(FORTUNE Magazine) – Worried about media concentration? Don't be. But do be worried about what's happening in media. To see why, look past the FCC's latest decision allowing media mammoths to grow even bigger, and consider the meaning of AOL Time Warner's recent settlement with Microsoft, and also the meaning of Finding Nemo.

The FCC has been getting all the ink--plus loads of raw-nerved criticism--now that it's letting TV networks own more local stations and letting other station owners buy more stations and even a newspaper in some markets. The change is either a long-overdue updating of the rules to reflect 21st-century reality or a blow to democracy that will squash independent voices in communities nationwide.

The new rules are baffling. In most markets a company may now own two stations as long as they're not both among the four stations with the highest ratings--meaning, I guess, that they'd better not make that second station too good. But the idea that we're now flirting with an Orwellian narrowing of media voices doesn't hold up. In fact, it's the opposite of the clear trend.

Media mogul Barry Diller, who opposed easing the rules, notes with alarm that the five biggest players in media now control 70% of the prime-time TV audience. Alarming? I don't see how. Remember that 25 years ago the three major networks controlled 90% of the audience. So we've gone from each dominant player having 30% of the audience on average to each having 14%. That is not a trend toward increasing concentration.

When I was a kid in South Dakota, we had two channels. Today more than 80% of U.S. households have cable or satellite TV, enabling them to get dozens or in some cases hundreds of channels. In the old days if a prime-time show didn't get a rating of 20, it was in danger of cancellation. Now TV's top-rated shows typically get a 12; the finale of American Idol got a 20 and made national headlines. And of course that was on Fox, a network that didn't exist 25 years ago. The overwhelming trend is not fewer choices but increasingly splintered audiences paying attention to more media voices.

A pause for the mandatory disclosures: My employer, FORTUNE, is part of AOL Time Warner, the biggest media conglomerate of them all. In addition, every day for the past 17 years, I've made broadcasts on CBS Radio, part of Viacom, a competing media conglomerate. I've co-written a book that has just been published by Penguin Putnam, part of Pearson, a much smaller media conglomerate that competes with parts of AOL Time Warner. And I'm co-anchor of Wall $treet Week With FORTUNE on PBS, another competitor, which is partly government funded. If you can see where my interest in this controversy lies, please e-mail me.

Even after the FCC's new rules, I'm not worried about increasing media muscle. The media-related trend that worries me is increasing mental flab. Regardless of who owns the content, video is everywhere--on your cellphone, in your car, on your desktop computer, on your laptop. TV will soon cease to be a useful concept; it'll all just be digital content, accessible through any broadband connection. That's where the AOL-Microsoft settlement comes in. As one of its key features, it supplies AOL with Microsoft's Windows Media player. Why? Because Microsoft realizes we're headed for a world of ubiquitous digital media, so the media player becomes strategically vital software.

But ubiquitous video is a disturbing idea. TV can be wonderful--I especially recommend Wall $treet Week--but more of it is not what we need. More of it is bad for kids--bad for their reading, speaking, and thinking skills--and bad for families, 40% of whom say they "almost always" watch TV during dinner.

And it's only going to get worse. That's where Finding Nemo comes in. It's a wonderful film, entirely computer-generated, and striking for the range of images it creates. With this film (and The Matrix Reloaded) animators no longer struggle to create realistic images; they just choose how much realism they want. Technology can now create absolutely any digital image you can imagine, which means TV, broadly defined, will only get more hypnotic and irresistible, even as it becomes omnipresent.

That's a recipe for more mental vegetating and less critical thinking. If there's a danger to the republic here, that's it. And it's not the FCC's problem. It's ours.

GEOFFREY COLVIN, the senior editor at large of FORTUNE, can be reached at gcolvin@fortunemail.com. Watch him on Wall $treet Week With FORTUNE, Friday evenings on PBS.