2.2 INTERLOCKING DIRECTORATES

Another mechanism of control of corporations is interlocks of directors and management personnel. The basic significance of this method is twofold: it forms a communications path, and it is a means of access to privileged corporate information. The use of interlocking directorates has been the subject of many governmental studies since the turn of the century (Sherrill 1980)). One of the main provisions of the Clayton Act was to prevent such interlocks. However, because of a combination of loopholes in the law, non-vigorous enforcement by the government and inconsistent rulings by the courts, the use

The same top 130 firms which Senator Metcalf used for his 1978 study of stock ownership also were the basis for his interlock study (US Congress 1978a, 1978c). These corporate giants had 530 direct and 12,193 indirect interlocks. And this included neither those of their subsidiaries nor of their management personnel. Concentration was higher among the leading 13 giants. Each one of these reached an average of 70% of the other major companies through a total of 140 direct and 5,547 indirect interlocks. This estimate is conservative, because the interlocks of the megacorporations' 486 subsidiaries were not included.

The huge banks and insurance companies are key meeting places for big business. Not only are they interlocked with each other, but also they are interlocked with the nation's largest utility, transportation, energy, industrial and retailing corporations. These giant financial institutions also are the ones which are the central figures in the stock ownership domination mentioned earlier.

Metcalf noted that previous governmental investigations on the subject in 1950, 1965 and 1969 concluded that such interlocking can provide preferential treatment in supply, purchasing and financial services, can destroy competition and can concentrate economic power. It can lead to conflict of interest and inside dealing. The Patman Committee went so far as to say that the pervasive interlocks of banks with non-banking corporations "could radically change the entire economic structure of the United States by the creation of giant conglomerate cartels centered around large banking institutions" (Sherrill 1980).

Sociologists and political scientists have only recently studied interlocking directorates. In fact, except

for the works by Sweezy in 1939, Perlo in 1957, Dooley in 1969, and by Blair in 1972, even economists have not done much basic research independent of the government. The few economists who used the material have not been those of the mainstream, neo-classical theorists, but people who have either been interested mainly in antitrust, such as Blair (1972) and Mueller (1970), or are more radical, such as Dowd (1974), Magdoff (1969) and Perlo (1957).

• Interlocks between major banks and the major industrial corporations form a dense and tightly interconnected network, with sub-networks of clusters.

• Banks have the most interlocks, forming the primary institutions through which control of other corporations is effected.

• 3. Of the boards of directors of the Fortune 500 and the top 50 banks, insurance companies, retailers, utilities and 45 miscellaneous companies, "it is possible to trace a link through overlapping board

• memberships between (any) one corporation and every single one of 721 others."

• 4. This interlocking is also close, i.e., each of the boards of the Fortune 500 is at the most only a few steps away from all the others.

• A division of labor exists within the corporate elite,

"upper-class officer directors have interests in other companies to a greater extent than non-upper-class directors. ... There may be a class-based division of labor in which the upper-class directors are more concerned with inter-organizational relationships and with the functioning of the economy as a whole, and that non-upper-class directors are concerned with day-to-day operations of individual companies"

(Soref 1976, 360, 366).

6. The boards of directors show two trends: they are becoming smaller and there are more outside directors, indicating that "legal control of the biggest industrials is increasingly falling into the hands of outside directors" (Koenig and Gogel 1979). The fascinating aspect of this empirical conclusion is that these two trends have been pushed by the banking interests and their allies in government, but are being resisted by management—another indication as to where the superior power lies (Insurance Information)

Institute (1977b).

Koening and Gogel (1979, 39, 40) have developed a class hegemony model, using social network theory, showing the corporate elite comprise a social network. The use of interlocking directorates forms a "network through which affect, evaluation, knowledge, opinion, influence and power are constantly passing among directors." This does not take place just on corporate boards, but with other social media such as conferences, exclusive schools and their reunions, social clubs, and civic and cultural organizations in which the elite participate. In addition to creating a common world view, it helps to produce concensus and cooperation and to establish communications paths.

The corporate board network is particularly powerful because it controls great economic resources. Although this power can be latent or low keyed, it can become quite visible and fully employed in times of crisis. Hence, the system of interlocking directorates acts as a system of social and economic cohesion and power.

2.2.3 COMMERCIAL BANK FUNCTIONS

2.2.3.1 Bond Holding

There are other mechanisms besides interlocking directorates and stock ownership through which banks and insurance companies can exert control or domination over corporations. One is bond holding (Menshikov 1969). Bonds are very significant in establishing ties between industrial corporations and institutional investors, because they are the primary media for long-term financing. Bond investors generally do not simply sell the bonds and collect the interest. Even the large corporations are required to sign agreements with various stipulations which make them dependent in varying ways on the investors, thus giving up to the investors a wide range of aspects of their freedom of decision making and tying them more closely with the

The term loan—an agreement to pay back a certain amount of money in a specified length of time—is another means for tying a company to the purse strings of institutional investors. Because the loans are arranged in the form of syndicates, the corporation cannot find competitors to arrange for more favorable conditions. As with bonds, there are restrictions placed on the company in order to get the money (Kimball 1962).

The long-term ties created by such loans and bond sales place the banks in such a central position of influence and control within the debtor company that they can handle other needs including mergers, evaluations of diversification and other financial operations, even to the extent of finding buyers for the company. By becoming a corporations's banker, a financial company can gain sensitive, inside information about its client. This can be used either to gain more control over the corporation or to provide

The activities of bank trust departments have been under scrutiny of the government for many years because enormous amounts of economic power are concentrated there. The trust departments hold assets for others. They are prohibited by law to use their trust departments to maintain their own accounts. The banks manage not only the wealth of individuals and families, but also pension funds. Although it is optional with the primary owner of the assets as to how the stock in the various companies is voted, generally the bank will exercise the vote.

Congressman Wright Patman (US Congress 1968) was greatly concerned with the great financial power which had been concentrated in these banks with their trust departments, particularly since, with the use of secret accounts, the true ownership in companies could be hidden so that various laws regarding ownership restrictions could be obviated. In the U.S. News and World Report (1974) article mentioned previously, it was the economic power which the leading banks had obtained through their trust departments

which was the cause of such alarm.

A seemingly innocuous means for effecting control or influence of the big banks over the smaller ones is through the correspondent relationship (Campbell and Campbell 1972, 73, 74). To state it simply, the large bank is the banker for the smaller one. The correspondent bank helps in providing money for loans which are too large for the smaller bank to handle legally; it provides advice on investments and legal matters; it may provide information on credit ratings of borrowers and even may help in finding management personnel for the smaller bank. Finally, the correspondent bank might also invite the smaller bank to join in loan syndicates.

member on the board of directors) the investment banker is closely involved with his clients' financial interests and in the management of the companies (Menshikov 1969; Brandeis 1914; Kimball 1962). The investment banker can become so intimately involved with the company that the Securities and Exchange Commission has stated that if an investment bank has a director on the board of a corporation, it controls that company.

2.2.5 ACCOUNTING AND AUDITING FIRMS

Accounting firms are at a lower level of power than the banks and the elite law firms (to be discussed later), but they provide information and communications which greatly assist in establishing, maintaining and enhancing economic power. The Metcalf Committee also delved into the accounting profession and the concentration in it, the control of it and how it operates. Its report said that the big accounting firms "heavily influence the economy as well as society in general (because) accounting is the language by which businesses report the results of their activities"

The accounting situation takes on even greater complexity and importance when looking at the great multinational corporations. Governments—big or small—cannot prevent these global giants from circumventing their tax, securities and banking laws. The corporations accountants and tax lawyers are able to devise a different set of books for each requirement, person, agency or government. "Skilled obfuscation is now an essential accounting tool" which produces results which have little to do with the real world (Barnet and Muller 1974, 263).

The auditing function of the accounting firms is supposed to be performed in an independent and disinterested way so that the public, investors and governments can be protected. But this has not happened because of a combination of factors. The auditors are not always given access to all relevant information; the auditing firm has its primary loyalty to its client, not to the public; and if an adverse audit is presented to a company, the auditor is frequently fired and another one is brought in to devise a

rosier picture (Briloff (1972, 1981); Chatov (1975); US Congress 1978a; Wall Street Journal 1982a).

A recent development of the accounting firms now ties them even closer with their corporate clients and has greatly heightened and solidified the community of interest between the two. This is management consultation. The firms which are supposed to be objective are very deeply involved with their companies; hence, they are even less likely to blow the whistle on the efforts of their own management consultant.

Senator Metcalf also analyzed concentration in the accounting field. Parallel with the structure of most business in the U.S., the accounting profession is highly concentrated. This takes the form of the "Big Eight"—the largest, most influential firms which have the most giant corporate clients. They have 85% of the 2,641 corporations listed on the American and the New York Stock Exchanges—92% on the NYSE, alone (US Congress 1978a, 15; Briloff 1981, 235). The concentration density is greater with the largest corporations and industry groups such as oil and banking (Medvin 1973). Metcalf was seriously concerned about the fact that the accounting firms are too closely intertwined with their corporate clients. Government regulation has

2.3 ELITE LAW FIRMS

The subject of law firms is complex but very fruitful in revealing the nature of how the Ruling Cartel works, because the leading firms on Wall Street are keys to the implementation and communication of power—political as well as economic. We will look at the latter function first. Gordon says of their economic role (Domhoff 1967, 58, 59):

These firms are not just tied to the financial community, but are an integral part of it. The partners have mostly upper class credentials, frequently hold high positions in government and teach at the major law schools (Domhoff 1967, 58-62). Being wealthy and working in jobs from which they can easily take sabbaticals, they can readily make themselves available for public service positions or on temporary "blue ribbon" panels in the government. Many Secretaries of State have come from such law firms.

Good examples can be found in the relationships of some of the Secretaries of State, their law firms and their clients in the oil industry (Blair 1978, 72, 73). John Foster Dulles and his brother Allen were partners of Sullivan and Cromwell. As Secretary of State, John Foster was instrumental in dropping antitrust action against his law firm's client, Standard Oil (now Exxon). Brother Allen, as head of the CIA, was instrumental in overthrowing Mossadegh in Iran and re-establishing the domination of the Iranian oil fields by U.S. companies.

One does not have to be the top man at the State Department to be powerful and influential. For instance, Wall Street lawyer and investment banker George Ball was Undersecretary of State for Economic Affairs, but additionally has been a key foreign policy advisor for many years as well as being an important participant in the Trilateral Commission, the Bilderbergers and the Council on Foreign Relations (to be discussed later) (Shoup and Minter 1977, 238-43, 264; Sklar 1980, 9, 179).

C. Wright Mills (1956, 289) evaluated the significane of men such as Ball:

a lawyer who handles the legal work of investment bankers, you get:a key member of the power elite.

Thus, the people from these elite law firms are tied together sociologically and professionally with each other and to other Cartel institutions by the same interlocking mechanisms we have previously mentioned. These men appear to be the prime media for establishing the legal framework of our monopoly capitalist system, for tying together of economic and political power, and for the implementation of this power in the government.

2.4 CONCENTRATION OF WEALTH AND INCOME IN THE U.S.

2.4.1 INTRODUCTION

In Domhoff's (1967) definition of a ruling class in the U.S. the top people would receive and disproportionate share

There are two sides of this subject. The first is the acquisition of wealth and income and the other is taxation.

Dowd's (1974, 117) definitions and explanation of income and wealth are clear and concise:

Historically, there has always been concentration of wealth in the U.S., starting in colonial times (Feagin 1982). Although this declined slightly after the Civil War and again in the 1930s and 1940s, it has increased since that time. Around 1800 the U.S. economy and nation were dominated by a small group of agricultural and commercial capitalists. It was estimated that prior to the Civil War 200 families controlled all the major trade and financial organizations. Later the industrialists moved into the

ranks of the wealthy. Even though there were conflicts between the old wealth and the new wealth, an accommodation gradually took place which has resulted in the distribution of power and wealth which we have have today (Parker 1972, 116. 117).

retained capital gains.

The concluding estimates of the Office of Business Economics of the Commerce Department are about 13% higher than those of the Census Bureau in determining the inequality of income (Tuckman 1973, 48). As a result of the problems with these two main sources, researchers have used various other means either in combination with IRS and Census information or they have developed data which they have used independently.

There are other problems of studying wealth and income distribution in relation to power.

• 2. Certain types of wealth and income can be hidden either by not being included in the studies (as in the case of some of the IRS and Census Bureau data), by being spread throughout a family, by placing stocks to be held in trust, or to be placed with foundations where the control can be maintained and where the foundations can in turn invest in the various dominant companies.
• 3. Comparison of one study with previous or subsequent ones is difficult because of differing approaches and usages of varying data bases.
• 6. The considerable tax loopholes and evasion.
• 7. Government support of business interests in the form of subsidies, tax breaks, provision of infrastructure, friendly regulatory agency administration, guaranteed loans, financial bailouts of ailing companies, foreign aid which must be spent with U.S. firms, support of the dollar, the entire Defense Department's budget, and many more government activities and laws which fall under the general heading of "welfare for the rich" (Tuckman 1973, 76-107; Boaz 1982; Hapgood 1974). Inability to get precise data on the very rich and the lack of information on the very poor.

9. Taxes not being factored in, particularly considering that state and local taxes are regressive and, although the federal taxes are progressive on paper, in actuality they produce only a very slight levelling of income.

2.4.2 INCOME

Most studies show that, although income concentration has been decreasing slightly, it has remained basically the same since the turn of the century. The most conservative estimate, by Miller (1971, 50), showed that in 1968 the lowest 20% of the families received 4% of the income, while the top 20% had 44% and the top 5% of families had 15%. Pechman and Okner (1974, 45, 46), using additional figures and estimates for non-reporting and underreporting of income, had the lowest 20% receiving 3.7% of income, the highest 20% having 47.9%, the top 5% having 22.1%, and the top one percent receiving 10.5%. The before and after-tax figures are very revealing. Before-tax income concentration

Two controversial studies on income distribution over the years should be mentioned because they showed opposite results (Zeitlin 1970, 114). Using income tax returns, Kuznets' conclusion was that there had been a significant reduction of about 40% in the income share received by the top 5% of individuals between 1929 and 1948. This report received great attention in the press because it purported to show how redistributive the American capitalist system had become. Goldsmith's figures also showed this concentration decline, although to a lesser degree (Miller 1971, 51, 52).

Kuznets' methodology and sources were attacked (Parker 1972, 118; Tuckman 1973, 54; Perlo 1970, 137), in that he used the vulnerable IRS data, did not consider that these top income holders come from a single social or economic class, that the wealthy people split their incomes for tax purposes, that there is significant underreporting of income in the higher brackets from dividends, interest and rent, and that undistributed profits were left out. Furthermore, because of paucity of information on the poor, the data for

Goldsmith (1970) recomputed her findings and concluded that Kuznets' analysis was indeed faulty. But, considering additional factors, she stated, although the concentration would be lower than Kuznets estimated, the general pattern would be the same—the narrowing of the inequality of the rich and the poor. However, Zeitlin (1970, 114, 115) points out that by using distribution of income—from production (from 1949—1955) compared with personal income, there has been no decline, and the relative income shares have remained fairly constant. Perlo (1970, 136) also points out that the Commerce Department figures indicated that between 1929 and 1948—the period of the Goldsmith and Kuznets reports—corporate profits increased 244%, farm income was up 212% and non-farm, unincorporated business income increased 177%; but wages and salaries increased only 156% (hefore taxes)

The other controversial study was that of Kolko (1962) which showed that, instead of the levelling of incomes, the opposite had happened. Although the share of the highest

Additionally, the lower one-half income groups received 27% of national personal income in 1919; but this had fallen to 23% by 1959. The University of Michigan Survey Research Center showed in 1968 that the share of the bottom half had dropped to 22%, indicating a continuing decline. The study revealed that in 1968 the top tenth received 30%, the top three tenths got 58%, with the remaining 60% of the population having the leftover 43% (Parker 1972, 81).

Kolko's data sources were mainly the National Industrial Conference Board (a pro-business research center) and the University of Michigan Survey Research Center. These data were criticized by Goldsmith, Kuznets and others (Miller 1971, 51, 52). Miller (1971, 51, 52) cites two

However, other studies support the Kolko perspective. Pechman and Okner (1974, 46) of the Brookings Institution showed that in 1966 inequality was more heavily weighted toward the top 5% than what Miller had estimated, i.e., 19.1%, vice 16%. Stern (1972, 419) noted that the nation's Gross National Product (GNP) more than doubled between 1947 and 1970, but the shares of income going to each fifth remained basically the same.

The controversy over income distribution will probably continue because there are too many variables which cannot be verified by present research methods because of inaccessibility to relevant data, particularly to corporate records and to information on the poor. Despite the differences of opinion over methods and data used, the preponderance of information indicates that there has been no basic or significant change in the nature of unequal distribution in the U.S.: it is concentrated in the upper brackets.

The possession of wealth is much more important in the determination of holding of power than is distribution of income (Dowd 1974, 123). Wealth not only produces income but provides the power to give income and to limit that of others. The control of wealth is the control of the economy, which can be translated into political power. Furthermore, it is not just the possession of wealth which is of primary importance, but the control over the key institutions of the production and management of wealth, i.e., control over the major corporations and financial institutions.

Although there is not the controversy over the research on the distribution of wealth as is found in the studies of income, there are problems in ascertaining precise information. Some of these are as follows:

• Control and ownership of stock can be hidden by various means such as secret and hidden accounts, ownership among various family members and the use of foundations.
• A trust department may have economic decision making

control over someone else's trust fund.

• Stock in one company can be held by other companies.
• 6. The decision of what measuring unit to use--individual, family, spending unit, extended family, interest group, social class--can make a significant difference in results.

Because of the economic complexity and the legal protection of secrecy involving these problems, most inquiries must work with only the data which is readily available. This is acknowledged by Lampman (1970) in his oft noted study of wealth holders from 1922-1956 which he made for the National Bureau of Economic Research. He showed that the top 1.6% of the wealth holders owned 32% of all privately owned wealth, including 82.2% of stock, 100% of state and local bonds, 38.2% of federal bonds, 88.5% of other bonds, 29.1% of cash, 36.2% of mortgages and notes, 13.3% of insurance reserves, 16.1% of real estate and 22.1% of debts. These findings were close to those of the Survey of Consumer Finances in 1953.

Lampman also measured the degree of change in concentration during the period. He found that the richest one percent of the people owned 24% of all personal wealth

Miller (1971, 156) looked at the last year (1962) the government produced figures of wealth holders from a top, tiny percentage, information which could give us a much clearer picture of the super rich and powerful. This showed that 200,000 consumer units constituted 0.5% of all units, but held 22% of the wealth, and the top 2.5% had 61%. Miller noted that .02% had 7% of all wealth and owned 21% of corporate stock. The increase in concentration of ownership in stock is indicated by the fact that in 1953 the wealthiest one percent of the population had 69.5%, but nine years later in 1962 this had increased to 71.6% (Dowd 1974, 124).

