The twentieth century can be divided in two. The first half of the century emphasized mass production, assembly lines, the rise of manufacturing plants, and the intense rivalry between U.S.-based businesses and businesses from other nations that produced competing products. By the 1950s, however, the U.S. economy was beginning a transition to a new cooperative global economy as the machines that drove the Industrial Age changed gears for the new Information Age. Offices slowly displaced factories as major work sites; centralized mass production declined and often gave way to internationalized, decentralized, and lower-paid service work; and the information-based economy became driven by computers and data.

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As part of the shift to an information-based economy, various mass media industries began marketing music, movies, television programs, and computer software on a global level. The emphasis on mass production (e.g., television programs targeted to mass audiences, or magazines designed to appeal to a broad cross section of the U.S. population) slowly shifted to the cultivation of specialized niche media markets. The political and economic forces swung from regulating media industries (and industries in general) in the first half of the twentieth century to deregulating them in the second half. Decades of deregulation have led to media mergers and acquisitions, resulting in media powerhouses and more concentrated ownership in nearly every media sector.

Deregulation Trumps Regulation

During the rise of industry in the nineteenth century, entrepreneurs such as John D. Rockefeller in oil, Cornelius Vanderbilt in shipping and railroads, and Andrew Carnegie in steel created monopolies in their respective industries. There was so little regulation of these newly powerful industries that the companies became notorious for their exploitative labor practices (including child labor), corrupt corporate conduct, and manipulation of the competitive landscape. Corporations and their business partners were often organized as “trusts,” but soon the word trust became equated with any large corporation—particularly large, unethical corporations that would try to drive out fair competition. Congress responded by enacting the first antitrust law in 1890, the Sherman Antitrust Act, which outlawed monopoly practices and corporate trusts that often fixed prices to force competitors out of business. Political progressives and muckraking journalists brought more anticompetitive trusts to light. In 1911, the government used the Sherman Antitrust Act to break up both the American Tobacco Company and Rockefeller’s Standard Oil Company, which was divided into thirty smaller competing firms.

In 1914, Congress passed the Clayton Antitrust Act, prohibiting manufacturers from selling only to dealers and contractors who agree to reject the products of business rivals. The Celler-Kefauver Act of 1950 further strengthened antitrust rules by limiting any corporate mergers and joint ventures that reduced competition. Today, the Federal Trade Commission (established in 1914) and the antitrust division of the Department of Justice are responsible for enforcing these laws.

Deregulation Spurs Formation of Media Conglomerates

The corporate regulations introduced between 1890 and 1950 were meant to increase competition between companies and prevent any one company from having too much control over the market. However, corporations chafed under these economic rules, and with the rise of public relations tactics and aggressive lobbying campaigns from the 1920s onward, they worked to turn the anticorporate rhetoric so prominent throughout the first half of the twentieth century (particularly in light of the Great Depression) into a commonsense narrative that government regulation was bad for business and bad for America.7 Although the administration of President Jimmy Carter (1977–1981) actually initiated deregulation, most controls on business were drastically weakened under President Ronald Reagan (1981–1989). Deregulation led to easier mergers, corporate diversifications, and increased tendencies in some sectors toward oligopolies (especially in air travel, energy, finance, and communications).8

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The Telecommunications Act of 1996 (signed by President Bill Clinton) brought unprecedented deregulation to a broadcast industry that had been closely regulated for more than sixty years. The act transformed the industry:

Prior to this, a company could own no more than twenty AM, twenty FM, and twelve TV stations. After the act, several corporations quickly grew to owning hundreds of stations. As a result, radio and television ownership became increasingly consolidated. At the time, some economists thought the new competition would lower consumer prices. Others predicted more mergers and an oligopoly in which a few megacorporations would control most of the wires entering a home and thus dictate pricing.

