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Lecture 7: Concentration of Media Ownership


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Title: Lecture 7: Concentration of Media Ownership

Lecture 7 Concentration of MediaOwnership
  • Thus far, I have dichotomized news organizations
    (and journalist) from the rest of the media
  • The picture which I have painted is, as if, news
    organizations are purely interested in reporting
    issues that is of public concern (theoretically)
    to ensure that citizens in a democracy would take
    note and act to ensure the health of democracy.

  • Such a dichotomy between news organizations and
    the rest of the media industry is false. News
    organizations are essentially part of the media
  • It could not escape the general trends that
    affect the media industry as a whole. As a matter
    of fact, such trends have an impact in the way
    news are reported and published.

  • Of particular importance to us in todays and the
    coming few lectures is the issue of media
  • Given the pervasiveness of the media in our daily
    life, these lectures will attempt to answer the
    question of Who controls what we watch, read and
    listen to?
  • This question focus on the issue of media
    ownership. Who owns the media has an important
    bearing on what gets to be published or broadcast
    in news.

  • However, in todays lecture, I will be directing
    our attention to the worrying trend of
    concentration of media ownership in the hands of
    a few.
  • Todays lecture will give us a broad context in
    the next few lectures.

What do We Mean by Concentration of Media
  • Media concentration is a commonly used term among
    media critics, policy makers, and others to
    characterize the ownership structure of the media
  • When we talk of media concentration we are
    referring to the presence of media conglomerates
    in the media industry.
  • We understand media conglomerate as a company
    that owns many different types of media

Two Examples of Media Conglomerates
AOL-Time Warner
  • Time-Warner was founded in a merger between Time
    Inc. and Warner Communications in 1990 before
    being subsequently purchased by AOL in 2001.
  • This media conglomerate is involved in a variety
    of media enterprises such as

  • Books
  • Time Life Books Book of the Month Club Warner
    Books Little, Brown and Company Little, Brown
    and Company (U.K.) and 19 other book brands such
    as History Book Club
  • Cable/DBS
  • HBO USA HBO Home Video HBO Pictures/Showcase
    HBO Independent Productions HBO Downtown
    Productions HBO NYC Productions HBO Animation
    HBO Sports Cinemax Time Warner Sports HBO
    International HBO Asia HBO en Espanol HBO Olé
    (with Sony) HBO Poland (with Sony) HBO Brasil
    (with Sony) HBO Hungary Cinemax Selecciones.

  • Other Operations
  • HBO Direct (DBS) Comedy Central (50 percent
    owned with Viacom) CNN Time Warner Cable (13
    million customers in USA) Road Runner
    (high-speed cable modem to the Internet) and 16
    others, including New York City Cable Group with
    over one million subscribers.
  • Magazines
  • Time Fortune Life Sports Illustrated People
    Entertainment Weekly and 26 other magazines,
    including DC Comics and Mad Magazine.
  • Movies and TV (Production and Distribution)
  • Warner Bros. Warner Bros Studios Warner Bros.
    (production) The WB Television Network
    Hanna-Barbera Cartoons Warner Home Video and
    nine other national and international operations,
    including Warner Bros. International Theaters
    (owns/operates multiplex cinemas in 12

  • Online Services
  • America Online (over 22.2 million subscribers)
    AOL International (4.4 million subscribers in 14
    countries, services in seven languages) AOL.com
    portal CompuServe Interactive Services AOL
    Instant Messenger AOL Europe AOL MovieFone
    Netscape Communications Road Runner and _at_Home.
  • Music
  • Warner Music Group Recording labels include
    Atlantic Group Atlantic Jazz Elektra Warner
    Bros. Records Reprise Warner/Chappell Music
    (publishing company) and 47 other labels,
    including Warner Music International.
  • Film Production
  • New Line Cinema Fine Line Features Turner
    Original Productions.

  • Retail/Theme Parks/Merchandise
  • Warner Bros. Studio Stores (stores in over 30
    countries) Warner Bros. Recreational Enterprises
    (owns and operates theme parks) Warner Bros.
    Consumer Products.
  • Sports
  • Atlanta Braves Atlanta Hawks Atlanta Thrashers
    Turner Sports.
  • Turner Entertainment (cable, sports
  • Entertainment Stations TBS Superstation Cartoon
    Network Turner Classic Movies Cartoon Network
    in Europe Cartoon Network in Latin America TNT
    and Cartoon network in Asia/Pacific.
  • Other operations
  • Turner Learning CNN Newsroom (daily news program
    for classrooms).

