Who Owns the Media? Competition and Concentration in the Mass Media Industry
Benjamin M. Compaine and Douglas Gomery
The primary objective of this book is to update a series begun with the first edition of Who Owns the Media? in 1979, and its update of 1982. Much has happened in 17 years, and we wish to bring that portrait current to the end of the 20th century by providing data points and trends over that time. Secondarily, this new edition offers an opportunity to evacuate the forces and trends identified in the earlier editions, and map new ones that have arisen since then.
Some History Behind WOTM?
As is sometimes the case in our decision processes, Who Owns the Media? was largely the outcome of serendipity. In 1977 Ben Compaine was director of books and studies for a small publishing company, Knowledge Industry Publications, Inc., KIPI. It was a period of some merger activity, particularly in book publishing and newspapers and the Federal Trade Commission announced a symposium on the subject of media ownership and concentration. KIPI was approached by a mid-level executive of CBS, Inc. about creating a report for them on trends in media mergers. As a publisher, not a research company, KIPI management thought it would be conflict of interest to be engaging in proprietary research. However, Efrem Sigel, the editor-in-chief, did spot an opportunity. He suggested to Compaine and publisher Elliot Minsker that this might be a timely topic for a book.
The idea behind the book was to gather hard data on the trends in the media industry sectors: circulation, audience, advertising, prices, titles, subjects and, of course, ownership and its changes. They knew that most policy discussions about media ownership tend to start with anecdotal, individual complaints: stories about an author who didn't get published because of some real or perceived corporate interference or an editor who claimed she made decisions based on what she thought the corporate office wanted or some news segment that was or was not aired due to some actual or imagined corporate self interest. But what was really known? Was there a body of valid and reliable research that provided support for various hypotheses about the direction and effects of media ownership?
The editorial viewpoint of the series, it was decided from the start, was to begin with a blank slate. Compaine assumed, based on exposure to the media's owns reports of mergers and acquisitions, that there was growing consolidation. But the book was not conceived to try to support or undermine any particular ideology or point of view. Time was short and the topic was hot. The FTC symposium was months away.Compaine, who had recently completed his Ph.D. dissertation on the newspaper industry, had a head start in that area. The plan was to do an edited volume, drawing on he contributions of experts in each of the traditional media segments. Compaine called a former professor of his at Temple University, Chris Sterling, who had written extensively on broadcast and cable regulation. Sterling agreed to the tight time frame for the first draft (three months) and suggested Tom Guback, of the University of Illinois, as someone who knew the film industry well. Compaine turned to Ken Noble, a top publishing analyst at PaineWebber, for the book publishing section. Compaine took on the magazine chapter as well as being general editor of the book and pulling together the conclusions.
Working with a condensed publishing schedule, Compaine and the KIPI staff managed to have bound hard copies off the press barely nine months from the project's inception. Typically it takes a publisher at least that long to get finished copies from the time they have the completed manuscript. And this was before authors provided their text in digital media. The first edition was greeted with generally positive reviews in the trade press as well as The New York Times. The second edition, only three years later, was primarily an update. The major change was the addition of Chapter 8, "Who Owns the Media Companies?" in response to one of the comments in a review.
This Edition of WOTM?
And that is where WOTM? was frozen until now. The initial goals of the publisher and editor were largely confirmed by the way the book was used. It was cited in subsequent articles, research and publications as often in support of someone's position of increasing concentration as in cases suggesting healthy continued competition. Over the years Compaine had been asked repeatedly to revise the 1982 edition. But the effort is considerable and there were always other projects that seem to take precedence. But in 1995, at the Broadcast Education Association conference in Las Vegas, Chris Sterling suggested it was timely to re-do the book and while Sterling passed on the opportunity to update his chapters, we are happy to have him provide the foreword to this edition. Neither Tom Guback nor Ken Noble, part of the original group, were available. Fortunately, Douglas Gomery, whose column "The Economics of Television" is a regular feature of the American Journalism Review, was.
The current edition is co-authored by Compaine and Gomery, a departure from the previous edition's contributions edited by Compaine. Compaine's and Gomery's individual contributions are noted in the following chapters while we have authored this initial chapter together.
