MAGISTERARBEIT

Titel der Magisterarbeit

„Concentration of Media Ownership in Europe“

Verfasserin ODER Verfasser

Bakk. phil. Lukas Wiesboeck

angestrebter akademischer Grad

Magister ODER Magistra der Philosophie (Mag. phil.)

Wien, 2009

Studienkennzahl lt. Studienblatt: A 066 841

Studienrichtung lt. Studienblatt: Publizistik- und Kommunikationswissenschaft

Betreuerin / Betreuer: Ao. Univ.-Prof. Dr. Hannes Haas

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CONCENTRATIONOFMEDIAOWNERSHIPINEUROPE

Perspectivesoflegalregulationsofmediaownershipandthe

safeguardingofmediapluralismintheEuropeanUnion

basedoncasestudiesofGermany,UnitedKingdomandFrance

Isthereaneedtoreconsidersupranationalmeasures?

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Summary

InthispaperIwillshowthatasupranationalapproachbasedonharmonizationof

nationalrestrictionsofmediaownershipinordertosafeguardmediapluralism,as

proposedbytheEUCommissioninits1992GreenBookisstillnotapplicabletoday,

despitethefactthatthemedialandscapeisundergoingconsiderablestructural

changes.Thereasonsforthisareofpolitical,legalandpracticalnature.Myanalyses

arebasedonanextensiveevaluationoftheeconomicconditionsandthelegal

frameworkofEuropeanmedia,whichIwillapplytocasestudiesofGermany,United

KingdomandFrance.MoreoverIwillconsiderthedefinitionofmediapluralismand

thepreconditionsforthetechnologicalchangesEuropeanmediawillbesubjectedto

inthenextcoupleofyears.AnewandrevisedEuropeanlegalframeworkshould

allowthesechanges–toacertainextent–tohappeninsteadofprotectingoutdated

businessmodelsof“oldmedia”.

Zusammenfassung

IndieserArbeitzeigeich,dasseinaufsupranationalereuropäischerRechtssetzung

beruhenderAnsatzderHarmonisierungvonnationalenRegelungenzurSicherung

derMeinungsvielfaltindenMedien,wieervonderEUKommission1992

vorgeschlagenwurde,auchheute,ineinervölligveränderteneuropäischen

Medienlandschaftnichtanwendbarist.Politische,rechtlicheundpraktischeGründe

sprechendagegen.MeineAnalyseberuhtaufeinerausführlichenEvaluierungder

ökonomischenundrechtlichenRahmenbedingungenvoneuropäischenMedien,die

ichanhandvonFallstudienausDeutschland,GroßbritannienundFrankreich

veranschauliche.DarüberhinauswerdenauchdieBedingungenvonMedienvielfalt

sowiedieVoraussetzungenfürdiestrukturellenVeränderungen,deneneuropäische

MedienaufgrundvontechnischenEntwicklungenindenkommendenJahren

unterworfenseinwerden.EineventuellerneuereuropäischerRechtsrahmensollte

dieseVeränderungenbiszueinemgewissenGradunterstützen,anstattüberholte

GeschäftsmodellevonMediender“altenOrdnung”zuschützen.

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TABLEOFCONTENTS

PREFACE ................................................................................................................ 7

1 INTRODUCTION................................................................................................ 9

2 THEFUNCTIONSOFMASSMEDIA....................................................................132.1 SOCIALFUNCTIONS .............................................................................................. 142.2 POLITICALFUNCTIONS .......................................................................................... 162.3 ECONOMICFUNCTIONS ........................................................................................ 17

3 MEDIAPLURALISMANDTHEPUBLICSPHERE ..................................................203.1 DEMOCRATISATIONOFMEDIA–THEONLINEREVOLUTION? ......................................... 26

4 CONCENTRATIONOFMEDIAOWNERSHIP .......................................................304.1 ECONOMICENVIRONMENT.................................................................................... 304.1.1 Competitioninamarketmodeleconomy ............................................... 304.1.2 Characteristicsofmediaeconomics ........................................................ 39

4.2 IMPACT............................................................................................................. 574.2.1 Evaluation................................................................................................ 574.2.2 Effects ...................................................................................................... 60

4.3 MANIFESTATION ................................................................................................. 644.3.1 Germany .................................................................................................. 654.3.2 UnitedKingdom....................................................................................... 764.3.3 France ...................................................................................................... 854.3.4 Europe ..................................................................................................... 92

5 CURRENTREGULATIONSOFMEDIAOWNERSHIP.............................................945.1 NATIONALREGULATIONS ...................................................................................... 975.1.1 LegislationinGermany ............................................................................ 975.1.2 LegislationintheUnitedKingdom......................................................... 1015.1.3 LegislationinFrance.............................................................................. 107

5.2 LEGISLATIONBYTHEEUROPEANUNION ................................................................. 1125.2.1 Existinglegislation................................................................................. 1125.2.2 Proposals ............................................................................................... 117

5.3 MEDIAGOVERNANCE ........................................................................................ 124

6 NECESSITYANDOFSUPRANATIONALREGULATIONS.....................................1266.1 TRANSNATIONALLEVEL....................................................................................... 1276.2 MEMBERSTATELEVEL ....................................................................................... 129

7 CONCLUSION.................................................................................................132

8 BIBLIOGRAPHY .............................................................................................134

9 APPENDIX .....................................................................................................145

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ABBREVIATIONS

ABC AmericanBroadcastingCompany/AuditBureauofCirculation

AG Aktiengesellschaft

AGOF ArbeitsgemeinschaftOnline‐Forschung

ALM ArbeitsgemeinschaftderLandesmedienanstalten

APA AmericanPsychologicalAssociation

APN AppointedNewsProvider

ARD Arbeitsgemeinschaftderöffentlich‐rechtlichenRundfunkanstaltenderBundesrepublikDeutschland

BaFin BundesanstaltfürFinanzdienstleistungsaufsicht

BARB Broadcasters’AudienceResearchBoard

BBC BritishBroadcastingCorporation

bn billion

BSkyB BritishSkyBroadcasting

BVerfGE Bundesverfassungsgerichtshof

CC CompetitionCommission

CEO ChiefExecutiveOfficer

CLT‐UFA CompagnieLuxembourgeoisedeTélédiffusion–UniversumFilm

CME CentralEuropeanMediaEnterprises

CNN CableNewsNetwork

CSA ConseilSupérieurdel’Audivisuel

DSPS DigitalSoundProgrammeServices

EBRA EstBourgogneRhôneAlpes

ECHR EuropeanConventiononHumanRights

EIAA EuropeanInteractiveAdvertisingAssociation

EU EuropeanUnion

ISP InternetServiceProvider

ITV IndependentTelevisionCommission

KDG KabelDeutschlandGesellschaft

KEK KommissionzurErmittlungderKonzentrationimMedienbereich

KG Kommanditgesellschaft

KiKa KinderKanal

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KKR KohlbergKravisRoberts&Co

LLC loidelalibertédecommunication

m million

NRCO NouvelleRepubliquedeCentreOuest

NRE nouvellesrégulationséconomiques

Ofcom OfficeofCommunications

OFT OfficeofFairTrade

OJD OfficedeJustificationdelaDiffusion

PBS PublicBroadcastingStations

RTL RadioTelevisionLuxembourg

SBS ScandinavianBroadcastingSystem

SCP Structure‐Conduct‐Performance

TIME Telecommunication/Information/Media/Entertainment

TNT TélévisionNumériqueTerrestre

UNESCO UnitedNationsEducational,ScientificandCulturalOrganization

WAZ WestdeutscheAllgemeineZeitung

XML eXtensiveMarkupLanguage

ZDF ZweitesDeutschesFernsehen

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Preface

“Ihaveyettoseeanyproblem,however

complicated,which,whenlookedatintheright

waydidnotbecomestillmorecomplicated.”

(PoulAnderson)

TheworkdescribedinthisthesiswascarriedoutbetweenJanuary2008andJuly

2009attheUniversityofViennaunderthesupervisionandguidanceofDr.Hannes

Haas.Asdescribedinthesummary,thispaperanalysestheeconomicandlegal

environmentofEuropeanmediacompaniesinordertoevaluatepotential

supranationalmodelsofregulatorymeasures.Theintroductionprovidesmuchofthe

generalbackground.

Sincetheeconomicanalysisisacorepartofthispaper,Iwouldliketopointoutthat

Iadoptapoliticaleconomypointofview,particularlywhenassessingthefunctioning

ofmarketsandthewaytheyinfluencesocietyandlaw.ThereforeIwillbuildmy

analysisontheneoclassicaltheoryofthefirm,whichcentresroundtheprincipleof

profitmaximizationandthenotionofperfectcompetition.Iamawarethatother

concepts,whichchallengethesimplificationsoftheneoclassicalassumptions,have

beenintroduced.Therearemanyalternativeandmuchmorecomplextheoriesof

themarketandthewayitworks,forexampletheStructurePerformanceConduct

(SCP)model.DespitethefactthatIwillprovidebriefexplanationsofthese

alternativetheoriesIwillnotgointodetailonthismatterbecauseitwouldgofar

beyondthescopeofthispaper,whichgenerallyfocusesonregulatorymeasures

fromamediaandcommunicationsciencesperspective.Besides,thewaymarkets

andcapitalismingeneralareanalyseddoessometimeshavemoretodowith

philosophythaneconomics.Wheneverhumansarethekeyplayers,anyassumptions

oflinearityaretobequestionedcarefully,especiallywiththeoriesofdecision‐

making.

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MoreoverIadopttheAPA‐styleofcitationdevelopedbytheAmericanPsychological

Association(Harvey,2008).Ithoroughlycomplywiththerulesofintegratingsources

outlinedbyHarveytoavoidanyformofplagiarismorothermisuseofsources.Ihave

triedtogetthepermissionsofallrightsholderofimagesandillustrationsusedin

thispaper.However,incaseanyinfringementofcopyrightsisnoticedIaskthe

readertocontactme.

FurthermoreIcomplywiththeUNESCOguidelinesongender‐neutrallanguageas

outlinedbyPavlic(Pavlic,1999).If,howeverIstilluseanambiguousorstereotyping

termIaskthereadertoconsiderthatnodiscriminationwhatsoeverisintended.

IwouldliketothankHaraldFidlerforinitiallysparkingmyinterestontheproblems

ofmediaownershipandmyparents,mysistersandmygirlfriendfortheirloveand

supportduringtheprocessofwritingthispaper.

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1 Introduction

InthelastcoupleofyearsthemedialandscapenotonlyintheEuropeanUnion,but

inthewholeworldhasbeendramaticallytransformed.Theevolutionofdigital

technologieshasledtoavastexpansionofonlinemedia,whichmarkstheadventof

anewparadigmofmediaproductionthatisnolongertiedtonationstates.

However,someofthenewdigitalplayershavebeenincorporatedintomedia

conglomeratesofthe“oldworld”inordertoexploitsynergiesofconvergence1.For

similarreasonscompetitors,suppliersandpartnersofnewspaperandtelevision

companieshavebeensubjecttoongoingconsolidation.MediacompaniesinEurope,

theUnitedStatesandelsewherearekeentotakepartinthechangesand,if

possible,attempttoemergeattheforefrontofanincreasinglytransnationaland

competitiveglobalcommunicationsmarketplace.Thechallengeforregulatorsinthe

wakeofareshapingindustry,whichisabouttobecomemoreandmoreglobal,isto

allowstructuralchangestohappenwithoutprotectingoutdatedbusinessmodelsof

thepast,whileatthesametimeensuringthatduringtheprocessoftransformation

mediapluralismisguaranteed.TheEUanditsMemberStates,whilecommittingto

safeguardingmediapluralismontheonehand,areverykeentopositionsomeof

theirplayersintheglobalmarketplaceontheotherhand,whichiswhytheyhave

retainedastrictlyeconomicapproachtoregulatingmediaownership.Moreoverthe

competencefordealingwiththeissueofmediapluralismtraditionallylieswiththe

MemberStates.

Citizenstodayaremorethaneverimmersedinamediasaturatedworld(Croteau&

Hoynes,2006).Duetothesheervolumeofmediaoutputitcanbedifficulttokeep

trackofrecentdevelopmentsinmediamarkets,whichhavebecomeverycomplex

andlesstransparentascompaniesattempttocircumventnationalrestrictionsand

morechannelsandoutletsarebeingcontrolledbyfewercompanies(Curran,2002,

1TheacquisitionofMyspacebyRupertMurdoch’sNewsCorporationin2005ortheacquisitionoftheGermansocialnetworkstudivzbyHoltzbrinckpublishersin2007arewellknownexamples.

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p.8).Thismight,inpart,provideanexplanationforthelackofbroadpublic

discussiononissuesofconcentrationofmedia.Infactpublicmediagovernancehas

beenratherfocusedoncontentthanonownership.

Myaiminthispaperistoassesstheregulationsofmediaownershipandotherlegal

instrumentsthatservetosafeguardmediapluralisminGermany,UnitedKingdom

andFranceandtoevaluatethenecessityofnewregulatorymodelsandframeworks,

whichcouldbeappliedtoallEUMemberStatesonasupranationallevelinorderto

acknowledgethechangesofthemedialandscape.Myresearchquestioniswhether

anysupranationalmeasures,beitaharmonizationoflegalinstrumentsoranyother

actioninsupportofpluralismacrosstheEUwouldbefeasible,effectiveand

expedient.

In1992theEuropeanCommissionhadalreadyproposedanapproachbasedon

harmonizationinitsGreenPaper“Pluralismandmediaconcentrationontheinternal

market”(EuropeanCommission,1992;EuropeanComission,2007;European

FederationofJournalists,2005;TheGuardian,2008).Theactionssuggestedinthis

report,howeverwereneitherconsideredappropriate,norattainableinthebroad

consultationprocessensuingthepublicationofthepaper,whichtolargepartswas

duetotheCommission’sapproachtoensureafunctioninginternalmarketrather

thantoguaranteepluralismanddiversityofopinionsintheEU.Morethan15years

later,theconditionshavechanged:Therehasbeenintensereorganisationand

deregulationoftheEuropeanmediamarketwhichhasledtoanincreasing

internationalandglobalscopeofmediacompanies.Moreoverwehavewitnessed

theformationofmultimediaconglomeratesandtheevolutionofonline‐media.Due

totheseandotherframeworkconditionsthathavechangedsincethepublicationof

theGreenPaper,Ishallre‐evaluatewhetherasupranationalapproachwouldstill

proveimpracticable.IchosetoanalyseGermany,UnitedKingdomandFrance,not

onlybecausetheyarethethreebiggestEUMemberStates,butalsobecausethey

regularlyconvenetripartitemeetingsofofficialsfromtheirregulatorybodiesto

discussissuessurroundingmediaandpluralism.

InordertoevaluatethisresearchquestionIwillfirstlyprovideanoverviewabout

theconceptsofmediaconcentrationandpluralism,includinganassessmentofthe

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currentsituationofthemediasectorsinthetripartitecountriesaswellasinthe

EuropeanUnionasawhole.Themediaconglomeratesoftodayofferavery

diversifiedportfolioofmediaproductsandareofteninvolvedinawiderangeof

non‐mediabusinesses.Thisdevelopmentcanbeexplainedbyanalysingthe

economicsofthemediaindustryandtheunderlyingconditionsofthestatusquo.I

willgoverymuchintodetailsinthissegmentsinceitisessentialtounderstandthe

specificeconomicconditionsrelevanttomediacompaniesbeforeanyregulatory

measurescanbetaken.Moreover,myanalysiswillshowthatthemarketitselfis

responsibleformanyproblemsrelatingtomediapluralism.

SecondlyIwillanalyzethecurrentregulationsofmediaownershipinthetripartite

countriesandtheEUutilizingacomparativelawapproach,which,incombination

withtheaforementionedcountrylevelevidence,shouldallowabasicassertion,

whichregulationsworkforwhichmarketstructures.Thehugevarietyofregulatory

measuresthroughouttheEUhascontributedtotheperceivedneedofsupranational

measuresinordertobetteraddresstransnationalmediaconcentration.

Finally,drawingfrommyassessmentwhichregulationsareinplaceforwhichkinds

ofmarketstructures,Iwillevaluatewhetherasetofregulations,oranyother

measurewhichcouldsuitthewholeEuropeanmediamarketwouldbeattainable

andwhichconditionsneedtobemetinordertoguaranteesuccessful

implementation.Iwillscrutinizethefeasibilityofthesemeasuresbymeansof

opinionsgatheredfromdiscussionswithEuropeandecisionmakers.

ItisimportanttonotethataftertheproposalsoftheGreenPaperhadbeenrejected

bytheMemberStates,theEuropeanCommissionhasturneditsbackona

harmonisation‐basedapproach.However,addressingthreatstothediversityof

opinionsintheEUbeyondensuringthefunctioningoftheinternalmarkethavebeen

declaredofficialpolicyCommissionersVivaneRedingandMargotWallström.In2007

astudywaslaunchedtofindoutaboutindicatorsofpluralisminallEUMember

States.PreliminaryresultshavebeenpublishedinJune2009.Thefullreportisdueat

theendofsummer2009.Theresultsofthisstudywillbeadecisivefactorforthe

decisionwhichapproachthenextCommissiontobeelectedinautumn2009will

takeregardingmediapluralism.AtthispointIwanttostressthatduetothe

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temporalproximity,evenuponavailabilityofanyresultsIcouldnotincorporatethe

outcomeofthisstudyinmythesis.

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2 Thefunctionsofmassmedia

Inthecontextofcommunicationscience,functionreferstoacertainstandardof

performanceandmerits,whichagivensocietyrequiresmediatoprovide(Burkart,

Kommunikationswissenschaft,2002,p.379).Theprincipalfunctionofmediafroma

systemtheoryperspective(Wallner,2007,p.57)ispublicity.Inacademicliterature

(Burkart,Kommunikationswissenschaft,2002;Ronneberger,1978;Münch,1991),a

setof(sub‐)functionsofmediahasbeenidentified.Theyaredividedinthree

categories:social,politicalandeconomical.

FUNCTIONSOFMASSMEDIA

social political economical

Information

Socialisation Enablingpublicdiscourse

Orientation Articulation

Circulation(knowledgetransfer,socialtherapy,

validation)

Recreation/Entertainment Politicalsocialisation/education

Regeneration

Integration Criticism&control Domination/manipulation

SOCIETY

Figure2‐1Thefunctionsofmassmedia,Source:Burkhard,2002,p.382

Thequalityandthedegreeoffulfilmentofthesefunctionsdiffersaccordingtowhat

Burkartdefinesasthe“frameofreference”(Burkart,Kommunikationswissenschaft,

2002,p.382)toagivenenvironmentorsociety.Thisframe,whichmirrorsthe

expectationsandrequirementsofthemembersofagivensociety,determines,

whichfunctionsarenecessary,required,acknowledgedortolerated.Thereforethe

analysisofthefunctionsofmediahastobecloselylinkedtotheaudienceand

(social)environmentthemediacontentisaimedat.

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2.1 Socialfunctions

Socialisationiswidelyseenasoneofthemainmeritsofmassmedia,particularlyin

industrializedsocieties.Duetothecomplexityoforganisationonsocietallevel,many

people,especiallychildren,areunabletoacquirefromfirsthandexperienceallthe

knowledgeandintellectualskillsnecessarytofilltherolesthattheyaresupposedto

fill.Mediacanbasicallyprovidetheadditionalknowledgeneededandcommunicate

valuesandculturalstandardsaswellaspatternsofthoughtandconduct.However,

Burkart,followingRonneberger,pointsoutthatthelatterrequiresintellectual

reflectionandcannotbeobtaineddirectlyfromthemedia(Burkart,p.385).

Somescientistsarguethattheimportanceofmediasocialisationhasbeen

overstated.Hurrelmann(1980)statesthatthereislittleempiricalproofofthe

influenceofmedia.Inhisview,mediasocialisationis,unlikefamilysocialisation,

easiertoreversesinceindividualsusuallytakeamoreactiveroletotheirownmedia

socialisation(Hurrelmann&Ulich,1980,p.603).Hurrelmann,therefore,seesthe

roleofmediaasanamplifierofvaluesabsorbedfromotheragenciesofsocialisation

(ie.parents,school).„Thedefiningquestion[...]isnot,whatisshownonTVhow

often,butinwhichcontextandunderwhichcircumstancesitisreceived,“

(Hurrelmann&Ulich,1980,p.610).

Closelylinkedwiththetheoryofsocialisationisthenotionoforientation.Inaddition

torisingcomplexityofsocietalorganisation,trendsofindividualisationandafloodof

dataavailabletoeveryoneininformationsocietieshavesparkedaneedforguidance

andtogetherness.Mediaassistinfilteringandsortingtheinformationthrustupon

theaudience(gatekeepingtheory).Atthesametimetheybalancethelackofsocial

encountersbyprovidingcommonexperienceseveryonecanrelatetoandthey

communicatepatternsofthoughtdifferenttotheoneswhichareencountered

conventionallyineverydaylife.Inconjunctionwithintegration,theformerisoften

referredtoas„thewater‐coolereffect“(seealsochapter4.1.2.4).

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Moreovermediaprovideameansofrecreationandentertainment.Recipientsare

offeredapossibilityofescapingtheworriesofeverydaylifeiftheyneedsome

distraction.

Finally,mediaaresupposedtoprovideintegration.Akintoorientation,thisfunction

takesthesenseoftogethernessonestepfurtherandaimsatmanufacturingtheglue

thatholdssocietytogether.Themorespecializedandindividualizedsociety

becomes,thelessweareabletorelatetoeachotherandthemoreneedthereisfor

thevariousunits(sociologicalgroupswithinsociety)ofthesystemtoworktogether

inordertopreventthewholesystemfromimploding.ForBurkart,thistaskcanonly

befulfilledwiththehelpofmassmedia(Burkart,2002,p.387)sincepeopledepend

ontheirabilitytocommunicatecommonvaluesandpatternsofbehaviourwithina

society.However,ifthemassmedia’sefforttoprovideintegrationisdysfunctional

disintegrationoroverintegrationmayoccur.Burkartmentionsdisintegration

particularlyinconnectionwithdigitaldivideandknowledgegapissueswhichbenefit

theformationof(media)elitesandbroadensthegapbetweenthesociologicalunits.

Overintegrationmayoccurwhenpluralismdeclinesandopinions/valuesoutsidethe

mainstreamtendtobeignoredorsupressed.Aclassicexampleofoverintegrationis

propagandaduringthesecondworldwar.

Figure2‐2Integrationthroughmedia,Source:ownillustration

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Bothdysfunctionalmanifestationsofintegrationareassociatedwithscenariosof

commercializedandconcentratedmediasectors(seechapters4.1.2.2and4.1.2.3)

whereassuccesfullintegrationisamongthetypicalmeritsofpublic(broadcast)

media.However,Burkartstresses,thatamediamarketeconomydoesnot

necessarilyexcludethesocialfunctionofintegrationandthatthereisnoevidence

mediahaveabandonedintegrationforthesakeofprofitandshareholdervalue

(Burkart,2002p.389).

2.2 Politicalfunctions

Thepoliticalfunctionsdefinedhererefertothefunctionsofmediainademocracy

theyarethecoreoftheconceptofpluralismoutlinedinchapter3.Firstlymedia

servetogeneratepublicityforpoliticaldiscussion.Theyprovidea(virtual)public

spacefordeclaration,clarification,elaborationandcontroversy,whichiscrucialto

thedemocraticprocessofdecision‐making.Inordertoallowasmanypeopleas

possibletofollowand/orjointhediscussion,massmedianeedtoestablishan

applicableplatform2.Severalcriticsclaimthatmediahavebecomemerelyaplatform

forpoliticaldebatebutaplatformfortheatricalstagingofpoliticalprocesses.Münch

(1991)arguesthatpoliticsisdeterminedbydramaturgyofpublicrepresentation

(Münch,1991,p.95).Successfulpoliticalmeasuresaredeterminedbythewaythey

arediscussedratherthantheirunderlyingidea.ForMünch,thisdefiestheconcept

ofpoliticaldiscussionsinceitischarmingrepresentationsinsteadofcompelling

argumentsthatincreasinglyshapethefaceofpolitics–aprocess,whichisvery

muchfacilitatedanddeterminedbymassmedia(seechapter3onHabermas).

Nevertheless,themediahavethepowertomakevoicesheard,whichconstitutes

thefunctionofarticulation.Articulationrequiresmediathatactasamouthpiecein

ordertoechothepluralismofpoliticalopinionswithinasociety.Thisisa

prerequisiteforpublicdiscourseinthefirstplace.

2Wallneradds,thatpoliticalfunctionsofEuropeanmediaalsoneedtobeviewedinaEuropeancontextandcannotbeanalysedintheirnationalenvironmentonlysince,duetopoliticalandeconomicintregration,nationshavelosttheirstatusasprincipalpoliticalbenchmark(Wallner,2002,p.45).

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Thefunctionofpoliticalsocialisationandeducationisablendbetweenthegeneral

functionofsocialisationdiscussedaboveandthefunctionofinformation.Naturally

mediaaresupposedtoinformaboutthepoliticalsystemandreportonthevarious

formsofpoliticalparticipation.

Finallymediaaremeanttocriticizeandexaminethepoliticalprocess.Criticismand

examinationcanattimesbeverysimilartoarticulation,sinceattimestheygivea

voicetoandexpressthepositionofthosewhodonothaveaninstitutionalized

representationunitsuchascitizens’groupsandinitiatives,smalltradeunions,

commercialinterestandpressuregroups,etc.(Ronneberger,1978,p.229).

Thecombinationofpoliticalfunctionsofmassmediacanbeseenhere:

Figure2‐3Politicalfunctionsofmassmedia,Source:ownillustration

2.3 Economicfunctions

Theeconomicfunctionsrefertothebenefitsmassmediacontributetothemarket

economy.Firstlytherearedirectoptionsofinvestment,sincemostmediacompanies

areeconomicentitieswhichcanbeboughtorwhichneedtobuysupplies.Secondly,

andmuchmoreimportantlymediaprovideindirectoptionsofinvestmentthrough

advertisement.Theyservetostimulateindustrialproductionbyboostingdemand

forconsumergoodsandservicesandallowsupplierstosellsomeoftheirproductsat

apremium.Thisconstitutesthefunctionofcirculation.Apartfromstimulating

demand,mediaalsoserveasameanstostrengthenmarketeconomyideasand

capitalistideologiesinsocietyandstabilizetheeconomicsystem(Burkart,2002,p.

399).Knowledgetransferaimsatpreparingpeopleforeconomicchangesand

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informsthemaboutpossibilities(i.e.ofconsumption)theyhave,socialtherapyhelps

themcopewithinequalities,deficienciesandotherunpleasanteffectsofamarket

economy,andvalidationservestolegitimizeandanalysetheirpersonalsituation.At

theendofthedayitallservesthepurposeofstrengtheningexistingpatternsof

resourceallocation(Burkart,2002,p.401).

Thisfunctionisintertwinedwiththeideaofdominationandmanipulationin

capitalistsocieties,whichhadbeenintroducedmorethan150yearsagobyKarl

MarxandFriedrichEngels.Marxstatesthatcapitalismcreatesideologies,which

servetocoverupcontradictionsbetweenwhatpeoplearepromisedandwhatthey

actuallyget,betweensubjectiveandobjectiveneeds.Assumingthatthebaseof

societyiseconomicproductionanddistribution,Marxidentifiedahierarchicalsocial

systemofbaseandsuperstructure.Thosewhoownproductioncapacities(base)are

membersoftherulingclassandthereforeshapeanddeterminesociety’sideas,

meaninglanguage,arts,religionandrituals(superstructure)

“Theclasswhichhasthemeansofmaterialproductionatitsdisposal,hascontrolat

the same time over the means of mental production, so that thereby, generally

speaking,theideasofthosewholackthemeansofmentalproductionaresubjectto

it.”(Marx&Engels,1995)

InthemidnineteenthcenturywhenMarxandEngelsexpressedtheseideasin“The

GermanIdeology”,economicproductionwasmainlybasedonmaterialgoodssince

theindustrialsectorwasabouttoreplacetheagrariansectorasthemostimportant

factorofproductionandthereforesourceofwealthandgrowth.Nowadaysthemost

important economic good is information, as the information economy forms the

most important factor of production within the service sector – the constitutive

element of the information society. Due to the crucial positionmedia hold in the

processofallocationofinformation,whoeverinfluencesand/orcontrolsmediamay

exertthesameorgreaterpowerastheownersofresourcesofproductionMarxand

Engels had in mind (see also chapter 4.1.1.1). Based on this analogy media is

sometimes regarded as the capitalism’s most powerful tool of “manufacturing

consent”,anexpressionestablishedbyNoamChomsky.

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Following the idea of domination in a Marxian (class structure) understanding, it

could be furthermore seen as obvious trend that recreation in the socialmeaning

changestoregenerationintheeconomicarea.Theeffectsmaybethesame,butthe

goal isdifferent.While recreation intends toprovideentertainmentandqualityof

privatelife,regenerationaimsatmaintainingthemoraleoftheworkforce.

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3 Mediapluralismandthepublicsphere

Mediapluralismreferstothequalityofmediaservicestothepublic.Theterm

embodiestheprovisionofabroadrangeofwell‐balancedopinionsreportedinfullin

ordertoguaranteeindividualfreedomofinformationandadequatearticulationof

minoritiesinthepublicsphere.Habermastracesthedevelopmentofthepublic

spherebacktothe18thand19thcenturieswhenthemiddleclass(bourgoisie)started

tocultivatereasonedargumentinordertoforma“zoneofmediationbetweenstate

andprivateindividuals”(Crossley&Robert,2004,p.2).Individualizationand

differentiationofsociety,aswellasseparationofchurchandstateandcentralization

ofstatepowerwithrespecttoindividualcitizen’severydayroutinehadleadtoa

collectivedemandofaccountabilityandtherebycontributedheavilytotheevolution

ofthepublicsphereandtheprincipleofrationalpublicdebate.Accesstothepublic

sphereshouldinprinciplebeopentoallcitizens(Habermas,2000,p.92)sinceit

servestoshapepublicconsensus.CriticshavesuggestedthatHabermas

underestimatedpersonaleconomicandsocialconstraintslimitingtheparticipation

inthishistoricpublicsphere.

