978-1319058517 Chapter 13

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Chapter 13

Media Economics and the Global Marketplace

In this chapter, we examine the economic impact of business strategies on various media.

We will:

• Explore the issues and tensions that are part of the current media economy

• Examine the rise of the Information Age, distinguished by flexible, specialized, and global markets

• Investigate the breakdown of economic borders, focusing on media consolidation, corporate mergers,

synergy, deregulation, and the emergence of an economic global village

• Address ethical and social issues in media economics, investigating the limits of antitrust laws, the

concept of consumer control, and the threat of cultural imperialism

• Examine the rise of new digital media conglomerates

• Consider the impact of media consolidation on democracy and on the diversity of the marketplace

Preview Story:

In 1997, Netflix started as a modest idea to rent movie DVDs online and ship them through the mail.

Netflix struggled the first five years and unsuccessfully offered to sell themselves to Amazon and

Blockbuster. In 2007, Netflix developed a better movie distribution system: Internet streaming, which

proved to be immensely popular. In 2010, Netflix began expanding to global markets. Netflix began

creating its own original series in 2013, and by 2016, it boasted that it had become “the world’s leading

Internet television network with over 75 million streaming members in over 190 countries.” Netflix also

changed TV culture and gave rise to binge-watching by releasing entire seasons of its own original series

and licensing other series. Netflix’s success has been built on providing easy, on-demand, affordable,

personalized access to excellent content. In doing so, Netflix not only killed the video store, it’s also in

the process of killing regular broadcast and cable television.

I. Analyzing the Media Economy

A. The Structure of the Media Industry.

B. The Business of Media Organizations.

1. Maximizing Profits.

1. Balancing Profits and the Public Good.

II. The Transition to an Information Economy

A. From Regulation to Deregulation.

1. Deregulation Spurs the Formation of Media Conglomerates.

B. Media Powerhouses: Consolidation, Partnerships, and Mergers.

C. Business Tendencies in Media Industries.

1. Flexible Markets and the Decline of Labor Unions.

2. Downsizing and the Wage Gap.

D. Economics, Hegemony, and Storytelling.

III. Specialization, Global Markets, and Convergence

A. The Rise of Specialization and Synergy.

B. Disney: A Postmodern Media Conglomerate.

1. The Early Years.

2. Global Expansion.

3. Disney Today.

C. Global Audiences Expand Media Markets.

D. The Internet and Convergence Change the Game.

1. The Rise of the New Digital Media Conglomerates.

2. The Digital Age Favors Small, Flexible Start-Up Companies.

IV. Social Issues in Media Economics

A. The Limits of Antitrust Laws.

1. Diversification.

2. Applying Antitrust Laws Today.

B. The Fallout from a Free Market.

1. Equating Free Markets with Democracy.

2. Consumer Choice versus Consumer Control.

C. Cultural Imperialism.

V. The Media Marketplace and Democracy

A. The Effects of Media Consolidation on Democracy.

B. The Media Reform Movement.

Case Study: Blacks Own Just 10 U.S. Television Stations. Here’s Why.

Media Literacy and the Critical Process: Cultural Imperialism and Movies

Case Study: From Fifty to a Few: The Most Dominant Media Corporations

LECTURE IDEAS

I. Analyzing the Media Economy

• Discuss advantages and disadvantages of media monopolies, oligopolies, and limited competition.

Contrast these three models with unfettered competition.

• Discuss if/how media corporations can balance profits with the “public good.”

II. The Transition to an Information Economy

• Describe the climate of deregulation from the late 1970s onward, and note the consequences of

deregulation for media industries. Provide current examples of monopoly, oligopoly, and limited

competition in mass media.

• Explain the concept of hegemony and how it relates to the way a society creates and accepts what it

deems “common sense.” Discuss how this process might undermine important critical discussions

about the national (and global) media systems.

III. Specialization, Global Markets, and Convergence

• Explain how the emphasis on mass production and mass consumption led to the development of mass

media outlets, specialized niche markets, and further media consolidation. Note how niche

programming has also made greater accuracy in audience ratings systems an important issue in the

television industry.

