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Title: 1


1
The Economics of Big Media
  • By far, most U.S. media is for-profit.
  • Profit concerns dominate considerations about
    content and policy.
  • Like other capitalist institutions, the media
    always serves the private interest.
  • However, the U.S. capitalist media its content
    and its policies - may or may not serve the
    larger public interest.
  • Generally the U.S. capitalist media is very
    entertaining, but not very informative.

2
Changing Patterns of Media Ownership
  • Ownership is an important issue.
  • Democratic societies require an informed
    citizenry, and we rely upon the media to help
    inform citizens about policies and platforms.
  • Whoever owns a specific media controls the
    content of that media.
  • Owners are not all of one mind, so it is too
    simplistic to see Big Media as a conspiracy of
    like-minded powerful owners.

3
Concentration of Ownership
  • The U.S. is in a period of monopoly and oligopoly
    in many industries, including media.
  • This is due partly to the failure of government
    to regulate and protect diversity of ownership.
  • By 1992, the mass media (TV, radio, print, etc)
    was dominated by only 20 companies.
  • For example, while there were more than 3000 book
    publishers in the U.S., 5 corporations accounted
    for more than half of the annual book revenues in
    the 1990s, and it is worse today.
  • Concentration has occurred in book publishing,
    the magazine industry, in newspapers, and in most
    of the media.

4
Media Concentration 1983-92
5
Concentration of Ownership
  • The extraordinary concentration of media
    ownership is not common knowledge.
  • This is because most magazines, newspapers and
    book publishers operate under a variety of names.
  • Five key book publishers own more than 3000
    differently-named book labels, like Ballantine,
    Penguin, Random House, etc.
  • The Charlotte Observer appears independent on the
    surface, but they are owned by the McClatchy
    newspaper chain.

6
Number of Firms that Dominated the Mass
Media,1983-2006 Sources Ben Bagdikian, The Media
Monopoly, 2000 Mother Jones, Mar-Apr 2007
7
By 2006, Media Ownership was Dominated by 8
Corporations Source Mother Jones Magazine,
Mar-Apr, 2007
  • Walt Disney - 73 Billion Market Value
  • ABC, AE, Lifetime channel, U.S. Weekly, ESPN
  • Time Warner - 91 Billion
  • HBO, Cinemax, CNN, Time Magazine, Sports
    Illustrated
  • Viacom/CBS - 54 Billion
  • CBS, Showtime, MTV, VH1, SimonSchuster
  • General Electric/NBC Universal - 391 Billion
  • NBC, MSNBC, CNBC, Bravo, History Channel
  • News Corporation - 57 Billion
  • Fox TV, Fox News, Harper Collins
  • Yahoo! - 40 Billion
  • Microsoft - 306 Billion
  • Google - 155 Billion

8
Conglomeration and Integration in the Media
  • Conglomeration this is when media firms become
    involved in a variety of diverse business
    activities.
  • Example General Electric makes nuclear weapons
    as well as TV content.

9
Horizontal and Vertical Integration
  • Vertical Integration Cross-industry ownership,
    or the degree a single firm owns its upstream
    suppliers and its downstream buyers. Here one
    firm engages in different aspects of the
    process,from production to distribution.
  • Example a firm hires an artist, records them,
    distributes them on stations they own and
    features them in clubs they own.
  • Horizontal Integration Consolidation of many
    firms that handle the same part of a production
    process. When a firm buys out other firms doing
    the same thing, it is seeking horizontal
    integration. It seeks to increase its share of
    the market. Most anti-trust laws are aimed at
    horizontal monopoly.
  • Example When MTVs Viacom buys other cable
    channels, magazines, and other distributing means
    it is seeking horizontal integration in
    distributing.

10
Consequences of Conglomeration and Integration
  • 1. Homogenization.
  • 2. Higher profits for big media.
  • 3. Horizontal Integration.
  • 4. Vertical Integration.
  • 5. A shift to the right, ideologically.
  • 6. Increased self-censorship toward the
    ideological right.
  • 7. The public is locked out of participating in
    the media.

11
Consequences of Conglomeration and Integration
  • 1. Homogenization.
  • Today there are fewer and fewer locally owned
    radio and TV stations.
  • There has been an erosion of local culture as
    national chain-media emphasize non-local content.
  • Homogenization threatens cultural diversity.
  • The homogenization hypothesis (see next page).

12
The Homogenization Hypothesis
  • This thesis argues that concentration leads to a
    lack of diversity in content.
  • Research reveals that, while generally true, it
    depends on the specific industry
  • In the newspaper industry, increased
    concentration does not appear to change content
    very much.
  • This is because newspapers have been concentrated
    since the early 20th century and theyve
    standardized content a front page, a sports
    page, a lifestyle page, etc, with editorializing
    relegated to a page or two.

