Media Conglomerates, Mergers, Concentration of Ownership

Media Conglomerates, Mega Mergers, Concentration of Ownership

There have been a lot of mergers and buyouts of media and entertainment companies since the 1980s. Mainstream media⁴ has since become more concentrated in terms of ownership and the influences of advertisers and owning companies both have an enormous in how mainstream media shapes itself and society.

At the end of the 1990s, there were 9 corporations⁶ (mainly US) that dominated the media world:

• AOL-Time Warner
• Disney
• Bertelsmann
• Viacom
• News Corporation
• TCI
• General Electric (owner of NBC)
• Sony (owner of Columbia and TriStar Pictures and major recording interests), and
• Seagram (owner of Universal film and music interests).

As Robert McChesney, a media critic, and author of Rich Media Poor Democracy, (University of Illinois Press, 1999) describes, these are the first tier companies and following them are around 50 or so second tier companies doing media-related business at either national or regional level. All of these companies each do more than one billion dollars worth of business. (The previous link provides more information on the various firms, if you are interested.) Compared to the 1980s, this is quite a limited market in terms of diversity of ownership:

When Viacom offered to buy out⁷ CBS earlier in 1999 for around $37 billion, it resulted a flurry of praises in the mainstream media in the US, which otherwise reports little on its own industry. However, as the previous link points out, there are increasingly fewer and fewer players in the media. This results in the possibility of less diversity and reduced quality of journalism⁸ as political interests may not allow certain topics to be covered. (The last link is to a speech from Barbara Ehrenreich at an awards ceremony in New York presenting stories that did not make it into corporate media due to heavy censorship. Worth listening to.)

Just as the Viacom/CBS deal fervor began to die down, we saw the largest corporate merger in history (valued at over $165 billion) between mega Internet giant AOL, and media king Time-Warner, merging to form AOL Time Warner. While corporate-owned mainstream media praised this, there were many critics⁹ commenting on the resulting lack of diversity that will impact meaningful democracy and open debate even more. (The previous link contains further links to many articles worth checking out that analyze and criticize the merger.)

That was in early 2000. Around early 2002, according to an article from The Nation magazine, the top ten media companies were now AOL Time Warner, Disney, General Electric, News Corporation, Viacom, Vivendi, Sony, Bertelsmann, AT&T and Liberty Media (see previous link). As the article’s author, Mark Crispin Miller points out, while different companies may come and go out of the top brass, the overall Leviathan gets bigger and bigger¹⁰.

At first thought, one might ask, what is wrong with a few companies becoming so big? Isn’t that how business works? Even from a business perspective, the oligopolies or monopolies is not desirable. Considering the important role that a free and diverse media takes on in a functioning democracy, these questions become even more important. One of the major concerns that arises from such concentration is that there are very few media owners in the mainstream that reach out to the masses. As a result, there is the risk of reduced diversity of issues and perspectives as well as undue political influence and interests from a few affecting the many.

Most citizens get their views and understandings of the world around them from the mainstream media. It is therefore critical to understand some of these underlying issues. The rest of this section introduces some of these concerns.

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Vertical Integration

Many of the large media company owners are entertainment companies and have vertical integration (i.e. own operations and businesses) across various industries and verticals, such as distribution networks, toys and clothing manufacture and/or retailing etc. That means that while this is good for their business, the diversity of opinions and issues we can see being discussed by them will be less well covered. (One cannot expect Disney, for example, to talk too much about sweatshop labor when it is accused of being involved in such things itself.) The wider ramifications are highlighted well in this following quote:

Vertical integration is also a part of a business strategy that serves to enhance market power, by allowing cross-promotion and cross-selling. Robert McChesney highlights this well:

McChesney then continues to also point out an example where the film, Beavis and Butt-Head Do America, based on the MTV cartoon series, cost $11 million but generated a profit of $70 million dollars. Such enormous profits are common place, and hence, the lure that vertical integration and increasing market power is obviously great. Especially considering that the above-mentioned film is at a lower end of potential profits, when compared to say Disney’s Lion King that generated over $1 billion in profit:

It is interesting to note how a film goes beyond box office take, but goes towards larger market share and profit through all the cross-selling. That is, a film may generate certain revenue, but the overall profit will be even more than the revenue.

