M EDIA E CONOMICS J201 Mass Media & Society November 22, 2013

E CONOMICS : A S TANDARD D EFINITION The study of how societies use scarce resources to produce valuable commodities and distribute them among various groups (allocation of resources).

M EDIA E CONOMICS DEFINED : “The study of how media industries use scarce resources to produce content that is distributed among consumers in a society to satisfy various wants and needs” (Albarran). “A term employed to refer to business operations and financial activities of firms producing and selling output into various media industries” (Owers et al).

E CONOMICS C AN A LSO I NFLUENCE : Decisions about: …What? (Production) …For Whom? (Allocation) …How? (Capital, control, organization) …And WHY ?

M AJOR M EDIA C ORPORATIONS

32,000 employees worldwide TV, film, publishing, websites Revenues from: Content (43% of revenues) Subscriptions (33%) Advertising (21%) Other (3%) T IME W ARNER

W ALT D ISNEY C OMPANY Breakdown of Revenue Sources, FY2010 Source: Standard & Poor’s 149,000 employees Some key recent acquisitions: 2006 = Pixar 2007 = Club Penguin 2009 = Marvel Entertainment 2010 = Playdom

Segments: Media networks (62% of FY 2010 revenues) Entertainment (38%) Ad sales, feature films, affiliate fees, TV licensing, ancillary sources (incl. merchandise) More than 2,000 websites Distribution partnerships with Hulu, Netflix, Microsoft, Yahoo, Bebo, Veoh, etc. 159 channels in 159 countries in 30 languages

NBC/U NIVERSAL GE =aircraft engines, power generation, water processing, medical imaging, NBC Universal Comcast = video, high speed Internet and phone services

51,000 employees N EWS C ORPORATION Cable Network Programming Book Publishing Other (advertising, digital) Integrated Marketing Services Direct Broadcast Satellite TV Newspapers and Information Services Television Filmed Entertainment

29 TV stations 130 radio stations Book publishing: Simon & Schuster, Scribner, etc. CBS Films CBS Outdoors CBS Records (TV show soundtracks)

Principal business segments: Consumer & Professional Devices Networked Products & Services Pictures (movies, TV, etc.) Music Financial Services Sony Ericsson Other (Blu-Ray, DVD, CD manufacturing, plus other) 168,200 employees S ONY C ORPORATION

S OME O THER M AJOR M EDIA C ORPORATIONS Publishing: Tribune, Gannett, Hearst, Bertelsmann Telecom: Verizon, AT&T, T-Mobile, Sprint, Charter Communications Tech: Apple, Google, Microsoft, Yahoo! Radio: Clear Channel (owned by Bain Capital/Thomas H. Lee Partners)

V IDEO : “T HE I MPACT OF M EDIA O WNERSHIP ”

S TRUCTURAL T RENDS IN THE M EDIA I NDUSTRIES

S TRUCTURAL T RENDS 3 goals Economies of scale Synergy (development and promotion) Branding Segmentation/specialization Diversification Globalization Joint ventures

P URPOSE OF M EDIA ?

Information Entertainment Public service Make money Communication Influence Other purposes?

B ALANCE P URPOSES WITH N EEDS OF S TAKEHOLDERS What are stakeholders? Who are media’s stakeholders? What do these stakeholders need/want?

W HERE DOES THE PUBLIC INTEREST FIT IN ? A ND WHY DOES IT MATTER ? History of media Print, broadcasting FCC, Radio Act of 1927: “serve the public interest, necessity and convenience” What about the introduction of newer media?

M EDIA & THE P UBLIC I NTEREST Information should circulate freely Ownership should be broad and diversified (Some) media should be publicly accessible “Serve” vs. “Target” “Citizens” vs. “Consumers” “Consumer control” vs. “consumer choice”