Copyright 1992,1998 Benjamin M. Compaine. Permission is granted for noncommercial copying or re-distributing for individual or educational purposes. All other rights reserved.

[This study was undertaken in 1991. It was originally published as a case note by the graduate business school of the University of Navarra, Instituto De Superioress De La Empresa, Barcelona, Spain.]

When U.S. media pundit A.J. Liebling wrote that freedom of the press belongs to those who own one he summed up the emotion that separates the media business from virtually any other enterprise. The press -- or today more generically the mass media -- stands not simply for the power to convey information, but more crucially for the assumed ability to shape attitudes, opinions and beliefs. The media are the vehicles for education--and propaganda. Who controls these outlets and what the players' intentions are for their use has been a contentious issue at least since the 15th century, when both Church and State recognized the potential of the printing press and immediately sought to control it.

From time to time in recent history public policy has become concerned with apparent trends towards concentration in one branch or another of the media industry. Since the 1930s various federal bodies have legislated, adjudicated, or regulated such areas as ending newspaper-television cross ownership, breaking up theatrical film distribution-exhibition combinations, limiting broadcast station ownership, prohibiting most television network program ownership, and preventing telephone ownership of cable.¹

In the 1990s this issue again became salient. The stakes have risen higher than ever, as ownership has broken out of national boundaries. The United States has long had a major media presence in much of the world through the preeminence of Hollywood in film and television production. British, German, Dutch, French, Japanese and Australian players have become prominent in the U.S., initially in publishing, now in all aspects of media. U.S. companies have been slower to get involved internationally.

The substance conveyed by the media can no longer be stopped at national boundaries by customs services. A dial-up telephone connection between computers can transfer information in seconds. A videocassette can be easily smuggled and inexpensively duplicated, and a television program can be transmitted by satellite across thousands of miles for reception by an antenna that can be purchased by anyone at a local electronic store. Three thousand dollars worth of computing equipment and access to a photocopying machine can mass produce a newspaper or magazine that only a decade ago required tens or hundreds of thousands of dollars worth of equipment.

WHAT IS GOING ON HERE?

There appear to be two trends pulling in opposite directions. One trend, suggested by a reading of the headlines, is that there is a new round of consolidation within the media industry. This would imply a lessening of separately owned outlets for information. At the same time, the trend of smaller, faster, better and cheaper information-related technologies appears to be generating the ability to create, store and transmit many types of information faster and less expensively, with greater "production values," than ever before. This trend would appear to imply that there is opportunity for a greater number of information outlets.

Thus it would seem to be an appropriate time to consider the future of the players in the media business in an international context. Ten international experts were asked to respond to ten questions. Respondents included Christopher Sterling of George Washington University, Gunnar Bergvall, co-founder of the first independent television channel in Sweden, Bernard Guillou, of France's pay-TV Canal+, and Jerome Rubin, chairman of Times Mirror's publishing group. We asked them if they believe there would be only a handful of dominant global media companies by the end of the decade. What key forces were pushing toward further media combinations? Are there forces pushing in the opposite directions, toward ragmentation? The full list of respondents and the questions they were asked are in Appendix A. Their responses are the basis for this essay.

It should not be surprising that the expectations of this group were diverse. However, there is sound reasoning behind several of the opinions that there will indeed be a greater number of large multinational media enterprises. Nevertheless, in general they will be holding companies for national operating units. Media content is likely to be tailored to the cultural needs of each national community. The exception will continue to be theatrical film, which has shown itself more than most other media forms to be able to transcend many cultural, and therefore national, boundaries.

THE ECONOMICS OF A GLOBAL MARKET

The underlying economics of the media would seem to favor larger over smaller. Even for what we might term "small" media, such as newsletters, larger is more profitable. This is because of the considerable first copy costs of any media product and the relatively low production and distribution costs for additional copies. Thus, producing a 30 minute entertainment show for video involves the certain costs for talent, production staff, writers, and so on are relatively fixed costs. Broadcasting that show has the same cost whether it is ultimately viewed by 500 people or 50 million.

In practice, of course, publishers and producers know they can get greater revenue for a larger audience so are willing to spend money. Similarly, while sending out a reporter, writing and editing an article, and producing a page of a newspaper or magazine is about the same regardless of the circulation, larger circulation publications know they can spend more than those with less circulation.