On such television channels or newspapers/magazines owned by such large corporations, you are understandably not going to read much criticism about those companies. Furthermore, you are not likely to see much deep criticism about economic, political or other policies that go against the interest of that parent company. So, while it is understandable why a company would aim for such cross selling and integration, the threat to diversity and meaningful competition is real. For smaller companies (who might still have multi million dollars backing) without such an arsenal of distribution and cross-selling possibilities, the competition is very difficult, and they face either going out of business, or being bought out, or try to emulate them.

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Interlocking Directorates

Interlocking directorates is also another issue. Interlocking is where a director of one company may sit on a board of another company. As pointed out by U.S. media watchdog, Fairness an Accuracy In Reporting (FAIR) for example, Media corporations share members of the board of directors with a variety of other large corporations¹², including banks, investment companies, oil companies, health care and pharmaceutical companies and technology companies. (See the previous link for details of top media companies and the companies they are interlocked with, etc.)

Ben H Bagdikian, in his book, The Media Monopoly, details some of the impacts of this interlocking. In these cases where directors from numerous large corporations sit on each others boards and own or sit on boards of large media companies, he points out that conflicts of interest can be numerous. Furthermore, he also points out that it is difficult to show beyond doubt that these conflicts of interest make their way into media decisions:

He continues to further point out that the concentrated ownership also allows criticism to be managed as well:

In this respect, as the mainstream media is more corporate owned, the same market pressures that affect those companies, affect the media as well and hence, the media itself is largely driven by the forces of the market¹³.

In the US, for example, it is very noticeable how competitive the media companies are between themselves. While competition can be a healthy aspect of news reporting and media in general, pushing for better quality, the oligopoly and concentrated control of media companies has meant that the competition has reduced itself to attracting viewers through sensationalism etc rather than quality, detailed reporting etc.

Many stations report news on the very same stories at the exact same time and have commercial breaks at the same time! The sensationalism they compete for is what they hope will drive audiences to their channel.

This type of competition affects the ability to provide quality news and affects the depth and even reputation of professional journalism.

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Disney

As an example of influence, Disney's size and popularity provides a good example. Disney is well regarded for providing wholesome family entertainment, with numerous films, cartoons/animation movies and so on. However, with the increasing size, owning the ABC news station, and enormous vertical integration, there have been increasing criticisms of Disney as well, ranging from the subtle cultural and even racial, gender and class bias depicted in their cartoons and movies, to their ability to naturally (directly or indirectly) influence major news stories via their ABC ownership¹⁵.

That is not to say that Disney is necessarily sexist, racist and so on by intent. It is possible that the drive for profits is more important and leads to less criticism, because from a business perspective, they have been very successful and implemented the most appropriate strategies to expand and grow. As Michael Eisner, CEO of Walt Disney Co. said in an internal memo:

Because it is sometimes hard to imagine criticism of Disney, especially as a prominent icon of American culture that has provided light entertainment, fun and laughter for so many, the following links provide more in-depth look at Disney in this respect, and in the light of its increasing size and influence:

• Background info¹⁷ from Fairness and Accuracy in Reporting.
• Additional info on what Disney owns¹⁸ from Columbia Journalism Review
• A search¹⁹ for Disney from the Mediachannel reveals many articles
• Mickey Mouse Monopoly-Disney, Childhood & Corporate Power²⁰ a documentary looking at the gender, class and racial aspects of Disney movies and animation.
• The Mousetrap; Inside Disney’s dream machine²¹ is issue 308 from New Internationalist Magazine, December 1998. It has a collection of articles related to Disney.
• How Disney Magic and the Corporate Media Shape Youth Identity in the Digital Age²² by Henry Giroux and Grace Pollock, TruthOut, August 4, 2010

