The Political Economy of the Media (International Library of Studies in Media and Culture Series, vol.1

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The Political Economy of the Media Volume I

-T The Internat ional Library of Studies in Media and Culture Series Editors: Laurie Taylor Emeritus Professor of Sociology University of York

The Political Economy of the Media

Andrew Tudor Reader in Sociology University of York 1. Feminist Cultural Studies (Volumes I and Terry Lovell

Volume I m

2. The Political Economy of the Media (Volumes I and Peter Golding and Graham Murdock

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Edited by

Peter Golding Professor of Sociology Loughborough University, UK and

Graham Murdock Reader in the Sociology of Culture, Loughborough University, UK Wherever possible, the articles in these volumes have been reproduced as originally published using facsimile reproduction, inclusive of footnotes and pagination to facilitate ease of reference. For a list of all Edward Elgar published titles visit our site on the World Wide Web at : http://www.e-elgar.co.uk F

THE INTERNATIONAL LffiRARY OF STUDIES IN MEDIA AND CULTURE

63424 3 An Elgar Reference Collection Cheltenham, UK • Brookfield, US

© Peter Golding and Grimam ·Murdock 1997. For copyright of individual articles please refer to the Acknowledgements. All rights reserved. No paz:t of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior permission of the publisher.

Contents Acknowledgements Introduction by the editors: 'Communication and Capitalism'

Published !>y .. Edward Elgai: Publishing Limited 8 Lansdown Place Cheltenham Glos GL50 2...'1U UK. ..

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PART I

Edward Elgar Publishing Company Old Post Road Brookfield Vermont 05036

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Library of Congress Cataloging in Publication Data The political economy of the media I edited by Peter Golding and Graham Murdock. (International library of studies in media and culture ; 2) Includes bibliographical references and index. '· 1. Mass media. I. Golding, Peter. II. Murdock, Graham. Ill. Series. P91.25.P65 1997 302.23-dc20

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ISBN 1 85278 777 5 (2 volume set)

Printed in Great Britain by Galliard (Printers) Ltd, Great Yarmouth

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PART II 96-35918 CIP

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DEFINING POLITICALECONOMY ·.,

A catalogue record for this book is available from the British Library.

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1. Gr-aham MurdoctY and (1974), 'For a Political ~-~·--) - Peter Golding . Economy of Mass Communications', in R. Miliband and J. Saville (eds), The Socialist Register 1973, London: Merlin Press,205,-34. / 2. Qouglas'Gomeri1t989), 'Media Economics: Terms of Analysis', Critical Studies in Mass Communication, 6, March, 43-60. 3. Nicholas Garnham (1990), 'Contribution to a Political Economy of Mass Communication', in Fred lnglis (ed.), Capitalism and Communication: Global Culture and the Economics ofInformation, Chapter 2, London: Sage, 20-55. 4. Oscar H. Gandy Jr (1992), 'The Political Economy Approach: A Critical Challenge', Journal of Media Economics, Summer, 23-42. 5. Robert W. McChesney (1992), 'Off Limits: An Inquiry Into the Lack of Debate over the Ownership, Structure and Control of the Mass Media in U.S. Political Life', Communication, 13, 1-19.

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COMMUNICATIONS AND CAPITALIST ENTERPRISE 6. Henry Wickham Steed (1938), 'The Finance of the Press', The Press, Chapter ill, Harmondsworth: Penguin, 81-105. 7. Royal Commission on the Press 1947-1949, Cmnd. 7700 (1949), London: HMSO, excerpts from 100-101, 103-5, 87-9, 95-8, 138-9, 140-42, 143-4, 148-50, 152-64. 8. Francis Williams ((1959), 'Mr. Elias Sells Newspapers', 'A Monolithic Press' and 'What Kind of Freedom?', Dangerous Estate: The Anatomy of Newspapers, Chapters 13, 16 and 17, London: Arrow Books, 161-77, 203-14 and 215-29. , 9. Richard Bunce (1976), 'The Conglomerate Complex', Television in the Corporate Interest, Chapter 6, New York: Praeger Publishers, 96-124. 10. The International Commission for the Study of Communication / Problems (1980), 'Concentration', Many Voices, One World, Part ll: Chapter 4, London, New York and Paris: Kogan Page, Unipub and Unesco, 96-111.

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154

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255

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The Political Economy of the Media· I

11. Harold Evans (1994), 'Preface to the Third Edition', Good Times, Bad Times, London: Phoenix, xvii-xxviii. 12. Ben H. Bagdikian (1992), 'The Endless Chain', The Media Monopoly, Chapter 1, Boston: Beacon Press, 4th ed., 3-26, notes. /' 'v' 13. Graham Murdock (1990), 'Redrawing the Map of the Communications Industries: Concentration and Ownership in the Era of Privatization', in Marjorie Ferguson (ed.), Public Communication - The New Imperatives: Future Directions for Media Research, Chapter 1, London: Sage, 1-15, references. 14. Philip G. Altbach (1992), 'Publishing in the Third World: Issues and Trends for the 21st Century', in Philip G. Albach (ed.), Publishing and Development in the Third World, Chapter 1, London: Hans Zell Publishers, 1-27. 15. Joseph Turow (1992), 'The Organizational Underpinnings of Contemporary Media Conglomerates', Communication Research, 19 (6), December, 682-704. Edward S. Herman (1993), 'The Externalities Effects of Commercial and Public Broadcasting', in Kaarle Nordenstreng and Herbert I. Schiller (eds), Beyond National Sovereignty: International Communication in the 1990s, Chapter 5, Norwood, NJ: Ablex, 85-115.

The Political Economy of the Media I

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PART ID COMMUNICATIONS, IDEOLOGY AND CAPITALISM 17. Karl Marx (1974), 'The Opinion of the Journals and the Opinion of the People', The Civil War in the United States, New York: International Publishers, 123-7. (Originally published in Die Presse, 31 December 1861.) 407 18. Herbert I. Schiller (1973), 'Manipulation and the Packaged Consciousness', The Mind Managers, Chapter 1, Boston: Beacon Press, 8-31, 192-3. 412 19. Dallas W. Smythe (1977), 'Communications: Blindspot of Western Marxism', Canadian Journal o/Political and Social Theory, 1 (3), Fall, 1-27. 438 20. Graham Murdock (1978), 'Blindspots abqut Western Marxism: A Reply to Dallas Smythe', Canadian Journal of Political and Social Theory, 2 (2), Spring-Summer, 109-19. 465 21. Peter Golding and Graham Murdock (1979), 'Ideology and the Mass Media: The Question of Determination', in Michele Barrett, Philip Corrigan, Annette Kuhn and Janet Wolff (eds), Ideology and Cultural Production, Chapter 8, London: Croom Helm, 198-224, bibliography. 476

22. Leslie T. Good (1989), 'Power, Hegemony, and Communication Theory', in Ian Angus and Sut Jhally (eds), Cultural Politics in Contemporary America, Chapter 4, New York and London: Routledge, 51-64, notes. 23. Douglas Kellner (1990), 'Contested Terrain and the Hegemony of Capital', Television and the Crisis of Democracy, Chapter 1, Section 3, Boulder, CO: Westview Press, 14-22, notes and bibliography. 24. Theodor W. Adorno (1991), 'Culture Industry Reconsidered', The Culture Industry: Selected Essays on Mass Culture, Chapter 3, London: Routledge, 85-92.

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PART IV COMMUNICATION AND THE GLOBAL ORDER 25. Herbert I. Schiller (1969), 'Electronics and Economics Serving an American Century', Mass Communications and American Empire, Chapter 1, Boston: Augustus M. Kelley, 1-17. 543 26. Jeremy Tunstall (1977), 'Media Imperialism?', The Media are American: Anglo-American Media in the World, Chapter 2, London: Constable, 38-63, references and bibliography. 560 27. The International Commission for the Study of Communication Problems (1980), 'The International Dimension', Many Voices, One World, Part I: Chapter 3, London, New York and Paris: Kogan Page, Unipub and Unesco, 34-9. 588 28. Herbert I. Schiller (1981), 'Whose New International Economic and Information Order?', Who Knows: Information in the Age of The Fortune 500, Chapter One, Norwood NJ: Ablex, 1-24. 594 29. Thomas Guback and Tapio Varis (1982), Transnational Communication and Cultural Industries, No. 92, Paris: UNESCO, 5-6, 9-15, 49-50. 618 30. Cees J. Hamelink (1988), 'Cultural Autonomy Threatened', Cultural Autonomy in Global Communications: Planning National Information Policy, Chapter 1, London: Centre for the Study of Communication and Culture, 1-25. 629 31. Armand Mattelart, Xavier Delcourt and Michele Mattelart (1984), 'The New World Information and Communications Order', 'Economics and Culture: The Same Struggle' and 'From Trading Patterns to Communications Systems', Part O~e. _ . Chapters 1-3, International Image Markets: In Search of an Alternative Perspective, London: Comedia, 7-26, 112-13. 654 32. 'UNESCO Resolution 4/19- On the International Commission for the Study of Communications Problems, 21 October 1980, Belgrade', in Kaarle Nordenstreng, Enrique Gonzales Manet and Wolfgang Kleinwachter (eds) (1986), New International Information and Communication Order Sourcebook, Prague: International Organization of Journalists, Document No. 42E, 248-50. 676

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33.

Name Index

'The Declaration of Talloires of the "Voices of Freedom" Conference, 17 May 1981, Talloires', in Kaarle Nordenstreng, Enrique Gonzales Manet and Wolfgang Kleinwiichter (eds) (1986), New International Information·and Communication Order Sourcebook, Prague: International Organization of Journalists, Document No. 71, 368-70.

Acknowledgements 679 683

The editors and publishers wish to thank the authors and the following publishers who have kindly given permission for the use of copyright material. Ablex Publishing Corporation for excerpts: Herbert I. Schiller (1981), 'Whose New International Economic and Information Order?', Who Knows: Information in the Age of The Fortune 500, Chapter One, 1-24; Edward S. Herman (1993), 'The Externalities Effects of Commercial and Public Broadcasting', in Kaarle Nordenstreng and Herbert I. Schiller (eds), Beyond National Sovereignty: International Communication in the I990s, Chapter 5, 85-115. Beacon Press for excerpts: Herbert I. Schiller (1973), 'Manipulation and the Packaged Consciousness', The Mind Managers, Chapter 1, 8-31, 192-3; Ben H. Bagdikian (1992), 'The Endless Chain', The Media Monopoly, Chapter 1, 4th ed., 3-266, notes. Richard Bunce for his own excerpt: (1976), 'The Conglomerate Complex', Television in the Corporate Interest, Chapter 6, 96-124. Canadian Journal of Political and Social Theory for articles: Dallas W. Smythe (1977), 'Communications: Blindspot of Western Marxism', Canadian Journal ofPolitical and Social Theory, 1 (3), Fall, 1-27; Graham Murdock (1978), 'Blindspots about Western Marxism: A Reply to Dallas Smythe', Canadian Journal of Political and Social Theory, 2 (2), SpringSummer, 109-19.

Centre for the Study of Communication and Culture, Saint Louis University, for excerpt: Cees J. Hamelink (1988), 'Cultural Autonomy Threatened', Cultural Autonomy in Global Communications: Planning National Information Policy, Chapter 1, 1-25. Constable & Company Ltd for·excerpt: Jeremy Tunstall (1977), 'Media Imperialism?', The Media are American: Anglo-American Media in the World, Chapter 2, 38-63, references and bibliography. Croom Helm for excerpt: Peter Golding and Graham Murdock (1979), 'Ideology and the Mass Media: The Question of Determination', in Michele Barrett, Philip Corrigan, Annette Kuhn and Jan~t Wolff (eds), Ideology and Cultural Production, Chapter 8, 198-224, bibliography. Gordon & Breach Publishing Group for article: Robert W. McChesney (1992), 'Off Limits: An Inquiry Into the Lack of Debate over the Ownership, Structure and Control of the Mass Media in U.S. Political Life', Communication, 13, 1-19.

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Hans Zell Publishers, an imprint of Bowker-Saur, a division of Reed Elsevier (UK) Ltd, for excerpt: Philip G. Altbach (1992), 'Publishing in the Third World: Issues and Trends for the 21st Century', in Philip G. Altbach (ed.), Publishing and Development in the Third World, Chapter 1, 1-27.

Sage Publications Ltd for excerpts: Nicholas Gamham (1990), 'Contribution to a Political· Economy of Mass Communication', in Fred Inglis (ed.), Capitalism and Communication: Global Culture and the Economics of Information, Chapter 2, 20-55; Graham Murdock (1990), 'Redrawing the Map of the Communications Industries: Concentration and Ownership in the Era of Privatization', in Marjorie Ferguson (ed.), Public Communication- The New Imperatives: Future Directionsfor Media Research, Chapter 1, 1-15, references.

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HMSO for excerpts (1949), Royal Commission on the Press 1947-1949, Cmnd. 7700, excerpts from 100-101, 103-5, 87-9, 95-8, 138-9, 140-42, 143-4, 148-50, 152-64. International Publishers Co. for excerpt: K.arl Marx (1974), 'The Opinion of the Journals and the Opinion of the People', The Civil War in the United States, 123-7. Journal of Media Economics for article: Oscar H. Gandy Jr (1992), 'The Political Economy Approach: A Critical Challenge', Journal of Media Economics, Summer, 23-42. Kogan Page Ltd for excerpts: The International Commission for the Study of Communication Problems (1980), 'The International Dimension', Many Voices, One World, Part I: Chapter 3, 34-9; The International Commission for the Study of Communication Problems (1980), 'Concentration', Many Voices, One World, Part II: Chapter 4, 96-111.

Herbert I. Schiller for his own excerpt: (1969), 'Electronics and Economics Serving an American Century', Mass Communications and American Empire, Chapter 1, 1-17. Speech Communications Association for article: Douglas Gomery (1989), 'Media Economics: Terms of Analysis', Critical Studies in Mass Communication, 6, March, 43-60. United Nations Educational, Scientific and Cultural Organization for the excerpt: Thomas Guback and Tapio Varis (1982), Transnational Communication and Cultural Industries, No. 92, 5-6, 9-15, 49'--50. Weidenfeld & Nicolson for excerpt: Harold Evans (1994), 'Preface to the Third Edition', Good Times, Bad Times, xvii-xxviii.

Armand Mattelart for his own co-authored excerpts: Armand Mattelart, Xavier Delcourt and Michele Mattelart (1984), 'The New World Information and Communications Order', 'Economics and Culture: The Same Struggle' and 'From Trading Patterns to Communications Systems', Part One, Chapters 1-3, International Image Markets: In Search of an Alternative Perspective, 7-26, 112-13.

Westview Press, Inc. for excerpt: Douglas Kellner (1990), 'Contested Terrain and the Hegemony of Capital', Television and the Crisis of Democracy, Chapter 1, Section 3, 14-22, notes and bibliography.

Merlin Press Ltd for excerpt: Graham Murdock and Peter Golding (1974), 'For a Political Economy of Mass Communications', in R. Miliband and J. Saville (eds), The Socialist Register 1973, 205-34.

Every effort has been made to trace all the copyright holders but if any have been inadvertently overlooked the publishers will be pleased to make the necessary arrangement at the first opportunity.

Penguin Books Ltd for excerpt: Henry Wickham Steed (1938), 'The Finance of the Press', The Press, Chapter ID, 81-105.

In addition the publishers wish to thank the Library of the London School of Economics and Political Science for its assistance in obtaining these articles.

Routledge for excerpt: Theodor W. Adorno (1991), 'Culture Industry Reconsidered', The Culture Industry: Selected Essays on Mass Culture, Chapter 3, 85-92. Routledge, Inc. for excerpt: Leslie T. Good (1989), 'Power, Hegemony, and Communication Theory', in Ian Angus and Sut Jhally (eds), Cultural Politics in Contemporary America, Chapter 4, 51-64, notes. Sage Publications, Inc. for article: Joseph Turow (1992), 'The Organizational Underpinnings of Contemporary Media Conglomerates', Communication Research, 19 (6), December, 682-704.

