The  Media  BusinessCONSOLIDATION  &  GLOBALIZATION

A  note  on  contentInformation  from  “Mass  Communication:  Living  in  a  Media  World”  by  Ralph  E.  Hanson

Who  controls  the  mediaOWNERS:  Many  owners  separate  themselves  from  the  content.  They  should.  Some  don’t.  Be  aware  of  conflicts  of  interest.

ADVERTISERS:  Despite  a  theoretical  line  between  advertising  and  editorial,  there  are  times  when  advertisers  will  threaten  to  pull  support  for  unfavorable  stories.  Consider  that  many  newspapers  lost  a  good  amount  of  revenue  from  family-­‐friendly  stores  because  they  ran  advertising  for  adult-­‐entertainment  establishments  (strip  clubs).

Who  controls  the  mediaGOVERNMENT:  It  happens  less  in  the  United  States,  but  in  some  countries  government  agencies  tell  media  companies  what  can  and  cannot  be  published.  Don’t  Google  search  “Tiananmen  Square”  in  China  and  expect  the  same  results  as  you  would  the  U.S.  The  Chinese  version  of  the  search  engine  shows  happy  tourists.  Our  version  shows  the  iconic  photo  of  a  man  blocking  a  tank  in  protest.

SPECIAL  INTEREST  GROUPS:  Certain  cohorts  of  people  control  media  messages  by  advising  against  them  or  protesting  them  outright.  

Who  controls  the  mediaNEWS  SOURCES:  This  group  often  controls  the  angle  of  the  message  more  than  the  message  itself.  Messages  can  be  told  with  different  slants  based  on  who  is  telling  the  story.  A  victim  of  a  violent  crime  may  be  more  reactionary  to  talk  on  the  record  about  a  mall  robbery  than  a  person  who  has  never  been  victimized.  Consider  who  the  media  is  interviewing  as  you  consider  the  story.

AUDIENCES:  Panels  of  people  are  often  put  together  to  help  media  companies  figure  out  how  to  send  a  message  that  will  appeal  to  greater  audiences.  Magazines  allow  voting  for  cover  models.  Movies  are  screened  before  being  mass  marketed  for  audience  approval.

Case  Study:  Spike  Lee  &  KickstarterBig-­‐name  filmmaker,  produced  “Do  the  Right  Thing”  and  “Malcolm  X”

He’s  had  major  studio  success

A  few  years  back  he  turned  to  Kickstarter to  raise  money  for  a  smaller,  more  independent  movie  he  wanted  to  produce

By  David  Shankbone -­‐ David  Shankbone,  CC  BY  3.0

Case  Study:  Spike  Lee  &  Kickstarter

Kickstarter screenshot

Case  Study:  Spike  Lee  &  Kickstarter• Lee  drew  criticism  similar  to  complaints  

lodged  against  these  funding  sites  in  year  months

• Why  did  he  get  to  ask  for  cash  online,  from  5,000  backers  when  he  could  find  a  studio  to  back  his  project?

• Shouldn’t  he  let  smaller,  less  known  filmmakers  use  this  sort  of  crowdsourcing?

Case  Study:  Spike  Lee  &  KickstarterLEE’S  RESPONSE:  “I’m  an  indie  Filmmaker  and  I  will  always  be  an  Indie  Filmmaker.  Indie  Filmmakers  are  always  in  search  of  financing  because  their  work,  their  vision  sometimes  does  not  coincide  with  Studio  Pictures.  But  I  do  put  my  own  money  into  my  films.  I  self-­‐financed  RED  HOOK  SUMMER.  My  fee  for  MALCOLM  X  was  put  back  into  the  budget.  The  truth  is  I’ve  been  doing  KICKSTARTER  because  there  was  KICKSTARTER,  there  was  no  Internet.  Social  Media  was  writing  letters,  making  phone  calls,  beating  the  bushes.  I’m  now  using  TECHNOLOGY  with  what  I’ve  been  doing.”