However,assessingtheconditionofthepublicsphereinacontemporary

environment,Habermasidentifiesotherfactorsresponsibleforthefactthatthe

currentrealityofpoliticalandpublicdiscourseismerelyapaleimitationoftheideals

thatsurroundedthehistoricalzoneofmediation.Heattributesthedeteriorationto

threeelements.Firstly,theconstitutionofmodernEuropeanwelfarestates,which

hasraisedmutualdependencyofstateandindividualsandhasleadtoa

transformationofcitizenstoconsumers.Secondly,accordingtothepropositionof

thenewpoliticaleconomymembersofgovernment,partiesandbureaucraciesas

wellasrepresentativesfirstandforemostpursueindividualgoalswhichmeansthat

politiciansdonotseektoengageinpoliticalargumentsforthebenefitofdemocratic

decisionmakingbutrather,attempttomaximizevotes,inaverysimilarwayto

entrepreneursmaximizingprofits(Benderet.al.,2007,p.300).Sinceviewsofparty‐

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basedorganizationstendtobestucktointhelongrun,inordertowinless

organizedorlessinformedvoters,politicaldebatesshiftto“tricksandtreats”and

becomemoreandmorestaged(Crossley&Robert,2004,p.5)(seealsochapter2.2).

Thirdlyandmostimportantlyinthecontextofthispaper,Habermasholdsthemedia

responsibleforadeclineofthequalityofargumentsinthepublicsphere.Inhisview,

allowingpubliccommunicationtobemoderatedbydemandsofbusiness,leadsto

mostofthecontentbeingplayedto“thelowestpossibledenominator”(Crossley&

Robert,2004,p.7).Subsequentlythehistoricalpurposeofthepublicsphere,tolevel

upthequalityofarguments,isreversed.

Criticsofmediaregulationandpluralismwatchdogssometimesarguethat,itisnot

profitmaximizationthatleadstoadeclineoftheamountofpublicvalue

programmesbutasimplelackofdemandtowhichmediacompaniesrespond.When

concurrent,themassofpeoplewillchooseBigBrotheroverapoliticaldebate,or

TheSunovertheGuardian.Thequestioniswhetherlesseducationoflowerclasses

canexplaintheunpopularityofpublicvalueprogrammes.Thepublicchoicetheory

providesananswertothisdilemma.Thismodelassumesthatpeoplehaveamulti‐

levelsetofgoalsandpreferenceswhichstandsincontraststothesinglesidedhomo

oeconomicusconcepttraditionallyfavouredbyneoclassicaleconomics(seechapter

4.1).Thegoalschangeaccordingtotherolethepersontakesatagivenmoment.

Thisexplainswhyaperson,asacitizen,somemayvaluephilosophicaldiscussionson

BBCveryhigh,whileasaconsumer,mayprefertowatchBigBrother.Thismirrorsa

conflictofinterest.Democracyserveseveryone,eventhosewhodonotwantto

participateinpoliticalwillformationorelections.Thisraisestheincentiveofbeinga

“freerider”onpoliticalinformation–thevalueoftheseprogrammesiscommonly

acknowledgedforsociety,however,theconsumerssetsasideparticipationand

pursuesothergoalssuchasentertainmentandrecreation(Lange,2008,p.172).

Habermas’assessmentofthepublicsphereneedstobeviewedincloseconnection

withhistheoryofcoercion‐freediscourse.Whenappliedtoapublicsetting,this

theorystipulatestwoprerequisitesforanideal,non‐coercivediscourse.Firstly,

generalaccesstoinformationandopinionshastobeensured,which,dueto

practicalimpossibility,Burkartseesasanaccentuationofthedutiesofjournalismto

‐22‐

providetransparentandbalancedreporting(Burkart,2002,p.518).Thesecond

stipulationistheprincipleofrationaldiscussionbasedexclusivelyonthepowerofa

superiorargument.

Inordertoretainazoneofmediationinashape3thatmeetscontemporary

technologicalandsocialchallengesthesestipulationsneednottobeentirelyfulfilled

butaclearefforttocomeclosetotheirfulfilmenthastobemade.Mediapluralismis

crucialtothiseffortasitisverycloselyconnectedtothedemocraticvalues

underlyingHabermas’conceptionofthepublicsphereandcoercion‐freediscourse.

Generally,pluralismreferstotheacceptanceofdiversityinagivensociety,which

permitstheharmoniouscoexistenceofdifferentideologies,schoolsofthoughtand

ideas.Pluralismislinkedwiththedemocraticprinciplesofequalityandfreedomof

expression.ForRagerandWeber(1992)athoroughlypluralistsocietymeansthatno

ultimatejudgementonwhattothinkofanygivenmattershalleverbeaccepted

sincethedemocraticmajorityonlyhasthepowertodecideonapoliticalcourseof

actionratherthanaboutwhatisrightorwrong(Rager&Weber,1992,p.8).Media

pluralisminthisunderstandingisareflectionofdiversityonsocietallevelandfirst

andforemostaidsandfacilitatestheprocessofdemocraticwillformation.Baker

(2007)holdsasimilarpositionandarguesthat“anormativeconceptionof

democracyrequiresthatthestructureitselfembodyoratleastbeconsistentwith

respectforcitizensequalclaimtoberecognizedaspartoftheselfdetermination

process”(Baker,2007,p.6).SinceBakerseesmediaasthe“mostcrucialinstitutional

structureofthepublicsphere”,theapplianceoftheegalitarianprincipleonmedia

requiresthemtoprovidecapacitiesforpeopletoexpressabroadrangeofopinions

andultimatelyinfluencepublicwillformation.Forthisreason,Bakerconcludes,“a

countryisdemocraticonlytotheextentthatthemedia[…]arestructurally

egalitarianandsalient”(Baker,2007,p.7).

Legally,thecallformediapluralismisrootedintherighttofreespeechandfreedom

ofexpression,whichinturnisshapedbytheaforementionedargumentfor

3Whethertheevolutionofonline‐mediafacilitatetheprocessofmovingtowardspublicdiscourseofaHabermasianconceptionshallbediscussedinchapter3.1.

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participationinademocracy.Fenwick&Philippson(2006)callthisargumentoneof

themostinfluentialtheoriesoffreespeech(Fenwick&Phillipson,2006,p.14).

Uninhibitedpubliccriticism,whichencompassesalsothefunctionofexposing

abusesofpower,hasa“specialprotectedstatusinmostWesterndemocracies”

(Fenwick&Phillipson,2006,p.16).Theyalsoacknowledgethatfreespeechclaimsof

(mass)mediaareoftenindistinguishablefromthoseofindividualspeakers,whichis

whypressormediafreedomisprotecteddistinctivelytofreespeechprotection.

AlthoughpressfreedomisnotmentionedinthetextofArticle10ECHRwhich

providesthat“Everyonehastherighttofreedomofexpression.thisrightshall

includefreedomtoholdopinionsandtoreceiveandimpartinformationandideas

withoutinterferencebypublicauthorityandregardlessoffrontiers”,theStrasbourg

Courthasdefactoassignedprioritytomediaspeechincomparisontotheexpression

ofindividuals(Fenwick&Phillipson,2006,p.25).Fenwick&Phillipsonperceivethe

dangerthatthepossibilitiescreatedbymediaownershipmaybeintensionwith

generalguaranteesoffreespeechsincetheproprietorofamediaoutletcould

exploittherightofdeterminingitscontentandtherebydamagetheconsumer’s

interestinpluralismofinformationwhichtheyrefertoasavalueunderlying

freedomofspeech.Fromalegalpointofview,theyconcludethatmediashouldnot

beallowedanyblanketspecialprivilegesincomparisonwithindividualspeakers.

Rather,anyclaimhastobethoroughlyscrutinizedandassessedagainstthebasic

principlesandvaluesoffreespeech.Alternativelyspecialanti‐privilegesorburdens

suchasmustcarryobligationstoprovideapluralityofculturalandpoliticalmaterial

couldbeintroduced(Fenwick&Phillipson,2006,p.28).4Theygoontostatethatan

infringementintoeditorialfreedomshouldbeweighedoffagainsttheaimof

enhancingthebenefittotheaudiencesincethereareseveralexamplesthat

unrestrainedfreespeechinthepresswillnotconsistentlypromotethevalues

underlyingfreedomofspeechitself(seechapter4.2.2.3).Thereforetheyarguethat

content‐basedcontrolsareinaccordwithfreespeechrationalessincetheyenhance

mediaspeechincomparisonwiththatofindividualspeakers.

4SofartheStrasbourgCourthasonlyfoundrighttoreplyprovisionstobeinalignmentwitharticle10(Fenwick&Phillipson,2006p.28)

‐24‐

Lange(2008)differsbetweenfunctionalpluralism,formalpluralismandpluralismof

content.Functionalpluralismmeanstherangeofmediafunctionscoveredbyany

mediaoutlet(Information,Education,Entertainment,Socialisation,seechapter2).

Formalpluralismmeanstherangeofjournalisticstylesanddisplayformatswhichis

supplementedbythepluralismofsourcesofinformation.Pluralismofcontent

meanstherangeofissues,opinionsandstakeholders(Lange,2008,p.187).The

morediversethisrangeis,themorelikelypluralismisrealized.Thisformisthemain

typeofpluralismreferredtoinacademicandpoliticaldiscussion.

Therearetwoconceptsofhowtoattainthedesiredoutcome,firstlybydiversifying

theeconomicentitiesofcontentproductioninordertoachieveapluralismof

providersorexternalpluralism,secondlybyimplementingcertainstandardsof

contentproductionsoasbroadentherangeofopinionswithinanyeconomicentity

ofcontentproduction,referredtoasinternalpluralism.

There is dissent whether the notion of an independent provider of information

corresponds with the concept of a self‐determining economic entity. For Lange

(2008) the number of independent providers does not sufficiently determine

pluralismbutitisanecessaryprecondition(Lange,2008,p.188).Langdisagreesand

argues that independentmedia companies do not guaranteemedia pluralism. On

the contrary, Lang has found that on markets, which to some extent rely on

advertising, “strategic clustering of content” will take place, which does not

representtheoutcomedesiredfromasocialpointofview(Lang,2004,p.111).

The current regulations in place to safeguard media pluralism mostly aim at a

pluralism of providers. One of the most important expected outcomes of the

IndicatorsStudybytheEuropeanCommissionwillbeamoresophisticatedapproach

tothedefinitionofmediapluralism,whichpermitstheintroductionofnewmethods

ofregulation.However,Never (2002)hasclaimedthatanyattemptstoquantifyor

validatemediapluralismaredestinedtofailsincemediacontentbeforeanyclaims

regarding diversity and balance can be made will always be subject to consumer

demand and taste. The element of subjective judgement impedes the accuracy of

any objective definition (Never, 2002, p. 167). While that may apply strongly to

‐25‐

entertaining content (Never gives the example of TV feature films) it remains

doubtfulwhethertasteplaysaconsiderableroleinotherformsofcontent.

‐26‐

3.1 Democratisationofmedia–theonlinerevolution?

TheevolutionoftheWeb2.0,aterminventedbyTimO’Reilly,markedtheadventof

anewframeworkforonlinemedia.Fromaninitiallystaticconcept,theWorldWide

Webgraduallytransformeditselfintoadynamic,socialtoolfor“harnessing

collectiveintelligence”(O'Reilly,2005).Theusergeneratedonlineencyclopedia

Wikipedia,personalweblogs,andsocialnetworkingwebsitessuchasFacebookor

Twitterarewellknownexamplesofthisdevelopment.Web2.0notonlychangedthe

waypeoplecommunicateontheInternet,movingpublicdiscourseclosertothe

idealoutlinedbyHabermas,italsoservedtointroducetheconceptofcollaboration

asanewparadigmformedia,business,government,politics,scienceandthe

generationofideasingeneral5.Inthecontextofmediapluralismthepromotionof

citizenjournalism6,whichwasstronglyfacilitatedbyWeb2.0isparticularly

interesting.Inthelate1920’sBertoldBrechtlaidthetheoreticalfoundationsof

citizenjournalism,askingauthoritiestomakenewlydevelopedradio“truly

democratic”(Haas&Langenbucher,2002,p.2)andallowaudienceparticipationin

ordertoexpanditsintendedpurposefrommeredistributiontocommunication.

Unlikefreeradiooropentelevisionchannels,whichstartedtoemergeinthe1950’s

andthe1960’srespectively,therearepracticallynobarriersofentryforonline

media,thecostsassociatedwithsettingupaWeblog,Vlog(VideoBlog)oraTwitter

accountforexampleareverylow.

Bowman&Willislistarangeofchangestriggeredbyonlinecitizenjournalism,

particularlychangesinthedegreeoftrustextendedbytheaudiencetotraditional

mediaandchangesintheorganizationalcultureofmedia(journalistswriteblogs,

5InhisbookTheWisdomofCrowds,JamesSurowieckiprovidesmanyexamplesthatgroupsofpeoplearesignificantlybetteratdecisionmakingthanindividuals,regardlessoftheirexpertise(Surowiecki,2004)6Thereissomedisagreementwhethercitizenjournalismisqualifiedtobereferredtoasaviableformofjournalism.ForNeuberger,alackofprofessionalresearchandmethodsofqualityassurancestandagainstit(Neuberger,2009).However,Daviesarguesthatduetotheconstraintsofcommercializationtraditionaljournalismhasbecomeincreasinglyunprofessionalitself(Davies,2008).

‐27‐

theaudienceisaskedtoparticipateinonlinediscussions)7(Bowman&Willis,2003).

WhileBowman&Willisdonotsuggestthatcitizenjournalismmayeliminateor

replacetraditionalmedia,theynotethatthe“notionoftheinstitutionalpressasthe

exclusive,privileged,trusted,informedgatekeeperandintermediaryofthenews”is

moreandmorechallenged.Webcommunitiesandsearchenginesarebecoming

valuedoutletsofnews,whichguideanddirecttheirreaderstoinformationof

interest.Therolethesesitesplayasfilters,simplifiers,clarifiersoramplifiersofnews

isaddinganewintermediarylayer(Bowman&Willis,2003).AxelBrunsdevelopsa

similarargumentandstatesthatcitizenjournalismispositionedasanalternative

andacorrectivetothemainstreamtierofnewsmediaandplaysavalidroleinpublic

debate.8Insteadofsimplystandinginopposition,itengagestheperspectivesof

mainstreammediaand“debunksthemastheviewsofindividualpoliticalorlobby

groupsratherthanasrepresentativeforamorediverserangeofsocietalvalues”

(Boler,2008,p.40).Moreover,citizenjournalistsplayaconsiderableroleincreating

hypeandtherebyweakentheabilityofmainstreammediatosetagendas(Boler,

2008,p.177).9Ononehand,citizenjournalismmayserveasasourceofinspiration

forprofessionaljournalists,ontheotherhanditfilterstheirveryoutput.

7Thischangeintheorganisationalcultureisthemainreasonwhyitissometimesdifficulttodistinguishbetweentraditionaljournalismandcitizenjournalism–i.e.professionaljournalistswriteaweblogfortheiremployerandoneforprivatepurposes.8InUSnewsmediathistieriscommonlyreferredtoas“blogosphere”9SusannD.Moellerreferstothisathe“tickleupeffect”(Boler,2008p.177)

‐28‐

Figure3‐1Therelationbetweenmainstreammediaandcitizenjournalism,Source:ownIllustration

Wegnerarguesthatfilteringandamplifyingofinformationincreasestheneedand

demandforqualityjournalism.Heobservesthatmanycitizenjournalists/bloggers

basetheirargumentonreportspublishedandbroadcastbytraditional,often

prestigiousmediasourcestheytrust.Insteadofmutualexclusivityhepredictsa

peacefulcoexistenceofcheapmicromediaandexpensivelyproducedcontent

(Wegner,2005,p.3).

Onlinemediaprovideavaluablemeansonparticipationincontentproduction,

howeverthedemocraticvalueofthisparticipationhastobeanalysedinconnection

witheconomicandsocialconstraints(similartothecriticismofHabermas’historic

conceptofthepublicsphere,seealsochapter3).Eveninmodernwesternsocieties,

digitaldivideandalackofmedialiteracyhavesofarpermittedonlyarelativelysmall

portionofthepopulationtoparticipateinchallengingthestrongholdoftraditional

media.Moreovertheoutreachofonlinecitizenmediaisverylimited.AsJenkinsand

Thorburnacknowledge,“theabilityofmainstreammediatospeaktoavastpublicis

immenselygreaterthanthediffusedreachofthenewmediathroughwhichmany

messagescanbecirculatedbutfewcanensureahearing”(Jenkins&Thorburn,

2003,p.11).Despitethisfacttheyareoptimistic,that“thenewcyberculture”would

beabulwarkagainsttheconcentrationofcommercialmedia,ensuringaccessto

‐29‐

alternativeperspectives.(Jenkins&Thorburn,2003,p.12).Moellerconcludesina

similarway:“TheproliferationofnewvoicesontheWeb[…]meansthatthe

opportunityexistsfordemocracy‐building,evenifthatopportunityisonlyfitfully

seized”(Boler,2008,p.185).

‐30‐

4 Concentrationofmediaownership

Thischapterisdividedinthreeparts.Firstly,Iwillshow,thatoncemediacompanies

adheretotheimperativesofthemarketandprofitmaximization,theyhaveno

alternativebuttoaimatconcentrationandcooperationinordertosustain

profitability.Thereasonsforthisareplentifulandincludethestructureofthe

markettheyarein,theirpositioninthismarket,theirspecificcoststructureand

externalinfluencessuchasderegulation,privatisationandtheevolutionofnew

technologies.SecondlyIwillassesstheconsequencesthatmediaconcentrationhas

orcanhaveonsociety,politicsandthepublicingeneral.FinallyIwilloutlinethe

levelofconcentrationalreadyestablishedinthetripartitecountriesandthewhole

EUandprovideanoverviewofthecurrentsituationintheaforementionedregions.

4.1 Economicenvironment

4.1.1 Competitioninamarketmodeleconomy

Anyeconomyhastosolvethethreebasicproblemsofwhichandhowmanygoods

andservicesaretobeproduced,howtheyareproducedandwhoistoreceivethem

(Hoskins,McFadyen,&Finn,2006).Thedominatingideaofhowtosolvethese

problemsisthemarketmodeleconomy.Thisreferstoasystemofexchangebased

onsupplyanddemand.Inthisconcept,priceservesasameansofcoordinationin

ordertoachieveanequilibriumsituationwheresupplymeetsdemand.Itisassumed

thateachparticipantaimsatmaximizingutilityforhimself10.Thisassumptionis

crucialtotheneoclassicaltheoryofthefirm,whichhasgainedwidespread

approbationandwhichimpliesthat“thedesiretomaximizeprofitsisassumedto

motivatealldecisiontakenwithinafirm”(Lipsey&Chrystal,1995,p.183).The

ChicagoSchooleconomistMiltonFriedmanputsitmoreboldly:“Inafreeeconomy,

10Thisconceptiscommonlyreferredtoas“homooeconomicus”.

‐31‐

participantshavethesoleresponsibilityofallocatingdisposableresourcesas

efficientlyaspossibleand,underthisimperative,makefirmsasprofitableas

possible”(Friedman,2002).Thisideaisrootedinthemarketdeterminationthesis

(Baker,2007,p.90)whichconstitutesthatacompetitivemarketstructureforces

participantstogenerateenoughrevenuetocovertheircosts.Thereforethe

participantshavetofindcheapwaysofsatisfyingmoneybackedconsumerdemand,

therebydenyingtheenterprizeanyfreedomexepttryingtobeasprofitableand

responsivetoconsumerdemandaspossible.

Whilethisisthedominantpurposeofmanycompaniestoday11,somefewhave

startedtoincludeother,non‐monetarygoalsintheirbusinessplans.Theconceptof

CorporateSocialResponsibility(CSR),forexample,providesaframeworkfor

companieswillingtoconsidertheimpactoftheirbusinessonsociety(moreon

criticismandthelimitsofprofitmaximizationinchapter4.1.1.1).

Theneoclassicaltheoryofthefirmmakeseconomicactionshighlypredictable,asit

isassumedthatwhenpresentedwithachoiceofmultiplealternatives,companies

willselectwhateveralternativeproducesthelargestprofits.Thisassumption,

however,isveryself‐centredandmayleadtounfairundruthlessbusinesspractices.

Inordertopreventstrongereconomicentitiesfromsubduingweakerentitiesbased

onpowerinsteadofperformance,marketsthereforedependonasufficientlevelof

competition.

Thenotionofbeneficialcompetitionisapproximately250yearsoldandwas

introducedbyAdamSmith.Hestatedthatcompetitiondoesnotonlyensurea

certaindegreeoffairnessitalsoprovidesarangeofotherdesiredoutcomesfor

consumersandsociety,themostimportantbeinglowprice.“Thenaturalprice,or

thepriceoffreecompetitionisthelowestwhichthesellerscancommonlyaffordto

take,andatthesametimecontinuetheirbusiness.”(Smith,1986)Lowprices

increasetheconsumer’ssurpluswhileproductdifferentiationstrategies,adoptedby

11Doylenotesthat“verymany”mediacompaniescomplywiththeclassicaltheoryofthefirm,meaningtheyareprimarilygearedtowardsmaximizingprofitsandsatisfyingshareholders.

‐32‐

companiesinordertogainmarketshare,allowconsumerstochoosebetween

severallevelsofproductquality.

Apartfromlowprices,CroteauandHoynesnamethepromotionofefficiency,

responsiveness,flexibilityandinnovationascrucialbenefitsderivingfrom

competitivemarket‐basedeconomies(Croteau&Hoynes,2006).Inordertostay

competitiveandsuccessful,allcompanieshavetotakethesedimensionsinto

accountandarerequiredtobevigilantoftheircompetitors’actions,afeaturewhich

servesasacontrolfunctionofthemarketsystem.

Generally,thereisbroadconsensusamongeconomiststhatcompetitionensures

thatconsumerdemandismetandthatresourcesareallocatedeconomicallyduring

theprocessofproduction(Hanusch&Kuhn,1994),(Woll,1996,p.135).Thesetasks

areperformedatbestwhenthelevelofcompetitionisatmaximum.Thisideallevel,

alsoreferredtoasperfectcompetition,isinreality,apartfromfewexceptions12,not

feasible.Thetheoryofperfectcompetitionbuildsonfiveassumptions(Woll,1996)

• Manybuyersandmanyvendors

• Ahomogeneousproduct

• Perfectmarkettransparency(informationonproducts)

• Nosignificantbarriersofentry(anyonecouldbecomeaproducer/vendor)

• Firmswanttomaximizeprofits(asopposedtoquality,imageormarket

share,etc.)

Theimplicationoftheassumptionsisthateachfirmhaszeromarketpower(Doyle,

Understandingmediaeconomics,2002).Thisisthedirectoppositeofamonopoly

wherejustonesellerisabletooperatewithoutanycompetitionwhatsoeverandis

abletocreatehighbarriersofentry.Sinceitisveryunlikelythatalloftheconditions

ofperfectcompetitionareperfectlymetinonescenario,theaimisgenerallyto

attempttocomeascloseaspossible.

12LipseyandChrystalgivetheexampleofwheatfarmers,whooperateinaperfectlycompetitivemarketbecauseneitherofthemcanchangethemarketpriceofwheatbyalteringhisownbehaviour.Eachfarmerisjustoneofmanyproducerswhoallgrowthesameproduct.Therefore,variationsintheoutputofonefarmerhavenosignificanteffectontheoverallpriceofwheat.

‐33‐

Inreactiontotheunrealisticassumptionsofperfectcompetitiontheconceptof

workablecompetitionwasdeveloped,whichassessescompetitioninrelationto

marketstructureandfirmbehaviour.TheSCP(StructureConductPerformance)

paradigmimpliesthattheamountofcompetition,requiredtomakethemarket

workatitsmostefficientlevelcannotbeanalysedseparatelyfromthemarket

structureandthedecisionstakenbyrivalcompanies.Underthisassumption,

marketswithonlythreecompaniesbutlowbarriersofentryandinhomogeneous

productsmaybemorecompetitivethanmarketswithsixcompaniesbuthigh

barriersofentryandhomogeneousproducts(Benderet.al.,2007,p.379).TheSCP

modelactsonamulti‐goalapproachandassumes,thatfirmsnotonlyseekto

maximizeprofitsbutalsowanttoincreasetheirmarketshare,stimulateinnovation,

etc.Empirically,theinterrelationbetweenmarketstructureandmarket

performancehasbeendifficulttoprove.Severalindependentstudieshaveyielded

contradictingresults(Benderet.al.,2007,p.380).DespitethefactthatSCPhasbeen

declaredsuitableformediamarketanalysis(Heinrich,2001),(Wallner,2007),it

cannotbeanalysedindepthinthispaper.

Amongeconomists,thereisdissentwhethergovernmentinterventionand

regulationisrequiredinordertoensureasufficientlevelofcompetitionanda

functioningmarket.

LiberalandneoclassicadvocatesofafreemarketmodelinthetraditionofAdam

Smith(i.e.MiltonFriedmanandFriedrichHayek)claimthatcompetitionderivesfrom

thefreeplayofforcesonthemarketandthatthemarketofitsownvolitionguided

byan“theinvisiblehand”tendstoproduceanoptimumequilibriumstate.They

favouralaissez‐faireapproachandcallfortheleastpossibleamountofintervention.

Others,followingthetraditionofJohnMaynardKeynes(i.e.PaulKrugman,Joseph

Stiglitz)rejectthenotionsoftheinvisiblehandandthequasi‐automaticmarket

equilibrium.Instead,theyemphasizetheriskofmarketfailure(i.e.depressioninthe

‐34‐

marketcycleortheestablishmentofmonopolies)andadvocategovernment

interventiontoensurecompetition13andstability.

Thequestionofhowtomakesurethereisasufficientlevelofcompetitionarises,

becausefromacompany’spointofviewcompetitionequalsrisk.Thereason,they

wanttoavoidcompetitionisthestructureofthemarketstheycompetein.Inmost

casesfewconsiderablylargemediacompaniesrivalfortheattentionofmany

customers.Thisformofcompetitionisreferredtoasoligopolyanditisthedominant

marketstructureforconsumergoodsandinparticularmediaservices(Lipsey&

Chrystal,1995)14.Adistinctfeatureofanoligopolymarketistheinterdependence

amongdecision‐makersandthecross‐priceelasticityofdemand.Forexample,ifone

mediacompanysignificantlylowersthepriceofitsproductinordertogainmarket

share,thethreemaincompetitorsareforcedtoengageincompetitiveactionand,

mostlikely,willdecreasetheirpricetoo(Hoskins,McFadyen,&Finn,2006).

However,inanoligopoly,profitmaximizationandtheextensionofmarketshareare

compatibleonlytoaverylimitedextent.Atleastintheshortrun,thedecreasein

pricesthatmayleadtohighermarketsharewillresultinsubstantialforegoneprofits

(Henrichsmeyer,Gans,&Evers,1983).

Duetothishighlevelofinterdependence,competitorshavetoactstrategically

whichmeanstheyhavetoattempttoforeseetheircompetitors’actions.Thegame

theory,awidelyusedapproachtodecisionmakingineconomicsandsocialsciences

basedonthestudyofefficientallocationbyVilfredoParetoprovidesfurther

explanationonthenotionofstrategicactingintermsofwhethertocooperateor

compete(i.e.out‐price)withcompetitors(Hanusch&Kuhn,1994),(Woll,1996).

LipseyandChrystallistseveraltypesofcooperativeandcompetitivebehaviourin

oligopolymarkets.Firmscaneithermakeanexplicitcollusionoratacitagreement

nottoengageincompetition.Ontheotherhandtheymightagreeonapriceor

agreetomaximizeprofitsjointlybutcompeteformarketsharesthroughotherforms

13Theongoingdebateaboutgovernmentregulationandintervention,notonlyintermsofcompetition,hasrapidlygainedsignificanceintheaftermathoftheglobalfinancialcrisis,whichevokedintheendof2008.TheFrenchnewspaperLeFigarowentasfarasproclaimingKeynestobethe“manoftheyear2009”(Robin,2009).14LipseyandChrystalarguethatbecause,mediaareabletoexploitcostadvantagesofsize(economiesofscale)theindustryisdictatedtobecomeanoligopoly.

‐35‐

ofcompetitionsuchasadvertisingandsuperiorproductqualityorofferingsecret

discounts.Themostobviousformofcompetitivebehaviourisloweringprices(Lipsey

&Chrystal,1995).

Ifacompanychoosestoactcompetitively,orisforcedtodoso,itsprofitabilityis

seriouslythreatened.Thenecessitytoforeseestrategicmovesofcompetitorsandto

remainflexiblereducespredictabilityandtheaccuracyoflongtermplanning.

Althoughanecessaryconditionforafunctioningmarket,competition,for

companies,meanseconomicinstability.Therefore,asMcAllisternotes,businesses

strivetoeliminatecompetitionthroughintegration(orcooperation)inorderto

controllargesectorsofthemarket,ifnottheentiremarket(McAllister,1996).

Wheneverpossibletheyavoidcompetitioninordertoreduceriskandensure

profitability.

Ifcompaniesdonotwanttoengageincompetitionanddonotoptforcooperation

therearethreeformsofgrowingattheexpenseofrivalcompanies(Lipsey&

Chrystal,1995).Firstlytakeovers(acquisitions),whichoccurwhenacompanybuys

anothercompany,secondlymergers,whichoccurwhentwocompaniesjoinforces,

andthirdlydrivingrivalsintobankruptcythroughpredatorypractices(Hanusch&

Kuhn,1994).Inordertobenefitfromtheeffectsofreducedcompetition,the

remainingfirmsneedtoestablishbarriersofentrytothemarket.Inthecaseof

mediacompanies,aswillbeoutlinedinthenextchapter,highsetupcostsforthe

productionofcontentworkinfavouroffirmsattemptingtopreventnew

competitorsfromenteringthemarket.

4.1.1.1 Criticismofthemarketmodel

Undisputablythemediaholdauniquepositioninmodernsocieties.AsCroteauand

Hoynesnote,mediainform,entertain,influencehowweunderstandourselvesand

ourworldandprovideameansofspendingleisuretime(Croteau&Hoynes,2006).

Indemocraticsocietiesmediaserveasavehicleofreflectingthediversityofculture

andideasandtheyprovideindependentinformationwhereasintotalitariansystems

mediaareamouthpieceoftheviewsofthoseinpower.

‐36‐

Becausethemediaholdssuchgreatpoliticalandculturalpowertheirrightto

freedomofexpressionisprotectedbyArticle10oftheECHR,signedbytheCouncil

ofEurope(CouncilofEurope,1950),whichservestoguaranteefreedomof

expression.ThisideaislegallystipulatedintheconstitutionsofmostEuropean

MemberStates(seechapters3and5).

Butwhatifthereisarestrictionoffreedomofexpressionanditisnotcausedbya

totalitariangovernmentbutbyanopaquesystemofmarketandprofitorientation,

wheremediacompaniesthemselvespreventanyreportingthatcouldbenegativeor

merelycriticalabouttheirowners,theirbusinesspartnersortheiradvertisers?What

ifsomesubjectsarenotdeemedworthreportingaboutbecausetheywillnotattract

abigenoughaudience?Canthepublicsphereeverbeweighedoffagainstthe

requirementsofthemarket?