As is apparent, the figures differ a little from study to study—but only a little. Wealth is highly concentrated and has been for many decades. In focusing on the most affluent people with the greatest wealth holdings, we are looking at the same people and families which are among those of the American Ruling Cartel—the top executives, the big bankers and the wealthiest families such as the Fords, Rockefellers, Mellons and duPonts. And, significantly, the government data on this tiny percentage at the top has not

2.4.4 TAXES

It could be argued that the maldistribution of income and wealth could be justified from an egalitarian perspective if things were evened out fairly through taxation, particularly if poorer people were getting fair shares of government largesse in return. Miller (1971, 16) believes that "when transfer payments are taken into account, a large measure of progressivity is added to the tax structure." However, even though the federal income tax is designed to be progressive, because of so many loopholes and widespread evasion, the tax turns out to be hardly progressive at all (Perlo 1970, 138; Pechman and Okner (1974, 64, 65). In 1962 it was shown that for all income groups there is less than a 2% difference in before and after federal tax percentage of income (Stern 1972, 418).

poor (Budd 1970, 150). One-third taken in taxes from an income of \$3,000 could be disastrous, but one-third of \$300,000 leaves you quite affluent. Additionally, the regressive state and local taxes have risen from 7% to 12% of GNP, whereas federal income taxes have remained constant. As a result, when all tax factors are considered—even those effecting estate and inheritance—the overall taxation falls almost with equal proportion on all income levels (Parker 1972, 179).

However, The Economic Report of the President in 1969 (Parker 1972, 79) showed that people with annual incomes under \$2,000 paid an average of 44% of their income in taxes—two times that of someone earning \$200,000. Those with income between \$2,000 and \$4,000 paid 27%, which was equal to taxes paid by most millionaires. With the working poor not being eligible for welfare, they are in effect paying for the transfer payments of their poorer brethren. The working poor do not get back in money and services the amount they pay in taxes. On the other end of the spectrum Miller (1971, 17, 18) admits that his figures do not take into account the massive tax benefits and other aspects of government activity which is frequently called "welfare for the rich," enumerated earlier.

Not only does the tax burden not fall heavily and

directly on the rich, corporate taxes also have been decreasing as a proportion of all taxes. In the mid-1940s, corporations paid 34% of all taxes; by the late 1970s this had fallen to 13% (Feagin 1982, 61); and in the early 1980s it had dropped to 7.9% (Wall Street Journal 1982e).

This drop in corporate taxes was from 61 billion in 1981 to 49 billion in 1982. Individual taxpayers made up the shortfall of 12 billion. Some examples of individual companies are as follows: AT&T paid 8% on its 1981 domestic income, down from 11.1% in 1980; Bank of America paid 3.1% in 1980, which was higher than most banks; Exxon paid 1.3% of its U.S. income in taxes, which was less than the rate for a family with a \$10,000 income (Wall Street Journal 1982e).

What do these studies indicate about the overall structure of the income, wealth and tax situation? First, they show that as you look nearer the top the more you find inherited wealth (Tuckman 1973, 43; Parker 1972, 132). Although there is room for new millionaires in our economy, most of the wealth is inherited, and through the use of tax loopholes, the control of wealth has remained intact from one generation to the next.

Secondly, the top families in income and particularly in wealth are those which control the major industrial and

financial institutions in the country—the economic bases of the Ruling Cartel (Tuckman 1973, 44-47). These are basically the same families noted in the Temporary National Economic Committee (TNEC) (Securities and Exchange Commission 1941; Sweezy 1939) in the late 1930s and early 1940s, the families being mainly the descendents of the robber barons of the late 1800s and early 1900s, plus a few leftovers from the "old wealth" days. This continuation of dominance of the top wealth holders over the years shows the stability of their control over the economic and political system.

Third, wealth alone is not an automatic key to power. Included in the wealthy are various people who are very rich but who are not powerful. Comedian Bob Hope is in this category (Tuckman 1973, 47). Others may be powerful within their own corporate sphere only, such as J. Paul Getty, the Hunts of Texas, and Howard Hughes. Still others may be of upperclass status but do not play power games. Among these would be the wives, particularly widows, of wealthy men. But one thing is clear. In the U.S. a person cannot be powerful on his or her own without being wealthy (Dowd 1974, 123). A Dean Rusk or Henry Kissinger can be powerful only so long as they are placed in positions of power by the

undoubtedly has accelerated since the above studies were made. The following are contributory to this:

• The accelerated merger wave of great proportions has further concentrated corporate control and profits.

• 2. Inflation has transferred income from the lower income spending units to those who are reaping the benefits of monopoly profits where prices can be raised to compensate for inflationary costs.
• 4. Meanwhile, a severe, prolonged depression has resulted in the largest unemployment since the Great Depression.
• 4. Morpubile most lower class and even middle class
• 8. Corporate taxes continue to fall (Wall Street Journal 1982e). In 1982 the corporate contribution to public coffers was down by \$18 billion as the corporate tax dropped to its lowest percentage in history—7.9%. This was occurring during the mid—1970s and early 1980s when most of these huge companies were breaking all records for profits. But it is not just that the corporate taxes are falling, the companies in monopolistic situations have the market power to merely pass these taxes on to their customers in the form of higher prices. Thus, the consumer ends up paying for almost all the corporate taxes, and the companies are off the tax hook.

latters' average total money income was less than \$3,150 a year, or \$60 a week--before taxes (Stern 1972, 417). Meanwhile, the top 4,000 families reported income of nearly four billion dollars. This was more than all government expenditures for feeding the poor and twice that spend on anti-poverty programs. It was more than all federal spending for education (Parker 1972, 123, 130).

Economist Paul Samuelson described income distribution with an analogy (Parker 1972. 6):

If we made an income pyramid out of a child's blocks, with each layer portraying \$1,000 of income, the peak would be far higher than the Eiffel Tower, but almost all of us would be within a yard of the ground.

Some people see the system as healthy, fair and with plenty of opportunity. Miller (1971, 159, 163, 165) (who has no criticisms of Kuznets) quotes the former Chairman of the Federal Reserve Board, the New York Times and Fortune magazine as saying that inequality is no problem. Believing that significant redistribution has taken place, the magazine said, "Though not a head has been raised aloft on a pikestaff nor a railway station seized, the U.S. has been for some time now in a revolution." The dominant fact for Miller in showing the health of the economy and proving that America still is the land of opportunity is the fact that

there are more millionaires now than ever before, and that if a person does not hold that as a "recognizable goal" and "you blame it on the system, you may just be looking for an alibi." Besides, Miller says, you have to have to have inequality in order to get people to work. As to the poor, Miller (1971, 246) states that their solution is to "control their fertility."

2.4.5 CONCLUSION

There are two aspects of the concentration of wealth and income which are rarely mentioned and a third which is never mentioned. First, in a capitalist society this concentration must occur. A Marxist would say that it only reflects the normal result of a combination of the capitalist class owning the means of production and appropriating the surplus value from the labor of the working class. The capitalist say the same thing but in a different way: there must be large and ever expanding profits so that the system can create a sufficient pool of money for investment in order to grow, which is a basic requirement of the system. Indeed, one of the main complaints of one of the core Ruling Cartel organizations—the Trilateral Commission—regarding the

that people are demanding too much from the system in income and benefits, thereby leaving too little for the capitalists to invest (Crozier, Huntington and Watanuki 1975).

The other aspect is mentioned time and again by the top executives in Silk and Vogel's book Ethics and Profits (1976). If people are too affluent, they will not work hard enough. If good jobs are plentiful, workers will be less apt to subject themselves to the authoritarian, demeaning demands of the workplace. Worse still, they would have time and energy left over to organize, petition and demonstrate, trying to change the system.

The third aspect is that the wealth of the top people is very different from that found in the upper-middle, middle and bottom strata. That of most people is held and used within that individual spending/wealth holding unit, whereas the enormous wealth of the power people at the top is pooled in various economic and political endeavors. They cooperate through their institutions in providing financial support for new endeavors. They invest in each other's financial institutions and commercial enterprises. They maintain and expand their wealth in extended family and interest group structures. The government supports them in these endeavors. It is therefore a distortion to consider

The nature of wealth and income concentration has not been written from the standpoints of extended family, interest group or class. Nor has it been looked into in comprehensive detail from the aspect of the timiest percentage at the top where the main power holders reside. Just as one cannot develop a true perspective of economic control by looking at individual corporations without their interconnectedness, we cannot obtain the clearest picture of the control of wealth in the country by studying only individuals, spending units or nuclear families. The research we have been citing is only the beginning of what

For the economically powerful to have control of the state, they must have institutions through which the power is exercised. It is a central part of maintaining the

implementation into governmental policy and law. There are three prime political Cartel organizations which fall into the above category: the Council on Foreign Relations (CFR), the Bilderberg group and the Trilateral Commission (TLC). There are several others in the U.S. which perform various functions in the power structure which act as mechanisms through which the Cartel increases and spreads its influence throughout the country in certain social, economic and political sectors (Domhoff 1967, 1979). They are significant in achieving consensus among local and regional ruling elites and they work to influence governmental policy in particular areas of interest. But, with the exception of the Brookings Institution (the prime Cartel think tank) and the Committee for Economic Development (CED)—the CFR for domestic issues—these others are of secondary importance to the big three: CFR, TLC and Bilderberg.

2.5.1 COUNCIL ON FOREIGN RELATIONS

The CFR, TLC and the Bilderberg organization have the same structure for determining their memberships. The CFR participants, particularly those on the steering and advisory groups, are dominated by the New York City law and banking elite—the core of the American Ruling Cartel. That the CFR represents the Eastern Ruling Class Establishment is shown by the paucity of members among the conservative businessmen's organizations such as the Chamber of Commerce, the National Association of Manufacturers and the Conference Board, where the top management men of the large corporations predominate.

The interlocking of top personnel of the Bilderbergers and the TLC with the CFR is pervasive. The men on the steering and advisory committees (who pick the other members) of the TLC and Bilderberg group are all CFR members. Of the 131 U.S. Trilateral Commissioners through 1979, 74 were CFR members, 50 of whom were involved with banking or other financial institutions. As in the economic

sphere of the history of power in the U.S., the early years of the CFR were dominated by Morgan interests, but since the 1950s the Rockefellers have prevailed, although the Morgans are not completely excluded (Menshikov 1969; Knowles 1973). The total membership principally is comprised of the following: men (and only recently a few women) from the prime multinational corporations, and particularly the banks and law firms; the carefully selected intellectuals of the approved think tanks and elite universities; leaders of the CIA; and the prime movers of the Eastern Establishment mass media (Silk and Silk 1980; Shoup and Minter 1977; New York Times 1966.

Perhaps the most important historical function of the Council has been to set up study groups to develop positions on foreign policy strategy and tactics. These conclusions and recommendations are almost always implemented by the government, even if with slight modification. The basic definition of U.S. global interest was made before U.S. entrance into World War II, setting the basic pattern and objectives for subsequent American imperialist foreign policy. Also, specific governmental actions have been taken and institutions have been set up after origination in the CFR. For example, the decision to drop the atomic bomb on Japan. The Marshall Plan, the United Nations, the

The CFR, TLC and the Bilderberg organization have the same structure for determining their memberships. The CFR participants, particularly those on the steering and advisory groups, are dominated by the New York City law and banking elite—the core of the American Ruling Cartel. That the CFR represents the Eastern Ruling Class Establishment is shown by the paucity of members among the conservative businessmen's organizations such as the Chamber of Commerce, the National Association of Manufacturers and the Conference Board, where the top management men of the large corporations predominate.

International Monetary Fund (IMF), the World Bank, NATO, the post-war treatment of Germany and the Soviet Union, and the policy toward China and South Africa. In addition, the Council has become deeply involved in specific situations: the overthrow of the Arbenz government in Guatemala was a result of the recommendations of a CFR study group—a body which was chaired by the head of United Fruit Co. and which had great input by CFR member Allen Dulles—the head of the CIA (and whose law firm represented United Fruit.)

The Council has had great impact, not only on determining what the "national interest" is and what policy is, but also who the decision makers in government are.

(For instance, in 1965, this organization of 1,400 people had 176 members currently in key government positions and

more than 400 others who previously had held such jobs.) Of considerable—perhaps even greater—importance is that the CFR has determined what the range of "respectable" options

2.5.2 BILDERBERG GROUP

In the drive to control and rationalize the economic system, U.S. capitalism has gone a long way in the cartelization of the country and in turning it into a corporative-mercantilist state (Miliband 1969; Hayek 1944; Dowd 1974). A similar movement has been taking place on the international scene, with huge transnational corporations and financial institutions dominating commerce Barnet and Muller 1974; Magdoff 1969).

With the Western European economic recovery following World War II, it became obvious to the Western capitalist leaders that cooperation would be desirable and profitable. The need was seen to develop consensus, hold down competition, facilitate the "free" international movement of commerce and capital, and to present a united front, both to the Third World countries (whose resources and cheap labor they needed) and to the Socialist nations (whose competition they feared). Additionally, European nations were concerned

There are three types of participants. One is a core group of regular attendees; another is comprised of more powerful men on the advisory and steering committees, the latter being a group which selects all members. David Rockefeller, Chairman of the Board at Chase Manhattan Bank, is the acknowledged leader of the organization. The participants are a mix of the most powerful men from the transnational industrial and banking institutions and law firms in the Western capitalist world, particularly the NATO countries

mass media, Rockefeller think tanks and foundations, and professors from the Establishment universities. Some of the people are regular attendees year after year and some are invited only once or twice. Specially selected academicians from prestige universities are invited to present papers on pre-selected topics of relevant interest. The U.S. representatives are from the core Ruling Cartel organizations, particularly from the Rockefeller institutions

The meetings are held in extreme secrecy, with great security precautions taken. The staff is not allowed to leave the premises during the three or four-day meeting period. All participants are sworn to secrecy, and it is made clear that anyone who talks with the press will not be invited back. The list of the participants is a closely guarded secret as are the subjects of discussion. All notes taken during the conference are burned and minutes and summaries are sent only to the attendees, including past

participants.

The most important aspects of the Bilderberg group are that it provides a secret meeting place where the prime movers in the Western capitalist world can meet and talk frankly, iron out problems, react to crises, coordinate activities, develop consensus and establish basic policies. Next, having the multinational levers of economic and political power at their disposal, they communicate the requisite information to the organizations and people in their power network for implementation (Sklar 1980, 171).

2.5.3 TRILATERAL COMMISSION

But the Bilderberg organization was not sufficient to meet the needs of the Western capitalist system in a changing world. The establishment and operation of the Trilateral Commission represent two important changes in the international power structure. The most significant one is the recognition of Japan as a major economic power along with the need to bring her into the top levels of capitalist cooperation. The second significant aspect is that the Commission represents to a certain extent the Bilderberg group coming out of the closet with a different mask on.

to be invited to a Bilderberg meeting.

The Trilateral Commission is the brainchild of David Rockefeller and his apparatchik Zbigniew Brzezinski—the National Security Advisor to former President Carter. Brzezinski succeeded Henry Kissinger, another long time Rockefeller man who held the same position in the Nixon—Ford administration. (Kissinger, a Bilderberger and a CFF member, became a TLC participant after Carter assumed office.)

Brzezinski convinced his mentor, Rockefeller, of the need to form such an organization. Rockefeller broached the subject at the 1972 Bilderberg conference and found immediate approval. He then handpicked the members of the Trilateral Commission's Executive Committee (Novak 1977; Sklar 1980), and in 1973, fueled by Rockefeller money (mainly from the Rockefeller and Ford Foundations, plus his personal funds), the organization commenced business. Many

of the participants were Bilderbergers (Sklar 1980; Skousen [1972]; Sutton and Wood 1978, 1981). Of the 59 U.S. members as of 15 August 1975 at least 19 either had been to Bilderberg meetings or had come from institutions or organizations which had representatives at the Bilderberg meetings. (Because we only have information for less than one-half of the meetings, there might be more Bilderbergers on the Commission.) Many foreign TLC members also have appeared at Bilderberg conferences. All U.S. members of the advisory committee are from the Council on Foreign Relations

Regardless of the individuals, most of the institutions represented on the Commission are of the same type as is found in the Bilderbergers: the most powerful transnational companies, international banks, key governmental officials (particularly of the "up and coming" variety), influential law firms representatives from Rockefeller think tanks, college professors who have the Rockefeller stamp of approval, and personnel from the Establishment press. Missing from the Commission are the military leaders and representatives from the internationally operating intelligence and police organizations such as are found on the Bilderberg list. Added to the TLC, however, are leaders

How does the Commission operate? It has a permanent staff and members who work on position papers. The Commission as a whole meets in secret to deliberate on the papers and the problems of the Trilateral community. The Commission accepts the papers, which are then published. The TLC also takes formal stands on subjects of importance in world politics and publicizes these positions.

Those words are worth reading again, noting particularly the use of the words "internal threats" and the "checking of intrusion" into "non-economic goods". What a chilling paragraph, particularly when it is realized that this group controls the most powerful economic institutions

The influence and power of the Trilateral Commission and its Bilderberg nexus can be seen by the early handpicking of Jimmy Carter for the TLC by Brzezinski and Rockefeller, followed by Carter's steady financial and political nurturing toward the presidency. The most blatant display of power is the shown by the number of men selected by Carter from the TLC to be in his cabinet—at least 25, of which at least seven are Bilderbergers. It is also of significance that Carter's Vice President, Walter Mondale, has been not only on the TLC, but also has been a Bilderberg attendee. Furthermore, it was reported that, when President, Carter kept in contact with TLC headquarters to see what the latest studies were (Karpel 1977b; Novak 1977). For the most part the Carter administration policies seemed to be lifted almost directly from the TLC position papers and books.

Although these policies were mostly economic in nature, the desire to control and effect change in the U.S. by the TLC was not limited to economics. The Commission expressed the necessity to muzzle the press and to repress civil liberties as necessary to that the President could govern

The foreign policy of the Trilateralists and the Carter administration regarding the Soviet Union had some contradictions. On one hand it marked the return to Cold War tactics of belligerence and intransigence toward the USSR, along with all the rhetoric with which the Cold War has been associated. This is in keeping with the writings of Brzezinski and with the policy of the Rockefeller people for several decades (Scheer 1975; Karpel 1977b). And yet, the TLC has also expressed the view that the USSR and the Eastern European countries could be brought into the international capitalist consensus as junior economic partners (Sklar 1980, 32-35). This seems to be a source of considerable disagreement within the Cartel.

2.5.4 ELECTIONS

The complexity of power and attitude relationships

Complicating the situation was the candidacy of John Connally and Ronald Reagan. Both openly attacked the Trilateral connections of the men running for both Republican and Democratic nominations. This was the first time that the TLC had been publicly exposed at such a high level of visability. The situation was even more complex in the light of the fact that many Reagan advisory people were from just this Establishment wellspring, although they might have been from the more conservative element. However, knowing that this was a favorite topic among the very conservative Republicans, whose support was needed in order

to get the nomination, Reagan's TLC people perhaps were merely using the attacks on the Commission as a political ploy. As subsequent events showed, this probably was the

After Reagan won the nomination, an accommodation was reached whereby Bush became the actor's running mate, nothing more was said about the Trilateral Commission, and David Rockefeller's support was forthcoming. This is parallel to the situation of Richard Nixon in 1960, when, after winning the nomination, he had to accept the conditions of Nelson Rockefeller before receiving Rockefeller and Establishment support (Silk and Silk 1980, 284, 284).

range of opinions is still narrow when compared to the full width of possible options and approaches. The fact is that these varying opinions represent merely the range of acceptable dissent within the Ruling Cartel plus some accommodation to the pressures from the Right Wing. The Cartel still remains firmly in control regardless of which party is in power. The nominees from both parties are either Establishment people or must submit to Cartel demands in order to be elected.

2.5.5 DECISION MAKERS

A useful way of looking at Cartel control is to tablulate the ruling elite organizations with connections to personnel in the key positions in the executive branch from the Eisenhower years through the Reagan administration through August 1982 (Wemple 1977; Sklar 1980; Liberty Lobby [1975]; Spotlight 1984a, 1984b).