• Consider Disney (or News Corp., Comcast, or Time Warner) as an example of postmodern media

conglomeration:

• In 1995, Disney bought the ABC television network, adding properties like ESPN to its

corporate holdings.

• In 2001, Disney bought Fox Family Network and renamed it ABC Family (rebranded as

FreeForm in 2016).

• In 2006, Disney acquired top animation studio Pixar, which is responsible for Toy Story, The

Incredibles, Monsters Inc., and Toy Story 3, launching Disney once again into the preeminent

position in animated film.

• In 2009, the studio acquired Marvel Entertainment, famous for its wide stable of comic-book

action heroes and successful film franchises.

• In 2012, Disney acquired Lucasfilm—and with it the Star Wars and Indiana Jones franchises.

• Describe the major digital corporations. Explain how they differ from traditional media

corporations and how they are similar in their need for narrative.

• In the past, when YouTube users uploaded copyrighted clips, copyright holders would typically ask

YouTube to remove the clip. Now, some copyright holders allow these clips to remain on

YouTube, and instead they split the advertising revenue that YouTube gets from running ads with

the clip. These clips are automatically recognized by YouTube’s Content ID program, which scans

clips and compares them to material provided by the copyright holder.

IV. Social Issues in Media Economics

• A trust is a collection of investments. Antitrust legislation is thus concerned with situations in which

owners/corporations have too many investments concentrated in a certain area, leading to a

noncompetitive monopoly or oligopoly.

• Describe why capitalism is so often used as a synonym for democracy and why it has become

increasingly difficult to criticize the concept of media conglomeration. Also explain why media

giants are still dependent on independent, alternative artists, producers, and writers.

• Describe why capitalism is so often used as a synonym for democracy and why it has become

increasingly difficult to criticize the concept of media conglomeration. Also explain why media

giants are still dependent on independent, alternative artists, producers, and writers.

• International media conglomeration is also a force in making English a universal language. The New

York Times reports that the media conglomerates that have grown the fastest are those that have

adopted English as the primary language of business. Big publishers in Spain, Italy, and Japan have

resisted using English, which has limited their international growth. (See Doreen Carvajal,

“Americans Buy Books. Foreigners Buy Publishers,” New York Times, August 10, 1997, sec. 4, p. 4.)

V. The Media Marketplace and Democracy

• The U.S. Supreme Court made an important decision with regard to political speech in 1978 in

First National Bank of Boston v. Bellotti. In a five-to-four vote (with William Rehnquist

dissenting), the Court allowed virtually unregulated amounts of special-interest money into

political campaigns. This decision changed the media environment in unprecedented ways: It gave

a huge amount of power to big media companies, which benefit from political advertising.

• In 2010, also in a five-to-four vote, the U.S. Supreme Court declared in Citizens United v.

Federal Election Commission that the U.S. government cannot ban political spending by

corporations in candidate elections.

• When Michael Eisner was Disney’s CEO, he was quoted as saying, “We have no obligation to

make history. We have no obligation to make art. We have no obligation to make a statement. To

make money is our only objective.”

• You may want to consider having your students read portions of Aldous Huxley’s Brave New

World and George Orwell’s 1984. Neil Postman summarized the two books’ fictional worldviews

in the foreword to his 1984 book, Amusing Ourselves to Death:

What Orwell feared were those who would ban books. What Huxley feared was that there

would be no reason to ban a book, for there would be no one who wanted to read one. Orwell

feared those who would deprive us of information. Huxley feared those who would give us so

much that we would be reduced to passivity and egoism. Orwell feared that the truth would

be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance.

Orwell feared we would become a captive culture. Huxley feared we would become a trivial

culture, preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal

bumblepuppy. As Huxley remarked in Brave New World Revisited, the civil libertarians and

rationalists who are ever on the alert to oppose tyranny “failed to take into account man’s

almost infinite appetite for distractions.” In 1984, Huxley added, people are controlled by

inflicting pain. In Brave New World, they are controlled by inflicting pleasure. In short,

Orwell feared what we hate will ruin us. Huxley feared that what we love will ruin us. This

book is about the possibility that neither Huxley, nor Orwell, was right.