Thesequestionshavequitealongtradition.Inthemid19thcenturyMarxandEngels

suggestedthatthefirstandforemostfreedomofthepressisnottobeabusiness

(Trappel,Meier,Schrape,&Wölk,2002).“Beingabusiness”inthiscontextmeans

complyingtotheideaofprofitmaximizationstipulatedbytheneoclassicalmodelof

thefirm.

Fromaneconomistpointofviewtherearetwopointsofcriticismofthismodel.

Firstlythemotivationofthefirm,secondlytheorganizationalstructure(Lipsey&

Chrystal,1995,p.184).Thefirstargumentisthatprofitmaximizationisnottheonly

motivationforbusinesses,sincesomeownersmaypursuepoliticalpower,others

maybeinfluencedbyratherphilanthropicurgessuchastheconceptofCSR.ACSR‐

frameworkallowsbusinessestomonitorandensuretheiradherencetoethical

standardsandenablesthemtoembraceresponsibilityfortheimpactoftheir

activitiesontheenvironmentandthepublicsphere.Lipsey&Christalnotethatthe

assumptionofamulti‐goalapproachdoesnotprovetheneoclassicaltheoryentirely

wrongsinceprofitmaximizationwithalllikelihoodremainsanimportant

considerationformostbusinessowners‐importantenough,thatthepredictions

derivedfromtheneoclassicalmodelofthefirmaresubstantiallycorrect.

Thesecondargumentisthattheorganizationalstructurecannotbecompletely

neglected.Theneoclassicaltheorydoesnotdifferentiatebetweenahuge

‐37‐

multinationalcorporationandasingleproprietorbusiness.Duetothecommon

diversificationofownershipamongmanyshareholders,decisionmakingisfarmore

complexforlargecompaniesthanforsmallbusinesses.Forexampleshareholders

mayordermanagersnottomaximizeprofitsbutshareholdervalueorthevalueof

thecompany’sbrand,whichleadsusbacktothefirstargument.

Despitethelimitsoftheprofitmaximizationmodelanddespitethenatureofmedia

andthevalueofitsgoodsforthepublicsphere,mediacompaniesarepredominantly

viewedasprofitmaximizingentities.Thisleadstoastrongconflictofinterest.In

1947AdornoandHorkheimer,followingthetraditionofMarxandEngelsdeveloped

theratherpessimistictheoryoftheculturalindustryinordertoexposehowthe

businesscenteredviewofmediaproductionhassetoffaregressionfrom

enlightmenttoideology.TurningtotheexamplesofTVandradiotheyarguethat:

“Hereenlightmentconsistsofthecalculationofeffectivenessandofthetechniques

ofproductionanddistribution;inaccordancewithitscontent,ideologyexpendsitself

intheidolizationofgivenexistenceandofthepowerwhichcontrolstechnology.”

(Adorno&Horkheimer,1979).

AdornoandHorkheimerinsinuatethatratherthanprofitmaximizationthe

underlyingproblemofmediacompaniesisthattheyareboundtooperateina

marketenvironment.Arguingthatdiversityandsubstancearemoreimportantthan

profitabilityispointlessonceyouareforcedtoadheretothelogicofthemarketin

thefirstplace.

Themarketmodeleconomyhasbeensubjecttoalotofcriticism,particularlyfrom

thepoliticalleft,yetthereisbroadconsensusthatthereisnoapplicablealternative.

Themostcommonpointsofcriticismare:

• Marketsareundemocratic‐Thosewhohavethemostresourcesarethemost

successful,thereforethesystemtendstobehighlyreproductive

• Marketsareamoral‐GüntherDuxsuggests,thatpeoplehavebecomeso

interdependentthroughtheirvariousrelationsonthemarket,–the

consumermarkettoobtaingoodsandthefactormarkettobeabletopayfor

them–thattheydonotmeetaspeoplebutaslegalentities(Dux,2005,

‐38‐

p.56).Therefore,apartfrombasicmoralprerequisitesthattouchcriminallaw

(i.e.prohibitionoffraud),allmoralcommitmentsonlyservethepurposeof

thecontractstheyenterwitheachother.Duxconcludesthatparticipantsina

marketbasedeconomyonlycareabouteachothertotheextentoftheirown

economicinterest(homooeconomicus).Underthispremiseitispointlessto

addressissuesofmoraleorpublicvalueinamarketeconomyandthePareto

Optimum(asituationofperfectlybeneficialallocationofgoods)canneverbe

achieved.Duxrejectstheideaofthemarketsolvingtheproblemsithelped

createinthefirstplace.

• Marketsdonotvaluesocialneeds‐Publicbroadcastingprogrammesfor

minoritiesaretypicalexamplesofservicesprovidedoutsidethemarketplace

becausethemarketisunableorunwillingtomeetthedemands(othersare

publichealthcare,pensions,statesupportededucation).Ontheotherhand,

evenpublicbroadcastingcompaniesneedtocomplywiththeruleofthe

market(i.e.BBC).Thisdilemmamakestheassessmentofthechanging

businessofmediaanditssignificancefordemocraticsocietiesverydifficult

(Croteau&Hoynes,2006).Canbothmissionsbesimultaneously

accomplishedoraretheymutuallyexclusivegoals?

Atthemomentmediacompanieshavenochoicebuttocomplywiththe

requirementsofthemarket.Particularlynewspapers,someofwhicharestruggling

tosurviveduetodecliningnumbersofreadersandincreasedcompetitionfrom

onlinesourceshavebeensubjectedtoanongoingdiscussionwhetheralterative

businessmodelsfornewspaperscanbeestablished.Settingupnon‐profitholding

organizationsorfoundationsweresomeoftheideassofar.Itremainstobeseen,

whetheranyrealalternativetothelogicofprofitmaximizationprovestobeviablein

themediamarketplace.

‐39‐

4.1.2 Characteristicsofmediaeconomics

4.1.2.1 Interrelatedmarkets–theroleofadvertisement

Mediacompaniesgenerallyoperateintwomarkets,therecipientmarketandthe

advertisementmarket.Theyrivalattentionofrecipientsonone,andrival

advertisementsontheother.Thedecidingfeatureistheinterrelationand

interdependencyofthosetwomarkets.Dewenteruseseconometricalanalysisto

showthat“anincrementofthedemand[ofmediaproducts]resultsinanincreasing

demandforadvertising”(Dewenter,2004,p.1).WhileDewenterdenysthe

symmetryofthereverserelation15,Heinrichmaintainsthatsuccessononeofthe

marketsusuallytriggerssuccessontheotherone.Hepointsoutthatcompanies

benefitingfromtheeffectsofincreaseddemandareabletoreinvesttheirincreased

profitsintotheirproductinordertoattractevenmorerecipients,furtherpropelling

theirmarketposition.Hereferstothismodelasthespiraleffectofadvertisingand

circulation(Heinrich,2001).Fromthispointofview,mediacompaniesmaysucceed

atsimultaneouslyachievingbothprofitmaximizationandanincreaseofmarket

share,thusconfutingtheeconomictheorythatthisisnotpossibleonalong‐term

basisinanoligopolymarket.However,thismodelstillrequirescompetitiontobe

reducedtoaminimuminordertounfoldamaximumofbenefitingeffectsforthe

company.

15Incasetherearenegativevaluationsoftheamountortheshapeofadvertisementthereareasymmetricrelations.Moreover,theconsumersofmediacontentandadvertisementarenotcompletelyidentical(Dewenter,2004,p.1)

‐40‐

Figure4‐1:Theexpansionofmarketpowerstimulatedbyadvertisement,Source:ownillustration

Theviabilityofthismodelisprovenespeciallybytheexampleofnewmedia

companiesorfreedailynewspapers,whichrelyonadvertisingasasolesourceof

funding.Theirprofitsriseinproportiontothenumberofuniqueusersorcirculation

perday16.

Wallnernotesthatthismodelshowsthateconomicconsiderationsmayinfluence

contentinordertoincreaseprofitabilityandmarketshare(Wallner,2007)as

traditionalmediacompaniesseektoattractthoseconsumers,whicharemost

attractiveforheavyspendingadvertisers.Thisisbecausethesheersizeofthe

audienceisnottheonlydeterminantofthevalueofspaceortimetoadvertisers.

Thepriceadvertisersarewillingtopayalsodependsontheconsumers’demographic

characteristics(Hoskins,McFadyen,&Finn,2006).Generallyadvertisementsare

16ForGustafsson(2006)thisconfirmsthatthereisanincreasingroleofadvertisinginmediadevelopment.Manyrecentmediacreationshaveusedadvertisingfromtheirverybeginning(televisionintheUS,orfreedailynewspapers),afactthat,inahistoricalcontext,appearstobetheexception.Gustafssonsuggeststhatintheongoingprocessofmediaexpansion,moreemphasisshouldbelaidonalternativesourcesoffunding,suchason‐demandfees.

Increasingdemandandmarketshare(ie.throughdecreaseinsubscriptionprice)

moreattractiveforads

Increasingpro9its

Reinvestmenttofurtherstimulatedemand

Increasingmarketshare/buildingupadominantposition

‐41‐

aimedatthosedemographicgroups,whichcommandthehighestdisposableincome

(agegroupbetween14and49years)andhaveastronginterestinhigh‐endleisure

activities.Thisexplainstrendstowardsuniformityofcontentbecauseallmainstream

mediacompaniesrivaltheattentionofthesegroups17.

Curran(2002),aswellasBaker(1994)elaborateonthisrelation,arguingthat

advertisementdistortsmediaproductionbecauseadvertisersareonlyinterestedin

howmanyconsumersareattractedbycontent,nothowmuchtheconsumersenjoy

it.Thisgeneratessubstantialpressureonmediacompaniestosupplycontentwith

wideappealtoasmanyconsumersaspossible.Content,whichprovidesindepth

insightsandgeneratesintenseinterestamongminorities,however,isdiminished

whichleadsto“advertiser‐inducedbiasinfavourofcorporateproductsandvalues

[…]tostimulatebuyingmoodsratherthancriticalthought”(Baker,1994,p.76).In

additiontothat,newcontentmaybecreatedinclosealignmentwithadvertiser’s

commercialmessage,whichbearstheriskofunderminingtheintegrityofthe

editorialproduct(Hoskins,McFadyen,&Finn,2006,p.257).

Ontheotherhand,onecouldarguethatadvertisementhasarangeofpositive

effectsonmediatoo.Firstly,itsfinancialsupporthasenabledtheprovisionof

contenttopeoplewhowouldnothaveaccesstocertaincontentotherwisebecause

theycouldnotaffordpayingforit.Forexample,Baker(1994)notesthatthepriceof

newspaperswithoutadvertisingwouldbeasmuchasfivetimesthecurrentprice

andconcludesthat“advertisinghaspaidalargeportionofthecostsofsupplyingthe

publicwithnewspapers”(Baker,1994,p.8).Theconceptofadvertisingasanindirect

subsidyforpoorconsumers,however,contradictswiththeadvertisementindustry’s

goaltoaimprimarilyatthosedemographicgroups,whicharevaluabletothem

(generallyratherwealthierconsumers).Bakeracknowledgesthatifanymedia

productattractsalargeenoughportionofconsumersfromthedesireddemographic

groups(i.e.middletouppermiddleclass)itmaygainsufficientstrengthto

17Hoskins,McFadyenandFinnnamecomputingandtechnology,travelandhealth&fitnessasrangingamongthemostlucrativeareasofinterestintermsoftheCPM(costperthousand)priceforadvertisersintheUnitedStates.

‐42‐

subsequentlyattempttodriveoutcompetition(Baker,1994,p.26).Thisagainleads

tothespiral‐effectoutlinedabove.

Secondlyonecouldmentionadvertisement’sroleintheprovisionofnichecontent

toahighlysegmentedconsumerenvironment.Themedialandscapehaslongbeen

claimedtograduallychangefromamassmedia‐oligopolysome‐to‐many‐structure

intoadiverseniche‐basedprovisionofcontent,resemblingthemany‐to‐many‐

modelofperfectcompetitionmarkets18(Burkart&Hömberg,2004).Pay‐TVand

onlinemediaarewellknownexamplesofthisapproach19.Here,advertisersare

alreadypresentedtotheconsumerstheyseektoaddress,becausetherangeof

editorialtopicsislimitedaccordingtospecialinterestortargetgroup.Onlinemedia

handadvertisersevenmoreprecisemethodsofreachingexactlytheconsumersthey

want.Google’s“AdWords”and“AdSense”markedthebeginningofhighlycontent

specificandcontentsensitiveadvertising.Furthermore,theevolutionofsocial

networksiteshasleadtoashiftfromcontextualtopersonaladvertisingdesignedto

matchnotonlycurrentbutalsopreviouspatterns(revealedpreferences)ofmedia

consumption(i.e.“thingsyoumaylike”recommendationsbasedonprevious

purchases).Whilemicroadvertising,asthisphenomenonisgenerallyreferredto,

raisesseriousissuesofprivacyprotection,Doyle(2002)expressesdoubtsaboutits

overallefficiencybecause“thecostofattractinglargeaudiencesviatailoredone‐to‐

one‐marketingissignificantlyhigherthanviaacampaignconveyedacross

conventionalmassmedia”(Doyle,2002,p.55).However,advocatesofmicro

advertisingarguethatitislesswasteful20andthecapitalinvestedyieldsmore

return.Furthermore,theEIAAprojectsgrowthratesrangebetween15%and20%in

theonlineadvertisementexpenditureinEuropefrom2008to2010(European

InteractiveAdvertisingAssociation,2008).Thequestionthereforeisnotwhether

18Onlyinthesenseofthestructureofcontentprovision,notintermsofownership19Inthisunderstanding,theconsumerissupposedtotakeamoreactiveroleandisnotjustsubjecttothecontentheisservedbutinteractingwiththemedia(ie.choosingindividualcameraangels).This,however,raisesthequestionwhetherconsumerscaneverbetruthfullyempoweredif,followingGustafsson’s(2006)implications,utilitymaximizingadvertisershaveplayedacrucialpartinsettingupthenewmediaoutletsinthefirstplace.20onacostpercapitabasis

‐43‐

microadvertisingisefficientornotbutwhetheritwillbeincrementaltoora

substitutefortraditionalmass‐marketadvertising(Doyle,p.55).

ForDoyletheanswersliesinthecreationofbrandloyalty.Personalized

advertisementsforfragmentedgroupsofmediarecipientsarenotanefficient

meansofcreatingstrongbrandswhosepowerderivesfrombroadrecognition

(Atkin,2004).Theerosionofmassmediaandmassaudiencesinfavourofspecial

interestnichesasdescribedbyBurkart&Hömberg(2004)makesconsumersmore

difficulttoreach.Forsomeindustries,forexamplebeveragemanufacturers,this

mighthinderthecreationofbrandloyalty.

Itisstillunclearwhichdirectionadvertisementwillheadto.Forthemomentonline

advertisingenjoysheavygrowthrates.

4.1.2.2 Economiesofscale

Thetheoremofdecreasingmarginalcostsapplieswithstrongevidencetomost

mediaproducts.Growingvolumeofoutputpermitsareductionofcostsperunitof

outputifthefixedcostsremainconstantorgrowmuchslowerthantheoutput.This

neoclassicaltheoremisgenerallyreferredtoaseconomiesofscale.

Mediaproductscanbereproducedinnumerabletimeswithoutbeingusedupor

losingquality.Inmostcases,hugefirstcopycostsarefollowedbyasteadydeclineof

averagecostsbecausethemarginalcostofprovidingcontenttooneadditionaluser

isnegligible.Newspapercompaniesforexamplehavetopaytheiremployees,

offices,etc(whichequalstheirfixedproductioncosts)regardlessifoneor100,000

newspaperscopiesareprintedanddistributed.Thecostsofprintingthesecondcopy

aredramaticallylowerthanthecostofmakingthefirstcopy.Thedeclineofaverage

costspercopyinthiscasedependsonthecirculation.Anevenmorecompelling

argumentcanbemadeforbroadcastmedia.Theincrementalcostofrerunningor

tradinganadditionalcopyofatelevisionprogramisextremelylowinproportionto

productioncosts(Hoskins,McFadyen,&Finn,2006).Evenonlinemediacanbenefit

fromeconomiesofscale,astheyareabletosplitruntheirestablishedplatformsin

othercountries.Thecostsofsettingupgoogle.co.ukforexampleweresignificantly

‐44‐

lowerthanthedevelopmentcostsoftheoriginalgoogle.complatformandalgorithm

inthefirstplace.Theprospectofreturnstoscaleisanimportantmotiveformany

mergersandacquisitionsinvolvingfirmsproducingthesameclassofproducts

(Hoskins,McFadyen,&Finn,2006).

Economiesofscale:spreadingoffixedcosts:

Thefixedcostsofproductionareaveragedonthenumberofcopiesproduced

causingthetotalcostsofeachunittodeclineinproportiontotheincreasein

production.Thereforeamonopolistisabletoproducecheapest.AsHeinrich

exemplifies,thecostperunitofamonopolistisatlevelc0whereasinaduopoly,two

producersofequalsizehavetofaceacostperunitofc1.Thisshowsthatefficiency

ofproductionformanymediacompaniesdoesnotonlydependonscalebutontheir

marketposition21.Thissituationpromotesconsolidationandconcentrationasfirms

seektoreducecompetitionasmuchaspossible(Heinrich,1994).

Moreover,anotherfeatureofhavingtofacesignificantfirstcopycosts,furtheradds

tothepromotionofconcentration:theriskofbearingsunkcosts,whichcannotbe

21SeeremarksabouttheSCP‐modelinchapter4.1.1

avg.cost/unit

quantity

price,costsperunit

c1

c0

K0Figure4‐2Economiesofscale,Source:ownillustrationadaptedfromHeinrich,1994

‐45‐

recoveredoncetheyincurred.Sunkcostsdescribeexpensesthathavebeeninvested

inaprojectinthepast,whichdidnotturnouttomeet(corporate)expectations(ie.

theinvestmentinthepilotepisodeofatelevisionseriesthatturnedouttobea

flop).Thebiggeracompany,thelessseverearetheconsequencesofinvestingina

projectwithoutgeneratinganensuingrevenuestream.

4.1.2.3 Economiesofscope

I’moptimisticthatoneandoneaddsuptofour

MichaelEisner,Disney’sCEOshortlyafterDisneytookoverABC

Theconceptofeconomiesofscaledescribestheadvantagesofsizewhenitcomesto

asingle,homogenousproduct.Inreality,largemediacompaniesnotonlyspecialize

ononeproduct,rathertheyofferawiderangeofdiversifiedformsofcontent.

Moreovertheyaredependentonexternalinputfromsuppliersandpartners.Thus

theyareabletoexploitanothersourceofsize‐dependentefficiency.Bydefinition,

“economiesofscopeexistifthetotalcostofproducingtwoormoreproductswithin

thesamecompanyislessthanproducingthemseparately”(Hoskins,McFadyen,&

Finn,2006,p.100).

Thedegreeofcompany‐internalvalue‐adddescribestowhatextentafirmrelieson

internalresourcesandtowhatextentitemploysexternalcontractorsandsuppliers.

Inacademicliteraturethisisreferredtoas“realnetoutputratio”ofacompany

(Karmasin&Winter,2006,p.95),(Heinrich,1994,p.27)22.Iftherealnetoutputratio

increasesinthecourseofamergeroracquisition,thenthecompanyinquestionis

likelytobenefitfromeconomiesofscope.Inordertodothis,mediacompanieshave

todeveloptheirbusinesseithervertically(withintheirownsupplychain)or

diagonally(outsidetheirsupplychain).

22Forexample,a60%realnetoutputratiomeansthat60%ofthevalueoftheproductwasgeneratedbythecompanyitself,whereas40%werecreatedbyexternalsuppliersandpartners.

‐46‐

Oneofthemainadvantagesderivingfromverticalintegrationisareductionof

transactioncosts.InitiallyidentifiedbyRonaldCoase,transactioncostsaredefined

as“thecostsofusingthepricemechanism”(Coase,1937,p.390).Thesecosts

includecostsofinformation,insuranceandcoordinationandariseassoonasthe

conditionsofperfectcompetitionarenotentirelymet.Throughverticalintegration

transactioncostscanbeloweredsignificantly.23

Theadvantageofdiagonalintegrationcan,similartothephenomenonofeconomies

ofscale,beexplainedbytheverynatureofmediaoutput.Contentwillnotbeused

up,nomatterhowoftenitisreproducedandthesamecontentmayalsobereused

inotherforms(i.e.anewspaperarticlewillbeturnedintoaradiobroadcast)ata

cheapercostthanproducingtwoseparatemediaproductswiththesamecontent

independently.Oncethecoreworkofresearchandcreationisdone,contentis

simplyreformattedaccordingtothefirm’sportfolio.Doyledefineseconomiesof

scopethereforeasthesavingsthatmayarise“ifspecialistinputsgatheredforone

productcanbereusedinanother”(Doyle,Understandingmediaeconomics,2002,p.

14).Inotherwords:“Maximizingsynergy[…]istakingadvantageofmultiplemedia

holdingstodeveloporpromoteasingleprojectwithmanyfacets”(Croteau&

Hoynes,2006,p.116).Forexampleifatelevisionreporterworkingforalarge,

integratedmediacompanyisgrantedanexclusiveinterview,itmaybeusedinthe

company’sTV‐news,newspapers,radiostationsandonlinewebsiteallatonce,ata

muchcheaperpricethanhavingfoureditorialteamsdevotingtheirtimetothesame

outcomeindependently.Itisnocoincidencethatmanyofthemostsuccessfulonline

mediawebsitesareoperatedbytraditionalmediaplayerssuchasCNN,BBCandthe

NewYorkTimes.Themorerevenuestreamsacompanyisabletogeneratefroma

singleinput,themoreitislikelytobenefitfromeconomiesofscope.Thereforelarge

multi‐mediaconglomeratesareabletoexploiteconomiesofscopeonaveryhigh

level.Inthisregard,Karmasin&Winter(2006)refertotheconvergenceoftheTIME

industries,meaningTelecommunication,Information,MediaandEntertainment,

whichhavesuccessfullysubstitutedimportantfeaturesoftheirownmangement,

23Verticallyintegratedcompaniesmayalsobenefitfromadvantagesintaxationbecausemarketpricescanbesubstitutedwithinternalprices(Karmasin&Winter,2006,p.97).

‐47‐

innovationanddevelopmentwith“inhomogeneousintegration”ofvariousaspects

ofvaluechainsfromotherindustries(Karmasin&Winter,2006,p.23)24.With

respecttomediathismeansthatcontentbecomesmoreandmorehybrid,often

simplybeingreducedtoabrand(DonaldDuckorStarWars)inordertobemarketed

inasmanyformsaspossiblebycollaborativedivisionsofsinglecorporate

conglomerates.ForexampleabookoraTVseriesmaybeturnedintoamovie(or

theotherwayround)whichthenwouldbepromotedbytheconglomerate’snews

mediasection.Lateron,actionfigures,ringtones,soundtracks,DVDandvideogames

allbuildonthesameidea.

Digitalisationandtechnologicaldevelopmentshavefacilitatedtheexploitationof

economiesofscopedramatically.“Newmediatechnologieshaveenabledthesame

contenttoflowthroughmanydifferentchannelsandassumemanydifferentforms

atthepointofreception”(Jenkins,2006,p.11).Trappel(2002)seesdigitalisationas

themaindriverofconvergenceofwhatonceusedtobecompletelyseparated

marketsofinformation,communicationandmedia(Trappel,Meier,Schrape,&

Wölk,2002,p.94).TheTIMEconvergencesignificantlychangestheconditionsof

competition,developmentandmanagementforalltheindustiresinvolved.New

formsofcompetitionandcooperationandco‐opetitionevolvefromthis

developmentasthenumberofavailablepartnersisincreased.Innovationnolonger

stemsfrominternaldevelopment,ratherthemeaningoftheterminamediarelated

contexthasbeentransformedto“takingwhatevermaysuitourbusinesspurpose

fromotherindustries”.Inconsequence,managersactaccordingtonetworklogic

insteadofbasingtheirdecisiononinternalressources.

24AnexamplefortheresultofTIMEconvergenceistheXMLprogramminglanguagewhichisauniversalcodefordatadescription(Karmasin&Winter,2006),(Zerdick,Picot,Schrape,Burgelmann,&Silverstone,2005)

‐48‐

Figure4‐3):TIMEConvergence,Source:ownillustration(inspiredbyFreienstein,2002,p.123)

TIME‐convergencehastobeunderstoodasatemporary,project‐basednetwork

system.Insteadofasingularprocess,theinhomogeneousintegrationKarmasinand

Winterreferto,isthusanaccumulationofmultipleprocesseswhoredefinethe

boundariesbetweenbranchesandindustries(Karmasin&Winter,2006,p.23).

Economiesofscope,asabenefitresultingfromTIMEconvergencethereforehaveto

beconsideredasoneofthemainmotivationsformergers,acquisitionsand

cooperationsthatreducethelevelofcompetition.Fromacompany’spointofview,

economiesofscope,apartfromtoimprovingoverallefficiency,andhelpingto

streamlinedepartments,generallyservetoreducerisk.CroteauandHoynes(2006)

basetheirapproachontheformationofconglomeratesandco‐operationsonthe

reductionofriskandattributetheongoingconsolidationofmediacompaniestoan

industrywhoseformerbusinessmodelsarenolongeradequate.

“Theconcentrationofmediaownership[…]isthenaturalbyproductofamaturing

industry,asyoungstartupsandolder,underperformingfirmsareconsolidatedinto

thebusinessplansofmaturebutinnovativefirms”(Croteau&Hoynes,2006,p.111).

Intheprocessofeconomicgrowthandinnovationitisinherentthatsomeindustries

declinewhileothersgrow.Ifafirmoperateswithinaframeworkofanindustryin

decline,thereislittleitcandotostemitsowndownfall,nomatterhowprogressive

‐49‐

itsmanagementis(Lipsey&Chrystal,1995).Ifacompany,however,managesto

combineseveralbusinessesinseveralindustriesandformaconglomerate,itisable

tospreadtheriskamongthem.Thesamewaymergersandacquisitionsaswellas

co‐operationsachievesharingorspreadingenterprisetherisk.

4.1.2.4 Habitsandnetworkeffect

Dewenter(2004)alsomentionshabitsofconsumptionandtheexistenceofa

networkeffectasspecialfeaturesofmediacompaniesandmediaproduction.Under

theconditionsoutlinedbelowtheymaybeanothersourceofscale‐related

advantages.

Hedetectsevidenceofthe“habiteffect”inthe“relativelyrareswitchingof

[consumers]tosubstitutionalproductsinspiteofrelativelowswitchingcosts”

(Dewenter,2004,p.46).Forexamplenewspaperreadersmaybereluctanttoswitch

toanotherpaperoncetheyhavegrownaccustomedtoonenewspaper’sformatand

recurringthemesandtopics.Companiesontheotherhand,strivetotransform

simplehabitsofconsumingcertainmediaintocustomerloyalty(Atkin,2004).They

wantconsumersbuyingtheirproductsnotbecausetheyareusedtoit,butrather

becausetheyarecommittedtothem.Commitmentyieldsarangeofpositiveeffects

forthecompany,forexamplewordofmouthadvocacyorthecreationoffurther

barriersofentryfornewcompetitors25.

Apossibleexplanationfortheformationofconsumerhabits,whichlateronmaybe

fosteredtobecomecommitment,istheexistenceofanetworkeffect.Thenetwork

effectreferstotheimpactoneadditionaluserofaproductorservicehasonthe

valueoftheproductforanotheruser.Themoreinterestingpeopleonecanpossibly

interactwithonaparticularnetwork,themorevaluablethemembershipisinthat

networkwillbeyou.Forexample,afterNewsCorporationhadacquiredthesocial

networkingwebsiteMySpace,therewerecontroversiessurroundingallegationsof

25Ifthecommitment,however,isnotmatchedbyanequivalentreward(ie.networkbenefits),includingthefeeling,thatleadershipisascommittedthentheresultscanbedisastrousas“commitmentmaybefiercebutnotblind(Atkin,2004,p.121)

‐50‐

corporatecensorship(Whitehead,2006).Still,veryfewpeopleleftMySpaceafter

thetakeoverbecausethesocialcostsofloosingthebenefitsoftheMySpace

networkprovedtohighformostusers.

However,Dewenter(2004)touchesuponthenetworkeffectnotexclusivelyin

referencetotheobviouscaseofonlinemediabutalsowithbroadcastandprint

media.Fromaconsumer’spointofview,thevalueofconsumingaspecificmedia

productincreasestoacertainextentinproportionwithoutputbecausethenumber

oflike‐mindedconsumersincreasesaswell,whichraisesthechancesofsharing

commongroundwithotherpeople.Reversely,aproductwhichisalreadyconsumed

byahighnumberofpeoplefromthesocialenvironmentofapotentialconsumer,

appearsmoreattractivetohim/herthanothers.Thistheorybuildsontheconceptof

socialidentity,which“placesapersoninrelationtootherindividualswhoshare

[similar]attributes(Giddens,2001,p.29).Inanagewheresymbolsrelatedto

consumptionplayagreatroleintheconstructionof(social)identity(Giddens,2001,

p.296),mediaconsumptionhastobeconsideredanimportantfactorinsplittingor

unitingpeople.Formanyyears,theSaturdaynightprimetimeshow“Wetten,dass?”

inGermanyusedtobeaperfectexample.Itwasashowmostpeoplecouldtalk

aboutwiththeirco‐workersandfriendsbecausenearlyeveryonehadseenit.

Colloquiallyreferredtoasthe“water‐coolereffect”,somemediaproductsmay

attainahighlevelofsignificancewhenitcomestosettingagendas(mostlywithin

certaindemographicorsocialgroups).Usedtherightway,thisfeaturemaypermit

mediacompaniestosuccessfullycreatebarriersofmarketentryaccordingtothe

editorialscopeoftheirproduct26(seealsochapter2.1onsocialorientation).

4.1.2.5 Deregulationandprivatization

Inthe1980snearlyallindustrializednationsstartedtoreducegovernmentcontrol

overindustry.Stateownedactivitiesthroughouttheworldweretransferredto

26Althoughmodernwesternconsumersocietiestendtobemasssocietieswheredifferencesofsocialclassesareoverriddentoacertainextent,classdifferencesmayalsobecomeintensifiedthroughvariationsintasteandconsumption(Giddens,2001,p.296).Seealso4.1.2.1onnichecommunication.