As it turned out, the latter group was right. Ever-larger corporations control cable, telephone, and broadband service to households, and they have charged ever-increasing prices. For example, the average monthly price of basic cable service grew to $64.41 by 2013, a price increase almost triple the rate of inflation since 1995.9 Of course, cable, telephone, and satellite companies are delivering even more channels to consumers. But because the industry “bundles” channels, most consumers pay for far more channels than they watch. The average U.S. home was receiving 189 TV channels by 2013 but watched only about 17 of them.10

Media Powerhouses: Consolidation, Partnerships, and Mergers

Despite their strength, the antitrust laws of the twentieth century have been unevenly applied, especially in terms of the media. When International Telephone & Telegraph (ITT) tried to acquire ABC in the 1960s, loud protests and government investigations sank the deal. But in the mid-1980s, just as the Justice Department was breaking up AT&T’s century-old monopoly—creating telephone competition—the government was authorizing a number of mass media mergers that consolidated power in the hands of a few large companies. For example, when General Electric set out to purchase RCA/NBC in the 1980s, the FTC, the FCC, and the Justice Department had few objections. When NBC Universal changed hands again—in its 2011 purchase by cable giant Comcast, which created the nation’s largest traditional media conglomerate—the New York Times reported that “Comcast said it faced few onerous restrictions” from federal regulatory agencies and no requirements to sell any assets.11

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In 1995, Disney acquired ABC for $19 billion. To ensure its rank as the world’s largest media conglomerate, Time Warner countered and bought Turner Broadcasting in 1995 for $7.5 billion. In 2001, AOL acquired Time Warner for $164 billion—the largest media merger in history at the time. The company was originally called AOL–Time Warner. However, when the online giant saw its subscription service decline in the face of new high-speed broadband services from cable firms, the company went back to the Time Warner name and spun off AOL in 2009. Time Warner’s failed venture in the volatile world of the Internet proved disastrous. The companies together were valued at $350 billion in 2000 but only at $50 billion in 2010. After suffering losses of over $700 million in 2010, AOL in 2011 bought the Huffington Post, a popular news and analysis Web site, for $315 million in an attempt to reverse its decline. AOL itself was bought by Verizon in 2015 for $4.4 billion.

Also in 2001, the federal government approved a $72 billion deal uniting AT&T’s cable division with Comcast, creating a cable company twice the size of its nearest competitor. (AT&T quickly left the merger, selling its cable holdings to Comcast for $47 billion in late 2001.) In 2009, Comcast struck a deal with GE to purchase a majority stake in NBC Universal, stirring up antitrust complaints from some consumer groups. In 2010, Congress began hearings on whether uniting a major cable company and a major broadcasting network under a single owner would decrease healthy competition between cable and broadcast TV and thus hurt consumers. In 2011, the FCC approved the deal.

Until the 1980s, antitrust rules attempted to ensure diversity of ownership among competing businesses. Sometimes this happened, as in the breakup of AT&T, and sometimes it did not, as in the cases of cable monopolies and the mergers just discussed. What has occurred consistently, however, is media competition being usurped by media consolidation. Today, the same anticompetitive mind-set exists that allowed a few utility and railroad companies to control their industries in the days before antitrust laws.

Most media companies have skirted monopoly charges by purchasing diverse types of mass media rather than trying to control just one medium. For example, Disney, rather than trying to dominate one area, provides programming to TV, cable, and movie theaters. In 1995, then CEO Michael Eisner defended the company’s practices, arguing that as long as large companies remain dedicated to quality—and as long as Disney did not try to buy the phone lines and TV cables running into homes—such mergers benefit America.

But Eisner’s position raises questions: How is the quality of cultural products determined? If companies cannot make money on quality products, what happens? If ABC News cannot make a substantial profit, should Disney’s managers cut back its national or international news staff? What are the potential effects of such layoffs on the public mission of news media and consequently on our political system? How should the government and citizens respond?

Business Tendencies in Media Industries

In addition to the consolidation trend, a number of other factors characterize the economics of mass media businesses. These are general trends or tendencies that cut across most business sectors and demonstrate how contemporary global economies operate.

Flexible Markets and the Decline of Labor Unions

Geographer David Harvey has observed that today’s information culture is characterized by what business executives call flexibility—a tendency to emphasize “the new, the fleeting . . . and the contingent in modern life, rather than the more solid values implanted” during Henry Ford’s day, when relatively stable mass production drove mass consumption.12 The new elastic economy features the expansion of the service sector (most notably in health care, banking, real estate, fast food, Internet ventures, and computer software) and the need to serve individual consumer preferences. This type of economy has relied on cheap labor—sometimes exploiting poor workers in sweatshops—and on quick, high-volume sales to offset the costs of making so many niche products for specialized markets.