This shows that, although administrations come and go, it generally makes little difference who is in "power"—Democrats or Republicans. The occupiers of the positions of political power in the U.S., particularly regarding foreign policy, almost always come from the same pot.

2.6 METHODS OF IDEA AND INFORMATION CONTROL

Institutions such as the major foundations, universities and think tanks have a great impact on development and inculcation of ideas and information. They form a close, pentagonal relationship with the governmental and corporate worlds (Whittaker 1974, 166; Domhoff 1967, 1979; Knowles 1973; Dye 1976). The corporate directors, trustees and key personnel are linked together and with the prime ruling class institutions such as the CFR, TLC, Bilderbergers and Committee for Economic Development (CED). Foundations financially support those four organizations as well as universities and think tanks. Much research is done for these four institutions as well as corporations and the government at the elite universities and think tanks.

19 universities. Dye's top men are trustees of 18 foundations, 25 universities and six think tanks.

2.6.1 FOUNDATIONS

The subject of foundations is much more complex than the view we usually receive from the mass media (Lundberg 1968, 513). Foundations provide economic and political linkage among all the other institutions. From the economic viewpoint they can do anything a commercial bank or corporation can do, but without regulation or public supervision, and they can do it tax free. By obviating taxes, the wealth (and power) can be retained in the hands of the family or corporation rather than having it dissipated into the public coffers. Control of family or core corporations can be maintained by using the foundation to own a substantial share of stock and by self-perpetuating boards of friendly interlocking trustees. By adding stocks of your foundation with that of other friendly sources such as relatives and banks, control over many corporations can be effected.

agendas and defining questions of importance for research (Lundberg 1968, 473). Politically, they are good training grounds for future decision makers of the power elite. From the power viewpoint, the historian Arthur Schlesinger (Shoup and Minter 1977, 63) stated that "the heart of the American Establishment . . . is the New York financial and legal community." Its "front organizations are the Rockefeller, Ford and Carnegie Foundations and the Council on Foreign Relations." Other social scientists conclude that the foundations are extremely significant in the maintenance of group power and in the multinational linking of ruling elites (Whittaker 1974, 12, 179).

The control of the foundation is in the hands of the trustees, a self-perpetuating body, usually controlled by the sponsoring corporation or family (Whittaker 1974, 125). Domhoff (1967, 69, 70) noted that in 12 of the top 13 foundations the power elite is in control, with two-thirds of the trustees being members of the upper class or from major corporations. The rest are mostly from universities. The more powerful families and their institutions control not just one foundation, but several: the Mellons at least six, the du Ponts at least nine, and the Rockefellers at least ten. Even more significantly, there is considerable interlocking among the foundations' trustees themselves.

It is not just on the board of trustees where control is sought. Domination of a foundation's finance committee is vitally important, because it is here where control over the investments of the organization is maintained. The Rockefeller people have long been in control of both the trustees and the finance committee of the Ford Foundation and several other large foundations (Dye 1976; Domhoff 1967).

The place of the foundations in the power structure is shown by the fact that historically the large New York foundations have been run by members of the Council on Foreign Relations (CFR) (Whittaker 1974, 97). Conversely, these foundations have financed the CFR endeavors. The same relationships exist with the CED, TLC and Bilderbergers. A prime example of how this interlocking works is found in the situation with John J. McCloy in the 1950s. He was the top man at the flagship Rockefeller institution—Chase—Manhattan Bank. As chairman of the Ford Foundation, he provided money to the CFR, of which he was chairman, to make a special study of Russian—American relations which was chaired by himself (Whittaker 1974, 11).

Governmental interlocking also is normal. Many of the past Secretaries of State were in high positions or were trustees of major foundations before assuming their key

Foundations have been used frequently by the CIA as conduits for money and activities which the government did not want to become publicly known (Whittaker 1974, 6 144-166). The CIA set up its own dummy foundations as well as using 39 legitimate foundations. Additionally, foundation personnel move into the CIA as part of the selection process which parallels that of the State Department. Conversely, CIA personnel transfer into foundations after their tenures are over (supposedly) with the intelligence organization.

How would the projects and accomplishments of the

foundations be assessed? Regardless of an evaluation of an individual project, most foundation money goes directly or indirectly for support of corporate goals or in maintaining the current power system (Lundberg 1968, 499; Whittaker 1974, 136). No matter what projects might benefit the people, foundation money does not go to groups or to individuals who desire basic change or who reveal how the system really works. (There are no major, significant radical foundations.) One study showed that only one percent of foundation projects could be considered controversial and only three percent were innovative (Whittaker 1974, 193, 214). (C. Wright Mills was cut off from foundation support after he wrote the Power Elite.)

So the foundations are the prime media through which the Ruling Cartel greatly determines what will flourish, what will die and what will remain untouched in economic, scientific and technical development, in social experimentation, in new communications media and their proliferation, and for new political and cultural institutions. All this is done with an eye on the maintenance of social control and the general development of the existing economic, political and power system.

It is ironic that the money the foundations are spending comes from the labor of the people: from the people

2.6.2 THINK TANKS

the think tank interlocking system is rather complex, because it can appear in a variety of ways. In addition to being a fully independent entity, the research organization can be a part of a university; it can be located at a university, but operated separately, theoretically, yet have university personnel; it can be composed of a consortium of universities (such as the Institute for Defense Analysis); it can be a spinoff from a university; a university can manage one of the Federal Consultant Research Centers (one-half of these are managed by universities); individual professors can be consultants for think tanks; professors can set up their own, small, profit-making research companies (and some not so small); and universities get research contracts directly from the government, particularly from the Defense Department (Ridgeway 1970, 5).

Sklar (Sklar 1980, 187) lists the primary "moderate" Ruling Cartel think tanks as the Brookings Institution (the oldest), the Rand Corporation, and the Center for Strategic and International Studies at Georgetown University. Domhoff (1979) adds the Urban Institute, the National Bureau of Economic Research, Resources for the Future, the Stanford Research Institute (now known as SRI, Inc.), and the Center for International Studies at MIT.

These major institutes and those connected with universities operate primarily with foundation money, whereas smaller, more specialized think tanks are more likely to receive government and business contracts. Think tanks can be set up quickly when the Cartel decides there is a major problem which must be dealt with and which must be controlled by the ruling elite. These institutions are funded by the big foundations. The boards of trustees are dominated by foundation personnel and have links with the CER and the CER.

The Brookings Institution holds a special place in the world of think tanks. It not only is the oldest--working closely with moderate, ruling class reformist organizations such as the National Civic Federation in the early 1900s--Dye (1976, 114-116) claims that it has recently supplanted even the Committee for Economic Development in

importance and now is the dominant domestic policy planning body, designing many of the liberal programs in the 1960s.

Domhoff (1979, 76, 77) says that in addition to conducting study groups and research, the Brookings Institution is "even more important as a kind of post-graduate school for expert advisors." It provides new ideas as well as highly qualified people for the government and for other elite organizations and institutions. Since it was founded in the 1920s, Brookings personnel have served in all administrations. It is highly interlocked with the CFR, CED and other key Cartel organizations such as Wall Street law firms and banks (Dye 1976).

2.6.3 UNIVERSITIES

The elite universities are closely integrated with the 7 think tank-government-foundation-corporate network. In addition to being sites for such organizations, university personnel swing in and out of the big think tanks such as the Brookings Institution. These same universities are also recipients of large grants from the major foundations. Most of the trustees of the major foundations also are on the boards of trustees of the elite educational institutions (and vice-versa), and the top university personnel are on

the boards of directors of major corporations. They participate in the powerful ruling class political organizations—even though perhaps temporarily on some of them—such as the CFR and the TLC.

development of elite schools. From 1902 to 1934 only twenty institutions were beneficiaries of 73% of the foundations' grants. The main emphasis of the Rockefellers was "to promote a comprehensive system of higher education in the United States" (Smith, D.N., 1974, 104). The Carnegie Foundation set up rigid rules for universities to follow. These conditions formed the bases of higher education which we still have today.

After World War II another significant step was reached by the economic system. Corporations had become even larger and more complex, necessitating hiring more highly qualified administrators, lawyers, and managers and requiring a greater number of more highly trained technical and scientifically qualified people.

Foundation, corporation and government action was intertwined. The passage of a bill prividing for corporate tax deductions for contributions to universities paved the way for large amounts of money from big business. The GI Bill was passed. There was a great surge in foundation development and subsequent giving to universities.

themselves. The organization's goals, clearly stated to be for the benefit of business, were "(1) new knowledge through research and competent teaching; (2) an adequate supply of educated manpower; (3) an economic, social and political climate in which companies ... can survive and continue to progress" (Smith, D.N., 123). The man who was appointed to direct this commission was from the core Rockefeller financial institution, the Equitable Life Insurance Company, as well as from the Carnegie Corporation.

The demands for changes in education follow changes in capitalist development, i.e., from the cottage industry to factory production and from single factory to huge, multi-factory conglomerate corporations.

• These changes create demands of industry for higher educated, more highly trained people to perform the tasks desired.

• 6. Schools would act as holding tanks for too much surplus labor, particularly youths in large urbar areas where social unrest might breed.

education, the wealthy, large foundations, particularly those of Carnegie and Rockefeller, financed most of the change-related activity. The Progressive Era, which brought progressive education with it, was part of the larger movement—which was originated and dominated by the Eastern elites—which resulted in many economic and political reforms. Although there was opposition, this was gradually accomplished, bringing the country at the national and local levels more firmly under elite control (Domhoff 1971; Weinstein 1968).

Now we need to look more closely at the major universities and the educational system as a whole to see how they fit into the American power structure. Domhoff (1967, 77-79) says that "control of America's leading universities by members of the American Business aristocracy is more direct than with any other institution which they control."

The top power positions are the regents or trustees.

Universities are set up basically on a corporate model:

hierarchical, authoritarian and bureaucratic. The board of

trustees controls the general direction plus as many

specific aspects of university administration as it

But the situation has gone far beyond the mere control of the university by regents, even though the regents today are claimed to be involving themselves much more deeply in the operation of the universities, at lower levels in the hierarchy, and in more subject areas than ever before (Dugger 1974). A major transformation has taken place since World War II which has progressively tied the universities more closely and intimately with the corporate and governmental world (Dugger 1974, 110; Ridgeway 1970):

• 1. Presidents and other high administrators, if not chosen from the corporate world, are brought into it by making them directors of corporations and by cutting them into business deals.

• The most important phenomenon is government contracts to universities, to university-associated think tanks and research organizations, and to individual professors. This has produced military-corporate-university cooperation to such a degree that a complete structure of economic and political interest has been created, drawing the major universities tightly into the Establishment's corporate and military orbit, and supporting the ruling class' foreign and domestic policies sociologically, economically and politically, including assisting in wars, in covert intelligence operations and in the full range of needs of the multinational corporations (Noble 1982; Rosenau 1982; Nation 1982; Ridgeway 1970).

businesses, slumlords and urban renewal effectuators.

This increasing intertwining of interests of the university with the military and corporate worlds has resulted not only in the trustees and high administrators being interlocked with ruling class institutions, but also more and more of the professors being drawn into the same orbit, sharing the same world view of the multinational corporations and the U.S. ruling class. To the administrators the teaching and learning process at best has become a sideline institutionally, except for the concerns of the fields which will contribute directly to corporate needs. This results not just in neglect of the student, but also in increased repression of unorthodox views, particularly economic ones (Dugger 1974: Ridgeway 1970).

Universities heed the requirements of the business world.

Universities are almost completely directed toward making the private enterprise system work effectively and

beneficially.

Universities are part of the corporate orbit.

Universities are locked tightly into the corporate power structure.

Universities are financed by the Establishment and answerable to it.

Universities are controlled by the ruling class and serve the interests of that class

2.7 METHODS OF MASS MEDIA CONTROL

What is the place of the major mass media organizations in the American power structure? Most of the researchers referred to in the first chapter say that the media are a significant part of the system. But the media, themselves, frequently claim that they are separated from the system, that they are simply mirrors, objectively reflecting the reality of the world. Indeed, they claim they are the watchdogs of the system on behalf of the public. Before we can analyze their actual functioning in American society in subsequent chapters, we must first assess their place in the U.S. power structure as we have done with other major

institutions.

2.7.1 THE COMMERCIAL TV NETWORKS

Because the three television networks have the most basic influence and the greatest direct impact on the mass of Americans than any of the other mass news media (Roper 1979; Broadcasting 1982f), the question of who owns and controls the networks is an extremely important one. All three corporations are large, multinational conglomerates which historically have been high up in the top half of the Eortune 500 (1977).

The critical questions are who owns a potentially dominant share of the stock and who are the members of the boards of directors. The study containing the most complete analysis of stockholdings was made in 1972 (Network Project 9 1973a). It shows that institutional investors and the networks' boards of directors had 61.1% of CBS, 36.*% of RCA and 76% of ABC. The holding of CBS stock by identifiable Cartel banks and insurance companies was 17%; that of RCA was between nine and eleven percent; and it was 24% in ABC.

An analysis of the 1972 boards of directors of the three networks reveals even further the core Ruling Cartel domination. (This is not a recent phenomenon. When RCA and

CBS were first established, the Rockefeller and Morgan banks held large—controlling—quantities of stock in the companies and had many representatives on the boards of directors (Waldrop and Borkin 1938, 222-225).) The Cartel financial institutions and their associated corporations interlock with the networks in the following manner: four of the 18 directors of RCA; ten of 18 of CBS; and six of 14 of ABC. The top network executives which are on the boards of directors of their corporations are Cartel interlockers. Almost to a man the Cartel representatives are Ivy League educated and are members of exclusive social clubs (such as the Century Club).

But these men are also interlocked with organizations other than some of the major financial, industrial and social institutions of the U.S. and the world. As members of the Power Elite they play important roles in the U.S. federal government, both by holding government positions and by participating in the elite Cartel organizations, particularly the Council on Foreign Relations (CFR), the Foreign Policy Association, the Committee for Economic Development (CED), the National Advertising Council and the Business Roundtable. CBS had by far the greatest number of these ruling class interlocks—18, compared with six for RCA and four for ABC.

There is yet another area of relationships which needs to be described—the interlocks among the three networks themselves. Using the same 1972 information, the directors

of the networks were on many of the same boards involving financial, industrial and social organizations. CBS was linked with ABC six times and with NBC five; NBC had seven with ABC. Although there were four interlocks on social, cultural or educational institutions and one on an industrial company, probably the most significant were the five on boards of financial institutions. The most important ones were probably those with First National City Bank and Manufacturers Hanover Trust, where representatives of all three networks sat.

Another facet of the networks is the role they play in the military industrial complex. In 1971 RCA (the NBC parent) was eighth among industrial prime contractors to NASA and 21st among prime contractors to the Defense Department. CBS Incorporated (the parent company) also had many contracts with the Defense Department, the Department of Interior, and with NASA. ABC had no direct, significant relationships with the military.

2.7.2 PRINT MEDIA

Domhoff notes that, except for Pittsburgh, there is at least one newspaper owned by a Social Register listee in every city which has such a publication which tabulates their upper class members. Outside of the Social Register cities there are papers owned by such blue blooded families as the Chandlers of Los Angeles, the Hobbys of Houston and the Binghams of Louisville. The most influential upper class newspaper is the New York Times, which, along with the equally aristocratically owned Washington Post, is frequently referred to as the Eastern Liberal Establishment press. Their influence is considerably greater than their circulation numbers alone would indicate, because they are habitually read by governmental and corporate officials. Additionally, they are closely scanned by the news personnel at the TV networks to see what was covered and how it was treated in order to keep the networks' stories within the

bounds enunciated by these two newspapers, particularly the Times (Halberstam 1976; Epstein 1973).

Domhoff also notes that the Knight-Ridder and Scripps-Howard newspaper chains are owned by people who are in the Social Register. Although most newspapers are not owned by members of the upper class, the two major news magazines are—Time and Newsweek. The Time, Inc., and Cowles empires of mixed mass media are owned by members of the upper class through birth, financial interests or marriage. Other magazines with significant upper class ownership or heavy financial support range from the conservative National Review of William Buckley, to the liberal New Republic and the New York Review of Books.

Another way of ascertaining the degree of Ruling Cartel control and influence on the major newspapers is to look at the backgrounds and affiliations of the poeple on the boards of directors of these companies. By combining the material compiled by Dreier and Weinberg with the information previously presented, we can make some clear conclusions. The 24 largest newspaper companies, whose daily newspapers account for more than half of the circulation of all U.S. papers and which are found in the largest American cities, have a composite total of 300 directors on their boards. The interlocks of these directors tie these newspapers in

^*Total number of papers considered is 24

^**If the count is based on corporations which have been represented at a Bilderberg meeting or the Trilateral Commission instead of just an individual who was an attendee, the number is 13 instead of 6.

Table 2 Media Participants in Bilderbergers, 1950s and 1960s

Note: Foreign Affairs is official journal of CFR.

• b: Editor, managing editor
• c: Reporter, writer, columnist (mainly syndicated columnists)
• *: The person is not primarily occupied in the mass media

Table 3

Media Participants in Bilderbergers in 1970s,

and Participant Totals. 1954-1978

Note: All but eight are also members of Council on Foreign Relations. Five of the eight belong to Rockefeller organizations.

Note: Foreign Affairs is official journal of CFR.

• a: Executive, publisher, director
• b: Editor, managing editor
• c: Reporter, writer, columnist (mainly syndicated columnists)
• *: The person is not primarily occupied in the mass media

• a Also a Bilderberg member
• b Mass Media are not primary pursuit
• c Not in CFR. but is member of Rockefeller organization

corporations, but also with the most important political, cultural and educational institutions, including the CFR, CED and Bilderbergers. (See table 1.) These 24 news companies have over 200 direct interlocks with the Fortune 1,300—the 1,000 largest industrials and 50 each of the largest banks, insurers, financial companies, utilities, retailers and transportation companies. There are 38 direct interlocks with the 50 largest banks as well as 45 additional ones with other banking institutions. All but four of the companies are strongly connected with these financial institutions, and these four have one interlocks each with a bank

A closer look at the director relationships shows that some of these newspaper companies are more intimately tied in with the U.S. power structure than some of the others. Field, Minneapolis Star, Washington Post, Dow Jones (publisher of the Wall Street Journal), and New York Times companies are in this category. They have a greater percentage of outside directors than the others (except for the Post whose outside directors compose only one fourth of the board); they have more people with memberships in the

However, the Cartel people are found in most of the companies. Some of the interlocks might be of greater significance than others. For instance, on the board of Ford Motor Company sit representatives of the Washington Post, New York Times and the Los Angeles Times. Chemical Bank of New York (a core Rockefeller institution) has two interlocks with Dow Jones and one each with the New YorkTimes and Thomson (one of the largest chains.) The bank previously had directors from the Affiliated and Scripps chains. There are six other compabnies which have interlocks with two of these 24 newspaper firms.

There are 21 interlocks with the core Cartel financial institutions and several with elite law firms. The interlocking with universities, foundations and think tanks is very extensive, but mostly with the local and state institutions. The elite organizations of this nature are represented in the people who are also intimately interlocked with the other prime Cartel organizations.

and three with United Press International (UPI). One of the companies, Scripps, owned UPI until recently. This, along with the information which shows that the elite newspapers and the TV networks are represented on the board of directors of the AP, indicate that the two wire services also are part of the power system (Dreier and Weinberg 1979; Armstrong 1979; Broadcasting 1976a).