Introduction: Communication and Capitalism Peter Golding and Graham Murdock

Academic analysis of the mass media has been an inevitable adjunct to their rapid growth and prominence in contemporary society·. So fast has been the increasing interest in the media as an object of study and research that the trappings of a new discipline seem to have emerged almost without warning, and certainly without conscious design. That the media should become so significant in the pedagogic map is hardly surprising. In just a few decades newspapers, cinema and, subsequently, broadcasting have come to be dominant features of our social, political and economic life to a degree quite unpredictable a century ago. Attempting to make sense of this growth has proved both irresistible and perplexing. Traditional disciplines have all played their role but, in doing so, have all had to acquire new vocabularies and methodologies. Right across the social and human sciences, and also the humanities, making sense of the media has been critical in their respective intellectual evolutions. This was inevitable. The media have a unique twin role in our lives. On the one hand they create and distribute many of the symbolic and cultural resources we require to make sense of the social world we inhabit. From the language we speak to the identities and institutions which constitute our social life, the media are often primary, and rarely less than contributory, providers of the building blocks of our experience. On the other hand, however, the media are also major institutions in the economic and political fabric of our societies. They provide the vehicle for advertising which connects the world of production to that of consumption. They absorb considerable proportions of our disposable spending as we buy an ever-increasing array of hardware and software to give us access to the world of mediated communications. They are also themselves political and economic actors of some magnitude, a lesson easily illustrated by the events of the 1989 East European revolutions, or indeed by the experiences of Mr Berlusconi in Italy in the 1990s. This twin role makes the world of communications and the media a diverse and complex one. For that reason, if no other, their study invites, indeed demands, a range of intellectual and disciplinary perspectives, among the most crucial of which is political economy. This two-volume set of writings and documents is intended both to support the preceding proposition and to act as a resource for those eager to pursue its implications. Political economy has a rich intellectual history as well as some reasonable claim to be the forerunner of the modem clan of interrelated social sciences. It arose explicitly in response to the emergence of mercantilism and subsequently to fully-fledged capitalism, as an attempt not merely to understand but to maximize the potential of the new social order. For the writers who constructed this edifice, the boundaries of the new intellectual field were broad indeed; most crucially, their basic concerns were moral rather than technical.

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The growth of markets, but also of the state, posed previously unexplored problems of the. relation of the individual to the social order. Hence political economy emerged with a strong sense of and analytical attachment to both history and moral philosophy. ~dam Smith, a codifier and developer of the ideas of others as much as an original . thinker, developed his thoughts initially in his Theory of Moral Sentiments. Reviled by John Ruskin as a 'half-bred and half-witted Scotchman' who taught us 'to damn God's laws and covet our neighbours' goods', it was Smith's destiny to be misunderstood and misquoted for over two centuries. Smith studied philosophy and literature at Glasgow and Oxford, and from 1752 occupied the Chair of Moral Philosophy at Glasgow. However, it was exposure to the French 'physiocrats' in Paris and Toulouse that stimulated what became the best-selling volunie that still conventionally tops the political economy reading lists. Published with historical neatness and considerable significance in the year of the American Declaration of Independence, by 1800 Smith's Wealth of Nations had gone through nine English editions. By 1810 it had been published in Ireland and the US, and was translated into seven languages (Seligman, 1910; Deane, 1978: 6). Smith's concern was with the protection and advancement of self-interest and natural liberty. His adoption in the 20th century as a talisman for ideologues of free market principles has often attracted criticism for its narrow reading of Smith's complex and variegated understanding of capitalism, not least his antipathy to its regressive distributive consequences - a theme prominent in the work of subsequent political economists. Nevertheless, the ideas set forth in his seminal work created the foundation for the development of political economy. Rooted in a sense of labour rather than land as the source of value the new scientific discipline (as it rapidly came to understand itself and as it wished to be W:derstood) flourished in the hands of Mill, whose own major treatise was explicitly fashioned on Smith's. Also in the hands of McCulloch, of Ricardo - who so carefully tidied up the technical shortcomings as he saw them in Smith's treatment of rent, profit and wages -and of other distinguished members of the Political Economy Club, founded in 1821. One key writer who most certainly was not a member of the Club was Karl Marx though, in wrestling with what he described as 'the confounded ramifications of political economy', Marx too constructed his analysis of capitalism as an aspect of a theory of history. As part of a broader philosophy of social analysis and practice, he departed from classical political economy in his emphasis on the central role of class struggle in the dynamics of capitalist development. Frequently contemptuous of other political economists, he and Engels often used the term as a shorthand expression for much that they despised. Writing 15 years before Marx's crucial Critique of Political Economy, Engels derisively rails against 'This political economy or science of enrichment born of the merchants' mutual envy and greed' which 'bears on its brow the mark of the most loathsome selfishness' (Engels, 1970: 197). Curiously, the enormous impact of Marx's thought on the politics of the 20th century, and its much-delayed though equally powerful shaping of the development of social science, may be contrasted with his relative marginality to the evolution of mainstream political economy. This is paradoxical. While Marx subjected the moral and historical props of political economy to the most profound under-mining, these props were simply discarded by the late 19th-century transmutation of political economy into the modem and 'dismal science' of economics. In the 'marginal revolution', writers like Jevons (who initiated the disciplinary name-change from 'the old troublesome double worded name of our science'),


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Menger, W alras and later, and perhaps to a lesser extent, Marshall all largely dispensed with history in their search for the laws of equilibrium. The mathematical description of the actions of economic man was now synchronically circumscribed in an endless elaboration of the rules which determine prices in a free market in steady state: Walras' grail, for instance, was a 'physico-mathematical' science of markets. These positivist ambitions of neoclassical economics signalled a radical departure from the scope and purpose of classical political economy. .This backdrop is important for an understanding of the revival of political economy nearly a century later. For as much as anything that rediscovery was in reaction against the sterile positivist style which, by the 1950s, had become dominant in the burgeoning social sciences, especially of North American academia. Significantly, much of this revolt came from within economics and, equally significantly (as we shall see), some of the key figures in the political economy of communications were themselves trained in economics. The emergence of an intellectual new left, not unconnected with the anti-Vietnam war movement and student politicization on American campuses, began, however uncertainly, to manufacture an internal critique of the mainstream social science disciplines. Writers like C. Wright Mills led the charge in sociology, while in economics the touchstones were European writers like Mandel and 'old left' US analysts like Baran and Sweezy. Their charge against mainstream economics was that it had lost all interest in the distributional consequences of the market, especially the evidently regressive pattern of income and wealth; that it ignored the social and political factors shaping demand and supply; was obsessed with micro processes while ignorant of macro structures; and was either deliberately or unwittingly ideological in its unspoken defence of a taken-for-granted capitalist order (Lindbeck, 1977). The critique was far from uniformly Marxist, including as it did powerful non-Marxist 'institutionalist' accounts by such influential writers as Galbraith. It was against this background that the political economy of communications evolved, especially in the Anglo-Saxon world. Scholars working in sociology and economics came increasingly to recognize the significance of mass media and communications; however, in their attempts to grapple both politically and intellectually with these institutions, many found existing work unsatisfactory. That communications had become a major business was self-evident. That mass communications meant mass consumption and that the media were thus at the core of social and economic dynamics also became ever more apparent. The development of, and political conflict over, the state regulation of broadcasting brought the political dimension of communications to the fore. Yet despite all this, academic communications research seemed confined locked into a positivist quest for the scientific description of 'effects', into social psychological experimentation to uncover the minutiae of attitude change, or into unproductive analysis, largely predicated on very conservative presumptions, of the deleterious consequences of 'mass culture'. Among the first to. contest these orthodoxies and pioneer the development of what later became recognizable as the political economy of communications were Dallas Smythe and Herbert Schiller. Smythe, a Canadian economist trained in California, became the first chief economist at the Federal Communications Commission in Washington, where among other tasks he created space for educational broadcasting. As an academic at Illinois, and later back home at Regina and Simon Fraser Universities, Smythe produced a corpus of work which was to influence a generation of communication scholars (see Wasko et al.,

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1993). Among these, Schiller has been the most productive. Schiller had been influenced by the older Smythe at the University of lllinois where they had met in the Institute for Communication Research established under the less than radical figure of Wilbur Schramm. When Smythe retreated back to Canada from the inhospitable climate of McCarthyite USA, Schiller, a graduate in economics from New York, effectively replaced him. Schiller had worked on post-war reconstruction in Germany, but at lliinois used his business economics background to investigate the economics of the radio spectrum. His 1969 book Mass Communication and American Empire was a typically terse, trenchant critique of what became known as 'cultural imperialism'. Its appealingly polemical style, detailed compilation of clippings for footnotes, and deep moral and political underpinning, set the mould for a continuing series of such essays over the following decades which have been prominent markers in the hesitant forward march of the political economy of communications. Subsequent work (whose intellectual lineages are portrayed in Mosco, 1996) remained initially rooted in this political grounding. Political economy approaches to communications developed alongside the emerging nexus of work in 'cultural studies', both reacting against positivist social science and conservatively orthodox cultural analysis. In its reclamation of the popular for serious study, its insistence on the diffuse and all-embracing character of the cultural, and its self-consciously proclaimed ambitions as a 'political project', cultural studies - like political economy - was irrepressibly interdisciplinary. That neither was explicitly nor uniformly Marxist was skated over by critics, and often by practitioners too. This was a cogent and radical critique of modern media and communications. For political economy this meant three insistent characteristics (see also Golding and Murdock, 1996). First, the political economy approach was holistic: it did not abstract the economic or the political from social relations, but examined in full the interrelation of social and cultural dynamics. Second, it was historical. Not only did this imply an understanding of process and the diachronic, but more explicitly it meant an understanding that the focus of analysis was the location and role of communications in a capitalist and global setting, whose processes of change and evolving dynamics were at the heart of analysis. Third, political economy adopted a realist/materialist epistemology. For critical political economy, two additional characteristics were essential. Firstly, the moral and philosophical foundations so essential to classical political economy were retained as the starting point of analysis. The concern was not only for what is, but for what ought to be. Secondly, and again in line with its classical forebears, critical political economy of communications addresses the distributional consequences of capitalism for communications processes and institutions. This means analysing the implications of markets for patterns of cultural distribution, and of the availability of differing forms and structures of meaning. It also means a critical concern with the distribution between public and private, not least in the realm of regulation. The relative role of the state, the private corporation and the individual in communications has been at the heart of political debate about communications; it is also at the core of concerns within critical political economy. Three developments characterize the later development of the political economy approach, and each remains unresolved. Firstly, whatever the codifying ambitions of its resident scholastics, the definition of the approach became ever more diffuse. At times used vaguely as a euphemism for Marxist approaches, at others a mildly dismissive term suggesting economic reductionism among those narrowly interested in the ownership of media

corporations, the term became almost a synonym for a diffuse or insipid radicalism. As Sayer correctly notes, 'Nowadays it is often seen as the preserve of radical researchers, particularly Marxists, neo-Marxists, and post-Marxists, though neo-Ricardians, Left-Keynsians and Left-Weberians might be included too'. In such a broad church he suggests, not surprisingly, that 'by "political economy" I mean approaches which view the economy as socially and politically embedded and as structured by power relations' (Sayer, 1995: ix). Secondly, as so often, political economy tends to define its parameters in opposition to that which it is not. Where once cultural studies was a common partner in the radical critique of positivism, an often less than productive debate has seen these two approaches increasingly diverge. Where cultural studies views political economy as unduly wedded to class divisions - insensitive to differences and divisions of other kinds, and frequently downright reductionist and deterministic - political economists have sometimes seen cultural studies as excessively fascinated with the ephemeral, depoliticized by its own populism, internalized in its debates, and focused on texts to the exclusion of social, economic and political structure. Thirdly, the emergence of critiques within feminism, postmodernism and (to some extent) post-coloniality has sometimes seemed to outflank political economy on its radical wing, while offering alternative accounts of some of its key concerns. With the revolutions in Eastern Europe in 1989 and the ostensible 'end of history', the apparent triumph of the market lent credence to the redundancy of the critique of market capitalism which was so crucial to the political economy project. For political economists, this claim was itself part of the ideological mystification which was one of its objects of analysis. The field is thus a live one, in which debat@ and res~ch are extremely active. In these two volumes we have brought together key texts which play out some of these issues, by writers who have either been influential in shaping the approach or whose work provides a key resource for the political economy of communications. In Volume I we begin at the beginning, with the definition of the political economy approach to communications in a set of articles, all by card-carrying political economists, attempting to delineate and chart the field of endeavour. Part II is concerned with the capitalist enterprise. Communications do not flow from some Olympian megaphone, but emerge as the result of industrial work in organizations at the heart of the capitalist structure. These articles assess the implications of this process, both nationally and internationally, and in some cases speak at first hand of the experience of cultural labour in conglomerate settings. Part m turns to the question of ideology. For political economy what the media produce are not messages or 'information', but ideology - an alarmingly simple claim which disguises a multitude of complex debates. The articles in this section provide a range of approaches to resolving this difficult question at the core of the political economy enquiry. Part IV addresses the global reach of communications, starting with a reading from Schiller's seminal text. In recent years the UNESCO-fostered debate about a 'New World Information and Communication Order' has subsided, though not before it prompted the withdrawal from UNESCO of the US and the UK. Yet the massive global inequalities of cultural flows remain, and political economists have been prominent in keeping these questions on both the intellectual and political agenda. Volume II is concerned with the 'political' in the couplet of political economy, and most especially with ensuring the common good in the regulation and management of communications and media. We introduce these issues in more detail h"l the Introduction to that volume.

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References Deane, P. (1978), The Evolution of Economic Ideas, Cambridge University Press. Engels, F. (1970 [orig. 1844]), 'Outlines of a Critique of Political Economy', inK. Marx, Economic - and Philosophic Manuscripts of 1844, London: Lawrence and Wishart. Golding, P. and Murdock, G. (1996), 'Culture, Communications, and Political Economy', in J. Curran and M. Gurevitch (eds), Mass Media and Society (2nd edn), London: Edward Arnold. Lindbeck, A. (1977), The Political Economy ofthe New Left: An Outsider's View, New York: Harper and Row. Mosco, V. (1996), The Political Economy of Communication, London: Sage. Sayer, A. (1995), Radical Political Economy: A Critique, Oxford: Blackwell. Seligman, E.R.A. (1910), 'Introduction', in A. Smith, The Wealth of Nations, London: J.M. Dent and Sons Ltd. Wasko, J., Mosco, V. and Pendakur, M. (1993), llluminating the Blindspots: Essays Honouring Dallas W. Smythe, Norwood, NJ: Ablex.

