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Starting in the early twentieth century, Congress passed several acts intended to break up corporate trusts and monopolies, which often fixed prices to force competitors out of business. But later in the century, many business leaders began complaining that such regulation was restricting the flow of capital essential for funding business activities. U.S. President Jimmy Carter (1977–81) initiated deregulation, and President Ronald Reagan (1981–89) dramatically weakened most controls on business (e.g., environmental and worker safety rules). Many corporations in a wide range of industries flourished in this new procommerce climate. Deregulation also made it easier for companies to merge, diversify, and, in industries such as airlines, energy, communications, and financial services, to form oligopolies.2
In the broadcast industry, the Telecommunications Act of 1996 (under U.S. President Bill Clinton) lifted most restrictions on how many radio and TV stations one corporation could own. The act further permitted regional telephone companies to buy cable firms. In addition, cable operators regained the right to raise their rates with less oversight and to compete in the local telephone business. Why this shift to deregulation in the communications industry? With new cable channels, DBS, and the Internet, lawmakers no longer saw broadcasting as a scarce resource—once a major rationale for regulation as well as government funding of noncommercial and educational stations.
Not surprisingly, the 1996 act unleashed a wave of mergers in the industry, as television, radio, cable, telephone, and Internet companies fought to become the biggest corporations in their business sector and acquire new subsidiaries in other media sectors. The act also revealed legislators’ growing openness to make special exemptions for communications companies. For example, in 1995, despite complaints from NBC, News Corp. had received a special dispensation from the FCC and Congress that allowed the firm to continue owning and operating the Fox network and a number of local TV stations.
Today, regulation of the communications industry is even looser. In late 2007, the FCC relaxed its rules further when it said that a company located in a Top 20 market (ranging in size from New York to Orlando, Florida) could own one TV station and one newspaper as long as there were at least eight TV stations in that market. Previously, a company could not own a newspaper and a broadcast outlet (a TV or radio station) in the same market. In 2009, a U.S. federal court struck down the FCC’s regulation limiting a cable company’s holdings to not more than 30 percent of the U.S. cable market, opening the possibility for a new round of unlimited cable mergers and acquisitions.