The Economics of Big Media

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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 m

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The Economics of Big Media

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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. 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. 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. 4 Media Concentration: 1983-92

5. 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. 6 Number of Firms that Dominated the Mass Media,1983-2006 Sources: Ben Bagdikian, The Media Monopoly, 2000; Mother Jones, Mar-Apr 2007

7. 7 By 2006, Media Ownership was Dominated by 8 Corporations Source: Mother Jones Magazine, Mar-Apr, 2007 Walt Disney - $73 Billion Market Value ABC, A&E, 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, Simon&Schuster 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. 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. 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 MTV’s Viacom buys other cable channels, magazines, and other distributing means it is seeking horizontal integration in distributing.

10. 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. 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. 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 they’ve standardized content: a front page, a sports page, a lifestyle page, etc, with editorializing relegated to a page or two.

13. 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. 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. 15 Consequences of Conglomeration and Integration, continued 2. Higher profits for big media. Stockholders benefit from conglomeration, but the public doesn’t. 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 aren’t very good. Example: Britney Spears. This also means “the look” matters. In the age of MTV, musical artists who don’t look good generally don’t get promoted.

16. 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. 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 didn’t 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. 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. 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. 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. 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. 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. 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. 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 Channel’s stated goal is “synergy” - a euphemism for monopoly control.

25. 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. 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. 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. 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. 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 Murdock’s Fox News censors out of self interest, favoring a right wing slant.

30. 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, rock’n’roll, 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 won’t 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. 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. 44 End

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