Part I Defining Political Economy

[1] FOR A POLITICAL ECONOMY OF MASS COMMUNICATIONS Graham Murdock and Peter Golding I INTRODUCTION

The mass media impinge upon people's lives in two very important ways. Firstly, in providing the facilities with which people occupy a considerable amount of their non-work time they command an increasing proportion of discretionary spending. Average weekly household expenditure on the media and on leisure activities is higher than on clothing or on household durables, and, in 1971, over £3,000 million was spent on the media and leisure (not even including drink, travel or catering).1 Secondly, the media are the major source of information about, and explanations of, social and political processes. The mass media therefore play a key role in determining the forms of consciousness and the modes of expression and action which are made available to people. Consequently, any adequate analysis of the distribution of power and of the process oflegitimation must necessarily include an analysis of the mass media. In recent discussions of the reproduction and legitimation of class relations, the part played by the mass media is frequently referred to but seldom dealt with in detail. Whereas, the role of other agencies, particularly education systems, has been mapped in some detail, the operation of the mass media has gone largely unexamined. In one recent collection of standard writings on "Power in Britain" for example, the media did not even rate a separate mention in the index. 2 This essay is an exploratory attempt to outline some of the basic features which underpin and shape the economic context and political consequences of mass communications in contemporary Britain. It is part of a work in progress. It is not intended to provide an exhaustive analysis, but simply to suggest some directions in which such an analysis might usefully proceed. Although, for the sake of brevity and convenience, we concentrate here on the British situation, many of the processes discussed are common to advanced capitalist states per se. The present essay should therefore be regarded as a case . study. 3 The obvious starting point for a political economy of mass communications is the recognition that the mass media are first and 205


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foremost industrial and commercial organizations which produce and distribute commodities. Unfortunately however, most analyses of this process have concentrated on the situation in one particular mass media sector and have consequendy ignored the emerging linkages between sectors. The 1966 Monopolies Commission report on film exhibition provides a classic instance of this sort of myopia. The report concluded that the domination of the market by two companies, Rank and Associated British Cinemas, was not necessarily against the public interest. Since that time, however, ABC has been acquired by Electrical and Musical Industries Ltd. (EMI) an entertainment corporation with interests in every level of film production, as well as in television and records. As we shall show later, EMI's film interests are substantial, but even so, they only accounted for 15% of the corporation's total turnover in 1972. Ranks similarly have interests in a wide range of enterprises, from the mammoth Xerox information processing complex to bingo, dance halls and holiday camps, and film exhibition within Britain contributes just 13% of Ranks' turnover. On the rare occasion when these emerging patterns have been examined, however, the result has tended to be a catalogue of linkages with litde or no analysis of their relationship to the general economic context. 4 The media companies are locked into the wider economic situation, firsdy through reciprocal investments and shareholdings and interlocking directorships with other large industrial concerns, and secondly through advertising. Advertising is the principal economic base of both the press and commercial television and hence both are direcdy vulnerable to adverse changes in general economic conditions. During recessions companies are faced with two basic options: either to increase advertising expenditure in an attempt to maintain sales, or to cut back on advertising in order to reduce costs, and as the relationship between advertising and sales is problematic, they are likely to opt for the second alternative. Although publishing, the cinema, and the record industry gain litde or no revenue from advertising they are still vulnerable to a generally worsening economic situation, firsdy because it increases production co..sts and therefore sales prices and secondly because spending on luxury items such as records and cinema seats is likely to be reduced. Changes in the mass media cannot therefore be adequat~onsidered apart from more general economic changes. This in turn requires an historical ~ec tive which will locate changes in the mass media within the general context of industrialization. In addition to producing and distributing commodities, however, the mass media also disseminate ideas about economic and political structures. It is this second and ideological dimension of mass media production which gives it its importance and centrality and which

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requires an approach in terms not only of economics but also of politics. Again, however, most analyses of the ideological role of the media have tended to be both abstract and schematic. Louis Althusser, for example, simply includes the mass media in his shopping list of "ideological state apparatuses" along with religion, education, political parties, etc., and leaves it at that.s It is not sufficient simply to assert that the mass media are part of the ideological apparatus of the state, it is also necessary to demonstrate ·how ideology is produced in concrete practice. In the first part of this essay we examine the evolution of the media industries and the changing nature of their economic environment. We go on to discuss the responses within the industries to the pressures reeendy operating on them, and conclude with some implications of the political economy of the media for the information and leisure facilities they produce. II THE INDUSTRIALIZATION OF MASS COMMUNICATIONS (a) FROM DIFFERENTIATION TO CONCENTRATION

The pre~ concentrated structure of the media industries is the latest stage in a sequence of organizational changes reflecting their changing economic base. Schematically all the media have gone through a similar cycle. Firsdy, small-scale or personalized production of a cultural product expands. Distribution and selling become separated and commercialized. As new technology enters the medium, production becomes industrialized and consumption becomes largescale and impersonal. This process of differentiation is succeeded by a period in which the growth of the industry reaches saturation and is hit by a series of pressures due to rising costs, declining revenue, and a changing pattern of demand. This is the process of concentration which we consider below. The final stage in this sequence involves·a developing tension between new technological potentialities on the one hand and economic concentration on the other. Some tentative ideas in this direction are suggested at the end of this paper. Both book and newspaper publishing began as small personalized activities; until the eighteenth century publisher-printers were responsible for both. Newspapers indeed began in the form of personal hand-written news-letter services, while book production preceded printing as a handwritten activity in ecclesiastical education. As authors established greater autonomy from publishers so too the eighteenth century saw the separation of bookseller from printer. Grub Street was born and writing, as Goldsmith complained, "converted~de". Mter 1750 newspaper publisher-printers were replaced by joint-stock companies.


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The cinema split even more distinctly after its early fairground origins in the 1890s. Exhibition, based initially on the stockpiling of films by early showmen, became a differentiated arm of the industry. As film makers competed for the favours of the exhibitors the open sale of films declined, to be replaced by a hiring system, bringing with it the middle-men or renters. Growing industrialization of the media-the introduction of new technology and mass production-brings with it a demand for greater financial underpinning. Through the nineteenth century the mechanization of paper-production, the steam-printing press, and later Iinotype greatly advanced the industrialization of the print industries. For ~ooks ~ n:.:eant _the growth of differentiated distribution through the crrculatmg libranes, and fii1.ally the penny book and widespread marketing. !or newspapers rapid industrialization combined with decreasing pnces when stamp tax e1;1ded facilitated rapidly rising circulations as individual purchases replaced collective subscriptions. Gradually the press became part of that embryonic entertainment industry which included professional sport and the music hall. The "new journalism" as Arnold labelled it drew on American typographical and photographic techniques, headlines, interviews, the factual "reporting" of the news agencies, and sports news to attract a new public. The socalled Northcliffe revolution was the recognition that the members of this public were also the consumers in the retail revolution. The bigger companies produced by the 1873-94 depression recognized the enlarged national press as the ideal advertising medium for the competitive selling of branded goods. The Mail, Mirror and Express all started in the period around 1900 on this new economic base. Expansion and technological sophistication attracted capital into each medium. As exhibition boomed in the cinema, capital in the industry rose from £110,000 in 1908 to over £3 million in 19Io.s Between the wars the cinema attracted a vast new audience. High and rising rental prices and a massive growth in the number of cinemas brought, as Lord Burnham observed in 1920, "the high financiers of the world ... flocking into the cinema industry".? Nearly 1,000 cinemas were built between 1924 and 1932 and capital in the industry rose from £15 million in 1914 to £70 million in 1929. As exhibition flourished so did the chains controlling it. By 1944 a third of the cinema seats were owned by three chains, ABO (which started as a production company in 1928), Gaumont-British, and Odeon. The latter two companies were taken over by Rank in 1941, and the new chain and ABC (now part of EMI) have dominated post-war film exhibition. In the same way the expanded press attracted the attention of financiers, and by 1929 four of them, Inveresk, Rothermere, the Berry

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brothers, and Cowdray controlled roughly half the daily circulation. The ensuing battle for readers in the thirties and the massive marketing operation it generated in effect created the mass popular daily press, doubling the national daily circulation between 1920 and 1939. """ Broadcasting necessarily began as an industry requiring expensive technology and financial backing. Arriving after the industrialization of the economy the cycle of industrialization -+ commercialization -+ saturation -+ crisis has been a comparatively contracted one. The six companies which formed the British Broadcasting Company in 1922 appointed Reith as General Manager later in the same year. He spent the next four years demonstrating, as he was later to put it in his autobiography, that "whatever was in the interests of broadcasting must eventually be in the interests of the wireless trade". 8 Television did not develop substantially until the post-war period, and it did not take long for ;tinancial backing to perceive the potential of the new medium. After war-time introduction to lighter styles of broadcasting the not uncommon opposition to the BBC in the Conservative Party, allied with advertising and equipment manufacturing interests produced "perhaps the most remarkable exhibition of political lobbying this country has ever seen". 9 Commercial television opened in 1~4, and licences climbed from 3 million in that year to 8 Inillion in 1958, arriving at virtual saturation in 1~ The resulting massive change in leisure patterns produced a decline in the cinema and popular press from their peak years (in 1946 for the cinema and about 1960 for the popular press), and was a major factor in · the resulting stage of consolidation and concentra---_ tion. (b) CONSOLIDATION Concentration has taken different forms in each of the media industries, but the pattern of their increasing involvement with each other and with broader industrial enterprises is a universal response to the general problems outlined above. This latest stage is worth examining in closer detail.

(i) Publishing Most books read today are borrowed from libraries or from other people. The growth of public libraries since 1919 has been a major source of income for publishers. While 312 million library issues were registered in 1948/9, twenty years later the figure was over 600 million. 10 But as book prices have risen rapidly library budgets have failed to keep up and only account for about 10 to 15% of book sales; thus libraries are contributing proportionately more to book reading and less to sales. -

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Rising costs have terrorized the industry. Between 1966 and 1972 paper, printing, and binding costs rose by.between 73 and 80%.11 Hardback prices consequently doubled in price between 1963 and 1970, and the overall price of books rose 112% between 1965 and 1971.12 The proportion of hardback sales has not surprisingly fallen before the advance of the "paperback revolution". In the decade from 1960 to 1970 the number of paperback titles in print rose from under 6,000 to over 37,000. For a large part of the publishing industry paperback and other rights (book clubs, films, serialization) have become the main hope for profitability. Paperback publishing provides the financial cornerstone of the whole industry, and by 1972 accounted for 45% of sales revenue. 13 Yet, because paperback publishing, relying on large print runs and extensive promotion and distribution, requires largescale finance, small traditional craft-like publishers have been coalesced into groups (like Associated Book Publishers comprising Methuen, Tavistock, Eyre and Spottiswoode, Chapman and Hall, inter alia), and into the multi-media combines who control paperback publishing (Granada, Thomson, Pearson Longman, etc.). The other growth field in publishing is in educational textbooks, whose sales jumped by 65% in the period 1969 to 1972 alone. Yet here again, this is precisely a fi('!ld requiring large financial backing and, increasingly, export organization. Thus publishing has quite clearly responded to pressures 'vith massive consolidation and industrialization. The proliferation of titles in the desperate search for large-scale successes have sucked the industry into a financial expansion that has totally changed its character.

circulation, though remaining a small absolute part of the market. The problem for the populars is their high survival threshhold, given that roughly two-thirds of their income is sales revenue, while the qualities get nearly three-quarters of their income from advertising. Thus a newspaper like the News Chronicle can disappear \vith a circulation of well over a Inillion. These problems are reinforced by the problematic nature of advertising. The advertising industry grew comparatively slowly through the sixties and its proportional contribution to newspaper revenue in fact declined. In addition, commercial television, though largely creating its own new advertising revenue, reduced the share of advertising going to the national press from 34% in 1956 to 18 per cent in 1971, (though newspapers more of less held their own through the sixties by keeping rates very low). 15 The variations \vithin advertising reinforced the revenue pattern. While the advertisers of consumer goods, food, and drink switched from the national populars to television, classified advertising of jobs, property and services expanded and contributed to the comparative vigour of the quality and provincial press. Thus only three cir four of the national dailies are profitable and the spectre of closure haunts Fle~t Street despite occasional bouts of optiinism and the recent surge of the Sun. The response has been twofold. Firstly, newspapers have merged into groups, \vith each other, with provincial chains, or with other publishing interests. Secondly, in order to stay alive, they have joined diversified industrial groups able and \villing for whatever reason to support loss-making newspapers.

(ii) The Press The period since 1945 has been one of perpetual crisis for the press, littered with commissions, enquiries, and obituaries for dead newspapers. For a few years after the war, newsprint rationing kept costs low and advertising was a seller's market. But costs rose by between 70 and 140% from 1957 to 1965, especially newsprint and labour. This rise in fixed costs led to a rise in the break-even point (the recovery of "first-copy" costs) putting a preinium on high circulation to spread costs. 14 Inevitably prices reflected this cost inflation, and many national dailies doubled, or even trebled their cover price between 1959 and 1971. The resulting decline in circulations reflects both a decreasing willingness to buy two newspapers, and a growing use of television as a primary source of information and entertainment. However, the overall circulation decline (of 11% between 1961 and 1971) disguises variation within the press. While "popular" dailies have lost most sales the "qualities" have in fact steadily risen in

(iii) Broadcasting Despite the golden age when commercial television, in Lord Thornson's immortal phrase, was 'a licence to print money', broadcasting has more recently foundered in the same sea of pressures as the other media. Advertising revenue has been uneven and unpredictable, rising only slowly through the 'sixties and hardly at all in 1969-71. Depressed profits in some of those industries providing the bulk of television advertising in the late 'sixties (like food manufacturing, hit by the power of the chain supermarkets) lay behind this uncertainty. At the same time the levy on television advertising revenue was beginning to bite. Introduced in 1965 the levy immediately represented over 25% of the costs of network companies. By 1969 the levy was extracting over £25 Inillion and represented nearly 40% of costs for the big five network companies.16 The levy was reduced by the Conservative government in 1971 by £10 million. The problem of revenue was eXacerbated by the spread of television ownership. By 1968 virtual saturation point had been reached with


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over 15 million licences in operation. If there is no increase in the audience there can be no increase in advertising revenue, especially in view of the growing power of agencies to keep rates down and enforce discounts. The option is to increase broadcasting time, as duly occurred in 1972 after a resurgence in the advertising industry, increasing the demand for an extra commercial channel. The ITV audience has not just remained static, however, it has actually declined since the arrival of BBC2 in 1964 enabled BBC 1 to compete aggressively for ratings. Where ITV had something over two-thirds of the audience in the early 'sixties this figure gradually dropped to 54% by 1972.17 The final factor in this catalogue of pressures was the rapid rise in costs created by the introduction of colour, and the increased production of expensive programmes for the American market. Total costs rose by about 50% between 1965 and 1970. The BBC has been far from immune from pressures. Increased costs with the expansion of the second service, and the spread of colour have created a situation which the annual report coyly described as 'financial inhibition'. 18 Despite licence fee increases in 1965, 1969 and 1971, by 1971 the BBC's accumulated deficit was over £6 million, and despite the recent drop in this figure as more colour licences are bought, the bailing out of the BBC is now a permanent feature of its political environment.

