Chapter 3: The Media Business: Consolidation, Globalization, and the Long Tail
Summary and Learning Objectives
The American media industry, the largest in the world, is run by private business with only
minor government control. Having gotten its start in the 1640s, it was among the first industries
in the American colonies. However, media business did not become big until the 1830s, when
high levels of literacy and the development of the steam-powered printing press allowed for the
mass production of newspapers, books, and magazines. The growth of the electronic media in the
second half of the 20th century helped create a national media culture, as the same content
became available simultaneously throughout the country.
For many years, six large media conglomerates dominated the American and much of the global
media. They own the major television networks, broadcast stations, cable channels and
providers, newspapers, magazines, record labels, movie studios, and Internet services. These
companies tend to be vertically integrated—producing, promoting, and delivering content to the
consuming audience. But there are a number of new players in the media business who are also
significant. They provide cable television and Internet services, online search and content, and
integrated media content and hardware. Among the biggest media companies operating in the
United States are Time Warner, Disney, News Corporation, 21st Century Fox, Viacom/CBS,
Bertelsmann, Comcast/NBCUniversal, Google, and Apple.
Recent years have seen both legacy and newer media companies struggle over what is the right
size to be in order to be the most competitive they can be in the marketplace. This has resulted in
a rapid series of sales, mergers, and transformations of these companies.
Widespread access to the Internet has brought about the rise of smaller scale new media
companies that specialize in providing a wide range of media content that appeals to relatively
small numbers of consumers. When combined, these niche markets, known as the long tail of
media, can rival the size of the markets for blockbuster media content.
After studying this chapter, you will be able to:
1. Describe how the media developed as a private industry in the United States from the colonial
period to the present day.
2. Summarize how control of the media industry has changed from the 1950s to the present day.
3. Explain why Apple, Google, and other tech companies may also be considered leading media
companies.
4. Explain how media companies struggle with the concept of how big they should be.
5. Describe the concept of long-tail media and its implications for the future of the media industry
with the concept of how big they should be.
Review Questions
1. How does Facebook make use and profit from user data? How has this created problems for the
company?
2. How is media ownership different in the United States than in much of the rest of the world?
3. What do the “legacy conglomerates” have in common as media companies?
4. How do the new Big Media companies differ from the older legacy companies?
5. Why are large media companies constantly merging and breaking up with each other?
6. How do long-tail media differ from short-head media?
Media Literacy Exercises
Synergy
Pick a popular current movie. What studio produced it? What major media corporation owns the
studio that produced it? Next, identify as many cross-promotion partnerships as you can. For
example, how many magazines owned by the same corporation are featuring articles about the
exercise at the Internet movie database at:
• http://imdb.com
Notes: This assignment is going to be very much a matter of degree. Commercial blockbuster
movies are going to have enormous levels of product tie-ins, while more serious movies will have
far fewer. Even the movie The Hours, which featured Virginia Woolf as a character, had a tie-in
promotion with several of Woolf’s books. You might consider asking your students to compare the
number of tie-ins each movie has with the size of its budget. This assignment can be done as a paper
for a grade or as a basis for a class discussion in a smaller enrollment section.
You can find a good estimate of many movies’ budgets at
• http://www.boxofficemojo.com
A second useful site is
• http://www.the-numbers.com/
As always, feel free to use whatever grading scheme works best for you. I use a rubric-based
system, where I assume that most students will complete the assignment in a competent manner
and should earn a grade of B.
Levels of Achievement
Criteria
Deficient
Less Than
Assigned
As Assigned
Superior
Length
Weight
35.00%
0%
Assignment is
significantly under
length
65%
Assignmen
t is under
assigned
length
85%
Assignment is
approximately 500
words
100%
Assignment is fully
developed essay that
goes beyond basic
assignment
Movie
Background
0%
65%
85%
100%
Weight
35.00%
Assignment omits
multiple required
details, makes
incorrect claims
Response
on who
produced
and
funded the
movie is
incomplet
e
Assignment names
studios/production
companies,
discusses what is
known about
ownership, clear
evidence of research
Assignment contains
all required
materials, elaborates
on details
Promotiona
l
Partnership
s
Weight
30.00%
0%
Assignment gives
minimal/nonexisten
t discussion of
partnerships/syner
gy
65%
Assignmen
t is vague
or
incomplet
e; shows
little sign
of
research
85%
Assignment gives
clear examples of
actual promotional
partnerships/syner
gy
100%
Assignment goes
beyond basic
requirements to
explain how these
partnership/synergi
es work
Suggested Readings
• Anderson, C. (2008). The Long Tail: Why the Future of Business is Selling Less of More. New York:
Hyperion Books. Make sure you get the revised 2008 paperback edition if you are buying this
book for the first time. This is, in my mind, one of the most important books about media
economics to come out in the last 10 years and provides one of the best explanations of the
changes taking place in the media industry. This is a great book to provide as an add-on if you
are teaching an honors section of your class.
