Concentration of Ownership and Conglomeration

Industries in Transition

Media consumer “behavior is shifting,” media consultant Mike Vorhaus told industry executives at the 2009 Consumer Electronics Show, and that means media companies “have to do business differently, which is hard enough in normal times. But when you add in a deep cyclical economic situation, the result is a deep pain like they’ve never seen before” (in Winslow, 2009, p. 15). How much pain has been produced by the “perfect storm” of rapid technological change, shifting consumption behavior, and economic turmoil?

• Movie attendance in 2011 dropped 4.5% from 2010, the eighth annual decline in the last nine years. That year’s 1.28 billion admissions was the fewest number of tickets sold since 1995’s 1.26 billion (US Movie Market Summary, 2012).

• The downward trend in annual sales of recorded music that began in the late 1990s continued in 2011, showing a 3% decline from $16.7 billion to $16.2 billion (Collette-White, 2012).

• Fifteen years ago the four major broadcast networks commanded 61% of all television viewing. Today their share hovers around 30%. The top-rated program in 1985 was The Cosby Show, viewed by more than 30% of all homes watching television; today it is American Idol, drawing about 13% (Seabrook, 2012).

• Beginning in 2007, DVD sales have fallen dramatically—for example, as much as 20% between 2010 and 2011 (Paul, 2011). Rentals, too, are down, dropping 11% in that same time (Baar, 2012).

• Video game industry revenues from the sale and rental of both hardware and soft-ware declined 8% between 2010 and 2011, a fall that would have been steeper if it were not for the growth in mobile gaming (Epstein, 2012). • Sales of printed books peaked in 2005 and have declined each year since (Keller, 2011).

• Daily and Sunday newspaper circulation has dropped every year since 1998, with the sharpest declines among young people under the age of 30. Seventy-three percent of the nation’s 100 biggest newspapers saw circulation declines in 2011 (Sass, 2011d).

• Circulation revenues, the number of ad pages, and gross revenue growth for American consumer magazines have all been fl at since 2002. Total consumer magazine advertising pages fell more than 1% from 2010 to 2011, and 152 titles disappeared in 2011 (Sass, 2011e).

• Listenership to American commercial radio has fallen steadily since 1998. Since 2008 there have been small annual upticks in the number of listeners, but in 2011 they tuned in for only 94 minutes a day, a big drop from 2008’s 102 minutes (Friedman, 2011).

Children 8 to 18 years old spend more than 10 hours and 45 minutes a day with media content, up by more than 2½ hours from 10 years ago. They amass such large amounts of consumption because they are adept at media multitasking, simultaneously consuming many different kinds of media (Rideout, Foehr, & Roberts, 2010). Considering all media used only at home, in 1980 Americans received about seven hours of information a day. Today they receive 11.8 hours, or more precisely, “3.6 zettabytes [a zettabyte is a billion trillion bytes]. Imagine a stack of paperback novels stacked seven feet high over the entire United States, including Alaska” (Young, 2009). Considering video only, by 2013 90% of all the traffic carried on the Internet will be video, and “the surface area of the world’s digital screens will be nearly 11 billion square feet, or the equivalent of 2 billion large-screen TVs. Together, this amount would be more than 15 times the surface area of Manhattan. If laid end-to-end, these screens would circle the globe more than 48 times” (Cisco Systems, 2009).

Concentration of Ownership and Conglomeration

Ownership of media companies is increasingly concentrated in fewer and fewer hands. Through mergers, acquisitions, buyouts, and hostile takeovers, a very small number of large conglomerates is coming to own more and more of the world’s media outlets. Media observer Ben Bagdikian reported that in 1997 the number of media corporations with “dominant power in society” was 10. In 2004 columnist William Safi re set the number at just 5: Comcast, Fox, Viacom, GE (NBC-Universal), and Time Warner (“Should Comcast,” 2004). Since then, Comcast has grown even larger, having bought NBC-Universal from GE to become the country’s largest cable company and largest residential broadband Internet provider. The conservative New York Times writer warned, “While political paranoids accuse each other of vast conspiracies, the truth is that media mergers have narrowed the range of information and entertainment available to people of all ideologies” (quoted in Plate, 2003, p. B4). Safi re was correct; people of all ideologies feel the impact of concentration of ownership. FCC commissioner and Democrat Jonathan Adelstein argued, “The public has a right to be informed by a diversity of viewpoints so they can make up their own minds. Without a diverse, independent media, citizen access to information crumbles, along with political and social participation. For the sake of democracy, we should encourage the widest possible dissemination of free expression” through our media (quoted in Kennedy, 2004, p. 1). Adelstein was echoing Supreme Court Justice Hugo Black’s eloquent defense of a vibrant media in his 1945 Associated Press v. U.S. decision: “The First Amendment rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public, that a free press is a condition of a free society.” Another defense of concentration and conglomeration has to do with economies of scale; that is, bigger can in fact sometimes be better because the relative cost of an operation’s output declines as the size of that endeavor grows. For example, the cost of collecting the news or producing a television program does not increase significantly when that news report or television program is distributed over 2 outlets, 20 outlets, or 100 outlets. The additional revenues from these other points of distribution can then be plowed back into even better news and programming. In the case of conglomeration, the parallel argument is that revenues from a conglomerate’s non media enterprises can be used to support quality work by its media companies. The potential impact of this oligopoly —a concentration of media industries into an ever smaller number of companies—on the mass communication process is enormous. What becomes of shared meaning when the people running communication companies are more committed to the financial demands of their corporate offices than they are to their audiences, who are supposedly their partners in the communication process? What becomes of the process itself when media companies grow more removed from those with whom they communicate? And what becomes of the culture that is dependent on that process when concentration and conglomeration limit the diversity of perspective and information? Or are the critics making too much of the issue? Is Clear Channel (850 radio stations) founder Lowry Mays correct when he argues, “We’re not in the business of providing news and information. We’re simply in the business of selling our customers’ products”.

