TRENDS IN COMMUNICATIONS

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TRENDS IN COMMUNICATIONS

• An Introductory Overview

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(1) Growth in Media

• Proliferation of technologies now including
  computers, vcrs, dvds, mobile phones etc.
• Greater portability and consumption opportunities
• Growth in circulation up considerably, from
  1940s, with some recent exceptions (newspapers,
  recorded music)
• Financial growth (e.g. money spent on advertising
  up 40bn to 179bn, 1950-1995)
• Expansion in media employment (from 20 in case
  of books to over 100 in case of movies,
  1970-1996)
• Many more editorial outlets overall (e.g. in
  television, from a handful of stations to several
  hundred video and Internet).

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Growth (ctd).

• Instances of global media growth
• 1964-2004 TV households increase six-fold to 1.2
  billion (world pop 6 billion)
• Cable and satellite households increase from 85
  million to 300 million in 1990s
• Internet is accessed by 500 million people
  worldwide

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2. Mergers and Acquisitions (MA)

• Bagdikian (2000) Depending on measures, major
  U.S. media are owned by between 6 and 23 media
  conglomerates

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MA (ctd.)

• Occur
• vertically (company buys company that supplied
  it, or that it supplies e.g. TV network buys
  Hollywood studio)
• horizontally (company acquires second
• company in same business e.g. theater chain
  buys another theater chain)
• by conglomeration (a company building a
  portfolio of different kinds of businesses) may
  be intra-media (media only) or extra-media
  (media plus non-media)

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MA (ctd.)

• Motivated by desires for economic gain, market
  control and predictability, synergy, cash flow,
  economies of scale, cross-subsidization,
  cross-promotion, global market activity,
  convergence, create barriers to new competition,
  tax benefits, greed and vanity.

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MA (ctd.)

• Stimulated by low interest rates, inflation,
  company valuation, future expectations of growth,
  and all factors affecting rates of return, and
  availability of finance.
• Some mergers fail convergence slow to happen,
  huge debt, overpayment, organizational conflicts,
  falling security prices, falling valuations

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(3) Regulation / Deregulation

• Regulation mainly affects scarce resource media
  (broadcast frequencies public rights of way in
  case of cable) or natural monopoly markets
  (telephony, cable, some newspapers).
• 1980s-1990s, incl. 1996 Telecommunications Act, a
  period of deregulation or of re-regulation
  away from criteria of public interest to criteria
  of competition.
• Deregulation stimulated by technological advance
  incl. digitization (increase in broadband),
  desire for MA, neoliberal philosophies

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(4) Convergence

• Convergence disappearance of technological
  differences among distribution networks
• Allows multiple applications over the same
  network to different platforms
• Allows for leverage of content over increased
  number of distribution networks and enhances
  cross-promotion

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(5) Globalization

• International markets are prime source of revenue
  growth following saturation of domestic markets
• May involve producing separate or customized
  content for different markets
• Enhanced by policies of deregulation and
  liberalization in many countries
• Motivated by desire for more revenue, leveraging
  of content, cross-subsidization etc.

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(6) Concentration of Media Markets

• Local (e.g. largest four radio owners gained 93
  of revenues in top 283 markets one cable
  provider in most markets, one dominant fixed-wire
  local telephony provider in most markets)
• National (e.g. four major TV networks two major
  satellite providers six largest MSOs provide
  service to 60 of cable subs 20 newspaper chains
  account for 70 of daily circulation 10 largest
  film distributors owned by 6 conglomerates
  account for 90 of revenues)
• Special Interest (e.g. two major players,
  Univision and Telemundo)

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Concentration (ctd.)

• Evaluation of significance of concentration
  complicated by
• different assessments as to when market is
  dominated by one or few
• new technologies sometimes create entirely new
  markets even if concentrated, more customer
  opportunities have been created

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(7) Digitization

• All forms of communication progressively more
  available for translation into computer language,
  and delivery over digital systems. This enhances
  convergence, and conglomeration.
• Digitization creates significant problems of
  transition and coordination between content,
  distribution and receiver technologies (e.g.
  currently, in case of television).

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(8) Privatization

• Process of removing media from government
  ownership / control and placing (selling) them
  into private hands OR of requiring government
  owned media to become semi-commercial.
• In U.S. privatization has affected broadcasting
  structure, attitudes to PBS funding, satellite
  systems, Internet development.
• Privatization enhances globalization

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(9) Commercialization

• The process whereby increasingly, over time, more
  and more aspects of media activity, including
  news and information, are determined by
  bottom-line mentality on behalf of owners and
  shareholders. Examples include dumbing down of
  television news product placement in Hollywood
  movies intensification of sex and violence
  reduction in political coverage on television
  news increase in number of advertisements per
  hour of entertainment.

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(10) Branding

• Range of strategies employed to increase extent
  to which corporate identities acquire household
  or consumer recognition. Branding aids
  marketing, and stimulates MA activity to extend
  brand name over wider range of products or
  services.

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(11) Synergy

• Combining of resources, talents, archives etc.,
  in a way that creates a Whole that is richer than
  the sum of individual Parts.
• Quest for synergy drives much MA activity

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(12) Specialization

• Also narrowcasting, customization,
  localization.
• Targeting small, specialized audiences.
• Often based on advertising economics.
• Specialist media typically owned by larger
  conglomerates.
• Opportunities facilitated by new technologies
  (cable channels, websites)

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(13) Competitivazation

• Process typically triggered by (a) new
  regulations that reduce restrictions on ownership
  or (b) new technologies that create entirely new
  markets (e.g. cell phones).
• These attract new entrants into given markets,
  creating the appearance, sometimes the reality of
  great competition.
• But, almost immediately, competition is followed
  by MA activity until one or a small number of
  companies dominate the market

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Specialization (ctd)

• If advertiser can reach 100 people for 100 and
  every one of those 100 people buys his 10
  product, that is better than spending 100 to
  reach 10,000 people of whom only 50 end up buying
  the product. In the first case he earns 900 in
  the second case he earns 400.
• Examples a cigar manufacturer who advertises in
  cigar magazine rather than LA Times.