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Diversified Worldwide Industries (DWI), Inc.: Discuss the legal and ethical implications of the ongoing debate and take a position as to whether the changes should be allowed and would they benefit DWI.

Scenario:

Congratulations! You have just been hired by Diversified Worldwide Industries (DWI), Inc., as the Vice President of Risk Management. DWI is headquartered in West Palm Beach, Florida, and has over 150 offices in 30 countries. DWI is incorporated in the State of Delaware; its ships are flagged by Liberia and the Bahamas.
The Corporation's principal activities are grouped into the following areas:
? ENVIRONMENT: Water and water treatment, waste management;
? OIL & ENERGY: Exploration, production, transport, refining, wholesale marketing, alternative fuels research;
? COMMUNICATIONS: Telecommunications, Internet, audiovisual activities, publishing and multimedia;
? LEISURE & RECREATION: Hotels, casinos, cruise ships;
? REAL ESTATE: Builds homes and manages properties in active adult, age-restricted communities;
? FINANCIAL: Brokerage for capital market investments in Russia, Eastern Europe, China, and emerging markets;
? MANUFACTURING: Produces, distributes, markets, exports and imports spirits and wines.
Your duties as the VP for Risk Management will require that you develop knowledge and expertise in all areas of business law, consult with corporate and outside counsel on legal matters, and advise the board as to available options to reduce or minimize the risk and liability of DWI in its ongoing activities.

Task Type: Discussion Board Deliverable Length: 1 page APA Format
Points Possible: 100 Due Date: 6/16/2005

Some DWI employees have opposed proposed changes in FCC regulations that will allow for more mergers overall in the print media and TV industry, permitting consolidation of up to 45% control in a geographic market prior to the FCC prohibiting further consolidation of media assets. The Editor of Consumer Reports magazine has recently wrote that "free TV and pay TV are completely intertwined. A handful of corporations own and control the vast majority of both." The public relations and lobbying team of the first tier media giants - GE, AOL/Time Warner, Viacom, and Walt Disney Co. - have requested we support the FCC's recommended changes in Congress.
Discuss the legal and ethical implications of the ongoing debate and take a position as to whether the changes should be allowed and would they benefit DWI.

Solution Preview

On June 2nd, the FCC voted to relax media ownership rules, allowing for further consolidation and cross-ownership of media outlets. They did so despite Congress's request to postpone the vote until evidentiary hearings could be held and the public's concerns could be voiced. The feeding frenzy of media mergers will soon begin, and freedom of the press and freedom of speech are now threatened like never before in America.
The same rules that destroyed localism and diversity in radio in the last few years, whereby Clear Channel and two other conglomerates own nearly all of the commercial radio stations in the country, will now be applied to network and cable television. Since radio was deregulated in 1996, demographically "localized" radio programming (homogenous in nature) and news is now delivered by computer& emdash; hundreds of miles from your local radio station. Live DJs have all but disappeared. As a result of the June 2nd deregulation, new mega-media conglomerates are now free to own multiple television and radio stations, and newspapers in all but the smallest markets.
From the ethical point of view:
According to its etymology, monopoly (monopolia) signifies exclusive sale, or exclusive privilege of selling. Present usage, however, extends the term to any degree of unified control over a commodity sufficient to enable the person or corporation in control to limit supply and fix price. The proportion of the media that must be controlled in order to attain these ends, depends upon many factors, and differs considerably in different industries. In the majority of monopolized businesses, it is somewhere between 70 and 90 per cent, although there are cases in which the unified control of a little more than one half the supply of the commodity seems to suffice. As FCC has relaxed the rules, in most of the cases in which the monopoly controls less than three-fourths of a business, the independent dealers seem to have the power to overthrow the Clear Channel but prefer to take advantage of the higher prices and steadier market conditions established by the dominant concern. They are, consequently, passive factors in the monopolized condition of the trade. No matter how great the degree of control which the Clear Channel enjoys, its power over supply and prices is not absolute. Many economic and prudential considerations will restrain Clear Channel from exercising this power to the extent that it might desire -- for example, the fear of potential competition, the discovery of a substitute for the monopolized article, or the possibility that people may get on without either the article or a substitute. But in all cases Clear Channel implies the ability deliberately to regulate supply and prices beforehand, and to fix both at some other point than that which would have been reached by the natural action of the market under normal competition. However inexpedient Clear Channel may be, it is ...

Solution Summary

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"Once the dust settles, all news reporting and editorials will reflect the opinion of a handful of CEO's who will have control over everything we see, read and hear. More importantly, they will have the power to..."

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