Global Media

Big media barons are routinely accused of dominating markets, dumbing down the news to plump up the bottom line, and forcing U.S. content on world audiences. But these companies are not as big, bad, dominant, or American as critics claim. And company size is largely irrelevant to many of the problems facing today's Fourth Estate.

By Benjamin Compaine

"A Few Big Companies Are Taking Over the World's Media"

No. Much of the debate on media structure is too black-and-white. A merger of Time Inc. with Warner Communications and then with America Online dominates headlines, but the incremental growth of smaller companies from the bottom does not. Breakups and divestitures do not generally receive front-page treatment, nor do the arrival and rapid growth of new players or the shrinkage of once influential players.

In the United States, today's top 50 largest media companies account for little more of total media revenue than did the companies that made up the top 50 in 1986. CBS Inc., for example, was then the largest media company in the United States. In the 1990s, it sold off its magazines, divested its book publishing, and was not even among the 10 largest U.S. media companies by the time it agreed to be acquired by Viacom, which was a second tier player in 1986. Conversely, Bertelsmann, though a major player in Germany in 1986, was barely visible in the United States. By 1997, it was the third largest player in the United States, where it owns book publisher Random House. Companies such as Amazon.com, Books-A-Million, Comcast, and C-Net were nowhere to be found on a list of the largest media companies in 1980. Others, such as Allied Artists, Macmillan, and Playboy Enterprises, either folded or grew so slowly as to fall out of the top ranks.

Indeed, media merger activity is more like rearranging the furniture: In the past 15 years, MCA with its Universal Pictures was sold by its U.S. owners to Matsushita (Japan), who sold to Seagram's (Canada), who sold to Vivendi (France). Vivendi has already announced that it will divest some major media assets, including textbook publisher Houghton-Mifflin. Bertelsmann also has had difficulty maintaining all the parts of its global enterprise: It recently fired its top executive and is planning to shed its online bookstore. There is an ebb as well as a flow among even the largest media companies.

The notion of the rise of a handful of all-powerful transnational media giants is also vastly overstated. Some media companies own properties internationally or provide some content across borders (for example, Vivendi's Canal+ distributes movies internationally), but no large media conglomerate owns newspapers, book publishers, radio stations, cable companies, or television licenses in all the major world markets. News Corp. comes closest to being a global media enterprise in both content and distribution, but on a global scale it is still a minor presence--that is, minor as a percentage of global media revenue, global audience, and in the number of markets it covers.

Media companies have indeed grown over the past 15 years, but this growth should be understood in context. Developed economies have grown, so expanding enterprises are often simply standing still in relative terms. Or their growth looks less weighty. For example, measured by revenue, Gannett was the largest U.S. newspaper publisher in 1986, its sales accounting for 3.4 percent of all media revenue that year. In 1997, it accounted for less than 2 percent of total media revenue. Helped by major acquisitions, Gannett's revenue had actually increased by 69 percent, but the U.S. economy had grown 86 percent. The media industry itself had grown 188 percent, making a "bigger" Gannett smaller in relative terms. Similar examples abound.

"U.S. Companies Dominate the Media"

No. Long before liberalization of ownership in television in the 1980s, critics around the world were obsessed by the reach of U.S. programming, which cultural elites often considered too mass market and too infused with American cultural values. However, in most of the world, decisions of what programming to buy traditionally lay in the hands of managers who worked for government-owned or government-controlled broadcasters. Then, as now, no nation's media companies could require a programmer to buy their offerings or force consumers to watch them. As the market becomes more competitive, with content providers such as Canal+ and the BBC marketing their products globally, it is even more important that media enterprises offer programming that people want to watch.
While Viacom, Disney, and AOL Time Warner are U.S. owned, many non-U.S.-owned companies dominate the roster of the largest media groups: News Corp. (Australia), Bertelsmann (Germany), Reed-Elsevier (Britain/Netherlands), Vivendi and Lagadere-Hachette (France), and Sony Corp. (Japan).

The pervasiveness of a handful of media companies looks even less relevant when one looks at media ownership across countries. The United Nations' "Human Development Report 2002" examined ownership of the five largest newspaper and broadcast enterprises in 97 countries. It found that 29 percent of the world's largest newspapers are state owned and another 57 percent are family owned. Only 8 percent are owned by employees or the public. For radio stations, 72 percent are state owned and 24 percent family owned. For television stations, 60 percent are state owned, 34 percent family owned. These data suggest there is little foreign direct investment in the media sectors of most countries.

News media can tap wire services from around the globe such as Reuters, Agence France-Presse, the Associated Press, Kyodo News, Xinhua News Agency, and Itar-Tass. TV news editors can use video feeds from sources as diverse as U.S.-based CNN to the Qatar-based Al Jazeera. The variety and ownership of tv content in general has substantially increased--a reality media critics ignore. From two state-owned channels in many European countries and from three U.S. networks plus the Public Broadcasting Service, there are now dozens, often hundreds, of video options via terrestrial, cable, and satellite transmission, not to mention the offline variety of videocassettes and DVDs and the online availability of music and movies. In addition, book and magazine publishing continues to be robust worldwide. Encouraged by relatively low start-up costs, new publishers are popping up constantly.

