The
quote is an example of the disillusionment that the public
at large has always had with the media. And it is as pertinent
today as it was when it was spoken. . There have been numerous
debates on the increasing power of media companies and the
decrease in the quality of content and the effects of this
on the society. There has been a general unrest among people
about the way the media industry conducts its business and
its effects on their lives. And the disillusionment has been
growing over the years. This feeling is definitely not unfounded
but is the alarm justified. What does the future hold for
the media industry. There is a revolution being ushered in
by the Internet and other advances in the area of information
technology. How will these affect the global media industry.
These are questions that only time can answer.
| There
is a revolution being ushered in by the Internet and
other advances in the area of information technology |
Looking
at the historical reasons behind the disillusionment of the
public with media. One of the main reasons is the consolidation
of global media holdings under a few companies. Over the years,
global media has become a consolidated mass that is controlled
by a few companies. These few companies control most of what
we see, hear and read. And this certainly does not augur well
for the society. This has led to a gradual decline in the
quality of journalism and content per se. It also has many
serious long-term effects on the society. A closer look at
the reasons behind the reasons for consolidation helps us
understand the working of the global media corporations and
how the concentration of ownership can be detrimental to the
society. It also helps to helps us predict the future of the
industry and the effects of the information technology revolution
|
TEN
KEY IN THE HISTORY OF MEDIA,
IN THIS CENTURY
Looking
at the consolidation of the global media industry
and the reasons behind it, some of the milestone events
in the evolution of this industry per se are summed
in this list of the top ten media events compiled
by the Agence France Presse.
December
12, 1901 :
|
Guglielmo
Marconi sends the first radio waves across the
Atlantic, paving the way for worldwide broadcasting.
|
|
| November
2, 1920 : |
First
commercial broadcast program airs. |
| 1926
: |
John
Logie Baird invents television. |
| 1936
: |
The
BBC kicks off public television in Britain. |
| November
18, 1951 : |
Edward R. Murrow's See it Now series launches
nationwide television programming in the United
States. |
| Late
1960s : |
A
U.S Defense Department project to link the computers
lays the foundation of the Internet. |
| 1980
: |
Ted
Turner launches CNN, world's first satellite network.
|
| August
1, 1981 : |
The
all-music channel MTV goes on air. |
| January
19, 1998 : |
Matt
Drudge airs Monicagate on the Internet. |
|
Evolution of the Global Media:
An analysis of the reasons behind the consolidation of global
media shows that the post 1980s era has been immensely important.
Until then, media companies were generally national in scope.
There was a limited international trade in books, music
and movies but the basic broadcasting and newspaper industries
were domestically owned and regulated. Beginning in the
1980s, pressure from the IMF, World Bank and U.S. government
forced many countries to deregulate and privatize their
media and communication industries. The opening up of large,
new markets along with new satellite and digital technologies
resulted in the rise of transnational media giants.
Along with the international expansion, there was consolidation
within the U.S markets also due to many reasons. One such
reason was the relaxing of ownership rules by the Federal
Communications Commission.
At present
the global media system is dominated by a mere handful of
firms. Some of them are Time Warner, Disney, Bertelsmann,
Viacom, News Corporation, General Electric, Sony and Seagram.
Below them there exists a second tier of some three dozen
media firms. These firms have national or regional strongholds
or specialize in global niche markets. Most of them are
from North America and Europe with only a handful from Asia
and Latin America. All the firms in the first tier are actively
engaged in equity joint ventures or some other form of partnership
with their competitors. Each of the first-tier media giants
has joint ventures with, on average, two-thirds of the other
first-tier media giants. As a result, today in the U.S,
a mere six corporations control more than half of all media
enterprises: books, magazines, newspapers, music, motion
pictures, radio and television. Some 77 percent of the nation’s
daily newspapers are part of chains. Two firms control more
than half the market for 11,000 magazines. Four firms control
major broadcast TV networks. Twenty-five radio groups control
one-fourth of the stations and 57 percent of the revenue.
Similarly, an overwhelming majority of the world’s
film production, TV show production, cable channel ownership,
cable and satellite system ownership, book publishing, magazine
publishing and music production is controlled by these 50
firms or so and the first tier firms thoroughly dominate
many of these sectors. The domination of the first tier
companies can be judged from the fact that Aol Time Warner’s
sales revenue is nearly 50 times that of the firms at the
bottom of the second tier. Thus the global media industry
has taken the form of a monopolistic oligopoly. But what
were the reasons or the key drivers for this degree of concentration
in the media industry. The key drivers are :
# Synergy
and need for content
# Globalization of markets
# Size
# Market share
# Growth
# Cost structure
# Availability of capital
# Policy and legislation changes
| By
the basic nature of the industry, the profit for a global
media giant can be vastly greater than the sum of the
media part |
In the
1980’s and 90’s, the markets were suddenly expanding
beyond national and regional boundaries. The opening up
of market in many countries along with the availability
of funds fuelled this growth. All firms needed to move quickly
and capture market shares through organic or inorganic growth.
In addition the firms were trying to attain a critical size
to avoid takeovers. For example, Disney and Time Warner
have almost tripled in size during the 90’s.
The firms also needed a lot of content for their media vehicles.
In addition, by the basic nature of the industry, the profit
for a global media giant can be vastly greater than the
sum of the media parts. A film, for example, can also generate
a soundtrack, a book, and merchandise, and possibly spin-off
TV shows, CD-ROMs, video games and amusement park rides.
Therefore, the firms need to have a conglomerated holding,
to sustain this advantage. A large component of the cost
for the firms is the fixed cost involved in generating the
content. The marginal cost of delivering the content to
different geographical areas is quite low. Thus, by expanding
the market globally, the firms can enjoy economy of scale.
.
