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316
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. By 2018, Netflix generated about
$6.8 billion in annual revenue, making it “the world’s leading Internet television network with
over 125 million streaming members in over 190 countries enjoying more than 140 million hours
of TV shows and movies per day, including original series, documentaries and feature films.”
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Netflix also moved closer to joining the world’s top digital companies when its stock market
value surged to $153 million, surpassing Disney and Comcast. Overall, Netflix has changed TV
culture and given 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
2. Balancing Profits and the Public Good
II. The Transition to an Information Economy
A. From Regulation to Deregulation
1. Deregulation Spurs 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
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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
Examining Ethics: Are the Big Digital Companies Too Big?
Global Village: China’s Dominant Media Corporations Rival America’s
Media Literacy and the Critical Process: Cultural Imperialism and Movies
LECTURE IDEAS
I. Analyzing the Media Economy
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• 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).
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• 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.
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• 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.”
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• 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,
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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?
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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
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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.
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Assign small teams of students to conglomerates from the list of the world’s ten largest
media companies (see p. 411).
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) the parent company’s percentage of partial ownership (either full or a
specific partial percentage).
Students can begin research with the Columbia Journalism Review’s “Who Owns What”
(http://www.cjr.org/resources) and the Free Press’s “Who Owns the Media”
(http://www.freepress.net/ownership/chart). However, they should also check the company’s
own corporate Web sites as well as LexisNexis, the New York Times Index, Readers’ Guide
to 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
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expansiveness. Who is the CEO, and what is his or her reputation? Why is this company
doing so well or not so well?
2. Analysis. How does the conglomerate use its size to cross-promote its products? To what
extent 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.
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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.)
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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:
launchpadworks.com
Disney’s Worldwide Hit: Frozen (2013, 1:09 minutes). A brief clip shows a scene from Disney’s
2013 international blockbuster Frozen.
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.
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.
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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.
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.
ATT&T, Time Warner and the Entire Media Merger Frenzy Explained (June 14, 2018, 2:44
minutes). Wall Street Journal reporter Amol Sharma discusses why media mergers are on the
rise in 2018. Available at https://www.youtube.com/watch?v=oly6YnOGZrw.
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.
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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.
This Mouse Swallows Part of a Fox: Disney Buys Most of Murdoch Empire (Dec. 14, 2017, 2:54
minutes) NPR Morning Edition podcast discusses motivations behind Disney deal to acquire
much of the Hollywood holdings of 21st Century Fox. Available at
https://www.npr.org/sections/thetwo-way/2017/12/14/568829541/this-mouse-swallows-part-
of-a-fox-disney-buys-much-of-murdoch-empire.
What would the AT&T-Time Warner merger mean for consumers? (Nov. 20,2017, 5:28 minutes.)
The Justice Department sued to block a $85 billion merger between media and telecom giants
AT&T and Time Warner, in the first major antitrust case taken up by the Trump
administration. https://www.youtube.com/watch?v=MDvpqcSRHFk.
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
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Pew Research Center: http://www.pewresearch.org/topics/media-ownership
FURTHER READING
Bagdikian, Ben H. The New Media Monopoly. Boston: Beacon, 2004.
Compaine, Benjamin M., and Douglas Gomery. Who Owns the Media? Competition and
Concentration in the Mass Media Industry. 3rd ed. Mahwah, NJ: Lawrence Erlbaum, 2000.
Croteau, David, and William Hoynes. The Business of Media: Corporate Media and the Public
Interest. 2nd ed. Thousand Oaks, CA: Pine Forge, 2006.
Greider, William. Who Will Tell the People? The Betrayal of American Democracy. New York:
Simon & Schuster, 1992.
Herman, Edward S., and Noam Chomsky. Manufacturing Consent: The Political Economy of the
Mass Media. New York: Pantheon, 1988.
Klaehn, Jeffery, ed. The Political Economy of Media and Power. New York: Peter Lang, 2010.
McChesney, Robert W. Digital Disconnect: How Capitalism Is Turning the Internet Against
Democracy. New York: New Press, 2013.
_________. The Political Economy of Media: Enduring Issues, Emerging Dilemmas. New York:
Monthly Review Press, 2008.
McChesney, Robert W., and John Nichols. Our Media, Not Theirs: The Democratic Struggle
Against Corporate Media. New York: Seven Stories, 2002.
Nichols, John, and Robert W. McChesney. Dollarocracy: How the Money and Media Election
Complex Is Destroying America. New York: Nation Books, 2013.
Postman, Neil. Amusing Ourselves to Death: Public Discourse in the Age of Show Business.
New York: Penguin, 2006.
PART 5
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Democratic Expression and the Mass Media
The digital turn and online outlets—particularly Facebook, Twitter, and YouTube—have
provided new methods that allow ordinary citizens and nonprofit groups to do some of the work
once performed by investigative journalists. The lack of centralized control over the Internet also
means that people have been able to use digital technologies and our interconnectedness as a way
to be heard and to effect change—especially in countries where press freedom has been limited
or compromised. Both the Arab Spring uprisings in the Middle East and the Occupy Wall Street
movement serve as examples. Another example is the role that “fake news” and e-mails from
hacked accounts, disseminated through social media, might have played in the 2016 presidential
election. The digital turn has also created significant ethical challenges. “Hacktivists” like
WikiLeaks and Anonymous and whistleblowers like Edward Snowden have raised issues
regarding whether some government and business documents should remain secret—to protect
national security, volatile economic markets, or vulnerable diplomats or other individuals at
work in difficult areas of the world—or if all information should be made available to the public
at all times. How shall we police the online world and control its overwhelming array of voices
and traffic? What concerns should we have as traditional news media shrink? We face these
questions, and many others, as our society continues to explore how powerful mass media fit into
a democracy.