‐51‐

privateownership(privatization)andgovernmentrestrictionsonbusinesspractices

weregraduallyreduced(deregulation).Oneofthemaincausesforthissituation

identifiedbyLipseyandChrystal(1995)wasthefadingbeliefthatindustriesunder

governmentcontrolwouldoutperformprivatelyheldcompaniesintermsof

efficiency,productivityandgrowth.Inotherwords,theprevailingviewwasthat

privateenterprisesaremoreefficient,moreresponsiveandlesscostlythanpublic

bureaucraciesandthattheseprivateagencieswouldperformbestwhenconfronted

withonlyaminimumofgovernmentrestrictions.Furthermore,privatizationand

deregulationwerealsopreferredbecausethe(free)marketsystemwastrustedto

fosterfreedomandself‐reliance(Curran,2002).Thisideologicalshiftcannotsolely

beattributedtothepoliticalagendasofconservativeandneo‐liberalgovernmentsin

poweratthatperiod(i.e.MargretThatcherintheUnitedKingdom,HelmutKohlin

Germany,JacquesChiracinFranceandRonaldReaganintheUnitedStates)since

governmentsofwidelydifferingideologieshavecontinuedmostofthesepolicies(ie.

TonyBlairintheUnitedKingdom,GerhardSchröderinGermanyandBillClintonin

theUnitedStates)27.Moreover,theEuropeanUnionhaspushedrepeatedlyfor

internationalderegulationinordertoenablethefreeflowofgoodsandserviceson

thecommonmarket(Albarran&Chan‐Olmsted,1998,p.100).

Generally,the80’sgaverisetoastrongmovementadvocatingareductionof

governmentinterferenceleadingtotheprivatisationofformernationalized

industriesandthederegulationofprivatesectorbusinesses(Lipsey&Chrystal,

1995).Thesepolicieshadconsiderableeffectsonmedia.

Theexampleofbroadcastmediaperfectlyillustrateshowderegulationinfluenced

andchangedawholesectorofmediaproduction.Before1980,nosignificantradio

ortelevisionserviceinEuropewasfundedbyprivatecapitaloroperatedprimarily

forprofit,only13%ofEuropeanTVChannelsreachingmorethan50%ofhouseholds

(intheirdomesticmarket)wereheldprivately.17yearslater,thesituationhad

dramaticallychanged.From13%twodecadesbefore,thenumberofcommercial

27Curranpointsoutthattheideologicalshiftdidnotreflecttheattitudesofthepublicbutofapoliticalelite.

‐52‐

channelswentupto55%,withSatellite‐,Cable‐,andPay‐TVaswellascommercial

regionalchannelsnotincluded(McQuail&Siune,1998,p.26).

Figure4‐4:Ownershipofbroadcastmedia,Source:adaptedfromMcQuailandSiune,Table3.1,1998

Thissituationhasincreasedcompetitiontheremainingpublicchannelsarefacing

fromforeigncompetitorsandsparkedadeclineinviewers.Furthermoreithaslead

toacertaindegreeofimitationofcommercialtelevisionbypublicbroadcasters,with

culturalprogrammesbeingmoreandmorepushedoutsideprimetimeinfavourof

lightentertainment(McQuail&Siune,1998,p.29).

Amongpolicymakersatthattime,however,commercializationandensuing

concentrationorconsolidationprocesseswerenotconsideredathreatbutratheran

opportunityfordomesticmediacompanies.Inpart,thiscanbeexplainedby

referringtothebeginningofglobalizationtrendsintheworldeconomy.Although

competitionondomesticmarketscouldsufferinthelongrun,regulatoryauthorities

chosetoremainreluctantonregulationinordertoallowtheirdomesticplayersto

positionthemselvesfavourablyintheglobalmarket.Theiraimwastogrant

economicopportunitiesforplayersaheadofinternationalrivals.“Anapparent

monopolyintheUnitedKingdommaywellbeoperatinghighlycompetitiveina

87%

45%

13%

55%

0%

20%

40%

60%

80%

100%

1980 1997

Ownershipofbroadcastmedia

private

public

‐53‐

marketthatincludesGerman,FrenchandevenJapanesefirms,”(Lipsey&Chrystal,

1995).However,Doyle(2002)argues,thattheideaofforsakingcompetitiononthe

home‐markettoacertaindegreeinordertoallowdomesticplayerstogrowinto

globalplayersworksbetterinairlinesandtelecomindustrieswhereregulationshave

falleninothercountriesaswellandwherecompaniesarefacedwitharealglobal

marketwithaglobalcustomerbaseandrealinternationaltransactions.ForTVand

newspapersthisisnotthecaseDoylearguesandpointsoutthatbothtelevisionand

newspapersarestronglyrootedintheirlocalenvironment(Doyle,MediaOwnership:

TheEconomicsandPoliticsofConvergenceandConcentrationintheUKandthe

EuropeanMedia,2002).Still,sheacknowledgesthatliberalizationandderegulation

couldindirectlyhaveanimpactontheexpansionoffirmsinoverseasmarketsinthe

fieldofnewlyemergingcommunicationinfrastructuresuchasInternet,andmobile

communicationmarkets.

Albarran,ontheotherhanddoesnotseethemediaindustrydiffersignificantlyfrom

industrialproductionintermsofglobalization.“Themediaarenoexceptiontothis

trend”,whichheseesreflectedbythe“expansionofconglomerates”(Albarran&

Chan‐Olmsted,1998,p.3).Asoutlinedin4.1.2.3mediacompanieshavedramatically

increasedcorporateactivitiesoutsidetheirdomesticmarketsaswellasoutsidetheir

corebusinesses.Sowhileit’struethatonlyasmallportionofmediaproducts28are

distributedglobally,mediaconglomeratesmaystilloperateonaglobalscale.The

questiontowhatextenttheyinfluencecontentwillbeconsideredin4.2.

Anothercauseforderegulationistherelationshipbetweenpolicymakersandthe

industryitself.Asmentionedinchapter3theirinterestistomaximizeelectoral

votes.Therefore,theyseektoholdfriendlyrelationshipswithmedia,whoplayan

importantpartinshapingandinfluencingpublicopinion.Doylealsonotes,that

policymakerstendtoperceivewhatisofeconomicinterestasofwhatcorporations

sayisintheirinterest.Inmostcasescorporateaspirations,howeverdonotconform

withwidereconomicobjectivesofsociety(Doyle,2002,p.11).

28ItismainlyHollywoodmoviesandtelevisionproductionswhichcomeclosetoaglobaldistributionnetwork,seealso(Miller,Govil,McMurria&Maxwell,2001)

‐54‐

McQuailandSiune(1998)givetwoexamplesfromthenewspaperindustry.Inthe

UK,whichhastobeconsideredaleaderofworldwidederegulationandprivatization

(Albarran&Chan‐Olmsted,1998,p.100)29,RupertMurdoch,whoseNews

Corporationranksamongthefivebiggestmediaconglomeratesintheworldwas

supportedbyMargretThatcher’sconservativegovernmentandallowedtotakeover

TheTimes,TheSundayTimesandTodayinadditiontomarketleadersNewsofthe

WorldandTheSunwhichhealreadyowned(McQuail&Siune,1998,p.12).Thereby

Murdochwasabletoaccumulateajointshareofcurrently35%oftheBritish

newspapermarket(TheGuardian,2008;Miller,Govil,McMurria,&Maxwell,2001),

seealso4.3.2.3.InFranceontheotherhand,RobertHersantwasbackedbyJacques

Chiraquetoenlargehisgroup’sshareofFrenchnewspapercirculationto30%

comingclosetobeingsubjecttothelegalrestrictionsofFrenchmedialaw(see

chapter5.1.3.2.).

4.1.2.6 Commercializationofmedia

AsprofitisthesolereasonforinvestingprivatecapitalInmarketmodeleconomies

profitsarethedrivingforceofmostentrepreneurialactions.Thegoalofprofit

maximisationhastobeconsideredthebeallandendallofthemarketplacewith

littledisagreement.Whiletherearetendenciestopromotetheimportanceofnon‐

corporategoals(seechapter4.1.1.1),economistMiltonFriedmansumsupthe

dominatingideaofcapitalistsocieties:

“Therearefewtendencies,whichunderminethefundamentalsoffreeeconomiesas

radicallyastheassumptionofanyothersocialresponsibilitythanacorporations’

purposeofmaximizingreturnsforitsshareholders.”(Friedman,2002)

Thisexclusiveorientationonprofitsgenerallyfades,assoonasthetraditional

economicrealmisleft,noteMeier&Jarren(2001).Thatissupposedtobethecase

formediacompanieswhicharemeanttoprovidepubliclyvaluedmeritgoodsand

29Between1979and1984morethan£7bnwereraisedbytransferringgovernmentrunbusinessesinoil,aerospace,transportation,shipping,automobileandtelecommunicationstoprivateownership.

‐55‐

arethereforenotonlycorporationsfromaneconomicpointofviewbutsocial

institutions.Thisnotion,however,appearstohavechanged(Meier&Jarren,2001).

Itisimportanttonotethatincontemporarymediastudiesthecommercializationof

theprocessofmediaproductionisseenasanaturalconditionofoperatingina

marketdrivenenvironment.AccordingtoKieferactingundereconomicprinciplesis

amatterofcourseinordertostayinbusiness(Kiefer,2001).Historically,asMcQuail

andSiune(1998)pointout,marketfreedominthefirsteraoftheprintingpresseven

hadapositiveconnotation,asitwascloselylinkedtofreedomofexpressionata

timewhenstatepowersoughttomaintainexistingpoliticalcontrol(McQuail&

Siune,1998).Whatraisespluralityconcerns,however,isthepriorityassignedto

profitmaximizationandeconomiccriteriaofproductionovermedia‐specificgoals

suchasprovidingunbiasedinformationandstimulatingpublicdiscussion.The

pursuitofprofitsisaboveallelseasthefocusofapublicutilityprovidinginformation

shiftsfromthepublicsectortobusinessentitiesofmediacompaniesandtheir

owners.InthisunderstandingHeinrichdefinescommercializationastheextensionof

monetaryandegoisticmotivesintheutilityfunctionofmediacorporations,which

goesalongwithanincreaseinthelevelofdeterminationtomaximizethisfunction

(Heinrich,ÖkonomisierungauswirtschaftswissenschaftlichterPerspektive,2001).In

otherwords,commercialisationreferstothechasteningofpubliclyvalued,merit

outputinfavourofmarketable,profit‐inducingoutput(Kiefer,2001).

Indicatorsandcausesofcommercializationinclude(Heinrich,Ökonomisierungaus

wirtschaftswissenschaftlichterPerspektive,2001),(Meier&Jarren,2001),(McQuail

&Siune,1998),(Trappel,Meier,Schrape,&Wölk,2002):

onamacroeconomiclevel

• theadventoftheinformationagewhereinformationandknowledgehave

becomethemostvaluableresources,andfactorsofproduction

• governmentderegulation

• (global)marketsbeingtheprimaryinstitutionofcoordinationandcontrol

onasocietallevel

‐56‐

• alossofcontentdiversityamongmarketleadersandanincreasein

specializedproductionofnichecontentamongsmallercompanies

• marginalizationoflesspopularculturalandinformationalcontent

• anincreaseinthenumberofmediaoutlets

• imitationofsuccessfulstrategiesinsteadofinnovation

onamicroeconomiclevel

• measuringsuccessintermsofshareholdervalue

• anapproximationofcostprices

• adecreaseofcross‐subsidisationofunderperformingmediaproducts

• anincreasingconsiderationofrecipientpreferences

• coremediacompetencestransformingfromresearch/reportingto

marketing/sales

Infact,commerciallogicisnowthenorm,ratherthantheexceptionforEuropean

media,statesMcQuailanddrawsonevidencefromtheEuropeanbroadcastsector

wherethesuccessofthefirstcommercialoperatorswhoappearedinthe1980shas

largelytransformedtheshapeofthemedialandscape(McQuail&Siune,1998).

Commercialization,however,isnotarecentphenomenon.Alreadyinthe1930s,

MaxHorkheimerandTheodorAdorno,bothcoretotheFrankfurtSchoolofsocial

thoughtexpresseddeepconcernsoverwhattheycalled“thecultureindustry”.

Mediaandtheentertainmentindustry,theyargue,promoteacapitalistideology

whichunderminesthecapacityofindividualsforcriticalandindependentthought

andensuresobediencetomarketinterests(Horkheimer&Adorno,2001).

‐57‐

4.2 Impact

4.2.1 Evaluation

Mediaconcentrationdoesnotnecessarilyhavetocauseadeclineinpluralism,in

somecasestheremaybenoimpactatall.Theconceptsofpluralism/publicvalue

andmediaeconomicsdiscussedabovemayimplyanincompatiblepairofmutually

exclusiveopposites‐publicbenefitversuseconomiclogic.However,sometimes

profitorientationandconcentrationofownershipcontributepositivelytomedia

companies’goalstofulfilpublicserviceandsometimespublicservicemedia

programmesyieldhigheconomicrewards.Knoche(1996)drawsfromempirical

evidencetobackthisviewandstatesthatconcentrationofmediaownershipand

pluralismareneitheridenticalnorlinkedinalinearproportion.Althoughmany

theoriessuggest(seechapter4.3,andLange,2008,p.188)someformofreciprocal

influence,therearecaseswhereafruitfulbalancebetweenpublicsphereand

economicreasoningcanbefound.

Basedonthisidea,Heinrich(1994)classifiedthreetypesofmediaconcentration

(Heinrich,1994,p.49):

• Positiveconcentration–competitionisimprovedandmarketpowers

becomemorebalanced,forexample,manysmallfirmsjoinforcesinorderto

competeagainstaverybigrival.

• Concentrationwithoutanyimpact–competitionisnotaffected,forexample,

numbersevenandnumbereightonthemarketmerge.

• Negativeconcentration–competitiondecreases,barriersofentryfornew

competitorsarecreated,forexample,themarketleadertakesoverthethird‐

rankedcompetitor

Thuseconomicconcentrationandpluralismhavetobeevaluatedseparately,since

priortoanyinquiryintotheregulationofanygivenactionofconcentrationofmedia

ownership,ithastobeconsideredwhichofthetypesappliestothecase.

‐58‐

Therearetwomethodsofmeasuringtheeconomicimpactofconcentrationon

competition(Trappel,Meier,Schrape,&Wölk,2002,p.56),seealso(Robinson,

1996).

• TheConcentrationRatio(CR)isacalculationofthecombinedrelativemarket

sharesoftheleadingfour(CR4)orfive(CR5)companies.ACR4above50%is

alreadyconsideredaconcentratedmarket

• TheHerfindahl‐Hirschmannindex(HHI)involvescalculatingthesumofthe

squaredrelativemarketsharesofallmarketparticipants.Theresulthastobe

multipliedby10,000.Theresultingnumberisanalysedinrelationtothe

boundaries0(perfectcompetition)and10,000(monopoly).

Inthispaper,onlytheCRwillbeappliedtomeasureeconomicconcentration.

Crucialtobothmethodsisadiligentdefinitionoftherelevantmarket(Kiefer,2001,

p.87),(Knoche,1996,p.109).Thedefinitionofthemarketstronglyinfluencesthe

outcomeofanyevaluationofconcentration.Aninaccuratedefinitiontherefore

bearstheriskofover‐orunderestimatingactualconcentrationratios.30Formedia

markets,nostandardofmarketdefinitionhasbeenestablishedduetohuge

differencesbetweennationalmedialandscapes.Heinrichconsidersthedefinitionof

therelevantmediamarket“oneofthemostcomplicatedproblemsofcompetition

policy”(Heinrich,2001,p.55),whichisalsoduetotheinterrelationofaudienceand

advertisingmarket.Inadditiontothatthevarietyofmethodsofmeasuring

audiences/consumersusedinmarketresearchenhancedthecomplexityofthetask

ofdeterminingtheactualconcentrationanditsimpact31.Generallymediamarkets

canbedefinedby

• typeofproduct(i.e.radio,television),

• typeofcontentorrangeoftopics(i.e.qualityvs.tabloidorspecialinterestvs.

generalorprimetimevs.morningshow),

• regionorothergeographicalindicators,

30ForexampleBaker(2007)clearlyrejectsCompaine’sdefiningoftherelevantmarketasthemediaasawhole,forthesegmentsofthisbroadmarketareincoherentandlackinterchangeability.Bakerlikensthisapproachtodefiningthecarmanufacturingmarketwithinclusionofcardealershipsandsteelcompanies(Baker,2007,p.60)31SiegertelaboratedonthisprobleminAltmeppen&Karmasin,2003,p.103

‐59‐

• typeofaudience(i.e.menvs.women,buyersvs.readersoragegroups)

• time(i.e.months)

Wallner(2007)hasproposedtheapplicationoftheSCPmodelofmarketanalysis

(seechapter4.1.1),whichevaluatesmarketactionsnotsolelyintermsofprofit

maximizationbuttakesCSRfactorsandpublicbenefitintoaccountaswell(Wallner,

2007,p.210).Thisapproachappearstobeparticularlysuitableformediamarkets

wherepublicvaluerequirementsarecloselylinkedwitheconomicreasoning.

Inthispaperonlytheaudience/viewermarketwillbeconsidered,definedbytotal

buyers/consumersofacertainmediaproduct,despiteadifferentapproachbythe

EuropeanCommission(seechapter5.2.1).

Regardless of the method of market definition, the economic impact of

concentrationof ownership is only one sideof theproblem.Due to thenatureof

mediagoods,issuesofmediapluralismanddiversityhavetobetakenintoaccount

as well. However, prior to any new regulative approach, there have to be clear

definitionsofpublicbenefitagainstwhichmarketdevelopmentscanbemeasured.

Unfortunately, no convincing model/theory of evaluating pluralism or defining

quantifiablesocio‐politicalconcernsrelevanttothismatterhasbeenintroducedyet

‐afactthathasbeencriticisedheavilyby(Knoche,1996,p.113)and(Just&Latzer,

2001,p.13)andwhichhas ledtheEUCommissiontoconducttheaforementioned

studyonindicatorsofpluralism.ForKnoche,theshortcomingofmostapproachesto

measuring pluralism is the misuse of parameters and indicators for example

circulation, whichmay serve as an indicator for both concentration of ownership

(marketshare)andpluralism(numberofmediaproductswithacertaincontent).He

findsthatthepoorselectionof indicators influencestheevaluationverynegatively

andultimatelyplaysdowntherealextentof theeffectsofconcentrationofmedia

ownership,thelattergenerallytendtobe“systematicallyunderestimated”inpublic

discussion(Knoche,1996,p.116).Anotherpointofcriticismistheexclusivefocuson

measurementofpluralismofprovidersinsteadofopinions(seechapter3.)Inorder

to overcome this divergence he, as well as Just & Latzer (2001), proposes an

approachbasedoncomparativecontentanalyses.

‐60‐

For Lange (2008) the operative point to this problem is the definition of media

power.Traditionallymediapower isrealizedwhenthemediaactsaccordingtothe

agendasettingtheory32.Attemptsofputtingforwardamoresophisticateddefinition

have included themeasurementof substantial influenceon consumeropinionson

different media markets, which had been ranked according to their persuasive

power(Lange,2008,p.188).Othermethodsalsoincludedfactorssuchassuggestive

power,massappealandactualityandrelevancyofmediacontent.Inordertodraft

efficient legislation, a European consensus on indicators of pluralism has to be

reachedassoonaspossible.WhetherthestudybytheEUCommissionismorethan

justafirststeptowardsthisgoalremainstobeseen.

4.2.2 Effects

Suprisingly little empirical research has been conducted on the actual effects of

accomplishedmedia concentration, aggravating thedifficultiesofpredicting future

outcomesoutlinedabove.Manydescriptionsoftheoutcomeofmediaconcentration

are largely based on theories and models. This may be due to the fact that the

subjectisofverycomplexanddynamicnatureandchangesveryquicklyaccordingto

consumerdemandandtechnologicaldevelopment.JosefTrappel,alongwithWerner

A.Meierisoneofthefewleadingresearchersontheimpactofmediaconcentration.

I will adopt his categorization of effects of concentration of ownership. (Trappel,

Meier,Schrape,&Wölk,2002,p.112).

4.2.2.1 Media

Obviouslymediaarethefirstinstitutiontobeaffectedbymediaconcentration.

Usuallyafteramergerortakeovertookplace,reorganizationofthecorporate

structureandrepositioningonthemarketwillensue(Carpenter&Sanders,2009,p.

330)

32seeBurkart,R.(2002)forfurtherelaborationonthistheory

‐61‐

Regardlessofthetypeofmedia,Heinrichdefinedseveralaspectsofthisprocess,

whichareverysimilartotheeffectsofmediacommercializationoutlinedinchapter

4.1.2.6.(Heinrich,2001,p.210)

• Thepossibilityofsubsidizingandstrengtheningcertainopinionswithinthe

companyrisesasthepoweroftheownersisincreasedwhilereportingon

sometopicsisdiscouraged(i.e.unethicalbusinesspracticesofparent/sister

companieswithintheconglomerate).Trappel(2002)perceivesthedanger,

thatjournalistsmayfollowtheseruleseveniftheyhavenotbeenoutspoken

bymanagementinordertoretaintheirchancesofsucceedingina

environmentwhereemployersbecomemoreandmorelimited(Trappel,

Meier,Schrape,&Wölk,2002,p.114).

• Reuseofcontentisfacilitated(economiesofscope)

• Barriersofentryarecreatedandpoweronthesupplymarket(i.e.news

agencies)isincreased

• Competitionandcontrolbymarketforcesdecline

• Cateringtoadvertisementpartnersbecomesmoreimportant

• Contentbecomeshomogenizedanduniform.Intheexampleofamergerof

twonewspapers,exchangeoneditorialmatterswillincreaseeveniftwo

separateeditorialteamsaremaintained(i.e.throughintegratedarchives).

Whileenhancedcooperationmayservetoincreaseeditorialoutputofboth

teams,itismorelikelythattherewillbe“moreofthesame”.However

Trappelacknowledges,that,inanattempttoseparatethemarketthe

companymayalsoseektodiversifytheirportfolioandhavethenewspapers

runonoppositepositions,cateringtodifferentaudiences.Apartfromcausing

poorcredibilitythispositiononlyholdsaslongasbothpapersareprofitable.

Intheeventofonefallingbehind,thecreationofsynergiesmaybeadvisable

fromaneconomicpointofview,whicheffectivelywillrequirethepapersto

movecloserintermsofcontent(Trappel,Meier,Schrape,&Wölk,2002,p.

115).

‐62‐

4.2.2.2 Economy

Fromaneconomicpointofview,concentrationofmediaownership isexpectedto

deteriorate market conditions and competition in most cases. However, as

mentioned above, no direct correlation can be assumed. Heinrich defines the

economic impact of concentration of ownership similar to the effects of reduced

competition(Heinrich,1994,p.124):

• Slowdowninpricecompetition

• Declininginnovation

• Reducedadaptationtomarketconditions infavourofattemptingtodictate

favourableconditions

• Barriersofentryforcompetitors

• Aimingatmonopolisticmarket

Trappel alsomentions external effects on supplymarkets and advertisingmarkets

where a decreasing choice of business partners may lead to higher (unhealthy)

competition and lower profits. The same applies to the labour market where

journalistshavetocompeteforfewerjobopportunities(Trappel,Meier,Schrape,&

Wölk,2002,p.117).This isparticularlytrueforcasesofcrossmediaconcentration

whereeconomiesofscopeallowmediacompaniestorealizestaffsavings.

4.2.2.3 PoliticsandLaw

Baker, referring to thepolitical functions ofmedia claims that,media constitute a

“crucialsluice”betweenpublicopinionformationandpoliticalwillformationunder

democraticprinciples(Baker,2007,p.7).Sincethecoreprincipleofdemocracyisthe

egalitarian distribution of control, Baker adopts the view, that, when applied to

media ownership this democratic principle can only be interpreted as requiring a

“maximumdispersalofmedia“ownership”.Concentrationofprivatelyheldmedia,

therefore puts the democratic principle in danger and threatens democratic

diversity.

• Oneeffectofconcentrationofmediaownershipmaybeinfactthatparticular

interestsofmediaowners and/or elites associatedwith themareeasier to

‐63‐

givepublicityto(Trappel,Meier,Schrape,&Wölk,2002,p.119).ForBaker,

this creates the possibility of “an individual decision maker exercising

enormous,unequal […], largelyunchecked,potentially irresponsiblepower”

(Baker,2007,p.16).

• Greaterpowerofenforcingopinionsandcampaigns– Inorder to influence

public opinion big, integrated media companies are able to launch and

sustainhugecampaigns,i.e.TheSun’scampaignagainsttheEUtreaty.

Figure 4‐5The

Sun’s

campaignagainsttheEUConstitution,Source:TheSun24thSeptember,2007

• Decreaseofoptionstostimulatepublicdiscourse,which,inturn,ismoreand

moreimpoverished.

• Lessimportanceisassignedtonewsandpoliticalinformation

• Blockingmedia policymeasures – Larger companies aremore successful in

pushing for favourable legislation,subsidiesandstate investments inmedia

infrastructure,sincepoliticiansneedtheirsupporttostayinpower

‐64‐

4.3 Manifestation

InthissegmentIwillprovideanoverviewofthemediamarketsinGermany,UKand

France.FollowingthelegislativeprinciplesinGermanyandtheUKandforreasonsof

simplificationIadopttheshareoftheaudience/circulationastherelevantmarket

only.Asoutlinedabove,duetotheinterrelationofmediamarkets,aconcise

evaluationofmediamarketsneedstoconsidertheshareoftheadvertisingaswell.

However,myanalysesfocusonthepotentialinfluenceonopinion,whichiswhythe

advertisingmarketwillnotbeconsideredinthefollowingsegment.Thenumbersfor

magazinesareestimatesduetodifferingpublishingcycleofweeklybiweeklyor

monthlypublications.

‐65‐

4.3.1 Germany

Germany,themostpopulousandstrongesteconomyintheEUisrankedasoneof

Europe’smostpowerfulmediamarkets(Albarran&Chan‐Olmsted,1998,p.119),

whichischaracterisedbyastrongregionalismofallmediasectors.Bertelsmannthe

biggestmediacompanyinEurope,isofGermanorigin.

4.3.1.1 Television

TheGermantelevisionmarketisthebiggestinEurope,consistingofmorethan140

televisionstations(whicharepredominatelycommercial).Intermsofadvertisement

revenue,TVstilltrailsthewrittenpressbytwopercent.In2007,45%of

advertisementspendinginGermanywenttoTV,whichequalsasumofslightlyless

than€10bn(ArbeitsgemeinschaftFernsehforschung,2008).Germanyhastwomain

publicservicetelevisionbroadcasters,ARDandZDF.ARDisanationwidechannel

operatedbyaconsortiumofallregionalpublicservicechannels.Thejointmarket

shareoftheseregionaloperatorsiscommonlyreferredtoasARD3(thirdchannels).

Apartfromthattherearefourminorpublicservicechannelsforspecialinterest,the

children’schannelKiKa,theculturalprogramme(incooperationwiththeFrance)

Arte,thepoliticalinformationbroadcasterPhoenixandtheculture/politicschannel

3sat.Forhistoricalreasons,theGermanbroadcastingregulationfallsunderthe

authorityofthefederalstates(Bundesländer).Therefore,changesinpublic

broadcastinghavetobenegotiatedthroughinterstatetreaties(Albarran&Chan‐

Olmsted,1998,p.123).TherevenuesofARD,ARD3andZDFconsistoflicensefees

andadvertisements.Thereare,however,strictregulationsonthenumberof

minutes,timeofdayandtimingduringaprogrammewhencommercialsmaybe

shown(Albarran&Chan‐Olmsted,1998,p.130).In2008,thepublicbroadcasters

controlled43,6%ofthetelevisionmarket(ArbeitsgemeinschaftFernsehforschung,

‐66‐

2008).Thisrepresentsastarkdeclinefromthe47.5%,measuredbytheEuropean

AudiovisualYearbookfouryearsearlierin2004(EuropeanComission,2007,p.47)33.

Figure4‐6–GermanTVmarketshare(public),Source:AGF/GfkFernsehforschung2008

ThevastmajorityofGermantelevisionchannelsarecommerciallyoperated.Private

televisionwasintroducedin1984.By1996therewerealreadytenestablished

channelsinfiercecompetitionformarketshares(Albarran&Chan‐Olmsted,1998,p.

130).Todaytwomajorgroupsdominatethecommercialmarket:theRTLGroup

(24.1%)andtheProsiebenSat.1MediaAG(21.6%).Awholerangeofsmallchannels

competesfortheremaining10.3%oftheaudience.

33Thecontrastmayalsobeexplainedbyadifferingmethodofcalculatingdailysharesofaudiencesinceanothersource,theEuropeanFederationofJournalists,assumedmuchlowernumbersfor2004andnamedajointshareof40.9%(EuropeanFederationofJournalists,2005,p.61).They,however,mayhaveonlyincludedthethreemainoperators.

ARD14%

ZDF13%

ARD313%

3sat1%

KiKa1%

Phoenix1%

Arte1%

Commercial56%

GermanTVmarketshare(public)

‐67‐

Figure4‐7–GermanTVmarketshare(commercial),Source:AFG/GfkFernsehforschung2008

TheProsiebenSat.1MediaAGiscurrentlyco‐ownedbyPermiraandKKR,two

internationalprivateequityfirms.MediainvestorHaimSaban,whohadacquiredthe

groupafteratakeoverdealbyKirchMediahadcollapsed,soldPermiraandKKR

50,5%oftheshares,whichallowedthemtoseizecontrolofProsiebenSat.1Media

AGandmergeitwithSBS,abroadcastinggroupfromLuxembourg(Kurp,2006).

PermiraandKKRhadbeenabletobuyProsiebenSat.1becauseatakeoverby

publishinggroupAxelSpringerhadnotbeengrantedpermissionbytheGerman

regulatoryauthorityKEK(seealsochapter5.1.1.)

TheRTLGroupisownedbyBertelsmann.ThegroupholdsseveralinvestmentsinTV

channelsalloverEurope(particularlyintheNetherlands,Belgium,FranceandUK)

andisEurope’sbiggestoperatorofcommercialtelevision.InGermanyithasreached

itsmostdominantnationalmarketposition.TheRTLGroupemergedfromamerger

ofLuxembourg‐basedCLT‐UFAandtheBritishPearsonGroupin2000.

44.6%ofGermanhouseholdsreceiveanalogueTVthroughcable,23.5%usesatellite

broadcasting,and3.9%receiveitthroughterrestrialtransmission.Themajorityof

householdswithdigitalTVusedsatellitetransmission(19.5%),(KEK,2006).