The participation of mass media members in the three key elite political organizations have been mentioned briefly. The fact that the media have ignored reporting on the TLC, CFR and Bilderbergers indicates either that they have not participated in these groups or that they have participated in them and have not reported and commented on them. But we previously mentioned that people from both the print and electronic media are, in fact, members of these organizations. Therefore, we must look at this more closely (Liberty Lobby [1975]; Spotlight 1979b; Dunsmore 1980; Eringer 1980; Foner 1979; Nicholas 1978a, 1978b; Potts

First, the Bilderbergers. Tables 1, 2 and 3 show the participation in the organization. Incomplete information

is a problem because twelve years of guest lists—about one—half—have not been revealed or uncovered. No working member of the press is at the highest levels, i.e., the advisory or steering committees, although two such committees members—Gardner Cowles and C.D. Jackson—have been prime officials in Cowles Publications and Time, Inc., respectively. The top officials from the prime Establishment newspapers—New York Times and Washington Post—do attend with regularity, but only on a composite basis. Individuals do not reappear each year as do the most influential men. An average of almost four representatives from the press have attended these meetings, with a minimum of one (once) and a maximum of ten. There has been a press representative at each gathering, with a working member being at nine of the twelve meetings about which information is available.

What has been the participation of the mass media in the Trilateral Commission? (Sklar 1980; Wemple 1977; Skousen [1972]; Sutton and Wood 1978, 1981) As Table 4 shows, we see the same institutions represented and the same power relationships as noted in the Bilderbergers. Almost half of the media TLC participants up to 1979 were also Bilderbergers. Only four of the 21 were working members of the press and only one executive had a primary role in news

Except for ABC the TV networks also are represented in the CFR, and for the first time we see working members of TV network news, such as Daniel Schorr, Marvin Kalb and John Chancellor, as participants in an elite Cartel organization. The legendary Ed Murrow of CBS also was a member. A fascinating insight into media participation in the CFR was made by Murrow when he observed that "they probably want me to do some dirty work for them!" (Kendrick 1969, 135). At the network executive level there were four CFR members in 1972.

The pervasive nature of the CFR in the media can be seen by observing how many of the organization's media participants interlock with the Bilderbergers and the TLC. Of the 44 Bilderberg media participants, all are CFR members but eight, of whom five have other elite connections such as the CED or Brookings Institution. It is unknown if the remaining three are Council members, although they come from institutions or corporations which do have strong CFR connections. Of the 21 Trilateral Commissioners from the media, all are from the CFR except for four, who have other elite connections. The one without such credientials is the Black syndicated columnist Carl Rowan.

top levels of power. Second, there is a glaring absence of representatives from the electronic media, the only ones being directors from NBC and CBS who (with the exception of Sarnoff) have no prime management interest or working function in the networks. Third, the reporters who are invited are nationally syndicated columnists—none known for their critical views of the Establishment—and these are mainly from the Times, with lesser participation from the Post and the Christian Science Monitor.

The preceding analysis shows the position of the leading mass media companies' personnel in the national power structure. Some of the outside directors are at or near the lighest levels in the Cartel, but the inside directors are at much lower levels. Although the latter are not prime decision makers, they can be considered very important functionaries. The publisher of the New York Times is well aware of the position of his newspaper in U.S. society (Silk and Silk 1980, 92-103). "We are the Establishment. That's why (my friends and business associates) are so surprised when we write against them." Concerning the reporting of business issues, Sulzberger said that "they want to have only the good news reported, and our job is to report also some (emphasis mine) of the bad news as well as the good." David Rockefeller observed. "It has

What is the function of the core Ruling Cartel organizations in relation to the media, and vice versa? It is the organizations' job to see that the media corporations and key personnel participate in the Cartel's consensus formation. For the media's part, they must censor what is neccessary, distort and obfuscate where required and attempt to ensure that the proper responses are made or at least are kept within acceptable limits.

This has been extremely successful so far. A minuscule amount has been printed and next to nothing has been broadcast by the networks—only one brief mention about the TLC by ABC and CBS (Vanderbilt University Library 1981). The key Cartel groups still toil in anonymity as far as the mass of Americans are concerned. It is vitally necessary to our rulers to hide from the American people the reality of the way the country and its international relationships are controlled by a few people in the ruling class and their trusted elite collaborators.

2.7.4 THE MEDIA AND THE CIA

2.8 CONCLUSION

How can we assess the composite phenomenon of the Trilateral Commission, Bilderbergers, Council on Foreign Relations and all the other institutions and people comprising the Ruling Cartel? Does it represent a secret conspiracy? The labelling of power structure studies as merely conspiracy theories is used both in a positive and negative way. A conspiracy theory accusation can be beneficial when critiquing wild claims which are made without adequate empirical evidence and with oversimplification of issues and social phenomena. Such is the case during times of Red-baiting hysteria and witchhunts; when much of the world's ills are attributed to an international Jewish conspiracy; or when the Rockefellers are seen as agents of the Kremlin.

However, the most prevalent use of the term "conspiracy theory" seems to be made by many people in academia and the press to disparage and discourage power structure studies, particularly when these studies fly into the face of cherished myths of pluralism or reveal the true nature of power relationships. Consequently, the efforts of power

"no amount of educational excursion [of the Populist individuals] would have rid them [of the point of view] that [the capitalists] were united in a way of life, [and had] a common economic viewpoint which left farmers and laborers out of account except as factors of production and, very often, subjects for exploitation."

Nugent then calls Populists' ideas "naive and shot through with simplification." In light of the material presented in this dissertation, and the realities of the monopoly capitalist, corporate world in their time, the Populists seem to have had a clearer, more sophisticated analysis of society than Nugent, although Nugent does acknowledge that the Populists had their views rooted in a "realistic conflict of economic interest."

In addition to disparaging the very real empirical basis of the arguments of groups like the Populists, the pluralist "anti-conspiracy" writers either ignore or place no crucial significance in the great volume of empirical evidence since the turn of the Twentieth Century (particularly from government investigations) which provides bases for power structure studies. Furthermore, the writings of C. Wright Mills, Domhoff and Marx are ignored by

Domhoff (1972, 75) does not seem to share the hesitancies regarding the conspiracy epithet that Soref and Mills displayed. Domhoff merely states that the word "conspiracy" should be replaced with "consensus" when it comes to analyzing the governing function of the American Ruling Class.

Another reason for the quick application of the epithet "conspiracy theory" may be that much of the writing in the field (particularly since World War II) has been done by right wing authors who lack the proper academic credentials and who do not write in acceptable prose or from an "objective" viewpoint (Von Hoffman 1975). Although some of these right wing authors occasionally make extravagant or seemingly absurd claims or come to conclusions with which other researchers might disagree, the empirical evidence provided by the writers can be valuable and should not be dismissed out of hand.

It is of interest to see what some of the right wing writers have said about the nature of the conspiracy. Sutton and Wood (1978a, 40) state that the fact that the Rockefellers and the Trilateralists exercise immense power does not mean that they are the only powerful people and that they control a conspiracy. That "is really irrelevant. If it is a conspiracy, it is the most open conspiracy in world history. What is important is intention."

Another conspiracy writer, Skousen (1971, 3) presents the oft-quoted statement of England's Benjamin Disraeli, "The world is governed by very different personages from what is imagined by those who are NOT behind the scenes." Further to the right of Allen, Skousen provides a lengthy review and commentary on Quigley (1966). Although Quigley reveals the secret history and existing nature of the covert power group (basically the internationally powerful bankers), he approves of it, much as Moody did in his The Truth about the Trusts. But Skousen sees the activities of the Rockefellers, et al., as a super-conspiracy which is using the Communists and Socialists as fronts to enslave the world in a totalitarian, socialist dictatorship under their control.

This brings us to the question of the evidence provided in this dissertation. What is the degree of conspiracy in relation to the control by the Ruling Cartel? It depends on your definition of conspiracy and on how you view the activity of the Cartel. In Webster's Third Collegiate

Dictionary (1926) the definition of conspiracy has several facets: "a combination, usually secret, of persons for evil or unlawful ends;" another definition is merely "harmonious action;" and a third is "to concur or to work to an end; to agree."

The activities of the Cartel fall into all three categories. The first definition is the one to which perple generally refer when the term "conspiracy" is used. Certainly there is plotting of illegal activity which is carried out in the boardrooms, at elite social clubs and in government, particularly in organizations such as the CIA. Examples of activity which can fall into the more sinister definition of the word conspiracy can be found in the meetings of the Bilderbergers, the Council on Foreign Relations and other Cartel-controlled organizations (including government agencies such as the National Security Council and the CIA), where illegal activity is planned, such as the 1954 overthrow of the Arbenz government in Guatemala, the destruction of the Allende government in Chile, the U.S. invasion of Grenada and the American actions against Nicaragua.

So the basic question is not a matter of conspiracy.

Conspiring goes on continuously. Some is covert, some is semi-covert and some is overt.

The basic questions in studying the American power structure are not a matter of conspiracy, but the following:

• 4. What are the nature and impact of struggles of non-Establishment, special interest groups and individuals?

Inis Chapter has provided a description of the institutions and some of the people constituting the American Ruling Cartel. In spite of the many problems which prevent the prime decision makers from running the country and its international relationships as smoothly as they would like, the fact remains that they are still firmly in control, the institutional framework and operation remain intact, and they derive most of the benefits in the form of income and wealth. Struggle as the masses of the people may, they can only use whatever means they may have to influence the controllers. Our rulers do respond eventually, even when they do not like to do so, if sufficient pressure is placed on them.

There are many significant problems which the American ruling class has handled but which still loom large in their memories: the violent labor movement in the nineteenth and twentieth centuries; the Great Depression, which brought near-revolutionary conditions; the civil rights movement with its large number of mass mobilizations, actions and riots; and the Viet Nam War which was brought to an end by public struggle too large to ignore (as well as other factors such as the success of the enemy army, the U.S.

armed forces' increasing ineffectiveness and even resistance to fight further, the economic dislocations at home, and the alienation of U.S. allies.) Now it is the peace movement which is fighting to produce a more dovish response from the Cartel.

the presidency and vice-presidency. It has brought about a cooperative labor leadership by including selected men in the CFR, TLC and Bilderbergers and by controlling their pension funds. Through its control of the CIA, FBI and armed forces, it has a corner on the violence market. Meanwhile, it maintains an accommodation with the Crime Syndicate (The Mafia), and even uses it cooperatively when it desires (Hammer 1975; Rolling Stone 1976). Through its control of the elite, Establishment news media and a combination of repression by the FBI and the Internal Revenue Service and the economic difficulties of sustaining alternative media, it is able to contain the mass dissemination of information and opinions which could threaten its hegemony.

Is there a prime center of power within the ruling class? This is difficult to answer with great clarity. The fact of ruling class centers of power cooperating rather than competing was noted in the early 1900s. Moody, Brandeis and the Pujo Committee observed that the Rockefellers and Morgans should be considered as one group despite occasional financial competitiveness because they were so intertwined and cooperative in basic interests. Later, in the late 1930s and early 1940s one of the TNEC studies used the term "the Rockefeller-Morgan Group."

No one can predict what the outcome will be of the situation of the Rockefellers, whose family dominance may come to an end with the passing of David and his family peer group. There seems to be no one in the family who is actively working on the economic side of the structure. Only John D. "Jay" Rockefeller IV (a TLC member and Bilderberger) has assumed a public role, but that is on the political side as governor of West Virginia. No significant power is presented there so far.

But, whatever the future of the Rockefeller family as individuals, their institutions will remain and will continue to be controlled by members of the ruling class. If, following the Morgan to "Morgan" metamorphosis, the Rockefeller group becomes the "Rockefeller" group, the consequences will be much the same so far as the rest of us are concerned. The powerful John J. McCloy was the top man and performing well while David Rockefeller was serving his apprenticeship at Chase-Manhattan.

Regardless of who the top decision makers are, regardless of the range of points of view and approaches within the Cartel, the bases of the capitalist system and the people who benefit the most from it remain intact. At the macro level the intra-ruling class disputes are mostly disagreements as to which group of powerful capitalists will run things. At the micro level it can make a difference of the degree of the economic benefits which will go to the middle class, the extent of the social and economic floor or safety net for the poorer masses and the difference in the degree of direct repression and deprivation of civil liberties and for which groups.

Chapter 3

THE U.S. MASS MEDIA: CONCENTRATION AND LEGAL CONTROL

Now that we have seen the place and role of the mass media in the American power structure, we need to look with much greater detail at other aspects of the news industry. Of particular importance is the concentration of ownership of the print and electronic media and the effects of this concentration. We also will evaluate the role of the government in relationship to the ownership and operation of these companies.

3.1 OWNERSHIP CONCENTRATION OF MASS MEDIA

It is obvious that the mass media in the U.S. are profit making businesses which are owned by capitalists for the private enrichment of themselves and their shareholders, if any. But more analysis needs to be made in order to

3.1.1 NEWSPAPERS

Concentration of newspaper ownership and control can be considered from different aspects: the number of competing newspapers in a city; the number of newspapers which control the greatest amount of circulation; metropolitan, regional and national concentration; cross-ownership with other media; chain ownership; and sociology of owners.

First, a look at the whole industry. There are slightly less than 10,000 newspapers in the country, of which 1745 are dailies (Compaine 1982, 30). The dailies receive more than 90% of all revenues and employ the same percentage of manpower (Bagdikian 1971, 116, 117). It is the third largest U.S. manufacturing industry by employment (Washington Post 1977b) and the tenth largest in value of shipments (Bagdikian 1971, 116,117). According to the

Washington Post (1977b) it is a "big and healthy business," receiving a return on sales twice the median for the Fortune

In the daily newspaper business the ownership pattern is similar to that of major U.S. industry: a few large firms control a disproportionate share of the total market. In 1969, 8% of the largest papers had over half the circulation and the top two percent of the dailies had 30% (Leroy and Sterling 1973, 21,22). In 1978 the top 10% had 61.3% and the largest 1% had 19% (Compaine 1979, 21). (This represents a very slight downward trend since 1923.) That was for individual papers. More significantly, the four largest chains had 23.2% of the circulation in 1977 (Compaine 1979, 22). This concentration was taking place in a shrinking pie: circulation decreased 2.1 million from 1973 through 1976 (Washington Post 1977b), although there was an upward trend which by 1980 had lessened the shrinkage to about 950,000 (Compaine 1982, 30).

Another aspect of concentration has been steadily increasing. Since 1910 the percentage of U.S. cities with competing dailies has diminished as follows (Lyle, 1967, 19; Cirino 1974, 6; Mintz and Cohen 1971, 131; Grotta 1974, 500; Krieghbaum 1972, 158):

Concentration has been made more severe, not just from the increase in monopoly newspapers and the death of other papers, but also from the growth in the number and size of chains. In 1971 more than half of the dailies were owned by chains, with 63% of weekday and 65% of Sunday circulation being under chain control (Kriegbaum 1972, 164). Seven years later, chains published 62% of dailies, a percentage which rose to 72.9% in 1980 (Compaine 1982, 39). Groups owned 19 of the 25 largest newspapers in 1971 (Mintz and Cohen 1976, 132)). In 1978 the ten largest chains received 38.6% of total revenue for all daily newspapers (Compaine 1979, 26), up from 25% in 1971 (Cirino 1974, 6). The four largest chains had 22% of the daily circulation (Compaine 1979, 26).

The 1970s and 1980s have seen acquisitions in the newspaper business which parallel those of large conglomerates in other sectors of the economy: chains have been bought out by even larger chains. (Thus, the above statistics show a drop of thirteen chains from 1978 to 1980, even though the number of chain-owned newspapers increased.) A Gannett executive said that there is no limit to the number of papers his company would like to purchase, particularly in the monopoly cities (Washington Post 1977b). The specific reason for this is profits: a monopoly paper is three times more profitable than one in a competitive situation (Washington Post 1977b). As Otis Chandler of the Los Angeles Times and Times-Mirror media conglomerate said, "You can engineer your profits" (Business Week 1977b, 59). New York Times columnist James Reston agrees, remarking that owning a monopoly newspaper is

Newspapers are being bought up at the rate of fifty per year, and no end is in sight. The Washington Post predicted that by the 1990s fewer than twenty-four firms will own all daily papers, and market analyst John Morton said that there

is nothing to stop the acquisitions of independent dailies "until they're all gone" (Washington Post 1977b).

3.1.2 TELEVISION AND RADIO

At first glance it would seem that there could be not concentration of ownership in broadcasting because of Federal Communications Commission (FCC) regulations. No on may own more than seven television stations (no more than five of which may be VHF), seven AM radio stations and seven FM stations. The duopoly rule prevents ownership of more than one station of the same type in the same area of reception (except for public stations, which are exempt). There also are rules against cross-media ownership. (These will be discussed in greater detail later.)

There is a great difference in the profits received by the companies which dominate the largest, richest broadcasting markets compared with those of owners in the smaller markets. Additionally, more than 90% of the most

3.1.3 CROSS-MEDIA OWNERSHIP

Information as of July 1974 indicated that 79 owners of daily newspapers also owned TV stations in their own market. Twenty-seven of these also controlled both a TV station and a daily paper in other markets (Leuchter 1976, 340). (However, cross-ownership in the same market has been decreasing as a percentage of total cross-ownership—from 72% in 1960 to 46% in 1974 (Compaine 1979, 94)). In 1967 newspaper-owned stations dominated the NBC and CBS affiliations, holding 47 of the 103 total (Rucker 1968, 197)

Cable television (CTV) has the promise of providing true diversity of ownership and content, but like the other mass media it has become concentrated in its ownership and program distribution. In 1981 broadcasters owned 38% of the

systems and newspapers and other publishers had 21%, although this cross-ownership is generally not in the same market (Compaine 1982, 386).

Ownership concentration has been increasing each year as the leading multiple system operators (MSO) buy out more franchises. The concentration of subscribers shows that the top four companies have 27% and the largest eight have 40.9% (Compaine 1982, 395). Although these percentages have not increased greatly the past six years, the major MSOs have increased their share of the major markets 75% from 1969 through 1981 as the big money has driven out the smaller investors (Compaine 1982, 394).

The most significant factor of CTV concentration is its vertical nature, with the major MSOs also generally being the prime premium program providers. With no effective governmental limits on ownership of systems or program services (except for the telephone companies), concentration is accelerating (Compaine 1979, 312-315; Compaine 1982). Time, Inc., the largest MSO, also provides 80% of pay cable program distribution, with over three million subscribers on 731 systems in 1981 carrying Home Box Office (HBO) and Cinemax. Time, Inc., also has purchased half interest in the USA Network and has recently announced a joint venture with CBS and Columbia pictures to form a movie studio (Pollack

Viacom (a CBS spinoff, but still within the CBS orbit (Network Project 1973, 7)) and Teleprompter (purchased by Westinghouse—known as Group W), which are the sixth and largest vMSOs respectively, own Showtime, which has 600,000 subscribers on 240 systems in forty three states. Other large media conglomerates have heavy investments in CTV systems (Compaine 1982, 312).

Until 1980 the FCC prohibited the TV networks from entering the field, although the Commission allowed CBS to start a program service, which since has folded. Now ABC has purchased the controlling interest in Entertainment and Sports Network (ESPN), is partners with Hearst in the ARTS and Entertainment Channel, and is reported to be joining Viacom in its ownership of Showtime (Boyle 1984; Pollack 1982), and ABC, Hearst and Viacom present the "Lifetime" program channel. NBC has been involved in bringing Bluebird program service to the U.S. from England. As mentioned above, CBS is getting into the business in a big way in its film studio joint venture.

by the nature of these new conglomerate combinations. When the top movie companies teamed up with Getty Oil in 1980 to start a movie distribution channel, they were prohibited by an antitrust injunction (Compaine 1982, 273). However, the more recent announcement that Universal, Paramount and Warner are joining with American Express in Warner's Movie Channel has gone unchallenged, as has the CBS venture with Columbia Pictures and Time, Inc.