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Given that 80 to 90 percent of new consumer and media products typically fail, a flexible economy has demanded rapid product development and efficient market research. Companies need to score a few hits to offset investments in failed products. For instance, during the peak summer movie season, studios premiere dozens of new feature films, such as Jurassic World, San Andreas, and Trainwreck in 2015. A few are big hits but many more miss, and studios hope to recoup their losses via merchandising tie-ins and movie rentals and sales. Similarly, TV networks introduce scores of new programs each year but quickly replace those that fail to attract a large audience or the “right” kind of affluent viewers. Of course, this flexible media system heavily favors large companies with greater access to capital over small businesses that cannot easily absorb the losses incurred from failed products.

The era of flexible markets also coincided with the decline in the number of workers who belong to labor unions. Having made strong gains on behalf of workers after World War II, labor unions, at their peak in 1954, represented 34.8 percent of U.S. workers. Then manufacturers and other large industries began to look for ways to cut labor costs, which had increased as then-powerful labor unions successfully bargained for middle-class wages. With the shift to an information economy, many jobs—such as manufacturing computers, stereo systems, TV sets, and DVD players—were exported to avoid the high price of U.S. unionized labor. (See “Global Village: Designed in California, Assembled in China,” in Chapter 2, which describes the conditions in which the Chinese company Foxconn currently makes electronic devices for Apple, Amazon, Microsoft, Sony, and a number of other electronics brands.) As large companies bought up small companies across national boundaries, commerce developed rapidly at the global level. According to the U.S. Department of Labor, union membership fell to 20.1 percent in 1983 and 11.3 percent three decades later, flattening out at the lowest rate in more than seventy years.13

Downsizing and the Wage Gap

With the apparent advantage to large companies in this flexible age, who is disadvantaged? From the beginning of the recession in December 2007 through 2009, the United States lost more than 8.4 million jobs (affecting 6.1 percent of all employers), creating the highest unemployment contraction since the Great Depression.14 The unemployment rate started to recede in 2009, but from 2009 to 2012, as the economy slowly recovered, 95 percent of postrecession income growth was captured by the top 1 percent—those Americans with the greatest income.15

Inequality in the United States between the richest and everyone else has been growing since the 1970s. This is apparent in the skyrocketing rate of executive compensation and the growing ratio between executive pay and the typical pay of workers in corresponding industries. In 1965, the CEO-to-worker compensation ratio was 20:1 (i.e., the typical CEO earned 20 times the salary of the typical worker in that industry). By 2013, the ratio had climbed to 295.9:1 (see Figure 13.2).16 Media corporations are among those with the highest wage gaps. In 2014, Robert Iger of Disney ($46.5 million), Philippe P. Dauman of Viacom ($44 million), and Rupert Murdoch of News Corp. ($29.2 million) were among the highest paid CEOs of publicly traded companies in the United States.17

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Corporate downsizing, which is supposed to make companies more flexible and more profitable, has served CEOs well but has not served workers well. This trend, spurred by government deregulation and a decline in worker protections, means that many employees today scramble for jobs, often working two or three part-time positions. Increasingly, the available positions have substandard pay. The National Employment Law Project reported that “more than one in four private sector jobs (26 percent) were low-wage positions paying less than $10 per hour.”18 This translates to a salary of about $20,000 a year or less. And the flexible economy keeps moving in that direction. The U.S. Bureau of Labor Statistics estimated in 2012 that 70 percent of the leading growth occupations for the next decade are low-wage ones.19 Even as most big businesses had recovered from the recession and experienced record profits by 2011, their low-wage workers’ wages still suffered. For example, at the top fifty low-wage employers, including Target, McDonald’s, Panera, Macy’s, and Abercrombie & Fitch, the highest-paid executives earned an average of $9.4 million a year. At that rate, they earned about $4,520 an hour, an amount it would take more than six hundred minimum-wage employees to earn in the same time period.20 Based on Robert Iger’s 2014 annual compensation of $46.5 million, it would take over 3,000 minimum-wage Disney employees to earn as much as he earns in a year.

Economics, Hegemony, and Storytelling

To understand why our society hasn’t (until recently) participated in much public discussion about wealth disparity and salary gaps, it is helpful to understand the concept of hegemony. The word hegemony has roots in ancient Greek, but in the 1920s and 1930s, Italian philosopher and activist Antonio Gramsci worked out a modern understanding of hegemony: how a ruling class in a society maintains its power—not simply by military or police force but more commonly by citizens’ consent and deference to power. He explained that people who are without power—the disenfranchised, the poor, the disaffected, the unemployed, the exploited workers—do not routinely rise up against those in power because “the rule of one class over another does not depend on economic or physical power alone but rather on persuading the ruled to accept the system of beliefs of the ruling class and to share their social, cultural, and moral values.”21Hegemony, then, is the acceptance of the dominant values in a culture by those who are subordinate to those who hold economic and political power.