Public44%

RTL12%

RTLII4%

SuperRTL2%

VOX5%

ntv1%

Sat.110%

Pro77%

Kabel14%

N241%

neunlive0% other

10%

GermanTVmarketshare(commercial)

‐68‐

Figure4‐8AccesstoGermanTV,Source:KEK2006

CableisthemostimportantformoftelevisiontransmissioninGermanywithajoint

marketshareof51.8%(analogueanddigitalcombined).Thelargestcablenetwork

operatorisKDG(ownedbyProvidenceequitypartnerInc.),whichholdsamarket

shareof42%ofcablehouseholds.KDG,togetherwithitsmaincompetitorUnity

MediaGmbH(majorityofsharesownedbyBCPartnersbasedinUKandApollo

ManagementLPbasedintheUS)controls66%ofthemarket(KEK,2006).Bothhave

beenrepeatedlycriticisedbytheALMforhesitatingtomigratetodigitalTV

(GemeinsameStelleDigitalerZugang,2007,p.27).KDGoperatesseveralspecial

interestchannelssuchasBibel‐TV,Games‐TVandWein‐TV.TheKEKhasrepeatedly

issuedconcernthatverticalIntegrationofcableoperatorswithbroadcastingstations

couldleadtoconsiderablebarriersofentryfornewcompetitors.

Thefigurealsoshows,that35%(14.8m)ofGermanTVhouseholdsareequippedto

receivedigitaltelevision.TheAGFpanelfoundthatinthefirstquarterof2009the

actualuseofdigitalTVissignificantlylower,at27%ofthetelevisionmarket.

Howeverthesenumbersrisesteadilyasthegovernmentplanstomakebroadcasting

exclusivelydigitalby2010.ThiscouldprovetobeaboostforPremiere,thebiggest

digitalsubscription/payperview‐basedbroadcasterinGermany.3.5mhouseholds

(23.6%)ofoverall14.8mdigitalTVhouseholdssubscribetoPremiere.Inthose

44.6

3.9

23.5

7.2

5.3

19.5

0

10

20

30

40

50

60

Cable Terrestrial Satellite

%ofh

ouseho

lds

AccesstoGermanTV

digital

analogue

‐69‐

households,Premiereholdsa23.7%marketshareofTVconsumption.Thatmakesa

shareofroughly1.5%oftheoveralltelevisionmarketshare.HoweverifonlyPay‐TV

subscribersareconsideredonly(5.23mhouseholds),Premiereholdsa66%market

share.Inlate2008,theNewsCorporation,whichcurrentlyholdsa29%stakein

Premiere(KEK,2006),askedtheGermanfinancialregulatoryauthorityBaFinfor

permissiontobefreedfromacompulsorypublicoffertootherPremiere

shareholdersinordertofurtherraiseitsPremierestakebeyond30%(Wiesmann,

2008).Asof2009thepermissionwasgrantedandNewsCorpisexpectedtolauncha

takeoverbidandsubsequentlyturnPremiereintoSkyDeutschland.Premiere’smain

competitorsarechannelsoperatedbycablenetworkoperatorsKDGandUnity

Media.

Figure4‐9GermanPayTVmarketshare,Source:GSDZ2007,p.57

4.3.1.2 Radio

TheGermanradiomarketentirelymirrorsthefederalstructureandtheregional

organisationofGermanbroadcastmedia.Thereareonlyfewnationalbroadcast

programmessincemostradiostationsoperateregionallyorlocally.Duetothis

situation,nocommercialbroadcastinggrouphasbeenabletoattainadominant

marketposition.ThepublicARDbroadcastersaccountfor65regionalprogrammes

Premiere66%

UnityMedia17%

KDG13%

other4%

GermanPayTVmarketshare

‐70‐

andtwonationalprogrammes,accumulatingajointmarketshareof27.5%ofthe

nationalradioaudience(EuropeanFederationofJournalists,2005,p.64).

Commercialoperatorsaccountfor24nationalprogrammes,56regionalprogrammes

and140localprogrammes(ArbeitsgemeinschaftderLandesmedienanstalten,2008,

p.199),ofwhichtheregionalprogrammesarethemostprofitable.Thebiggest

commercialradiobroadcastersaretheRTLGroup(6.6%),AxelSpringerAG(~1%),

HubertBurdaMediaHoldingGmbH&Co.KG(~13.6%),MadsackGmbH&Co.KG

(~6.7%)34,(KEK,2005)

Figure4‐10Germanradiomarketshare,Source:KEK2005/EFJ2005

4.3.1.3 Writtenpress

TheGermannewspaperandmagazineindustrystillcommandsthelargestsegment

oftheGermanmediamarketwith49%ofadvertisementspendingwhichequalsjust

above€10bnfromadvertisementalone(ArbeitsgemeinschaftFernsehforschung,

34Springer,BurdaandMadsackholdmostlyminoritystakesbelow25%invariousradiobroadcasters,thereforeoverallnumbersofmarketshareareestimationsandmayvarygreatlyaccordingtothemethodofcalculation.

ARD27%

RTL6%

Springer1%

Burda14%

Madsack7%

Other45%

Germanradiomarketshare

‐71‐

2008).Thereare377dailynewspaperswithacombinedcirculationof27.2m,27

weeklynewspaperswithacirculationof2m,900magazines,whichdistribute115m

copies(numberofactuallypurchasedmagazinesisnotavailable)and1,159special

interestperiodicals,whichdistribute13.9mcopies(Informationsgesellschaftzur

FeststellungderVerbreitungvonWerbeträgern,2009).

In2005thetoptenGermannewspaperswere(regionalnewspapersshadedgrey):

Title Publisher Circulation(in1,000)

BILD AxelSpringer 3,867

WestdeutscheAllgemeine

Zeitung

WAZMediengruppe 1,001

ZeitungsgruppeKöln DuMontSchauberg 628

SüddeutscheZeitung SüddeutscheZeitungVerlag 442

RheinischePost Rheinisch‐BergischeDruckerei

undVerlagsgesellschaft

405

ZeitungsgruppeThüringen ZeitungsgruppeThüringen 398

FrankfurterAllgemeineZeitung FrankfurterAllgemeineZeitung

Verlag

380

FreiePresse FreiePresseChemnitzerVerlag 358

AugsburgerAllgemeine/

AllgäuerZeitung

Presse‐DruckundVerlagshaus 353

NürnbergerNachrichten MitteldeutschesVerlagshaus 310

Figure4‐11TopTenGermannewspapers,Source:EuropeanComission,2007p43

Thenewspapermarketisratherdiverse.Thetopfivepublishersaccountfor44.8%of

themarketshare,thetoptengroupsaccountfor58.5%(Röper,2008,p.420).Axel

Springer,whopublishesthemarketleaderBILD,controlsnearlyonequarterofthe

market.

‐72‐

Figure4‐12Germannewspapermarketshare,Source:Röper,2008p.420

Röper(2008)dividesthenewspapermarketintoqualitypapers(subscriptionbased)

andtabloidpapers(basedonstreetselling)thelattershowinganapparent

dominationofthebigfivepublishers:96.1%ofthetabloidmarketshareiscontrolled

bythetopfivepublishers,79.3%bySpringeralone(Röper,2008,p.421).Springer’s

dominationinthissegmentwasoneofthemainreasonsfortherejectionofthe

group’sbidtotakeoverProsiebenSat.1Mediain2006.

TheGermanmagazinemarketisalsofairlyconcentrated.Thetopfivepublishers

controlmorethantwothirds,68.5%,ofthemarket:

AxelSpringer22%

VerlagsgruppeStu~garterZeitung/DieRheinpfalz/

SüdwestPresse9%

VerlagsgruppeWAZ6%

DuMontSchaubert4%

Ippen‐Gruppe4%

other55%

Germannewspapermarketshare

‐73‐

Figure4‐13Germanmagazinemarketshare,Source:Vogel,2008p.468

VogelgoesontodividethemagazinemarketinacomparablewaytoRöper.He

distinguishesbetweenmagazinespublishedweeklyoreverybiweekly,and

magazinespublishedatlongerintervals.Intheweeklytobiweeklysegment,thebig

fivehaveamarketshareof87.3%,BauerandSpringeralonecontrol53.2%(Vogel,

2008,p.468).

4.3.1.4 Online

In2008thetoptenGerman‐basedwebsiteswere:

Website Marketer/Provider UniqueClientspermonth

(averageinmillions)

T‐Online InteractiveMediaCCSPGmbH 14.39

Web.de UnitedInternet 12.80

Yahoo!Deutschland Yahoo!DeutschlandGmbH 11.13

MSN.de MicrosoftAdvertising 10.75

GMX UnitedInternet 8.7

AxelSpringer15%

HubertBurdaMedia16%

Gruner+Jahr11%

WAZZeitschri�enMarke�ng

7%

HeinrichBauerVerlag19%

other32%

Germanmagazinemarketshare

‐74‐

MyVideo SevenOneInteractiveGmbH

(Prosiebensat.1Media)

7.35

RTL.de IPDeutschlandGmbH(Bertelsmann) 6.62

studiVZ HoltzbrinckNetworksGmbH 5.41

SPIEGELONLINE SPIEGELnetGmbH 5.26

CHIPonline HubertBurdaMedia 5.26

Figure4‐14TopTenGermanbasedwebsites,Source:AGOF2008/Companyprofiles

InthisrankingtheAGOF(ArbeitsgemeinschaftOnlineforschung)consideredwebsites

operatedbyGermanbasedmarketers/providersonly.NielsenOnlineprovidesdata

forinternationalprovidersinFebruary2009(Germanbasedmarketers/providers

shadedgrey):

Propertyname Uniqueclientspermonth Reach/marketcoveragein%

Google 30,009 83.21

Microsoft 23,894 66.25

Ebay 20,319 56.34

DeutscheTelekom 16,181 44.87

UnitedInternet 15,484 42.93

Bertelsmann 13,866 38.45

AOL 13,137 36.43

Wikimedia 12,892 35.75

HoltzbrinckNetworksGmbH 12,262 34

Prosiebensat.1 11,995 33.26

Figure4‐15TopTeninternationalbasedwebsites,Source:NielsenOnline2009

‐75‐

AlookattherankingofdomesticInternetmarketers/providersshowsarather

competitivemarket.CalculationsbyNielsenandAGOFdifferslightlyduetodissimilar

calculationsoftheuniversalset.ThetopGermanInternetproviders/marketersenjoy

marketcoverageratiosofaround40%permonth(41mGermansareonlineona

regularbasis).However,thereare15companiesthatcoveratleast25%ofthe

marketandtheAGOFlists61marketers/providersthatreachmorethan500.000

people.

Figure4‐16TopGermaninternetmarketersandproviders,Source:AGOF2008,companyprofiles

Incasecross‐mediaownershipistakenintoaccount,itshows,thatthreeofthefive

biggestInternetmarketers/providersare“oldmedia”giantsthathavesuccessfully

managedtobroadenthescopeoftheiroperations.TheothertwoplayersareISPs.

19.75 18.98 17.52 17.4612.61

0

5

10

15

20

25

Unitedinternet

SevenO

neInterac�veGmbH

(Prosieb

enSat.1Med

ia)

Interac�veMed

iaCCSPGmbH

TOMORR

OWFOCU

SAG

(Hub

ertB

urdaM

edia)

IPDeu

tschland

GmbH

(Bertelsmann)

marketcoverage(n=41million)

TopGermanInternetmarketers/providers

‐76‐

4.3.2 UnitedKingdom

UKhasmaturenationalandregionalnewspapermarkets,whichhavebeensubject

tosubstantialconsolidationinrecentyears.Thebroadcastmediasectoris

dominatedbytheBBC,whichremainsakeyplayerintheBritishTVandradio

markets(Ward,2004,p.197).

4.3.2.1 Television

TelevisionintheUnitedKingdomisa£11.2bn(€12.1bn)industry(Ofcom,2008,p.

147).26.8%ofadvertisingexpenditureisallocatedtotelevision,whichmakesup

aboutonethirdofTV’soverallrevenue–publicfunds(23%)andsubscriptions(38%)

providethegreaterpartofothersourcesofrevenue.Atthemomentthereare470

channelsbroadcastingintheUK,however,onlyfivechannelsareavailablenationally

onterrestrialanddigitaltelevision,allofthemhavepublicserviceduties.Duetothe

highlevelofdigitalisedTVhomesof87.3%,nearlyallUKchannelsaredigital.

Moreover,theUKhasthelargestPay‐TVmarketinEurope.UnlikeinGermany,

marketsharesofUKchannelsvarygreatlydependingonwhichplatformof

transmissionistakenintoaccount.

Thefivenationalchannels,BBC1andBBC2,ITV(Channel3),Channel4andFiveare

commonlyreferredtoasPBS–PublicBroadcastingStations.Togethertheycontrol

60%oftheoveralltelevisionmarket.BBC1andBBC2arefinancedbylicensefeesand

arenotallowedtobroadcastadvertisementsatall.TheremainingthreePBS

channelsarecommerciallyfunded(withtheexceptionofChannel4),however

programmingminimumsarespecifiedfornews,currentaffairsandeducational

programmes(Albarran&Chan‐Olmsted,1998,p.103).ITV,aBritishversionofthe

ARD3conceptinGermany,isaconglomerateof15operators,whicharelicensedto

provideregionalprogrammes,althoughelevenofthemareownedbytheparent

companyITVplc.ITVplchasbeensubjecttotakeoverrumoursbyPay‐TVmarket

leaderBSkyB,cableoperatorNTLandRTL/Bertelsmann(Oatts,2006).Inlate2008

BSkyBwasorderedtoreduceits17.9%stakeinITVplcduetocompetitionconcerns.

TheCompetitionCommissionreportedthatfourothershareholdersholdmorethan

‐77‐

3%inITV.Channel4ontheotherhandispubliclyownedwhileFivebelongstothe

Bertelsmanngroup.Botharenationalsingleservices.

AsofFebruary2009,theBBCchannelsaccountedfor28.8%oftheoverallTVmarket

share,whiletheotherthreeoperatorsaddupto30.9%(Broadcasters'Audience

ResearchBoardltd.,2009).

Figure4‐17BritishTVmarketshare,Source:BARB2009

Atthemoment,only13%ofTVhouseholdsuseterrestrialanalogueTV,wherethe

PBSbroadcastershaveajointmarketshareof100%duetolackofcompetition.The

majorityofBritishTVhouseholdsusedigitalterrestrialtelevision(DTT)(38%)and

DigitalSatelliteTV(34%),whichisdominatedbyPay‐TV.

BBC121%

BBC28%

ITV19%

Channel47%

Five5%

Other40%

BrimshTVmarketshare

‐78‐

Figure4‐18AccesstoBritishTV,Source:OfcomCommunicationsreport2008,p.211

Itisimportanttonote,thatthesenumbersrefertothemainTVinahousehold.

AmongallTVsetsintheUK,theuseofsatelliteTVisabout10%lowerwhile

analogueterrestrialtransmissionisup10%.

With87%ofTVhouseholdsequippedtoreceivedigitaltelevision,PBSbroadcasters

aresteadilylosinggroundinmultichannelhomes.Aspointedoutabove,theycontrol

100%oftheanalogueterrestrialmarketand60%oftheoverallmarket.Insatellite

andcablehomeshowever,PBSprogrammesaccountfor47%ofthemarket.Their

strongestcompetitorisBSkyB.ItsportfolioalreadyoutperformsFiveat7.6%market

shareinmultichannelhomes(Ofcom,2008,p.222).

ThedominatingplatformoftransmissiononDTTisFreeview.ApartfromthePBS

channelsandsomespecialinterestchannelsassociatedwiththem,Freeview

broadcastsentertainment,newsandchildren’schannels,aswellasinteractive

channelsandradiostationsfreeofcharge.FreeviewisrunbyDTVServicesLtd.,

whichisownedbyfiveshareholders:BBC,BSkyB,ITV,Channel4andNationalGrid

Wireless/Arqiva(formerlyknownasNTLbroadcastitbelongstoaconsortiumledby

AustralianinvestmentbankMacquarie).FreeviewhasnodirectrivalsontheDTT

marketsinceTopUpTVandSetantaofferPayTVservicesonly(Ofcom,2007,p.2).

Analogueterrestrial

13%

Digitalterrestrial

37%

PaySatellite34%

FreeSatellite3%

DigitalCable13%

AccesstoBrimshTV

‐79‐

BSkyBisthemainplayeronthesatellitemarket.BSkyBoffersawiderangeofPay‐TV

Services(ie.SkySports,SkyMovies)andsomefreetoair(FTA)programmes.BSkyB

has9msubscribers,whichrepresentsonethirdoftotalUKTVhomes(26m).Sky’s

extraordinaryperformancewasacrucialfactorinmakingsubscriptionthemost

importantsourceofrevenue(38%oftotalrevenues)fortelevisionintheUK,even

surpassingadvertisement(32%oftotalrevenues).SomeofSky’schannelsarealso

includedintheVirginMediacableTVportfolio.NewsCorp.currentlyowns39%of

BSkyB(Ofcom,2007,p.29)

DigitalcableTVintheUKisprovidedbyregionalpayTVretailers.VirginMediaisthe

largestproviderofcableTVservingabout47%ofcablehomes,withSmallworldand

Wightcablethemostimportantcompetitors(Ofcom,2007,p.2).VirginMedia

emergedfromamergerofntl:TelewestwithVirginMobile.Shortlyafterformer

rivalsNTLandTelewesthadjoinedforcestobecomethedominantplayerincable

TV,VirginMobilesteppedinandanevenbiggercompanywasformed.Thisallowed

VirginMobiletooffer“quadruple”services(TV,Internet,fixedandmobile

telephony),providedbyonesingleverticallyintegratedcompany(Ofcom,2007,p.

42).VirginMediaTVservicescanonlybesubscribedinpackagewithabroadbandor

landlinetelephonyservicetoo.VirginMediaisownedbyavarietyofinvestors,the

threebiggestbeingFidelityManagementandResearchLLC,aUSbasedinvestment

group(13.4%),VirginEntertainmentInvestmentHoldingsLtd.(10.4%)andFranklin

MutualAdvisorsLLC,anotherUS‐basedinvestmentfirm(10%),(VirginMedia,2009).

4.3.2.2 Radio

TheBritishradiomarketisaboutonetenththesizeoftheTVmarketintermsof

overallrevenue.Radio’sshareofadvertisingexpenditureisjust2.9%.Thereare397

radiostationsintheUK,mostofthem(336)arelocalcommercialstations.Thereare

onlyfournationalcommercialstations,versuselevennationwideBBCstations.Local

BBCstationsmakeuptheremaining46(Ofcom,2008,p.243).TheBBC’stotalshare

ofaudienceis57%.ThebiggestcommercialoperatorsofradiostationsareGlobal

Radio(15%)andBauerRadio(10%).

‐80‐

Figure4‐19Britishradiomarketshare,Source:OfcomCommunicationsreport2008,p.253

ThedominationofpubliclyfundedBBCstationsintheshareoflisteninghoursleads

toadominationofcommercialleaderGlobalRadioontheadvertisementmarket.

Thegroup,whichisownedbyaconsortiumofIrishinvestors,controlsapproximately

44%oftheadmarket(Piasecka,2008).TheothermajorplayerisBauer,aGerman

company,whichalsoholdssharesinregionalradiostationsinnorthernGermanybut

ismorerenownedforitspublishingactivities.Interestingly,digitalandonlineradio

broadcastsmakeupalmost18%ofthetotalUKradioaudience(Ofcom,2008,p.

238).

4.3.2.3 Writtenpress

Thereare30nationaldailynewspaperswithanoverallcirculationof22.5mcopies.A

strikingfeatureoftheBritishnewspapermarketisthehighperformanceofSunday

papers.TheFinancialTimesandTheEveningStandardaretheonlynational

newspaperswithoutaSundayedition.

BBCna�onwide

47%

BBClocal10%

GlobalRadio17%

BauerRadio10%

GuardianMedia5% other

11%

Brimshradiomarketshare(listeningh)

‐81‐

Inadditiontothat,668Britishmagazinesdistributeabout100mcopiesonaweekly

ormonthlybasis.46mofthosecopiesareactivelypurchased.

Inthefirstquarterof2009thetoptenBritishdailynewspapers(withoutSunday

papers)were(regionalnewspapersshadedgrey):

Title Publisher Circulation(in1,000)

TheSun NewsInternationalLtd 2,954

TheDailyMail AssociatedNewspapersLtd 2,218

TheDailyMirror TrinityMirrorplc 1,326

TheDailyTelegraph TelegraphMediaGroupLtd. 822

TheDailyStar ExpressNewspapers 781

DailyExpress ExpressNewspapers 715

TheTimes NewsInternationalLtd 608

FinancialTimes FinancialTimesLtd. 421

DailyRecord TrinityMirrorplc 349

TheGuardian GuardianMediaGroup 340

Figure4‐20TopTenBritishnewspapers,Source:AuditBureauofCirculations2009

TheBritishnewspapermarketishighlyconcentrated.Thetopfourpublisherscontrol

morethan80%ofthenewspapermarket(includingSundaypublications),withNews

InternationalLtd.(NewsCorp.)accountingforonethirdofthemarketsharealone.

‐82‐

Figure4‐21Britishnewspapermarketshare,Source:owncalculationsbasedABC2009data

SimilartothesituationinGermany,thetopfourpublishers’dominationisallthe

moreobviousifthemarketisdividedintotabloidandqualitypapers.Inthetabloid

segment,thebigfourcontrol96%ofthemarket.However,NewsInternational’s

sharedoesnotchangesignificantlyincomparisontotheoverallmarket,sincethey

publishthequalitymarketleaderTheTimes.Thegrowingimportanceoffreesheet

newspapers,inparticularinmetropolitanareasmarksasignificanttrendoftheUK

newspapermarket.TherearecurrentlyfourfreesheetpapersinLondon,twoof

whichbelongtothebiggestpublishersAssociatedNewspapers(LondonLite)and

NewsCorp.(TheLondonPaper).

Theconsumermagazinemarketisnotconcentratedasintensely.However,thefour

largestpublishersholdajointmarketshareof46%.Thetwolargestpublishing

groupsaretheGermanBauergroup(16.6%marketshare)andIPCMedia(15.9%),a

memberoftheUS‐basedTimeWarnerconglomerate.Theirsmallercompetitorsare

NatMags(NationalMagazineCompanyLtd.,6.7%),whichbelongstotheoldUS

mediagiantHearstCommunicationsandBBCMagazines,thecommercialpublishing

subsidiaryoftheBBC(6.4%).

AssociatedNewspapers

20%

ExpressNewspapers

11%

NewsInterna�onalLtd.35%

other17%

TrinityMirrorplc

17%

Brimshnewspapermarketshare

‐83‐

Figure4‐22Britishmagazinemarketshare,Source:owncalculationsbasedonABC2009data

Althoughthereisnodataavailableonthemarketshareintheweekly/bi‐weeklyand

themonthlysegment,itisfairlysafetoassumethatthejointmarketshareofthebig

publishersincreasesinproportiontodecreasingpublishingintervals,similarto

GermanandFrenchmarkets.

4.3.2.4 Online

InFebruary2009thetoptenproviders/marketersintheUnitedKingdomaccording

toNielsenOnlinewere(domesticplayersshadedgrey):

Propertyname Uniqueclientspermonth Reach/marketcoveragein%

Google 24,251 87.08

Microsoft 22,090 79.32

BBC 14,601 52.43

Yahoo! 14,518 52.13

eBay 14,277 51.26

BauerMediaGroup17%

IPCMedia16%

BBCMagazines6%

NatMags7%

other54%

Brimshmagazinemarketshare

‐84‐

Facebook 13,630 48.94

Amazon 10,194 36.6

HMGovernment 8,665 31.11

AOL 8,628 30.98

WikimediaFoundation 8,232 29.56

Figure4‐23TopBritishinternetmarketers,Source:NielsenOnline2009

ThedominationofUS‐basedonlineservicesisstriking.TheABCe,theonline

departmentoftheAuditBureauofCirculationpublisheduniqueuserclients

rankings,whichcontradictheavilywithNielsen’sfiguresbecausetheABCe

measurementincludesworldwideusersoutsideoftheUK.

AccordingtotheABCe,guardian.co.uk,theTelegraph,Timesonline,MailOnlineand

TheSunonlineallmanagedtogobeyondthe20muniqueclientspermonthmark,

withguardian.co.ukclosetobreaking30m.MoreoverTheIndependentandthe

MirrorGroupreached10mand6mvisitorsrespectively(AuditBureauofCirculation

electronic,2009).

‐85‐

4.3.3 France

TheFrenchmediasectorischaracterisedbyastrongregionalpressandhighly

competitivetelevisionandradioindustries.DespitetheemergenceofVivendiasa

globalplayerintheaudiovisualindustry,theFrenchtelevisionmarkethasbeenvery

stable,whiletheradiosectorisoneoftheleastconcentratedinEurope(Ward,2004,

p.43)

4.3.3.1 Television

Televisionaccountsfor36%ofmediaadvertisingexpenditurewhichequalsslightly

morethan€4bn(ConseilSuperieurdel’Audivisuel,2009).Advertisingistheprincipal

sourceoffundingforFrenchtelevision.

Therearesevennationalchannelsofwhichfourarepublicservicebroadcasters

(France2,France3France5andArte)andoneisapartiallyencryptedPay‐TV

channel(Canal+).TheremainingTF1andM6arecommerciallyoperated.These

sevenchannelstogetherhold77%oftheoverallaudienceshare.Oftheremainder,

11%isaccountedforbyfreetoviewchannelsavailableontheTNTdigitalterrestrial

platform.Otherspecial–interestchannelsmakeup12%.

Amongthenationalchannels,TF1istheclearmarketleader,accountingfor27.2%of

theaudienceshare.TF1’slargestshareholderisBougyes(43%),alargeFrench

industrialandtelecomgroup.Theremaining57%arefreefloatingshares.Second

placedFrance2trailsTF1bynearly10%.Together,publicbroadcasterscontrol

35.5%ofthemarket.Statetelevisionreceiveslicensefees,governmentsubsidies

andisallowedtoadvertiseindifferentproportionsdependingoneachchannel

(Albarran&Chan‐Olmsted,1998,p.189).WhileCanal+isownedbymedia

conglomerateVivendi,44%ofthesharesand33%ofthevotingrightsofM6belong

totheRTLGroup.

‐86‐

Figure4‐24FrenchTVmarketshare,Source:Médiametrie2008,p.2

Ithastobementionedthatonanalogueterrestrialplatforms,France5andArte

haveatime‐sharingagreement.France5broadcastsbefore7pm,Arteafterwards.

OndigitalTV,however,bothareavailable24hours.

TheoverallFrenchtelevisionaudienceis57mpeople.33%accessTVthroughthe

TélévisionNumériqueTerrestre(TNT)platform,adigitalterrestrialtelevision

platform,whichiscomparabletoFreeviewintheUK.Theportfolioofchannels

carriedonTNTissubjecttoselectionbytheCSA.Atthemoment18freetoview

channelsandninePay‐TVchannelsarebroadcastonTNT(Thepaychannelsare

drawnfromthemostpopularofferingsofsatelliteandcableoperators).

24%oftheFrenchtelevisionaudiencehaveaccesstosubscriptionbasedsatellite

channels.TherearetwomainoperatorsofsatellitePay‐TV.Thedominantplayeris

NouveauCanalsat,ownedbyVivendi(65%),pubishinggroupLagardère(20%)and

commercialTVoperatorsTF1(9.9%)andM6(5.1%),whichcarriesthepopular

Canal+portfolio.Canalsat’ssolecompetitorisBisTélévision,whichisownedbythe

founderofitsholdingcompanyABGroupe,ClaudeBerda(66.5%)andTF1(33.5%).

(Médiametrie,2008,p.5).

Approximately6%usesubscription‐basedcable‐servicesasameansofaccessingTV.

TheonlyprovideronthecablemarketisNuméricable,whichisownedbyBritishand

TF127%

France219%

France313%France5

3%

Arte2%

other23%

Canal+3%

M611%

FrenchTVmarketshare

‐87‐

AmericanprivateequitygroupsCinvenandCarlyle(bothhold35%)andfellowcable

operatorAltice(30%)basedinLuxembourg.

20%stilluseanalogueterrestrialtransmission,while16%useDSLbasedonline

services,offeredbymosttelecomproviders,includingtheIliadGroup(Alice,Free),

BouyguesTélecom,SFR(controlledbyVivendi)andOrange.

Figure4‐25AccesstoFrenchTV,Source:Médiametrie2008,p.5

4.3.3.2 Radio

RadioisahighlypopularmediuminFrance,Morethan98%ofthepopulationownat

leastonereceiver.Afterbeingstateownedfornearly40years,radiowasliberalized

intheearly1982.Shortlyafterwards,advertisementwasauthorizedasaviable

sourceoffundingforprivateradiostations.Todayradioreceivesabout7%oftotal

mediaadvertising(€0.7billion).PublicradiobroadcasterFranceRadiocarriesa

portfolioofgeneralandspecialinterestchannelsandattainsacombinedaudience

shareof21%.RTListhelargestcommercialradiogroupandonlyslightlybehind

publicradiointermofaudienceshare(19.2%).MoreoverRTLhasthemostpopular

radiostationRTLradio,which13%oftheFrenchpopulationlistenstoregularly.

DigitalTerrestrial

34%

AnalogueTerrestrial

20%

PaySatelite24%

Cable6%

DSL16%

AccesstoFrenchTV

‐88‐

OthersignificantcommercialoperatorsareNRJGroupandLagardère(Médiametrie,

2008).

Figure4‐26Frenchradiomarketshare,Source:Mediamétrie2008

TogetherthefourlargestcommercialoperatorsattractmorethanhalfoftheFrench

radioaudience(54.4%).

4.3.3.3 Writtenpress

ComparedtoGermanyortheUK,theFrenchnewspapermarketissmallandconsists

oftennationalnewspapersand62regionalnewspapers.Thedailycirculationofall

Frenchnewspaperstotals8mperday,whichisonethirdofGermanyandhalfofthe

UK.Thissituationissometimesattributedtothetightcontrolexercisedbythe

Frenchworkers’unionLeLivre,whichhassetrigidworkinghoursandstrict

protectionsfortheproductionofprintworks.Thismakesproducinganewspaperin

FrancemoreexpensivethaninotherEuropeancountries(Chrisafis,2008).Another

strikingfeatureofthemarketistheabsenceofabigdailytabloidnewspaper.The

biggestsellingtitleistheregionalnewspaperOuestFrance(OJD,2008).In2008the

toptennewspaperswere(regionalnewspapersshadedgrey):

Localsta�ons14%

Publicradio21%

RTL19%

NRJ16%

Lagardère14%

NextRadio5%

other11%

Frenchradiomarketshare

‐89‐

Title Publisher Circulation(in

1.000)

OuestFrance GroupeOuestFrance 772

LeParisien/Aujourd’hui GroupeAmaury 512

LeFigaro Socpresse/GroupeDassault 320

L’Equipe GroupeAmaury 311

SudOuest GroupeSudOuest(Lemoine) 308

LeMonde GroupeLaVie‐LeMonde 300

LaVoixduNord GroupeLaVoixduNord 282

LeDauphineLibéré GroupeEBRA 239

LeProgres GroupeEBRA 214

LaNouvelleRepubliquCentreOuest GroupeNRCO 208

Figure4‐27TopTenFrenchnewspapers,Source:OJD2008

DuetothespecificstructureoftheFrenchnewspapermarketandthestrong

positionofregionalandlocalpublishers,thereisnodominatingplayeronthe

newspapermarketandtheaudiencesharesaremoreorlessevenlydistributed.The

fivebiggestpublishersaccountforslightlymorethan50%ofthenewspapermarket,

noneofthemexceeds15%marketshare.