It is ironic that the type of dominant structure which has emerged in CTV program distribution—the vertical integration of program distribution, of franchise ownership and now of program production—is similar to that which existed in the film industry which the Supreme Court and Justice Department broke up in the 1930s and 1940s (Compaine 1982, 395, 435, 442). But as Congressman Henry Gonzalez of the House Banking and Currency Committee said on an Austin, Texas, public access TV program (Alternative Views), the Antitrust laws are dead. They are not being enforced, leaving an almost carte blanche situation for almost any kind of merger and joint venture.

significantly, it has brought together two of the mass media which in the past were operatedly separately, although there was a relationship in the showing of movies on TV. Now, however, the two media are joining to cartelize the cable program business. And so another new mass medium which held promise for diversity of ownership and program content is rapidly going the way of the other media and the rest of the economy: concentrated control.

The phenomenon of media conglomerates is one which must be considered in order to develop a clearer picture of the nature of media concentration in the U.S.. These corporations are of three basic types. One is the true media conglomerate which has its main focus in the media business. This would include companies such as Hearst and Newhouse which have holdings in newspapers, cable, and publishing of books and magazines. The other extreme is found in corporations such as Gulf+Western which is a huge conglomerate with many different types of unrelated corporations performing a variety of functions and with the media operations not providing a large percentage of revenues to the parent company. The third type is composed

of conglomerates which fall in the middle of these two extremes, companies such as RCA which has significant interests other than the media, although its overall emphasis is in electronics and communications.

Monaco (1978, 24) concludes that "in any given year six of these twelve companies—ABC, CBS, NBC, Warner Communications and any two other film companies—account for more than half of the total non-print media market in the U.S." It is of considerable significance to remember that these media giants are multinational in nature, spreading their goods and services—hence, ideology and influence—in other parts of the world.

• the most successful TV broadcasting network (270 stations).

• five VHF stations in the largest markets

• sixteen radio stations

• 6. consumer and farm publications: is the leader in mass market paperbacks: third in sales in 1977
• 8. joint venture with Time, Inc., (HBO) and Columbia pictures for film making

• joint venture with Knight-Ridder to produce women'sCTV programming on Daytime

• 11. CBS' spinoff, Viacom, is ninth in cable franchise
• 12. Viacom is joining ABC and 20th Century Fox in operation of Showtime premium CTV channel.
• 13. In 1972 Viacom was distributing programs from sixteen locations to more than one hundred countries.
• 14. joint venture with ATT to make viewdata system
• 15. largest producer, manufacturer and marketer of records
      in the world
• 17. toys and children's products

• record and tape clubs

• 19. handicraft institute and tool making
• 20. stereo stores

• music publishing and related companies

• 22. communications technology labs
• 23. business machines
• 24. film production
• 26. video cassette and disc manufacturing, with joint venture with MGM for distribution
• 27. started, then folded, culture network on CTV (Levine, C., 1982)

Just as CBS' main interest is broadcasting, other conglomerates seem to have a primary focus (Compaine 1982). Time, Inc., is the giant of the publishing business, yet has huge interests in CTV franchises and program distribution. Hearst is primarily a newspaper empire, but has large publishing operations and has sizable investments in TV programming and franchises. Warner-Amex is primarily invilved with making films, but also is the fifth largest CTV operator, has a premium CTV programming channel and is now the tenth largest publisher of mass market books.

ABC has become one of the world's largest multinational media conglomerates (Network Project 1973; Compaine 1982; Monaco 1978). It is moving aggressively into CTV programming and into publishing. It has purchased a controlling interest in ESPN, it runs the ARTS and Entertainment channel with Hearst, is joining with Fox and Viacom in the Showtime premium CTV channel, and has joint ventures with Warner in the video cassette and disc field and with Fox for film

If the media giants have been moving into the publishing business to become conglomerates, the largest independent publishers have become conglomerates themselves, acquiring companies in unrelated industries as well as in the communications media. Sometimes these moves were attempts to fight off takeovers by the giants who were stalking cash-rich corporations. The acquisition fever was burning in the five years previous to 1982. Three hundred publishing mergers took place during this time, the same amount which occurred during the previous twenty years (West 1982, 298).

The merger movement has brought the control of the mass media into fewer and fewer hands. Not only have the giants become larger and have diversified into related fields, they have clasped hands in joint ventures. Thus, the mass media are becoming more and more cartelized.

Earlier we assessed the ownership in the TV networks by the Cartel institutional investors. Now we will look at Cartel ownership positions and interlocks of other media corporations, particularly the large conglomerates. There is significant ownership of broadcasting by financial institutions, the extent of which is not completely known. It is difficult, sometimes impossible, to obtain sufficient information because much basic data regarding ownership is protected by law. Additionally, many of these institutions simply either refuse to cooperate with congressional investigations or they only provide incomplete information (US Congress 1968; US Congress 1973; US Congress 1978a; US Congress 1978c).

There never has been a comprehensive investigation of total media ownership by these financial giants, although the Network Project made a detailed study of institutional ownership of the three networks in 1973. Congressman Patman (US Congress 1968, 503) stated in 1968 that banks often have significant holdings in the media. His study indicated that there were large blocks of stock held by banks in 18 leading newspaper and magazine publishing companies which owned 31 newspapers, 17 magazines and 17 radio and TV stations. The

investigation revealed director interlocks and stock ownership of the large institutionals in many media companies.

The information produced by the Corporate Data Exchange (CDE) for the Metcalf Committee hearings showed that several institutionals had stock, not only in the networks, but in other multimedia corporations such as Times-Mirror, Cox, Gannett, Taft, Time, Inc., Metromedia, Capital Cities, Storer and Teleprompter (US Congress 1978a). The latest CDE (1980a) information reveals Cartel institution holdings in selected media corporations:

Gannett
Knight-Ridder
Knight-Ridder

*Macmillan

*Times-Mirror

*McGraw-Hill

*Time, Inc.
Harcourt, Brace, Jovanovich
has an additional 8.68%. In 1968 Patman (US Congress 1968) reported stock positions plus interlocks by J.P. Morgan and Citicorp.)

Warner Communications

*Washington Post

Rockefellers control it via stock ownership.)

##Columbia Pictures

+#*Fox

"Cede & Co." See below for explanation.)

+*Cox

*Fuqua

American Express

parent. Rawleigh Warner, Jr., is on the boards, not only of AMEX, but also of Chemical Bank and Mobil Oil—core Rockefeller companies.)

+#Warner Communications

7.5%

Coca-Cola (parent of Columbia Pictures): four interlocks with Cartel financial institutions

Holdings in broadcasting, also

CTV holdings, also

One of the reasons that the extent of investments in the media (or any company) is not completely known is the widespread use by bank trust departments of nominees or street names as fictitious companies as a devices to hide the true investor or investors (Network Project; Spotlight 1979a; US Congress 1978a). For instance, in the Network Project study the top two investors were Kane & Co. and Cudd & Co. These are two nominees used by Chase-Manhattan Bank. Various nominees were used by other institutionals.

It was not until Congressman Wright Patman purloined a copy of the hitherto secret industry book which equated the nominees to banks that it was possible to determine more precisely the degree of institutional stock ownership in a company. But because new nominees can be started at any time, and since more than one institutional use a nominee occasionally, there is a continuous problem of identification. However, the underlying basic problem still exists. That is, who are the real investors? Individuals? Foreign governments? The Mafia? The bank itself (even though this is illegal)? Corporations? How much is illegal investment? Although the hidden investor behind the nominee perhaps may have the right to exercise voting power over his or her stock, usually the bank votes the stock, or it automatically is voted for the management.

There is another: device set up by the Securities and Exchange Act of 1934 and governed by the Federal Reserve which is used to completely hide stock ownership, ever eliminating the middleman banker (Spotlight 1979a). The Depository Trust Corporation (DTC) is a limited trust company into which any investor may deposit stocks under the nominee Cede & Co. If the investor wishes to have complete secrecy, he may bypass the broker on the floor of the stock exchange by establishing a brokerage of his own. He then can utilize the entire nominee system of Cede & Co. in complete anonymity.

The extent of the use of the DTC is indicated by its 1977 annual report in which it was stated that the annual value of securities delivered through the DTC increased by almost \$50 billion for a total of \$357 billion. Fourteen banks in ten states started using the system that year, raising the number of participating banks to fifty-three, headquartered in twenty-three states. Many other banks also use the system indirectly through the accounts of correspondent banks which also use the DTC system. Broker-dealers particularly have increased their use of the system.

by the institutionals (US Congress 1978a, 6). For broadcast stations the FCC Ownership Form 323 does not require a listing of owners of one percent or less, or in the case of institutionals, less than five percent. This means that an institutional can hold stock in the name of several nominees which all totaled comes to a percentage greater than the legally allowable. Also, no provision is made for consideration of such investors which are themselves intimately connected, such as those of the Rockefeller Interest Group or the Ruling Cartel as a whole.

The FCC handling of the subject of the institutional investor is very revealing (US Congress 1978a; Access 1976b). A 1953 order allowed one percent; in 1968 it was raised to three percent when it was found that there were widespread violations of the one percent rule. Later, after it was ascertained that the three percent rule was being ignored, the allowable was raised to five percent. In the Metcalf hearings (US Congress 1978a, 17) in 1974 FCC Chairman Wiley had to admit that the Commission in reality did not know the extent of institutional investment in broadcasting. In observing that the stockholding limit was being raised, Senator Metcalf remarked that, in regard to ownership of the networks, the banks "violated with such impunity" the ownership laws that "you changed the rules for

It was noted in Chapter Two regarding the the U.S. power structure that the control of debt is very significant in the control of a corporation. Yet the FCC does not have information as to the identification of debt holders on a

regular basis. It also does not have direct reporting from financial institutions of their holdings in broadcast corporations. The Commission does, however, require that it be sent copies of mortgage or loan agreements which a group filing for a license has with a financial institution, if the debt agreement might restrict the licensee's freedom of operation. The Commission requires a copy of the loan agreement of a licensee only if it results in a change either in stock ownership or of representation on the board of directors. But there is little indication that the FCC closely scrutinizes or takes aggressive action on licensee loan agreements, although Commissioner Wiley said that the FCC "generally closely" looks at "those which new applicants have with lending institutions" (US Congress 1978c, 5).

There is a great deal we do not know about the extent of institutional investment in mass media corporations and the degree of control over those corporations which is exercised by the financial giants. This much we do know: the collective accumulation of stockholdings, interlocking directorates, debt holdings and financing of individual projects (such as films) indicates that the financial powers are in a position to exercise significant influence and control over the American—indeed, the capitalist world's—communications media. Considering that our

information is limited, the institutional control is probably much more vast than we realize at this time.

3.1.7 STATE, REGIONAL AND LOCAL CONCENTRATION

The significance of cross-media, chain and conglomerate ownership is very evident when studying the concentration of ownership at the state, local and regional levels. It often results in monopoly, oligopoly, or at least market dominance.

A case study of concentration in a state was made in Oklahoma in 1966 by FCC Commissioners Cox and Johnson (Mintz and Cohen 1976, 136; Johnson 1970, 53). There were 73 separate owners of 93 commercial broadcasting stations, 83 of which were radio and 10 were TV. But four of the owners had 56% of the total revenue and 88% of the media income of the state. Oklahoma had fifty daily newspapers, but the Oklahoma City papers had 35% of the daily cirlulation in the state. Three other firms accounted for another 34% of the paper circulation. The owner of the two Oklahoma City

papers also owned the large TV-AM broadcasting complex in the state capital. Of the other 49 towns with broadcasting stations there were 12 with media monopolies, and all the stations and daily papers, where there were any, were jointly owned. In seven Oklahoma cities the newspapers were owned by the Donrey Media Group, which also possessed the papers and single TV station in the border city of Ft. Smith, Arkansas, and the AM station in nearby Springdale (TV Factbook 1976). The FCC Commissioners mentioned other areas of regional concentration, but said that the one in Oklahoma was typical.

But the story does not stop there. The Kearns-Tribune Corporation, the partner of the Church in the newspaper business, also owned 35% of the NBC affiliate in Salt Lake City--KUTV-TV. This was in addition to other conglomerate ventures. The rest of the 65% of the stock in KUTV-TV was owned by Glassman-Hatch interests, owners of the only daily newspaper in Ogden--the second largest city in the state and located thirty-five miles from Salt Lake City. Other communications holdings of Glassman-Hatch were seven more TV and radio stations in Utah, Idaho, Montana and Hawaii as well as several cable TV systems.

It is in the cities where most concentration of ownership of the media is focused. Former FCC Commissioner

Nicholas Johnson is very concerned about this. An example of the absence of strong independent television voices in a major metropolitan area is in New York City (Sandman, Rubin and Sacheman 1972, 49). There are six commercial VHF stations. Each of the three networks owns one, two are possessed by chains (Metromedia and RKO General), and the remaining one belongs to the New York Daily News. There are several independent UHF stations, but their viewership is no challenge to the VHF giants (Sandman, Rubin and Sacheman 1972, 49).

In other cities the concentration is more marked. For example, in Atlanta the Cox media group has 80% of the advertising revenues in the print and electronic media (Howard 1976, 27). In Chicago two corporations have 70%; and in St. Louis two corporations have 80% of media advertising revenue (Niro 1974). The Justice Department has made unsuccessful attempts through the FCC to reduce media concentration in cities such as these (Bennett 1971; Broadcasting 1976b).

number had dropped to less than twenty (Leuchter 1976, 340)

Nicholas Johnson's (1970, 52-55) concern stems from the fact that we are an urban people. Because nearly half of the people live in six states, those people and their politics are heavily influenced, if not dominated, by the large urban centers in their states, thus giving these places significant potential national influence and power. This means that media ownership or domination in even one of these cities is very significant. When there are interests of certain companies in more than one of these cities, it is very significant. The potential influence "is startling," according to Johnson. He states that twelve companies own more than one-third of all the TV stations in the major

3.1.8 CONCENTRATION IN WIRE SERVICES

104. In the U.S., AP supplied services to 1750 publications and 3,100 broadcasting stations. Twenty-five percent of the U.S. dailies subscribed to both services; 45% received only AP; and 30% had only UPI (Cirino 1974, 173).

About 1,600 of all the daily newspapers and almost all broadcasting stations depend entirely on the wire services for foreign news. (But where do the wire services get their foreign news? Mostly from the government and press of each particular country (Cirino 1974, 173).) There are other news services such as those belonging to the New York Times and the Los Angeles Times-Washington Post, but they serve only scores or hundreds of outlets and cannot come close to matching the huge output of the two giants (Schramm and Alexander 1975, 535).

Who owns and controls the two major wire services? AP is a cooperative venture by owner-subscribers, but with their representation on the board of directors and their financial connection with stock and bond holdings, the representatives of the big, Establishment newspapers and the TV networks are in a position to dominate the company (Broadcasting 1976a; Armstrong 1979). (The participation at the director level by the networks is a comparatively recent phenomenon.)

UPI was the result of a merger between Hearst's

3.1.9 CONCENTRATION IN NEWS MAGAZINES

Although the main news magazines have increased their circulation over the years, their impact on the country and people is minimal when compared with that of the newspapers and the electronic media (Domhoff 1967, 82). The main significance so far as the mass news market and its economic structure are concerned is that the corporate owners of the two leading news magazines, Time and Newsweek, are conglomerates which also possess substantial broadcasting, newspaper, cable TV and publishing businesses (Rucker 1968, 209; Compaine 1982). Perhaps of greater significance is that

3.1.10 PUBLIC BROADCASTING

The subject of concentration of ownership and control of the public broadcasting media is rarely discussed. And yet, in many ways the concentration is much greater than it is for the commercial stations. For instance, in 1976 thirty-one state governments operated 135 of the 266 public TV stations. Because public licensees are exempt from duopoly and multiple ownership rules, each state except Hawaii and New Hampshire was reported to have networks of three or more outlets. In 1982 there were 159 licensees operating 300 public TV stations in the U.S.: 52 colleges, 23 state governments, 15 municipal boards of education and 69 non-profit and civic groups (Koughan 1983, 24).

The history of the development of the public TV system in the U.S. (Network Project 1971) is similar to that of higher education in the country, except that the former's development was faster and was more closely and directly controlled by ruling class organizations, particularly by the big foundations. The Ford Foundation started the system in 1951, explored the medium's potential, constructed stations, established the network and closely determined what the programming would be. It even funded groups to function as lobbies in Washington, D.C. and to initiate national publicity.

Meanwhile the Carnegie Commission on Educational Television issued a report in 1963 which became the basis for the Public Broadcasting Act of 1967, at which time the Ford Foundation turned its offspring over to the government. Even after the government's Corporation for Public Broadcasting (CPB) took over in that year, the Ford Foundation continued to provide funds to run the system. Congressional action to adquately fund PTV did not occur until 1970, but further contributions from CBS and the

But the Ford Foundation did not simply turn the new medium over to the control of faceless government bureaucrats. Cartel control remained, as is shown by the composition of the first board of directors of the Corporation for Public Broadcasting (Network Project 1971, 17, 18). By law, the board must be composed of U.S. citizens from fields such as education, cultural and civic affairs, the arts, and radio and television, and it must be representative of various regions of the country, professions, occupations, and kinds of experience and talent appropriate to the Corporation's functions and responsibilities.

Of the fifteen members of the board, seven were interlockers with major corporations; six had interlocks with major financial institutions; five were members of the Council on Foreign Relations (Network Project 1971; Shoup and Minter 1977); one belonged to the CFR's sister organization for domestic economic affairs, the Committee for Economic Development (CED); one had been with the Cartel think tank Brookings Institution; five had connections with

foundations; three had participated in special Rockefeller organizations and three had been in positions which had special relationships with the CIA; four persons could be identified as coming from the American upper class; and seven members were interlockers with Cartel corporations and financial institutions. Four members had held high federal government positions and there was one state legislator. Four (at least) were lawyers. Four people had backgrounds in broadcasting and journalism, with one of the four also being in education. There was one musician and one union president. Finally, there was John D. Rockefeller III.

The three top men in the hierarchy were intimately associated with Cartel institutions. Frank Pace, the Chairman of the Board, was a CFR member, had extensive governmental and corporate experience at the highest levels, including an advisory position at Bankers Trust, one of the core Morgan financial institutions. He had numerous other Cartel interlocks, including two with Rockefeller organizations as well as with the Brookings Institution.

Intelligence Control Board.

The man who was selected as the first president of the CPB, John Macy, Jr., had held many governmental posts in the executive branch and had a previous, close working relationship with Frank Pace (as had the first CPB Vice-President), and had served with one of the Ford Foundation's spinoffs which were involved in the development of educational television.

Finally, many of the people on the first CPB board belonged to organizations which were interlocked with the Ford Foundation. To complete the circle, James Killian, the CPB Vice-Chairman, had been Chairman of the Carnegie Commission on Educational Television—the organization whose report was used as the basis for the Public Broadcasting Act which set up the CPB. Thus, all the bases were covered by the Ruling Cartel. (Congressional hearings in 1975 showed that the situation had not changed, despite a few replacements of individuals on the board.)

