Global Media Giants

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Some nations can influence and control
their media greatly. In addition, powerful
corporations also have enormous influence
on mainstream media.
In some places major multinational
corporations own media stations and
outlets. Often, many media institutions
survive on advertising fees, which can lead
to the media outlet being influenced by
various corporate interests.
Other times, the ownership interests may
affect what is and is not covered. Stories
can end up being biased or omitted so as
not to offend advertisers or owners.

The ability for citizens to make informed

decisions is crucial for a free and
functioning democracy but now becomes
threatened by such concentration in
ownership.
The global commercial system is a very
recent development.
Until the 198Os, media systems were
generally national in scope.
While there have been imports of books,
films, music and TV shows for decades, the
basic broadcasting systems and
newspaper industries were domestically
owned and regulated.
Beginning in the 198Os, pressure from the
IMF, World Bank and U.S. government to
deregulate and privatize media and
communication systems coincided with
new satellite and digital technologies,
resulting in the rise of transnational media
giants.
How quickly has the global media system
emerged?
The two largest media firms in the world,
Time Warner and Disney, generated
around 15 percent of their income outside
of the United States in 1990.
By 1997, that figure was in the 30 percent-
35 percent range.
The global media system in now
dominated by a first tier of nine giant firms.

The five largest are Time Warner, Disney,

Bertelsmann, Viacom, and Rupert
Murdoch’s News Corporation.
Besides needing global scope to
compete, the rules of thumb for global
media giants are twofold:

First, get bigger so you dominate markets

and your competition can’t buy you out.

Firms, like Disney and Time Warner have

almost tripled in size this decade.
Second, have interests in numerous media
industries as film production, book
publishing, music, TV channels and
networks, retail stores, amusement parks,
magazines, newspapers and the like.

The profit whole for the global media giant

can be vastly greater than the sum of the
media parts.
A film, for example, should also generate
a soundtrack, a book, and merchandise,
and possibly spin-off TV shows, CD-ROMs,
video games and amusement park rides.

Firms that do not have conglomerated

media holdings simply cannot compete
in this market.
While they are not as diverse as the media
holdings of the first five global media
giants, these four firms have global
distribution and production in the areas
where they compete.

And firms like Sony and GE have the re-

sources to make deals to get a lot bigger
very quickly if they so desire.
In short, the overwhelming majority (in
revenue terms) of the world’s film
production, TV show production, cable
channel ownership, cable and satellite
system ownership, book publishing,
magazine publishing and music
production is provided by these 50 or so
firms, and the first nine firms thoroughly
dominate many of these sectors.
By any standard of democracy, such a
concentration of media power is troubling,
if not unacceptable
 Time Warner
 Time Warner, the largest media corporation
in the world, was formed in 1989 through the
merger of Time Inc. and Warner
Communications.
 In 1992, Time Warner split off its entertainment
group, and sold 25 percent of it to U.S. West,
and 5.6 percent of it to each of the Japanese
conglomerates Itochu and Toshiba. It
regained from Disney its position as the
world’s largest media firm with the 1996
acquisition of Turner Broadcasting.
Time Warner has zeroed in on global
television as the most lucrative area for
growth. Unlike News Corporation, however,
Time Warner has devoted itself to
producing programming and channels
rather than developing entire satellite
systems.

Tie Warner is also one of the largest movie

theater owners in the world, with
approximately 1,000 screens outside of the
United States and further expansion
projected.
The Time Warner strategy is to merge the
former Turner global channels--CNN and
TNT/Cartoon Channel with their HBO
International and recently launched
Warner channels.

HBO International has already established

itself as the leading subscription TV
channel in the world; it has a family of
pay channels and is available in over 35
countries.
Disney

Being a dominant global content producer to

being a fully integrated media giant with the
purchase of Capital Cities/ABC for $19 billion,
one of the biggest acquisition in business
history.
Disney now generates 31 percent of its
income from broadcasting, 23 percent
from theme parks, and the balance from
“creative content,” meaning films,
publishing and merchandising.

The ABC deal provided Disney, already

regarded as the industry leader at using
cross-selling and cross-promotion to
maximize revenues, with a U.S.
broadcasting network and widespread
global media holdings to incorporate into
its activities.
Disney “is uniquely positioned to fulfill
virtually any marketing option, on any
scale, almost anywhere in the world.”

Historically Disney has been strong in

entertainment and animation, two areas
that do well in the global market
In 1996 Disney reorganized, putting all its
global television activities into a single
division, Disney/ABC International
Television.