On a global basis, the effect of this economic reality is more prominent in the visual media, that is television and motion pictures. Whereas the print media are limited by language, much of the message of the visual media is universal. Translating and dubbing a television show or motion picture is a minor expense. Especially with action and adventure themes, language is a relatively small portion of the entertainment. Thus Hollywood has been the first of the media to go global. Already benefitting from the economies of producing for the sizable U.S. domestic market, the production values of American movies make them popular throughout the world -- and further reinforce the economies of scale.

Taking advantage of the economies of the media are far less obvious on the print side. Indeed, numerous studies in the U.S. have found few economies of scale for domestic newspaper chains.² Given substantial cultural differences, it is even less likely that a publisher of books, magazines or newspapers in Europe or Japan has any economy of scale incentives to own similar properties in the U.S., or vice versa. There may be superior management techniques that a particular owner can bring to other, less efficiently run operations, but that alone cannot be enough of a rationale for the proselytizing for going global.

It may even be hard to show great economic benefit from being able to sell good product to one's own affiliate across an ocean. The cost-free benefits of selling successful book titles or licensing magazine formulas overseas to the highest bidder are substantial, without having to own the foreign publishing operation as well.

THE OTHER SIDE: SMALLER, CHEAPER, EASIER

Although the first copy cost of media products is a substantial potion of the total cost, many of the costs have declined in real dollars in the past 30 years. The technologies of telecommunications and silicon -- computers --have lowered many of the components involved in both print and electronic media. Equipping a modern video or audio studio is relatively less expensive today that in the past. Typesetting equipment today may be as modest as a basic personal computer, several hundred dollars worth of software and a high end laser printer.

Similarly, some distribution bottlenecks have fallen. Whereas television outlets throughout the world have been tightly controlled by a handful of commercial ventures or government authorities, cable, satellite and videocassette distribution options have vastly expanded the opportunities for reaching audiences. On the print front, it is now possible to bypass printing altogether, making text material available directly to the end user via dial-up telephone lines, $100 modems and $1000 PCs. While not many start-up ventures using these techniques have reached large audiences or made much money, there are countless mom and pop operations that have found many small audiences. The global impact has been minimal so far (but there have been some profound political implications).3

Audiotex is another information service being made possible by compunications (telecommunications and computers). Using the public telephone network for access from anywhere, dialing certain exchanges can connect a caller with a message for which they are automatically invoiced for as part of their telephone bill. The information provider needs virtually no capital investment, using a service bureau's computer to digitally store their information. In the U.S. audiotex is most often accessed through "900" and "976" exchanges. It has been used to provide current sports scores, lottery numbers, entertainment guides, as well as for "adult" messages (a piece of the industry that has tainted the entire business, although the same thing happened in the early days of videocassette, when most of the tapes available for rental were of a "X" rated variety).

Indeed, the economics of compunications may shape what print media will remain to go global, if any. While the costs associated with print continue to escalate, the costs of compunications decrease even faster. Paper based products are highly energy intensive. Paper-making itself requires hugh energy inputs. Distributing printed products, via gas guzzling trucks or electricity hungry trains bumps up with every Middle East political crisis. On the other hand, silicon-based computers get more power, smaller, and less expensive each year. Not only are the electronic media well situated to take advantage of this cost curve, but the cost of transporting digitally stored information via telecommunications is falling, thanks to global competition, technology, and a changing political attitude toward competition (this latter being directly related to the former two trends).

WHO WILL DOMINATE?

Shortly before Time Inc. and Warner Communications announced their merger in early 1989, Time Chairman Richard Munro said he believed that in the future there would be room for only four or five dominant global media companies. Was this only so much puffery in anticipation of the merger announcement or was Munro's vision of global combinations as the unmistakable trend?

For the most part, the panel of experts believe that media companies operating on a global basis are indeed an growing reality, but that Munro grossly overstated the scenario. SEAT's Damiano Lombardo summed up the view of the group: "...Mr. Munro has exaggerated. The most likely scenario could be a few (10?) global media companies and a lot of small and medium companies. The former, diversified and mainly in the mass market, the latter mainly in the specialized products and/or in niche markets."