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Concentration of ownership is where the problem largely lies

There may be a large number of outlets giving the appearance of diversity, but a concern is that so many are owned by one of the few media giants:

It isn’t necessarily the corporate ownership that is problematic. For example, in U.K. the Independent Television Network (ITN), and Channel 4 are highly regarded for their quality documentaries and ITN’s evening news program was said to challenge the BBC’s news programming for quality (until ITN seemed to succumb to pressure to use that prime time for movies instead of news). More problematic is when the ownership of media (and therefore of major avenues of opinions and views etc) becomes concentrated, as pointed out by Ben Bagdikian here:

This concentrated power, Ben also points out, is so concentrated, ubiquitous, and artful, that to a degree unmatched in former mixtures of entertainment, it dilutes influences from family, schooling, and other sources that are grounded in real-life experience, weakening, their ability to guide growing generations. (see p.xx of the above-cited book).

In some respects, even large media companies can be potentially beneficial. For example, with size comes that political power, and ability to provide appropriate scrutiny on wrong-doings of local businesses etc, as pointed out by Dan Kennedy:

But when big media is owned by big business, there is less criticism of big business or related political issues in big government.

Political bias can also creep in too. Media watchdog, Fairness and Accuracy In Reporting (FAIR) did a study of ABC World News Tonight, CBS Evening News and NBC Nightly News²⁴ in 2001 in which they found that 92 percent of all U.S. sources interviewed were white, 85 percent were male and, where party affiliation was identifiable, 75 percent were Republican. While of course this is not a complete study of the mainstream media, it does show that there can be heavy political biases on even the most popular mainstream media outlets.

A year-long study by FAIR, of CNN’s media show, Reliable Sources showed a large bias in sources used, and as their article is titled, CNN’s show had reliably narrow sources²⁵. They pointed out for example, Covering one year of weekly programs [December 1, 2001 to November 30, 2002] with 203 guests, the FAIR study found Reliable Sources’ guest list strongly favored mainstream media insiders and right-leaning pundits. In addition, female critics were significantly underrepresented, ethnic minority voices were almost non-existent and progressive voices were far outnumbered by their conservative counterparts.

Given that so many of the large media owners are entertainment companies, broadcast journalism and much of print journalism, as well as the book publishing industry, are increasingly criticized for having become appendages to entertainment empires. Furthermore, with various top media/entertainment companies owning shares in each others' enterprises, combined with the interlocking described above, the resulting concentration of ownership, while maybe not a monopoly in the strictest sense, tends towards oligopoly or cartel, and this leads to a common interest amongst such companies in keeping out competing enterprises and even competing ideas. The Nation magazine captures the consequence of this quite well, looking at the situation in the United States:

A U.S. Federal Court ruling on February 19, 2002, lifted barriers to two regulations that attempted to limit the power of media companies. One was that a company can reach no more than 35 percent of the country, and the other was that it cannot own a TV station in an area where they own a cable company. As a result of this decision, the concern here is that it means that those with the most money can buy other stations ³⁰ which will lead to further concentration and consolidation³¹. (See also the Center for Digital Democracy³² web site for more on this and other such issues.)

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The Quest for the Public Airwaves

For many years now, corporate lobbyists had been lobbying to have the public airwaves sold to private corporations. While in many countries, national ownership of the airwaves can lead to propaganda avenues, many democratic countries are able to, through their governments, apply some set of standards and regulations on how radio is used to ensure people have access to it while also allowing private corporations a lot of access to it. Large, private, often multinational corporations, however, do not have such accountability. Their only real accountability is to shareholders, whose concerns are returns on investments (profit).

As Jeremy Rifkin asks³⁷, Our PCs, palm pilots, wireless Internet, cellular phones, pagers, radios and television all rely on the radio frequencies of the spectrum to send and receive messages, pictures, audio, data, etc … If the radio frequencies of the planet were owned and controlled by global media corporations, how would the billions who live on earth guarantee their most basic right to communicate with one another?