13
Music radio homogenization depends upon various
factors
  • 1. Degree of competition.
  • The less competition, the more homogenized the
    content. (The homogenization hypothesis).
  • Today 4 record corporations control 80 of the
    music market. They prefer safe musical content
    that is fairly standardized.
  • 2. Openness to new music.
  • The more a station manager is open to new music,
    the more diverse the musical content.
  • This presumes the station manager is allowed to
    influence content. Corporate radio has taken much
    of the freedom away from managers and DJs,
    preferring safe content dictated from corporate
    headquarters.

14
Talk radio homogenization
  • Today roughly 80 of talk radio consists of
    right-wing commentary.
  • Loss of diversity of radio ownership has led to
    emergence of Clear Channel-style radio, with a
    clear bias toward the political right.
  • Radio owners are wealthy. Most prefer Republican
    to Democratic platforms, especially on economic
    issues. They hire talk radio hosts who reflect
    their conservative world views.
  • The demise of the Fairness Doctrine, which used
    to require balanced views, allowed radio/TV
    owners to load up on right-wing content without
    being fair and balanced. Example Fox News.

15
Consequences of Conglomeration and Integration,
continued
  • 2. Higher profits for big media.
  • Stockholders benefit from conglomeration, but the
    public doesnt.
  • 3. Horizontal integration.
  • The loss of independence between films, TV, and
    music means the same artist we see in the movies
    may also show up on an album. Or visa versa. They
    will be cross-promoted, guaranteeing success even
    if they arent very good. Example Britney
    Spears.
  • This also means the look matters. In the age of
    MTV, musical artists who dont look good
    generally dont get promoted.

16
Consequences of Conglomeration and Integration,
continued
  • 4. Vertical Integration.
  • When the same firm that produces a musical artist
    also distributes the artist, it virtually
    guarantees they will sell. Ex Britney Spears.
  • However, independent artists get locked out of
    the system. Independent artists bring innovation,
    creativity, and diversity of content.
  • Instead, we see more of these in-house top 40
    performers (are they artists?) in heavy rotation.
  • Corporate media prefers safe content. Roughly
    50 of all musical content on commercial radio
    consists of safe love songs, sung by safe
    artists.

17
Consequences of Conglomeration and Integration,
continued
  • 5. A shift to the right, ideologically.
  • While anti-establishment content is sometimes
    allowed as long as it is profitable Big Media
    prefers artists who are friendly to their agenda,
    and this agenda leans to the middle and right.
  • ESPN hired Rush Limbaugh for sports commentary.
    (He didnt last long).
  • Clear Channel censored the Dixie Chicks, Neil
    Young, Rage against the Machine, etc, while
    sponsoring pro-Bush, pro-war rallies.
  • Fox News is the most biased of all major TV
    networks, yet claims itself to be fair and
    balanced using cynical advertising techniques.

18
Consequences of Conglomeration and Integration,
continued
  • 6. Corporate self-censorship has increased.
  • News that challenges the legitimacy of capitalism
    or the policies of private corporations is more
    likely to be censored by corporate media.
  • Example 1 GE refused to let NBC report on GE
    corruption in the nuclear industry.
  • Example 2 Big Media has yet to cover the Iraq
    invasion from anything but a moderate or a right-
    wing perspective.

19
Consequences of Conglomeration and Integration,
continued
  • 7. With concentration, the public gets locked out
    of participation.
  • As local media decline, ordinary folks have less
    influence.
  • Today, freedom of the press is limited to those
    who can afford to own radio and TV stations the
    millionaires and their corporations.
  • Media corporations routinely use the rhetoric of
    freedom at the same time that media oligopoly
    serves to reduce choices.

20
Conclusion The Issue of De-Regulation
  • Big Media claims that de-regulation brings
    freedom and diversity to the market.
  • In fact, it has done the opposite.
  • This is because de-regulation has allowed large
    corporations to concentrate, eliminating smaller
    media outlets. This brings monopoly and
    oligopoly, which violate the public interest.

21
Conclusion The Issue of De-regulation
  • What does de-regulation really mean if the media
    today are essentially one big media cartel?
  • The agenda of most large media corporations is to
    lobby for more de-regulation as they seek even
    more concentration and integration.
  • Politicians, beholden to Big Media lobbyists,
    usually give Big Media most of what they want.
  • Unfortunately, neither the public interest nor
    democracy itself is served by these policies.

22
The Case of Clear Channel
  • The following local radio stations are owned by
    Clear Channel
  • 99.7 WRFX Classic rock
  • 96.1 Beat
  • 102.9 Lite
  • 96.9 Kat Country
  • 106.5 New rock
  • Today, the musical play lists of these stations
    are relatively homogenized to reflect the top
    40 agenda of Clear Channel Corp., although
    limited discretion is given to DJs and station
    managers.