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of television. The proportion of feature films . on the two dominant circuits which were American-financed doubled from 43% in 1962 to 88% in 1968. However, problems in the American film industry have depeleted much of this support and the proportion has fallen steadily over the last five years. (v) Records Unlike the cinema, the record industry has been a beneficiary rather than a victim of changing leisure patterns. Whereas the profitability of almost all the other media sectors declined between 1967 and 1971, the record market expanded at an annual rate of 11%. 20 This growth is due largely to the increasing importance of the youth market for pop music. In fact, the various sorts of pop account for just over 90% of the total record market. 2l Undoubtedly, the most significant recent trend in the record industry has been the rise of the long-playing record. LP's, which now account for over 60% of record production and sales, have become the industry's principal financial prop. The period since 1967 has seen some reduction in the dominance of the two "major" companies-EM! and Decca. Whereas in 1967 their joint share of the LP market was 58%, by 1970 the figure had dropped te 32% and by the end of 1972 to 27%. 22 However, this vacuum has been filled not by the independents but by other major companies. (C) THE DIMENSIONS OF CONCENTRATION

(iv) Cinema The cinema has been a major victim of changing leisure patterns. Since the peak of admissions in 1946 of 1,635 millions they have shrunk steadily and dramatically to 182 million in 1972. In the same period the number of cinemas has contracted from 4,703 to 1,510. The major villain, of course, is television, particularly after the rapid expansion of set ownership in the late 1950s. The result has been government assistance, contraction, and a reliance on American finance, as well as the concentration which we consider later. Government aid has been by legislation in the form of quotas against foreign films, by a statutory levy on seat prices, redistributed among British film producers according to box-office success, and through the National Film Finance Corporation which provided funds for domestic production, particularly by support of British Lion. However, the failure of the latter had, by 1971, prompted the Corporation to withdraw from independent support of films and instead to concentrate on financing strictly commercial films in conjunction with a private consortium. 19 The other response to contraction was the acceptance of massive American backing as the domestic market in the USA sank in the wake

The increasing concentration of control and influence in the hands of a few large companies is the outcome of three interlinked but analytically distinct processes: integration; diversification; and internationalization. (a) Integration There are two main types of integration: horizontal integration, where firms acquire additional units at the same level of production, and vertical integration where they acquire units at different levels. Both types of integration are accomplished by the familiar mechanisms of mergers and take-overs. The period 1967-70 saw a boom in both mergers and take-overs. In those four years, commercial and industrial companies spent almost £5,000m on acquisitions--considerably more than the total for the whole of the preceding sixteen years. 23 Media companies were part of this general trend. Horizontal integration enables companies to consolidate and extend their control within a particular sector of media production and to maximize the economies of scale and shared resources. The most notable example within publishing was the acquisition by reverse take-over of Penguin Books, the world's largest paperback house, by Pearson Longmans, one of

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Britain's largest publishing corporations. An important instance within the newspaper industry was the acquisition of two leading "qualities", the .Times and the Sunday Times, by the Thomson Organization, which at that time was already the world's leading newspaper corporation with almost ninety newspapers in the USA and Canada, and over fifty provincial and local papers in the United Kingdom. Vertical integration occurs when a company with interests in one stage of the production process extends its operations to other stages such as the supply of raw materials, the provision of capital equipment, and the organization of distribution and retailing. This considerably reduces the company's vulnerability to fluctuations in the supply and cost of essential materials and services and enables it to regulate and rationalize production more precisely and to increase its control over the market. The most significant instance of vertical integration occurred in 1970 when the leading British newspaper and magazine publishers IPC merged with the Reed Group Limited, an international corporation with interests in wood, pulp, papers and newsprint. The resulting company, Reed International Limited, has interests in most stages of newspaper publishing, from raw materials to retailing. Another notable example of vertical integration cocurred in the film industry when Electrical and Musical Industries Ltd. (EMI) acquired the Associated British Picture Corporation in 1969. This gave the corporation a substantial interest in both film production and exhibition. Then, in 1970, EMI acquired Anglo Amalgamated Film Distributors Ltd., which gave the group an interest in every stage of film production, from finance through production to distribution and exhibition. These, and other less spectacular moves towards vertical integration, have considerably accelerated the shift from differentiation to concentration. The overall result of these twin integrative processes has been to consolidate the control of the four or five leading companies within each media sector. The following table summarizes the current situation in selected sectors. Proportum of the Total Market Accounted for by the Fwe Leading Companies in Selected Mass Media Sectors.24 (Percentages are rounded off to the nearest whole number) 86% National Morning Newspapers:% of circulation .. 88% National Sunday Newspapers: %of circulation .. 73% Network Television: % of television homes served 86%t Paperbacks: % of domestic production (1971) 69% Mid-price long playing records:* % of market 78% Cinema Exhibition:% of admissions+ t denotes estimate

* Mid-price =

99p to £1.98p

+Top Four Companies

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Although incomplete, the above table clearly indicates that the ownership and control of the British mass media tends to be highly concentrated, with the five leading companies in each sector accounting · · for 69% or more of the market. Concentration of ownership is most marked in the national press, with the "Big Five" accounting for well over 80% of the circulation of both the national dailies and the Sundays. A more detailed account of the breakdown of market shares is given below. Proportion of National Newspaper Circulation Accounted for by the Leading Fwe Companits• (June 1972) 25 Morning Daily

Sunday

All Newspapers*

Reed International News International Beaverbrook Associated Newspapers Thomson Organization

30·0 18·0 23·3 11·9 2·4

40·5 24·6 16·1 6·8

30·3 17·6 16·5 7-3 7-3

Total Market Share

85·6

88·0

79·0

* Includes provincial press.

The national "daily" market is dominated by the four leading "populars". Heading the list and still well out in front is Reed International's Daily Mirror, followed by Beaverbrook's Daily Express, News International's Sun, and Associated's Daily Mail. The "quality" end of the spectrum is dominated by the Telegraph with 10% of the total "daily" circulation. The Times and Guardian come a poor second and third with just over 2% of the circulation each. Pearson's Financial Times accounts for just over 1%. The national Sunday market is even more concentrated, wi·th the leading three companies taking just over 80% of the circulation. Half of this is accounted for by the two Reed papers, the Sunday People and Sunday Mirror, followed by News Inter:national's News of the World and Beaverbrook's Sunday Express. The "quality" sector is convincingly headed by Thomson's Sunday Times with just under 7% of the total circulation, the remainder being split almost equally between the Observer and the Sunday Telegraph. Concentration in the provincial daily press is less marked. Nevertheless, the five leading companies in this sector still account for 60.7% of the evenings' circulation and 39.9% of the mornings'. Of the major national groups only two have a substantial share: Thomsons with a fifth of both the mornings and evenings, and the Daily Mail group with


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13.9% of the evenings and 3.3% of the mornings. The other leading provincial daily groups are United Newspapers, and the family concerns controlled by the Iliffes and the Cowdrays (Viscount Cowdray is also chairman of S. Pearson whose publishing subsidiaries include the Financial Times and Pearson-Longmans.) The initial allocation of commercial television contracts concentrated control in the hands of the four companies serving the major population centres. Associated-Rediffusion provided weekday programming in the London area, ATV served London at weekends and the Midlands during weekdays, Granada provided weekday television in the North, while ABO filled the weekend slots in the North and Midlands. The remainder of the country was divided into ten regions each served by its own company. The primary task of these smaller regional companies was to produce local news bulletins and other programmes of local interest. The rest of their air-time was filled by programmes produced by the four network companies. When the commercial television franchises were re-allocated in 1967, the number of network companies was increased from four to five. Weekday London programming was awarded to Thames and the weekend slot to London Weekend; ATV served the Midlands, while the North was split between Granada and Yorkshire Television. These five network companies together serve 73.2% of the television homes in Britain and receive around two thirds of ITV's gross revenue. In theory the pattern of contractors was originally "designed to spread responsibility for making programmes over as many companies as the expected advertising revenues would support and to provide (very roughly) equal revenue potential for each company". 26 In practice, however, network programme planning provides a functional equivalent to integration, and the five network companies produce all but a tiny handful of prime-time output. The recurrent problems of the ITA with regard to franchise allocation and the like reflect the permanent contradiction of a state regulatory agency attempting to control a commercial system. Integration in publishing has gradually split the industry into two groups. Old independent publishing houses like Faber and Faber, or Routledge and Kegan Paul, maintain their independence and survive on small steady returns on capital. Meanwhile many firms have been forced along the several dimensions of concentration to cope with the mass marketing and export methods now the lifeblood of British publishing. Associated Book Publishers are a major example ofa group ofmediumsized publishers taking advantage of joint operations, though, like many general publishers they are glad to get a return on sales of 4 or 5%. 27 The group includes Methuen, Eyre and Spottiswoode, Sweet

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and Maxwell, and Chapman and Hall. The major university presses remain secluded havens of indeterminate profitability. Concentration in publishing is generally difficult to calibrate, especially in the hardback market where it is not yet particularly important anyway. But as early as 1949 Sir Stanley Unwin estimated that "about 85% of the total book turnover is represented by the sales of at most fifty firms". 2s The Economist in 1958 estimated that the ten largest publishers issued 23% of all new titles that year. Luckham in 1969 modified this to the six largest producing nearly 30%. 29 These six were Hamlyn (purchased by IPC, itself now part of Reed International), Collins, Penguin (part of the Pearson Longman empire), A. B. P., Hutchinson, and Routledge and Kegan Paul. At the same time bookselling had also become highly concentrated; by 1965 80% of the trade was going to 10% of the booksellers. 30 The paperback publishers are integrated into groups with parent diversified companies. Pearson Longman control Longman hardbacks as well as Penguin, and Ladybird books. Granada Publishing comprises Adlard Coles, Crosby Lockwood Staples, and Hart-Davis MacGibbon, as well as Mayflower, Panther, Paladin and a substantial holding in Chatto and Windus, and Cape. Lord Thomson controls, among others, Thomas Nelson, Michael Joseph, Hamish Hamilton, Rainbird, and Sphere. Of the other major paperback imprints Pan is jointly controlled by Macmillan and Heinemann, Corgi by the American publishers Bantam (themselves part of the National General Film Corporation), and Fontana by the giant Collins publishing house. In 1968 British film production was dominated by American companies. Then in 1969 Hollywood experienced a crisis as five of the seven major companies lost a total of 180 million dollars, and as part of the resulting rationalization, investment in the British film industry was cut back by 40%. Because of the sums required, only the large companies such as EMI and Rank were in a position to step into this vacuum. The American film industry has recently undergone something of a resurgence, but in 1972 EMI continued to lead British production with nine films, followed by the Rank Organization and the Laurie Marsh group with six each. The other notable feature of the present situation is the rapid growth of independent producers, a point we shall return to later. The main trends in British film production are summarized in the table below. Between the film producer and the public stand the intermediary stages of distribution and exhibition. At the level of distribution the influence of the reciprocal arrangements and combines of the dominant groups is decisive. In 1972 for example, sixteen of the top twenty box office films in Britain were distributed by the three major coalitions; seven by the Columbia-Warner group, six by the EMI-MGM combine,



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group. 32

and three by the Fox-Rank At the exhibition level, only the large companies have the capital required to undertake the extensive alterations to cinemas necessary to attract the declining audiences. This had the effect firstly of consolidating the duopolistic doinination of the EMI and Rank chains, and secondly of driving the smaller chains into the hands of large companies such as Granada and the Laurie Marsh group, who have interests in a wide range of leisure facilities. The only other significant cinema chain is the Star group.* British Film Production in Selected Tears. 31 Number of films produced by:

1968

1972

LEADING AMERICAN COMPANIES

54%

23%

LEADING BRITISH COMPANIES

14%

31%

INDEPENDENTS ..

13%

30%

Total Number of films produced ..

81

84

Since 1968, when they accounted for half the records produced, Long Playing records have rapidly increased in importance until they now constitute over 60% of total record production and contribute the bulk of the record industry's profits. LP's can be divided into three main types on the basis of selling price; budget record (selling for under £1) Inid-price (£1-2) and full price (£2+). The budget market is dominated by two companies-the Minnesota-based Pickwick International and EMI'S Music for Pleasure. Pickwick currently claim to be running just ahead ofMFP with 40% of the market. The Inid-price market is dozninated by the two leading British "majors", EMI and Decca, whose joint market share stood at 50·6% in the last quarter of 1972.33 At the full price range, however, their joint share drops to just over a quarter (25·6%). However, this gap is filled not by the independents but by the other leading companies, most notably CBS and RCA, the two giant American corporations, and Polydor, the record subsidiary of Siemens, the German electronics combine. Recently the American marketing firms of K-Tel and Ronco have been making a significant impact, re-releasing material leased from the majors on records backed by extensive TV promotion. At the end of 1972, K-Tel's share of the full price market stood at 10·3%. Despite this increasing complexity, however, taken overall, the record market continues to be doininated by EMI. *In 1972 Rank accounted for 27% of cinema admissions, EMI for 25%. The Marsh Group for 14%, Star for 12% (Retail Business No. 177).

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(b) Diversification In addition to consolidating their position within .a particular medium through mergers and take-overs, the larger companies have increasingly diversified their interests and acquired holdings in a range of leisure and information-providing facilities. Diversification enables companies to hedge their bets and to cushion the effects of recession in a particular sector. The Associated Television Corporation Liinited (ATC) provides a good illustration of how this works in practice. ATC's operations are split into two main divisions; network television represented by A TV which serves the Midlands, and the "diversified interests". These include a film-making subsidiary ITC, Pye records, Northern Songs (which holds the rights to 200 of the Beatles' most popular songs), the Stoll Theatre group which includes the London Palladium and ten other West End theatres, Planned Music Liznited, and a merchandising company, Century 21 Enterprises. In July 1969, the levy on the turnover of the commercial television companies was increased, and in the words of ATC's Chairman, Lord Renwick, "This ... immediately produced a crisis which changed the whole financial structure of Independent Television and endangered the very existence of some companies not protected by diversified operations." 34 The post tax profits of Westward TV which serves the south-west of England, for example, dropped from 139 thousand pounds in 1969 to 64 thousand in 1970. 35 ATC however, was "protected by diversified operations" most notably its film and music interests, as the table below clearly shows, and these cushioned the effects of the Levy on the company's profitability. Proportion

of A TC' s Pre-tax Profits Accounted for by Selected Actiuities: 1969-197236 1969

1970

1971

1972

Network TV (ATV) Film Production and Distribution Records and Music

49% 22% 12%

11% 41% 32%

17·5% 32% 38%

51·5% 21% 24%

Pre-tax profits (£mill) ..

5·6

5·3

4·9

6·2

During the period of financial stringency in the television industry, the share of profits attributable to ATV dropped from around a half to under a fifth, and the gap was filled by the expansion of the record and film interests. During the summer of 1969 for example, more ATC productions were screened in "prime time" on American networks than any other single producing company with the exception of MeAUniversal. The success of the diversified activities was not entirely sufficient to maintain profits but it certainly cusioned the effects of the


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levy. Then, as the domestic television situation improved, the balance of profits attributable to -network operations and to the diversified activities evened out again to around fifty-fifty and overall profitability increased substantially. As well as providing a cushion against recession in a particular sector, diversification (whether through direct acquisition, investment or reciprocal arrangements) enables a company to capitalize on a commoditv's success in one sector by marketing spin-offs in a number of other sect~rs. Here, for example, is ATC's write-up of the success of "The Persuaders". "'The Persuaders' featuring Tony Curtis and Roger Moore, has been sold to more than 62 countries.'American Broadcasting has scheduled the re-run of 13 episodes. ... the theme, composed and recorded by John Barry, has sold more than 116,000 records in the U.K. Pan Books have sold 180,000 paper-backs based on the series." 37

Diversified activities are becoming increasingly important, and in several leading media companies they already account for more than half the annual turnover. 38 For example, although IPC is the country's leading newspaper publisher with 30·3% of the total circulation, IPC onlv accounted for 30% of Reed International's 1972 turnover. Sinrilarly, in 1972 over half the turnover of the Thomson Organization was attributable to activities other than newspaper publishing. They included book and magazine publishing and trade exhibitions (24·6%) and package holidays (27·6%). Granada and Rank provide other prominent examples of media companies with diversified leisure interests. In 1972 for example, 40% of Granada's turnover came from TV set rental, 36·2% from network TV operations, 7·9% from motorway services, 6·2% from cinemas and Bingo, and 5·6% from publishing. Similarly, 28·4% of Rank's 1972 turnover came from TV and radio-set manufacture, 19·9% from film exhibition, 15% from audio-visual equipment manufacture (notably Leak Wharfdale hifi sets), 7·7% from hotels, restaurants and motorports, and 7·2% from Dancing and Bingo. Rank also hold 37·6% of the ordinary shares of Southern TV, one of the main regional TV companies. However, undoubtedly the most spectacular example of diversification is provided by EMI, which in addition to heading the record industry and having a substantial stake in all levels of the cinema industry, holds just over 50% of the voting shares in Thames TV, the most successful network company. In 1972, records and tapes accounted for 55% ofEMI's turnover, film interests for 15%, TV interests for 7%, and electronics and TV manufacture for 23%. Recently EMI have extended their diversification policy even further with the acquisition of the "Golden Egg' restaurant chain, and investments in the Swindon Cable TV station and in the Brighton Marina complex.

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In addition to consolidating and extending their control within and across the various media sectors, the big companies are also becoming increasingly intermeshed through joint investments, reciprocal shareholdings and interlocking directorships. The pattern is immensely complex, but the following instance provide a simple illustration of the emerging network. Among the EMI directors is Lord Shawcross, who is a director of Times Newspapers in the Thomson Organization, and Chairman of Thames TV. Similarly, the ATC board includes representatives of the two leading newspaper groups, Sir Hugh Cudlipp, Deputy Chairman of Reed International, and Sir Max Aitken, Chairman of Beaverbrook. In addition EMI and ATC are linked through the Grade family. After the Second World War, the two Grade brothers, Lew and Leslie, established an actors' and artists agency, while their half-brother, Bernard Delfont, built up his own agency business. The two companies later merged to form the Grade Organization under the direction ofLeslie Grade and Bernard Delfont. In 1967 the Grade Organization was acquired by EMI, but Delfont continued as chairman and the Grade family retained its interests. Currently, Bernard Delfont is Chairman of the EMI Film and Theatre Corporation Ltd. and Lew Grade is Deputy Chairman and Chief Executive of ATC.