When President Nixon tried to accomplish a combination of weakening and taking over public broadcasting in the U.S., the attitudes of the local stations and their controllers were mixed (Koughan 1983, 24, 26). They generally were more conservative than the national PBS program providers and did not want the centralized hand in Washington, D.C., sending them liberal programming with which they did not agree. They also wanted more money directly, free of PBS constraints. However, they did want to preserve public broadcasting.

stations. Although funds were reduced, the money which was left was sent to the stations, not to PBS. The program cooperative came into being in 1974, whereby, from a pool of two-hundred programs presented by producers, the stations would bid on them, depending on the content and the cost. The programs receiving the most bids would be the ones sent on the network (Koughan 1983, 24). This resulted in programs with the lowest common demoninator being shown. The shows selected were the cheapest and least controversial, with new programs or series rarely being purchased (Koughan 1983, 24, 26).

PBS no longer has a voice in what shows will be produced. It is only a provider of program scheduling and distribution. This is a 180 degree change from the framework established by the Ford Foundation with National Educational Television (NET)—PBS' precurser—in which programming decisions and distribution were centralized and the stations were mere passive affiliates. The ill will sometimes felt toward NET by its more conservative affiliates found triumph in the emasculation of PBS.

million. More than one-half of the \$130 million goes to the local stations for operating expenses and progam purchases. With a comparitively uncomplicated talk show like the MacNeil-Lehrer Report having an annual budget of approximately \$9 million (with AT&T providing a \$10 million grant), it is obvious that the money to provide more technically complex programming would have to be received from other sources (Austin Prime Time 1983; Albin 1984).

To place the funding in perspective, in 1983 all of public broadcasting received less money than did military bands, and the latter were given a nine percent increase for 1984. The CPB receives \$22 million per year to produce programs for national distribution, whereas the Pentagon public relations program receives \$30 million annually (Aufderheide 1983, 9).

For national programming the main sources of supplemental funds are from large corporations and foundations, most of which are Ruling Cartel organizations. For instance, of the 48 special programs or series financed by these institutions in 1976, at least 35 were underwritten by Cartel organizations, particularly by the oil companies (Broadcasting 1976c; Access 1976). By 1978 more than one-half of PBS' programming hours were underwritten by these sources (Koughan 1983; Weissman 1981).

But these sources are insufficient, particularly for local stations. Consequently, the public stations have been going to great and varied lengths to bring in more money. The following are some of the methods being used (Aufderheide 1983,8): leasing their facilities for production; selling liquor at public events; cooperative production deals with private companies; teletext services; pay TV joint ventures; and some are doing the previouysly forbidden—selling commercials. And, of course, the periods of seemingly interminable and embarrassing begging on camera. The dearth of funds has had its deleterious effect particularly on local programming, which one writer commented "has all but disappeared from public television" (Kouphan 1983, 26).

Ironically, these financial problems are occurring when public TV apparently is enjoying its greatest degree of public acceptance and its largest audiences (Aufderheide 1983, 8). The viewership has doubled the last three years. Not only is the audience estimated at 5% of the viewing public each month, but also cable is helping to spread the PTV audience. Polls indicate that CTV subscribers are more satisfied with public programs than those found on the three commercial networks (Koughan 1983, 27).

PBS and various local stations have had a long history

of program censorship, non-clearance of programs on the net by affiliates and of avoidance of programming which would be controversial or which would not be acceptable to the local power structure and financial backers or, at the national level, programs which would be upsetting to government officials and especially to corporate and foundation underwriters (Network Project 1971; Koughan 1983, 26; Aufderheide 1983, 9; Texas Journalism Review 1975a; Quaintance 1983; Time Out 1978).

This has been made worse by the necessity of the stations having to seek more corporate backing. Not only must the program-producing entities please their underwriters, they also become more obsessed with ratings: they seek a mass audience and the lowest common demoninator in programming just like the commercial networks do. The irony is that the programming decision makers are heading the opposite direction from what PTV's audience is attracted to. Even some of the origional corporate underwriters are restive, feeling that the high cultural image with which they want to be associated and the special audience which they want to reach will be diminished or diluted by the "massification program" by PTV executives (Aufderheide 1983, 8, 9). Furthermore, this also has caused a split between the stations which are more educational oriented and those which

are not (Koughan 1983, 28).

each radio affiliate to be assessed a certain amount to transfer #1.6 million back to NPR (Loomis 1983). With NPR being under attack by conservatives both in and outside of Congress, the future of NPR is in doubt without a financial bailout of some sort. The fact that the Corporation for Public Broadcasting finally provided funds to keep the network going might have been at some cost to the relative independence of NPR.

What will happen to the public broadcasting system and what it will develop into is not clear at this time—mid—1984. PTV seems to be drifting more and more into commercialization. But one thing is clear, considering the history of the initial development of the system by the Ford Foundation; the fact that the members of the controlling structure of CPB come from the Ruling Cartel, and that the governing boards of PBS and the local stations come from the local elites; and given the necessity to please corporate underwriters, public broadcasting in the U.S. will seldom stray from the narrow range of subjects which it has displayed in the past. Controversy, if not eschewed, will be controlled.

3.1.11 PUBLISHING CONCENTRATION

Publishing consists basically of two major categories—books and magazines, but there are sub-markets within these major classifications. Because relevant, accurate data on the industry has been available only comparatively recently, some of the information presented below is not so comprehensive and is in not so great a historical depth as is the material presented on the other mass media (Compaine 1979, 134, 251).

3.1.11.1 Books

1960s and the 1970s which have made great changes in the industry.

The three main results of these merger periods are, first, the entry of media giants into the publishing field via acquisitions and, second, the mergers of softcover and hardcover houses (Powell, W.W., 92, 93). The large firms such as ABC, CBS, Hearst, and the movie conglomerates such as MCA (Universal) and Gulf+Western (Paramount) set up the possibilities for synergistic publication of books based on film or TV (and vice versa) and even record releases related to the movie and TV scores. The third trend is the entry into the U.S. market by foreign publishing companies, also via the merger route (Compaine 199, 46).

Writers who do not view the concentration with alarm point to the fact that there is still ease of entry into the market and that the giants compete among themselves. They say that the mergers are a good thing because they provide financial backing and professional management which smaller firms lack, and that buying them out keeps the smaller companies alive within the same walls of the conglomerate. They also point out that there has been an increase of the number of publishers from 1958 through 1976 (Compaine 1979, 92; Robinson and Olszewski 1980, 82).

the growth in the total number of publishers has been accounted for by small firms and that the large firms have increased their market shares significantly but accounted for only four percent of the increase in the number of publishers. Additionally, these gross figures provided by the industry trade organizations in support of concentration ignore the submarkets, some of which are highly concentrated (Robinson and Olszewski 1980, 82, 83).

For instance, in the mass market paperback industry the top eight firms account for 81% of sales and the four largest have more than 50% (Robinson and Olszewski 1980, 82, 83). There is not the ease of entry here as in some of the other segments of the industry. In the significant elementary—high school category the giants dominate (Compaine 1979, 280). Similarly the college publishers are concentrated, with the top four having 40.4% and the leading eight having 63.9%. The main significance is that the markets for education in the U.S. are highly concentrated, with the same conglomerate names being at the tops of the lists of these submarkets as well as being among the overall leaders in publishing (Compaine 1979).

For smaller publishers the problem does not seem to be so much the costs of printing or the availability of material to publish as it is the lack of financial power to

compete in the areas' of sales, promotion and distribution, including obtaining retail shelf space (Compaine 1979, 276).

Critics of the existing industry structure say that the mergers have reduced the number of independent companies, have given too much influence to the few huge corporations, and that new authors have difficulty getting attention. They say that the linking of the hardcover and softcover publishers with newspaper chains, movie conglomerates and TV giants (including Cable TV) has created enormous vertical media monopolies. These critics point to various studies which show that concentration in other fields results in reduction of product diversity and innovation (Powell, W.W., 1980, 90, 91).

3.1.11.2 Magazines

change, with the focus now on specialized publications with small circulation rather than on the mass circulation, general interest magazines. Historically, the field has been considered easy to enter, making it a highly competitive field. However, concentration is somewhat more pronounced than it is for newspaper and book publishing (Compaine 1979, 141).

The group-owned companies predominate, with the chains having an average circulation 89% greater than magazines of independent publishers. Although the top three consumer magazines are single publications owned by different companies, most of the top twenty-nine are published by the same media conglomerates we see in the other fields: Time, Inc., Hearst, ABC, CBS, Washington Post, New York Times, and Times-Mirror. Furthermore, these giants are also the largest publishers by revenue. The same phenonmonon occurs when looking at the leading publishers of the subgroups such as business magazines or consumer and farm publications (Compaine 1979).

capitalist market place than is that of books. Most magazines are directly reliant on advertising for their financial existence. While advertisers will support conservative and mainstream publications, the progressive and left wing magazines constantly carry on a struggle to remain alive and frequently have fund raising drives to maintain publication. However, many do cease to exist because of lack of revenue, no matter how informative or well-written the publication might be. With the financial support for books being the purchase price, it allows for greater range of information and opinion in that medium than in the large circulation magazines.

Publishing—particularly of books—is an industry where it is possible to print a new publication without undue expense, unlike the major investments required and great risks incurred to start a daily newspaper or the liabilities of starting a broadcasting station, with all the attendant problems of being selected and licensed by the Federal Communications Commission. Although entry into publishing is comparatively easy, survivability in an independent status is difficult. Meanwhile, many of the same multimedia conglomerates which dominate the other mass communication fields also are at the top of publishing.

Of particular concern should be the dominance of the

school textbook market from elementary through college by many of the same top publishing companies. Of course, textbook selection is a complex process, particularly for the el-hi level, because selection can be affected by the political processes in the local school boards and the state legislatures. Nonetheless, this concentration of ownership could lead to the conclusion that most of the books Americans are using in all (or most) of their school years are being published by the same small group of companies, corporations which also are in control of much of the other mass media. Writers who are not alarmed at this concentration and that found in other sectors of publishing either are not looking at the cartelization of the industry or are in approval of it.

3.1.12 CONCLUSION

Reading a listing of broadcasting stations and cable offerings in a city and looking at the number of newspapers which abound, particularly in a large, metropolitan area, one would think that there is a great variety of many media voices competing furiously in the market place and which are providing the public with a plethora of diverse and antagonistic views and information. Some researchers

One such writer, Campaine (1979, 37, 38), further states that not only is the umbrella concept valid, but that we should look at each media industry competing against the other media industries, implying that determining ownership concentration is really an outmoded way of looking at the media. He claims that actually there is too much information which is swamping the American people with the greatest diversity in history. Furthermore, he says that there is no validity to the claim that increased diversity will provide better quality and greater quantity.

While it is true that people are bombarded every day with messages and information from their mnass media, when the situation is closely inspected, one can see that the information comes from concentrated sources within an overall framework which narrows the possibilities before they are presented in print or on the air. First of all, the mass media are overwhelmingly capitalist, profit—making enterprises which compete for advertising and which must

Within this total framework we find that the newspaper business is very concentrated, with few competing voices. In only a very few U.S. cities is there not a newspaper monopoly. At many state and regional levels we also find total media concentration of voices, readership and profits. With the great growth and dominance of chains and group ownership in all the media (including publishing), the number of independent voices is becomeing smaller and smaller. Not only have huge conglomerates become the major voices in the media, these corporate giants are now linking with each other in various joint ventures, narrowing even further the possible sources of information and opinions, and raising the entry barriers to an almost impossible height for all but the giants.

The umbrella concept could be viewed from another aspect. An umbrella is used to keep the rain off of us. In this case the rain could represent the total possible range of information and opinions to which the public could have access. The umbrella of the Establishment media is doing a good job of restricting what we shall read, see and hear, while the rain of alternatives is falling all around us but seldom penetrates the umbrella. After looking at the alternative press, listening to Pacifica Radio stations, and viewing the presentations on some public access channels of the cable, we can see what a narrow range of information is made available to the general public on the American mass

media.

The enormity of this interlocking relationship of concentrated media industries lies in the fact that it is the same few companies which to a significant extent select what is entered into our textbooks from elementary school through much of college, while they simultaneously greatly determine what we see on television, hear on records, listen to on radio, see in the cinema, read in the newspapers (particularly about national and international news), and read in our magazines.

And the concentration continues to increase. The control of information and the communicating of it is becoming more and more cartelized.

3.2 MEDIA OWNERS AND THE LOCAL POWER STRUCTURE

national centers of power. First, however, it would be revealing to look at who are the publishers and broadcasters and their number one men-the editors and general managers.

The publisher is a businessman primarily and a man of wealth (with the exception of most of the owners of small, struggling papers), and has similar attitudes as other publishers (Sandman, Ruben and Sacheman 1972, 38). A fascinating study was made by Donohew (1965, 172, 173) in which 1,150 publishers in three states were asked whose opinions they respected the most. The results were as follows: merchants 25%, lawyers 14%, public officials 12%, bankers 12%, educators 8%, and newsmen 6%. Political affiliation made no difference in the response. The low repute the publisher has of his employees and the high respect he has for fellow businessmen and professionals show the class and economic solidarity of the publisher with his capitalist peers and the disdain he has for the proletarian professionals who work for him.

role in civic boosterism and city growth (Burd 1969; Donohew 1965).

There also is a difference in the position and activity of the number two media managers in the broadcast hierarchy—the newspaper editor and the broadcast general manager. The editor is usually prominent in civic affairs and is a journalist by trade, whereas the broadcast manager is primarily a businessman and does not participate in civic organizations to a significant extent (Altheide 1976). In the smaller towns the editors tend to be Democrats, but the electronic media managers are predominantly Republicans (Bohn and Clark 1972, 205).

The popular impression—fostered by the news media—is that the press plays an adversary, watchdog role, one in which the press objectively tells the truth wherever it finds it. If this is true, the news media would have to be outside the power framework of the community and nation in order to do their job and fulfill their promise. We have already seen that the mass media of national stature are deeply involved in the Ruling Cartel. We now will look at the local media and the power structure in their cities.

In this section we will look only at the place of the press in the power structure; the effect of this on content will be assessed in a later section. The role the media

play in the power structure generally has not been studied in great detail. Most of the books on local power structures and decision making in cities either largely ignore the media or do not give them a significant role in the community. On the other hand some writers (generally not political scientists, but journalists and communications experts) give the media a significant influence in the community, particularly in support of the local power structure and the status quo (Hvistendahl 1970, 474; Donahue, Tichenor and Olien 1973, 455).

At the local level the publisher or broadcaster may or may not use his or her power within the community structure. The option is theirs. There are several articles and books on this subject, but none of which includes the broadcast medium. The one exeption to this is the study of small towns which showed tangentially that the broadcast station general managers consider themselves as somewhat important in the community, but, unlike the newspaper publishers who consider themselves, "strong local influentials," the broadcasters do not take an active role in the town's politics or power structure (Bohn and Clark 1972, 205). Naturally, in a city where there is cross-ownership, the publisher-licensee could exercise even

A significant factor which may allow a publisher or broadcaster to take a more aggressive, critical stand in the community is economic security and strength. If the medium is strong financially, it can afford to be controversial. However, this can become a circular matter with the opposite effect. In order to be economically secure, a paper and station must please its advertisers. Many media owners have been threatened with reprisals by irate advertisers, even to the extent of being put out of business or placed in financial jeopardy by withdrawal of advertising by businesses whose owners disliked the editorial stance or news reporting (Cirino 1971, 6; Cirino 1974, 131-133).

The relationship of chain ownership to the community power structore has not been comprehensively studied. Chain management can operate within or outside of the local establishment, depending on such variables as the corporate policy, the amount of backing of the editor by headquarters, and the degree of use of the corporate "deep pocket" to outlast irate advertiser retaliation. (It is anticipated that in the city where the corporate headquarters is located the chain owners are significant local elites, particularly if they have a newspaper there.)

There are various reasons for support or non-support of the local power relationships. A chain may want to increase circulation by being controversial and muckraking. A prominent media analyst believes that a locally owned newspaper is less likely than a chain to oppose the power structure, because the local owner is part of the establishment himself (Washington Post 1977b). One publisher disagrees, saying that some chains are more cautious, because local managers will play it safe because they do not own the papers themselves (Brucker 1973, 274). It is also likely that chains which are primarily interested in profits

will not want to upset the local notables.

Not only are the publishers and their papers very significant in the community power structures, the dominant newspapers in the large, metropolitan cities are significant in linking the local establishments with the national power structure. The directors are of particular significance, because the inside directors focus on the city, whereas the outside directors have their primary interests in other parts of the country and the economy, and they participate in organizations at the national and international power levels. The exceptions to the inside directors being only locally oriented are the owners of some of the large and more significant newspapers or media empires, people such as Sulzburger, Graham, Chandler, Hearst, and Cowles (Dreier 1979). These are people who belong to the CFR and attend Bilderberg meetings.

It is not just the fact that the publishers and editors hold positions in local elite organizations, their main significance is that, because they own and run ideological institutions, they shape public opinion, both in presenting information in a particular way and also—perhaps even more importantly—in preventing certain information and opinions from ever reaching the public eye, or, if they are presented, they are done so in an unfavorable or distorted

3.3 ECONOMIC EFFECTS OF CONCENTRATION

Many opinions, observations, speculations and studies have been made over the years concerning the effects of various types of ownership situations of newspapers and the electronic media. Because there are so many variables, because so much of the subject matter and evaluations are qualitative and subjective, because much of the data is of a comparative nature, because media situations differ so much from city to city, and because the electronic media are ephemeral in nature, it has been very difficult to come to any strong conclusions and general agreement. Nonetheless, we should take a look at the situation. This section will consider mainly the economics. See Chapter Three on content

for further exposition:

3.3.1 CHAIN/GROUP OWNERSHIP

is looking at company policy and general corporate performance. The other method is to observe local performance after a transfer from independent ownership or when a small chain is purchased by a larger one. Group owners have varying reputations. Some look only at the profit and cost picture, not always to the benefit of the readers and community. Others build up the organizations; some milk them for profits (Lyle 1967, 20, 21; Business Week 1977b; Bagdikian 1972, 11, 12; Jones 1976, 174). Some chain owners give local managers a free hand (so long as profits are high), while others force their papers and broadcasters to follow certain policies, ranging from editorial approaches to criteria for personnel hiring, firing and

In an article on concentration in all communications media, Powell (1980, 97) found studies which showed that independent papers spent more money on expensive types of news and that there were other studies which showed that chains often raise the price at the newsstand and increase advertising rates when they take over, but overall they do little to improve the newspaper (Washington Post 1977b).

Because the profits in monopoly papers are three times those of competitive companies, the chains seek to purchase papers in monopoly situations. Ninety-seven percent of chain papers are in cities with no economic competition (Washington Post 1977b). This includes the towns with agency agreements, where the business aspects of the competing newspapers are merged, but the editorial and news functions are supposedly separate. Another aspect of group ownerships is that almost all of them are public corporations whose

A good case can always be made in theory about the dangers of monopoly in any field of capitalist endeavor. The realities of such dangers have been well documented for industry in general (Blair 1972 and 1978; Brandeis 1914; Green 1972 and 1973; Green and Massie 1980; Mueller, W., 1970; US Congress 1913, 1941, 1968, 1977). But there are also defenders of the desirability of a monopoly which is capable, responsive, efficient and productive (Blair 1972, 199, 200).

Only recently has the subject been studied very extensively, mostly with the print media. Very revealing are the hearings before the House Subcommittee on Antitrust and Monopoly when it was considering the Failing Newspaper Act (US Congress 1967b). The hearings revealed many instances of predatory, abusive behavior by the media which enjoyed a monopolistic position. In this sense it showed that the newspaper business differs little from other

Many economists would say that if the monopolistic market structure exists, the predatory, monopolistic behavior will also exist. At the least, the temptation and means to use and abuse the monopoly position will be available when needed and will be used either overtly or as an implied threat. Other economists say that performance is the best test of the measure of the desirability of monopoly or oligopoly. The Warren Supreme Court favored the market structure test for determining monopolistic behavior (Green, 1972, 7).