23
Clear Channel Corporation
  • Began acquiring radio stations in 2000.
  • Now owns about 1200 stations across the country,
    representing 10 of all radio stations.
  • Owns ½ of all major radio stations.
  • Owns stations in 47 of the top 50 markets.
  • Has 110 million U.S. listeners.
  • 3 billion in annual revenues.
  • Controls 60 of all rock music radio.

24
Clear Channel Goals
  • Horizontal and Vertical integration
  • Horizontal Buy up as many radio stations as they
    can.
  • Vertical Buy up venues for live shows and use CC
    radio to promote CC shows.
  • For example, Clear Channel teamed up with Verizon
    (wireless, amphitheater) in Charlotte and
    elsewhere.
  • By 2002 Clear Channel controlled about 70 of all
    live venue concerts and used its radio stations
    to promote its own concerts. Rival or independent
    performers could not get their music or concerts
    promoted on Clear Channel stations.
  • Clear Channels stated goal is synergy - a
    euphemism for monopoly control.

25
Clear Channel Origins
  • 1996 Telecommunications Act
  • Allowed unlimited ownership of radio stations by
    a single corporation, or horizontal integration.
  • Prior to this, a corporation could own a maximum
    of 40 radio stations.
  • Immediately after this law, Clear Channel and
    Infinity began buying up radio stations across
    the country.

26
The Politics of Clear Channel
  • Owned by a conservative Texas corporation.
  • Like Fox News, Clear Channel favors a right wing
    slant in content.
  • Sponsored rallies to support the 2003 U.S.
    invasion of Iraq.
  • Censored opposing viewpoints and artists who
    disagreed with the invasion.
  • Homogenized or safe play lists emphasized.
  • DJs denied play list freedom and censored or
    fired for complaining.
  • Payola via third party agents.

27
Summary
  • Clear Channel is the outcome of the de-regulation
    policies.
  • De-regulation led to increased monopoly and
    oligopoly at the expense of the public interest.
  • Media content is being homogenized toward a
    corporate-conservative agenda under the rhetoric
    of free market.
  • The public interest is better served with
    diversity of ownership and diversity of content.
  • Diversity of viewpoint sustains democratic debate
    and an informed public.

28
Media Control and Political Power
  • Can the concentration of media undermine our
    political system?
  • Yes. Corporate Media routinely lobbies and
    donates funds to politicians in exchange for
    favorable treatment.
  • Many politicians are afraid to be openly critical
    of Corporate Media policies because they have
    become dependant on their donations to get
    re-elected.

29
Censorship
  • It is ironic that most discussion of censorship
    and free speech focuses on government censorship,
    not corporate censorship.
  • Most media censorship is corporate censorship. It
    is self-censorship.
  • Corporations are reluctant to publish news that
    reflects badly upon themselves.
  • Example tobacco firms and self-censorship.
  • Corporations use Public Relations firms to spin
    the truth a version of censorship.
  • Rupert Murdocks Fox News censors out of self
    interest, favoring a right wing slant.

30
How is Corporate Media Biased?
  • Corporate media is biased in different
    directions, depending on the issue and the
    specific media (recall talk radio). There is a
    general observation
  • Social issues like sex, drugs, rocknroll, race
    issues, gay issues, etc corporate media offers a
    generally moderate to liberal slant.
  • Americans are shifting to the left on social
    issues, and corporate media likes to appeal to
    mainstream America.

31
How is Corporate Media Biased?
  • Economic issues pertaining to government
    legislation of the economic sector, distribution
    of wealth, the welfare state, etc corporate
    media offers a generally moderate to conservative
    slant.
  • While most Americans are not economic
    conservatives, most private corporations are.
  • U.S. corporations favor the economic-conservative
    ideology more than any other.
  • To corporate media, the bottom line is profit
    maximization via laissez faire government
    economic policies and/or favorable legislation
    that gives them an economic advantage. They are
    fundamentally capitalists.

32
Mass Media for Profit
  • Capitalist media focus on one specific goal
    financial profit.
  • The problem is there is no sure-fire way to make
    a profit.
  • In network TV, only a handful of new shows are
    successful.
  • These hit shows are hugely profitable.
  • As few as 10 of media productions can provide
    profits large enough to make up for the vast
    number of shows that lose money.

33
Prime Time Profits
  • Given their profit motive and the failure rate of
    new shows, network programmers follow the logic
    of safety.
  • They seek to minimize risk by adopting a simple
    formula Avoid shows which are too controversial,
    too original, or too risky in any way.
  • The consequence of the logic of safety is network
    TV shows that are imitations or spin-offs of the
    rare hit shows.
  • For example, there are more than 200 reality TV
    shows, almost all of which are imitative. This
    system drives quality downward.