Globalization

Closely related to the concentration of media ownership is globalization. It is primarily large, multinational conglomerates that are doing the lion’s share of media acquisitions. The potential impact of globalization on the mass communication process speaks to the issue of diversity of expression. Will distant, anonymous, foreign corporations, each with vast holdings in a variety of non media businesses, use their power to shape news and entertainment content to suit their own ends? Opinion is divided. Some observers feel that this concern is misplaced—the pursuit of profit will force these corporations to respect the values and customs of the nations and cultures in which they operate. Some observers have a less optimistic view, arguing that “respecting” local values and customs is shorthand for pursuing profits at all costs. They point to the recent controversy surrounding the decision of Internet giants Yahoo!, Cisco, Google, and Microsoft to “respect” the local values and customs of the world’s second-largest Internet population as well as its fastest-growing consumer market—China. Microsoft spokesperson Brooke Richardson explained her company’s position: “Micro-soft does business in many countries around the world. While different countries have different standards, Microsoft and other multinational companies have to ensure that our products and services comply with local laws, norms, and industry practices” (in Zeller, 2006, p. 4.4). Google attorney Andrew McLaughlin called it “responding to local conditions” (Bray, 2006, p. A10). But “local conditions” in this case meant censoring searches and keywords and shutting down websites on orders from China’s Communist leaders.

The nature of the other partner in the mass communication process is changing too. Individual segments of the audience are becoming more narrowly defined; the audience itself is less of a mass audience. This is audience fragmentation.

Before the advent of television, radio and magazines were national media. Big national radio networks brought news and entertainment to the entire country. Magazines such as Life, Look, and the Saturday Evening Post once offered limited text and many pictures to a national audience. But television could do these things better. It was radio with pictures; it was magazines with motion. To survive, radio and magazines were forced to find new functions. No longer able to compete on a mass scale, these media targeted smaller audiences that were alike in some important characteristic and therefore more attractive to specific advertisers. So now we have magazines such as Ski and Internet World, and radio station formats such as Country, Urban, and Lithuanian. This phenomenon is known as narrowcasting, niche marketing, or targeting. The new digital technologies promise even more audience fragmentation, almost to the point of audiences of one. For example, 40,000 of Reason magazine’s 55,000 subscribers received individualized versions of the June 2007 issue. On the cover was an aerial photo of each reader’s house and neighborhood. Inside were data on things like the educational levels of their neighbors and how many of the children in their zip code were being raised by grandparents. Ads were personalized as well, with appeals from public interest groups containing information on how each reader’s congressperson voted on various pieces of legislation. But if these audience-fragmenting addressable technologies —technologies permit-ting the transmission of very specific content to equally specific audience members—are changing the nature of the mass media’s audiences, then the mass communication process itself must also change.

The costs involved in acquiring numerous or large media outlets, domestic and inter-national, and of reaching an increasingly fragmented audience must be recouped somehow. Selling more advertising on existing and new media and identifying additional ways to combine content and commercials are the two most common strategies. This leads to hypercommercialism.

So ubiquitous has this product placement —the integration, for a fee, of specific branded products into media content—become, that the Writers Guild of America, hoping to secure a piece of the annual $26 billion-and-growing industry, has demanded negotiations with television and fi lm producers for additional compensation for writing what are, in effect, commercials (J. Hall, 2010). The producers’ response is that product placement is not a commercial; rather, it represents a new form of content, brand entertainment —when brands are, in fact, part of and essential to the program. Many radio stations now accept payment from record promoters to play their songs, an activity once illegal and called payola. It is now quite acceptable as long as the “sponsorship” is acknowledged on the air. Cable channel Comedy Central produces a six-show lineup exclusively for its Internet channel, Motherload. Movie studios make their titles available not only on DVD but for handheld video-game systems. Cable’s AMC runs a slate of webisodes, Web-only television shows, to accompany its hit series The Walking Dead.