Many of the studies of media monopoly, particularly regarding newspapers, and more recently involving cross-ownership, show opposing results, particularly concerning content. Grotta (1971) observed the effects of newspaper monopoly from several aspects: advertising space, newsstand price, subscription price, change in editorial personnel, size of the news hole, proportion of local news to total news, change in editorial news hole, change of local to total editorial comment, circulation change and

change in retail sales in the city. He found that there was greater circulation under monopoly, but that there was a correspondingly greater increase in the milline rate to the advertisers, "contrary to industry practice" (Grotta 1971). The advertiser not only received no benefits from consolidation, but paid a significantly higher price after newspaper consolidation took place. Although the monopoly paper increased its circulation, it was much smaller than the combination of it plus the publication which had ceased to exist.

Grotta also found that the number of editorial employees per one—thousand circulation decreased, even though there was some absolute increase in staff. Overall, the consumers paid a higher price, with no increase in quality and perhaps even a decrease in quality. The large scale economies were not passed on to the consumer. In another study, Langdon (Compaine 1979, 39) found similar increases in advertising rates in a switch to a monopoly situation. He also noted that wage rates are lower where there is no competing newspaper. Advertisers prefer a competitive situation. An Advertising Age (1979f) writer called a monopoly situation "a take it or leave it proposition."

those who are concerned about newspaper concentration and Campaine, who is not. Regarding the phenomenon of the combination rate offered by a single publisher of morning and evening newspapers in a city—either where there is a single owner or where there exists a joint operating agreement—Campaine (1979, 46-48) states that advertisers benefit because they can receive a lower rate for both papers than they could if each paper were competing and both were asking the full, traditional rate.

Barnett has a different view (1980, 72, 74). Traditionally there is a weaker and a stronger paper, with the healthier usually being the morning publication. The rate for the stronger paper—the one the advertisers really want to use—is set at an inordinately high level, and the rate for the weaker newspaper is only for a small, additional amount. Because it is almost irresistible not to advertise also in the weak paper, the advertiser is practically coerced into using both publications. Through use of the combination rate, not only can the weak paper survive—when it perhaps should not continue in operation—but also it is a good way to drive out any competitors, if they still exist, or to keep them out, if they are trying to gain a foothold.

In cities where unitized rates have been used from 1929 through 1950, the success rate of a competitor was only eleven percent. In the Times Picayune case, which has been roundly critized by antitrust people and others concerned with newspaper concentration, the Supreme Court upheld the unit rate by a 5-4 decision in 1953. (The Times-Picayune in New Orleans had used the combined rate to destroy its competitor.)

3.3.3 CROSS-OWNERSHIP

It is on the subject of cross-media ownership in a city

Part of the problem lies in the fact that complex media are being studied where much of the material is subjective and where much human behavior is intimately involved. Also, there seem to be many problems in methodology, with many writers revealing the inadequacies of methodology of previous studies, particularly if the conclusions are at variance. For instance, Owens' (1973) study showed that where there was cross-ownership the advertising rates were higher. Lago and Osborn (1973), whose work was commissioned by the National Association of Broadcasters (and which supported the broadcasters' position favoring cross-ownership), criticized Owens' methods. Owens returned in kind (Wirth and Allen 1979).

"the form of media ownership generally seems to have a small impact on economic or content performance" (Compaine 1979, 100).

On the other hand, after reviewing many studies, including those from the FCC hearings in 1971, Linda Leuchter's (1976, 348) observation was that "no evidence has shown that joint operation economies arise from cross-ownership." Because it is a difficult subject to handle quantitatively and because she could find methodological weaknesses in all approaches and studies, Leuchter's conclusion was that most anecdotal evidence is probably more reliable and significant.

Different observations were made by Wirth and Allen (1979). (They were critical of both Owens and Lago.) Following their extensive study—and much to their surprise—they found that cross—ownership had a negative influence on broadcasting advertising revenues. Their conclusion was that, although they found fault with Owens' methodology in using time rate cards for stations, because this could be distorted by bargaining and by the fact that most advertising is now in thirty—second spots, not by time blocks, they nonetheless tended to agree with Owens' findings. Wirth and Allen's observation was that perhaps the anti—cross—ownership position of the FCC had been a

factor, because Owens' study had been made before the FCC's pressure could have been felt, whereas their own findings were reached afterward. Hence, it could be likely that in a cross-ownership situation, the media managers might be loading the price of the rates in their newspaper, where there is no competition, and less in their TV station, where there is competition and where the FCC might be watching. They concluded that, with the impending deregulation of TV and the lessening of interest by the FCC and other agencies in the executive branch, a rise in rates could be expected of the advertising time of the TV stations where cross-ownership is present.

3.3.4 CONCLUSION

There is nothing which can guarantee a good newspaper or broadcasting station. A blanket indictment cannot be

made for monopoly situations everywhere just as 100% approbation can automatically be given for media operating under competition. After being purchased by a chain some bad newspapers can be improved; or the management can be improved but content is not; or the paper is worsened in all aspects but for profit. The president for news of the Gannett chain said that only top professional people can make a good newspaper, and that fact "cannot be inflated by competition nor can it be diluted by monopoly" (Compaine 1979, 26).

This is only partly true. The problem is not that there are a lot of good professional prople working in bad newspapers and broadcasting stations and vice versa, but that the media are businesses which are working within the profit imperatives of the capitalist framework. The anecdotal information and many of the studies reveal what can occur in places where competition is either meager or non-existent. This behavior does not vary much from that of corporations and other types of businesses in other fields. The media are businesses which are out to maximize profits. They generally will use whatever methods they can to achieve this end. That some owners of individual stations or papers and of some chains are more ethical than others and are more concerned to provide their primary and secondary

customers—the advertisers and readers/viewers, respectively—with a better product than some of the other owners does not necessarily mean that monopoly situations under them are better than competitive situations with some of the other owners. In all areas of capitalism it is generally observed, particularly by antitrust economists, that where there is competition, the public is better served.

3.4_ADVERTISING'S CONTRIBUTION TO ECONOMIC CONCENTRATION

This is not a new phenomenon. There are case histories which go back into the late 1800s and early 1900s which show how a big company would invade a market, advertise heavily, and drive out the competition. The subject is still very much alive today (Mueller 1973; Greer 1973; Compaine 1979, 110). The lines are generally drawn between the people who

favor antitrust on one side against the conservatives who favor complete freedom for the media.

People who claim there is no connection between advertising and concentration have made studies which show various concentrated industries in which advertising plays a moderate or inconsequential role, such as the sugar industry. As in the case with the debate over the matter of the economic and public service effects of media concentration, many of these studies have been financed by elements of the advertising media themselves.

Since these studies were made, a merger wave has hit the adagency business, making concentration even more marked (Advertising Age 1979d and 1979e).

A big company can move into a market and unleash a massive campaign, using some of the following tactics: product proliferation, which can usurp shelf space; an advertising blitz; special premiums; and predatory pricing,

which is easy for a conglomerate or a company with a nationally marketed product to sustain through a combination of its deep pocket and its ability to raise prices elsewhere in the country or of other products within the company order to subsidize the local losses in the target market. The owner of a smaller, local company cannot compete and is usually either driven out of business, is forced to sell his company to the larger, invading corporation, or is driven to reach an accommodation which is favorable to the predator. After competition is destroyed, the prices can be raised back to even higher levels than before the war began. This phenomenon can be observed at the national, regional and local levels (Green 1973; Mueller 1973).

Although the activity may occur at the local level, it has nationwide effects as it sweeps across the country. The coffee business is a good example (Greer 1973). Procter and Gamble bought Folgers, a regional marketer. P&G then swept the country, city by city, challenging the other major brand, Maxwell House, which is owned by another giant, General Foods. In the ensuing advertising and price war the smaller coffee companies were liquidated. The resulting concentration can be seen by the fact that in 1963 there were 261 coffee producers; in 1972 there were 162; and in 1979 there were 40. There are predictions that soon the two

Not only are small businesses driven out, consumers have to pay artificially higher prices in the form of monopoly overcharges. Antitrust writers estimate that the additional cost to the consumers for food is from \$10-\$15 billion annually. For the whole economy the monopoly overcharge is estimated at \$180 billion each year. Antitrust researchers claim that competition does have the effect of reducing these prices. Where the top four producers in an industry have 40% or less of the market, these monopoly overcharges do not occur (Greer 1973; Mueller 1973a; Green. M.J., 1973).

favorable rates because of greater bargaining power and greater advertising volume discounts, but also the conglomerates (and a large company with brand proliferation) can always fill the time with one of their many products. A smaller or single product company cannot afford to do this; indeed, it may not want to advertise its product so heavily as the networks' volume discounts would permit it to do. Conglomerates are allowed to rotate their products advertised, but smaller companies cannot subcontract their time or rotate their time with another company as a package deal in order to get the volume discounts or to increase their bargaining power with the networks (US Congress 1966a; Advertising Age 1979c).

Regional companies cannot usually advertise economically on the networks because of the additional cost of deleting network meterial for the insertion of the regional announcement. Actually the small advertisers complain that prime time is generally not even available to them because it is already pre-empted by the giant advertisers with long-term contracts (Blair 1972, 311-321; Gordon, R.L., 1979; Business Week 1979). Even larger companies which want to expand find they cannot use prime time because incumbant advertisers are given first option for renewal (Business Week 1979). This is particularly a

Such are the hardships of smaller competitors. But there is a big problem for any potential competitor, large or small: entry barriers. When a product or industry is heavily advertised, it creates a considerably expensive barrier for new companies to enter the market, because they also must heavily advertise in order to attract attention. Even when the level of advertising is only at a moderate level, if the advertised industry is highly concentrated, the oligopolists can quickly turn on the advertising faucet if competition arises, thereby raising the entry barrier (Greer 1973). The big, established, nationally marketed company and the conglomerate can then absorbe the losses until the potential competition is either destroyed or withdrawn.

that there is not a correlation between advertising and concentration, because some of the most concentrated industries and products are not the most heavily advertised. Greer analyzes several industries historically to show that the relationship of advertising to concentration is "positive at low to moderate levels of concentration, but negative at higher levels."

Greer's conclusion is that case histories alone cannot prove or disprove an economic generalization, but they tend to support the conclusion that there is a causal relationship between advertising intensity (and other promotional activity) and economic concentration. The relationship is not linear, but parabolic. Furthermore, the causal link is rarely simple.

Economist John Blair (1971, 312, 313) studied the relationships between TV advertising and concentration. He says that

Former Acting Assistant Attorney General of the Justice Department Edwin Zimmerman agrees. He testified before the Senate Antitrust Subcommittee in 1966 that the mere fact that there are only three TV networks with limited prime time is in itself an entry barrier (US Congress 1966a, 651).

advertisers to see if there had been increases in concentration in the fields. Of the 33, 25 recorded significant increases in concentration, while only 8 registered declines. Seventeen of the 25 had very large increases in concentration. For the country as a whole, the increased concentration in manufacturing was roughly matched by corresponding decreases, but the heavily TV-advertised fields increased concentration by more than three to one.

media) by the leading companies, concentration increased. Conversely, in those six industries where the concentration ratio declined, there had been an improvement in the advertising position of the smaller companies relative to the larger ones. Blair's final conclusion is that "there can be little doubt about the continuation of the upward trend in concentration among industries with high TV advertising intensities" (1971, 334).

The subject under discussion is a complex one. As with many social phenomena it is difficult to determine precisely the direct and indirect relationships involved. Concentration and advertising can be a two-way street. Concentration gives greater power—actual and potential—to advertising. Conversely, advertising can be a powerful tool in creating and maintaining concentration.

Of even greater significance of this subject in relationship to the concentration of ownership of the electronic news media is that the power to determine who receives advertising time, particularly on the TV networks, apparently can significantly determine the nature of specific industries and the structure and direction of the American economy as a whole.

It is well to remember that many of the men on the TV networks' boards of directors—the men in whose hands this power ultimately lies—are also directors of and own stock in, not only many of these giant corporations in concentrated industries which benefit so greatly from TV advertising, but also are on the boards of directors of banks which also have potentially controlling interests and significant holdings in these giant corporations. It is well to keep these facts in mind when considering the question of who is helped and who is hurt by the situation Blair and the others are analyzing.

3.5 GOVERNMENTAL ACTION AND MEDIA CONCENTRATION

The three main sources of activity on the subject have been the Federal Communications Commission (FCC), the Justice Department, and the courts. These actions have

resulted in policy pronouncements and decisions by the Commission and a few antitrust cases. Some of the FCC cases have ended up in court. The Justice Department has been an actor in a few of the FCC cases; it has participated in some of the antitrust cases in court; and it has initiated actions of its own. Even though many of these actions are interrelated, we will look at each area of activity separately.

3.5.1 FEDERAL COMMUNICATIONS COMMISSION

of 1934. It gets into all areas of broadcasting, ranging from the technical areas and the selection of licensees to the nature of content. Historically, the Commission has been a pro-broadcaster organization (Brown, L., 1971; Cole and Oettinger 1978; US Congress 1978b). The commissioners have predominantly been either broadcasters or people who are sympathetic to the licensees. Nicholas Johnson, who fought for the public interest, was unique in his selection as a commissioner.

The FCC is one of the many regulatory agencies with the notorious "revolving door" of personnel with the industry it is supposed to be regulating (US Congress 1978b; Common

seven each of AM, FM and TV stations are the maximum a person can have, with no more than five of the TV stations being VHF. (The FCC recently recommended dropping these restrictions.) The duopoly rule (not applicable to public stations) prevents a person from having more than one station of a type in the same area of coverage. However, the Commission has permitted exceptions to this rule. Also, the FCC is supposed to consider ownership diversity as a positive factor in comparative license hearings (Emery 1971, 149-252)

As we have seen previously in the section under institutional ownership, the FCC does have restrictions on stockholder, officer and director relationships with licensees, but these have largely been ineffectual because of (1) the vagueness of the wording, (2) the lack of information about ownership as a result of non-cooperation of the owners and holders of stock and the lack of a computer system at the Commission which could handle the information even if it had it, and (3) because the FCC evaluates each case separately in reference to size, class of station, and extent of other competitive service in the area. These factors provide the Commission almost a blank check for decision making with its pro-industry bias.

The Commission has conducted investigations on

4. It announces a policy, then invites waivers for all violators and grants each waiver. Example: the restrictions on cross-ownership of broadcasters with cable systems.

Regardless of the expressed concern of the Commission over the phenomenon of concentration, in deciding specific cases the FCC frequently goes the other direction. It repeatedly has refused to allow hearings to the Justice Department's petitions to deny a license renewal, even when statistics show that there is great media concentration in a particular city. The Commission changed its standard from that of "public interest" to that of the antitrust laws when the Justice Department files a petition. The latter must show that there has been a Sherman Act violation before the FCC will permit a hearing for a license renewal (Bennett 1971). A frustrated Justice Department official complained that when they bring an antitrust suit against a broadcast

owner, the courts will tell them to take the case to the FCC; when they go the FCC, they are told to pursue the matter in the courts (Antitrust and Trade Regulation Report 1974. 674).

Meanwhile, using the case-by-case method, the Commission permits so many exceptions to a rule that the rule almost becomes inoperative. And with the deregulation fever running high in Washington, D.C., it may be that most or all ownership restrictions have become or will become moot (Access 1983a; Dallas Times Herald 1984).

3.5.2 JUSTICE DEPARTMENT

The Justice Department has been very active over the years in relationship to ownership of the media. (Some of these activities have resulted in antitrust suits which will be discussed later.) It has many ways of trying to combat what it considers concentration and ownership abuses. Some of these methods are a preliminary inquiry, intervening in an FCC case, filing suit, dropping a case and reaching a settlement, and an antitrust case brought to completion.

and had stifled competition and growth of radio through a combination of patent licensing agreements and the interlocking of directors and stock ownership. The government suit was delayed until the corporations could agree on a settlement, resulting in RCA becoming a separate, independent company and the others withdrawing from broadcasting, although they were given RCA debentures.

several years; with the long length of time it now takes to prosecute a case; and finally, with the climate of deregulation extant, the activity of the Justice Department has percipitously diminished.

3.5.3 THE COURTS

The judicial handling of broadcasting is rather unique. Because the FCC is in Washington, D.C., the cases which are appealed from the regulatory agency go directly to the D.C. Circuit Court of Appeals, which is the primary forum for judicial review of broadcast regulation. The Supreme Court has seldom become involved in broadcasting issues—only the truly landmark cases. The cases involving the written media are handled differently from those of broadcasting, in that they occur throughout the country and follow the normal judicial paths.

Court frequently has 'found itself as odd-man-out, with the Supreme Court now supporting the Commission in reducing the general public's interests and more protective of those of the industry.

The Burger Court has been very anti-free press the past years (Higdon 1980). Although it supported the newspaper industry in refusing to allow public access to newspapers in the Tornillo case (Miami Herald v. Tornillo, 418 US 241 (1974)), and even though it ruled in favor (although not strongly) for the New York Times in the Pentagon Papers case, it has diminished the First Amendment protections of the press, has reduced access to news sources for the press, lifted source confidentiality restrictions, and has approved provenuental and police intrusions into the news process.

If concentration of ownership of the media is of such

ownership with the only TV station in town penalized anyone advertising in a competitive medium, the antitrust laws were successfully applied (Kansas City Star v. US, 240 F. 2nd 643 (1957)).

However, in the seemingly anomalous Times-Mirror case the court struck down the sale of San Bernadino morning, afternoon and Sunday newspapers to the owner of the Los Angeles Times as a violation of Section Seven of the Clayton Act because the papers' readerships overlapped (US v. Times-Mirror, 390 US 712 (1968)). The court's decision indicates that it is all right to purchase existing monopoly newspapers, it is legal for two local papers to join to create a monopoly, but it is not permissible to create a new monopoly by such means as the Times-Mirror people had planned. More recently, the Justice Department stated that it would investigate Ruppert Murdoch's purchase of the New York Post, Village Yoice, and the New Yorker, but no further action was taken (Washington Post 1977b).

The FCC does have a club which it can use: character qualifications of a licensee. When a licensee has been convicted of antitrust violations (or any law), the Commission may revoke or deny a license. The FCC has had ample opportunity to apply this power, but it has failed to do so even in some of the most blatant cases. This is particularly noticeable where the licensee is a large corporation such as Westinghouse, General Electric, RKO (General Tire) and Paramount. The courts also may revoke the broadcast license of an antitrust violator, but this has not been done.

Despite the strong wording of the Communications Act (sections 313 and 314) regarding antitrust, and even though the FCC's 1951 report concerning character qualifications in regard to law violations was aimed mainly at antitrust matters and anti-competitive activity, the FCC's application of these laws, which is done on a case-by-case basis, is rarely made to the detriment of the antitrust violator.

This occurs particularly because the FCC does not consider consent decrees and nolo contendere pleas as pertinent and does not deem antitrust violations by a company as relevant unless they were directly involved with the broadcasting station itself. Furthermore, only repeated violations within three years of the litigation with the FCC are looked at. And, even at that, the Commission may consider extenuating circumstances. The Commission said in 1953 that one or even a series of antitrust violations do not ipso facto disqualify an applicant, because he still might be able to operate a station in the public interest (Emery 1971, 234-241).