  • Employing an estimated 84,900 employees, AOL
    Timer-Warner earned USD 43.7 billion in 2005.
  • As can be observed, this media conglomerate owned
    different media businesses which operates

Sony Corporation
  • Japan-based Sony Corporation started in 1946 as
    Tokyo Telecommunications Engineering, with three
    employees. Now, it boasts more than 180,000
    employees worldwide and over 58 billion in sales
    for 2001.

  • Sony started as a conglomerate that deals with
    consumer audio-video products before moving into
    the media business in the late 1980s. Today its
    Sony Pictures Entertainment is one of the seven
    major movie houses in Hollywood, while Sony Music
    is one of the top five distributors of albums
  • Heading into 2003, Sony's strategy is a gamble
    connecting each of its consumer products to the
    Internet and then using them as a platform to
    deliver content from its entertainment divisions.

  • Film
  • Sony Pictures Entertainment
  • Columbia TriStar
  • Sony Pictures Classics
  • Screen Gems
  • Television
  • Sony Pictures Television
  • AXN
  • Animax Japan
  • SoapCity
  • GAME SHOW NETWORK (50 with Liberty Media)
  • Movielink (jointly owned with Paramount Pictures,
    Sony Pictures Entertainment,  Universal Studios
    and Warner Bros. Studios)
  • Music
  • Sony BMG Music Entertainment (50 with
    Bertelsmann)Labels include Arista Records, BMG
    Classics, BMG Heritage, BMG International
    Companies, Columbia Records, Epic Records, J
    Records, Jive Records, LaFace Records, Legacy
    Recordings, RCA Records,

  • Other
  • Sony Electronics
  • Sony Computer Entertainment America
  • PlayStation
  • 989 Sports
  • Sony Connect Inc.
  • Metreon
  • (last updated 9/28/2004)
  • RCA Victor Group, RLG - Nashville, Sony
    Classical, Sony Music International, Sony Music
    Nashville, Sony Wonder, So So Def Records, Verity
  • Sony/ATV Music Publishing (joint venture with
    Michael Jackson)
  • Music Choice (venture with Time Warner, EMI,
    Motorola, Microsoft, and several cable companies
    Cox, Comcast, Adelphia, Time Warner Cable)

The Rise of the Media Conglomerates
  • The rise of media conglomerates can be traced
    back to the 1980s 1990s which saw a lot of
    mergers and buyouts of media and entertainment
  • Bagdikian, a media scholar who studied this
    phenomenon noted that the last twenty years
    witnessed a trend where the ownership of the
    media industry was increasingly concentrated in
    the hands of a few companies. For example, in 1983

  • fifty corporations dominated most of every
    mass medium and the biggest media merger in
    history was a 340 million deal. ... In 1987,
    the fifty companies had shrunk to twenty-nine.
    ... In 1990, the twenty-nine had shrunk to
    twenty three. ... In 1997, the biggest firms
    numbered ten and involved the 19 billion
    Disney-ABC deal, at the time the biggest media
    merger ever. ... In 2000 AOL Time Warner's 350
    billion merged corporation was more than 1,000
    times larger than the biggest deal of 1983.

  • And when the dust settle, there emerge a global
    media system that is dominated by a group of
    media conglomerates.
  • They are AOL Time Warner, Disney, General
    Electric, News Corporation, Viacom, Vivendi,
    Sony, Bertelsmann, ATT and Liberty Media (as of
    2002) which forms what media scholar McChesney
    calls, as the first-tier media

  • conglomerates which is followed by a
    second-tier made up of 50 or so companies doing
    media-related business at either national or
    regional level.
  • All of these conglomerates each do more than one
    billion dollars worth of business.
  • This trend is not restricted to the US but is a
    worldwide phenomenon.