(c) Internationalization The third aspect of concentration is the internationalization of the media, embracing export and foreign investment as well as foreign ownership of British media companies. Exports play an increasingly important role for all media industries and most of all in publishing. Book exports rose from 29% of total sales in 1949 to 47% in 1969. Educational texts flow in growing profusion to the Third World and in 1972 made up over 20% ofBritish book exports (a proportion nearly doubling in four years). 39 The old slogan that "trade follows the book" has been outmoded by the book becoming the trade. Similarly the export of TV programmes is an ever-more important source of income for both the BBC and the larger independent companies. ATC derived 31% of its sales revenue from overseas in 1971-2 and has been a leader in the growth of the British programme export drive under the inspired control of Sir Lew Grade. The potential of TV film exports was healthy enough to encourage ATC's chairman, Lord Renwick, to announce last year an investment programme of £7 million to back it up. 40 Production for the foreign market encourages mid-Atlantic innocuity and expensively superficial slickness, as well as feeding back onto domestic production styles and resources. This is not a development that has left the BBC untouched, suffering as it has been from the permanent nightmare of "financial inhibition"



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and the impending reorganization of broadcasting. In 1971-2 the income of BBC Enterprises, the marketing wing of the Corporation, rose by 11% a11d contributed about a fifth of the total surplus on the year's working. 41 Total programme sales to nearly lOO countries amount to about £2! million. The success of BBC programme sales is a rare glimmer in a preponderantly gloomy financial atmosphere. It joins merchandising, and record sales (over 150 titles in 1972) among the extensions of the BBC's commercial activities. Go-production with Time-Life and other organizations adds to this growing nexus. Internationalization also involves overseas investment by media companies. The participation of news media in imperial expansion was crucial both as the communications arm of the empire and as a source of revenue for the media. In most colonial countries local indigenous newspapers were either started by British companies or later succumbed to competition from them (the chain of IPC newspapers in West Africa is a good example of this). Most television stations in colonial territories have been set up by British companies who continue 42 to service them with programme material, training, and equipment. Direct investment in Europe is a more recent and growing form of internationalization. The Thomson Organization have considerable interests in German newspapers, and like many media firms are preparing for the impact of entry into Europe. EMI own record companies in virtually every European country, and indeed all over the world, while Ranks have film exhibition interests in Holland and laboratories in Italy. Foreign, mainly American, ownership of British media has further consolidated the monolithic character of the industry, though with the flight of American capital from the ailing film industry, the frequent lack of success of American publishing interests in taking over British firms and the enduring insularity of most of the press (despite the Australian Murdoch and the Canadian Thomson) this aspect of internationalization is frequently overstated at the expense of other more subtle relationships. The complexity of these relationships is in part a facet of the wider face of what is frequently stigmatized as "cultural imperialism" or "the cultural offensive", in which British media are but part of a global marketing system as yet incompletely documented. American t~le vison film series dominate international programme sales, amountmg to nearly 200,000 programme hours in 1971, and providing a revenue that year of approximately 85 million dollars. 43 For all but a very few non-Communist nations television is an American medium. On the other hand the two dominant news films agencies, Visnews and UPITN, are British-based (the latter being half American). The international traffic in newsfilm (and in a visual medium this dominates

news selection) is a major part of the export of cultural material from the developed countries to the Third World, and is a more concentrated version of a similar one-way flow through the news agencies. Internationalization , then, shares with other aspects of concentration the effect of consolidating the necessary commercial constraints on cultural production. As an increasingly evident response of the media to domestic economic pressures involvement in the international market is an inevitable development of later media industrialization.

222

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IMPLICATIONS

To turn to the implications of these structural processes we need to avoid two common inferences. One is to condemn the wickedness of monopoly and concentration in the media per se, leaving aside the reasons for such denunciation. The second is to produce anecdotal accounts of isolated incidents of suppression or manipulation. It is far more relevant to a political economy of the media to establish the general and systematic constraints on information and leisure provision which ·result from tl1e 11ecessities of survival and profitability in the industries providing them. (a) The Constriction of Choice in Leisure and Entertainment The process of producing mass media output is a dual one. For the owners, investors and managers media products are commodities to be packaged, promoted and marketed in the same way as any others. As EMI'S Chief Executive put it: "I ... firmly believe that running a business in the leisure industry is basically no different from running any other.... the same principles of management must and do apply. . . . We in the leisure industry have to examine market potential, identify growth areas, set up a sound and imaginative marketing plan to exploit the situation. " 45 For many of the people who actually make them, however, media products are not simply commodities but media for creative expression. This balance between commodity production and creativity is a precarious one however, and one which is ultimately framed and determined by the general economic context within which production takes place. In periods of economic stringency, the criteria of cost-effectiveness are likely to be decisive with the result that production will be characterized by a systematic rejection of the unpopular and the reversion to formulae with a proven market and profit potential. An illustration from television will show this process in operation. During the pressure on television profits in the period 1969-1971, the programme companies' total costs remained constant at£64·8 mill. Direct programme cost, however, fell by £1·5 mill. indicating that companies were responding to fiancia1 pressures by originating fewer


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FoR

new programmes and relying instead on repeats of previous successes or on programme formats which are cheap to broadcast and which have proven audience appeal and therefore high revenue potential. 46 The following table gives some estimates of the relative costs and audience potential of various categories of programmes. 4 7

Saturday Feature Film American series (e.g. "Ironside") .. Studio show (e.g. "Opportunity Knocks") Situation comedy (e.g. "On the Buses") .. Documentary (e.g. "World in Action") .. Play (e.g. "Play of the Month") .. Arts programmes (e.g. "Omnibus") (N.B.

23


Cost per broadcast hour in £1,000

Likely audience in millions

4 4 4

10-20 9-10 9

15 10-15 25 8

11

6 3 2·5

Costs are based on 1970 figures).

The table clearly indicates that the most profitable programmes in the sense of those that involve the minimum costs for the maximum audience and hence advertising revenue, are repeats of successful American series, old cinema films, studio shows such as give-away quizzes and talent contests, and also comedy shows. Conversely, the least profitable programmes are arts programmes, documentaries and plays. An example of this logic of profitability operating in practice is provided by the case of London Weekend Television (LWT). LWT was awarded the contract to serve the London areas between Friday night and Saturday night on the basis of a submission which stressed "respect for the creative talents of those who, within sound and decent commercial disciplines, will conceive and make the programmes". 48 Substantial innovations in the fields of documentary, drama, and arts programmes were promised. As the economic situation of the television industry worsened, however, respect for "creative talents" was increasingly subordinated to cost-benefit criteria. The programmes shown at peak viewing time on a typical weekend in August 1971, for example, included three old cinema films, three comedy shows, two quiz shows and a repeat of an American crime series. The documentaries, dramas, and arts programmes promised in the original submission had either been axed altogether, allowed to continue with substantially reduced budgets, or broadcast at non-peak viewing times, thereby restricting the range of programmes offered to repeats and revivals of past successes. In addition to the advertising revenue accruing to domestic transmissions, television companies can also boost their profits by selling

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PoLITICAL EcoNOMY OF MAss CoMMUNICATIONs

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programmes abroad. The need to produce programmes that will fit easily into the schedule of the American networks imposes certain restraints on the creative personnel. In order to accommodate the frequent advertising breaks, for example, American oriented programmes have to build around a series of dramatic peaks punctuated by fade-ins and fade-ups. In addition, the need to produce a programme that will appeal to most people in most places necessitates the deletion of any elements which are too localized or culturally specific and a reliance on international "name" stars against "jet-set" backgrounds. The resulting mid-Atlantic style is epitomized by the ATV series "The Persuaders" and "The Protectors", both of which feature an English actor paired with an American (Roger Moore-Tony Curtis and Nyree Dawn Porter-Robert Vaughan) against interchangeable penthouse-casino-yacht locales. Morcambe and Wise, the most successful British comedy team, have consistently refused offers of American series on the grounds that it would mean deleting many of the local and topical references and running jokes which characterize their humour. The high priority placed on a programme's export potential also reinforces the squeeze on documentaries as these tend to be both geographically and temporarily specific. The exclusion of the untried and the reliance on the familiar and already popular are also very evident in the cinema, where both the top two box office films of 1972 ("Diamonds Are Forever" and "The Godfather") were based on best-selling paperbacks, while four others in the top twenty were adapted from successful televison comedy series. A parallel situation is beginning to emerge in the record industry, where the success of marketing companies like K-Tel in re-releasing recent hits has forced the majors like EMI to follow suit. As a result, pop records are increasingly taking on a double economic life, first as a Top Twenty "single", and then, months later, as a track on a compilation LP. However, it is not just a question of the increasing control of the large media companies over a particular media sector or even several sectors, but also of their increasing inf:l.uence over the whole field of non-work time. In 1971 spending on the mass media and entertainment accounted for 9·3% of all consumer spending, while spending on drink, and eating out and holiday accommodation accounted for 7·2% and 5·2% respectively. 49 This fact has not been lost on the large media corporations, who have been attempting to branch out into pubs, catering and ,holidays. The Rank Organization, which already has interests in film, television, bingo, dancing and also in the Xerox Corporation, recently acquired Butlin's holiday camps and narrowly failed in its bid for Watney Mann's brewery and pub chain. In the 1972 Annual Report, the Company Chairman, Sir John

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Davis, explained the rationale behind what he called the "Rank Philosophy". "The Rank Organisation has developed its leisure interests, originally only in films, but now including hotels, entertainment centres, dancing and catering, Top Rank Clubs and motorway service areas, and many of the products which we sell are closely allied with leisure, such as television, radio and hi-fi equipment ... The addition ofWatney's with its new style Schooner Inns and the retailing outlets of International Distillery and Vintners, would have been an entirely logical step forward for the Organisation. 60

A.nother example of a multi-media company extending its interests in catering, hotels and holiday accommodation is EMI's recent acquisition of the Golden Egg chain and their investment in the new Brighton Marina complex. By the same token, companies who already have substantial interests in hotels, drink and food are moving into entertainment and media. An important instance of this is Grand Metropolitan Hotel's acquisition of the Mecca complex whose interests include bingo, dance halls, betting shops, casinos, ice rinks, bowling, the Clubman's Club, and the Miss World contest. The sugar empire ofBooker McConnell provides another example,of this movement. In this case it is the addition of an Artists' Services Division, which owns the copyright on certain works and employs artists' services, to their existing spirit and liqueur ~ufacturing interests. Included among the artists are Harold Pinter andJoseph Losey, and best-selling paperback authors Agatha Christie Georgette Heyer and !an Fleming. This increasing interpenetration of the media and general leisure industries is accompanied by increasing rationalization leading to the deletion of small units of relatively low profitability and the application of common management techniques and marketing strategies in the overall interests of corporate growth. The cumulative result of this is to increasingly restrict the variety of entertainment and leisure options on offer to the majority of people, and to standardize the content. (b) The Control of Information and the Consolidation of the Consensus In the same way that leisure facilities are restricted and regulated so too there is a limited range of information made available by the media. The range of interpretive frameworks, the ideas, concepts, facts and arguments which people use to make sense of their lives, are to a great extent dependent on media output, both fictional and non-fictional. Yet the frameworks offered are necessarily articulated with the nexus of interests producing them, and in this sense all information is ideology. To describe and explicate these interests is not to suggest a deterministic relationship, but to map the limits within which the production of mediated culture can operate. Cultural production retains a real

25

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227

autonomy derived from tradition, occupational ideologies and the genuine tolerance of the liberal consensus. Nonetheless the crux of the system is that information is a commodity, to be packaged, distributed and sold in whatever guise and context guarantee commercial survival. For the press such survival is increasingly problematic and the desperate search for readers, the right readers, demands an increasingly moderate, apolitical, entertainment-oriented press. As the editor of the London Evening Standard has admitted, "even if a newspaper consistently loses money, but enjoys the support of an indulgent publisher with profits from other successful enterprises to meet the bills, the effect of loss making is certain to be felt in the editorial operation". 51 It will mean less space, less chance for background discussion, even greater reliance on the handful of agency sources, greater passivity, less risk-taking, the evacuation of politics. News becomes a means of handling social change, a comforting reaffirmation of the existing order. Any threat is explained away at temporary, deviant or inconsequential. Underlying conflicts of interess and political process are reduced to a necessary concentration on the arresting mythologies of the superficial drama of legislative life. These limitations, as we show below, are part of the demands of commercial information production in a situation of economic pressure. The British provincial press, too, survives at the end of an evolutionary process which has left just twenty provincial dailies, and no English town with a choice oflocal morning papers. Local monopoly is indulged under the benevolent but watchful eye of local business interests, or is rendered harmless by coalition into a national chain (five chains between them control 40% of the British provincial morning circulation and 59% of the evening). Not surprisingly "what is shared by most provincial papers ... is the underlying motive of occupying the widest political field short of areas of hostility to business ideals", 52 the familiar conservative consensus of the local press. Television news has been moved to the front line in the battle for viewers. Like the press, broadcast journalism has responded to economic pressure by assuming its unavoidable role in the ratings war as an entertainment commodity. The intermittent experimentation with presentation and the need to select and present information in a visually exciting way impose their own constraints on the nature of the information portrayed. The invisible-commerce, Whitehall, Latin America, social process-gives way to the spectacle, reducing for example international relations to airport arrivals and departures and minor Third World countries to simple crisis-torn oddities. Publishers of the old school have long resented the transformation of the book. For Sir Frederick Warburg only hard-book selling is "publishing in the sense we normally attribute to this word, and the

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paperback operation is commodity selling". 53 As an increasing number of titles is issued each year smaller sales of each put a premium on rights. The number of novels has not been part of this proliferation and "it is increasingly difficult for fiction of high literary calibre from rare or unknown authors to succeed in the paperback market, roughly a third of which is controlled directly or indirectly by W. H. Smith and the paperback wholesale house Bookwise." 54 As well as controlling nearly 500 retail outlets W. H. Smiths are wholesale newsagents and have subsidiaries in advertising, road haulage and cassettes, as well as running various book clubs jointly with Doubleday and Go. We have argued throughout this paper that the relationship between the material interests controlling the media and the cultural products they provide is a complex one, not explicable in terms of conspiracy or conscious intent. The part played by the media in cementing the consensus in capitalist society is only occasionally characterized by overt suppression or deliberate distortion. If we are to explain why, in an inegalitarian society, many of those receiving least of the rewards available are willing to accept and even actually support the system which maintains their subordination, the role of the media in legitimating that system must be explored. To do that requires investigating not isolated instances of malignity but the routines of practice in the media industries. Within the economic parameters we have already sketched, the necessary contingencies of information gathering and processing produce a cultural artefact which legitimates the consensus. This, we suggest, is because the routines and beliefs which survive in occupational practice are these which satisfy or become incorporated in occupational ideologies while at the same time serving the ends demanded by the economic constraints of the industry. To illustrate this we briefly look at some component elements of the consensus and the occupational practices which support them. Firstly any consensus needs to assert that threatening opposition to the status quo is illegitimate and therefore punishable, or ephemeral and therefore not threatening. Thus the fragmentation of the consensus is not portrayed and rent strikes, "politically-motivated" strikes, squatting, alternative life~styles, and so on are ignored, condemned or denuded of political meaning. This is in large part related to the eventorientation of news, the need not to report reality but "an aspect that has obtruded itself", 55 and thus to concentrate on superficial eruptions and the dramatic, on form rather than content, so that, for example, demonstrations become happenings rather than manifestations of political process. Superficial conflict is made apparent by available overt symbolism, like race and religion, masking underlying conflicts of an unreportable nature.