Its first order of business is to expand the

children and family-oriented Disney
Channel into a global force, capitalizing
upon the enormous Disney resources.
 For the most part, Disney’s success has been
restricted to English-language channels in
North America, Britain and Australia. Disney’s
absence has permitted the children’s
channels of News Corporation, Time Warner
and especially Viacom to dominate the
lucrative global market.
 Disney launched a Chinese-language Disney
Channel based in Taiwan in 1995, and plans to
launch Disney Channels in France, Italy
Germany and the Middle East. “The Disney
Channel should be the killer children’s service
throughout the world,” Disney’s executive in
charge of international television states.
With the purchase of ABC’s ESPN, the
television sports network, Disney has
possession of the unquestioned global
leader.
ESPN has three U.S. cable channels a
radio network and the ESPN Sports Zone
website, one of the most heavily used
locales on the Internet.
With ESPN and the family-oriented Disney
Channel, Disney has “two horses to ride in
foreign markets, not just one.”
Disney’s plans call for a chain of ESPN
theme sports bars, ESPN product
merchandising, and possibly a chain of
ESPN entertainment centers based on the
Club ESPN at Walt Disney World.

In late 1996, Disney began negotiations

with Hearst and Petersen Publishing to pro-
duce ESPN Sports Weekly magazine, to be
a “branded competitor to Sports
Illustrated.”
Bertelsmann is the one European firm in
the first tier of media giants-
The Bertelsmann empire was built on
global networks of book and music clubs.
Music and television provide 31 percent of
its income, Book publishing 33 percent,
magazines and newspapers 20 percent,
and a. global printing business accounts
for the remainder.
In 1994 its income was distributed among
Germany (36 percent), the rest of Europe
(32 percent), the United States (24 percent)
and the rest of the world (8 percent).
 Bertelsmann’s stated goal is to evolve “from a
media enterprise with international activities into a
truly global communications group.”
 Bertelsmann’s strengths in global expansion are its
global distribution network for music, its global
book and music clubs, and its facility with
languages other than English.
 It is working to strengthen its music holdings to
become the world leader, through a possible
buyout of-or merger with- EM1 and through
establishing joint ventures with local music
companies in emerging markets.
 Bertelsmann has two severe competitive
disadvantages in the global media sweepstakes.
It has no significant film or television production
studios or film library and it has minimal
involvement in global television, where much of
the growth is taking place.
 The company began to address this problem in
1996 by merging its television interests (Ufa) into a
joint venture with Compagnie Luxembourgeoise
de Telediffusion (CLT), the Luxembourg-based
European commercial broadcasting power.
According to a Bertelsmann executive, the CLT
deal was “a strategic step to become a major
media player especially in light of the recent
European and American mergers.”
Viacom

 In 1994, thereby promoting the firm from’ $2

billion in 1993 sales to the front ranks.

 Viacom generates 33 percent of its income

from its film studios, 33 percent from its
music, video rentals and theme parks, 18
percent from broadcasting, and 14 percent
from publishing.
Viacom’s growth strategy is twofold. First, it
is implementing an aggressive policy of
using company-wide cross-promotions to
improve sales.
Second, Viacom has targeted global
growth, with a stated goal of earning 40
percent of its revenues outside of the
United States .
It is already a world leader in children’s
television, reaching 90 million TV
households in 70 countries other than the
United States-where it can be seen in 68
million house- holds and completely
dominates children’s television.
News Corporation
The News Corporation is often
identified with its head, Rupert
Murdoch, whose family controls some
30 percent of its stock. Murdoch’s
goal is for News Corporation to own
multiple forms of programming-news,
sports, films and children’s shows-and
beam them via satellite or TV stations
to homes in the United States, Europe,
Asia and South America.
News Corporation operates in nine different
media on six continents.
filmed entertainment
newspapers,
Television,
Magazines
book publishing
News Corporation has been masterful in
utilizing its various properties for cross-
promotional purposes, and at using its
media power to curry influence with public
officials worldwide.
Although News Corporation earned 70
percent of its 1995 income in the United
States, its plan for global expansion looks
to continental Europe, Asia and Latin
America, areas where growth is expected
to be greatest for commercial media.

Until around 2005, Murdoch expects the

surest profits in the developed world,
especially Europe and Japan. News
Corporation is putting most of its eggs in
the basket of television, specifically digital
satellite television
It plans to draw on its experience in
establishing the most profitable satellite
television system in the world, the
booming British Sky Broadcasting (BSkyB).

News Corporation is spending billions of

dollars to establish these systems around
the world;
Sony
Music accounts for about 60 percent
of Sony’s media income and film and
television production account for the
rest. Sony is a dominant
entertainment producer. It also has
major holdings in movie theaters in
joint venture with Seagram.
 Sony was foiled in its initial attempts to find
synergies between hardware and software,
but it anticipates that digital communication
will provide the basis for new synergies.
 Sony hopes to capitalize upon its vast
copyrighted library of films, music and TV
programs to leap to the front of the digital
video disc market, where it is poised to be
one of the two global leaders with Matsushita.
 Sony also enjoys a 25 percent share of the
multi-billion-dollar video games industry; with
the shift to digital formats these games can
now be converted into channels in digital
television systems.