Although some number of major players -- ten or twelve seems to be a widely held estimate -- may predominate, there is good reason to expect a large number of smaller yet influential players to thrive. Indeed, different players are likely to fulfill varying roles in a global marketplace, just as they have been the base on a national scale.

The media business consists of two components. One is the creation of content. The second is process.⁴ While the two often fall within a single organization, there are more opportunities for players in the former sector than in the latter. The content business includes publishing operations (books as well as magazines), film and TV production companies, record "labels" and their counterparts in other media. Sweden's Bergvall refers to these as the "creative production (CP) sector.

The process sector, which Bergvall calls "marketing and distribution" (M&D), includes book retail chains, book clubs, magazine distributors, chains of movie theatres, TV channels and their counterparts in other media.

Bergvall makes a case for increased combinations, national and globally, of marketing/distribution companies, while expressing reservations on the forces providing any advantages for combinations on the creative side:

In book publishing, the CP side of many big companies is being reorganized as several relatively small publishing units or imprints. There is also an interest from the big companies to make distribution deals with small but successful independent publishers.

As a specific example I can mention the Bonnier Group. The Book Division today consists of nine independent publishing units, whereas in the middle of the 70s there were only three. These units have their areas of specialization, but there are no rules against expanding into other areas.

In television, the integrated TV channels (production and distribution) are becoming obsolete. The structure emerging is independent production companies selling their programs to transmitting TV channels (exemplified by Channel Four in the UK). The production companies will remain relatively small and there is little to be gained by "going global" on the production side.

The existing integrated TV channels, at least in Europe, will have to split their operations and concentrate on the distribution side, with production either organized as either separate companies or sold off to outside interests.

In the film business, the independent production companies, often built up around an outstanding producer, are taking over an increasing part of the productions. There are similar trends in the record and businesses.

In the M&D sector, there are forces pushing both towards global operations and towards media combinations. The trend towards globalization is partly due to the fact that an increasing number of media products have a global market -- in books exemplified with books by Stephen King or by the Nobel Prize winner each year. In records we have Bruce Springstein, and Madonna, in films any Hollywood blockbuster, in television Dallas or the World Soccer Championship.

It is important to note that each of the above products can come from a fairly small CP "production company". To make it a truly global product, a number of M&D companies -- or a global M&D company -- must take responsibility for the world wide marketing and distribution. [Emphasis added].

In many ways these media M&D companies do not differ from consumer branded goods companies, a main difference being that the products of the media M&D companies are often better produced outside the company itself, or at least the M&D arm of it, whereas there seems to be no disadvantage in producing branded goods in house.

Any M&D company must strive to control the channels of distribution and in this lies the driving force both to establish a global presence, and to establish media M&D combinations. A media product that can be exploited, for example, as a book, a film and a TV series offers many advantages from a marketing standpoint. For the M&D company, the aim must be to control channels of distribution for as many media in as many countries as possible. In this way it will be able to serve as an optimum outlet for related CP companies, and to attract the best media products from other CP companies.

Thus, at least according to Bergvall's approach, there may indeed be a handful of firms that control process, while being dependent on a broader range of healthy providers of content.

There are considerable forces that are pushing in the direction of global media giants. Among the key forces pushing toward media combinations are the perception of the media companies, whether true or not, that (a) markets for entertainment and advertising are becoming "globalized," and (b) original intellectual/entertainment content may be the commodity in shortest supply in an information-rich world. The latter perception leads to dreams of vertical integration on content and process: having Company A's book publishing subsidiary find the author and publish the book (hard- and soft-cover editions) leading then to stage rights, film production and distribution, audio sound-tracks for both stage and screen productions, perhaps with an additional book and a TV show about producing the movie (The Making of Rocky Meets Star Wars III is how one respondent summarized this). Then there are sequels, the eventual video series, the toys and tee shirts, etc.

First, while Hollywood may be a place in California, the film production industry is largely owned by non Americans. MCA and Columbia Pictures are controlled by Canada's Seagrams and Japan's Sony, respectively.  20th Century Fox is ultimately controlled via Australia. Disney, while independent, has raised a pot of $600 million from Japanese interests to finance its film production. There has long been controversy around the film industry about the role of ownership and financing in determining the content of the pictures they get made. Would Gung-Ho a comedy which painted a negative picture of a Japanese-owned car factory in the U.S., be made today by Universal or Columbia Pictures? On the other hand, Hollywood has a reputation for productions that would seem to be antiestablishment (e.g., The China Syndrome) -- and even anticapitalist (e.g., Wall Street), despite being heavily dependent on bankers and the securities markets for their financing.