Where  we  started• Media  has  a  long  history  of  private  ownership  dating  back  to  1640s

• First  printing  press  was  used  by  Massachusetts  Bay  Colony  to  produce  the  Bay  Psalm  Book

• Benjamin  Harris  owned  and  published  the  first  newspaper  in  1690  called  Publick Occurences,  only  one  issue  was  ever  published

• Subscription  prices  were  initially  too  high  for  regular  people  to  afford,  making  newspapers  out  of  reach

Public  Domain

Where  we  started• “Penny  Press”  papers  began  being  distributed  in  1830s

• Focused  on  larger  distribution  areas,  with  more  readers

• Could  be  produced  easier  thanks  to  beginnings  of  industrialization

• Newspapers  were  the  first  medium  in  the  country  to  be  paid  for  on  an  advertising-­‐based  revenue  model

Public  Domain

Where  we  started• Even  the  Telegraph  industry,  which  started  up  in  the  1840s,  was  private

• There  was  no  government  subsidies  for  these  organizations

• There  were  no  bailouts  in  case  these  industries  failed

• There  still  are  none

Growth  of  national  news• As  more  mediums  became  available  to  transmit  news,  more  viewers  began  partaking

• Nightly  news  is  only  an  advent  of  the  past  70  years,  beginning  with  15–minute  broadcasts  then,  now  standard  30-­‐minute  broadcasts  coming  into  play

• America  Held  Hostage  morphed  into  Nightline

• CNN  (Cable  News  Network)  went  on  air  in  1980,  promising  to  stay  on  until  “the  end  of  the  World”

• C-­‐SPAN  began  broadcasting  in  1979,  with  coverage  of  the  U.S.  House  of  Representatives

Consumers  have  more  optionsBut  the  number  of  individual,  independent  media  companies  providing  those  choices  has  declined.

Big  media  conceptsVERTICAL  INTEGRATION:  Controlling  all  aspects  of  a  media  project,  including  production,  delivery  to  consumers  in  multiple  formats,  and  the  promotion  of  the  product  through  other  media.

•One  company  can  now  handle  project  from  conception  to  published  product

•Many  companies  have  to  use  multiple  outlets  to  produce  one  product

Big  media  conceptsSYNERGY:  A  large  company  can  use  the  strengths  of  its  various  divisions  to  market  its  content.

• One  company  can  have  various  outlets  to  get  information  out

• Multiple  platforms

LEGACY  MEDIA:  Often  considered  “old  media”  that  has  existed  since  before  the  Internet,  these  are  often  big-­‐name  brands.

Big  five  in  legacy  mediaDISNEY

• Walt  Disney-­‐founded  company,  now  owns  ABC  network,  Us  Weekly  magazine,  Pixar,  Lucasfilm,  theme  parks,  cruise  lines  and  ESPN  Inc.

• 2010  Sales:  $38.1  billion

Big  five  in  legacy  mediaNEWS  CORPORATION

• Home  of  Fox  News,  Fox  Broadcasting,Wall  Street  Journal,  New  York  Post

• 2010  Sales:  $33.4  billion

• Controlled  by  Rupert  Murdoch  and  family

• News  of  the  World phone  hacking  scandal  killed  paper,  hurt  News  Corp.,  (Reporters  hacked  calls  of  a  13-­‐year-­‐old  girl)

• 21st Century  Fox  now  a  different  company,  once  joined

The  big  five  in  legacy  mediaTIME  WARNER

• 2010  Sales:  $26.9  billion  (down  $20.1  billion  in  2008)

• But  went  from  $13.4  billion  loss  in  2008  to  $2.6  billion  profit  in  2010.

• Improved  profitability  by  selling  off  AOL  and  Time  Warner  cable

• Lesson  of  merger  with  AOL:  bigger  isn’t  always  better

The  big  five  in  legacy  mediaVIACOM/CBS

• 2012  combined  revenue:  $28  billion

• Home  of  MTV  Networks  (MTV,  VH1,  Nickelodeon),  CBS,  CW  and  Paramount

• CBS  owned  Viacom;  then  Viacom  owned  CBS;  now  separate  companies  for  financial  reasons

The  big  five  in  legacy  mediaBERTELSMANN

• 2009  sales:  $22  billion

• Likely  not  as  well  know  as  others  mentioned

• Major  player  in  publishing;  also  magazines  and  European  broadcasting

• Random  House,  book  publisher,  is  one  of  the  companies  owned

• Home  of  American  Idol and  Idol programs  globally

• Privately  held  German  company

Case  Study:  The  Record• Newspaper  started  by  Irving  Martin,  Sr.  in  1985  with  a  $2,500  loan  from  the  Bank  of  Stockton,  according  to  company  history

