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Media Globalization Oct 17/05

Outline1. Review/Intro2. McChesney Thesis3. Attributes of a Global Media System4. Three Global Media Companies

• Time-Warner• Disney• News Corporation

5. Lincoln Report6. VIDEO: Conrad Black7. Your articles8. Summary

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1. Review/Intro

What have I learned?

What’s a bit muddy?

What would I ask?

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Exercise

Choose an example of your use of a media product(s) and how it ties back to TW, News Corp/Fox or Disney?

Is the connection clear?

Share it with others in the group..

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2. McChesney Thesis

- Emerging global commercial media system- Detailed examination of:

- (AOL)Time-Warner, Disney and News Corporation- Shows certain characteristics

- Tied in with largest TNC’s- Cross-media- Huge Growth- Oligopolisitc tendencies- Predominance of US base - Brand Leveraging

- “Missionaries of Globalization”

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3. Attributes of a Global Media System

a) Denationalization of telecomb) Privatization/commercialization of pubcastersc) Deregulation/re-regulationd) Integration horizontally and vertically inside

states, with links to TNC’se) Media power concentration in regional state

groupings

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4. Three Global Media Companies

- Time-Warner- Disney- News Corporation

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The World’s Top Nine (plus one Canadian…)

Company 2004 Revenues ($Billions)

General Electric $183B (153 US)*AT&T $50B (41 US)Time-Warner $48B (40 US)Disney $37B (30 US)Sony (Japan) …News Corporation (US; from Australia in 2004) $25B (21 US)Viacom $24B (20 US)Vivendi (France) …Bertelsman (Germany) …Corus/Shaw Communications $2.6 (2.2 US)

* Note that the bulk of GE is in non-media businesses; AT&T still is predominantly telecommunications.

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Canada’s Top 10

Company 2001 or 2002 Revenues ($Billions)

Corus Entertainment and Shaw Communications 2.6Rogers Communications 2.2CanWest Global Communications 2.1Quebecor 1.9BCE 1.2Torstar .8Cogeco .5CHUM Limited .5Astral Media .4Power Corporation .3

Source: CESM, Heritage Report, 2003: p.9

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i) Time-Warner

New Line Cinema’s Wedding CrashersBreaks $180M to Become the Top-Grossing Comedy of 2005August 25, 2005

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i) Time-Warner1997

Revenues $26B

Major Holdings

-US TV network (WB)-US cable systems (largest)-Cable TV Channels, e.g. CNN, HBO-Warner Bros. Film and TV Studios -Magazines (time, People, SI, Fortune- total of 155)-Warner Music group-Time-Life Publishing -Sports Teams-Toy Companies-Involvement in US satellite systems

History -1989 Time and Warner merge-1996 TW buys Turner Broadcasting

Key Attributes

-Media conglomerate (all media except radio/newspapers)-Combination media content and distribution-Highly recognized brand names (e.g. Looney Tunes - $4B value)-Double digit growth through 1990s-35% of revenues outside US

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i) Time-Warner1997 2004-05

RevenuesMajor Holdings

History

Key Attributes

$40B$26B

-US TV network (WB)-US cable systems (largest)-Cable TV Channels, e.g. CNN, HBO-Warner Bros. Film and TV Studios -Magazines (time, People, SI, Fortune-total of 130)-Warner Music group-Time-Life Publishing -Sports Teams-Toy Companies-Involvement in US satellite systems

-1989 time and Warner merger-1996 buys Turner Broadcasting

Plus:-AOL (2000)-AOL Internet Phone Service (VOIP) in 40 markets-Magazines up to 155

-2000 AOL merger (biggest deal in history)-2003 Big losses of $54M (CEO Steve Case fired); rebounds in 2004

-Media conglomerate (all media except radio/newspapers)-Combination media content and distribution-Highly recognized brand names (e.g. Looney Tunes - $4B value)

-Movement into telecommunications

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http://www.timewarner.com/corp/aboutus/twcenter/index.htmlTime-Warner Center in NYC

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ii) Disney

CEO, Michael Eisner

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ii) Disney1997

Revenues $23B

Major Holdings

-ABC TV network-ABC Radio network-Cable TV: Disney Channel, ESPN, A+E, etc.-Film Production: Walt Disney Pictures, Miramax-TV production and Distribution: Buena Vista-Theme parks, e.g Disneyland-Retail Stores-Sports teams-European TV companies-Cruise Line /Model community-Publishing: Hyperion (1991)

