For better than 30 years, activists and press critics on the left have disparaged the corporate consolidation of media. Tracking the story with the stamina of an ultramarathoner, Ben Bagdikian has written a new version of The Media Monopoly every three or four years since the first edition came out in 1983. In recent years, activist-academic Robert McChesney has beavered away at a similar rate.
The activists and critics take the alarmist view of media concentration, decrying the fact that five big media "corporations decide what most citizens will—or will not—learn," as Bagdikian puts it. What's bad is only getting worse with the passage of the decades, they believe. When Bagdikian first wrote TheMedia Monopoly, just 50 media companies dominated the industry and he thought the problem was out of control then!
But as I wrote in my review of The New Media Monopolylast summer, the trend toward media gigantism isn't as inevitable as Bagdikian thinks, because bigger doesn't always make business sense. CBS Inc., which was the largest media conglomerate in 1986, unloaded its various record label, book, and magazine divisions before finally selling its television network to the new conglomerator on the block, Viacom.
Time Warner did incalculable business damage to itself by merging with AOL, and in recent months has shed its record label and its Time-Life books-and-records division. It would love to sell its Little, Brown book subsidiary if it could find a taker, and it routinely contemplates ditching AOL. And we all know about the financial tragedy of the French water company that conglomerated itself into a media megalith (Vivendi) and deconglomerated itself in almost record time.
Comes now Viacom's idea of halving its behemoth self into a broadcasting-outdoor-sign company and a studio-cable-book operation—and no unreasonable offer for its book division would be refused, I suspect. Investors have seconded Viacom CEO Sumner Redstone's proposal, bidding Viacom stock up 9 percent at one point this week.
What's troubling the media giants' balance sheet is (hold onto your hat, Professor Bagdikian!) competition. In a piece about the Viacom plan, the March 17 Wall Street Journal reports that "new technologies, which include the Internet, satellite radio and digital-video recorders such as TiVo" and new media businesses are cutting media conglomerate profits. The article continues:
[T]he consolidation mania of the 1990s failed to produce the idealized benefits that drove the original mergers. Not only did infighting impede cooperative ventures, but slow decision-making led to missed opportunities. No media giant was savvy enough to buy Yahoo Inc. early on, for example, before it became an important player.
The infighting the Journal refers to is what the media companies got instead of synergy when they conglomerated. Ask anybody who works for a big media company how much cooperation they get from their corporate cousins, and you'll be greeted by a horse laugh. The broadcast division won't give the record division a sweet advertising deal if it can sell the same air time for more to an outside client. At the bottom of the ledger, every subsidiary must stand for itself.
Today's New York Timesillustrates the failure of synergy with a telling anecdote from an anonymice.
One indication of just how little synergy there was for Viacom is the fortunes of its movie studio. In the era of consolidation, media executives pointed to the advantages of combined studios with TV networks and cable networks.
At Paramount, the combination did not pay off. Viacom owns Paramount Pictures as well as MTV and CBS, but if Paramount made a movie that was poorly received, the film was likely do badly on television and cable. The same was true for television programs.
"Poor films and TV shows go right through the pipeline and destroy value," said a media executive who insisted on not being identified. And when a film studio makes a hit, the entire market should be able to compete for it to maximize its value.