How, then, does this process actually work in our society? How do lobbyists, the rich, and our powerful two-party political system convince regular citizens that they should go along with the status quo? Edward Bernays, one of the founders of modern public relations (see Chapter 12), wrote in his 1947 article “The Engineering of Consent” that companies and rulers couldn’t lead people—or get them to do what the ruling class wanted—until the people consented to what those companies or rulers were trying to do, whether it was convincing the public to support women smoking cigarettes or to go to war. To pull this off, Bernays would convert a client’s goals into “common sense”; that is, he tried to convince consumers and citizens that his clients’ interests were the “natural” way things worked.

So if companies or politicians convinced consumers and voters that the interests of the powerful were common sense and therefore normal or natural, they also created an atmosphere and context in which there was less chance for challenge and criticism. Common sense, after all, repels self-scrutiny (“that’s just plain common sense—end of discussion”). In this case, status quo values and conventional wisdom (e.g., hard work and religious belief are rewarded with economic success) and political arrangements (e.g., the traditional two-party system serves democracy best) become accepted as normal and natural ways to organize and see the world.

To argue that a particular view or value is common sense is often an effective strategy for stopping conversation and debate. Yet common sense is socially and symbolically constructed and shifts over time. For example, it was once common sense that the world was flat and that people who were not property-owning white males shouldn’t be allowed to vote. Common sense is particularly powerful because it contains no analytical strategies for criticizing elite or dominant points of view and therefore certifies class, race, or sexual orientation divisions or mainstream political views as natural and given.

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To buy uncritically into concepts presented as common sense inadvertently serves to maintain such concepts as natural, shutting down discussions about the ways in which economic divisions or political hierarchies are not natural and given. So when Democratic and Republican candidates run for office, the stories they tell about themselves espouse their connection to Middle American common sense and down-home virtues—for example, a photo of Mitt Romney eating a Subway sandwich or a video of Barack Obama playing basketball in a small Indiana high school gym. These ties to ordinary commonsense values and experience connect the powerful to the everyday, making their interests and ours appear to be seamless.

To understand how hegemony works as a process, let’s examine how common sense is practically and symbolically transmitted. Here it is crucial to understand the central importance of storytelling to culture. The narrative—as the dominant symbolic way we make sense of experience and articulate our values—is often a vehicle for delivering common sense. Therefore, ideas, values, and beliefs can be carried in our mainstream stories—the stories we tell and find in daily conversations, in the local paper, in political ads, on the evening news, in books, magazines, movies, and favorite TV shows, and online. The narrative, then, is the normal and familiar structure that aids in converting ideas, values, and beliefs to common sense—normalizing them into “just the way things are.”

The reason that common narratives work is that they identify with a culture’s dominant values; Middle American virtues include allegiances to family, honesty, hard work, religion, capitalism, health, democracy, moderation, loyalty, fairness, authenticity, modesty, and so forth. These kinds of Middle American virtues are the ones that our politicians most frequently align themselves with in the political ads that tell their stories. These virtues lie at the heart of powerful American Dream stories that for centuries have told us that if we work hard and practice such values, we will triumph and be successful. Hollywood, too, distributes these shared narratives, celebrating characters and heroes who are loyal, honest, and hardworking. Through this process, the media (and the powerful companies that control them) provide the commonsense narratives that keep the economic status quo relatively unchallenged and leave little room for alternatives.

In the end, hegemony helps explain why we occasionally support economic plans and structures that may not be in our best interest. We may do this out of altruism, as when wealthy people or companies favor higher taxes because of a sense of obligation to support those who are less fortunate. But more often, the American Dream story is so powerful in our media and popular culture that many of us believe that we have an equal chance of becoming rich and therefore successful and happy. So why would we do anything to disturb the economic structures that the dream is built on? In fact, in many versions of our American Dream story—from Hollywood films to political ads—the government often plays the role of villain, seeking to raise our taxes or undermine rugged individualism and hard work. Pitted against the government in these stories, the protagonist is the little guy, at odds with burdensome regulations and bureaucratic oversight. However, many of these stories are produced and distributed by large media corporations and political leaders who rely on the rest of us to consent to the American Dream narrative in order to keep their privileged place in the status quo and reinforce this “commonsense” story as the way the world works.