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TRENDS IN COMMUNICATIONS

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Proliferation of technologies now including computers, vcrs, dvds, ... Examples: a cigar manufacturer who advertises in cigar magazine rather than LA Times. ... – PowerPoint PPT presentation

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Title: TRENDS IN COMMUNICATIONS


1
TRENDS IN COMMUNICATIONS
  • An Introductory Overview

2
(1) Growth in Media
  • Proliferation of technologies now including
    computers, vcrs, dvds, mobile phones etc.
  • Greater portability and consumption opportunities
  • Growth in circulation up considerably, from
    1940s, with some recent exceptions (newspapers,
    recorded music)
  • Financial growth (e.g. money spent on advertising
    up 40bn to 179bn, 1950-1995)
  • Expansion in media employment (from 20 in case
    of books to over 100 in case of movies,
    1970-1996)
  • Many more editorial outlets overall (e.g. in
    television, from a handful of stations to several
    hundred video and Internet).

3
Growth (ctd).
  • Instances of global media growth
  • 1964-2004 TV households increase six-fold to 1.2
    billion (world pop 6 billion)
  • Cable and satellite households increase from 85
    million to 300 million in 1990s
  • Internet is accessed by 500 million people
    worldwide

4
2. Mergers and Acquisitions (MA)
  • Bagdikian (2000) Depending on measures, major
    U.S. media are owned by between 6 and 23 media
    conglomerates

5
MA (ctd.)
  • Occur
  • vertically (company buys company that supplied
    it, or that it supplies e.g. TV network buys
    Hollywood studio)
  • horizontally (company acquires second
  • company in same business e.g. theater chain
    buys another theater chain)
  • by conglomeration (a company building a
    portfolio of different kinds of businesses) may
    be intra-media (media only) or extra-media
    (media plus non-media)

6
MA (ctd.)
  • Motivated by desires for economic gain, market
    control and predictability, synergy, cash flow,
    economies of scale, cross-subsidization,
    cross-promotion, global market activity,
    convergence, create barriers to new competition,
    tax benefits, greed and vanity.

7
MA (ctd.)
  • Stimulated by low interest rates, inflation,
    company valuation, future expectations of growth,
    and all factors affecting rates of return, and
    availability of finance.
  • Some mergers fail convergence slow to happen,
    huge debt, overpayment, organizational conflicts,
    falling security prices, falling valuations

8
(3) Regulation / Deregulation
  • Regulation mainly affects scarce resource media
    (broadcast frequencies public rights of way in
    case of cable) or natural monopoly markets
    (telephony, cable, some newspapers).
  • 1980s-1990s, incl. 1996 Telecommunications Act, a
    period of deregulation or of re-regulation
    away from criteria of public interest to criteria
    of competition.
  • Deregulation stimulated by technological advance
    incl. digitization (increase in broadband),
    desire for MA, neoliberal philosophies

9
(4) Convergence
  • Convergence disappearance of technological
    differences among distribution networks
  • Allows multiple applications over the same
    network to different platforms
  • Allows for leverage of content over increased
    number of distribution networks and enhances
    cross-promotion

10
(5) Globalization
  • International markets are prime source of revenue
    growth following saturation of domestic markets
  • May involve producing separate or customized
    content for different markets
  • Enhanced by policies of deregulation and
    liberalization in many countries
  • Motivated by desire for more revenue, leveraging
    of content, cross-subsidization etc.

11
(6) Concentration of Media Markets
  • Local (e.g. largest four radio owners gained 93
    of revenues in top 283 markets one cable
    provider in most markets, one dominant fixed-wire
    local telephony provider in most markets)
  • National (e.g. four major TV networks two major
    satellite providers six largest MSOs provide
    service to 60 of cable subs 20 newspaper chains
    account for 70 of daily circulation 10 largest
    film distributors owned by 6 conglomerates
    account for 90 of revenues)
  • Special Interest (e.g. two major players,
    Univision and Telemundo)

12
Concentration (ctd.)
  • Evaluation of significance of concentration
    complicated by
  • different assessments as to when market is
    dominated by one or few
  • new technologies sometimes create entirely new
    markets even if concentrated, more customer
    opportunities have been created

13
(7) Digitization
  • All forms of communication progressively more
    available for translation into computer language,
    and delivery over digital systems. This enhances
    convergence, and conglomeration.
  • Digitization creates significant problems of
    transition and coordination between content,
    distribution and receiver technologies (e.g.
    currently, in case of television).

14
(8) Privatization
  • Process of removing media from government
    ownership / control and placing (selling) them
    into private hands OR of requiring government
    owned media to become semi-commercial.
  • In U.S. privatization has affected broadcasting
    structure, attitudes to PBS funding, satellite
    systems, Internet development.
  • Privatization enhances globalization

15
(9) Commercialization
  • The process whereby increasingly, over time, more
    and more aspects of media activity, including
    news and information, are determined by
    bottom-line mentality on behalf of owners and
    shareholders. Examples include dumbing down of
    television news product placement in Hollywood
    movies intensification of sex and violence
    reduction in political coverage on television
    news increase in number of advertisements per
    hour of entertainment.

16
(10) Branding
  • Range of strategies employed to increase extent
    to which corporate identities acquire household
    or consumer recognition. Branding aids
    marketing, and stimulates MA activity to extend
    brand name over wider range of products or
    services.

17
(11) Synergy
  • Combining of resources, talents, archives etc.,
    in a way that creates a Whole that is richer than
    the sum of individual Parts.
  • Quest for synergy drives much MA activity

18
(12) Specialization
  • Also narrowcasting, customization,
    localization.
  • Targeting small, specialized audiences.
  • Often based on advertising economics.
  • Specialist media typically owned by larger
    conglomerates.
  • Opportunities facilitated by new technologies
    (cable channels, websites)

19
(13) Competitivazation
  • Process typically triggered by (a) new
    regulations that reduce restrictions on ownership
    or (b) new technologies that create entirely new
    markets (e.g. cell phones).
  • These attract new entrants into given markets,
    creating the appearance, sometimes the reality of
    great competition.
  • But, almost immediately, competition is followed
    by MA activity until one or a small number of
    companies dominate the market

20
Specialization (ctd)
  • If advertiser can reach 100 people for 100 and
    every one of those 100 people buys his 10
    product, that is better than spending 100 to
    reach 10,000 people of whom only 50 end up buying
    the product. In the first case he earns 900 in
    the second case he earns 400.
  • Examples a cigar manufacturer who advertises in
    cigar magazine rather than LA Times.
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