• Here is an excerpt of a letter that Media & Culture author Richard Campbell sent to the editor of

Brill’s Content in 1999, exposing the problems arising from conflicts of interest faced by

journalists working for big corporations and whose voices are most likely to be heard:

For a democracy to work best, news media need to be independent of political parties and

corporate decrees. We live in a world where journalists have turned into TV stars,

commanding multimillion-dollar salaries and $20,000 speaker fees. In such a world, the era

of 60 Minutes is ending. The turning point: the 1995 tobacco industry story that Don Hewitt

killed after feeling the heat from his CBS corporate bosses. Unfortunately, many of the star

journalists who should be investigating this business story are so heavily invested in or

beholden to their multinational corporate bosses that it is no longer in their best interest to tell

this tale to the public.

MEDIA LITERACY DISCUSSIONS AND EXERCISES

MARKETING FOR INDEPENDENT COMPANIES

Imagine that you are either a small independent record label or a book publisher. You have produced a

high-quality product, but it has limited appeal. Without relying on signing distribution agreements with

giant companies, how might you go about creating a market for your product and reaching the audience

that might be interested in your product? Be specific.

FEMALE AND MINORITY OWNERSHIP IN MEDIA INDUSTRIES

How important is it for women and minorities to own radio stations, television channels, and so on?

Should the U.S. government (e.g., through the Federal Communications Commission) take action to

increase the percentage of media properties owned by women and members of minority groups?

GOOGLE-SOFT?!

Microsoft tried to buy Google in 2003, but Google rejected the offer (mentioned above). Have students

speculate on what such an acquisition would have meant for Microsoft, for Google, and, most important,

for users. Which products would we have? Which would we not have? How might such an arrangement

been of even greater benefit to consumers? In what ways would the imagined consolidation have

undermined progress in digital media?

DISNEY’S CULTURE OF MARKETING SYNERGY

Pre-Exercise Question: To what extent were you immersed in Disney culture?

Consider Disney animated movies such as The Little Mermaid (1989), Aladdin (1992), The Lion King

(1994), Toy Story (1995), Mulan (1998), Toy Story 2 (1999), Monsters Inc. (2001), Finding Nemo (2003),

The Incredibles (2004), Up (2009), Toy Story 3 (2010), Cars 2 (2011), Brave (2012), Frozen (2013),

Maleficent (2014), Inside Out (2015), and Finding Dory (2016). What do you think about the culture that

Disney creates around these kinds of movies? Is this synergy blatant overcommercialization that exploits

children and their parents, or does it create a worthwhile shared culture for children and adults?

NEWSPAPER READERSHIP IN INDIA AND THE UNITED STATES

The number of newspaper readers is rising in India but declining in the United States. Why? Do

newspaper media companies in India better serve their cities?

In this Critical Process exercise, investigate a U.S. newspaper and a newspaper that is serving one or

more of India’s largest cities, such as Mumbai, Calcutta, or New Delhi. Do some general research to

choose your cities and newspapers (if you can, try to find stories about the newspapers and the cities for

context). After choosing your papers, find out what they are doing to serve their readers.

1. Description. In a LexisNexis search, locate recent articles about your newspapers. Find out if the

paper has a parent corporation or if it owns other media properties. Using the newspapers’ Web

sites, read the papers for a three-day period, and log a typical day’s news coverage. (Work with

your instructor to limit which sections of the paper’s site you will use for your analysis.) Most

major Indian newspapers offer an online English version. Create categories of news and

information based on what you read. How much local and national information is there? How much

do the two papers cover parts of the world outside their region and nation?

2. Analysis. What patterns did you find in the papers’ coverage of their cities and nations? What kind

of news is offered, and what kind of information is available about local and national events? What

patterns did you find in the stories devoted to events and issues from abroad? What other nations

and what kinds of issues tended to get covered? Are things missing from the coverage?

3. Interpretation. Look at what you have discovered. What does it mean? Can you make an argument

about whether or not the cities represented by these papers are well served by their newspapers?

Just from looking at the three days of coverage, can you offer any reason why the U.S. paper may

be in decline while the Indian paper might be on the rise? Provide evidence.

