Whatever Happened to Media Consolidation?
Numerous writers and analysts have argued that large media conglomerates’ purchases of movie studios, magazines, and book publishing companies over the past four decades have had a deleterious effect on the quality of production in these media, because it forced them to bring in higher profits than were historically attainable.
But there were always two additional interesting questions regarding media conglomeration that needed to be asked and seldom were.
Question One was whether these industries would remain as appealing to corporations as they had become during the 1960s and thereafter.
Question Two was whether the decline in quality and increasing sameness of product from corporatized major publishers and film studios would cause a rise in competition from independent producers and publishers. And if the latter happened, might not the answer to Question One be that the big corporations might wish to unload some of these firms?
That does appear to be the case, with the well-documented rise of independent media productions, proliferation of new magazines (which has slowed only in the past few years), and increasing success of university presses, small book-publishing houses, and other such ventures.
In response, we are seeing strong signs of a reversal of the media consolidation trend of recent decades.
Time Warner, for example, is jettisoning numerous magazines “as it looks to prune its portfolio of smaller, less-profitable titles,” as The Wall Street Journal reported. This move is significant because it includes very popular magazines, such as Popular Science, Field & Stream, Outdoor Life, Skiing, Parenting, and Babytalk.
Of course, those publications will likely be sold to other big investors, because they are still worth a lot of money, but this will likely result in a more reasonable scale of organization for the publications and certainly more realistic profit expectations (note these are “less-profitable titles” for Time Warner)--or nobody would buy them.
Equally significant in recent news was the announcement by the New York Times Co. that it is selling off nine television stations in secondary markets such as Des Moines, Iowa and Memphis, Tennessee.
“The decision to explore the sale of our broadcast stations is a result of our ongoing analysis of our business portfolio,” said Janet L. Robinson, president and CEO. “These are well-managed and profitable stations that generate substantial cash flows and are located in attractive markets. We believe a divestiture would allow us to sharpen our focus on developing our newspaper and rapidly growing digital businesses, and the synergies between them, thereby increasing the value of our company for our shareholders.”
Critics of Consolidation
Leftist critics complained about the corporatization and consolidation of the media as an unwelcome phenomenon in the ‘60s and thereafter, and they were correct to point out there would be deleterious effects. There may indeed have been an initial increase in sameness of movie and TV productions and a loss of creativity and vitality in the book publishing industry, especially in the fiction section.
Market-oriented analysts simply replied by saying the consolidation was good because it was what people wanted and they wouldn’t do it if it didn’t make sense. That was not the correct response, however. People do stupid things, and corporations do stupid things too.
The sensible rejoinder should have been that the media consolidation that began in the 1960s was most likely part of a societal and technological transition that would ultimately work to everybody’s benefit, as free markets typically do over the long term. We had already seen that happen in other industries, and there was no real reason to believe the media and communications industries would be any different.
And that appears to be what has happened and is happening today.
Contrary to the leftists’ claims, competition among media providers actually increased during the period of consolidation, and new technologies forced significant change, as a simple glance at the current media landscape should make abundantly clear. In response to that competition, big media companies are beginning to divest themselves of some of their media holdings in order to make themselves leaner and more effective at responding to competition, as the New York Times statement makes clear.
That process will increase media competition further, and will create increased capacity for variety, efficiency, and customer satisfaction in the communications media. That is what markets do, and it is always for the good in the long term.
S.T. Karnick (firstname.lastname@example.org) is director of publications for The Heartland Institute and an associate fellow of the Sagamore Institute for Policy Research.