April 22, 2013

A primer on the Koch industries and the Tribune's newspapers

The New York Times reported on Sunday, April 20th, that Koch Industries, run by the infamous Koch brothers -- they of oil and global warming infamy -- is considered the frontrunner in the race to buy the Tribune corporation's newspapers, including the Chicago Tribune and the Los Angeles Times.

Understandably, revulsion is widespread over the very prospect, but many folks apparently need to be updated on a few things.

For one, the very fact that the Tribune is being broken up, and that this sale is even happening, is the consequence of grassroots political activism going back at least a decade. The Tribune corporation, in 2002 and 2003, sought to become a first-tier media corporation, like Time Warner, or NewsCorp, or Viacom, and the plan was for the Tribune to expand via expanding its suite of profitable and influential cross-media ownership holdings -- like owning TV stations and newspapers in New York and Los Angeles and Chicago. But instead of owning them in a handful of cities, the vision was to own them in every city in America. The FCC, then led by the infamous Michael Powell (who's now America's chief cable TV lobbyist), was only too happy to oblige. But grassroots activists rallied Americans to what was happening just in time, and the resulting outcry galvanized a court challenge which overturned the FCC's attempt to overwrite those media ownership rules. (A second attempt in 2007 to rewrite those rules failed a second time in court.)

The Tribune corporation, whiny over its loss, moaned about the turn of events on its editorial pages, and filed appeals to overturn the ruling. Those appeals failed, and when Tribune shareholders saw that the Tribune had no Plan B for carrying out this planned expansion, staged a revolt to demand an ownership change. They got it, in the form of Chicago-area real estate billionaire mogul Sam Zell, who then proceeded to make a bad situation far worse. Instead of charting a trajectory of growth, Zell led the Tribune into bankruptcy for four years, fending off well-heeled creditors who made hell for Zell.

In early 2013 the Tribune emerged out from bankruptcy, but all reports say that the commutation is actually a death sentence, as Tribune plans to sell off most if not all of its media properties. (It has already sold off the Chicago Cubs baseball team, which it owned since the 1980s.) First on the chopping block: the newspaper holdings.

It's an irony that grassroots political activism played a key role in what could be a buyout of a major American newspaper chain by two of America's most reviled billionaires. If the opposition were smart they would exploit this fact to discredit America's media reform and justice movements. Nevertheless, the efforts to block the immediate media ownership rules at the FCC, while successful, haven't (yet) addressed deeper concerns regarding undue political influence, and corporate involvement in media and politics. I've been working on this myself; no doubt others will as well. But suffice it to say that the Koch buyout of the Tribune newspapers isn't a foregone conclusion for a number of reasons.

For one, the Kochs will now get the full-throated response of the environmental movement in addition to the media reform and media justice communities in its attempted buyout. That's not insignificant; the environmental movement has increasingly been flexing its muscle on the climate crisis. Suddenly, once they hear that the Kochs may look to widen their influence by buying out a number of prominent newspapers, they will add their voices to the resistance. And it's been the growth of voices of resistance which proved critical in blocking previous attempts at widening media concentration.

For another, the FCC (the government agency which would have to approve a transfer) is in a state of flux. They are short of their full complement of five commissioners, with Republican Robert McDowell departing and chair Julius Genachowski about to depart. The FCC might be leery to proceed on this without a full complement of commissioners, though its unclear how long it would be before it got back to full strength. Remember, the last two times the FCC tried to proceed on increasing media ownership concentration, the FCC got their rewrites smacked down in court. It might not bode well to go down that rabbit hole again for a third consecutive time. Even so, the FCC might still grant a one-time waiver or waivers for a transfer without having to enact a full and thorny media ownership rewrite. But even that might not work: the FCC actually granted an exception to the Tribune itself in 2007, and that action did nothing to prevent its current travails.

What's more, the Tribune could choose a less-notorious (or less-well-known) company to buy out its newspapers. Sure, the Kochs are currently the leading candidate, but it might not stay the leading candidate. A deal could get scuttled in ways we can't yet foresee, but which grassroots political activism could foment. What's more, investors might be less than enthused to see Koch get into an industry that's seen in many corners as moribund and steadily decreasing as a source of news and journalism, but which remains a prominent source of local community information.

Meanwhile, the effects of global warming will escalate, the conservative media establishment will continue to look like a bunch of headless chickens, and to quote one friend: "a new, right wing maneuver to capture the corporate media will make its biases even less implicit." The endgame is far from assured.

Stay tuned...