4. Evaluation. Based on what you have found, are the companies that are running these papers doing a

good or bad job? What are they doing well? What are they doing poorly?

5. Engagement. Try to interview (via e-mail) editors from one or both of the papers. Ask them how

well they believe that they are serving their cities. Ask them about readership and who their

customers are. Why do these editors think readership is going up or down? How is the Internet

affecting their readership?

DECONSTRUCTING THE CONGLOMERATES

Pre-Exercise Question: Name a recording that you’ve recently heard or a movie or television show that

you’ve recently watched. Do you know which parent company is responsible for it?

This Critical Process exercise is designed to help students grasp the extent of mass media

conglomeration.

Assign small teams of students to conglomerates from the list of the world’s ten largest media

companies (see the Case Study, “From Fifty to a Few: The Most Dominant Media Corporations”).

1. Description. Have each team research all the subsidiaries (as many as can be identified) of the

conglomerate. Make sure they note (a) some of the brand-name products of these subsidiaries and (b)

Periodical Literature, and the like for updates and for other information about their conglomerate

that they can bring to the class discussion. When researching, students should consider the

following possible subsidiary categories: music record labels, song libraries, music clubs, music

manufacturing, motion-picture studios/production companies, film libraries, movie theaters, cable

and satellite channels, broadcasting, cable franchises, television production/distribution, television

libraries, radio, books, magazines, multimedia, video arcades, theme parks, manufacturing, retail,

sports, and real estate.

For a more in-depth research paper, you may also want to situate the conglomerate’s history in

media history. For example, Viacom owns Paramount, but what is Paramount’s role in film history?

What is CBS’s role in TV history? What is MTV’s role in cable history (and Nickelodeon’s, etc.)?

How did a particular conglomerate get so big, and when? What is the strategy behind its

consolidation? Describe the company’s headquarters location, numerous office locations, number

of employees, and a general idea of this company’s global expansiveness. Who is the CEO, and

what is his or her reputation? Why is this company doing so well or not so well?

does the conglomerate dominate a particular medium?

3. Interpretation. What does the success of the particular conglomerate (and its synergistic practices)

do toward disseminating a large number of voices in a media system? To what extent is there a

diverse media landscape?

4. Evaluation. Some of the larger questions to consider: Are there positive aspects to conglomeration,

and if so, what are they? Does the parent company have a strong public identity? Why or why not?

If you were to effectively explain company conglomeration to your peers, how would you frame it?

What examples would you choose? Do you think people should understand where media content

comes from, and if so, why?

5. Engagement.

• Take action using the FAIR (Fairness & Accuracy In Reporting) Media Activism Kit:

fair.org/take-action-now/media-activism-kit.

• Click on “Take Action” at the Free Press Web site (http://www.freepress.net) to learn about

activist opportunities. For this chapter, the page that is most relevant is Fighting Media

Consolidation (http://www.freepress.net/media-consolidation). This assignment may work well as

a paper or a presentation.

• Identify an issue that students find important (e.g., net neutrality). Have them find relevant

information on the FCC Web site. Then they should take action by contacting the FCC to express

their views.

TRACKING RECENT DEVELOPMENTS IN MEDIA OWNERSHIP: A SEMESTER-LONG

CRITICAL PROCESS EXERCISE AND PAPER

In this exercise students discover the most recent developments in media ownership, and they become

familiar with the Benton Foundation’s news aggregation site. The paper they produce is due in sections,

which correspond with the steps in the Critical Process.

1. Description. Read recent developments on media ownership at Benton Foundation’s Web site:

https://www.benton.org/taxonomy/term/21. Take notes on topics that have multiple stories or

mentions in the current year. What issues or developments have received a lot of recent attention,

discussion, or commentary? (Focus only on information from the current year.) Write a one-page

synopsis of the information you found about current topics in the industry. Cite your sources

properly.

2. Analysis. Look for one development or pattern that has received significant attention in the current

year. Choose one specific trend, and write one or two pages with details about the information you

found about that trend. Continue to track news about your topic as the semester progresses. Cite

sources properly.