• Schudson, M. (1995). The Power of News. Cambridge: Harvard University Press; Gans, H.
(1979). Deciding What’s News. New York: Pantheon Books. Both of these books do an excellent
job of looking at how the news media behave and the influences they have on society as a
• All of the Chapter 3 links posted to my RalphEHanson.com blog at
http://www.ralphehanson.com/category/chapter-3/
Lecture Builders
Lecture Builder and Classroom Debate—Who Controls the Media?
Despite the growing presence of the long tail, the news and entertainment business is still
dominated by a small number of highly profitable big businesses. This is clearly a source of concern
for those who worry that only a limited number of interests control what is being presented to the
public at large. But media scholar Michael Schudson argues that, even though the media are run by
profit-seeking capitalists, the media do a good job of providing responsible journalism. The New
York Times still views its primary responsibility as providing readers with an accurate reporting of
the day’s news. Furthermore, the media presents a variety of viewpoints, even if they tend to focus
on the middle ground rather than the extreme left or right.
Secret 7—It is easy to view the media giants as powerful forces (the “they” of Secret 7—There is no
“they”) that control the lives of their audiences. While it is true that there is no “they,” reality is far
more complex than that. Numerous pressures on the media influence what they deliver—pressures
that come from owners, stockholders, advertisers, or even the audiences. Companies seek profits,
but they must also seek credibility, largely because their credibility gives value to the product they
are selling. As long as a wide range of audiences exists, the media will strive to carry a diversity of
content.
Bob Herbold of Microsoft told Advertising Age that the media landscape is being changed radically
by the rise of broadband networks, which are high-speed channels for sending data and video into
the home via cable or wireless connections. No longer can the networks dictate what people will
view. As Herbold puts it, “One of the things that will be dramatically different than the past is that
your ability to capture the individual for a period of time and almost force them to watch something
will be greatly diminished.”
Consumers now have the option of going to traditional Big Media companies or viewing events
directly. Those with the time and inclination can watch the actions of the U.S. government on three
separate C-SPAN networks. Anyone who can afford a high-speed Internet connection can receive
virtually an unlimited array of media choices.
Secret 1—Critics often ask whether Big Media control society. This is a worthy question, but it is
overly simplistic because it assumes that a single force runs these powerful institutions. The media–
literate consumer will remember Secret 1—The media are essential components of our lives—and
ask a somewhat different question: “Who controls the media and their content?” It’s not an easy
question to answer. The influence of media owners is limited. If people don’t want to watch a
certain movie, no amount of promotion can get them to go see it. If a television show is offensive,
few major companies will want to advertise on it. So the list of those who control the media needs
to include advertisers, governments, pressure groups, news sources, and audience members
themselves.
Owners
Owners of the media have ultimate control over the content their newspapers, websites, or
television stations carry. Critics charge that corporate owners may attempt to control the news that
is reported by the news organizations they own. There is rarely a direct order from headquarters to
kill a story, but that doesn’t mean the owners don’t exercise control over content, either directly or
indirectly. In the late 19th and early 20th centuries, financiers such as J. P. Morgan and the
Rockefeller family bought controlling ownership of magazines that had been harassing them, such
as Harper’s, Scribner’s, and Century, and simply stopped the unflattering exposés. It wasn’t so much
censorship as new owners taking the magazines in safer directions.
Who owns the media you’re consuming?
Perhaps the biggest issue is how news organizations cover stories involving their owners. In the
case of ABC News, that owner is the Walt Disney Company. Disney’s tight control of all aspects of its
properties is legendary. For example, in 2011 Johnny Depp’s contract for Pirates of the Caribbean 4
Advertisers
With the exception of books, CDs, and movies, American commercial media are supported largely
by advertising revenue. As a result, advertisers have a major influence on the types of news and
entertainment presented in the media. They can threaten to withdraw their advertising if they don’t
like a story; they might even suggest that a particular topic should be covered or not covered. Some
companies simply don’t want to have their ads associated with controversial material, whereas
others may be trying to stop the media from running stories that would be directly damaging to the
Government
Governments around the world influence how media companies operate. When Comcast made its
bid for NBCU, it had to go through more than a year of governmental review before it was allowed
to complete the deal, and when AOL and Time Warner merged, they faced eleven months of review
by the FTC.