Second, as television stations, cable and DBS channels proliferate throughout the world, the appetite for programming is likely to promote opportunities for growth of other production centers. Much of the growth in demand for video programming over the next decade will come from opening new markets -- particularly Eastern Europe, Russia, and China -- rather than simple growth in today's markets. While these new markets represent a huge opportunity for Hollywood, non-U.S. producers may have unique advantages in this new game. Taiwan, for example, could become the video programming capital for the Chinese-speaking world.

The Hollywood model, points out Neuman, means "commercially-oriented, mass-audience entertainment programming. If privatization and commercialization of mass communications continues as a world wide trend, this component of the term Hollywood will be increasingly dominant no matter where programming is actually produced."

In this sense, the Hollywood model is likely to dominate the production of regular blockbusters and day to day television fare. Guillou expects that besides Chinese language productions South East Asia, Japan and India, all of which have strong cultural identities, are most likely to support indigenous film and television production. The Spanish-speaking market has potential as well. "In between, from time to time, some European made productions will make their way to success but on a national scale only, unless a European-based studio is created using the same methods as the [Hollywood] majors and catering for the world market. This is not impossible and has been mentioned as a serious hypothesis by such companies as Beta, Fininvest and Canal+, not to mention American majors themselves."

Guillou expects the development of a strong European production center to be a long time in coming. It still must develop many of the attributes that will make Hollywood for the foreseeable future:

• An industrial organization linking studios, agents, publishers and scriptwriters to work on scripts, plots and develop the projects in an "industrial way".
• A strong drive to export, the consequence of the regulation (the financial interest and syndication rule of the Federal Communications Commission) and the traditional leading position in the movie market worldwide (since 1947).
• An efficient system of distribution designed for worldwide markets and to carve out the different channels for the product (cinema, pay-TV, video, broadcast) so as to maximize revenue.
• Easy access to the capital market thanks to the strong value of their library.
• A marketing driven selection of projects as opposed to the European model where artistic values still prevail, especially in movie production.

Other factors being equal, repeated studies show that audiences do prefer their own national programming. "People in Belgium can watch television from the UK, France, Germany and the Netherlands. Still, 85% of viewing time is spent on Belgian programs. "With the investment in the technical capability to make broadcast standard programming declining there is reason to expect greater emphasis on national productions for television, with the occasional successful cross-over to an international market.

The consensus of this group is that traditional Hollywood will continue to be the major production center for theatrical and television programming, but it will lose some ground to other production centers in Europe, the Pacific Rim and Latin America. The question is what role, if any, will the Hollywood studies play in these new areas?

ADVERTISING: THE POT AT THE END OF THE RAINBOW?

Advertising accounts for about two percent of Gross National Product in the United States. In most of the rest of the Western nations advertising expenditures are generally between .9% and 1.25% of GNP. The most visible gap is in television advertising. Government controlled networks refuse or severely limited advertising. Now, with restrictions being lifted by broadcast authorities, the addition of new commercial channels, as well as cable, and the likelihood that Central and Eastern Europe will finance media growth by advertising revenues, there may be reason to expect the proportion of GNP devoted to advertising to approach the level of the U.S. This potential could be viewed as a strong incentives for U.S. companies to become more interested in global expansion, while providing new opportunities for current media players -- and others such as Sony -- to be interested in further media property investment.

The list of trends favorable to greater television advertising seems convincing:

• above all, deregulation of the airwaves;
• new European policies fostering competition, which should lead to the need for producers to seek market share by advertising;
• the growth of new outlets, such as DBS and cable, which will be seeking advertising dollars.

But while the experts surveyed here certainly see a trend toward greater media expenditures, they site numerous reservations for a cap on growth well below the U.S. model.

Perhaps one leading indicator is that even the print press in Europe tends to have slimmer publications in Western nations outside North America. The typical U.S. big city Sunday newspaper weighs four to six pounds (1.8-2.7 kg), 70% of which may be advertisements. Despite the limited broadcast outlets, one does not find this heft in London, Paris, Madrid, Rome, or even Tokyo. Rubin attributes this to both cultural and commercial differences. On the latter he points out, "The U.S. is largely a consumption-based, service economy; countries with a greater fraction of manufacturing in the GNP spend proportionately less on advertising."

