CHAPTER ESSENTIALS

• By the mid-twentieth century, the U.S. shifted from a manufacturing-based economy to one fueled by information and cooperation with other economies, causing mass media industries to expand globally. Although early regulation was designed to break up monopolies, deregulation of the industries won out, leading to a growth of mergers and acquisitions (pp. 470–471).

• Media industries have one of three common structures: monopoly (when a single firm dominates production and distribution in a particular industry), oligopoly (when a few firms dominate an industry), or limited competition (when there are many producers and sellers but only a few products within a particular category) (pp. 471–472).

• Today’s media powerhouses avoid monopoly charges by purchasing diverse types of media rather than controlling just one medium (pp. 474–475).

• Media companies make money from direct payments, which come from consumers who buy media products, and indirect payments, which come from advertisers and companies that purchase ads to attract specific customers. Companies also come up with specific business strategies to maximize profits. For example, many try to achieve economies of scale, the economic process of increasing production levels so as to reduce the overall cost per unit (pp. 475, 478).

• Historically, media companies have operated in separate industries; however, the Internet has changed the way people consume media. This development has presented new opportunities for some media organizations while posing challenges for some older media companies (pp. 478–479).

• Other trends that have affected the media economy include flexible markets and the decline of unionized labor, as well as downsizing and a growing wage gap (pp. 479–480).

• All these trends take place, in part, because mass media play a powerful role in establishing hegemony, in which a society’s least powerful members are persuaded to accept the values defined by its most powerful members (pp. 480–481).

• As globalization increased, companies began specializing to enter the new, narrow markets in other countries. They also sought to spur growth through synergy—the promotion and sale of different versions of a media product across a media conglomerate’s various subsidiaries (p. 483).

• The Walt Disney Company is an example of a media conglomerate that has excelled at specialization and synergy. The company has also had success with its global expansion (pp. 483–486).

• Following Disney’s model, many media conglomerates look to international expansion as a way to access markets and to provide opportunities to advance (pp. 486–487).

• Critics of mergers and media consolidation argue that antitrust laws are too limited, resulting in fewer voices in the marketplace and less competition among industry players (p. 487).

• Others decry consumers’ loss of control in the marketplace when just a few companies determine what messages and media content are produced (pp. 490–491).

• Still others warn against the infiltration of American culture and media messages into every corner of the globe—a situation known as cultural imperialism (pp. 491–492).

• Democracy suffers when news coverage is determined by fewer decision makers and when media powerhouses increasingly shape the regulatory environment. Grassroots organizations and the Internet have enabled media reform groups to form globally, suggesting that consumers might be willing to look more closely at the media marketplace’s impact on our lives (pp. 492–493).

1. Question 14.1

   How are the three basic structures of mass media organizations—monopoly, oligopoly, and limited competition—different from one another? How is the Internet changing everything?

2. Question 14.2

   Why has the federal government emphasized deregulation at a time when so many media companies are growing so large? How have media mergers changed the economics of mass media?

3. Question 14.3

   How do global and specialized markets factor into the new media economy? Using the Walt Disney Company as an example, what is the role of synergy in the current climate of media mergers?

4. Question 14.4

   What are the differences between freedom of consumer choice and consumer control over marketplace goods? What is cultural imperialism, and what does it have to do with the United States?

5. Question 14.5

   What do critics and activists fear most about the concentration of media ownership? What are some promising signs regarding the relationship between media economics and democracy?

• DESCRIBE the various subsidiaries and synergies of one media corporation—try Time Warner, Disney, or News Corp. You can begin by looking at the corporate Web site and Columbia Journalism Review’s ownership site, www.cjr.org/resources. Also, read corporate press releases and news stories about the media corporation’s businesses.

• ANALYZE the patterns in the synergies. Which subsidiaries work with other subsidiaries? Are there any divisions that operate independently? Which kinds of products have the most extensive synergies: News? Prime-time television? Comic-book characters?

• INTERPRET what these patterns mean. For example, do the synergies result in higher quality or more profitable media content? Do the synergies result in overexposure of some media content?

• EVALUATE the media corporation’s business structure. Is synergy a good thing or a bad thing? Can journalism function well in a large media corpo-ration?

• ENGAGE with the community by writing a letter to a local newspaper or an online publication (or a journalism outlet within the media corporation itself) that reveals the good and bad about synergies within corporate media.