"Corporate Ownership Is Killing Hard-Hitting Journalism"

A bright red herring. When exactly was this golden age of hard-hitting journalism? One might call to mind brief periods: the muckrakers in the early 20th century or Watergate reporting in the 1970s. But across countries and centuries, journalism typically has not been "hard-hitting." With more news outlets and competition today, there is a greater range of journalism than was typical in the past. Further, a 2000 comparison of 186 countries by Freedom House, a nonprofit devoted to promoting democracy, suggests that press independence, including journalists' freedom from economic influence, remained high in all but two members (Mexico and Turkey) of the Organisation for Economic Co-operation and Development, where global media's markets are concentrated.

Also underlying the complaint that news has been "dumbed down" is an assumption that the media ought to be providing a big dose of policy-relevant content. Japan's dominant public broadcaster, NHK, does so, yet is Japan a more vibrant democracy as a result? More to the point, with so many media outlets today, readers and viewers can get more and better news from more diverse perspectives, if that is what they want. Or they can avoid it altogether. The alternative is to limit the number of outlets and impose content requirements on those remaining.

The third problem with this notion of corporations killing journalism is that it assumes ownership matters. In the old days of media moguls it may have: William Randolph Hearst, William Loeb, and Robert McCormick were attracted to the media because they each had political agendas, which permeated their newspapers. Nearly a century before Italian media owner Silvio Berlusconi rose to the top of Italian politics, Hearst, whose newspapers dominated in the United States, was elected to the U.S. Congress and harbored presidential aspirations. But Hearst's dual roles did not affect U.S. politics or democracy in any lasting way. The jury is still out on the effect of Berlusconi's dual roles.

Corporate-owned newspapers may actually provide better products than those that are family owned: Research suggests that large, chain-owned newspapers devote more space to editorial material than papers owned by small firms. In many parts of South America, where regulation has restricted or prevented corporate ownership, family-run enterprises have often been closely identified with ideological biases or even with using political influence to benefit other businesses. Brazilian media enterprise Globo, owned by the politically involved Marinho family, encompasses a TV network, radio, cable, and magazines. Yet Globo no longer opposes recent moves to liberalize Brazilian media ownership because then it could gain access to desirable foreign investment. As Latin American media shift from family-owned, partisan media to corporations, observes Latin American media scholar Silvio Waisbord, the media become less the "public avenues for the many ambitions of their owners," and their coverage of government corruption "is more likely to be informed by marketing calculations and the professional aspirations of reporters." This trade-off may not be bad.

Global media will not necessarily introduce aggressive journalism in places where press freedom has traditionally been constricted. For instance, News Corp. was criticized for dropping BBC News programming from Star TV presumably to mollify Chinese leaders in the mid-1990s. Yet satellite broadcaster Phoenix TV (in which News Corp.'s Star TV maintains a 37.6 percent stake, alongside that of the local Chinese owners) sometimes pushes the envelope in China, as when it reported on the election of Chen Shui-bian as president in Taiwan.

"Global Media Drown Out Local Content"

Absolutely not. Most media-like politics are inherently local. Global firms peddle wholly homogeneous content across markets at their peril. Thus, MTV in Brazil plays a mix of music videos and other programming determined by local producers, even though it shares a recognizable format with MTV stations elsewhere. News Corp.'s newspapers in the United Kingdom look and read differently from those in the United States. When Star TV, an Asian subsidiary of News Corp., began broadcasting satellite television into India, few tuned in to Dallas and The Bold and the Beautiful dubbed in Hindi. The network only succeeded in India once it hired an executive with experience in Indian programming to create Indian soap operas and when an Indian production house took over news and current affairs programming.

Often viewed as a negative, consolidation may have considerable social benefits. It took the deep pockets of News Corp. to create and sustain a long-awaited fourth broadcast network in the United States. And the 1990 merger in the United Kingdom of Sky Channel and BSB created a viable television competitor from two money-losing satellite services.

"The Internet Has Leveled the Playing Field"

Yes. Or more accurately, it's helping to level the terrain because it is a relatively low-cost conduit for all content providers. As the old adage goes, "Freedom of the press is guaranteed only to those who own one." Make no mistake: an activist with a dial-up Internet connection and 10 megabytes of Web server space cannot easily challenge Disney for audiences. But an individual or a small group can reach the whole world and, with a little work and less money, can actually find an audience.

Worldwide, an estimated 581 million people were online by 2002, more than one third of whom lived outside North America and Europe. Yet the Internet is in its infancy. The number of users is still growing and will continue to expand to the literate population as access costs decrease.

Once online, Internet users have access to thousands of information providers. Some are the same old players--Disney with its stable of cartoon icons, Infinity with its familiar music and talk-radio broadcasting, and old government-run stations still operating in much of the world. But these coexist with newer, Internet-only options such as those found at Realguide.com, which links to 2,500 real-time audio streams from around the world, or NetRadio, which outdraws many traditional stations. These Internet-only "broadcasters" have not had to invest in government-sanctioned licenses and generally have no limits on their speech.