Guillou concurs, adding that "advertising and sponsorship [remain] more regulated in general in Europe, some products are forbidden on TV (like books and movies in France), readership and therefore interest for advertisers is lower in European southern countries. Moreover, European economies are in general not so marketing and sales-driven as it is the case in the States." Even so Guilllou expects advertising expenditures in most European countries to top 1.5% by the end of the decade. Lombardo cites some dramatic increases in Italy. According to the data he provided, overall advertising expenditures in the traditional media⁷ grew twice the rate of GNP, thus doubling between 1975 and 1989. Much of this was fueled by the loosening of broadcast restrictions in 1982-83. Bergvall is the most optimistic, foreseeing advertising spending levels in Europe to be close to U.S. levels by the end of the decade, primarily due to the loosening on broadcast advertising.

A TRULY GLOBAL MARKETPLACE?

"Television without frontiers" was the description applied by an EEC White Paper in 1984 to the impact of technology on broadcasting. To some extent this vision is becoming reality. We can watch Cable News Network in a hotel room in Tokyo, Rome or Sao Paulo. An occasional advertisement for Levis or Coca Cola can be broadcast without translation in multiple countries. Guatemalan immigrants can watch the Spanish language SIN network in Hartford, Connecticut. And an Indian immigrant can rent a Hindi film from a video shop in London.

Global in this sense means worldwide, rather than universal, as Marshall McLuhan predicted. The panel of international media experts agrees that while media can now span the globe, it will not necessarily lead to everyone seeing the same content. Despite the success of Hollywood, despite the availability of satellite transmission, national identities and national media are expected to remain dominant. The companies that create media products may or may not be locally owned, but content will be by and large national. National and subnational linguistic and ethnic identities will thrive with targeted programming from international and regional sources.

As Dennis describes it:

...There will be a great global marketplace where the leading voices may well be European, Asian or American, and at the same time a kind of "boutique" market wherein the various nation-states will hang on because of special expertise or characteristics that have an important local and international market.

It may be that for many years there will be what Sterling characterizes as a "two-tier structure":

A thin veneer of international publication/television with small but important audiences (corporate officials, government people, etc.) and a much larger national media. Most people will make use of the latter, whether print or broadcast (or whatever). Some media content--print and electronic--will become more international in tone (if not actual source), but media outlets (print and broadcast) will retain strong national ties.

The position that strong political, language and cultural differences will prevail can be bolstered by a long list of examples. The strength of nationalism is evident in the former USSR and Eastern Europe. Despite decades of suppression of nationalism they have come rapidly to the surface as government oppression has been lifted.

There are less dramatic but substantial differences between Southern and Northern Europe. In broad strokes, the former has strong motivation on cultural policy (quotas, subsidies, etc.) and the latter is more prone to arm's length policy towards media and culture. In Britain, the sensitivity to "American imperialism" is lower than in France because of the community of language and of the strong autonomy of the British television. This also reflects the position of the Nordic countries where fluency in English is high and does not conflict with the use of local languages.

Guillou points further to differences between the smaller and larger countries. The former

have a dedicated interest in protecting their culture without spending too much in subsidies, [while] the big countries ... try naturally to export their cultural products and media goods thanks to electronic means or satellite transmission. Regulation will play a role there by balancing local and foreign programmes so as to protect access to local viewers for the national media. The experience shows that the people tend, in Europe, to rely more upon their national media for information, even if they do not trust them! In French speaking Belgium, before zapping to the French version of "Wheel of Fortune" broadcast on the French channel TF1, native people watch their news on RTBF or RTL.

The obstacles facing truly universal -- as opposed to simply global -- media content were discovered at some expense by Murdoch's Sky Channel. Bergvall notes that even the all-Scandinavian Stenbeck TV3 channel is perceived as covering too broad of a market.

WHO WILL BE IN THE BIG FOUR -- OR BIG 10?