The companies had to deal with a similar review by government regulators in Europe
as well.
Rupert Murdoch’s News Corporation and 21st Century Fox, whose satellite services provide
television to much of Europe and Asia, have had to make compromises in the content they provide.
For example, objections by the Chinese government led Murdoch to drop the BBC from his Star
Special Interest Groups
Special interest groups often put pressure on the media either to avoid dealing with particular
topics in what they consider to be an offensive manner or to stay away from certain topics
News Sources
Among the strongest influences on the news media are the people who provide stories. Those who
are available to provide information or be interviewed will determine what kinds of stories are
reported. In general, the views that are most likely to be reported come from people who are in
positions of authority or have institutional connections. These people are often government
officials, business executives, or experts in a specialized field. They can choose with whom they will
speak, and they are able to negotiate ground rules for interviews.
In contrast, ordinary people, poor people, and the disadvantaged typically have little influence on
the media or how stories are covered.
For example, in 1992, Zoë Baird was nominated to be
were not in positions of power, domestic workers such as those Baird had employed weren’t seen
as sources and hence had no influence. The one exception was the Spanish-language television
network Univision, which reported the story from the point of view of low-paid immigrant
workers.
When a magazine is planning to run a story about a major celebrity, it must negotiate who the
photographer will be, who the writer will be, and how much control the source will have over photo
selection and article content. The negotiations involve not just the particular story being run, but
also whether the celebrity will be available for future articles for that magazine and other
publications handled by the same company. Since many magazines depend on newsstand sales, and
former president’s willingness to pose for the magazine’s cover.
Audiences
The power of audiences comes primarily from their willingness to read a particular book, watch a
particular movie, or listen to a particular CD. Nothing can make audience members pay attention to
media content. If the audience is not there, the media are not likely to carry the programming.
In an attempt to gauge their audiences’ interests, the major media companies conduct continual
research. Sports Illustrated used a Facebook poll to have fans from around the world pick the cover
Potter and the Sorcerer’s Stone, producers showed it to a children’s focus group. Members of the
test audience reported that the length was not a problem; in fact, they wanted to see more details
from the book in the film.
Who do you believe controls the media? What evidence do you have of their influence? Has this
chapter changed your understanding of who runs the media?
Explore Media Companies
Please read these instructions right away—This discussion board is somewhat different from ones
you may have had before:
Our discussion this week will focus on the companies that run our media. Each of you is to select a
media company you would like be prepared to discuss.
(As you are looking for stories about your company, you might find it useful to use the LexisNexis
database your university library website. It contains articles from all the major newspapers.
If you have not used LexisNexis before, you will need to experiment a little to get recent articles from
major newspapers. There is a menu at the top of the screen that lets you select the newest articles. A
list of choices on the left of the screen that lets you select newspapers. There is also a widget at the top
right of the article you are reading that will give you a link to the article you can post. You are not
required to use LexisNexis, but you will likely find it helpful all semester in researching your
discussions.)
Media Activities
Classroom Debate: More or Less Choice?
In the 21st century, we have more media options available to us than ever before. But these media
outlets are owned by a small number of corporations. Given this, do you believe we as media
consumers have more choices or fewer choices? Why?
Notes: This is one of the central debates relating to modern mass media. We have more outlets
owned by fewer companies. For example, we now have six or more broadcast networks compared
to three in the past. On the other hand, fewer and fewer local television stations are independently
owned by individuals within the communities that the stations serve. There are literally hundreds
of options when it comes to cable channels, but in many cases they are repackages of the same basic
sets of material.
Want to See More About Google Doodles?
In the book, there is a Test Your Visual Media Literacy box about Google Doodles. You can see a
couple more examples of them if you visit this blog post:
• https://www.ralphehanson.com/2018/05/11/ch-3-visual-media-literacy-google-doodles/
How Would Little Shop of Horrors ended if Disney hadn’t forced a change?
If you’ve known me for any time at all, you know that as much of a Disney fan as I can be (Love
• https://www.ralphehanson.com/2015/05/08/how-little-shop-of-horrors-would-
have-ended-if-disney-hadnt-forced-a-change/