34
Profit and the News Media
  • Commercial news organizations are for-profit too.
  • With oligopolization, the news divisions of
    various media have been criticized by
    owners/stockholders as not profitable enough.
  • News divisions are typically not as profitable as
    Entertainment divisions.
  • Therefore, under pressure to increase profits,
    news policies have shifted in recent years to
    increase corporate profits.

35
Corporate News Recent Changes
  • Corporate news programs have found numerous ways
    to increase profits
  • 1. Less investigative reporting.
  • 2. Use fewer news sources.
  • 3. Decreased news staffs.
  • 4. Make the news more entertaining.
  • More emphasize on if it bleeds, it leads.
  • 5. Focus on sensational or tabloid news stories
    (like OJ, Britney Spears, man bites dog, etc).
  • 6. Include soft human interest stories that
    reassure audiences with their happy endings.
    Use upbeat styles.
  • 7. Hire personalities (like Katie Couric at CBS)
    rather than real journalists to deliver the news.
    Place emphasis on these news personalities as
    celebrities to worship.
  • 8. Eliminate the news altogether and play re-runs
    of former hit shows.

36
Prime Time Profits
  • As a result of these corporate media policies,
    American prime time news has suffered a severe
    drop in quality since the 1970s, and virtually
    all of the major network news shows are
    carbon-copy imitations of each other.
  • The same exact news byte on CBS will air on the
    competitor networks, often at the same exact
    time.
  • This pattern is similar to price-fixing and
    relates to the oligopolistic nature of U.S.
    corporate media. Rather than be different, the
    networks have worked out a defacto arrangement to
    be similar to each other.

37
Prime Time News
  • The real casualty of the decline of news quality
    has been the U.S. public.
  • When it comes to world affairs, Americans are
    among the most misinformed and ignorant
    populations of all industrial societies, partly
    due to the low quality of information supplied by
    U.S. commercial TV networks.
  • Studies suggest that loyal Fox News viewers are
    the most ignorant and misinformed on issues like
    the U.S. invasion of Iraq, largely because Fox
    News coverage is so slanted.
  • However, Fox News is more profitable than most
    other news organizations because Fox rejects
    traditional journalism in favor of infotainment.

38
Advertising and the Press
  • The traditional take on the British press was
    that 19th century British newspapers won their
    freedom from government and party control as they
    shifted to an advertising-driven press.
  • This view claimed they achieved economic
    independence, allowing them to become watchdogs
    or the fourth estate.

39
Advertising and the Press
  • However, this argument obscures how advertising
    led to new forms of self-censorship.
  • An advertiser-driven press is not a free press.
    It is beholden to the advertisers interests in
    order to sustain revenue.

40
Advertising and the Press
  • Advertisers in the 19th century were not
    interested in the problems of the working class,
    or in criticizing industrial capitalism.
  • To the extent the working class press criticized
    capitalism, advertisers withdrew support and gave
    it to the more conservative press.
  • Ultimately, the ad-driven press led to
  • the decline of the radical ideology press
  • the emergence of a press inclined toward
    non-ideological coverage, such as lifestyle
    pages
  • more balanced coverage of events in order not
    to offend paying consumers.

41
The American Press
  • Advertising driven, mostly. Therefore, it is
    biased toward capitalist values. Most content is
    ads.
  • Radical ideology is almost totally censored.
  • Prefers safe or soft content that is
    non-ideological over hard or controversial
    content. Hence lots of sports, leisure
    lifestyles, local news, tabloid, etc.
  • Relegates politics and (controversial)
    editorializing to the back page(s).
  • Tries to present relatively balanced coverage in
    order not to offend different constituencies.
  • The objectivity norm in journalism relates here.
  • Recent exceptions include Fox News, Sinclair
    Broadcasting and other heavily-biased media that
    seek an ideological niche at the expense of
    balance.

42
Advertising and News
  • Advertising exerts pressure on the news media to
  • Avoid upsetting the sponsors, who are typically
    major capitalist corporations.
  • Use safe stories that wont rock the boat.
  • Present a world view consistent with that of the
    advertisers.
  • Utilize subtle reassurance messages that the
    status quo is just and orderly.
  • Self-censorship no direct criticism of
    capitalism is expected.
  • The news beat is biased toward the powerful
    especially capitalists at the expense of
    balance.

43
Conclusion
  • A capitalist media will rarely be an objective
    media. It will typically be biased toward the
    agenda and world view of capitalists,
    particularly corporate capitalists.
  • This can be very costly when citizens need
    crucial information about social policy.
  • The profit motive behind capitalist media
    explains why the emphasis is on entertainment
    more than information or news, and why the
    content is self-censored toward the agenda of
    capitalism.
  • Corporate conglomeration and oligopoly have
    degraded the U.S. news-information system.

44
End
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