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In a similar way the constant reiteration of a national interest as having greater reality than sectional interests, invoking the Dunkirk spi~t an:i its like, is part of an attempt to assert a "we-ness", a common community between medium and audience, to encapsulate the widest possible audience. At the same time it reasserts the campaigning function of journalism, turning a critical eye on scapegoats and guilty isolates. The "consent of the governed", a crucial postulate of any consensus, is commonly demonstrated by the conspicuous display of response by politicians to newspaper polls, serving the twin function of legitimating the role of the medium in the political process and exhibiting the good order of the democratic process itsel£ Secondly, the consensus includes the notion of public debate being about the means to agreed ends, about which there are no residual fundamental disagreements, merely a pressing urgency to get on with the job at hand. The limits of debate are defined as those of the existing predominant political spectrum. The ideals of impartiality and objectivity grew from the 19th-century innovations of "reporting" and the early separation of journalism in Britain from party politics and its emergence as a full-time profession. The resultant fourth estatewatchdog ideology requires allowing "both sides" to have their say, which in turn sets the agenda of public debate, locating responsibility and trutl;J. somewhere in the middle space occupied by medium and audience. In translating impartiality and objectivity into working rules they inevitably become the balanced use of "accredited spokesmen". 56 But as the chief executive of one commercial television company has explained, "due impartiality does not require putting the case for things that have already earned the disapproval of the majority consensus". Necessarily too, the emphasis on immediacy produces a fragmentation of reality; the end of ideology is made concrete in a media world where things happen but nothing really changes. A third claim of the consensus is that any residual dissent can be successfully articulated through existing channels of conflict resolution. In media practice this appears in the concentration of attention on central governmental processes, elite figures (those that seek publicity and those able to be sought) and on the metropolitan aspects of centralized industrial relations. To service this focus a vast army of lobby and other specialist correspondents has emerged both tied to and dependent on elite sources and central institutions. It is also a consequence of the easy dramatization of elections as spectacles, and indeed the greater visibility of all formalized politics. As part of the general consensual notion that such change as there is lacks threat or great substance is a fourth notion; that of Britain's role in the world. Beyond ethnocentricity and stereotyping lie two more crucial sets of factors. In the first place the history and economics of

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news-gathering have located correspondents and agencies in a limited and uneven distribution over the globe, emphasizing British interests and the doings of ex-colonies. In addition the perceived need to interest audiences in an area with which they are felt not to be concerned produces a stress on British interest and personnel. 57 Fifthly the consensus entails the idea of an open society and widespread mobility, the rags to riches mythology of the meritocracy which has fi~red prominently i~ ~e int~rview sections of business supplements m recent years. This 1s not JUSt rooted in the fascination with personalities, but in the persistent paradox that in repeatedly reporting the unusual, the news media are suggesting that such phenomena are indeed usual and routine. Finally, in asserting a shared set of values between medium and a~dience the ~onsens~al notion o_f a uniform moral community is remforced, laymg drum to what 1s generally accepted as right and proper, as well as to what is generally known. In this way reporting of t~e Fisher Report on Social Security "abuse" used phrases like "it did not need all the panoply of a government appointed committee to tell us there is enough abuse of social security to cause justified alarm" (Telegraph), or that "everybody has a shrewd idea of how much scrounging goes on in the social services" (Mail). sa Most generally news must be entertainment; it is, like all media output, a commodity, and to survive in the market-place must be vociferously inoffensive in the desperate search for large audiences attractive to advertisers. IV THE POSITION NOW-cONTRACTION OR CONTRADICTION?

While any extrapolation of our historical schema would be tentative one aspect is worth introducing. In each of the media there is an increasingly apparent opposition between the social potentialities for redifferentiation and the trends towards economic concentration. New techniques permitting. gn;ater control by the coruumer, greater fragmentatiOn and localizahon, and cheaper production are quickly being enveloped in the same economic structure as described in this article. There is, in other words, a residual contradiction in the media between the material and social relatioru of production. Such tensions in later industrial development are widely recognized. Dobb notes "the growing obsession of capitalist industry in its latest phase with the limitation of markets .... This is manifestly connected with the fact that the expansion of consumption and of opportunities for profitable investment have come to lag chronically behind the growth of the productive forces .... " 59 Some illustration from present changes in the media may illuminate this, as well as caution against

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the euphoria which often accompanies discussion of these new media technologies. Developments in broadcasting revolve mainly round three innovations: cable, cassettes, and satellites. Cable or community-antenna television permits local programme origination, a multiplicity of channels, and ultimately two-way flows of diffusion. Yet the earlv experiments in this country do not yet suggest these possibilities will be fully exploited. Most of the finance and equipment for experimental CATV has come from the large media corporations and local progrrunming has been minimal. As with local radio the problem of serving an area small enough to be a "community" in some sense yet large enough to be commercially attractive and viable looks likely to be intractable, and given the direction of ownership it will be the noncommercial goals which suffer. Video cassettes and other forms of home recording and playback bypass programming decisioru to grant the viewer control over what he views and when. Yet so far the video market has been merely an extension of existing concentrated production. ATC, which already has 30% of the pre-recorded tapes market, is a major producer of video tapes for export, and is ·well-established for exploitation of any new video market. If the American example is anything to go by the educational market (at present dominated by the large publishing corporations) and pornographers will be the twin beneficiaries of video. Satellite broadcasting contains the promise of widespread international flows of material, ultimately directly to individual receivers. Yet here again the dominance of existing structures and a pricing system whose high threshold costs prevent the active participation of smaller interests seeiiiS likely to curtail major changes in usage. 60 Television traffic only represents 2-5% of total satellite flows in the face of a pricing policy which discourages much use and leaves the system with excess capacity. The provincial and local press is the healthiest section of the newspaper industry. Provincial morning circulatioru rose 9% between 1961 and 1971 and the number of papers has actually increased. The introduction of web-offset printing, and computer and photographic typesetting, potentially encourage decentralized printing, while other developments point to direct home diffusion, the "telenewspaper" allowing selective reading of a wide range of printed material transmitted directly to individual homes. Yet much of this remains in the realm of fantasy, part of the grasping at straws of a fighting national press. Newspapers are becoming more like daily magazines, whose entertainment-orientation has bequeathed information provision to the broadcast media, and the leisure market to the proliferating and highly profitable specialist magazine sector (itself already highly

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concentrated). Further, the provicial press, as we have already noted' is predominantly a series of chains. While the cinema is largely moribund, rekindled embers are to be found in the spread of smaller cinemas and in evidence that in Italy and the USA the fall in audiences is levelling off and the number of regular attenders actually increasing. 61 There has been a marked growth in club and cineaste cinemas. The number of twin- and multicinemas increased from 39 in 1969 to 113 in 1972. Independent production using cheap methods and minimal budgets is increasing too. But here again the new possibilities are totally dependent on existing organizational arrangements. While 70% of films are financial failures recurrent production by independentfilrn-makers using new techniques requires financial backing, and this is limited to the major distributors who already dominate the market. 62 Reaction against the growth of the corporation publishers has led to the birth of many small publishers in the last few years. While there were 1,054 publishers in 1950 there were over 1,600 twenty years later, over I ,500 of whom publish less than 50 titles a year each. 63 New forms of printing technology have given birth not only to coffee-table and art books, but also to cheap methods of lithography and a willingness to accept unjustified type-setting that potentially open up the publishing industry. Distribution has on the whole resisted the process of concentration, though the acquisition of wholesale Library-suppliers by McGraw Hill may be the start in a new trend of vertical integration, as may the exclusive arrangement between W. H. Smith and Octopus Books. The other implications for books "is that publishers should diversify into the areas of non-book publishing which will match up with the market demands induced by technological development". 6 4 V CONCLUSION

FoR A PoLITICAL EcoNoMY OF

4. 5.

6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24.

We have tried in this essay to sketch the causes and implications of the political economy of the mass media. The complexity of power relations in capitalist society demands an analysis of the means by which these relations are legitimated. Mass communications are central to legitimation, and, we contend, can only be understood in the light of historical process and economic necessity as we have begun to delineate them here. NOTES AND REFERENCES

1. See Famify Expenditure Survey, Dept. of Employment, London, HMSO, 1972 and 1972 National Income and Expmditure (Central Stationery Office). 2. John Urry and John Wakeford eels. Power in Britain (Heinemann Educational Books} 1973. 3. For an analysis of the situation in West Germany see Helmut H. Diederichs

25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

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Konzentration in Den Massemedien Systematische Uberblick Zur Situation in Der BDR. (Munchen Carl Hanser Verlag) 1973. For a typical example see Friends No. 27, 5 April, 1971, special issue entitled, "Meet the Media Monster". Louis Althusser, Ideology and Ideological State Apparatuses, in Althusser, Lenin and Philosopqy and Other Essays (London New Left Books) 1971. For a similar formulation see, Stuart Christie and Albert Meltzer, The Floodgates of Anarchy (London Sphere Books} 1972, Chap. 12. R. Low, The History of the British Film 1906-1914, London, Allen and Unwin, 1949. R.Low, TheHistoryoftheBritishFilm 1918-1929, London,AllenandUnwin, 1971. J. W. C. Reith, Into the Wind, London, Hodder and Stoughton, 1949. H. H. Wilson, Pressure Group, London, Seeker and Warburg, 1961. Figures from the Municipal 'rearbook, annually. Report by Educational Publishers' Council, London, September 1972. See summary in The Author Vol. 83 (4) Winter 1972, pp. 187-8. Department of Education and Science, Library Information Series, No. 1. The Purchase of Books by Public Libraries, London, HMSO, 1972. Calculated from Board of Trade Business Monitor, Production Series, p. 75, General Printing and Publishing, London, HMSO, quarterly. See National Board for Prices and Incomes, Report No. 141, Costs and Revenues of National Daily Newspapers. Cmnd 4277 sess. 1970/l. London HMSO. See annual reports of The Press Council, and The Printing and lqndred Trades Federation, National Newspaper Industry, London, December 1972. National Board for Prices and Incomes, Report No. 156, Costs and Revenues of Independent Television Companies, Cmnd. 4524 sess. 1970/1. London, HMSO. See BBTA Bulletins. BBC Annual Report and Accounts. Cmnd. 5111, sess. 1971}2. London, HMSO. National Film Finance Corpvration, A11nual Report 1971, Cmnd. 4761, sess. 1970/1. London, HMSO, Para. 13. Special Report No. I: Gramophone Records, Retail Business, No. 159, May 1971, p.l8. Ibid., p. 28. 1967 figures from The Times, Nov. 2~, 1968, p. iv, 1970 figures from Retail Business, op. cit., p. 26, 1972 figures from Music Week, 27 Jan., 1973. Andrew Glyn and Bob Sutcliffe, British Capitalism, Wvrkers and the Prqfits Squeeze (Penguin Books} 1972, p. 143. Newspaper figures from 19th Annual Report of The Press Council1972, p. 119-121; TV figures from Independent Television Authoriry Annual Report and Accounts 1971/2 (House of Commons paper 1, sess. 1972/3), London HMSO; paperback figures are calculations from the estimates given in A. Blond, The Publishi11g Game, Jonathan Cape, London, 1971; record figures from Music Week, 17 Jan., 1973. Cinema figures from Retail Business No. 177, Nov. 1972, p. 37. Figures from Press Council 1972, op. cit. Pm Report No. 156, op. cit. Annual Report and Accounts 1972. Letter to the Economist, 15 October 1949. B. Luckham: The Market for Books, in R. Astbury (ed.); The Writer in the Market Place. London, Clive Bingley, 1969. pp. 153-176. G. E. Harris; The Book Trade in R. L. Collison (ed.}; Progress in Library Science, London, Butterworth, 1968. Calculated on the basis of figures given in Cinema TV Today, 6 Jan. 1973. Cinema TV Today, 30 Dec. 1972. Music Week, op. cit. Associated Television Corporation Limited Annual Report and Accounts 1970, p. 4. Westward TV Report and Accounts 30 April1970, p. 7.


32

234


[2]

1973

36. This table is derived from the figi.Ires given in the ATC Annual Reports for the respective years. 37. Associated Television Corporation Ltd. Annual Report and Accounts 1972, p. 1I. 38. The figures for the proportion of ~over are calculated from figures given in the 1972 Annual Reports of the respective companies. 39. See M. Deane; United Kingdom Publishing Statistics, :Journal of the Royal Statistical Society, Vol. 114, Series A, 1951, pp. ~8-489; and Board of Trade Business Monitor Production Series, p. 75. General Printing and Publishing, quarterly returns, from which our figures are calculated. 40. Annual Report, 1972, p. 4. 41. BBC Annual Report and Accounts 1971/2. Cmnd. 5111, sess. 1971/2. London, HMSO, pp. 17-19. 42. See P. Elliott and P. Golding; Mass Communications and Social Change, paper given to 1972 British Sociological Association conference, forthcoming in conference anthology. 43. T. Varis; International Inventory of Television Programme Structure and the Flow of TV Programmes Between Nations, Research Institute, University ofTampere, 1973. 44. See H. Schiller; Mass Communications and American Empire. A Kelley, New York 1969. For Latin America see A. Wells; Picture-Tube Imperialism. Orbis Books, New York, 1972. 45. John Read, .The Leisure Market-Patterns and Prospects, The Advertising Q.uarter{y, No. 25, Autumn, 1970, p. 33. 46. PIB Report No. 156, op. cit. 47. The relative costs are taken from C. F. Pratten, The Economics .of Television (London PEP Broadsheet No. 520) 1970, p. 26. The audience figures are from B. P. Emmett, The Television and Radio Audience in Britain, in D. McQuail ed. Sociolog of Mass Communications (Penguin _Books) 1972, pp. 211-12. 48. Quoted in Open Secret (Journal of the Free Communications Group) No. 1, Summer 1969, p. 17. 49. National Income and Expenditure 1972 (Central Statistical Office) 1972, Table 22. 50. The R.ank Organisation Limited, Annual Report and Accounts 1972, p. 18. 51. C. Wintour; Pressures on the Press, London, Andre Deutsch, 1972, p. 173. 52. A. C. H. Smith; Provincial Press: Towards one big shopper, in R. Boston; The Press we Deserve, London, Routledge and Kegan Paul, 1970, p. 141. 53. Letter to the Times Literary Supplement 10/6/1965. 54. A. Blond; The Publishing Game, op. cit., p. 86. 55. W. Lippmann's classic definition in Public Opinion, Macmillan Paperbacks Edition, New York 1961. Chap. 23. 56. Stuart Hall's perceptive phrase, see for example his remarks in The Listener 16/3/1972. 57. For an extended discussion of this point see P. Elliott and P. Golding; The News Media and Foreign Affairs, in R. Boardman and A. J. R. Groom: The Management of Britain's External Relations, London, Macmillan 1973, pp. 305-30. 58. Both in editions of29/3/1973. 59. M. Dobb; Studies in the Development of Capitalism, London, Routledge and Kegan Paul, 1963. p. 357-8. · 60. SeeP. Passell and L. Ross; Communications Satellite Tariffs for Television; London, International Broadcast Institute, 1972. 61. See Cinema-TV Today 13/1/1973, but also 31/3/73 for evidence that the rebirth is not yet apparent in this country. 62. See interview with Tony Garnett in 7 Days, 12/1/1972. 63. See M. Deane; United Kingdom Publishing.Statistics, op. cit. Comparative figures calculated from The Bookseller, 22/1/1972. 64. C. Bingley; The Business of Book Publishing, London, Pergamon, 1972, p. 151.