‐90‐

Figure4‐28Frenchnewspapermarketshare,Source:owncalculations

Incontrasttothenewspapermarket,theFrenchmagazinemarketisoneofthe

biggestinEurope.About40mcopiesareactivelypurchasedeveryweek,fivetimes

asmanyasnewspapers(OJD,2008).Althoughtherearenonumbersavailableon

marketsharesofthebiggestpublishersitisunderstoodthatHachetteFilipacci

publishers(whichbelongtotheLagardèregroup)areundisputedmarketleaders,

followedbythePrismaGroupandMondadoriGroupcontrolledbytheItalian

Fininvest,whichbelongstoSilvioBerlusconi.(Albarran&Chan‐Olmsted,1998,p.

188).

4.3.3.4 Online

InMarch2009thetoptenFrenchonlinecontentproviderswere(domesticplayers

shadedgrey):

Propertyname Uniqueclientspermonth Reach/marketcoveragein%

Google 25,445 84.98

GroupeOuestFrance13%

GroupeEBRA12%

GroupeAmaury11%

GroupeSudOuest8%

GroupeHersantMedia8%

other48%

Frenchnewspapermarketshare

‐91‐

Microsoft 24,718 82.55

FranceTelecom 18,077 60.37

Iliad 12,817 42.8

PagesJaunes 12,197 40.74

eBay 12,065 40.29

Yahoo! 11,979 40.01

GroupeTF1 11,582 38.68

GroupeLagardere 11,572 38.65

BenchmarkGroup 11,277 37.66

Figure4‐29Topteninternetmarketersandproviders,Source:NielsenOnline2009

TheOJDalsopublishesonlinerankings,however,nodataonuniqueclientsis

available.AccordingtotheOJD,thewebpresenceoftheprivateradiostation

Skyrock,whichbelongstotheOrbusgroupownedbyinsurancecompanyAxa,had

byfarthemostvisitspermonthin2008(OJD,2008).

‐92‐

4.3.4 Europe

Duetostructuralandculturalreasons,(forexampletechnicalandlinguisticbarriers,

seechapter6)mediamarketshavebeenstronglytiedtonationstateswhichiswhy

thereareonlyafewtransnationalEuropeanmediacompanies(seeFigure9‐1).

Governmentderegulationandconvergenceofmediasectors,however,have

facilitatedtheformationofpan‐Europeancorporationsandhaveledtonon‐EU

investorsenteringtheEuropeanmediamarkets.InparticularEasternEuropean

countries,manyofwhicharestillinaperiodofeconomictransitionhavebeen

persistenttargetsforcrossborderinvestment.

Theonlyrealconglomerate,operatinginallmediasectorsistheGerman‐based

Bertelsmann,theworld’sthirdlargestmediagroupwitharevenueofmorethan

€15bn,whichownsEurope’sbiggestTVoperatorRTLandEurope’sbiggestpublisher

ofmagazinesGruner+Jahr.TheyhavebeenactiveinanumberofEuropean

countries,mainlyinGermanyandtheUK.

ThenumbertwoinEuropeisFrench‐basedVivendigroup,whichhastaken

convergencefurthestandintegratedfilm,music,mobilecommunication,publishing,

themeparksandarangeofnon‐mediaactivitiesintheirportfolio.However,only

42%ofVivendi’srevenueofmorethan€20bnisaccountedforbymediaoperations.

ThirdrankedGroupeLagardèreisalsobasedinFranceandmainlyactiveinthe

publishingsector.Itsrevenuecomescloseto€14bn,58%ofwhichisaccountedfor

bymediaactivities.

TheCouncilofEurope(2004)listedotherconsiderabletransnationalmedia

businesses:

• PublishersSpringer,WAZandRingierfromGermanyandSwitzerlandhave

achievedinfluentialpositionsonCentralandEasternEuropeanmarketsin

thepublishingandpresssegmentsrespectively.

• RupertMurdoch’sNewsCorp.,alreadyactiveinthepressandtelevision

marketsofAustrialia,theUSandtheUnitedKingdomexpandedtotheItalian

marketandannouncedplanstoacquireGermanpayTVoperatorPremiere

‐93‐

(seechapter4.3.1.1)

• AftermergingwithScandinavianbroadcastingGroupSBStheGerman

ProsiebenSat.1MediaholdsinterestsacrossvariousEuropeancountries.

• CME(CentralEuropeanMediaEnterprises)ownsseveraltelevisionstationsin

sevenCentralandEasternEuropeancountries.Inearly2009US‐basedTime

Warner,inc.,theworld’sbiggestmediacompany,announcedthatitintends

toacquireastakeof31%inthecompany(Tomasova,2009).

OveralltheEuropeanmediamarketsarestillverymuchdominatedbydomestic

players,withexceptionsinsomeEasternEuropeancountries.However,thereallevel

ofcrossborderinvestmentissometimesconcealedbycomplexlegalconstructions

whichraisestheneedfortransparencyonthismatterinordertoassessthetrue

extentoftransnationalmediaconcentration.

‐94‐

5 Currentregulationsofmediaownership

Therearemanywaysinwhichsocietylimitsbusinesspracticesforthesakeofthe

publicinterest‐fromthebroadinstitutionalizationoflabourlawsinEuropeinthe

mid19thcenturytotheinternationalintroductionofenvironmentallawsatthe

beginningofthe20thcenturytonewlyestablishedfinancialregulationsinthewake

theglobaleconomiccrisisattheendof2008,thereisalonghistoryofregulatory

measures.Regardlessoftheirbusiness,companieshavetooperatewithinadynamic

frameworkofsocialandpoliticalconstraints(Croteau&Hoynes,2006).Regulations

arebasedonthebroadconsensusontheconceptonthepossibilityofmarketfailure

andtheincreasinglyimportantideathatsuccessofcompaniescannotbeassessed

solelybytheirprofits,whichmeansthatotherfactorsneedtobeincorporatedinthe

evaluationinordertosee“thebiggerpicture”.Thereisavarietyofstakeholders

whohaveaninterestintheactionsofamediacompanyandparticulartheshapeof

theregulationitisfacedwith.

Figure5‐1Stakeholdersofmediaregulation,Source:ownillustration

mediacompany

employees/journalists

owners/investors

partners/advertisers

competitors

consumerssociety

government

lobbyists/publicrelations

politicians

‐95‐

Theinterestsofthevariousstakeholdersareveryheterogenous.Forexample,

journalistmaybeworriedabouttheirjobs,whilepoliticianwanttohaveastrongally

inacampaignandcompetitorsseektogainmarketshareattheexpenseofother

mediabusinesses.Touniteallthesedifferentinterestswithinoneregulatory

framework(spanningacrossdifferentnationsincaseoftheEU)isverydifficultand

requiresconsiderablecompromises.Theconceptofmediagovernance(seechapter

5.3)providestheoreticalbackgroundonthisissue.

InthispaperIwillfocusonlegalmethodsofregulationcarriedoutbynationaland

internationalauthorities.Theymaychoosebetweendifferenttoolsofregulation

suchasrulesandregulations,publicownership,expenditure(subsidies)andtaxation

(Lipsey&Chrystal,1995,p.425).LipseyandChrystalcallinterventionstoprevent

firmsfromengaginginanti‐competitivepracticessuchascolludingormerging

unnecessarilythe“leaststringentfromofgovernmentregulation”,asopposedto

fixingparticularpricesordefiningtheconditionsofentryandexittoamarket.Laws

andotherinstrumentsthatareusedtoencouragecompetitionanddiscourage

monopolypracticesmakeupcompetitionpolicyandareusedtoinfluenceboththe

marketstructureandthebehaviouroffirms(Lipsey&Chrystal,1995).Antitrust

measures,regulationsofownershipandlimitsontheexertionofmarketpowerare

someoftheseconstraintstobeanalysedmorecloselyinthischapter.

Inacademicliterature,themajorityofassessmentsoftheimpactofconcentrationof

mediaownershipfocusexclusivelyoneconomicaspects.Someauthors(forexample

Compaine,2000)defendthisapproachfortwomainreasons.One isthealignment

withmethodsofevaluationusedbycurrentantitrust legislationwhichiscombined

with the persistent view that historically, antitrust law is bound to embody socio‐

political values in addition to the mere restriction of monopolistic pricing power

(Baker, 2007, p. 65). Secondly an economic approach employs “criteria that are

relatively identifiable, quantified and validated” (Compaine, 2000, p. 555). This

providesaquickoverviewof thenumberand strengthof forcesatplay inagiven

market.

‐96‐

Forothers(forexampleBaker2007)theassumption,thatcompetitionlawprovides

appropriatemeasurement(andremedy)formediaconcentrationiswrong,sincethe

mere act of preventing an “entity fromamassing sufficient economic power […] is

certainly a legitimate goal by itself but is has no necessary correspondence to

avoidinganobjectionabledistributionofinfluenceoverpublicopinion”(Baker,2007,

p.56)whichwouldconstituteathreattomediapluralism.Therefore,theycallfora

multi‐valueapproach,whichalsoincludesrelevantsocio‐politicalconcerns.35

35 Knoche adds that an exclusive focus on economic aspects further establishes the role of communicationssciencesasameredocumentorofcompanyrankings.Ineffectmoreandmoreresearcheskeeptodescribingthesymptomsoftheproblemratherthananalysingthecausesandconsequences(Knoche,1996,p.103).

‐97‐

5.1 Nationalregulations

5.1.1 LegislationinGermany

GermanyhasprotectedthefreedomofthepressinthesecondsentenceofArt5Par

1GGinitsconstitution.Thislegitimizeslegislatorstoconfinebusinessinterestsfrom

threateningmediapluralismandobligesthemtoconsiderthenatureofmediaupon

regulatingcompetition(BundesministeriumfürJustiz,2004,p.38).However,the

GermanFederalConstitutionalCourtBVerfGEhasrepeatedlyproddedtothe

reciprocationbetweenmarketcompetitionandpluralism.Germanlawdifferentiates

betweenprintmediaandbroadcastmedia.ThefederalcartellawGesetzgegen

Wettbewerbsbeschränkungen(GWB)withitsspecialprovisionsformediacompanies

appliestoboth.Additionally,broadcastmediahavetocomplywiththe

Rundfunkstaatsvertrag(RStV),whichestablishesfurtherlimitsonmarketpower.The

scarcityoffrequenciesandthehighsetupcostsofbroadcastmediaweretwo

argumentstojustifythenecessityoftreatingbroadcastmediadifferentlyandto

applytighterregulationthanforprintmedia.Moreimportantlyhowever,the

BVerfGEhasclearlystatedtheneedforprecautionarymeasuresinordertoprotect

broadcastmediafromanyeffectsofmarketfailure,sinceabasicsupplyof

informationandothercontenthastobeguaranteedregardlessofeconomic

constraints(KEK,2000,p.49).Duetothecoexistenceofpublicandprivate

broadcasters,theBVerfGEregardsspecialregulationforbroadcastmedianotasan

infringementinthefreedomofthepressbutasanecessarymeasuretoguarantee

thisfreedom(Lehrke,2006,p.173).

5.1.1.1 Competitionlaw

Mergersareregulatedin§§35‐41GWB.Thelawdefinesamergerin§37GWBasany

acquisitionofassets,controloverofrightsorcontractsorsharesexceeding50%of

thecapitalor25%ofthecapitalandthevotingrights.Thelawwillalsobeappliedto

anyattemptstoavoidandbypassthelegaldefinitionofamerger(i.e.acquiring

‐98‐

24.9%)whilegainingthesamefactualpower.Governmentapprovalhastobegiven

formergersofcompanieswithcombinedworldwideturnoverexceeding500mEuro

andcombineddomesticturnoverexceeding25mand5mEuro.Incaseboth

conditionsarefulfilledapprovalwillonlybegrantedwhentheFederalMonopolies

Commissionaccordingto§36Par1GWBdecidesthatthenewentityhasno

potentialofmarketdominanceorthecompaniesprovethatthebenefitsto

competitionresultingfromthemergeroutweightheillsofmarketdominance.

Marketdominanceisdefinedin§19GWBwhichcontainsavarietyofhorizontaland

verticalcriteriatobeapplieddependingontheindividualcase,suchasmarketshare,

accesstosupplymarkets,abilitytoerectbarriersofentry,levelofcompetition.The

relevantmarketisdefinedbythenatureofgoodsproducedortradedandby

geographicalfactors.Formediacompanies(producersanddistributorsof

newspapers,magazinesandbroadcastedcontent,aswellassellersofairtimefor

advertisement),§38Par3codifiesmuchlowerlevelsofturnoverinorderto

constitutethenecessityofgovernmentapproval.Exceedingonetwentiethofthe

turnoverlimitofotherindustriesissufficient,whichmeansthebarriersformedia

companiesareworldwideturnoverof€25manddomesticturnoverof€1.25m.

TheregulationoftheGWBisviewedaseffectivebyGermanpolicymakers,however

bigpublishinggroupssuchasAxelSpringer,BauerandHoltzbrinckhaverepeatedly

pushedforaliftofthestrictregulationforthesakeofcompetitivenessofthe

Germanpressinthewakeofglobalisation.SomeBundesländerhavesuggestedthe

introductionofmeasuresinordertostrengthenthepluralismofopinionswithin

mediacompanies,themajorityofwhichhavenotprovedpracticableyet

(BundesministeriumfürJustiz,2004,p.53).

5.1.1.2 Lawforbroadcastmedia

Forhistoricalreasonsbroadcastingregulationfallsundertheauthorityofthe

Bundesländerwhichhaveagreedonamultilateralcontracttoaddressthelegal

issuessurroundingbroadcastmedia.Thesafeguardingofpluralismisregulatedin

§§25‐34RStV.Anindependentregulatoryauthority(KEK)andtheassemblyofthe

‐99‐

mediaauthoritiesoftheBundesländer(KDLM)areinchargeofmonitoring

concentrationofbroadcastmediaandtakingactionifnecessary.Private

broadcastersneedtobelicensedandareobligedtoadequatelyconsiderthemost

importantpoliticalandideologicalforcesinthecountryintheirprogrammes.The

numberofprogramme‐licencesforacompanyisunlimitedunlessitattainsa

dominantinfluenceovertheexpressionofopinions.Havingadominantinfluenceis

definedas

• reachingmorethan30%ofviewers36inoneyearor

• reaching25%ofviewersinoneyearwhilstholdingadominantmarket

positioninarelatedmarketor

• takingallotherrelevantactivitiesintoaccount,achievingastatussimilarto

reaching30%ofviewers.

Programmesofothercompaniesofwhich25%ormoresharesareheld,or

significantcontrolsimilartothatcanbeexercisedareattributeddirectly.

Thethirdpointiscrucial,sincetheachievementofadominantpositionmaybe

realizedwellbelowthe30%markthroughmeansofverticalintegrationandthe

creationofbarriersofentry(KEK,2000,p.56).Forexamplein2005theKEK

prohibitedAxelSpringerfromtakingoverProsiebenSat.1Mediabecause,although

thenewgroupwouldeffectivelynotcrossthe25%audiencesharemarkonthe

televisionmarket,itsdominantinfluenceonthepresswouldhanditthesame

influenceonpublicopinionasamediagroupwitha42%TVaudienceshare.

TheRStVdoesnotprohibitanylegallyspecifiedcrossmediaconcentrationactivities

butwillconsiderothermediamarkets,whicharerelatedtotelevision.Related

marketsmaybeadvertisement,radio,printmedia,rightsdistribution,production,

online‐mediaorelse.Ultimately,uponevaluationofarelatedmarket,theBVerfGE

ruledthatcomparablefeatureswithregardtoinfluencingandshapingopinionsbe

assessed.Thesecomparablefeaturesincludesuggestivepower,massappealandup‐

36Insomecasesadominantinfluencemaybeachievedatalowermark,however,theKDLMhasdefineda28%audienceshareasthelowestlevelatwhichadominantinfluencemayeffectivelyberealizedandtheregulationofthebroadcastingactmaybeapplied(KEK,2000p.58)

‐100‐

to‐dateness.Theaveragetimespentonconsumptionisnotrelevantinthismatter,

sincethemodeofconsumptiondiffersheavilybetweenvarioustypesofmedia

(press,radio,TV)intermsofattention,activityandeffort.Whetheradominant

positioninanyoftheserelatedmarketsisachievedisassessedthroughthecriteria

of§19GWBoutlinedabove.Itisessentialtodifferentiatebetweentherelevant

marketwithregardtotheevaluationwhetheradominantpositionhasbeen

establishedandtherelatedmarketwithregardtothenatureofmediagoodsand

services.

Interestingly,theRStVnotonlyprohibitsexternalgrowthsuchasmergersand

acquisitionsbutalsointernalgrowth,incaseacompanyexceedsthemarkof30%

audienceshare.Ifnoagreementbetweentheregulatorandthecompanycanbe

achievedtoaddresssuchasituationthestatemediaauthorityinchargemaytake

awayasmanyprogrammesasnecessarytorevokethedominantinfluence.

‐101‐

5.1.2 LegislationintheUnitedKingdom

Theconstitutionalfoundationofpressfreedomandmedia‐relatedregulationinthe

UKisdifferentfromotherEuropeancountriesduetotheBritishtraditionofcommon

law.Commonlawreferstoalegalsystem,whichisbasedondecisionsofcourts

ratherthanwrittenstatutes.Britaindoesnothaveacodifiedconstitutionbuthas

safeguardedthefreedomofopinion,informationandpressintheCivilLiberties.

However,thesearenotlegallybindingfortheUKlegislators,who–deiure–could

defythemanytime37.Yet,duetotheUK’sintegrationinthelegalframeworkofthe

EU,BritishlegislationhastocomplywithECandEUtreatiesandissubjecttorulings

oftheEuropeanCourtofJustice.Moreover,theUKissignatorytotheECHRandhas

included,amongmostotherprovisions,thefreedomofexpressioninSection12of

theHumanRightsAct1998.

In2003theUKintroducedarevisedandliberalizedlegalframeworktoaddress

concentrationofmediaownership.Atthattimethegovernmentsoughttoretaina

toughstanceonjointownershipofnewspapersandmassappealpublictelevision

stationswhilerelaxingmostotherrulesinordertoattain“healthycompetition”

throughderegulation(Ofcom,2006,p.9).Insteadofspecifiedlimitsformedia

mergers,moreauthoritywashandedtotheCompetitionCommission.Accordingtoa

regulatoryassessmentbyOfcom,theoverallaimwastopromotepluralityofnews

sourcesratherthandiversityofmediaentities(Ofcom,2006,p.6).However,dueto

theabsenceofagenerallyacceptedwaytomeasureviewpointplurality,ownership

pluralitywasretainedasthebestapplicableproxy.

Therearecurrentlyfourmainpiecesoflegislationgoverningtheregulationofmedia

ownershipintheUK:

37ThisstemsfromthetraditionalwaytheunwrittenEnglishconstitutionwasunderstoodtooperate.Thefreedomofindividualactionispresumednottobebasedonideasofpositivehumanrightsbutonnegativeliberties–subjectsareentitledtodowhateverisnotforbiddenbylaw.ThisnotionturnedouttobeparticularlyproblematicwhenlinkedwiththesovereigntyofParliament,whichineffectwouldbefreetorestrictindividuallibertiesanytimebypassingthenecessarylegislation(Slapper&Kelly,1999p.23)

‐102‐

• theCommunicationsAct2003,whichhasestablishedstatutoryduties

regardingthesafeguardingofmediapluralismfortheregulatoryauthority

Ofcomandupdatedsomeprovisionsof

• theBroadcastingAct1990,whichstipulatesrestrictionsoneligibilityfor

holdingabroadcastlicence

• theEnterpriseAct2002whichappliestogeneralcompetitionissuesand

allowstheSecretaryofStatetoorderapublicinteresttestformediamergers

• theMediaOwnershipOrder2003,whichintroducedapointsystemto

addressownershipoflocalradiostations

EverythreeyearstheOfcomisrequiredtorevisetherulesonmediaownershipand

reporttotheSecretaryofState,givingrecommendationswhethertoamendor

repealcertainmeasuresofregulation.Ofcomwasestablishedasabodycorporateby

theOfficeofCommunicationsAct2002.ItistheregulatorfortheUK

communicationsindustries,withresponsibilitiesspanningacrosstelevision,radio,

telecommunicationsandwirelesscommunicationsservices.

5.1.2.1 CompetitionLaw

MergersareregulatedinPart3oftheEnterpriseAct2002Thelawrequiresthe

OfficeofFairTrade(OFT)tomakeareferencetotheCompetitionCommissionif,

accordingtoSection23(1),twoormoreenterpriseshaveceasedtobedistinct

enterprises(i.e.theyarebroughtundercommonownershiporcontrol)andthe

valueoftheturnoverintheUnitedKingdomoftheenterprisebeingtakenover

exceeds£70m(€80m)orthenewlyformedenterprisecontrolsatleast25%ofthe

relevantmarket.Thereareexceptionsifthemergerisnotofsufficientimportanceto

justifythemakingofareferenceortheconsumerbenefits(lowerprices,better

quality,greaterchoice)outweighthesubstantiallesseningofcompetition.The

SecretaryofState,however,hasthepowertogiveaninterventionnoticetotheOFT

andorderapublicinterestconsideration(Section42(2))andsubsequently,referthe

casetotheCompetitionCommissionevenifthelegalthresholdsofSection23would

notbemet.ThepublicinterestconsiderationwouldrequireaconsultationofOfcom

andanassessmentoftheaccuratepresentationofnews,thefreeexpressionof

opinionandthepluralityofviews.

‐103‐

Thelawisgenerallyappliedtoallmediamergers.Inthepast,duetospecific

provisionsforbroadcastmediaitwasmostlyappliedtonewspapermergers,noneof

whichwereprohibited.

Priorto2003allnewspapermergersweresubjecttoapublicinteresttest(underthe

FairTradeAct1978).DuetothedeminimisrulesofSection23inplacenow,thetest

willbeconductedforlargermergersonly.

5.1.2.2 Lawsforbroadcastmedia

Schedule2oftheBroadcastingAct1990namesarangeofinstitutions,whichare

disqualifiedfromholdingabroadcastlicenceinthefirstplace.

Generallydisqualifiedare

• localauthorities

• politicalorganisations

• theBBC(whichobtainsitslicenceunderadifferentlegalprovision)

• theWelshAuthority;

• advertisingagencies

• personswhoaresubjecttoundueinfluencebyadisqualifiedpersonsuchas

toactagainstthepublicinterest.

Disqualifiedforcertainbroadcastlicences(particularlynationalradioandChannel3

andChannel5licences)are

• religiousbodies

• publiclyfundedbodies,whichreceivemorethan50%offundingfromthe

public

• BBCandChannel4/S4Csubsidiaries

• nationalpublictelecommunicationsoperatorswithannualturnoverinexcess

of£2bn

Thosewhoareeligibletoholdabroadcastinglicencehavetocomplywithasetof

crossownershiprestrictions.Mostnotably,Par1ofSchedule14ofthe

CommunicationsActstipulatesthatnoproprietorofanationalnewspaper,which

‐104‐

hasamarketshareof20%(measuredbycirculation),mayobtainaChannel3(oneof

15regionalITVstations)TVlicense.Thesameappliesincasearegionalnewspaper

reachesthe20%thresholdinthecoveragearea.Holdingsharesinabodycorporate

thatobtainedaChannel3licenseispermittedforthesenewspaperproprietorsonly

uptoa20%limit.Similarly,theholderofaChannel3licencemaynotacquirean

interestof20%ormoreinabodycorporaterunningoneormorenational

newspaperswithanaggregatemarketshareof20%ormore,orinabodycorporate

runningoneormoreregionalnewspapersreachingthesamethresholdinthe

coveragearea.

Section9oftheMediaOwnershipOrder2003specifiesanothercrossmedia

ownershipprohibition.Nopersonmayholdalocalradiolicenceandanda

localChannel3TVlicencewhilebeingadominantlocalnewspaper(50%market

shareormoreinthecoverageareaoftheradiolicence)providerin

thesamearea.Whetheranewspaperistobeconsiderednationalorregionalis

determinedbyOfcom.

TheChannel3licenseholdersarealsoobligedtoappointanAppointedNews

Provider(ANP),whichprovidesnationalnewsonallITVbroadcastingstationsand

hastobeindependentfromtheBBC.ThejustificationforthisobligationisthatITV,

asthelargestcommercialtelevisionchannel,hasanespeciallyimportantroletoplay

inensuringpluralityintheprovisionofnews(Ofcom,2006,p.24).Itisimportantto

notethatthesamerestrictionsapplyinrespectoftheChannel3appointednews

providerasforholdersofChannel3licences,assetoutinSchedule14ofthe

CommunicationsAct2003.

Forradiobroadcastersother,morecomplexrulesapplydependinguponwhether

thelicenceisananalogueordigitallicenceand,inthecaseofdigitallicences,

whetheritisamultiplex38orasoundprogrammeservicelicence.

TheMediaOwnershipOrder2003introducedapointssystemtobeapplied

prospectivelyinordertomeasuretheinfluenceonpublicopinionofoverlapping

38amultiplexreferstoasystemwheremultipleaudiostreamsarecombinedbymeansofcompressionwhichallowsconsumerstoautomaticallytunetoalltheavailablestations,choosingfromalistofallstations

‐105‐

radiobroadcasters.Section8providesanexample:

Descriptionoflicence Numberofpoints

Thelicenceinquestion 4pointsEachlocalsoundbroadcastinglicenceunderwhichisprovidedaservicewhosepotentialaudienceincludes75%ormoreofthepotentialaudienceoftheserviceinquestion

4points

Eachlocalsoundbroadcastinglicenceunderwhichisprovidedaservicewhosepotentialaudienceincludesatleast25%of,butlessthan75%of,thepotentialaudienceoftheserviceinquestion

2points

Eachlocalsoundbroadcastinglicenceunderwhichisprovidedaservicewhosepotentialaudienceincludesatleast5%of,butlessthan25%of,thepotentialaudienceoftheserviceinquestion

1point

Figure5‐2UKradioownershippointssystem,Source:MediaOwnershipOrder2003

Underthissystemapersonwhoholdsatleasttwolocalradiolicensesmaynotbe

permittedtoobtainanotheroneifthatwouldmovehisshareofthetotalpoints

availableintheregionpastthe55%mark.Themarkisloweredto45%incasethe

holderwouldbeapersonwhoisthedominantlocalnewspaperprovider,orthe

holderofalocalChannel3televisionlicence,regardlessofwhetherheownsthe

otheroverlappingradiostationsornot.

Comparablerulesapplyforlocaldigitalsoundprogrammeservices(DSPS)and

multiplexes.Thebasicrulestatesthatnopersonmayprovideanadditional

DSPSincasehealreadyholdsholdmorethanfourlicencesonarelevantmultiplexor

anoverlappingmultiplexand,asaresultoftheadditionalDSPSlicencehewould

holdmorethan55%ofthetotalpointsintherelevantarea.

Centraltothenewlegislationwastheunderlyingconceptofthreemediavoicesin

eacharea.Whetherthisconceptisapplicableforverysmallregionalmarkets

ortheallowanceofsynergiesoflocalnewsprovidersmightinducebetterservice

withoutconstitutingathreatforpluralityremainstobeseen.Initslatest

consultationin2006Ofcomproposednochangestotheregulations.

Non‐nationalrestrictionsonmediaownership,particularlythedistinctionbetween

Europeanandnon‐Europeanownershipweredroppedin2003.

‐106‐

‐107‐

5.1.3 LegislationinFrance

TheFrenchconstitutiondoesnotcontainabillofrights,whichmeansthereisno

codifiedrighttofreedomofexpression,opinionandpress.Initsrulingsonmedia

concentration,theFrenchSupremeCourtConseilConstitutionnelhastherefore

resortedtoArt11oftheDéclarationdesdroitsdel'hommeetducitoyende1789

whichismentionedinthepreambleoftheFrenchconstitution.

Art11reads:“Lalibrecommunicationdespenséesetdesopinionsestundesdroits

lesplusprécieuxdel’Homme:toutCitoyenpeutdoncparler,écrire,imprimer

librement,saufàrépondredel’abusdecetteliberté,danslescasdéterminésparla

Loi.”

TheConseilConstitutionnelinterpretsthisrulingastoalsoembodyfreedomof

disseminationofcontentbymediainstitutions(Holznagel,1996,p.106).Ina

decisionregardingaudiovisualcommunicationtheConseilConstitutionnelhas

adjudgedthatoneofthedutiesofthelegislatorwithrespecttoArt11istoprotect

andguaranteethepluralityofopinions(Loisurlacommunicationaudiovisuelle,

1982),whichlateronwasdefinedasrequiringaholisticapproachtoregulation

beyondtheaudiovisualmediasector(KEK,2000,p.398).

Therearethreepiecesoflegislationgoverningtheregulationofmediaownership.

• TheLoin°2001‐420du15mai2001relativeauxnouvellesrégulations

économiques(NRE)ofthecommercialcode,whichlaysoutgeneral

regulationsforcompetitionbutdoesnotincludespecificprovisionsformedia

andisthereforerarelyappliedtomediamergers

• TheLoin°86‐1067du30septembre1986relativeàlalibertéde

communication(LLC)whichdefinesacomplexsetofrulesrestricting

ownershipbasedonshareofcapitalorvotingrightsofamediainstitutions

ratherthanmarketshareoftheinstitutions(contrarytoGermanyandUK).

• TheLoin°86‐897du1août1986portantréformedurégimejuridiquedela

pressewhichregulatesmediaownershipofthepress

‐108‐

5.1.3.1 Competitionlaw

UnderthepresumptionofArtL430‐1ofthecommercialcodeaconcentrationis

deemedtoariseunderFrenchlawwhentwoormorepreviouslyindependent

undertakingsmergeoroneormorepersonsalreadyholdingcontrolofatleastone

undertakingacquirecontrolofallorpartofoneormoreotherundertakings,directly

orindirectly,whetherbytheacquisitionofaholdinginthecapitalorbypurchasing

assets,acontractoranyothermeans.Theacquisitionofcontrolmaybeconstituted

byrights,contractsorelseandisdefinedasanycourseofactionleadingtoa

situationwhichconfersallthepossibilityofexercisingdecisiveinfluenceonan

enterprise.AlegaldefinitionisprovidedbyArtL233‐3.

