1999

Carol Loomis
Following the Money

In November 1999, when just about everyone else was championing the strength of the market, Fortune's Carol Junge Loomis wrote a piece relaying Warren Buffett's warning -- that stocks could not possibly meet the public's overblown expectations. A look at the current economic climate makes the piece seem almost prophetic. Either that, or she's just an excellent journalist.

Loomis has been at Fortune for forty-seven years. She started in 1954 as a researcher and began working on the magazine's investing column in 1962. It was more than a simple promotion. Loomis had been moved from researcher (all of whom were women) to writer (all of whom were men).

By 1968 Loomis was writing serious features, which she continues to do today as she approaches her mid-seventies. Her journalism is impeccable, her reporting extremely thorough, and her ability to understand complex accounting, without any formal training, astounding. As Floyd Norris of The New York Times pointed out in a "Role Models" piece in cjr last year, Loomis is not afraid of numbers. In 1982 she noticed that Aetna was using aggressive accounting to report profits. The information -- which was included only as a footnote in the company's annual report -- had gone unnoticed by the S.E.C. After Loomis reported it, the S.E.C. went after Aetna. In 1998, Loomis wrote a moving cover story about five Holocaust survivors who recreated their lives in America and built millions. She spent two years reporting the story.

"Most great institutions have an exemplar, an individual who personifies just what's so great about them," wrote John W. Huey, the then-managing editor of Fortune, in a 1995 editorial. "Jazz had Duke Ellington; the '27 Yankees had Gehrig; Fortune has Carol Loomis." -- L.J.



Concentration of Power
Mergers get bigger and bigger, and the number of companies that produce news gets smaller and smaller.

When Time, Inc., and Warner Communications merged in 1989, Jane Ciabattari wondered in the pages of CJR if the big business story of 1990 would be, Who will buy Time Warner? She was off by a decade, although the ultimate buyer -- AOL, at the time a fledgling Internet service provider -- could not have been predicted by the most prescient of pundits.

Since Ronald Reagan's FCC began dismantling nearly a century of media regulation in the early 1980s (the task was furthered considerably with the passage of the 1996 Telecommunications Act), the media world has endured a leap-frogging series of mergers, each new deal bigger than any before it. Capital Cities and ABC in 1985; GE and NBC in 1986; Time and Warner in 1989; Westinghouse and CBS, and Disney and Cap Cities/ABC in 1995; Time Warner and Turner Broadcasting (CNN), and News Corporation (Fox) and New World Communications in 1996. In 1999, Viacom gobbled up CBS and got its fifteen minutes as the Biggest Media Deal Ever. In 2001, AOL swallowed Time Warner and jaws dropped all over again.

Newspaper and radio ownership weren't spared this merger mania. Since 1996, when the Telecom Act eased ownership restrictions for radio stations, an estimated half of the 11,000 stations in the U.S. have changed hands. And when the Tribune Co. bought Times Mirror last year, it was only the latest in a twenty-year shift toward ever-bigger newspaper chains. "The urge to merge," remarked The Wall Street Journal in a 1998 assessment of the Telecom Act, "has overwhelmed the compulsion to compete."

The times have indeed changed. When the international behemoth ITT tried to buy ABC in 1966, Lyndon Johnson's Justice Department convinced a federal appeals court to block the deal on the ground that ITT's global dealings could compromise ABC's journalistic independence. Twenty-nine years later, when Disney -- another global monster -- bought ABC, the Clinton Justice Department shrugged it off. Deregulation, touted as a way to boost competition, instead unleashed a torrent of consolidation and hypercommercialism. With all the new ways to deliver news and information, companies needed to get a slice of everything to stay competitive. "If you look at the entire chain of entities -- studios, networks, stations, cable channels, cable operations, international distribution -- you want to be as strong in as many of those areas as you can," Peter Chernin, president of Rupert Murdoch's News Corporation, told Fortune magazine in 1998. "That way, regardless of where the profits move to, you're in a position to gain."

And gain they did. In 1988, for example, Viacom was a puny $600 million cable outfit. Last year it had more than $20 billion in revenues. Its journalism, in this case CBS News, is now only a small part of a very large, non-journalistic entity. "By the 1990s," Robert W. McChesney argues in his 1999 book, Rich Media, Poor Democracy, "traditional professional journalism was in marked retreat from its standards of the postwar years, due to the tidal wave of commercial pressure brought on by the corporate media system." NBC, for instance, devoted more time in 1996 to the Summer Olympics, for which it owned the television rights, than to any other story. For ABC, CBS, and CNN, meanwhile, the Olympics did not even crack their top ten stories.

Some of the "synergies" that were cited as strengths of the mergers too often translated into nothing more than marketing of a company's myriad other products, poorly disguised as news. As part of the merger with Viacom in 1999, for example, Mel Karmazin, CBS's chairman, pledged to spend $650 million for "promotion" on Viacom-owned media over the next six years. And consider this synergistic snippet from Disney-owned ABC's Good Morning America, broadcast live from Orlando during the 1997 celebration of Disney's twenty-fifth anniversary:

Joan Lunden: "Disney World rocks around the clock.

The attention to detail in this place is really astounding."

Charles Gibson: "Probably the greatest man-made vacation center that has ever been built."

Howard Kurtz, The Washington Post's media reporter, relayed the Disney World anecdote during a panel discussion at Columbia's Graduate School of Journalism, calling it the closest thing to an infomercial that he had ever seen on network television.

More worrisome than hype is the specter of corporate censorship. In 1994, Rupert Murdoch, trolling for business in China, dropped the BBC from his satellite news service after Chinese leaders complained about the network's coverage; in 1998, Disney effectively killed an embarrassing ABC piece on hiring practices at Disney World; during debate of the 1996 Telecom Act, CNN refused to run phone company commercials that claimed cable rates would rise if the act passed. There is also the possibility that some stories are being silently avoided by reporters and editors who learn too quickly what the corporate rules are. When a company has multiple global interests, opportunities for self-censorship multiply.

But a potentially more ominous problem looms. In the '90s some argued that the Internet and cable had ushered in more democracy in the media. But all those new voices that cropped up are increasingly owned by the heavyweights. And as all media are owned by an ever-shrinking number of ever-larger companies, what chance does a genuinely maverick voice or a risky political thought or investigation have to be heard?

And, meanwhile, who's going to buy AOL/Time Warner? --B.C.