Critical Studits in Mass Communication 6 (1989), 43-60

Media Economics: Terms of Analysis DOUGLAS GOMERY

0 -Fundamentally, the mass media in the United States are economic institutions. To properly understand their role in American culture, a framework is needed for economic analysis. This essay lays out such a framework and argues for its utility in understanding the workings of the television, motion picture, newspaper, and radio industries, as well as in evaluating appropriate public policy responses and considering historical trends. The basics of the model deal with the structure, conduct, and performance of the industry. distribution, and T presentation of radio, over-the-air and cable television, motion pictures, HE PRODUCTION,

newspapers, and magazines require great expense and frequently generate enormous profits. This raises the ire of many. Critics often complain about monopoly media making too much money and holding too much sway in community public opinion. Ben H. Bagdikian (1983, p. xviii) has mourned "the subtle but profound impact of mass advertising on the form and content of advertising-subsidized media-newspapers, magazines, and broadcasting." Year-in, year-out independent film .makers accuse Hollywood of having all the resources and dominating the screens of U.S. theaters (and, in recent years, owning them as well). Thomas Guback (1987) sees in these trends less choice for movie fans, the same handful of films playing in all the thea,ters. Guback (pp. 75-76) found that "during the 1986 Christmas holiday, the five most widely Douglas Gomery is Professor of Communication Arts and Theatre, University of Maryland.

distributed [Hollywood] films were playing in a third of all theatres in [the United States]." Furthermore, he argues that the expansion of theaters, pay television, and home videOhas not led to more new opportunities for· film makers, only more economic power in the hands of a few. The buqget cutbacks at the television network news organizations have provided reminders of the economi_s constraints inherent in news reporting. Years before those cutbacks, researchers such as Edward Jay Epstein in News From Nowhere (1973) and Herbert J. Gans in Deciding What's News {1979) argued that there ought to be a government-funded endowment for news to improve the-coverage they observed in their studies. Changes such as those made in USA Today, the television program, due to its poor ratings during its first week offer ample evidence of news as an economic good. It is commonplace to assert that the production, distribution, and presentation of the mass media in America involve vast sums of money, and thus no research in mass communication can be Copyright1989,S~

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complete unless questions of economic available products and services; business influence are addressed. But how should enterprises attempt to maximize longthis research goal be accomplished? The run profits (the difference between reveliterature on mass media economies fails nues and costs). In the United States, to provide a set of fundamental terms for corporations produce and distribute the analysis. Benjamin M. Compaine's Who bulk of goods and services (governments Owns the Media (1982) asks a simple create the rest). but fundamental question about the Industrial organization analysis, in newspaper, film, and television indus- particular, seeks to answer basic questries. But then, none of his four analysts tions about how sets of corporations (in(includin g himself) uses the same dustries) behave. It examines how profitmethod to answer this question. One maximizing business concerns interact author calls for an upheavaLof the class with market forces of supply and structure, another for governmental demand. And it not only concerns the intervention, and yet another for no production and selling of goods and servalue judgments at all. What are we to vices but also their fair distribution to make of these different conclusions about members of the society (Scherer, 1980, the mass media in the United States? pp. 1-8). Industrial organization analyWhat is an appropriate, logical, system- sis overlaps with a number of other atic way to analyze the economjcs of the specialties in the field of economics (e.g., media? (Compaine, 1982). labor economics, banking and finance, This article establishes basic terms for international trade, and governmental analysis. Since the theory and method finance). The study of media economics determines the answers obtained, it is should concentrate on the study of the important to understand the conditions organization and behavior of business of analysis. This is as true of economic enterprises, since they form the core ecostudy as it is for social, critical, or psy- nomic institutions of the mass media chological research. Economic investiga- industry in the United States. With the tion seeks to analyze the allocation of study of industrial organization economresources and distribution of products ics as the core, the analysis can be filled and services in an economy. In other out and completed by adding concerns of words, it attempts to understand how labor, international, and financial ecogoods and services are made, and then nomics. sold. It also examines how the final The industrial organization model products are distributed to members of operates on three levels. It directs attenthe society. These are the basic issues of tion to the basic structure of a set of efficiency of production and selling and profit-maximizing firms: Who are they? the equity questions of distribution and How big are they? Do some dominate? access. Media economics serves as a par- The structure directly influences the corticular subset of this study. poration's conduct or behavior: How do In particular, it is important to focus firms set prices? How do they decide to on how producers and consumers make distribute what they sell? Structure and their decisions in response to prices and conduct, in turn, dictate the performan ce quantities generated by the interplay of of that industry: Are services distribute d supply and demand. Consumers seek the fairly? How is access determined? At the maximum satisfaction available from level of performance, governmental their incomes through acquisition of intervention may be used to atfect behav-

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ior of businesses; economic considerations can lead to more informed choices and assessments of alternative consequences.

ECONOMIC STRUCTURE A set of firms creating a similar product or service constitutes an industry. Certain basic conditions of the supply and demand of raw materials define the nature of these firms. "Supply'' concerns the availability of raw materials, technological advancement, product durability, business attitudes, and the extent of unionizatimi. "Demand " deals with the flexibility of prices, rate of growth of interest in the product or service, availability of close substitutes, possible marketing strategies, and issues of seasonality. For a particular industry, conditions of supply and demand give rise to a certain number of corporations which, in turn, define its basic economic structure. The fundamental question of media economic structure is: Who owns the media? The answer might manifest itself as a monopoly (one newspaper in a city) or oligopoly (the three television networks or the seven movie studios). In general, analysis of economic structure seeks to establish the number and size of the corporations involved in an ind'i:istry, the impact of barriers to entry for possible new competitors, the effects of horizontal and vertical integration, and the consequences of conglomerate ownership. The basic data for the current economic structure of the media industry in the United States can be found in Benjamin M. Compaine's Who 07!!ns the Media? (1982), with yearly updates located in the industry trade publication Channels' Field Guide. Consider the economic structure of the television -industry and how Rupert Murdoch seeks to change it. Even with

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other means of getting signals into the home (including cable television, direct satellite transmission, and the VCR), the three television networks (NBC, ABC, and CBS) still dominate. They have significant rivals in pay television (Time Inc.'s HBO), cable television (Turner Broadcasting Service for news), and home video (virtually all the major studios). These major players try to collect and establish positions in various media industries and then have one component feed into another. This is another example of the longstanding media interest in verti~l integration. Its far-reaching implications for the network television structure can be understood through an examination of the recent activities of Rupert Murdoch's News Corporation, Ltd. and its attempt to establish a fourth television network. Entrepreneurs from all walks of life have long recognized the enormous profit and power of the three_j)'. S. television networks. In 1985, news mogul Rupert Murdoch began a serious quest to create a fourth U. S. television network. He did not initially move directly into the television industry but rather into television's source of programming, Hollywo_9d. In March 1985, Murdoch agreed to buy one half of Twentieth Century Fox, the movie and television production studio, from Denver oil man Marvin Davis for $250 million. He would buy the other half six months later. Prior to buying him out, however, Murdoch persuaded Davis to join him in purchasing the most powerful set of U. S. television stations outside those owned and operated by the three television networks. Early in May 1985, Twentieth Century Fox signed to acquire and run six independent television stations from Metromedia for nearly $2 billion. These were located in New York City (the largest U. S. television market), Los Angeles (the 2nd larg-

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est), Chicago (3rd), Dallas (8th), Washington, D.C. (9th), and Houston (lOth). In total, nearly 20% of U. S. homes with television sets are able to view one of these stations, providing a reach comparable to the stations owned by NBC, ABC, or CBS (Field Guide, 1988). Twentieth Century Fox paid more than the accepted going rate for the Metromedia stations. In the 1980s, television stations in the United States sold for 10 times the cash annually generated by operations. Twentieth Century Fox anted up ail amount 16 times the cash flow, or 60% more than the going rate. At the· end of the summer of 1985, Murdoch had completed the package and bought the remaining half of Twentieth Century Fox, accepting the more than $1 billion set of notes associated with the acquisition of the television stations (Abrams, 1985, p. 5). In less than six months, Murdoch became a significant player in the U. S. film and television business. His first move was to place Barry Diller in charge of his new empire, which he renamed Fox, Inc. Diller had the perfect background to run the new film and television corporation. He knew how the major networks operated: at ABC in the 1970s, he pioneered the successful made-fortelevision Movie of the Week series. He also knew Hollywood: working at Paramount during the late 1970s and early 1980s, he created a consistent string of box office successes. Davis lured Diller to Fox with a salary estimated to be more than $3 million per year. Diller's management skills since have served as one of the linchpins in Murdoch's quest to turn Fox, Inc. into the dominant force in the mass entertainment industry ("Rupert Murdoch's Big Move," 1985, p. 107). Murdoch and Diller have had to work fast, since the Twentieth Century Fox and Metromedia acquisitions do not rep-

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resent Murdoch's only new financial obligations. Today, Murdoch's News Corporation, Ltd. represents a $4 billion global empire that encompasses more than 150 newspaper, book, and magazine publishing operations, a satellite channel, an airline, television stations, a major stake in Reuters news service, a hotel reservation service, and even a sheep ranch in the Australian Outback. With total revenues of nearly $4 billion per annum, the United States only accounted for just over one half of Murdoch's revenues. Newspapers continue to be the dominant segment of the business, representing more than one third of net profits. Film accounts for one quarter and television one fifth, with magazines and commercial printing making up the rest (Barnes, Cieply, & Landro, 1986, p. 9). Murdoch made his boldest move into the publishing business in August 1988 with the $3 billion purchase of Waiter H. Annenberg's Triangle Publications. This added the nation's largest circulating magazine, TV Guide, plus Seventeen and The Daily Racing Forum to Murdoch's collection of magazines. With the acquisition of Triangle, the largest transaction ever in the publishing industry, News Corporation, Ltd. became the largest U.S. publisher of consumer magazines in terms of circulation. Among News Corporation, Ltd.'s other magazines are Elle, New York, The Star, and Premiere, which total 7 million in circulation (Rogers, 1988, p. 3). Murdoch does not always do well in his investments. When he took over the ailing New York Post, he applied the techniques that proved so successful with his Australian and British papers: circus layouts, lurid stories of sex and violence, and constant promotional giveaways. He succeeded in doubling the New York Post~s circulation to almost a million, but

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the new readers were not the types of folks the New York advertisers (such as department stores) wanted to reach, and so increases in revenues never matched rises in circulation. Over 11 years, Murdoch lost more than $150 million on the investment in the New York Post. His newspapers remain his most profitable operations throughout the world. News Corporation, Ltd., the parent company, has awesome market power. Its newspapers control 60% of the market in Australia and more than one third in Britain. The South China Morning Post commands a lion's share of the market in Hong Kong's English language newspaper circulation. The corporation also controls the largest set of magazine circulation and distinguished publishing houses such as William Collins Sons & Co. and Harper & Row. To meet legal requirements and ongoing debt obligations, Murdoch is supposed to sell some of his most profitable U., S. and Australian newspapers, because restrictions normally prevent ownership of a television station and a newspaper in the same market. Often he has received extensions and waivers. But an important exception occurred in 1985 when he proffered one paper, The Village Voice, to Leonard Stern, chairman of the Hartz Mountain pet food and supplies corporation, for $55 million and made a healthy profit on the deal. The Village Voice staff was not sure this forced sale was for the better. Jack Newfield, a senior editor, said, "On paper, you're not going to find a worse owner than Murdoch. In practice he turned out to be terrific for us. He gave us absolute freedom" (Meyers, 1988, pp. 19-21). But for Murdoch the future is television in the world's most profitable ~ar ket, the United States. The centerpiece of this expanded empire has become Fox,

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Inc. Murdoch is betting billions that in the long run his new film and television enterprise will · prosper to a greater degree than have any of his other media investments. To take full advantage of the film and television capabilities of Fox, Inc., he and Diller have focused on creating a fourth television network. They hope to link up the multitude of new independent television stations which have gone on line during the 1980s; the number of such stations is double that of a decade ago. A network of independent stations, reasoned Murdoch and Diller, thus could provide an adequate basis for selling national advertising time. 1 To make Murdoch's plan work, Diller has attempted to turn out attractive programming to ensure that stations will buy from Fox. He has had mixed results. After a year the ratings were less than expected; and the original, modest acceptable losses have grown far in excess of $50 million per annum. The first show on Fox was a late night talk program starring J oan Rivers, which went on the air in October 1986. With it, the Fox network delivered younger adults, aged 18 to 34, to advertisers but not in the expected numbers. The network cost Fox about $100 million to start. The service reaches 86% of the United States through 115 independent stations but works with only 120 employees to keep overhead costs low. The average rating for the first year was a 3.7, with a 7 share for Sunday night and less for offerings on Saturday night (McClellan, 1988, p. 52). The most popular attraction has been an action adventure show, 21 jump Street, followed by an offbeat situation comedy, Married ... With Children, and the critically praised comic tour de force, The Tracy Ullman Show. The Late Show, with original star Joan

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The Political Economy of the Media I 48 MEDIA ECONOMICS

Rivers, lasted only seven months and then wobbled on with a string of less famous hosts. Fox's greatest investment came with George C. Scott in Mr. President, but few found that situation comedy very funny, and it never did well in the ratings. In 1988, Murdoch decreed that Fox could lose no more than $40 million in 1989. Programs would be kept to strict budgets and monitored closely in weekly reports. The result, most predict, will be a fourth network built around news programs and reality-based shows. But the ultimate goal remains: try to build a full seven days a week schedule by early in the 1990s. Murdoch and Diller have hedged their bets. Fox television is more than a fourth network. Twentieth Century Fox is the production company behind the hit L. A. Law on NBC, and the less successful Hooperman on ABC. Off-network syndicated shows include M*A*S*H and The Fall Guy, while first-run syndication includes Small Wonder, The $100,000 Pyramid, and 9 to 5. International sales of these programs made 1987 a record year for Fox. A bonus is that programs already in the can, long ago fully depreciated on the accounting sheets, feed Twentieth Century Fox a constant stream of pure profit. For example, Twentieth Century Fox has an agreement to provide more than 50 films from its library to the People's Republic of China for telecast. CBS-Fox Home Video continues to be a major player in the burgeoning VCR market, with more than one eighth of the market sales (Frank & Morris, 1988; "Rupert Murdoch's Big Move," 1985, p. 106; Witcher, 1988). The innovation of the fourth network symbolizes the extraordinary efforts of one entrepreneur to break into the exclusive profitable oligopoly that has long

49 MARCH 1989

been U.S. network television. It would have been realistically possible only because Murdoch owns both the creator of the programs (Twentieth Century Fox) and important outlets in his core television stations. Fox broadcasting simply links those two entities (and other stations) together. Indeed, the potential for stitching these together to create an integrated corporation offers Fox an advantage no other network has. Consider that a book published by Harper & Row could be excerpted in Murdoch newspapers and magazines, recast as a Twentieth Century Fox film, done again as a television program for the network, and then syndicated around the world. The film can be reviewed in Premiere, while the television programs can be promoted in TV Guide. This is a vivid example of vertical integration. 2 In terms of economic analysis, vertical integration can be defined as the expansion of a business enterprise in gaining control of operations from the acquisi.: tion of fundamental raw materials through the sale of the final product. For film and television entertainment, a fully vertically integrated system includes the production of the program, its distribution, and its final presentation. This was long the basis of the Hollywood studio system and provided a core of the stable, long-run profits for Hollywood before the U.S. government stepped in and, through an antitrust suit, forced the studios to sell their theaters (Gomery, 1985). Two economic motivations are common to all forms of vertical integration. First, businesses desire to take full advantage of the power integration offers to reduce costs of sales and transactions. The vertically integrated corporation sells productions to "itself' and thus does not have to go through bidding procedures; it can have smaller sales and

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accounting departments. The second motivation is market control. A vertically integrated firm need not worry about being shut out of key markets. For example, in the past, Fox had to convince key stations to buy its films and television shows. Often these stations were already affiliated with a network and thus only had limited time for Fox shows. Marginal shows would fail if a television station in New York or Los Angeles, the two largest U.S. television markets, did not buy. By vertically integrating, Twentieth Century Fox need not worry about being shut out of New York, Los Angeles, or four other major U. S. media markets (Scherer, 1980, pp. 297-314). With television firmly established as the prime showcase for visual entertainment, and with the virtual elimination of FCC constraints, Fox's Hollywood rivals also have begun to purchase television stations, principally in the top U.S. markets. For example, MCA (parent company to Universal Pictures) with WWOR in New York and The Wait Disney Company with KHJ in Los Angeles surely understood these economic advantages when they purchased independent television stations for hundreds of millions of dollars. In the 1990s, other major movie corporations surely will purchase one or more television stations. Only the required millions of dollars in the purchasing price stand in their way. Indeed, it took an Australian, Rupert Murdoch, to show Hollywood that vertical integration of film and television entertainment represents the business strategy of the future. Murdoch's proposed fourth U. S. television network will cost him millions, even billions, but if successful, it will forever change the face of American television (far more than the vaulted promises of cable television or even home video have). Cable television has strug-

GOMERY.

gled for decades simply to enter half of the homes using television in the United States, while in one bold move Murdoch acquired access to a national market. It has taken a rich outsider, willing to pay above-market prices, to break into a tight structure of network television and to accomplish what no American corporation has been able to do: seriously offer a viable fourth U. S. television network. Murdoch has forever linked Hollywood directly to the television industry. As a consequence, Hollywood, despite the onslaught of new television technologies, has and will grow more powerful. Ten years ago, it was thought that the emerging world of cable television would cripple Hollywood. Instead, the new television technologies have enabled the major studios, through careful use of vertical integration, to acquire even more power and in the long run ever more profits.