Incasethemergerconstitutesa

• combinedaggregateworldwideturnoverofallofthecompaniesorofallof

thenaturalpersonsorlegalentitiesinvolvedinthemergergreaterthan

€150mora

• combinedaggregateturnoverachievedinFrancebyatleasttwoofthe

companiesorgroupsofnaturalpersonsorlegalentitiesconcernedgreater

than€50m

theMinistryofEconomyhastobenotifiedpriortocompletionofthemerger

accordingtoArtL431‐3.Failuretodosomayleadtoasubstantialfinancialpenalty

ofupto5%oftheannualturnover.IftheMinistryconsidersthemergertoadversely

affectcompetition,thematterhastobereferredtotheCouncilonCompetitionfor

anopinion.TheCouncilmaythenproposespecificmeasuresinordertoremedy

adverseeffectsoncompetition.

5.1.3.2 Lawsforprintandbroadcastmedia

Forprintmedia,Art11oftheLoin°86‐897du1août1986prohibitsanyperson,

grouporbodycorporatefromobtainingcontroloverageneralinterestnationaldaily

newspaperincasethiswouldhandtheperson,grouporbodycorporatecontrolof

over30%ormoreofthetotalcirculationofFrenchgeneralinterestdaily

newspapers.Art7ofthesamelawprohibitsforeignersfromobtainingmorethan

‐109‐

20%ofsharesorvotingrightsofamediacompanyinvolvedinpublishingFrench

languagecontent.Foreigninthiscontextreferstonon‐EUnationalitiessincethelaw

issubjecttotheinternationalcommitmentsundertakenbyFranceinordertoensure

conformitywithECtreaties.

AccordingtoParaschos(1998)therearetwojustificationsforthisrule.Firstlyafear

ofdilutionofculturalvaluesunderpowerfulforeignownership,secondlythe

opportunitytoincreasethechancesofsurvivaloffailingnewspapersandthus

maintainpluralism,whichiswhytheFrenchgovernmenthasbeensubsidizingdaily

newspaperssince1974(Paraschos,1998,p.188)39.

Theregulationofownershipforbroadcastmediadiffersaccordingtotheplatformof

transmission.ItisimportanttonotethataccordingtoArt29LLCalicencemayonly

beawardedtoabodycorporate(société)intheformofacompany,afoundationor

anassociation.Art39Par1LLCprovidesthatnoshareholdermustholdmorethan

49%ofcapitalsharesorvotingrightsinasociétéauthorizedforanationalterrestrial

broadcastserviceiftheaverageannualaudienceexceeds2.5%ofthetotaltelevision

audience,whicheffectivelyrequiresaminimumofthreeshareholdersforlargerTV‐

stations.Amaximumof50%ofsharesorvotingrightsispermittedforregional

terrestrialTVstations(servicingbetween200,000and6mpeople).Shareholders

whoholdmorethan15%inasociététhatholdsanationalterrestriallicenceare

prohibitedfromholdingmorethan15%inanothernationallicenceholdingsociété.

Similarly,shareholderswhoholdmorethan5%intwosuchsocietiesareprohibited

fromobtainingmorethan5%ofathirdone.SimilarlytoArt7oftheloin°86‐897du

1août1986noforeignnationalmaymakeapurchasethatdirectlyorindirectly

causestheshareofcapitalownedbyforeignerstoexceed20%ofthesharecapital

orvotingrightsofacompanythatholdsanauthorisationterrestrialbroadcasting

serviceprovidedintheFrenchlanguage40.

Ontopofthat,accordingtoArt41Par1LLCnoonemayholdtwoauthorisations

eachforaterrestrialnationaltelevisionservicebroadcastorsimultaneouslyhold

39Infact,inearly2009,thegovernmentannounceda€600mfinancialaidplanforthenewspaperindustry,whichincludesfreedistributionofnewspapercopiestothenation’s18‐yearoldsforoneyear(Chrisafis,2009).40Itisindisputewhetherthislimitalsoappliestocableoperators

‐110‐

authorisationforaterrestrialnationaltelevisionservicebroadcastandan

authorisationforaserviceofthesamekindotherthananationalservice(aserviceis

considerednationalifitpotentiallyreachesmorethan6mpeople).Concerningradio,

Art41Par1providesthataphysicalorlegalpersonmayonlyholdasmany

terrestrialradiolicencesasthetotalrecordedaudienceintheareasserviceddoes

notexceed150mpeople.

Forsatellitebroadcasterstherulesareslightlydifferent.Aphysicalorlegalperson

mayholduptotwolicenses.However,Art39Par2LLCprovidesthatshareholders

areallowedtoholdupto50%ofanauthorizedsociété.Incasetheyholdmorethan

onethirdofcapitalsharesorvotingrightstheyareprohibitedfromobtainingmore

thanonethirdinanothersociété.Iftheyownmorethan5%intwosocietiestheyare

prohibitedfromobtainingmorethan5%ofathirdone.

Cablelicencesarenotsubjecttoanylimitations.However,Art41Par6LLCprovides

thatitisprohibitedtoobtainanewauthorisationforacablestationifthetotal

recordedpopulationoftheareasservicedexceeds8mpeople.

InAdditiontotheprovisionsformonomedia,therearearangeofcrossmedia

ownershiprestrictions,whicharereferredtoastwooutoffourrule,since,according

toArt41LLCnonationaltelevisionauthorization(analogueordigital)mustbeissued

toacompanywhichwouldineffectholdmorethantwooutofthefollowingfour

positions:

• Beaholderofoneormoreauthorisationsfortelevisionservicesbroadcastby

terrestrialradiolinkthatallowsservicingofareaswhoserecordedpopulation

standsatfourmillionpeople;

• Beaholderofoneormoreauthorisationforradiobroadcastingservicesthat

allowsservicingofareaswhoserecordedpopulationstandsatthirtymillion

people;

• Beaholderofoneormoreauthorisationsfortheoperationofnetworksthat

distributeradioandtelevisionbroadcastingservicesbycablethatallow

servicingofareaswhoserecordedpopulationstandsatsixmillionpeople;

• Produceorcontroloneormoredailyprintedpublicationsofpoliticaland

generalinformationrepresentingmorethan20%ofthetotalcirculationon

‐111‐

thenationalterritoryofprinteddailypublicationsofthesamekind,

consideredoverthelasttwelvemonthsknownpriortothedateonwhichthe

applicationforauthorisationwassubmitted.

Similarprovisionsapplyonalocallevel.Noregionaltelevisionauthoriziationmustbe

issuedtoacompanywhichwouldineffectholdmorethantwooutofthefollowing

fourpositions:

• Beaholderofoneormoreauthorisationsfortelevisionservices,whether

nationalornot,broadcastbyterrestrialradiolinkintheareainquestion;

• Beaholderofoneormoreauthorisationsforradiobroadcastingservices,

whethernationalornot,whosetotalpotentialaudienceintheareain

questionexceeds10percentofthetotalpotentialaudiencesinthesame

areaofallpublicorauthorisedservicesofthesamekind;

• Beaholderofoneormoreauthorisationsfortheoperationofnetworksthat

distributeradioandtelevisionbroadcastingservicesbycablewithinsaid

area;

• Produceorcontroloneormoredailyprintedpublicationsofpoliticaland

generalinformation,whethernationalornot,circulatedinsaidarea.

TheLLCestablishedtheConseilsupérieurdel’audivisuel(CSA)asanindependent

bodyofregulation,which,amongotherduties,hastheresponsibilitytomonitorthe

developmentofmediaownershipinFranceandtosafeguardmediapluralism.

‐112‐

5.2 LegislationbytheEuropeanUnion

5.2.1 Existinglegislation

Duetotheprincipleofsubsidiarity,thelegislativepoweroftheEUislimited.TheEU

canonlyactonissuesassignedtotheCommunities.Art5ECTreaty(consolidated

version,formerlyArt3b)stipulates:

“TheCommunityshallactwithinthelimitsofthepowersconferreduponitbythis

Treatyandoftheobjectivesassignedtoittherein.Inareaswhichdonotfallwithinits

exclusivecompetence,theCommunityshalltakeaction,inaccordancewiththe

principleofsubsidiarity,onlyifandinsofarastheobjectivesoftheproposedaction

cannotbesufficientlyachievedbytheMemberStatesandcantherefore,byreasonof

thescaleoreffectsoftheproposedaction,bebetterachievedbytheCommunity“.

Currentlynocompetenceregardingtheintroductionofalimitofmediaownershipin

ordertoensurethesafeguardingofpluralismhasbeenassignedtotheEU.Thereis

oneprovisionunderArt151ECTreatywhichstatesthat„TheCommunityshall

contributetothefloweringofthecultureoftheMemberStates[...].[It]shalltake

culturalaspectsintoaccountinitsactionsunderotherprovisionsofthisTreaty,in

particularinordertorespectandtopromotethediversityofitscultures.“However:

Art151Par5explicitlyexcludesanyharmonizationoflawsinMemberStatesandis

limitedtoincentivemeasures.

InnearlythesamewordsinArtIII‐181oftheConstitutionalTreaty,theUnionshould

takeculturalaspectsintoaccountinitsactionunderotherprovisionsofthe

Constitution,inparticularinordertorespectandpromotethediversityofits

cultures.ThismeansthattheUnionshouldforexampletakemediapluralisminto

considerationwhenitisabouttoapplyEUcompetitionlawtothemediasector.

However,nocomplementarycompetencehasbeenconferredtotheUnion(Council

ofEurope,2004,p.16).

‐113‐

AlthoughEUcompetitionlawdoesnotincludeanymediarelatedprovisionsit

contributestosecuringcompetitionintheEuropeanmarket,albeitonlyfroman

economic/marketpointofview.Mergersandacquisitionsofmediacompaniesor

companiesinanyotherindustryaretreatedequally.Art81and82ECTreatyboth

providegeneralprinciplesregardingtheapplianceofcompetitionlaw,prohibiting

collusionsandtheexploitationofdominantmarketpositions.However,these

Articlesdidnotpermitasystematicandholisticapproachtocompetition,whichis

whytheCommissionintroducedtheCouncilRegulation(EEC)No4064/89of21

December1989onthecontrolofconcentrationbetweenundertakingstomakethe

ArticlesoftheECTreatyapplicabletomergersof“communitydimension”.

Communitydimensionisconsideredtobe(EuropeanCommission,2005):

• thecombinedaggregateworldwideturnoverofallthecompaniesismore

than€5bnand

• theaggregateCommunity‐wideturnoverofeachofatleasttwoofthe

companiesismorethan€250m,unlesseachofthecompaniesachievesmore

thantwo‐thirdsofitsaggregateCommunity‐wideturnoverwithinoneand

thesameMemberState.

AnymergerthatdoesnotmeetthesethresholdsneverthelesshasaCommunity

dimensionwhere:

• thecombinedaggregateworldwideturnoverofallthecompaniesismore

than€2.5bnand

• ineachofatleastthreeMemberStates,thecombinedaggregateturnoverof

allthecompaniesismorethan€100mand

• ineachofatleastthreeMemberStates,theaggregateturnoverofeachofat

leasttwoofthecompaniesismorethan€25mand;

• theaggregateCommunity‐wideturnoverofeachofatleasttwoofthe

companiesismorethan€100m;unlesseachofthecompaniesachievesmore

thantwo‐thirdsofitsaggregateCommunity‐wideturnoverwithinoneand

thesameMemberState.

MergerswithaCommunitydimensionmustbenotifiedtotheCommissionnotmore

thanoneweekaftertheagreement.Itthenmaydecidetoinitiateproceedings,ask

‐114‐

thecompaniesinvolvedtomakeadjustmentsandchangestothedealordeclarethe

mergercompatiblewiththecommonmarket(EuropeanCommission,2005).

Art21Par4ofthemergerregulationallowsMemberStatestotakeappropriate

measurestoprotectlegitimateinterestsincasesofmergersofcommunity

dimension.Thepluralityofthemediaisexplicitlymentionedasbeingalegitimate

interest.Sofartherehasonlybeenonecasewherethisprinciplehasbeenapplied

(NewspaperPublishing,1994).

SomeimprovementsweremadeinthefollowupCouncilRegulation(EC)No

139/2004of20January2004whichcameintoeffectshortlyaftertheenlargement

oftheEUandduetoincreasedcomplexityofindustrialconcentration;itadoptedthe

principleofsubsidiarity,wherebyamergerisexaminedbythejudicialauthoritybest

placedtodoso.

ThecriteriawhichmergersmustbenotifiedtotheCommissionremainedthesame

inthe2004regulation,whichmeansthatinternalgrowthsuchassettingupa

subsidiaryevenbeyondthelimitsdefinedbythemergerregulationarenotcovered.

Basedonthemergerregulation,theDGCompetitionhasdecidedonalargenumber

ofmediarelatedmergers(DGCompetition,2009),mostofthemhavebeendeclared

compatiblewiththeinternalmarketaccordingtoArt6Par1litbofthemerger

regulation.However,fivemajorcasessofarhavebeendismissed,allofthem

between1994and2000:theGermanregulatoryauthorityKEKacclaimedthatasa

“contributiontotheindirectprotectionofmediapluralism”(KEK,2000,p.75).The

fivecaseswere

• ThefoundationofMSGMediaServicebyBertelsmannandDeutscheTelekom

(MSGMediaService,1994)

• AjointventurebyNorskTelekomandTeleDanmark(NordicSatellite

Distribution,1995)

• Holland,MediaGroup,ajointventurebetweenRTL,VeronicaandEndemol

(RTL/Veronica/Endemol,1996)

• TheacquisitionofPremierebyCLT‐UFA(Bertelsmann)andTaurus(Kirch)

(Bertelsmann/Kirch/Premiere,1998)

‐115‐

• TheacquisitionofBetaResearchbyBetaTechnikandDeutscheTelekom

(DeutscheTelekom/BetaResearch,1998)

Regardingthedefinitionoftherelevantmarket,theCommissionhasrepeatedly

appliedthecriterionofapossiblesubstitutionofservicesandgoodsfroma

consumer’spointofview.Withregardtothetelevisionmarketthismeansthe

commissionfocusesprimarilyontheadvertisingmarket,itconsidersthepositionof

atelevisionbroadcasterontheviewermarketsinglyasanindicatorofthe

advertisingpowerduetothelackofeconomicexchangebetweenbroadcastersand

viewers41(KEK,2000,p.78).IngeneraltheCommissionhasattemptedtoabidebya

rathernarrowdefinitionofthemarket,whichbearstheriskoffailingtocapture

crossmediaconcentration.However,verticalintegrationofmediacompanies,which

spreadsacrossdifferentmarkets,hasbeenconsideredintheBertelsmann/CLTCase

(Bertelsmann/CLT,1996).ByandlargetheEuropeanCommissionhasconsidered

thatthreatstopluralism,arisingasaconsequenceoflargemediacompanies

extendingtheiractivityinotherStates,wouldnotraisecompetitionconcernsatthe

EUlevelbecause,beingindifferentnationalmarkets,themediacompanieswould

notbeconsideredtohaveadominantposition(CouncilofEurope,2004,p.16).

Thereforeitremainsdoubtful,whetherEUcompetitionlawinsufficientlydealing

withthethreatstopluralismwhichcross‐countryandcross‐ownershipconsolidation

ofsourcesofopinioncouldpose.

Inadditiontocompetitionregulationstherearespecificprovisionsforbroadcast

mediaintheCouncilDirective89/552/EECof3October1989onthecoordinationof

certainprovisionslaiddownbylaw,regulationoradministrativeactioninMember

Statesconcerningthepursuitoftelevisionbroadcastingactivities,commonly

referredtoastheTelevisionwithoutFrontiersDirective.Thisdirectivelaiddowna

minimumstandard,whichallEuropeanbroadcastershavetocomplywith.Ithas

beenimprovedandupdatedin1997andwasfinallyamendedintotheAudiovisual

MediaServicesDirectivein2007whichisduetobeimplementedinthenationallaw

41“Attention”isnotregardedasadequatelyquantifiableineconomicmonetaryterms

‐116‐

oftheMemberStatesbytheendof2009.Art19litboftheTelevisionwithout

FrontiersDirectiveallowsMemberStatestolaydownstricterrulesforbroadcasters

totakeaccountof“theprotectionofpluralismofinformationandofthemedia”.In

addition,severalprovisionsofthedirectiveactivelypromotepluralism:theaimof

Art4,5and6istofacilitatethecirculationofaudiovisualworksfromothercountries

andtosupportindependentproducers(EuropeanComission,2005,p.3).

IntheAudiovisualMediaServicesDirectivetheCommissionalsorequiresthe

MemberStatestochooseappropriateinstrumentstotransposeandimplementthe

legislationwithconsiderationgiventothepromotionofmediapluralism.

Moreover,theEUintroducedaregulatoryframeworkforelectroniccommunications

(Directive2002/21/ECoftheEuropeanParliamentandoftheCouncilof7March

2002onacommonregulatoryframeworkforelectroniccommunicationsnetworks

andservices),whichcomprisesaseriesoflegaltextsandassociatedmeasuresthat

applythroughouttheEUMemberStates,promotingcompetitioninordertoachieve

economicefficiencyintheinterestsofusers.Theframeworksupportsmedia

pluralismintwoways:

• Firstlythroughaccessremedies,whichlimitsthemarketpowerofthosewho

controlaccesstonetworksorassociatedfacilities.

• Secondlythroughsafeguardstoensurebasicuserintereststhatwouldnotbe

guaranteedbymarketforces,forexamplemust‐carryrules(European

Comission,2005,p.4).

OveralltheCommissionhasbeenactiveonmediaownershipmostlythroughcalling

ontheMemberStatestoconsidertheissueintheirnationalframeworks.Duetothe

limitsofitslegislativepoweritmaynotgobeyondthatstageunlessitislegitimized

todosobyaresolutionoftheMemberStates,which,however,areunwillingto

handawaycompetenceonthatmatter.

‐117‐

5.2.2 Proposals

Intheearly1990stherewereseveralattemptstointerveneontheissueof

concentrationofmediaownership.FollowingtheratificationofthefirstTelevision

withoutFrontiersdirectivein1989(whichrequiredthatatleasthalfofthe

programmingofbroadcastersbeofEuropeanorigin)theEuropeanParliamentput

outtworesolutionsandtwoworkingpapersbetween1990and1992adressingthis

issue.Moreover,theCouncilofEuropeexpressedconcernovermediaconcentration

inresolution1ofthethirdEuropeanMinisterialConferenceonMassMediaPolicyin

1991.Althoughtheyrecognizedthepositiverole,mergersplayinenablingmediato

competeinnationalandinternationalmarkets,theyfoundthepaceofconcentration

tobeprejudicialtofreedomofinformationandpluralismofopinion(Paraschos,

1998,p.182).TheycalledontheCounciltomonitorthedevelopmentof

transnationalmediaconcentrationandtheproblemsthisphenomenonmightraise

forsmallerEuropeancountries.

Inresponse,theEuropeanCommissionreleaseditsfirstGreenPaperonPluralism

andMediaConcentrationin1992(Harcourt,1998).TheGreenPaperproposedthe

optionofaharmonizationofnationalregulations,withrespecttotheprincipleof

proportionalitylaidoutintheECTreaty.Itbasedthisproposaleitheron

• adirectivelegitimatedbyArt57Par2oftheECTreaty,whichprovidesthat

“[…]theCouncilshallissuedirectivesfortheco‐ordinationoftheprovisions

laiddownbylaw,regulationoradministrativeactioninMemberStates

concerningthetakingupandpursuitofactivitiesasself‐employedpersons.”

or

• aregulation,legitimatedbyArt100aoftheECTreaty,whichprovidesthat

[…]“theCouncilshall[…]afterconsultingtheEconomicandSocial

Committee,adoptthemeasuresfortheapproximationoftheprovisionslaid

downbylaw,regulationoradministrativeactioninMemberStateswhich

haveastheirobjecttheestablishingandfunctioningoftheinternalmarket.”

Thismeansthatmediaconcentrationwouldnotbeaddressedforthesakeofmedia

‐118‐

pluralismbutratherinorderensureafunctioninginternalmarket–therewould

havebeennotcompetencetoharmonizenationallegislationsotherwise.

Theharmonizationwouldfocussolelyonnational,mediaspecificanti‐concentration

rulesinordertofirstlyfacilitateaccesstomediaactivitiesandsecondlyguarantee

pluralityofmediacontrollers.IneffecttheMemberStateswouldbeunabletogrant

anylicences,authorizationsorconcessiontomediacompaniesincasethe

harmonizedconditionswerenotmet(EuropeanCommission,1992,p.107).The

Greenpaperproposedtwovariants,onefocusingonbroadcastmediaandcross

mediaactivites(comparabletoGermany),theotheronealsoincludingmonomedia

pressactivitiesontopofthat(comparabletoFrance).

TheCommissionputthreeoptionsupfordiscussion(EuropeanCommission,1992,p.

9)withoutissuinganypreference:

I. takingnoactionincasethesituationisassessedasnottojustifycommunity

action

II. proposingarecommendationtoenhancetransparency.TheCommission

consideredthatmoretransparencyofmediaownershipandcontrolcould

facilitatethetaskofnationalregulatorsandservetocreatesolidarity

betweenauthoritiesofMemberStates.Thisactionwouldbecompletely

independentfromanyharmonization.

III. proposingaharmonizationofnationalrestrictionsofmediaownershipby

directive,regulationoreitherofthetwoinconjunctionwithaindependent

committeeintheformofaEuropeanmediacouncilcomprisedof

representativesfromtheindependentregulatoryauthoritiesofeachMember

States(whichwouldhavetobesetupincasetheydonotexist).

TheunderlyingproblemoftheGreenPaperwithregardtothesafeguardingof

pluralismwasthatitdefinedthemassmediaaspartoftheservicesindustries,which

accordinglysubjectedittoregulationbytheEuropeanUnionorgansinchargeof

ensuringagainsteconomicconcentration.Underthispremise,theEU’sintervention

onmediaownershipwaseffectivelyalwaysgoingtoberestrictedtosimply

promotingefficiencyinthedomesticmarkets.ContrarytotheEUParliament’s

‐119‐

resolution42,whichprecipitatedtheGreenPaperandwhichclearlystressedthat

“restrictionsonconcentrationareessentialinthemediasector,notonlyfor

economicreasonsbutalso,andaboveall,asameansofguaranteeingavarietyof

informationandfreedomofthepress”,pluralismwasnotthefocussinceiswas

primarilyregardedbytheCommissionasamatterfortheMemberStates.The

Commissionstatedthat“therewouldnotappeartobeanyneedforactionat

communitylevel,sincenationalmechanismsforprotectingpluralismcanbeapplied

tosituationswithacommunitydimension”(EuropeanCommission,1992,p.7).The

Commissionwouldonlyproposetotakeactioninsofarasnationalregulationswould

leadtoanyinterferewithintheareawithoutfrontiersandtheestablishmentofthe

internalmarketprovidedbyArt7aoftheECTreaty.Thiswouldincludelimitingthe

numberofmediacontrollers,whichmayhaveindirectpositiveeffectsonmedia

pluralism.Ultimatelyhowever,pluralismcannotbeconflatedwithcompetition

policy(seechapter4.2.1).

InitsintroductorystatementtotheGreenPaper,theCommissionmadeclearthatit

viewedthemanydivergentlawsandregulationsconcerningmediaownershipin

placeintheEUMemberStatesasaprobabledangertocompetitionintheinternal

market.

Several,potentiallyharmfulscenarioswereoutlined(EuropeanCommission,1992,p.

8):

• Amemberstatecouldpossiblerestrictthefreemovementofbroadcastsin

theeventofgenuinecircumventionofoneoftheselaws[i.e.abroadcaster

operatesfromaneighbourcountryinordertobypassstricterlegislationin

thecountryheisservicing]

• Theestablishmentofmediacompaniesinanothermemberstatecouldbe

limited

• Restrictionsanddistortionsofcompetitionareintroduced

• Uncertaintyinthelaw,harmfultothecompetitivenessofcompanies,could

42see Resolution on Media Takeovers and Mergers, OJ C 68/137-138, 15 February 1990

‐120‐

resultfromdivergingviewsonwhatconstitutescircumvention

• Suchlawslimitaccesstotheactivitiesandtotheownershipofthemedia,

whenaccessshouldbefacilitatedsoastopermittheestablishmentofa

singlemarketandsecurethecompetitivenessofthemediacompanieswhich

pluralismrequires.

InhisconsultationontheGreenPaperIosifides(1997)hasidentifiedtwoother

objectivesbesidestheestablishmentofasingleEuropeanmarketwhichappearto

standbehindtheapproachproposedbackthen,namelytoraisetheinternational

competitivenessofEuropeanmediacompaniesandtofacilitatetheformationofa

Europeanaudio‐visualpolicytocreateaEuropeanaudio‐visualspace43(Iosifides,

1997,p.94).Bothobjectivesareimpededbyarangeofdivergentnational

restrictions.

ThepublicationoftheGreenBookwasfollowedbyawide‐rangingconsultation

whichlastedmorethanoneyear,withseventyorganisationssubmittingwritten

statements–onefactorthatcontributedtothedifficultyoffindingconsensuson

thisissue.OptionIIIwassupportedbyboth,theEuropeanParliamentandthe

EconomicandSocialCommittee,whichadvocatedEUwidespecificlimitsonmedia

ownershipbothwithinonecountryandonatransnationallevelwithotherUnion

countries(Paraschos,1998,p.198).MostMemberStatesandthemediaindustry44

ontheotherhandfavouredoptionI.Noagreementwasinsight,whichiswhyin

1994theCommissionsubmittedaCommunicationtotheCouncil,whichcalledfor

furtherconsultationsonthematter.

TheParliament,however,continuedtocallontheCommissiontoissueadirective.

Aftermanyconsultations,in1997,theCommissionsubmittedanewtextanddrafted

adirectivetitled“MediaOwnership”,whichsuggestedachangeinthefuturegoalof

regulationbyintroducingthe“flexibilityclause,thatwouldenabletheMember

43seeBundesministeriumfürJustiz,2004p.183forfurtherelaborationonthisissueinconjunctionwithArt6EUTreaty44Theproprietorswereparticularlywaryoftakingapositionwithoutknowingtheexactcontentoftheregulationsinadvance(Iosifides,1997,p.95)

‐121‐

Statestoindividuallysetthethresholdsofconcentration,”(Harcourt,1998).

However,thisdraft45waslaterchangedtoanon‐bindingrecommendation(KEK,

2000,p.80).TheideawastodefineanEUwidestandardofa“mediacontroller”,

whichaccordingtotheconsultationwouldhaverequiredtochangetheenterprise

ownershiprulesofmanyMemberStates,sincethereisnotacommonapproachto

companyownershipacrossEurope(Watson‐Brown,2008).Moreover,thelevelof

transnationalmediaactivitywasnotconsideredsufficienttojustifyCommunity

action.

Recently,anumberofinitiativeswithreferencetoeconomicconcentrationand

mediapluralismhavebeentakenbytheEU,amongthemthe2004Whitepaperof

theEuropeanCommissiononservicesofgeneralinterestbytheCommissionand

severalreportsandresolutionbytheEuropeanParliament

TheCouncilofEuroperecognizedthatintheCommission’sapproachtowards

addressingmediaownershipthestatusquohadbeeneffectivelypreserved,sinceEC

competitionlawcontinuedtobethemaintoolforEUintervention.Howeverthelaw

takesintoaccountnon‐economicfactorsonlytoaverylimitedextent,whichmakes

itinsufficienttodealwiththethreatstopluralismwhichcross‐countryandcross‐

ownershipconsolidationofsourcesofopinioncouldpose(CouncilofEurope,2004,

p.18)

Inearly2007thisstatusquoappearedtochange,whichtolargepartsisowedtoa

newpragmaticapproachbyCommissionersVivianeRedingandMargotWallström.

UponthepresentationoftheReding‐Wallström‐approach,Redingwasquotedas

statingthat

“Whilethemediafaceradicalchangesandrestructuringduetonewtechnologyand

globalcompetition,maintainingmediapluralismiscrucialforthedemocraticprocess

45ThedraftappearedtobemodelledaftertheGermanregulationasitprohibitedbroadcastmediafromobtainingfurtherlicencesoncetheycontrolled30%oftherelevantmarket.Asimilarrulewasintroducedforthepresswiththemarksetat10%(KEK,2000,p.81)

‐122‐

intheMemberStatesandintheEuropeanUnionasawhole(EuropeanComission,

2007).

ThenewapproachcontainsthreestepsandistobeimplementedbytheTaskForce

forCo‐ordinationofMediaAffairsintheDGInformationSocietyandMedia:

1TheCommissionpreparesaworkingpaperonmediapluralism,whichoutlines

effortstopromotepluralismbythirdpartiesandorganisationsandhasabasicfirst

surveyofMemberStates'audiovisualandprintmediamarkets.

2AnindependentstudyonmediapluralisminEUMemberStatesisconductedin

ordertodefineandtestconcreteandobjectiveindicatorsforassessingmedia

pluralismintheEUMemberStates.

3TheCommissionissuesacommunicationonindicatorsformediapluralisminEU

MemberStates,tobefollowedbyabroadpublicconsultation.

Thisnewapproach,whichisnotsolelyfocusedonthefunctioningoftheinternal

marketbutondevelopingaframeworkinordertoassessandevaluatethecondition

ofmediapluralismineachmemberstatecomesmuchclosertomeetingthecallsfor

effectivemeasurestoguaranteemediapluralismbytheEuropeanParliamentand

theCouncilofEuropeinthe90s.Theapproachfollowssuggestionsmadebyatthe

LiverpoolAudiovisualConferencein2005whereaStudyconductedbytheEuropean

InstitutefortheMediaonbehalfoftheEuropeanParliamentwaspresented.This

studyfoundthatduetothevarietyofapproachestoensuringmediapluralismand

thedifferingmeasurestoassessinfluenceonthemarket(circulation,audience

share,numberoflicences,capitalshares,votingrights,advertisingrevenue,

involvementinacertainnumberofmediasectors)“itisdifficulttoproposeanykind

ofharmonizationofrulesbetweentheEUMemberStates.Thesystemshave

developedalongsideandpartlyinresponsetothenationalmarkets,whichineach

countryhavespecificcharacteristics”(TheEuropeanInstitutefortheMedia,2004,p.

222).

Redingjustifiedthenewapproachasbeingrequiredbythechallengesofmedia

convergence,whichasJust&Latzer(2000)havefound,mayfirstandforemostlead

toproblemsregardingthedefinitionoftherelevantmarketwithinnationalborders,

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partlyduetogrowingco‐opetitioninthemediasector(Just&Latzer,2000,p.404).

Thisfacilitatestheerosionofnationalrestrictionsandstrengthensthecallfor

regulatorymeasuresbeyondmemberstatelevel.