3. Interpretation. What does the trend mean for the state of media ownership? Is it evolving? How?

What does it tell you about media in general at the current time? What might it say about our culture

or our society? Can your information help us interpret the role of media ownership in our lives? Write

up your interpretation in a five-page paper. (The first page should be a synopsis of the trend, with

proper citations.) You might not have to provide information from your sources for the next four

pages because this section is your interpretation of the trend. (Save any ideas you have about whether

the trend is “good” or “bad” for the Evaluation step of the Critical Process.)

4. Evaluation. Is the trend “good” or “bad”? For media? society? culture? democracy? us? What do you

think might happen in the future?

5. Engagement. Are there any actions you can take (related to your trend and media ownership)?

Possibilities include posting your views on social media, creating a petition, or contacting people in

media to see what they think of your interpretation and evaluation. (This step need not be required if

students are not motivated to take action.)

Note: This exercise works well if each step of the Critical Process is due two weeks after the prior step is

due. Limiting students to information from the current year helps keep them on track.

CLASSROOM MEDIA RESOURCES

LAUNCHPAD FOR MEDIA & CULTURE: http://www.macmillanhighered.com/mediaculture11e

Disney’s Worldwide Hit: Frozen (2013, 1:09 minutes). A brief clip shows a scene from Disney’s 2013

international blockbuster Frozen.

The Impact of Media Ownership (2010, 4:15 minutes). In this video, leading media professionals discuss

the rampant media consolidation of the past few decades and its impact on what gets covered and

what gets left out of news coverage. Featuring Richard Campbell, Noam Chomsky, Jonathan

Adelstein, and David Game.

The Money behind the Media (2009, 3:42 minutes). In this video, producers, advertisers, and advocates

discuss how ownership systems and profits shape media production. Featuring Jamal Dajani, Jeff

Goodby, Mickey Huff, and Robin Sloan.

Eugene Mirman vs. Time Warner Cable (2011, 3:12 minutes). In this video, comedian Eugene Mirman

reads an open letter he wrote to Time Warner Cable expressing his dissatisfaction with their customer

service.

VIDEOS/DVDS/CDS

Ammo for the Info-Warrior (2002, 55 minutes). A series of five- to ten-minute documentaries combining

high-impact images with commentary by media experts, scholars, and political leaders as well as with

music cuts by top recording artists like Peter Gabriel and the Beastie Boys. Of particular relevance for

this chapter is the short featuring Ralph Nader, who talks about the impact of big business on the

media system. Distributed by the Media Education Foundation, 800-897-0089;

http://www.mediaed.org.

Digital Disconnect: How Capitalism Is Turning the Internet Against Democracy (2017, 55 minutes).

Based on Robert W. McChesney’s critically acclaimed book, Digital Disconnect argues that the

revolutionary and democratizing potential of the Internet has been blunted by consumer capitalism

and corporate power. Distributed by the Media Education Foundation, 800-897-0089;

http://www.mediaed.org.

Mickey Mouse Monopoly: Disney, Childhood, and Corporate Power (2001, 52 minutes). This

video/DVD, an insightful analysis of Disney’s cultural pedagogy, examines its corporate power and

explores its vast influence on our global culture. Distributed by the Media Education Foundation,

800-897-0089; http://www.mediaed.org.

Rich Media, Poor Democracy (2003, 30 minutes). Adapted from Robert McChesney’s book of the same

title, this video demonstrates how journalism has been compromised by the corporate bosses of

conglomerates such as Disney, Sony, Viacom, News Corp., and Time Warner. Distributed by the

Media Education Foundation, 800-897-0089; http://www.mediaed.org.

WEB SITES

AFL-CIO Executive Pay Watch: http://www.aflcio.org/Corporate-Watch/Paywatch-2014

Benton Foundation: https://www.benton.org/taxonomy/term/21 [media ownership news]

Center for Public Integrity: http://www.publicintegrity.org

Columbia Journalism Review, “Who Owns What”: http://www.cjr.org/resources

Common Cause: http://www.commoncause.org/issues/media-and-democracy/media-monopolization

Free Press: http://www.freepress.net/media-consolidation

Pew Research Center: http://www.pewresearch.org/topics/media-ownership