Lecture on Media Economics and the Global Marketplace

Overview

• Continuation of discussion on media corporations.
• Focus on Chapter 13: Media Economics and the Global Marketplace.
• Discussion includes structure of media industries, notable legislation, and corporate mergers.

Structure of Media Industries

1. Economic Structures:

   • Monopoly: One firm dominates production and distribution.
     • Examples: AT&T (1980s phone business), Edison (film business, 1908), Microsoft (1990s computer software), Comcast (local cable TV markets).
   • Oligopoly: A few firms dominate the industry.
     • Examples: Major advertising and PR players.
   • Limited Competition: Many producers/sellers, few products.
     • Examples: Radio stations with limited genre offerings.

2. Media Business Operations:

   • Direct Payments: Revenue from direct consumer purchases (e.g., CDs, Hulu subscriptions).
   • Indirect Payments: Revenue from advertisers based on audience attention.

Media Organizations' Struggles

• Balance between profit-making and social responsibility.
• Importance of regulation to ensure quality content.

Legislation Impacting Media

1. Antitrust Acts:

   • Sherman Antitrust Act (1890): Outlawed monopolistic practices.
   • Clayton Antitrust Act (1914): Prevented exclusive contracts with consumers.
   • Legislation (1950): Limited mergers to maintain competition.

2. Deregulation:

   • Began in Carter administration, accelerated under Reagan.
   • Goal: Encourage competition, reduce prices.

3. FCC Rules:

   • 777 Rule (1953): Limited media ownership.
   • Expanded under Reagan and further under Clinton with the Telecommunications Act (1996), leading to significant deregulation.

4. Major Mergers:

   • Disney/ABC, Time Warner/Turner, AOL/Time Warner, Comcast/NBC, AOL/Huffington Post.
   • Resulted in reduced competition due to media consolidation.

Economic and Social Implications

1. Media Consolidation:

   • Less competition and increased wealth gap.
   • Use of hegemony to maintain power dynamics.

2. Specialization and Synergy:

   • Specialization: Targeting niche audiences.
   • Synergy: Cross-promotion and sales across subsidiaries.
     • Example: Disney’s marketing strategy for films like "Frozen 2".

Impact on Democracy

• Fewer journalists cover public issues.
• Focus on superficial news over substantial public issues.
• Influence of Citizens United ruling on corporate political contributions.

Upcoming Workshop

• Further discussion on media consolidation and its impact on democracy.