Atthemoment,steptwooftheCommission’sactionplanisapproaching

completion.InJune2009apreliminarydraftwaspublished,askingstakeholdersfor

feedbacktobeamendendinthefinalreport.Stepthreeisproposedtobecompleted

by2010.Thatmeansitmighttakesomeyearsbeforeanylegislation,whetheron

Communityormemberstatelevelonthismattercomesintoeffect.Thequestionis

whetherthisisalreadytoolate,sinceconsolidationbetweenoldmedia

conglomeratesandnewmediainstitutionshasalreadystartedtounfold.Asofnowit

alsoremainsunclearwhetherthenextCommissionstartingitsterminautumn2009

willpursuetheissueofsafeguardingmediapluralismonaEuropeanlevelwiththe

sameapproachandthesameintensity.

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5.3 MediaGovernance

Whilethereisnoinstitutionaldefinitionformediagovernance,Donges(2007)

championstheviewthatitiscomposedofelementsofregulation,controlling,

coordinationandcooperationanditsmaingoalisthecollectivesettlementof

societalissuesonalllevelsofinstitutionalhierarchy.Thereisnoconsensusamong

thedisciplinesofsocialscienceastohowthisgoalshouldbeachieved.InthispaperI

willfollowthesuggestionsmadefromapoliticsandpoliciespointofviewwhich

centrearoundtheargumentthatthegovernmentwhenitcomestoregulationand

controlofsocietyandmedia,isjoinedbyarangeofnon‐governmentalorganisations

inamulti‐layersystemofcoordination(manifestedforexamplebytheprocessof

wide‐rangeconsultationsofCommissionproposals).Whenputtoworkproperly,

mediagovernanceshouldthusencouragecitizenstoactivelytakepartintheprocess

ofregulationandcontrolofmedia.46

Therefore,(media)governancecanbedefinedasaguidelineofanalysingcomplex

structuresofcollectiveaction,asnewstakeholdersjointheprocessofpolicymaking

(Donges,2007).Particularlygivenincreasinglevelsofmediaconcentrationand

mediapower,mediagovernancethusservesasameansofdemocratisationbecause

theverynatureofgovernanceisthatmultiplestakeholderswithdiffering

preferencestakepartintheprocess.Dongespointsoutthatpreferences,inthis

context,donotrefertomaximizationofutilityonly,butalsoincludesvaluesand

ideas(Donges,2007,p.20)

Examplesofmediagovernanceputintopracticearemostlyfoundinacontent

relatedcontext:Self‐regulation(i.e.theGermanPressCouncil)andco‐regulation(i.e.

theOfficeofCommunicationintheUK)arewellknownexamplesofthisapproach.

46Schedler&Proeller(2006)havegiventheparticipationofcitizensinpublicadministrationalotofthought,albeitinamoregeneral,qualityofservice‐relatedway.Theconceptofnewpublicmanagementbuildsonindividualresponsibilitybasedonapositiveandoptimisticideaofmanwhichderivesfromtheassumptionthatproblemsolvingcapacities,judgement,imaginationandresponsibilityarenotlimitedtoelitesbutareaninnatefeatureofmostpeoplewhousuallydonotneedexternalrewardstoperformattheirbest.

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Intermsofconcentrationofownershiptherearenoeffectivegovernancemodelsin

placeinEurope.Nationaldiscussionsaside,someinstitutionssuchastheEuropean

Parliament,theTradeUnions,theEconomicandSocialCommitteeandAcademics

andConsumerPlatformshaveaddressedmediaconcentrationanditspossiblethreat

topluralismandhaverepeatedlyissuedtheirconcern.Despitethat,no

institutionalizeddiscoursehasformedalthoughtheCommission’sreportonthe

indicatorsofpluralismissettostimulatepublicdiscussiondecisively.

Interestingly,DongesraisesthequestionwhethertheEuropeanUnionhastobe

seenasonesinglestakeholderofmediapolicy.Inhisviewitisaconglomerateof

stakeholderswithwidelydifferinginterests–culturalvs.economical(Donges,2007,

p.17).FromthispointofviewithastobediscussedwhethertheEUhastospeak

withonevoiceinthismatter,orifitiscapableofconductingactiononthebasisof

multilateralconsensus.WiththeGreenPaperin1992thisapproachhasnot

producedanyagreement(Iosifides,1997),itremainstobeseenwhetherthe

consultationprocessfollowingthestudyontheindicatorsofpluralismwillbemore

successful.

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6 Necessityandofsupranationalregulations

ForalongtimemediaconcentrationinEuropewasclearlyrestrictedtoMember

States.TheCouncilofEurope(2004)hasidentifiedanumberofreasonsforthis:

• lackingsubstitutabilityofculturalproductsduetolinguisticandcultural

barriers

• lackingflexibilityofadvertisements(tailoredtonationalmarkets)

• highsetupcostsorlackofavailablebroadcastinglicencesduetotechnical

limitations

• strongpositionsofdomesticpublicbroadcasters

• governmentregulations

• sufficientpossibilityforgrowthwithindomesticmarket

ThesefactorscontributedtocementingtheroleofMemberStatesaslegal

authoritiesonthismatter,whichwasveryreasonableaslongasmediasectorswere

systematicallyseparatedbytechnology.However,duetorecenttechnological

developmentsandconvergencemediabusinessescannolongerbeseenas

autonomousentitieswith“oneteleologicallineofactions”(Watson‐Brown,2008).

Mediacontenthasgrownincreasinglyundistinguishablewithregardtodifferent

platforms(i.e.websitesofnewspaperscomparedtowebsitesofTV‐stations).With

new,digitalformsofbroadcasting,regulatorymeasuresbasedforexampleonthe

conceptofscarcityoffrequencieswithinonesinglenationseemobsolete.

Newspapers,whichformerlywereveryexpensivetoproducehavebecome

increasinglycommodified(risingfreesheetcirculation)andinsomemarketsare

merelyrecedingassets.Moreover,nationalmarketsarebecomingsaturated,and

legalstipulationslimitgrowthormergersatanationallevel(Malzanini,2007).Atthe

sametime,duetotheestablishmentoftheinternalmarket,mediasectorshave

beenderegulatedandliberalized.Authoritieshavepermittedforeignplayerstospan

theiroperationsacrossmultiplenations(CouncilofEurope,2004,p.7).

Furthermore,thelastcoupleofyearshavebroughttendenciesofhomogenisationof

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contentataEuropeanlevel,acrossdifferentculturalregions.Programmessuchas

"BigBrother”,“Whowantstobeamillionaire”and“X‐Factor”(Malzanini,Media

ConcentrationsinEurope,2007)andadvertisementcampaignssuchasHeineken(in

partnershipwiththeUEFAChampion’sLeague)orNespressoareprominent

examples.

Asmyeconomicanalysesinchapter4.1.2hasshown,mostoftheaforementioned

developmentsstronglypromotetransnationalconcentrationfromtheviewofprofit

maximizingmediacompanies.Forsome,duetoanincreasinglyoutdatedbusiness

model,consolidationisameansofsurviving,forothersitconstitutesanopportunity

tostayontop.However,theempiricalevidencethattransnationalmedia

concentrationisabouttorisecontinuouslyisnotconvincing(seechapter4.3.4),yet

asteadytrendparticularlyinEasternEuropeisapparent.

Ifitisassumedthattransnationalconcentrationwillrise,thequestioniswhetherthe

currentregulationsbytheEUandtheMemberStates,someofwhichweredesigned

foradifferentmedialandscape,aresufficienttodealwiththechallengesthisposes

regardingmediapluralism.

Thisquestionneedstobeevaluatedondifferentlevels:

6.1 Transnationallevel

BesidesthefactthattheCommunitydoesnothaveanylegislativecompetenceto

addressissuesofmediapluralismonCommunitylevelincasethisdoesnot

constituteaninfringementontheprovisionsofECcompetitionlaw,mediapluralism

accordingtoMalzanini(2008)andKleist(2006)mayonlybeatriskwithinagiven

andsufficientlyspecifiedareaofcommunication.Whilethisiscertainlytruefor

nationsandinsomecasesevenlanguageareas,itishighlydoubtfulwhetherthe

multinationalandmultilingualEUconstitutessuchanareaandwhetherthereisa

EuropeanpublicsphereofaHabermasianconception,whichmaybeunderthreat.

Malzaninidoesnotperceivea“subjectofprotection”withregardtomediapluralism

onaEuropeanlevel(Malzanini,2008).NeitherdoesKleist,whopointsoutthat,

whiletherehasbeenasteadyprogressionofeconomicintegration,theEUhas

maintaineditsculturalheterogeneity(Kleist,2006,p.11).TheTVshows,whichare

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broadcastedindifferentlanguagesbutinthesameformatthroughoutEurope

mentionedabove,areafirststeptowardscontenthomogenisation.Pan‐European

broadcasterssuchasEurosportandEuronews(whichisfinancedbytheCommission)

alreadygoonestepfurther.However,notoneofthesebroadcastersattractsmore

thananicheaudienceorisinanyotherwayinapositiontoinfluencepublicopinion

inEurope.

EvenwithouttheexistenceofaEuropeanpublicspheresomeauthorshavepointed

totheriskthatpowerfulownersofmediaconglomeratesmayutilizetheirvarious

mediaoutletstopushcertainpoliticalagendas,whichreflecttheirpersonalviews,

throughdifferentformatsalloverEurope(Baker,2007).Empirically,however,there

isnoprooftothisclaim,whichremainsa“gut‐feeling”(Malzanini,2008).Moreover,

underthepresumptionoftheneoclassicaltheoryofthefirmitappearsunlikelythat

mediacompanieswouldfavouragenda‐settingoverprofit‐maximizationunless

thesegoalshappentocoincideortheformeryieldsothereconomicbenefits

relevanttothecompany.Thispresumptionissupportedbytheongoing

commercializationofmediadiscussedinchapter4.1.2.6,whichismuchmorelikely

toleadtoade‐politisationofmediaconsumersasmediaproducersfocusonthe

massappealoftheircontentratherthanonthepublicvalueitholds.Thisproblem,

however,isnotnecessarilylinkedtomediaownership.Rather,itrepresentsa

distinctstructuralfeatureoftoday’smedialandscape,whichneedstobeaddressed

andcloselyscrutinizedbymediaimpactstudies.

Tosumitup:Duetothe

• lackoflegislativecompetence

• absenceofaEuropeanpublicsphere

supranationalmeasuresofmediaownershipregulationsintheEUarenotworkable.

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6.2 MemberStatelevel

IfthereisnoneedtotakeactiononaEuropeanlevel,whataboutMemberStates

whichhavenotyetintroducedlegislationinordertosafeguardmediapluralismor

whichhaveverylenientregulations?

Theunderlyingtheoryofmanyauthorsadvocatingaharmonizationofmedia

ownershiprulesisthatifeveryMemberStatehasthesamerulesgoverningmedia

pluralism,oratleastsetsthesameceilingsonmediaownership,thiswould

effectivelypreventmediaconglomeratesfromattainingaposition,whichwould

allowthemtoexerciseadominantinfluenceonpublicopinion.

However,myeconomicandlegalanalyseshaveshownthataharmonizationof

mediaownershipregulationsisnotfeasible,evendespiteanongoingtransformation

oftheEuropeanmediamarkets.

Thisisduetoanumberoffactors:

TheEUdoesnothaveanylegislativecompetencetoregulatemediaownershipsolely

forthepurposeofprotectingmediapluralism.UndertheprovisionsoftheECTreaty

theCommunityisboundtoactonlyuponmatters,whichhavebeenexplicitly

conferredonit.Atthemomentthisdoesnotincludetakingregulatorymeasuresto

protectthediversityofopinions.The1992GreenPaperhadbeenpreparedbythe

DGInternalMarketandaimedatensuringafunctioninginternalmarket.Even

thoughtheaimwasdifferentfromwhatisproposedintheresearchquestionofthis

paper,theconsultationfollowingthepublicationoftheGreenPaperrevealedthe

wholevarietyofstakeholdersatplayinthismatterandthefullextentofhowfar

theiropinionsdiverge.TheEuropeanParliamentontheonesidecalledfor

transnationalregulation,whiletheMemberStatesdidnotwanttochangethe

existingrules,unwillingtogiveawaytheirownlegislativecompetenceonthis

matter.

Apartfrombeinglegallyandpoliticallyunacceptableaharmonizationwouldposea

rangeofpracticalproblems.Inchapter4.3Ihaveshownthatatleastamongthe

tripartitecountries,therearecertainsimilaritiesinthemarketstructureofthe

mediasector.Strongpublicservicebroadcastersfaceprivatecompetition

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predominantlyfromafewpowerfulgroupsofTVandradiochannels,whilehighly

concentratednationalnewspapermarketsarecounterbalancedbydiverseregional

printmedialandscapes.Thekeyonlineplayersaremostlyassociatedwith

establishedoldmediacompaniesorbasedintheUS.

Whilethemarketstructuresmaysuggestaharmonizationisattainable,Chapter5.1

hasthenprovidedanoverviewofthedifferencesintheregulatoryapproachesto

thesemarketstructures.Thismadeclearthattheregulatorymodelswhichinclude47

• differentregulatorycompetencies48

• differentmeasuresofregulation(generalcompetitionlaw,audienceshare

model,cross‐ownershipregulation)

• differenttreatmentofnon‐domesticlicensees

• andotherregulatorytrends,influencedbynationaleconomicinterests

aretoodivergenttobeharmonized.

Moreoverthereisnoconciseandgenerallyaccepteddefinitiontomediapluralism

yet.Anyevaluationofthelevelofmediapluralismisverymuchtiedtothe

conditionsoftherelevantmarket.TheestablishmentofSkyItaliaforexamplehas

certainlybenefitedmediapluralismItaly,whichisoneofthemostconcentrated

mediamarketsinEuropewhileatthesametimeservingtoincreasethemarket

shareofatransnationalEuropeanmediaplayer(Watson‐Brown,2008).

Furthermoreaharmonizationofmediaownershipcouldbeusedasatoolof

protectingunderperforming“oldmedia”companiesfromtheemergenceofnew

formsofmedia.Legalregulationshowever,shouldnotpreserveoldstructuresbut

shouldrathersupportanongoingprocessoftransformation,whichwillmost

certainlyincludechangesinthestructureofmediaownershipandsomeamountof

consolidation.ForCroteau&Hoynes,therapidgrowthinmediaoutlets,the

constantshiftsinconsumertastes,andtheever‐changingterrainoftheindustry

itselfmakeanyapparentdominationoftheindustrybyafewcompaniesanillusion.

47SeeGrünwald,H.(2005)foranelaborationonthediverseformsofmediaownershipregulation48InGermanyforexample,broadcastingregulationarealegislativecompetenceoftheBundesländer–theGermanfederationcouldnotpledgethemtocomplywithanyEuropeanlegislation

‐131‐

“Noonecancontrolsuchavastandconstantlyevolvingindustry”(Croteau&

Hoynes,2006).

InitsstudyontheindicatorsofpluralismtheCommissionacknowledgesthisfactby

adoptingarisk‐basedapproachfocusingonthequestiontowhatextentthe

transformationmaybeallowedtounfold(Watson‐Brown,2008).Theyintendtodo

sobyfocusingininternalpluralismandonmediaoutput,ratherthanondiversityof

mediaownership.ThisapproachalsoseemsmuchmoreapplicableforMember

States,whicharetoosmalltodevelopeconomicallyviableindigenousmediaplayers

sinceaharmonizedsetofrulesthatworksforGermanymayeffectivelyerodethe

mediamarketinLithuania.

Tosumitup:Duetoa

• lackoflegislativecompetence

• lackofpoliticalwill

• lackofaconcisedefinitionofmediapluralism

• divergingnationalregulations

• divergingmarketsizes

• apossibleobstructionofstructuraltransformation

aharmonizationofmediaownershipregulationsintheEUisnotworkable.

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7 Conclusion

InthispaperIhaveshownthatdespiteconsiderablechangesintheEuropeanmedia

landscapeanapproachtosafeguardingmediapluralismbasedonsupranational

measuresandaharmonizationofnationalrestrictionasproposedbythe

Commissionintheearly1990’sisstillnotapplicableatpresentday.Eventhoughthe

specificeconomiccharacteristicsofmediapromoteconsolidationinthecurrent

periodofstructuraltransformationfromaparadigmoftechnologicallyseparated

mediasectorstoanageofmulti‐mediaconvergence,thesafeguardingofmedia

pluralismshouldnotbeusedasatoolofprotectingoutdatedbusinessmodelsof

“oldmedia”companies.Moreover,theEUhasnolegislativecompetencetoestablish

regulatorymeasuresonthismatter,whichhastraditionallyliedwiththeMember

States.Althoughmoreandmoreformsofmediawillemergewhichcannolongerbe

tiedtoanynationaljurisdictionintermsofdisseminationofmediacontentthereis

currentlynoEuropeanpublicspherewhichwouldconstitutetheneedtoprotectthe

processofEuropeanwillformationfromanyundueinfluences.

Drawingfrommyeconomicandlegalanalyses,myresearchquestionwhetherany

supranationalmeasures,beitaharmonizationoflegalinstrumentsoranyother

actioninsupportofpluralismacrosstheEUwouldbefeasible,effectiveand

expedienthastobeansweredwithaclearno.However,someaspectsofthis

problemhaveremainedunclearandrequireempiricalresearch.

Inordertogetafullunderstandingoftheissuemoretransparencyaboutthelevelof

transnationalconcentrationinEuropeisneededaswellasadditionalresearchonthe

changingmedialandscapeanditslikelyimpactonmediapluralism.

ThereforeIproposemeasuresmodelledafteroptionIIofthe1992GreenPaper(see

chapter5.2.2)topromotetransparencyaboutmediaownership.OnlyfewEuropean

countrieshaveestablishedindependentbodiessuchastheGermanKEKorthe

BritishOfcom,whichamongotherdutieshavetheresponsibilitytokeeptrackof

changesinmediaownership.Thishasbecomeanincreasinglydifficulttaskas

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ownershipstructuresareconcealedthroughcomplexlegalconstructions.Inthe

GreenPaperTheCommissionconsideredthat“moretransparencyofmedia

ownershipandcontrolcouldfacilitatethetaskofnationalregulatorsandserveto

createsolidaritybetweenauthoritiesofMemberstates”(EuropeanCommission,

1992,p.9).Shortlyafterwards,inDecember1992,theEuropeanAudiovisual

ObservatorywasestablishedinStrasbourgunderthelegalframeworkoftheCouncil

ofEurope.Itsaimistoimprovethetransferofinformationwithintheaudiovisual

industryandtopromoteaclearerviewofthemarket.Inthewakeofongoing

convergenceonthemediamarketsIproposeanexpansionoftheresponsibilitiesof

theEuropeanAudiovisualObservatorytoalsoincludepressandcrossmedia

operations.Theexpansionofdutiesdoesnotconstitutetheneedtoconferany

regulatorypowersonit.However,Malzanini(2007)hascalledforincreased

collaborationbetweentheEuropeanmonitoringagencyandnationalmedia

supervisoryauthorities.

Eitherwaytheenhancementoftransparencysymbolizesanempowermentof

citizens,whichmightservetostimulatenationalandtransnationaldiscussionsabout

mediapluralism.

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TABLEOFAUTHORITIES

Statutes

§19GWB .......................................................................................................................................... 89,91

§36Par1GWB....................................................................................................................................... 89

Art11oftheDéclarationdesdroitsdel'hommeetducitoyende1789............................................... 97

Art11oftheLoin°86‐897du1août1986 ............................................................................................ 98

Art39Par1Loin°86‐897du1août1986.............................................................................................. 99

Art39Par2Loin°86‐897du1août1986............................................................................................ 100

Art41Par1Loin°86‐897du1août1986.............................................................................................. 99

Art41Par6Loin°86‐897du1août1986............................................................................................ 100

Art5Par1GG ........................................................................................................................................ 88

Art7Loin°86‐897du1août1986......................................................................................................... 98

ArtL233‐3Loin°2001‐420du15mai2001 .......................................................................................... 98

ArtL430‐1Loin°2001‐420du15mai2001 .......................................................................................... 97

ArtL431‐3Loin°2001‐420du15mai2001 .......................................................................................... 98

Par1ofSchedule14oftheCommunicationsAct.................................................................................. 94

Schedule2oftheBroadcastingAct1990 .............................................................................................. 93

Section12oftheHumanRightsAct1998 ............................................................................................. 92

Section8oftheMediaOwnershipOrder2003 ..................................................................................... 95

Section9oftheMediaOwnershipOrder2003 ..................................................................................... 94

Treatises

Art100aECTreaty ............................................................................................................................... 107

Art151ECTreaty ................................................................................................................................. 102

Art5ECTreaty ..................................................................................................................................... 102

Art57Par2ECTreaty .......................................................................................................................... 107

Art7aECTreaty ................................................................................................................................... 108

Art81and82ECTreaty ....................................................................................................................... 103

Article10ECHR ................................................................................................................................ 22,32

ArticleIII‐181EUConstitutionalTreaty ............................................................................................... 102

Regulations

CouncilRegulation(EC)No139/2004of20January2004 .................................................................. 104

CouncilRegulation(EEC)No4064/89of21December1989 .............................................................. 103

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Directives

CouncilDirective89/552/EECof3October1989 ................................................................................ 105

Directive2002/21/ECoftheEuropeanParliamentandoftheCouncilof7March2002.................... 106

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TABLEOFFIGURES

Figure2‐1Thefunctionsofmassmedia,Source:Burkhard,2002,p.382 ............................................ 13

Figure2‐2Integrationthroughmedia,Source:ownillustration ........................................................... 15

Figure2‐3Politicalfunctionsofmassmedia,Source:ownillustration ................................................. 17

Figure3‐1Therelationbetweenmediaandcitizenjournalism,Source:ownIllustration .................... 28

Figure4‐1:Theexpansionofmarketpowerstimulatedbyadvertisement,Source:ownillustration... 40

Figure4‐3Economiesofscale,Source:ownillustrationadaptedfromHeinrich,1994 ........................ 45

Figure4‐3):TIMEConvergence,Source:ownillustration(inspiredbyFreienstein,2002,p.123 .......... 48

Figure4‐4:Ownershipofbroadcastmedia,Source:adaptedfromMcQuailandSiune,1998 ............. 52

Figure4‐5TheSun’scampaignagainsttheEUConstitution,Source:TheSun24thSeptember,2007. 63

Figure4‐6–GermanTVmarketshare(public),Source:AGF/GfkFernsehforschung2008................... 66

Figure4‐7–GermanTVmarketshare(commercial),Source:AFG/GfkFernsehforschung2008.......... 67

Figure4‐8AccesstoGermanTV,Source:KEK2006 .............................................................................. 68

Figure4‐9GermanPayTVmarketshare,Source:GSDZ2007,p.57..................................................... 69

Figure4‐10Germanradiomarketshare,Source:KEK2005/EFJ2005 ................................................ 70

Figure4‐11TopTenGermannewspapers,Source:EuropeanComission,2007p43 ........................... 71

Figure4‐12Germannewspapermarketshare,Source:Röper,2008p.420......................................... 72

Figure4‐13Germanmagazinemarketshare,Source:Vogel,2008p.468............................................ 73

Figure4‐14TopTenGermanbasedwebsites,Source:AGOF2008/Companyprofiles ....................... 74

Figure4‐15TopTeninternationalbasedwebsites,Source:NielsenOnline2009................................. 74

Figure4‐16TopGermaninternetmarketersandproviders,Source:AGOF2008,companyprofiles ... 75

Figure4‐17BritishTVmarketshare,Source:BARB2009...................................................................... 77

Figure4‐18AccesstoBritishTV,Source:OfcomCommunicationsreport2008,p.211 ....................... 78

Figure4‐19Britishradiomarketshare,Source:OfcomCommunicationsreport2008,p.253............. 80

Figure4‐20TopTenBritishnewspapers,Source:AuditBureauofCirculations2009........................... 81

Figure4‐21Britishnewspapermarketshare,Source:owncalculationsbasedABC2009data ............ 82

Figure4‐22Britishmagazinemarketshare,Source:owncalculationsbasedonABC2009data ......... 83

Figure4‐23TopBritishinternetmarketers,Source:NielsenOnline2009 ............................................ 84

Figure4‐24FrenchTVmarketshare,Source:Médiametrie2008,p.2 ................................................. 86

Figure4‐25AccesstoFrenchTV,Source:Médiametrie2008,p.5 ....................................................... 87

Figure4‐26Frenchradiomarketshare,Source:Mediamétrie2008..................................................... 88

Figure4‐27TopTenFrenchnewspapers,Source:OJD2008................................................................. 89

Figure4‐28Frenchnewspapermarketshare,Source:owncalculations .............................................. 90

Figure4‐29Topteninternetmarketersandproviders,Source:NielsenOnline2009 .......................... 91

Figure5‐1Stakeholdersofmediaregulation,Source:ownillustration................................................. 94

Figure5‐2UKradioownershippointssystem,Source:MediaOwnershipOrder2003 ...................... 105

Figure9‐1BiggestmediacompaniesinEurope,Source:Nordicom2006,basedoncomp.reports ... 145

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9 Appendix

ThebiggestmediacompaniesinEurope(rankedbyrevenuefrommediaactivities):

Company Domicile

Total

revenue

(Euro

mills)

Media

revenue

(Euro

mills)

Media

shareof

revenue

(%)

New

spap

ers

Magazines

Book

s

Radio

TV

Film

Music

BertelsmannAG Germany 19,297 19,297 100 ✔ ✔ ✔ ✔ ✔ ✔ ✔

Vivendi2 France 20,044 8,494 42 ✔ ✔ ✔ ✔

Lagardère France 13,999 8,092 58 ✔ ✔ ✔ ✔ ✔

ReedElsevier Netherlands/

GreatBritain 7,935 7,935 100 ✔ ✔

ARD Germany 6,161 6,161 100 ✔ ✔

BBC GreatBritain 6,127 6,127 100 ✔ ✔ ✔

BSkyB GreatBritain 6,086 6,086 100 ✔

Pearson GreatBritain 6,068 6,068 100 ✔ ✔ ✔

Mediaset5 Italy 3,748 3,748 100 ✔

WoltersKluwer

The

Netherlands 3,693 3,693 100 ✔ ✔

DailyMail&General

Trust GreatBritain 3,192 3,192 100 ✔ ✔ ✔

ITVPlc GreatBritain 3,171 3,171 100 ✔

FranceTélèvision France 2,853 2,853 100 ✔

RAI‐Radiotelevisione

Italiana Italy 2,839 2,839 100 ✔ ✔

GrupoPrisa Spain 2,812 2,812 100 ✔ ✔ ✔ ✔

TF1‐Société

TélévisionFrancais France 2,654 2,654 100 ✔

EMIGroup GreatBritain 2,652 2,652 100 ✔

SanomaWSOY Finland 2,742 2,386 87 ✔ ✔ ✔ ✔ ✔ ✔

RCSMediaGroup Italy 2,380 2,380 100 ✔ ✔ ✔ ✔

SpringerVerlag Germany 2,376 2,376 100 ✔ ✔

Figure9‐1BiggestmediacompaniesinEurope,Source:Nordicom2006,basedoncompanyreports

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Wordcloudofthispaperbywww.wordle.net

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LUKASWIESBOECKDateofbirth:08/10/1983

EDUCATION2008(July)– HarvardUniversity2008(August SummerSchoolcourseonstrategicanalysis(StrategicManagementIn

ADynamicEnvironment)2007(February)– ViennaUniversityofEconomicsandBusinesspresentday Administration LLBBusinessLaw(exp.graduationJune2010)2006(September)– UniversityofVienna2009(November) Mag.phil.MediaandCommunicationwithfocusonmediaeconomics

Masterthesis:ConcentrationofmediaownershipinEurope2006(September)– MiddlesexUniversityLondon2007(January) ERASMUS‐studysemester,mainfocusonfinance2003(March)– UniversityofVienna2006(September) Bakk.philMediaandCommunication(1.9),minorinmedialaw2002(July)– AustrianArmedForces2003(March MilitaryservicewithpromotiontoGefreiter(privatefirstclass)1994(September)– Bruck/Leithagrammarschool(languagefocus)2002(June) A‐Levels:English(A),French(A),German(B),Music(A),Mathematics

(C)[GermanandMathematicsmandatory]WORKEXPIERIENCESince2009(May) ThierryPolitikberatung,Vienna Researcher/PoliticalConsultant Workingparttimeinateamoffour Researchingbackgroundinformation,developingandimplementing

politicalcommunicationstrategies2008(June) EURO2008–EuropeanFootballChampionships,Vienna MediaAssistant Onemonthvolunteerexperienceatalargeinternationalevent

AssistingtheVenueMediaCoordinatorasateamleaderprovidingserviceforaccreditedjournalists

2008(January)– INSETResearch&Advisory,Vienna2009(January) Consultant/ResearchAnalyst Oneyearworkexperiencewithasmallconsultantfirmspecializedon

mobilebusinesssolutions Conductingmarketresearchanddevelopingmarketingstrategiesin

thetelecomsector,preparingcustomerpresentationsandmanagingsmallprojects

‐148‐

2007(July)– Invyte.de,Hamburg2007(October) Marketingassistantandeditor

ThreemonthsworkexperiencewithaGermaninternetstartupspecializingoneventinvitationmanagementVariousmarketingactivities,buildinguponlinemagazine

2006(July)– FrankfurterAllgemeinenZeitung,Frankfurt2006(October) Journalist,reporter

ThreemonthsworkexperiencewithaprestigiousGermannewspaperWritingindependentlyaboutsociety‐,economy‐,andculture‐relatedtopicsinFrankfurtandthesurroundingarea

2006(March)– InstituteofCommunicationScience,Vienna2006(July) Teachingassistant

Fivemonthsworkexperienceoverseeingagroupof20universitystudentsPreparingaseminarforfirstyearstudentsinordertohelpthemunderstandthemainconceptstaughtintheintroductorylectures.

2004(July)– ORFandPro7,Vienna2004(October) Productionassistantand Threemonthsworkexperienceeachyear,firstlywithapublic2005(July) broadcastingTVstation,secondlywithaprivateTVstation

AssistingaseniorreporterproducingTV‐clipsandsegmentsfornewsbroadcasts;independentteletextandonlineservice.

2001(July)– NÖNandBezirksblätter,LowerAustria2005(November) Reporterandphotographer(2001–2005),Editoroftheculturesection

(2004‐2005) Fouryearsworkexperiencewithtwoweeklylocalnewspapers,

workinginteamsfromfivetoeightIndependentlycoveringlocaltopicsandevents,configuringthelayoutofnewspaperpages.

SCHOLARSHIPSANDAWARDS2008(October) StudyTourofJapanforEuropeanYouth–Tendayscholarshipgranted

bytheMinistryofForeignAffairsofJapan2008(May) kwA(kurzfristigewissenschaftlicheArbeitenimAusland)–Onemonth

scholarshipgrantedbytheUniversityofViennaforindependentresearch

2002(October) AustrianArmedForcesServiceMedalawardedbytheAustrian

secretaryofdefenceforthreeweeksserviceinadisasterreliefoperation(flood)