Whether we will see a truly worldwide marketplace with similar content evolve in the next decade may be beside the point. What is clear is that large firms will own operating units across boundaries. The industrial model they follow may be more like that of Nestle or General Motors than is a World Today version of USA Today. After all, multinational organizations are not new. What the experts here are saying is that media firms, with some exceptions in book and magazine publishing, have been heretofore satisfied -- or forced -- to remain largely national. Now, due to a lessening of legal restrictions, along with several technological forces, the same economic incentives that helped create multinational industrial organization 20 years ago are now being followed by media companies. Far less certain is whether the content of the media will become any more common in Brazil, Europe and the U.S. than is the content of Fords produced in each of those nations.

The eventual scenario is that a corporate entity (call it MediaGlobCom, Inc.) based in Sydney, New York, Paris, Tokyo, London, Hamburg -- or maybe Moscow -- may control national operating units in multiple countries. Many of these units will have names known only locally. The content, whether in print or electronic form, will be tailored to and largely locally produced. On occasion, a successful bundle of content (i.e., a game show, book title, magazine idea, newspaper column) may prove universal enough to translate for other markets where that corporate entity has operations. A relative handful of advertisers may have products universal enough to make use of a single source purchase of time/space from that corporate entity for publications or programs around the world.

The exception, as it has been for decades, is likely to be the Hollywood studios. Big budget entertainment lends itself to themes of international acceptance. The technology of satellites, DBS, videocassettes, and cable create cheaper distribution channels than even movie theaters have provided. But even here, there appears to be plenty of room for niche players, catering to smaller language and cultural interests.

A combination of local needs, government protectionism, and the decreasing economics of information processing will likely insure the survival of many smaller national and regional enterprises. There is also opportunity for surprises from new players, such as financial institutions, electronics manufacturers, package goods companies, or retailers, who are in the wings to keep the universe of contenders broad.

Those most likely to succeed on a global scale are those who have shown mastery of their particular markets, and an ability to avoid delusions of grandeur about becoming a "dominant global media company." The list of existing or potentially major international players belies Time Warner Munro's prediction of four or five dominant competitors emerging this decade. The names include those in Table 1.

RESPONDENTS TO THE QUESTIONNAIRE

Benjamin M. Compaine specializes in the strategic application of economics and technology to the information business. Previously he was president of Nova Systems, Inc. and executive director of the Program on Information Resources Policy at Harvard University. His books include Issues in New Information Technology (1988), Understanding New Media (1984) and Who Owns the Media? (1982). He has also been a publisher of newspapers and books. His Ph.D. is in mass communication and he has an M.B.A. from Harvard.

Gunnar Bergvall is the co-founder of TV4 Nordisk Television, the first independent commercial television channel in Sweden. Previously he was a principal in Invoco AB, a consulting company to media firms. For many years he was responsible for strategic planning and business development for Bonnier Group. He has an M.B.A from the Stockholm School of Economics.

Everette E. Dennis was the executive director of the Freedom Forum for Media Studies at Columbia University. Previously he was Dean of the School of Journalism at the University of Oregon. He is the author or co-author of many books and articles, including Reshaping the Media.

Bernard Guillou works for Canal+ International in Paris. Before that he was with France Telecom. He is the author of Les Strategies Multimedia: Des Groupes de Communication.

Damiano Lombardo is head of strategies and studies for SEAT, the publishing division of Italy's STET p.a. He is on the Board of Directors of the Italian Association of Information Services Suppliers and has a degree in statistics from the University "La Sapienza"--Rome.

Russell Neuman was Associate Professor in the Media Laboratory at the Massachusetts Institute of Technology and is today At the Kennedy School of Government at harvard University. He is the author of The Paradox of Mass Politics: Knowledge and Opinion in the American Electorate. He has a Ph.D. in sociology from the University of California, Berkeley and has been on the faculty at Yale.

Jerome Rubin was Chairman, Professional Information and Book Publishing Group, Times Mirror Co. A lawyer by training, he previously was President of Mead Data Central, Inc., the creator of the LEXUS and NEXUS full-text electronic data bases.

Christopher Sterling ssociate Dean of the College of Communication at George Washington University. He has served as assistant to Commissioner Anne Jones of the Federal Communications Commission. He is the co-author of Broadcasting in America and has lectured widely in Europe and South and North America.