History -1923 Walt Disney starts company-1955 Disneyland

Key Attributes

-Branding is key…-Total control over content, distribution and retail (Merchandizing of films outstrips movie sales…)-Big push to build the sports brand through teams and ESPN

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ii) Disney1997 2004-05

Revenues $23B $30B

Major Holdings

-ABC TV network-ABC Radio network-Cable TV: Disney Channel, ESPN, A+E, etc.-Film Production: Walt Disney Pictures, Miramax-TV production and Distribution: Buena Vista-Theme parks, e.g Disneyland-Retail Stores-Sports teams-European TV companies-Cruise Line /Model community-Publishing: Hyperion (1991)

-Radio Disney-Touchstone Pictures

History -1923 Walt Disney starts company-1955 Dsineyland

-2004 buys Muppets-Attempts in 2003 to dislodge Eisner

Key Attributes

-Branding is key…-Total control over content, distribution and retail (Merchandizing of films outstrips movie sales…)-Big push to build the sports brand through teams and ESPN

-Some move away from Sports teams (LA Dodgers and Mighty Ducks sold-Move into cable distribution in Latin America (2004)

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ii) DisneyMichael Eisner, CEO, The Walt Disney Company(Letter to shareholders in 2004 annual report)

Fellow Owners and Cast Members:

2004 was certainly a momentous year for The Walt Disney Company. By every measure, the Company prospered. Earnings per share were up 72%; the stock price was up 12%; and operating income, return on invested capital and cash flow were all up significantly, with cash flow hitting record levels. Performance of this kind would be gratifying under any circumstances. But it was that much more so given the circumstances in which it was achieved.

The past several years were influenced by the horror of 9/11, a worldwide recession, two wars, a downturn in tourism, an unsolicited and below market offer by Comcast to buy your Company and an unusually intense publicity campaign against the Board and management by two dissident former directors. As we confronted this confluence of events we were resolute in keeping our focus on the operations of the Company and returning to the kind of stellar performance our shareholders expect of us. I am exceedingly proud of our management team and entire Cast, who not only kept the Company on course throughout this challenging period, but were able to deliver the

phenomenal results it did as the turbulence began to subside.

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iii) News Corporation

CEO Rupert Murdoch

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iii) News Corp.1997

Revenues $12B

Major Holdings

-Fox TV-22 affiliate stations-20th Century Fox Film and TV production-Newspapers: 130 including the Times of London-Magazines: 25 including TV Guide-Book publishing: Harper-Collins -BskyB (British Satellite system)-Asian TV production,channels and satellite (Star TV)

History -started from a based of newspaper publishing in Australia-move to British newspapers and satellite

Key Attributes

-One of the most aggressive in global media expansion-Satellite and conventional TV cover 75% of global population

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iii) News Corp.1997 2004-05

Revenues $12B $21B

Major Holdings

-Fox TV-22 affiliate stations-20th Century Fox Film and TV production-Newspapers: 130 including the Times of London-Magazines: 25 including TV Guide-Book publishing: Harper-Collins -BskyB (British Satellite system)-Asian TV production,channels and satellite (Star TV)

-Cable TV and Australian satellite TV expansion-magazines up to 175-Harper-Collins buys Fourth Estate publishers-Big satellite TV expansion in US, Latin American and Italy -Fox news takes up leading news channel share position (enters Canada in 2004)

History -started from a based of newspaper publishing in Australia-move to British newspapers and satellite

Rupert Murdock moves HO from Adelaide to LA in 2004

Key Attributes

-One of the most aggressive in global media expansion-Satellite and conventional TV cover 75% of global population

-Furthering international expansion form new US base

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Rupert Murdoch’s Address to Shareholders in October 2004.