In countries where governments strictly control print and broadcast media, governments also can try to restrict Internet access, as China does. But some may choose not to do so: In Malaysia, the government pledged not to censor the Internet to promote its version of Silicon Valley to foreign investors. As a consequence, Malaysian cyberspace media are free of the restrictions their print and broadcast brethren face. [see "Mahathir's Paradox"]

"Proliferating Media Outlets Balkanize Public Opinion"

No. The flip side of concerns that media concentration has limited available information is the concern that technology has made it possible to access so many voices that people in democratic societies can and will seek only information that supports their prejudices. A fragmented public, tuning in only to select cable channels or specific Web sites, could thus wall itself off from healthy public debate.

Recent U.S. studies show that as users gain experience with the Internet, they use it not to replace other sources of information but for more practical applications. They perform work-related tasks, make purchases and other financial transactions, write e-mail messages, and seek information that is important to their everyday lives.

Although news is low on the list of its uses, the Internet functions in much the same way as older news media: offering opportunities for both those who directly seek news sites and those who chance upon news links serendipitously. The Pew Internet and American Life Project reports that 42 percent of those who read news on the Web typically find news while they are doing other things online. This picture is not consistent with the notion that Web audiences routinely tune out information with which they disagree.

"Media Coverage Drives Foreign Policy"

Probably not often. Analyzing media coverage is often a chicken-and-egg dilemma: What stimulated the media to cover an event or issue? And if public policy responds to an event the news media cover, does that mean the media (or those who run the media) set the agenda?

The idea that media coverage of international crises can spark a response from politicians is termed the "CNN effect." The classic case is the coverage of starving children in Somalia in the early 1990s, which was followed by U.S. military involvement in humanitarian relief efforts. But even in the case of Somalia, some administration officials actually used the media to get the attention of other officials, and the majority of the coverage in Somalia followed rather than preceded official action.

In many places, governments are even more likely to be driving media coverage rather than the other way around, although it may suit governments to appear as if they have bowed to public opinion. The Chinese government delayed release of the crew of the U.S. EP-3 spy plane that made an emergency landing on Hainan Island in 2001, claiming that an embittered Chinese public demanded it. Angry Web comments did precede and were then reflected in media coverage of the incident. But at the same time, the government had been fanning the flames, cultivating nationalistic sentiment through the selection and treatment of stories in the news. At other times, the Chinese government both censors Web comments and withholds information from the media when it needs to preserve its foreign policy options.

"Stricter Regulation of Media Is in the Public Interest"

Just the opposite. Beware when someone claims to be speaking for the "public interest." In most cases, those who invoke the term really mean "interested publics." For example, advertisers' sense of which policies on media ownership are in their interest may differ from that of regular newspaper readers or that of satellite tv subscribers.
Fostering competition has long been a central tenet of U.S. media regulation. What if preventing two newspapers from merging results in both having to trim news budgets or pages, neither having the resources to engage in investigative reporting, or worse yet, one closing shop? Media concentration may be in the public interest if it provides a publisher with greater profit margins and the wherewithal to spend some of that on editorial content, and research in fact shows this is the case.

Licensing acts as an entry barrier to new players, and antitrust laws often lag behind reality. In the market for video program distribution, for instance, terrestrial broadcast licensees compete with cable operators and networks, who in turn compete with satellite providers. Regulation and policy limits will always be necessary, but having different regulatory frameworks for each media segment makes less sense today.

Governments that give can also take. Japanese law makes public broadcaster NHK one of the world's most autonomous public broadcasters, yet the ruling Liberal Democratic Party (LDP) strongly influences the agencies that control media licenses and that select NHK's governing board. Not coincidentally, NHK provides neutral, policy-relevant news but avoids controversial topics and investigative reporting. Where Japanese commercial television has tried to fill this gap, LDP politicians have reacted: in one case, asking an advertiser to withdraw sponsorship and in another, seeking the withdrawal of a broadcasting license.

Paradoxically, relaxing broadcast regulation may expand competition. When News Corp. put together a fourth network in the United States in 1986, the timing was not random. It followed two regulatory decisions: the Federal Communications Commission raised the limit on local licenses that a single firm could own from seven to twelve and waived a rule that kept TV networks from owning their programming. The first change allowed News Corp. to assemble a core of stations in larger markets that gave it a viable base audience, and the second sanctioned News Corp.'s purchase of 20th Century Fox, with its television production studio. Fox was thus able to launch the first successful alternative to the Big Three in 30 years. Its success also paved the way for three other large media players to initiate networks.


Benjamin Compaine is a research consultant at the Massachusetts Institute of Technology's Program on Internet and Telecoms Convergence and coauthor of Who Owns the Media? Competition and Concentration in the Mass Media Industry, third edition. (Mahwah: Lawrence Erlbaum Associates, 2000).

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