Jules Tewlow was Director of Special Projects for Lee Enterprises, Inc., a publishing and broadcasting company. He served for many years on the Telecommunications Committee of the American Newspaper Publishers Association (ANPA). Previously he was on the staff of ANPA and worked for The New York Times Co.

The tenth contributor, with both university and government experience, asked to remain anonymous.

Questions for the Panel of Experts

1. Shortly before Time Inc. and Warner Communications announced their merger in early 1989, Time Chairman Richard Munro said he believed that in the future there would be room for only four or five dominant global media companies. Was this only so much puffery in anticipation of the merger announcement or do you see global combinations as the unmistakable trend?

2. What are the key forces pushing toward media combinations? Are there significant forces that may push in the opposite direction-- toward smaller, or segmented operations?

3. Are there many, or any, natural economies of scale between traditional electronic media -- i.e., television and radio broadcasting, cable and satellite transmission -- with the print media? What are they?

4. What technologies in the past two decades have been pivotal in blurring the boundaries among the media? What budding technologies -- e.g., switched broadband, VSAT -- may further upset the boundaries of the traditional media forms? How?

5. Which, if any, of the traditional media industries may have an advantage in building the strongest base worldwide: publishers, broadcast companies/authorities, cable companies, telephone companies/authorities? Why?

6. Worldwide trends consistently show increased time spent with television, generally at the expense of print media. In the absence of regulatory barriers, would the voracious appetite of television (including cable, terrestrial broadcasting, direct satellite broadcasting, and video cassettes) for programming suggest greater dominance of "Hollywood" on the world cultural scene or will this demand increase the programming opportunities for other production centers?

7. Advertising accounts for about two percent of Gross National Product in the United States. In most of the rest of the Western nations advertising expenditures are well under this proportion. As broadcasting restrictions loosen in these countries, is it reasonable to expect relative advertising expenditures to increase? If not, why? If yes, is this an incentive for growing interest--and presumably prices--for international media companies?

8. The Harvard Information Business Map, on the following page, shows the telephone industry as well outside the boundary of the traditional media, located in roughly the right third of the map. Yet videotex is closely associated with telephone in many countries. In France, West Germany, and Great Britain among others, the telephone authority or company has been the moving force behind videotex, with very mixed results. In the U.S., the telephone companies have been greatly restricted in the videotex field. Is videotex going to be a major information or entertainment medium in the next decade? Can it advance without a central role played by the telcos? Should the telephone companies responsible for local exchange service be permitted to provide anything more than the transmission facilities through which others provide the information?

9. We have heard about "television without frontiers." We have daily and weekly publications published simultaneously in many countries, such as The Economist, The Wall Street Journal, The Financial Times. While the technology may be able to leap geographic boundaries, cultural and political barriers seem to be as strong as ever. Will technology pull us into a truly global marketplace before the end of the 20th century, or will national identities continue to preserve national markets?

10. What companies, in your country or abroad, do you expect to be the dominant international players in the next decade?

ENDNOTES

1. For a historical review of such concerns and efforts, see Benjamin M. Compaine, et al, Who Owns the Media?, 2nd ed. (White Plains, NY: Knowledge Industry Publications, 1982). Back
2. See in particular James N. Dertouzos and Kenneth E. Thorpe, Newspaper Groups: Economies of Scale, Tax Laws, and Merger Incentives (Santa Monica, Calif.: Rand, 1982). Back
3. See for example Oswald Ganley and Gladys Ganley, Global Political Fallout: The VCR's First Decade (Norwood, N.J.: Ablex Publishing Corporation, 1987). Back
4. Benjamin M. Compaine, "A New Framework for the Media Arena: Content, Process and Format" in B. Compaine, ed., Understanding New Media (Cambrdige, Mass.: Ballinger Publishing Co., 1984). Back
5. ISDN: Integrated Services Digital Network. This is a common standard being worked on that will convert the world's telephone system from analog (requiring modems to connect to digital computers for data transmission) to a completely digital system. Back
6. For a full explanation of the map, see John F. McLaughin with Anne Birinyi, "Mapping the Information Business" in B. Compaine, ed., Understanding New Media (Cambridge, Mass.: Ballinger Publishing Co., 1984). Back
7. Media here includes newspapers, magazines, television, radio and cinema. The 2% of GNP figure used for the U.S. includes direct mail (about 15% of total). Back