During the height of the concerns, Robert W. McChesney wrote a lot about this, including detailed history, in his book, Rich Media Poor Democracy; Communication Politics in Dubious Times, (University of Illinois Press, 1999). (See part II.)

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The Quest for the Internet?

The Internet is hailed as the new communications medium taking over from television eventually. While there are currently enormous problems and issues of the digital divide and while it is still in its infancy, the Internet has proved to allow enormous amounts of information to be exchanged and be made available. It is very easy to get news from half way around the world, and some see the Internet as one of the main new technological advances that will enhance and improve democracy further. Some even describe the Internet as providing a more level playing field for new, smaller and diverse groups and companies.

The potential is very exciting and numerous innovative sites, activities and other forms of organizing and action has been centered around the use of the Internet.

However, in terms of the potential for diverse news and information reaching people, as Danny Schechter, executive director of the MediaChannel.org, points out, the Internet, is not very diverse, even though it appears to be³⁹. The concentration in ownership that is restructuring old media has led to conglomeration in news transmission and a narrowing of sourcing in new media. It is cheaper for Web sites to buy someone else’s news than generate their own. Like many others, he points out how major web portals such as AOL look to lock in their audience to their site(s) and products so that they can better sell and target their audience (customers).

Furthermore, consolidations and media mergers such as that of AOL and Time Warner, have skewed the playing field. According to Jupiter Media Metrix, a company that tracks Internet and technology analysis and measurement, the [t]otal number of companies that control 60 percent of all minutes spent online in the US dwindled 87 percent, from 110 in March 1999 to 14 in March 2001 due to successes in advertising and marketing as a key to overcome the barrier to online entry. (See this press release⁴⁰ from them for more details.) They further point out that within the 14 companies, it is heavily skewed towards the top four. Also, they suggest that key factors driving media consolidation in this way include:

• Mergers and acquisitions turning already powerful companies into even more powerful media behemoths.
• Major media companies have been able to invest heavily in [i]mproved quality of presentation, intensity of marketing and integration with off-line programming
• Economies of scale, that also apply to online businesses as well as traditional businesses.

As Danny Schechter also points out in the above mentioned link, most news and information sites don’t provide their own news sources, but get them from the likes of Reuters and Associated Press, or, in the case of broadcast companies, their own content together with mixes of such agency content.

Into 2007, those top four have really become 3 as noted earlier (Yahoo, Microsoft, and the largest, Google). The rise in blogging and other forms of social media on the Internet has, however, enabled people to report and write more quickly about various events as they unfold. In many cases, local people are able to upload personal videos from mobile phones, etc, faster than mainstream journalists can report. In this way, some journalists are concerned about their profession’s future, or at least the impact such citizen journalism is going to have on them.

That being said, the financial and political muscle of larger media companies won’t vanish overnight, either, as the Internet is still not the primary source of information for many people. Around the world, governments are trying to stifle citizens from blogging about certain topics. Even in the US, some companies are trying to challenge how the Internet is accessed (through issues such as Net Neutrality⁴¹) and so this potential promise of citizen journalism will need to be watched with interest.

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More Information on Ownership issues

For more information on ownership related issues, as well as the links above, you could start at the following links:

• From the MediaChannel.org:
  • Media Concentration Watch⁴⁵ section provides a collection of articles.
  • Their Media Ownership section⁴⁶ provides information and links to articles, books and other resources, including a chart of ownership data.
  • Why Ownership Rules Matter⁴⁷ looks at issues in the U.S. in particular.
• From Fairness and Accuracy in Reporting:
  • Corporate Ownership⁴⁸ provides numerous articles.
  • A search⁴⁹ for the term ownership will result in numerous articles. (You will have to type in the search term though.)
• The Nation Magazine has a chart⁵⁰ detailing the big ten
• Who Owns What⁵¹ from Columbia Journalism Review provides a list of major media organizations and details what else they own.
• Media Giants⁵² from PBS provides links and charts breaking down what major media giants now control.
• Media Links for more Information⁵³ from this web sites mainstream media section.

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