1. Media Economics and the Global Marketplace
Chapter 13

2. Shopped til They Dropped
Enron
WorldCom
Tyco
Vivendi
Adelphia Communications
AOL/Time Warner
All mired in scandal

3. Three Common Structures
Monopoly
Oligopoly
Limited competition

4. Media Performance Direct payment Indirect payment Economies of scale
Consumer buys media products.
Indirect payment
Products supported by advertisers
Of course, you pay later in each advertised product’s cost.
Economies of scale
Increase production levels to reduce overall cost per unit
Economic analyses
Early 1990s cutbacks in news divisions jeopardized their role as watchdog.

5. The Information Economy
“Transnational media corporations executed business deals across international terrain.”

6. Antitrust and Trust Sherman Act, 1890 Clayton Act, 1914
Celler-Kefauver, 1950
Vs.
“Big is bad if it stifles competition…but big is good if it produces quality programs.”
—Michael Eisner

7. Media Mergers Disney bought ABC for $19 billion in 1995.
Time Warner bought Turner Broadcasting for $7.5 billion in 1995.
Time Warner merged with AOL—a $160 billion deal—in 2001.
AT&T cable joined Comcast in 2002 in a $72 billion deal.

8. Flexible Markets and Downsizing
“Downsizing” makes companies more productive, competitive, and flexible.
Who benefits from downsizing? Who is disadvantaged?

9. Labor Unions
Era of downsizing coincides with decline in workers who belong to labor unions.
By 2006, Wal-Mart had successfully fought all organized union attempts to represent its employees in its 3,850 U.S. stores.

10. Global Markets Specialization Synergy
America’s global extension of media occurred because
Media became cheap and portable
Outsourcing of production to foreign countries

11. The Disney Example 1920s: Disney elevates the film cartoon.
1950s-60s: Moves into TV and non-cartoon movies
Diversifies
1984: Dominates video sales
2006: Merges with Pixar
Apple Computer CEO Steve Jobs is now Disney’s largest shareholder.
It’s all about Synergy.

12. Social Issues in Media Economics
The limits of antitrust laws
Easily subverted since the 1980s
Companies diversify among different product lines.
Never completely dominate one particular industry
Consumer control vs. consumer choice
Participating in deciding what is to be offered vs. freedom to choose among the products
Consumers and even employees have limited power in deciding what gets created and circulated.

13. Cultural Imperialism American-made images American-made language
American style
All saturate the world
Questions cultural imperialism raises:
What small country can justify building a competing media system if American programming is cheap?
How do people feel when they are bombarded with products they can’t afford to buy?

14. “The top management of the networks…has been trained in advertising, research, or show business. But by the nature of the corporate structure, they also make the final and crucial decisions having to do with news…. Frequently they have neither the time nor the competence to do this.” —Edward R. Murrow