MEDIA ECONOMICS

J201 Mass Media & Society

November 22, 2013

ECONOMICS:A STANDARD DEFINITION

The study of how societies use scarce resources to produce valuable commodities and distribute them among various groups (allocation of resources).

MEDIA ECONOMICS DEFINED:

“The study of how media industries use scarce resources to produce content that is distributed among consumers in a society to satisfy various wants and needs” (Albarran).

“A term employed to refer to business operations and financial activities of firms producing and selling output into various media industries” (Owers et al).

ECONOMICS CAN ALSO INFLUENCE:

Decisions about:…What? (Production)

…For Whom? (Allocation)

…How? (Capital, control, organization)

…And WHY?

MAJOR MEDIA CORPORATIONS

32,000 employees worldwide

TV, film, publishing, websites

Revenues from:Content (43% of

revenues)Subscriptions (33%)Advertising (21%)Other (3%)

TIME WARNER

Theme Parks and Resorts;

28%

Media Networks;

45%

Studio Enter-tainment; 18%

Consumer Products; 7% Interactive; 2%

WALT DISNEY COMPANY

Breakdown of Revenue Sources, FY2010

Source: Standard & Poor’s

149,000 employees

Some key recent acquisitions:• 2006 = Pixar• 2007 = Club

Penguin• 2009 = Marvel

Entertainment• 2010 = Playdom

Segments: Media networks (62% of FY 2010 revenues) Entertainment (38%)

Ad sales, feature films, affiliate fees, TV licensing, ancillary sources (incl. merchandise)

More than 2,000 websites Distribution partnerships with Hulu, Netflix,

Microsoft, Yahoo, Bebo, Veoh, etc. 159 channels in 159 countries in 30

languages

Comcast; 51%

General Electric;

49%

Ownership of NBC Universal

NBC/UNIVERSAL

GE =aircraft engines, power generation, water processing, medical imaging, NBC Universal

Comcast = video, high speed Internet and phone services

51,000 employees

NEWS CORPORATION

Cable Network Programming

Book Publishing

Other(advertising,

digital)

Integrated Marketing Services

Direct Broadcast

Satellite TV

Newspapers and Information

Services

Television

Filmed Entertainment

29 TV stations 130 radio stations Book publishing: Simon &

Schuster, Scribner, etc. CBS Films CBS Outdoors CBS Records (TV show

soundtracks)

Principal business segments:Consumer & Professional DevicesNetworked Products & ServicesPictures (movies, TV, etc.)MusicFinancial ServicesSony EricssonOther (Blu-Ray, DVD, CD manufacturing, plus

other) 168,200 employees

SONY CORPORATION

SOME OTHER MAJOR MEDIA CORPORATIONS

Publishing: Tribune, Gannett, Hearst, Bertelsmann

Telecom: Verizon, AT&T, T-Mobile, Sprint, Charter Communications

Tech: Apple, Google, Microsoft, Yahoo!

Radio: Clear Channel (owned by Bain Capital/Thomas H. Lee Partners)

http://www.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6

VIDEO: “THE IMPACT OF MEDIA OWNERSHIP”

STRUCTURAL TRENDS IN THE MEDIA INDUSTRIES

STRUCTURAL TRENDS

3 goals

Economies of scale Synergy (development and promotion) Branding Segmentation/specialization Diversification Globalization Joint ventures

PURPOSE OF MEDIA?

PURPOSE OF MEDIA?

InformationEntertainmentPublic serviceMake money

CommunicationInfluence

Other purposes?

BALANCE PURPOSES WITH NEEDS OF STAKEHOLDERS

What are stakeholders?

Who are media’s stakeholders?

What do these stakeholders need/want?

WHERE DOES THE PUBLIC INTEREST FIT IN? AND WHY DOES IT MATTER?

History of mediaPrint, broadcastingFCC, Radio Act of 1927: “serve the public

interest, necessity and convenience”

What about the introduction of newer media?

MEDIA & THE PUBLIC INTEREST

Information should circulate freely Ownership should be broad and diversified

(Some) media should be publicly accessible

“Serve” vs. “Target”

“Citizens” vs. “Consumers”

“Consumer control” vs. “consumer choice”