In spite of the fact that the Justice Department has generally been unable to use the antitrust laws effectively in court in media cases, and despite being unsuccessful in eliciting a favorable response from the FCC on license denial petitions, it has been achieving some periodic successes in obtaining consent decrees and in threatening antitrust suits in situations where it has felt that media concentration is too high or where an increase in concentration is threatened (Emery 1971). With this power, plus the Newspaper Preservation Act provision that the Justice Department must approve in advance all proposals for newspaper joint operating agreements, the Department can

of mind now, Congress is turning its back on the whole problem of antitrust and concentration. The executive branch, particularly the Justice Department, has followed suit.

3.6 CONCLUSION

Over the years mass media ownership has become highly concentrated from many aspects at the local, regional and national levels. This continuing trend is being pushed from two sources. First, the media giants are becoming larger; second, the giants are joining hands in joint ventures. But the industry is probably much more highly concentrated than we are aware because of the ability to hide corporate ownership (particularly by financial institutions) through various mechanisms.

media domination than they do under a system where competition is extant.

There is a reciprocal relationship between advertising and concentration, particularly on television. Locally, advertising has been used by big companies as a tool to destroy competition. Nationally, the wealthy corporate giants in concentrated industries preempt the limited (concentrated) time available on the networks, thus not only shutting out competition from access to a mass audience, but also producing an almost insurmountable entry barrier for prospective competitors.

There seems to be no end in sight to this trend in media concentration, which is parallel to (or a part of) the continuation of total economic concentration in the U.S.. The news media are not informing the public about the situation, and at the present time the government does not provide a counterpoise. Indeed, the government activity ranges from tacit approval to active encouragement.

Chapter 4

4.1 INTRODUCTION: A GENERAL FRAMEWORK OF HEGEMONY

In studying the mass media, the "bottom line" is content. If there are freely and widely disseminated opinions and information representing the entire range of inquiry that is possible and if a mass medium and audience are readily available and accessible for people who desire to speak out, then there is no need to make such a thorough study of the mass media as is contained in this dissertation.

But, as we shall see, this is hardly the case in the U.S.. There are many factors which contribute to the control of information and media accessibility. This chapter will address these. The first factor is the general framework

The nature of the content which we experience with the mass media is not just a simple matter of decisions of various people to permit certain information to be disseminated in a certain manner, although this is the final way material is entered into the news system. This stratum of news production exists within a larger framework of the

There are varying approaches to how this is accomplished—and the role of the mass media in the process (Sallach 1974);—but there are two which seem to be the most adequate. Schattschneider's concept is called the "mobilization of bias," which is inherent in the social, political and economic bases of the system. It is reflected in a "set of predominant values, beliefs, rituals and institutional procedures ('rules of the game') that operate systematically and consistently to the benefit of certain persons and groups at the expense of others" (Bachrach and Baratz 1970, 43, 44).

The concept of hegemony seems to be the most comprehensive explanation of this phenomenon. Marx provided the seminal idea with his famous statement that "the ideas of the ruling class are in every epoch the ruling ideas: i.e., the class which is the ruling material force of society is at the same time its ruling intellectual force" (Sallach 1974, 165). This analysis was elaborated by Gramsci to describe the way in which "a certain way of life and thought is dominant, in which one concept of reality is diffused throughout society in all its institutional and

private manifestations" (Sallach 1974, 165). Because the dominant class controls the prime economic and political organizations of society, as well as the idea-producing and disseminating institutions, the ruling class will use these media to inculcate its values in the masses and to reinforce existing societal structures and relationships in order to maintain the ruling class' privileged position within the society. Along with this is the prevention of the dissemination of alternative views of reality, history, ethics, and social, political and economic organization.

The next hegemonic step is the self-acceptance or internalization of these ruling class values by the lower, dominated classes (Sallach 1974, 166; Veblen 1948). Or, failing complete acceptance, at least the underclasses must not be able to perceive any viable alternatives, and so will remain with confused, fragmentary and contradictory orientations which will present no threat to ruling class hegemony.

In countries with more dictatorial and authoritarian governments, direct, comprehensive censorship or media monopoly can be used to accomplished the above. But in more open societies, particularly where there is a range of opinions within the ruling class itself—such as in the U.S.—the press can operate more freely, so long as it does

not venture outside of the hegemonic limits. Indeed, in such a situation the system can be strengthened if the ruling class control is not publicly heavy-handed, because it gives the impression of the press as being "free" and "objective," and the "watchdog of the system." The people, thinking they are getting "all the news that's fit to print," are less likely to look elsewhere for information. Societal stability is thus maintained and the power relationships are not seriously challenged, or, if challenged, are controlled and contained.

4.2 MACRO-LEVEL INFLUENCES ON CONTENT

4.2.1 CORPORATE OWNERSHIP INFLUENCES

As the previous chapter has shown, there can be no doubt that ownership of the media is firmly in the hands of the capitalists and that the three commercial networks and the leading newspaper companies are securely controlled by the core, monopoly power sector of the U.S. society and operated for the Ruling Cartel's benefit. But there are varieties of press ownership which at the local level have significant effect on content. even though the total range

of material printed and broadcast will remain within the constraints of the capitalist corporate system.

The effects on content of cross-ownership, chain ownership, and monopoly media situations have long been debated (Compaine 1979; Bagdikian 1971, 1972 and 1980; US Congress 1967b). There are studies regarding each category which indicate that a particular arrangement is beneficial, and there is some research which shows the opposite. For example, some group owners seem to allow more editorial independence than others. Some milk a newspaper for profits at the expense of content, while others occasionally build up a paper. Of course, this partly depends on how bad a paper was before it was purchased.

However, when all studies are considered, the majority conclusion seems to be that independent newspapers in competitive situations and without cross-ownership provide for better media. We should look at the deleterious effects on content in different situations of media ownership concentration (Barnett 1973 and 1980; Howard 1974; Leuchter 1976; Owen 1973; Hvistendahl 1970; Ardoin 1973; Rarick and Hartman 1966; Wirth and Allen 1979; Sterling 1969; Wirth and Woolert 1976; Thrift 1977; Wackman 1975; Powell, W., 1979; Wall Street Journal 1978).

• • power structure, because because they want to be good citizens and particularly do not wish to offend either the advertisers or the local power relationships, mainly because the distant corporate headquarters is too far away to have intense interest in local events—only the profits. However, there are strong opinions to the contrary, that the independent is less likely to go against the local Establishment because the publisher/owner is a part of it and has to live among his peers in town. The key factor may be local monopoly. If the paper has it, the company can withstand retribution by the advertisers' threats of withdrawal of business. However, the chain also could conceivably ride out the ire of the advertisers
• • There is less local news, fewer pictures and fewer opinion columns.
  • 4. The most comprehensive empirical study of such a situation was made by Grotta (1971) who observed the effects of a change to a monopoly situation from several aspects. His conclusion was that the people as consumers, employees, advertisers and news seekers all were losers. The only gainer was the owner, who raised the rates and prices, cut the number of editorial employees and kept the extra profits. Grotta's conclusion was that monopolists will be

monopolists regardless of what economic or business field they are in.

4.2.1.3 Cross-media ownership

• There is a threat to objective reporting and editorializing because of the conflict between news events and the owners' economic interests.
• News content is similar in the paper and on the newscasts, because the reporters share facilities and sources.
• The TV station carries less locally originated programming.
• 5. The TV station more frequently transgresses the

4.2.1.4 Total Media Monopoly

Two studies were made in situations of total media monopoly (Stempel 1973; American Institute for Political Communication 1973). It was found that the media content was less comprehensive in the monopoly city and the people were less informed than the inhabitants in the towns with media competition. Additionally, the citizens of the city with single ownership of all the media took considerably longer to be able to make up their minds about candidates running for state and local office than people did who were living in a place where there were more media voices.

diversity of sources, they not only will not be informed, but they will have no (or little) information with which to compare to what they are being exposed. Perhaps their blameless ignorance and civic pride would cause them to regard their media so highly. Or maybe we can see the results of the hegemonic process in a more pure form.

Concerning the lack of concern by the populace regarding media concentration, the press itself almost never talks about it. How is the public supposed to know what they are missing? It is a circular argument to say that the monopoly press is beneficial because the people do not complain.

4.2.1.5 Conclusion

The controversy over effects of media ownership and concentration will continue as researchers find examples of one category or other which differ in some way with results from studies of another category. Corporations, individual managers and cities are all different. Nothing will guarantee a "good" newspaper or broadcasting station. But regardless of the ownership situation, the advantages and disadvantages work within the narrow range of capitalist political and economic exigencies, and their employees are

4.2.2 CORPORATE ECONOMIC INFLUENCES

There are factors of corporate operations which have influences on media content. The supreme target—high profits—can greatly influence the amount of money spent on personnel and operations. Budgets may or may not correspond to the profit picture; but this is another area for corporate decision making which will have an effect on output. For the print and electronic media the rating and circulation systems are extremely important, particularly for broadcasting, and if the numbers and demographics are not what the managers want, the content of production frequently is changed. Advertisers can have significant influences on media content either by their economic support or non—support of firms or of individual programs or by threats of reprisals if the advertisers are displeased with the behavior or performance of the company.

4.2.2.1 Profits

Owning a newspaper or broadcasting station is generally a profitable venture; owning a media conglomerate is almost invariably very profitable; owning a TV network is extremely profitable. Of course the making of profits is the "bottom line" under capitalism. Because the media are businesses run by businessmen, profits are the prime consideration.

Although English media magnate Lord Robert Thomson called the ownership of a commercial TV station "a license to print money" (Washington Post 1977b), not all media operations are equally profitable. The independents make less money than their network affiliate rivals; the stations in the top twenty markets are considerably more profitable than those in the smaller markets; the UHF stations historically have had a rough time financially compared with the VHF stations; and the three networks' owned-and-operated stations are extremely profitable (Sandman, Rubin and Sachsman 1972; Johnson 1970; Malone 1977). Furthermore, the networks, themselves, are three of the most profitable companies in America (Fortune 1977; Wall Street Journal 1977b and 1977e; Pearce 1976; Johnson 1970).

Newspaper ownership also is lucrative, particularly in

the monopoly situation in which most of the press finds itself today. New York Times columnist James Reston called ownership of such a paper a "license to steal" (Washington Post 1977b). Monopoly newspapers make profits which are three times those of the papers in a competitive market. "You can engineer your profits," remarked Otis Chandler, head of the Times-Mirror, Inc., media conglomerate (Washington Post 1977b).

What are the ways in which the pursuit of profits can affect content? We have already noted that content can change for the worse with different types of ownership situations. It depends on the company. If it wants to maintain high profits and decrease the quality and quantity, it can. However, if an owner is not making what he considers substantial profits, there will be insufficient funds for superior content.

Halberstam (1976) shows that the TV networks, CBS in particular, have become primarily profit conscious the past decades. The two basic historical drives are for profit and broadcasting excellence, with the latter clearly diminishing over the years. CBS chairman Paley, with his huge stock holdings, progressively became more interested in the bottom line than in broadcasting excellence as time passed and as the was accepted into some of the upper strata of the power

elite. (fn) Halberstam charts the profits of the corporation, showing that for each of the first twenty-five years the company's profits (ending in 1952) were generally around \$4 to \$5 million. But by 1965, as the corporation developed into a multinational conglomerate, needed financial support from Cartel banks, and became an attractive commodity on the stock exchange, the news and public affairs programming became not just less important, but troublesome. Paley demanded a 15% profit increase each year. He complained to stockholders that in 1965 the profit would have been higher had it not been for news and coverage of special events.

Another aspect of the economic and profit nature of the networks is their position and performance within the conglomerate corporate structure. Because the broadcasting sector within such a structure is often such a disproportionate profit producer (Dingell 1973; Pearce 1976), it is possible that these profits could be siphoned off from producing higher quality programming and could be used instead for other, non-broadcasting purposes. This has happened at NBC (Epstein 1973). At ABC the network had its public affairs budget reduced because of the poor profit picture in other areas of the conglomerate operation. The network itself had been profitable (Brown, L., 1975;

Friendly 1967, 170). The Justice Department has been concerned that "given their combined market share and current levels of profitability, network control over owned and operated stations may well contribute importantly to the networks' ability to preempt program acquisition and, consequently, to distribute a disproportionate share of programming and to obtain a disproportionate share of broadcast revenues" (Wall Street Journal 1976d).

4.2.2.2 News Budgets

If profits are so healthy, what is the nature of the funding for news and public affairs? The network news departments operate under strict budgets. An example of a budget was presented in Epstein's (1973) study. On a weekly budget of \$7,000, exclusive of salaries, CBS was charging up to \$28,000 a minute for commercials, producing \$36 million in revenue and profits of approximately \$13 million.

If the profits are so large, why is the news and public affairs budget so small? One obvious answer is pure, capitalist profit maximization. But another reason is that the networks' managements believe that spending more money on gathering and presenting news will not result in an increase in audience size. They think that the size of

One of the results of the budgetary shackles is a limit on where news stories are gathered—mainly in the major cities where the networks have their owned-and-operated affiliates and perhaps two or three major cities elsewhere. Otherwise, additional costs for crews and telephone cables are incurred. Another result is that producers plan for only one-half of the news program to be hard news, with the remaining time being taken up with "features," i.e., entertaining news from film strips from their libraries.

Because special events and documentaries usually have smaller audiences and cannot command high advertising rates, they generally are looked upon with disfavor by executives. But this is not always the case. Since the commercials missed during special events can be made up later, the net can show a comparatively inexpensive program (compared with entertainment programs) and still collect the money for the commercials. Documentaries come in handy when a network does not want to compete with a blockbuster—show on another

network. One can be shown for one-third the cost of an entertainment program. Another desirable time to show a documentary is where a rival network also is showing one. But as a general rule, because the networks are in the business of attracting the largest possible audience, there simply will not be many documentaries. Another reason for avoiding such programming is that if they are too hard hitting or about subjects which are too sensitive, they can upset the advertisers, the high executives and the government.

An anomaly seems to be the CBS program 60 Minutes, which has been at the top of the ratings for many months in the early and mid-1980s. This may show that people are really interested in expose, muckraking programming. However, CBS had to survive many long years of low ratings while the audience developed. The fact remains, though, that normal documentaries shown on an aperiodic, special basis still have low ratings.

1981c; Access 1981j; Access 1982b). Now that all FCC requirements and restrictions have been lifted, it is highly likely that there will be even less news and public affairs programming, particularly by those stations of marginal profitability (Dallas Times-Herald 1984).

Unlike the network situation the local stations spend a disproportionate amount of their budgets on news. Generally it is the greatest single expense (Altheide 1976, 15). For many stations, especially in the smaller markets, the local news effort either operates in the red or barely breaks even (Altheide 1976; Author's conversation with Austin, Texas, station manager). But in the larger and many medium-sized markets the news operation can be very lucrative (Epstein 1973, 86; Kreighbaum 1972, 7; Kellner 1976, 23). However, it also can be very competitive, which explains why so many stations hire consultants to perform audience research (particularly on personality attractiveness of newspersons) and to make proposals for increasing newscasters' audience appeal, hence greater viewership size and larger profits. As a result, we see light news, happy talk and pretty young people (Wall Street Journal 1976a).

generally is sufficient time for personnel to cover the press releases, public relations announcements and other staged news which comprise at least one-half of the material, and also to cover some of the routine news (Altheide 1976, 16). Having small staffs makes it very difficult for local stations to perform much in-depth reporting, particularly on those subjects which would make for fine journalism but which have not been assigned by the local news directors for various reasons (Author's talks with Austin, Texas, TV news personnel). These limitations also keep any incipient muckrakers out of trouble with the station management and the local power structure.

4.2.2.3 Ratings and Circulation

basis upon which to establish advertising rates and to differentiate themselves from their competitors. This is easier for the print media than for broadcasting. Newspapers and magazines at least can point to subscriptions and to sales from newsstands and route deliveries. What is left, basically, is how to select and measure the audience, the number of readers per unit sold, and the various demographics involved. But even this can lead to controversy (Wall Street Journal 1976c and 1977j).

For some newspapers, particularly in monopoly situations, audience quantity is not so important as the desired demographic make-up of that audience. Otis Chandler, publisher of the Los Angeles Times and head of the Times-Mirror empire, candidly remarked that "American newspaper publishing is based on advertising . . not a circulation base" (Washington Post 1977b). Therefore, the newspaper must seek the affluent reader, not just the poor masses.

Enter the rating services. The industry uses the results of the rating system as the officially defined market. At both the local and national levels, profits and careers rise and fall with the ratings. What and whom we are permitted to see and hear are greatly influenced by the ratings. There are various factors involved in producing ratings of the most desirable kind. The most basic aspect is the lineup of affiliates. The more you have, the more viewers you potentially will reach. ABC was handicapped many years by this as well as by the second significant factyor: these affiliates must reliably clear the network programs for broadcasting (Epstein 1973, 19-93; Friendly 1967, 271, 272).

Finally, of course, the ratings must be high quantitatively. As a president of NBC said, "First place in the ratings is where you maximize profits" (Daily Texan 1977b). The vice-president of program research of NBC was even more blunt about it when he said that TV is in the

The preoccupation with ratings has resulted in a program philosophy called the Theory of the Least Objectionable Program (LOP), a description applied by a former programming and research executive at NBC, Paul Klein (Kellner 1976; Network Project 1973). The basis of LOP is that the TV audience seems to be of constant size during prime time regardless of programming, although the composition of the audience varies. People watch the tube regardless of what is on it. Klein said,

LOP explains why some interesting programs die and some stupid programs seem to thrive. Place a weak show against weaker competition, LOP teaches us, and it inevitably looks good; it may even look like a hit—get huge ratings and a quality audience if the time period it fills has that audience. Place a strong show against a stronger show and, never mind whether it is far superior to a dozen other shows on the air in other time slots, it will look like a bomb. . . . The best network programmers understand this. They are not stupid. They like most of the stuff they put on about as much as you do. But they also know that a program doesn't have to be 'good.' It only has to be less objectionable than whatever the hell the other guys throw against it.

(Kellner 1973, 26).

affiliates to switch to another network or to non-clearance of programs. In smaller markets where one station will have more than one network, the programs with the highest ratings will be shown to the exclusion of the offerings of the other network(s). Finally, low ratings not only can cause a decrease in ad revenue for the network, it also can cause the network to spend more money on programming and perhaps audience research.

There many critics of the rating systems, including people in the industry (Skornia 1968; Advertising Age 1978a, 1979a and 1979b; Altheide 1976; Kellner 1976; Austin Sun 1977). The main criticisms are as follows:

• Total preferences or general likes and dislikes are not ascertained.

• People who submit to being used for ratings are of a certain type.

• 6. The people are subject to the Hawthorne Effect: their

The major rating companies themselves admit weaknesses in their statistics. Arbitron said that it provided only "at best rough approximations" of the TV audience and its composition (Kellner 1976). Even broadcasting salesmen are doubtful of the validity of the ratings (Althiede 1976). A study of Arbitron ratings of radio stations in Austin, Texas, revealed that all station managers had serious doubts about the accuracy of the information, even the managers whose stations benefited from the ratings (Austin Sun 1977). But, nonetheless, the advertisers put their money where the ratings are. What this means to Austin radio is that the top three stations (according to the ratings) prosper while the others change format and personnel and also cut budgets.

particularly for news.

Perhaps the most basic criticism of the rating system is that it generalizes, averages and homogenizes human beings. But people are distinctive in their individuality, their uniquieness, their changing needs and moods, their growth, and their diverse cultural backgrounds. But the rating system herds people into "markets," and then sells them like cattle to advertisers. In the ensuring cultural slaughter we all are net losers—except for the broadcasters and advertisers.

4.2.2.4 Advertising