Media Economics and the Global Marketplace Chapter 12

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Storytelling as Business Strategy In the end, compelling narratives are what attract people to media whether in the form of books or blogs, magazines or movies, shows or talk radio.

The Structure of the Media Industry  Monopoly A single firm’s local or national domination of production and distribution in a particular industry  Oligopoly A few firms dominate an industry.  Limited competition A media market with many producers and sellers but only a few products within a particular category

The Performance of Media Organizations  Direct payment Consumer buys media products.  Indirect payment Products supported by advertisers  Economies of scale Increase production levels to reduce overall cost per unit  Economic analyses let consumers examine instances when mass media falls short.

The Internet Changes the Game  Media companies traditionally were part of discrete or separate industries.  The Internet changed that. Offers a portal to view or read older media forms Requires virtually all older media companies to establish an online presence  Ease of putting up and locating information on the Internet can be problematic.

The Transition to an Information Economy  Major shift to an information-based economy emphasized information distribution and retrieval as well as transnational economic cooperation.  By the 1950s, mass media industries began marketing their products on a global level.  In the 1960s, the current trend toward serious national media consolidation began.

The Escalation of Deregulation  Government-regulated business Sherman Antitrust Act of 1890 Clayton Antitrust Act of 1914 Celler-Kefauver Act of 1950  Government regulation denounced as a barrier to the more flexible flow of capital  The Telecommunications Act of 1996 lifted most restrictions on radio and TV ownership.  2010: The FCC set to examine media ownership rules

Media Powerhouses: Consolidation, Partnerships, and Mergers  Disney bought ABC for $19 billion in  Time Warner bought Turner Broadcasting for $7.5 billion in  Time Warner merged with AOL—a $106 billion deal—in 2001 only to spin the company off by  Comcast purchased a majority stake in NBC Universal in 2009.

Business Tendencies in Media Industries  “Downsizing” is supposed to make companies more productive, competitive, and flexible. Problematic results: companies unable to compete due to too few employees and a decline in innovation.  Who benefits from downsizing? Who is disadvantaged?

Economics, Hegemony, and Storytelling  Hegemony: the acceptance of the dominant values in a culture by those who are subordinate to those who hold economic and political power  Convince consumers and citizens that the interests of the powerful are common sense and thus normal or natural

The Rise of Specialization and Synergy  Specialization Magazine, radio, and cable industries sought specialized markets to counter television’s mass appeal. By the 1980s, television embraced niche marketing. Young and old viewers sought other specialized forms of media.  Synergy The promotion and sale of different versions of a media product across the various subsidiaries of a media conglomerate

Minority and Female Media Ownership: Why Does It Matter?

Disney: A Postmodern Media Conglomerate  1920s: Develops the film cartoon  1950s–60s: Diversifies into TV and non-cartoon movies  1984: Revives animated division, live- action films  2006: Merges with Pixar  2009: Acquires Marvel Entertainment It’s all about synergy!

Social Issues in Media Economics  The limits of antitrust laws Easily subverted since the 1980s Companies diversify among different product lines  Consumer control vs. consumer choice Participating in deciding what is to be offered vs. freedom to choose among the products

Cultural Imperialism  American styles in fashion, food, media dominate the globe.  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?

Media Economics and Democracy  Today, superficial consumer concerns, not broader social issues, dominate the news.  Mass media mergers make debate over economic issues difficult.  Local groups, consumer movements are working to challenge “Big Media.”