(No Transcript)
Vertical Integration as Basic Characteristics of
Media Conglomerates
The Profit Motive
  • Essentially, all activities of the media industry
    centered around the creation and packaging of
    intellectual property with the aim of maximizing
    revenues by selling it as many times as is
    feasible to the widest audience.
  • Given its aim of revenue maximization, the media
    industry have focused on the vertical integration
    business strategy.

What is Vertical Integration
  • This term describes a style of ownership and
    control where a group of companies are united
    through a hierarchy and share a common owner
    where each member of the hierarchy produces a
    different product or service, and the products
    combine to satisfy a common need.

  • The idea behind vertical integration is that all
    activities of an industry are ordered in a
    sequence which starts upstream at the early
    stages in the production process, works its way
    through succeeding or downstream stages where
    the product is processed and refined, and
    finishes up as it is supplied or sold to the
  • Also known as vertical supply chain.

The Media Supply Chain
Production creating media content
Packaging content is collected together
assembled as media product
Distribution delivering Product to customers
  • By controlling the media vertical supply chain, a
    conglomerate can generate enormous profit out of
    its media products.
  • Therefore, if a media conglomerate has a
    successful movie, it could promote the file
    through its broadcast properties, and then use
    the film to spin off TV programs, musical CDs,
    books, merchandise, etc.

  • As Viacoms CEO Redstone put it When you make a
    movie for an average cost of 10 million and then
    cross promote and sell it off of magazines,
    books, products, television shows out of your own
    company, the profit potential is enormous.
  • For example, Disneys 1994 animated film The Lion
    King generated over USD 1 billion in profit. It
    also led to a lucrative Broadway show, a TV
    series and all sorts

  • of media spin-offs. It also led to 186 items
    of merchandising.
  • The common parlance for such practice is
    synergy which attempts to boost sales by
    promoting products across media where for every
    hit movie (or any other media product) there is
    a TV series, soundtracks, books, plastic mugs,
  • In another example of synergy, Disney takes its
    lucrative ESPN cable channel and use the name to
    generate other

  • products, including ESPN radio network. In
    1996, Disney launched ESPN Magazine to compete
    directly with AOL-Timer Warners Sports
    Illustrated. Using incessant promotion on ESPN,
    the magazine exceeded initial estimates with a
    circulation approaching 500,000 after a few
    months. This resulted in the launch of ESPN Grill
    restaurants to appeal to those who wish to
    combine sports with dining out.

  • What we are witnessing today is that media
    conglomerates are no longer producing media
    products as creating brands that are durable and
    profitable which is promoted through its media
  • Branding has become the primary means of
    attracting and keeping audiences while offering
    new commercial possibilities.

  • As have been suggested earlier, branding enables
    media conglomerates to enter the world of selling
    retail products based on their branded media
    products which have been pursued aggressively.
  • Fore example, in 197 Disney sold USD 25 billion
    worth of Disneys merchandise, (more than twice
    the global sales of Toys R Us) with 660 retail
    stores selling its products while its licensing
    revenue was USD 10 billion in the same year.

  • The moral of the story is size matters! If a
    media company controls a vertical supply chain,
    it can use the full resource of its organizations
    to squeeze the last ounce of profitability out
    of its media products.

Conclusion Why Should I be Concerned?
  • Historically speaking, the origins of what we
    term as the media has its roots in newspapers
    that proliferated in the 19th century.
  • The function of newspapers was to inform and
    educate its readers on the issues of the day as
    well as disseminating ideas.
  • However, the 20th century have witnessed the
    gradual evolution of the media that moves away
    from news to entertainment.

  • And the trend in media ownership in the past
    twenty is simply accelerating the medias move
    towards entertainment.
  • With the emphasis towards profitability, rather
    than social responsibility, media content have
    increasingly been watered (some would say dumbed)
    down in an effort to entertain us rather than
    inform and educate us (or what Neil Postman calls
    as Amusing Ourselves to Death.

  • And given the pervasiveness of the media in our
    lives, its influence is undeniable.
  • We are what we read, see and hear through the
    media. And the message of the media is simply
    this Resistance is futile. Become part of the
    mindless audience hive that consumes what we

Tutorial Question
  • For the next 3 days, you will keep a log of the
    media that you spend time with together with a
    brief note of the content of such media.
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