IN FISCAL 2004 THAT COMBINATION OF FORESIGHT AND OPERATIONAL EXCELLENCE HELPED NEWS CORPORATION BECOME WHAT MANY IN OUR INDUSTRY NOW CONSIDER TO BE A TEMPLATE FOR HOW A 21ST CENTURY MEDIA COMPANY SHOULD LOOK. LAST YEAR, WE COMPLETED THE TRANSFORMATIVE DIRECTV DEAL WHICH GAVE US A 34% INTEREST IN THE LARGEST SATELLITE PLATFORM IN THE LARGEST MARKET IN THE WORLD; WE BEGAN THE SWIFT TURNAROUND AT SKY ITALIA AND, AFTER THE FISCAL YEAR ENDED, BOUGHT OUT OUR MINORITY PARTNER IN THE BUSINESS; AND, WITH THE PROPOSAL TO REINCORPORATE THE COMPANY IN THE UNITED STATES, WE ARE HOLDING OUT THE PROMISE OF A NEW AND MORE PROSPEROUS ERA FOR NEWS CORP. SHAREHOLDERS. I’LL TALK MORE ABOUT THE REINCORPORATION IN A MINUTE, BUT LET ME BRIEFLY BRING YOU UP TO DATE ON THE STRATEGIC GAINS WE ACHIEVED IN FISCAL 2004.

THE HIGHLIGHT OF THE YEAR WAS THE ADDITION, LAST DECEMBER, OF A US DISTRIBUTION SYSTEM TO OUR GLOBAL SATELLITE PAY-TV PLATFORM WHEN WE ACQUIRED A CONTROLLING INTEREST IN DIRECTV. WITH DIRECTV’S 13 MILLION SUBSCRIBERS, NEWS CORPORATION HAS ACCESS TO NEARLY 30 MILLION SUBSCRIBERS AROUND THE WORLD WHEN ADDED TO THE CUSTOMERS OF BSKYB, SKY ITALIA, OUR PLATFORMS IN LATIN AMERICA AND, HERE IN AUSTRALIA, FOXTEL.

BY COMBINING NEWS CORPORATION’S INDUSTRY-LEADING CONTENT CREATION BUSINESSES – THE MOVIES AND TV SERIES WE PRODUCE – WITH THE WORLD’S ONLY GLOBAL DISTRIBUTION PLATFORM, WE HAVE COMPILED WHAT I BELIEVE IS THE INDUSTRY’S MOST FORMIDABLE GROUPING OF ASSETS.

IT GIVES US THE ABILITY TO BETTER CONTROL OUR OWN DESTINY IN AN UNCERTAIN AND INCREASINGLY CONSOLIDATED GLOBAL MARKETPLACE BY ENABLING US TO CREATE CONTENT THAT WE KNOW WILL BE SEEN. BUT WE DIDN’T JUST ACQUIRE OUR INTEREST IN DIRECTV FOR ITS STRATEGIC BENEFITS. IT IS A GREAT BUSINESS IN ITS OWN RIGHT.

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Writes Al Franken of Murdoch:

"There's one important thing you should know about Murdoch. He'sevil. I defer to the . . . Columbia Journalism Review: 'Murdoch uses his diverse holdings . . . to promote his own financial interests at the expense of real news gathering, legal and regulatory rules, and journalistic ethics. He wields his media as instruments of influence with politicians who can aid him, and savages his competitors in his news columns. If ever someone demonstrated the dangers of mass power being concentrated in few hands, it would be Murdoch.'"

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More Information:

Columbia Journalism Review web site

www.cjr.org/tools/owners/newscorp.asp

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THINK BREAK

What have I learned?

What’s a bit muddy?

What would I ask?

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5. The Lincoln Report

- Familiarity?

- “Globalization and Cultural Diversity”- Nature of current cultural exemptions- International pressures- “International instrument to protect cultural

sovereignty”

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Cultural Exemptions

- Sec 2005 of FTA- “cultural industries are exempt form the

provisions of this agreement”- Also built into NAFTA

- WTO 1997 ruling - split-run magazines

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International Pressures – Same global media groups…

• Arguing:– “cultural sovereignty concerns are unwarranted”– “cultural exemption could backfire”

• Direct interventions to Heritage:– AOL-Time-Warner– CMPDA (Disney, TW, News Corp., etc.

• Previously:– CMT 1994 CRTC ruling (Viacom(CBS)/Shaw)– WTO 1997 Ruling (TW’s Sports Illustrated)

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International Instrument

- Canada taking leadership internationally (in part though UNESCO)

- Goals:- Recognize the importance of cultural diversity- Acknowledge that cultural good sand services are

significantly different from other products- Acknowledge that domestic measures and policies

intended to ensure access to a variety of indigenous products are significantly different from other policies.

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6. VIDEO: Conrad Black

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7. Your Articles

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8. Summary

1. McChesney Thesis2. Attributes of a Global Media System3. Three Global Media Companies

• Time-Warner• Disney• News Corporation

4. Lincoln Report5. VIDEO: Conrad Black