ECONOMIC CONDUCT The industrial organization economic model posits that certain structures (monopoly, oligopoly, competitive) act in certain systematic ways. That is, the analyst examines the behavioral consequences of a particular market structure. This is referred to as the study of industrial conduct. Key variables include pricing policies, product differentiation, advertising behavior, and innovation of new technology. Indeed, the importance of market structure lies in the way it induces firms to behave: changing prices and outputs, setting the characteristics of services and products, and factoring in efforts of research and innovation. Market conduct directs attention to a firm's external behavior, both toward the market in general and toward specific rivals in particular. The industrial organization economist looks at external

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behavior, what the corporation actually operate on a more complex plane. A does in the marketplace. For media cor- monopolist has no rival behavior to conporations, the analyst ought to investi- sider; a tiny firm in a competitiv e world · gate £!ices (the fees for renting a video- cannot possibly monitor what all rivals tape versus subscribing to HBO versus are doing and then figure out how to going out to the movies) and typ~s of react accordingly. In the competitiv e service purchased (watching television, world, companies simply react to general reading the newspaper, listening to the market forces. radio, or going to live sporting events or Economic theory has a hard time with concerts). oli~opolists. Theorists often throw up Different market structures tender their hands and declare solutions to moddifferent industrial conduct. If there is a els "indeterminate." That is, there are free and open market of pure competi- too many possible outcomes, all dependtion, then there is widespread, noncon- ing on particular social, ideologica l, even centrated ownership, ease of getting into personal forces. Unlike in the competi(and out of) business, and a homogeneity tive or monopoly cases, it is impossible to of products or services offered. This type predict the behavioral implications for a of industrial market conduct is rare in general market configuration. But that the United States and nonexistent in the does not mean we cannot say something media business. about the conduct of oligopolists. To On the other end of the spectrum is the make the most possible mon~y as a monopoly, a single company constituting group, oligopolists ought to cooperate the market structure. This most concen- fully and thus behave as if a monopoly trated type of industry is very hard to were operating. That is, each of the break into as a result of some inherent members of the oligopoly could extract a advantage the monopolist has and pro- share of the maximum possible monopduces a product or service without any oly profit. The problem is how to split up close substitute. The phone company, the this profit, and that is where cooperativ e gas company, the electric company, and behavior breaks down. Still, oligop~st s indeed the cable television franchise offer frequently work together, especially constant reminders of the power of a when threatened from the outside, such local monopoly. as in a case of keeping out possible The typical market structure in the competitors. Nothing united the three media business is an olig<W<Jly, owner- television networks more than a threat ship by a few. Actually, the media busi- by the cable industry. ness consists of a set of oligopolies, sepaBut more often than not, the individrate industrial structures each dominated ual members of an oligopoly want to by a handful of large corporations. The extract a greater than average share, and essence of an oligopoly is that the num- soon cooperation breaks down. They ber of firms is small enough that all can begin to differentiate their products. The be cognizant of the actions of rivals and three television networks are constantly react accordingly. Take the case of the promoting new shows. But in the end the three networks: When NBC offers a new products they hype seem strangely alike: comedy at a particular time of a particu- situation comedies or action/adventure lar day, its rivals, ABC and CBS, coun- dramas in prime time, soap operas in the terprogram. With seven major movie afternoon, news in the early evening or companies, the behavioral dynamics immediat ely after prime time. In

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essence, all three "agree" on the rules of the competition and then seek to differentiate their products to make the most money, always knowing what their rivals are up to. The goal is the most profitable product within the rules of the game. Industrial organization economics deals with this behavior through game theory analysis (Caves, 1987, pp. 57 -58; Scherer, 1980, pp. 376-380). The complexities of market conduct for the mass media can be appreciated by looking at one particular problem: selling movies to the public. Even as late as a dozen years ago, the process of selling a theatrical feature film seemed one dimensional. A feature film played in theaters. It opened with big premieres and publicity; publicity campaigns were conducted through newspapers, magazines, and press tours. Moreover, once a feature film had played off theatrically, it was gone. A film earned the bulk of its money from play in theaters. Movie companies sought to differentiate their products, milk the most profit, and then move on to another film. The selling of movies began to change in the mid-1970s. In 1975, Universal fundamentally altered film marketing with jaws, the first major film to skillfully employ saturation advertising on network television. This use of television was considered an adventuresome, innovative marketing maneuver at the time; today it is standard practice. During the final six months of that year, this one film earned more than $100 million, easily surpassing The Godfather . as the all-time Hollywo od box-offic e champion. A serious market contender emerged in the mid-1970s. Time, Inc.'s innovation of HBO added the possibility of millions of extra dollars in a new market. HBO played feature films nearly around the clock and charged subscribe rs

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accordingly. Now a movie studio had to consider not only how rivals markete~ films on television but also how to maximize sales to HBO, The Movie Channel, or Showtime without cutting interest at the theatrical box office (Lyon, 1984, pp. 220-221). By the mid-1980s, the home video revolution further complicated the actions of a movie company selling its products. Suddenly the public could rent or own individual titles, formerly the province of the rich, well-connected, or illegal operator. A decade of underground collectors had bootlegged copies of Gone With the Wind and Vertigo. Now they could be bought or rented on tape in stores throughout the country. The major Hollywood companies have been the big winners in the world of the new television technologies because they have learned to take advantage skillfully of all the possible windows of release. They extract more and more money from their features through a careful use of price discrimination. That is, they set different prices for the "same" film. Buffs who want to buy right away pay the most, those with less interest pay smaller amounts, and many remain content to wait until it appears on "free" television. The game for Hollywood is to set the maximum possible price at each stage of release-to o high and they force customers to a cheaper level; too low and they fail to extract the maximum price. Hollywood has adjusted its behavior to a changing world of new technological possibilities of presentation. The Hollywood majors have done this so skillfully that they stand at an apex of profit and power unseen since the golden age of the 1940s.3 Feature films still begin their marketing life in theaters. The theater has turned into a make or break advertising display venue. A theatrical blockbus-

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MEDIA ECONOMICS

ter frequently guarantees millions of additional dollars from the home video and pay television arenas. A bust in theaters often means minimal monies from pay television and the VCR market. That is why the major Hollywood companies work so hard to craft a hit in the theaters. But the continuing importance of theaters has become obvious only in the last few years. Consider that as the film industry entered the 1980s the consulting firm Arthur D. Little, Inc. predicted that there probably would be no need for movie theaters by 1990. Everybody could stay home and view films on the new television technologies. Instead, during the 1980s, more new movie theaters have been built, creating more theatrical screens in the United States than at any time in history. Theatrical releases require more and more theater screens, so that Hollywood can take full advantage of the economies of television advertising. Even though the cost of marketing a film can often exceed $10 million, spreading the cost over more theaters means that marketing costs per theater per film remain relatively low. The economies of scale of television advertising of theatrical features provide the foundation of the multiplex theater. A multiplex complex with 12 screens is four times more likely to locate a hit than a triplex. Once the early results set a hit in motion, the blockbuster can be shifted to the largest auditorium in the complex, while new films are introduced in smaller, adjacent viewing sites (Dekom, 1987, pp. 9-15). In the 1970s, theaters supplied more than three quarters of the revenue for an average Hollywood feature film. Today the theater situation provides less than half. Movie theaters are doing just fine, but home video is doing even better. The recent data from the home video industry

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is nothing short of astonishing. In 1980, the Hollywood majors collected some $20 million from world-wide sales of video cassettes. In 1987, the figure was over $7 billion. Ten years ago, an average film took in nothing from home video; today that share tops one third of total revenues. In the beginning, Hollywood loathed the new machine, arguing that VCRs stole precious dollars from the box office. But, during the 1980s, Hollywood found a way to exploit the new technology. During the first two years of the decade the major Hollywood studios tried to sell prerecorded movies to the public for $60 and up, thinking fans would want to accumulate tapes at home as they had with books in forming a library. But, quietly, entrepreneurs with no conn~c tions to the movie business began to buy multiple copies of prerecorded movies and offered them for rent. The terms varied, but usually up to $10 was anted up to join a "club" and then a tape rented (from a selection which might reach 5,000) for $2 per day. By the mid-1980s, stores renting video tapes seemed to be popping up everywhere. Grocery stores, drug stores, convenience chains, gas stations, dry cleaners, and, even in some locales, pizza delivery services were willing to lease tapes. Consider that in 1987 fully one sixth of all tapes were rented from grocery stores and drug stores alone. Hollywood has sought ways to participate in this rental market by establishing different prices through time. Initially, a tape is sold for close to $100, with principle buyers being video rental stores. But once that market has been milked, a "special sale" is held for about $20, aimed at individual buyers. And, make no mistake about it, a hit film can generate serious dollars through video sales. In 1986, Paramount's Top Gun brought in

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$82 million to the parent company in theatrical rentals; tape sales generated an additional $40 million (Bessman, 1987, pp. 70-72; Rosenthal, 1987, pp. 37 -39). NBC, ABC, and CBS now have to play feature films after the pay market and home video releases. With repeated showings on pay-cable and home video, the ratings for theatrical features shown on network television have fallen to a low unmatched since Twentieth Century Fox and NBC introduced Saturday Night at the i\1ouies 25 years ago. So, now Saturday Night at the Mouies (or a counterpart on another night, depending on the schedule and the season) means a series of films especially made for premiere on television, the ubiquitous "television movies." In this way, Hollywood can differentiate its product, a feature one pays for in a theater, on pay television, or through home video. A madefor.. television movie premiere is "free." These relatively low budget ($2-5 million for a 90-minute film) madefor-television movies thrive by promoting instant controversy. A $20 million feature, with an orchestrated advertising campaign, requires months, if not a full year of lead time. A television movie can turn over fully in a matter of months. If ever there was proof of product differentiation, it came on a Sunday night in February 1984 when CBS first aired Star Wars. CBS was so confident that here was a special case that it doubled its prime-time advertising rates. But to nearly everyone's surprise, Star Wars was beaten in the ratings by Lace, a steamy made-for-television movie which cost only $3 mill}on to make (Gomery, 1986, pp. 53-56). Star Wars had already been seen by millions; Lace was new. There are further changes on the horizon. Hollywood wants to establish another pay television window. It plans to collect a one-time fee for viewing a

GOMERY

premiere of a blockbuster on a special pay-cable network. Such features would be shown before they reached the video store or began unreeling on HBO. This pay-per-view concept represents yet another means of presentation intended to extract even more dollars from every hit film Hollywood manages to create in the theaters. Pay-per-view services require technologically advanced addressable converters for a cable home. But as more and more American homes are wired with such devices (plus appropriate wiring for transmission linked to computers for billing), Hollywood can contract with cable operators to turn on a movie in any one home and then automatically bill the customer (Montavalli, 1987, pp. 15-17; Ziegler, 1987, pp. 1, 35). Whatever additional new television technologies appear in the future, the business of Hollywood will continue to be to seek additional ways to soak up the most possible money from any and all hit films. It will do this by trying to formulate policies for technological exploitation in order to make optimal use of the economic principle of price discrimination. Businesses seek to segment potential customers and have each group pay as much as possible for a product, in this case the viewing of a film. In the United States, this used to be done with theaters by having various runs and then charging top price for the first run, less for the second run, and even less down the line (Philips, 1983). The first run for the 1980s is the theater. Then comes pay-per-view, home video, pay television, network television, and finally independent television stations. The customer antes up less and less down the line until he or she can watch for free on network and independent television. (Of course, the viewer "pays" through advertisement costs

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54 MEDIA ECONOMICS

added to the price of advertised products.) Hollywood seeks to maximize the revenues for each category and then move down the line. The problems that result are how best to segment the categories and how best to determine if a category has been fully exploited. Throughout the 1980s, the American motion picture industry has gained increasingly more economic power because of its skillful manipulation of the new television technologies. In the early 1~70s, there seemed to be some hope that With the advent of new technologies Hollywood would lose its long-held central place in American popular entertainment. Critics argued this would change the structure of the mass entertainment industry and hence its conduct. More and more small companies could begin to offer alternative films and television programs. This has not happened. Instead, Hollywood has gained even more power and profits. The major Hollywood studios not only control the movies for theaters but also those shown on pay television,. home video, pay-per-view, network television, and independent television stations. Hollywood controls movie presentation as never before.

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MARCH 1989

What viewers generally got were shows like Wheel of Fortune and M*A*S*H, over and over again. Generally, there are three criteria offered to judge economic performance. The first is that the industry's firms ought not waste re~urces, that they should be as efficient as possible. Those promoting free markets, in recent years associated with the administration of President Ronald Reagan, argue that a market of oligopolists acts as if it were competitive and so we can treat it as such. The quest for profit maximization guarantees efficient marketplace behavior. There is, thus, no reason to meddle with the media industries; they should be free to act as efficiently as possible. Yet, to even the most casual observer the mass media industries hardly see~ efficient enterprises. Consider their salary structures, whiCh are unlike those of almost any other industry. Waste seems inherent in excessive salaries, such as the $20 million for Sylvester Stallone for Rambo Ill or the "limousine culture perks" of the three television networks in the recent past. Millions of others want to get into the movies and television but confront few jobs. Is this an efficient use of society's resources? Many would argue no. But effi~ncy is not the sole criterion PERFORMANCE by which to e'valuate corporate structure In the end, it is the relationships of and conduct. How do they do in terms of performance that are of concern. That is, the use of technology? New technologies what are the public policy consequences should be used as soon as they are availof the structure and its behavior? For able, whether as inputs into the producradio and television, with their necessary tion or distribution processes or as licenses from the FCC, the government aspects of the final product or service. is always directly involved. In the past, Monopolies Ed strongly cooperative the FCC emphasized "localism." For oligopolies resist new technologies in example, it instituted the so-called prime order to protect their highly profitable tim~cess rule to mitigate netw~k positions. So, during the 1960s and into power and force better behavior by the 1970s, the over-the-air broadcasters requiring that "local" programs be pre- as represented by their National Asso~ sented in greater numbers in prime time. ciation of Broadcasters lobbying organi-

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GOMERY

zation in Washington, D.C., resist the inform. This is a complaint about conemergence of cable television. duct. Critics argue television fails to meet A test case of some complexity is the great potential of teaching the public before the film and television industries and instead provides more and more of as they move into the final decade of the the same, be it a situation comedy or a twentieth century. High Definition summary of the news, instead of inTelevision (HDTV) offers a superior depth analysis. Such critics seek governimage to the present television standards mental action to encourage alternative adopted in 1941, but most of the pro- conduct: subsidize educational programs posed HDTV systems are incompatible and discourage "run-of-the-mill" fare. A second set of grievances can be with current sets. So how does the technological transformation take place? Is labeled the wasteland complaint: televithe new image so superior that the public sion and film appeal onfy to the domican be convinced to junk the old sets and nant audience and ignore minority culbuy new ones? With what types of pro- tures and tastes. Diversity would be grams? Sold in what fashion? Techno- better. This complaint about economic logical change will continue to offer a conduct has been somewhat ameliorated difficult, ongoing set of policy issues for in recent years through the coming of anyone interested in the mass media, be cabl

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