• Martin  moved  the  paper  to  its  current  location,  at  530  E.  Market  St.,  by  going  $160,000  in  debt  for  a  modern  facility  in  1910

• The  paper  added  a  Sunday  edition  in  mid  1980s

• The  Record  started  out  as  a  family-­‐owned,  afternoon  newspaper

• Stayed  in  the  Martin  family  until  1969,  when  the  widow  of  the  then  publisher  sold  the  newspaper  to  Speidel

Case  Study:  The  Record• In  1977,  Speidel merged  with  Gannett  (USA  Today  publisher)

• In  1994,  the  Omaha  World-­‐Herald  purchases  the  newspaper

• The  Record  was  purchased  in  2003  by  OttawayNewspapers,  which  was  also  known  as  Dow  Jones  Local  Media  Group.

• In  2007,  when  News  Corp.  purchased  Dow  Jones,  The  Record  became  a  News  Corp.  property.

• In  2013,  the  newspaper  was  spun  off  and  purchased  by  an  investment  firm.  It’s  now  operated  by  GateHouseMedia.

No  such  thing  as  a  ‘newspaper  company’

• Conglomerates  are  moving,  changing  and  splitting  up

• Some  are  “spinning  off”  properties  to  be  able  to  have  multiple  investors

• New  media  companies  are  replacing  standard  newspaper-­‐only,  broadcast-­‐only  companies

• New  players  are  emerging  in  the  market

Big  media:  The  new  playersThree  companies,  specifically,  are  emerging  as  new  leaders:

Comcast/NBC  Universal• Comcast  had  2010  Sales  of  $37.9  billion,  on  par  with  Disney.

• Major  player  in  cable  services,  cable  networks,  movies,  broadcast  TV

• NBC  Universal’s  biggest  value  is  for  cable  channels

• Owns  NBC  broadcast  network,  Telemundo,  CNBC,  Bravo,  SyFy,  USA  Network,  Universal  Pictures,  Focus  Features,  Weather.comand  Hulu

Google• 2012  revenue  of  $23.5  billion  in  U.S.  alone

• Big  asset  is  search,  major  source  of  revenue  is  highly  targeted  online  advertising

• Automated  aggregator  of  news

• Founded  on  a  premise  that  if  the  product  was  good  enough,  the  advertising  revenue  stream  would  come

• AdWords (word-­‐based)  and  AdSense  (aggregation  to  serve  up  content  to  fit  your  website)

AppleIn  2004,  iPods  were  just  making  the  way  to  the  mass  market  beyond  “early  adopters.”  Apple  had  a  targeted  campaign  with  lots  of  bright  colors.

• First  iPods  sold  for  about  $500

• Held  20GB  or  40GB  depending  on  the  model

• The  4G  Classic  was  what  really  brought  Apple  into  prominence  (that  was  the  iPod  I  bought  first)

• Original  iPods  were  hard-­‐drive  based,  not  solid  state  Flash  as  they  are  now

• Suddenly  everything  was  coming  up  Apple

Apple• What  was  once  a  product  only  schools  

would  buy,  suddenly  became  the  “it”  product

• iTunes  revolution,  including  contracts  with  media  distributors  part  of  that

• App  Store  later  took  center  stage

Apple• 2010  revenue  of  $65  billion• $25  billion  from  mobile  phones  (iPhone)• $8.2  billion  from  iPods• $4.9  billion  from  music  and  video  sales• $4.9  billion  from  first  year  sales  of  iPad

• Redefined  how  we  consume  and  use  media  by  reinventing  the  media  game

• Even  if  you  don’t  have  an  Apple  product,  you’ve  likely  used  one  or  had  exposure  to  one

Other  major  playersGannett  Co.

• USA  Today,  eighty  daily  newspapers,  TV  stations  and  publishing

• USA  Today,  launched  in  1982,  now  considered  “the  nation’s  newspaper”

• USA  Today  catered  to  readers  looking  for  short  stories,  it’s  evolved  into  serious  news  source

• The  Record  was  once  owned  by  Gannett

Clear  Channel  Communications  (iHeartRadio since  Sept.  2014)

• Emerged  as  major  media  player  after  massive  mergers  and  consolidation  in  radio  industry

• Telecommunications  Act  of  1996  allowed  Clear  Channel  to  acquire  more  radio  stations

• Company  also  has  holdings  in  broadcast  and  outdoor  advertising