In the late 1970s and early 1980s two books were published that tracked the growing concentration of ownership in the media industries. The first, published in 1979 by Benjamin M. Compaine, was titled Who owns the media? The first edition of Benjamin H. Bagdikian’s book The media monopoly was published in 1983. Over the following years subsequent editions of these books continued to show how mergers between media corporations were creating a situation where a smaller and smaller number of media corporations controlled an increasing proportion of the media products audiences consumed. At the beginning of the new millennium, both series of books found it necessary to issue heavily revised editions to take account of the growing speed of change in the media industries (Compaine & Gomery 2000; Bagdikian 2004).
There are many reasons why media corporations have sought to grow in size through mergers and acquisitions. Technological convergence, particularly as a result of a shift toward digital technologies, has led some media industries to compete in ways that were impossible before. For example, cable television companies now want to provide their subscribers with telephone service and high-speed Internet access through their digital networks. Similarly, telephone companies now look to various broadband services as a way of expanding the services they provide their customers. Merging with a company already active in the new media sector you want to enter is often an attractive strategy.
But it would be wrong to suggest that it is only technological change that has intensified the urge to merge. A search for synergy and economies of scale has also been an important catalyst. Synergy is the ability of one part of a media corporation to promote the products of another. For a time during the 1980s and early 1990s, synergy became the “holy grail” of corporate strategies. Industry executives stared enviously at the ability of Disney’s television properties to promote the activities of its theme parks, while the theme parks could introduce new generations of children to characters from Disney’s growing archive of animated movies (Wasko 2001).
There was also a belief that, by growing ever larger, media corporations could enjoy economies of scale that would increase their profitability. This was intensified by the fact that in many media industries, the initial costs of production are very high while the costs of creating copies and distributing them are comparatively low.
It should also be noted that the growing globalization of media industries convinced many governments that they needed to allow their media corporations to merge in order for them to become big enough to compete on a global, or at least regional, scale. Thus, in the United States regulations stopping a corporation operating in one industry sector, such as local telephone service, from operating in another sector, such as cable television, were progressively weakened or eliminated. And the portion of an industry sector that a single corporation could control was increased, relying mostly on antitrust laws, rather than sector-specific regulations, to protect the public from anti-competitive behavior. All of these governmental actions contributed to the momentum for mergers in the media industries.
Not everyone was convinced that these media mergers benefited anyone other than the individual media corporations. Against the tide of neo-liberal thinking, which argued that media industries should be treated just like any other industry, a growing undercurrent noted that, unlike many other manufactured goods, media products contribute to the collective culture and our understanding of the world around us and our place in it. Therefore, while a media merger might not create a situation where the merged corporation could use its new market power to fix prices, and thus attract the attention of antitrust authorities, there might still be a concern that the diversity of viewpoints and voices would be diminished. Additionally, the merged media corporation might now feel unwilling to report critically on the activities of its new corporate parent.
But these concerns were countered by other observers. They noted several ways in which the creation of increasingly large media corporations could be beneficial. For example, if a community’s newspaper was owned by a large corporation headquartered in some distant city, it might be less open to pressures from local elites to cover the news in ways that served the interests of those elites rather than most members of the community. Similarly, on a global scale, a transnational media conglomerate might be more willing than an organization based in that country to challenge restrictions placed on its operations by a government trying to restrict the flow of information to maintain its power.
References:
- Bagdikian, B. H. (2004). The new media monopoly. Boston. MA: Beacon Press.
- Bettig, R. V., & Hall, J. L. (2003). Big media, big money: Cultural texts and political economics. Lanham, MD: Rowman and Littlefield.
- Compaine, B. M., & Gomery, D. (2000). Who owns the media? Competition and concentration in the mass media industry, 3rd edn. Mahwah, NJ: Lawrence Erlbaum.
- Demers, D. (2002). Global media: Menace or messiah? rev. edn. Cresskill, NJ: Hampton.
- Doyle, G. (2002). Media ownership: The economics and politics of convergence and concentration in the UK and European media. London: Sage.
- Gershon, R. A. (2007). The transnational media corporation and the economics of global competition. In Y. R. Kamalipour (ed.), Global communication, 2nd edn. Belmont, CA: Thomson Wadsworth, pp. 55 –78.
- Hamelink, C. J. (2007). The politics of global communication. In Y. R. Kamalipour (ed.), Global communication, 2nd edn. Belmont, CA: Thomson Wadsworth, pp. 201–231.
- Horwitz, R. B. (2005). On media concentration and the diversity question. The Information Society, 21, 181–204.
- McDaniel, D. (2002). Electronic tigers of Southeast Asia: The politics of media technology, and national development. Ames, IA: Iowa State University Press.
- Wasko, J. (2001). Understanding Disney: The manufacture of fantasy. Malden, MA: Blackwell.