Economics of the Media Industry

Chapter 2 Recap/Lecture

A Production Perspective

 Social process of production  framework = media products institutional  Emphasis on process of producing media  Consider context in which media products are created  Consider influence of social structural forces  Consider conditions in broader society (e.g. social, political, technological)

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Profit

Network Television     Large audiences  advertising dollars Small amount of successes  large dollars Considered most effective medium by advertisers (more than cable TV) “profit-driven logic of safety”  Consequences?

 Decline in Revenue    Declining audience (cable, other viewing platforms, Internet) Increased cost of production Result: cheap programs for smaller audiences  News magazine programs; followed by game shows, talent contest; followed by increased reality programs  Increase in Viewing Options  Impact on profit?

 Goal of controlling content and distribution (Examples: Comcast, Netflix)

Profit

 News media  Cutting costs of producing and gathering news   Problematic?

Increasing revenue by making the news ‘fun and exciting’ (media sensationalism, Hollywoodization of news)  Problematic?

Advertising

 Advertisers interested in audiences; media product is the bait  Technological advances make it harder to keep attention of audience  Solutions to new challenges?

 Product placement  Ads in once ad-free media  Brand integration  Identifying and targeting more captive audiences  The case of Channel One: https://www.youtube.com/watch?v=G ptO6vFAaY

This video shows the unprofessionalism of Channel One News. They were the company that saturated American classrooms with advertising. That was what the company was known for, yet in 2014, the reporter Shelby Holliday fails to tell students about Channel One's major role in bringing ads into schools. This wasn't a simple slip-up. This was intentional. Notice the "opposition" to ads in schools (one female student) is almost convinced herself by the end of the story that ads may not be so bad in school. This was a self-serving story by Channel One News. The message: Don't be upset with Channel One News because of our advertising, look schools "across the country" are embracing ads. This type of skewed storytelling is now part of Houghton Mifflin Harcourt. This publisher acquired Channel One in May 2014. Educators and parents need to be very concerned about the future course of Houghton Mifflin.

- Jim Metrock

Advertising

 Advertising in news media  Advertising online (e.g. social networking)  Advertising in Niche media  Ads on Lifetime vs. Speed Channel

Why Study Media Ownership?

Concentration of Ownership

 Meaning?

 Oftentimes unknown to consumers  Conglomeration  One corporation owns several other companies, including media  Media = attractive investment. Why?

Concentration and Conglomeration

 Vertical Integration and Horizontal Integration  Difference? (Figure 2.4, pg. 42)  Benefits to Owners?

Impact of Conglomeration and Integration

 Conglomerates favor specific products; what fits with what we own?

 Increase in cross-media promotion  Impact on smaller media firms?

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HCA #2

Begin in class today; continue as homework Presentations on Thursday In sets of 3, select a media conglomerate  Sign up sheet on my door (no duplicates allowed) Research the conglomerate’s ownership (consider their “ranking”) Any controversies? Examples of media sensationalism? Examples of “the Hollywoodziation of the news” found? Examples of vertical and/or horizontal integration? (hypothetical or real) What are the pros and cons associated with the conglomerate’s ownership?

 What are the bigger implications considering the consequences of integration, conglomeration, and concentration of ownership? No write up required; prepare a PowerPoint presentation. Submit slides and will present in class.

Examples of Conglomerates

 Bertelsmann AG  Gannett Co.

 CBS  Viacom  Time Warner  Disney  News Corp  GE  Sony  Vivendi Universal

Impact of Conglomeration on News Media

 Impact on content  Increased pressure to make profit  “the Hollywoodization of the news” – Dan Rather  Sensationalism  Multimedia platform  news = content  considering the “fit” of the information  Is this problematic? Why or why not?

Effects of Concentration

 Potential political influence?

    Private media ownership = political asset  Problematic?

 Some media outlets – ‘vow for for objectivity, evenhandedness…watchdogs over politicians’ (p. 48) Some owners use of media to promote political agenda  What is include? What is excluded?

“The Corporate Voice” – Herbert Schiller (p. 49) Impact on citizens ability to monitor the government? (e.g. war-making powers)  Social Issues   Controversial topics that impact bottom line – little to no coverage If issues become more acceptable  advertisers  more coverage more appealing to audiences and  Alternative media voices?

Effects of Concentration

 Content Diversity  Media Pluralism  Variety in media? Different views, voices, representations, etc.  Media concentration = Uniform information?

 The Homogenization Hypothesis (Bangdikian, 2004)  Audience’s expectations; sometimes more suspicious of monopolies than economic competitors  No single effect