The basic structure of the series was followed with several substantial additions. Most obviously Compaine added a chapter covering the online information business. This looks primarily at the use of the Internet and the World Wide Web as both a complement and competitor to the established media. Gomery added a second half to the radio chapter, covering the recorded music industry. Music publishing is often part of other media companies, makes up a large portion of the content of radio, and plays a large role in theatrical films and, increasingly, the Internet.
We have made a few structural changes as well. In chapter 5 Gomery considers television as a single industry, whether viewed via terrestrial broadcast, cable or satellite. Thus, competition, rather than the artifact of regulatory regime, is the organizing principal. Similarly, Gomery analyzed all the venues of the film industry together -- theatrical film, pay-TV, and home video. We are convinced these additions and changes better organize the understanding of these industry segments.
Objectives of the Book
In the end, the objective of the original editions holds for this one as well: "To bring together as much relevant data as feasible on the nature and degree of competition and ownership in the mass media business." The motivation then, as now, was to provide an empirical context for the continuing debate on the structure of the traditional media segments. By 1999 it had become readily apparent, however, how artificial traditional boundaries have become. The real action and issues rests on the borders between and beyond the conventional industries; yet for continuity sake we have fundamentally retained the series' basic organizational structure.
Another objective, inescapable given the title of this volume, was to specifically identify the owners of media properties. This included the corporate owners and, to the limited extent possible, many of the largest individual and institutional owners of the media corporations themselves. The book explores the extent of concentration in the media industries as the 20th century ended, and compares then-current levels with those of previous periods.
Third, this volume preserves what many users said was a strength of the previous editions: the noticeably different voices of the authors. In those volumes Chris Sterling wrote from his forte as a historian of the media, particularly regulation. Ken Noble was a financial analyst. Tom Guback wrote from what has been called in academic circles the "critical [of capitalism]" perspective. And Compaine took more of a managerial economist's perspective.
In this current volume, readers will readily find a difference in both style and substance between the authors. Compaine maintains his data-mongering, stick-to-the-facts approach. Gomery follows the industrial organization framework for analysis as he has laid out in a companion Erlbaum book.1 The I/O model begins with analysis elements of market structure, the focus of this edition of WOTM?
This has lead to a rather unique ending to this edition: two concluding chapters. While the two authors probably agree more than they disagree on the interpretation of the data, it would have looked like the literary equivalent of a pretzel had we written a common conclusion that we both felt comfortable with. But such differences of analysis and interpretation define the very debates of media ownership. When, for example, Compaine sees that the merger of cable companies should be positive for greater competition in the merging arena of telephony and data transmission, Gomery looks at the same events and expresses concerns about AT&T's domination of the consolidation in the cable industry. Such interpretations are what policy debates are about. So our third objective is to highlight these differences and encourage readers to join in (not that anyone seems to need an invitation) in their seminars, board rooms or rule making proceedings.
How to Use This Book
How each reader uses this book depends on your motivation for holding it. There is no need to read it sequentially. Each of the first chapters is relatively self-contained. Some readers, however, might find greater context by reading the concluding chapters first: in understanding where each author comes out there may be greater understanding of the analysis each author lends to his chapters. On the other hand, other readers might find this "pollutes" them, or creates a predisposition to a certain slant. They may prefer -- and we would not discourage -- such readers to make their own analyses and then check out our conclusions later. In addition this book serves as a data baseline as the 20th century ends.
But most of all, we hope it serves as a analytical primer for mass media industries, a mapping of these important communication and entertainment industries. A map helps travelers get from point A to point B. On the physical roads themselves, the landscape may change some over the years: gas stations open and close, fast food restaurants spring up, housing developments are built or old buildings torn down. But those changes do not affect the reality that the road still goes from point A to B. So we hope that WOTM?3 continues to serve that function in understanding the forces behind acquisitions, divestitures, mergers, start-ups, regulatory changes and the like. Tracking those daily developments is the role of weekly newsletters and instant Web updates. Besides its static presentation of data series that end in 1996 or 1999, Who Owns the Media? should help readers understand why these things happen as well as what contexts may be appropriate for analyzing their import.
1. Alison Alexander, James Owers and Rod Carveth, Media Economics: Theory and Practice, 2nd ed. (Mahwah, NJ: Lawrence Erlbaum Associates, Publishers, 1998).