Media as Businesses

1. Business organization

2. Implications?

Media business: video clips

Entertainment Tonight Xena, Warrior Princess Hollywood Squares MTV

Facts about media Concentration Increasing Concentration Most people unaware Media ownership no longer LOCAL

Ownership increasingly trans-national

Issues, Concerns Power of media moguls

“Tomorrow Never Dies”Elliott Carver

Hidden agendas, conflicts of interest

Media globalization Internet immune?

How real an issue today? Big media dominate US, world

AOL, Time Warner merger AOL: world’s #1 provider of

online services Time Warner: one of world’s

largest traditional media companies

AOL Time Warner Leader in every major

media sector 78.3m Internet visitors 21% US magazine revenues 19% U.S. cable subscribers 13% of box office sales 16% music sales

What does the merger mean? Faster Internet service Interactive TV Online music Movies online Advertising, e-commerce New media amalgams Cross promotion

Concerns about merger Huge company Potential to dominate U.S.

media markets Power to exclude rivals FTC consent decree: new

company to facilitate competition

Other conglomerates? NBC: RCA/GE CBS: Viacom ABC: Disney UPN: Viacom Fox: News Corp. WB: AOL Time Warner

Global media giants1. AOL Time Warner ($41b)2. Disney ($24.8b)3. Vivendi/Seagram ($16.6b)4. Viacom ($14.9b)5. Bertelsman($14.8)6. News Corp. (14.1b)7. Sony ($10.8b)8. NBC/GE ($7b)

Media conglomerates National, international companiesAOL Time Warner, Viacom, News Corp., Gannett, GE

Puget Sound media

Types of ownership Governmental ownership or

funding Employees work for govt. Revenues: taxes, fees Profit? + Capital, not

commercialized - Government

Types of ownership Private ownership,

individuals or groups Revenues: sales Profit required + Competition,

independence - Commercialization,

independence

U.S. media: characteristics

Pvt. ownership, minimal govt. control

Media businesses Profit orientation Revenue: Ads, subscription

Advertising revenues

Medium $/ad revenues

Daily newspapersTV

Magazines

Radio

U.S. media: characteristics News= industry standards Competitive environment Economies of scaleUnit costs drop in mass production Economic efficiency/vertical

integration

Why concentration? FCC rules Media very profitable Existing profits Attractive to sell U.S. tax laws Concentration savings Synergy

+ on Concentration Economies of scale More resources, potential for quality

More public service Greater independence Greater investment

- on Concentration Fewer voices Private agendas Public unaware Synergy of dubious public

value Loss of family companies No longer local

Rupert Murdoch Danger to democracy? News Corporation Criticisms: Politics China Content Goals

Media business: video clips

Entertainment TonightPromotion of Viacom companies: VH1 Xena, Warrior PrincessProduction ending; no vertical integration Hollywood SquaresPromotion of CBS show MTVPromotion of Viacom products (CD, book,

play, movie)