Media Diversification:

Is Bigger Better After All?

By

Angela Powers

Apowers@niu.edu

Northern Illinois University

(815) 753-7011

Idon Pang

Idonp@hotmail.com

IDC Malaysia

(630) 2163 3715

Sara Johnson

Sjoh6789@aol.com

(815) 963-8547

 

May 2002

Paper submitted for presentation at the 5th World Media Economics Conference. Angela Powers is professor of journalism in the Department of Communication at Northern Illinois University. Idon Pang is research editor for the Asia/Pacific branch of International Data Corporation. Sara Johnson is a graduate of Northern Illinois University’s School of Business.

Media Diversification: Is Bigger Better After All?

 

Abstract

As media companies expand their holdings, they could be thought of as more pluralistic, rather than as a monopoly of one industry. This study examines media conglomerates moving toward diversification of their media operations following the Telecommunication Act of 1996. Five years later, do audiences have more or fewer choices for media including telecommunications, publishing and the Internet? Are the companies sustaining their operations in order to continue providing at the level audiences are used to receiving in America, Western Europe, and Asia?

Results indicate the media has diversified holdings from primarily print or broadcasting, to print, broadcasting/cable and new media. Significant increases in new media were identified. Furthermore, while overall revenues increased, revenues from publications dramatically decreased. The operating revenues and holdings of such conglomerates as Viacom and Gannett were analyzed in 1995 and 2000 to determine the extent to which these organizations were succeeding in expanding news outlets of various media.

Media Diversification: Is Bigger Better After All?

In light of increased need for international news and cultural understanding following terrorists attacks in recent times, questions have arisen as to whether or not large media organizations are contributing to a free and robust, global press. Some claim that media are handmaidens of government because CEO's are so removed from newsrooms. Others claim that news acts independently, as it always has, in search for truths (Cunningham, 2001). With the war on terrorism, appreciation for abundant hard news is more apparent and than ever (Paulson, 2001; Terror Coverage, 2001).

Since the Federal Communications Commission began deregulating the media in the 1980’s, and especially since the deregulatory 1996 Telecommunications Act, the media industry as a whole has moved toward increased concentration of ownership. As a result, media conglomerates have undergone rapid mergers, acquisitions, buyouts, and consolidations, resulting in possibly fewer outlets for freedom of expression. Mergers of major news organizations have included Capital Cities and ABC in 1985; GE and NBC in 1986; Time and Warner in 1989; Westinghouse and CBS, and Disney and Cap Cities/ABC in 1995; Time Warner and Turner Broadcasting (CNN), and News Corporation (Fox) and New World Communications in 1996. In 1999, Viacom acquired CBS, and in 2001, AOL bought Time Warner. Since 1996, an estimated half of the 11,000 stations in the U.S. have changed hands. These same trends are evident within newspaper chains as well (Concentration of Powers, 2001).

As a result of concentration of ownership, questions are being asked as to whether consumers are better off than before deregulation. Do they have more or fewer choices for media including telecommunications, publishing and the Internet? Are the companies sustaining their operations in order to continue providing at the level that most in America, Western Europe, and Asia are used to receiving?

While it is true fewer owners could result in a stifling of ideas, there are indications that these larger companies are diversifying their media content and holdings. With these expanded holdings, media conglomerates could be thought of as more pluralistic, rather than as a monopoly of one industry. Diversity in media is defined as a single supplier of multiple products and services. Media monopoly, on the other hand, according to Gomery (1998) is where a single firm "dominates and collects their monopolies under one institutional umbrella" (p.47). Both terms most likely apply to large media companies today. Nevertheless, it is important to look at the characteristics of the media conglomerates in existence today in order to identify whether they are expanding into new or different media as the industry deregulates. This paper examines financial data in 1995 and 2000 as a first-step look at possible benefits of larger corporations.

Literature Review

Media Monopolies

Scholars suggest that media is moving toward a monopoly market structure. The media industry is similar to any other industry that has profit as a bottom line. The media industry generates profit by selling goods and services, as does any other industry that strives for a profit. Thus in a monopoly perspective, for the conglomerates to maximize profit, they must dominate other competitors. One way a media company can dominate is to become a monopoly, thus eliminating competition. A monopoly is an economic structure where there is one seller of a product. But clearly there is not a single provider for all our media consumption.

According to Albarran (1996), the closest example of a monopoly in the mass media is cable television. This is because most cable systems are regulated locally under the guidelines of a franchise agreement. The cable industry has monopoly power in a local setting because there is no clear substitute, and consumers are forced to either purchase the service or avoid consumption of that service.

Another industry that has a monopolistic trend according to Albarran (1996) is the newspaper industry. In 1994, only 33 cities were served by two or more newspapers operating under separate ownership. The newspaper industry has historically operated under chain ownership, which centralizes decision-making for the newspaper companies that the chain owns. According to Albarran (1996), "concentration of market" is a good rule of measurement to use in order to show the degree to which a single firm controls the marketing of a product (p.47). He also suggests that market concentration in media ownership will have a negative effect on the society. This is because market concentration in media will result in a decline in the "diversity of expression"(p.47).

Waterman (1991) examined four different national media industries to look at the growing trend of media ownership concentration from 1977-1989. His evaluation includes the newspaper industry, movie theaters, cable television systems and broadcast television. According to Waterman (1991), MSOs (multiple system operators) for the cable industry have the highest national concentration of the four industries (p.169). A way of interpreting this result is to first distinguish "local" and "national" concentration (p.171). Waterman (1991) suggests that the cable industry "rarely" competes for subscribers in a small geographic area (p.171). Rather, the cable industry competition is on a national level, which enables the cable companies to control "100%" of different local markets (p.171). This results in local cable ownership in the hands of the bigger national conglomerates. These practices in the media industry, especially the cable conglomerates, result in "monopolization" of the local markets. Thus, smaller local cable companies cannot compete with the bigger national media conglomerates.

Another interesting finding from Waterman’s (1991) observation is the notion of "efficiency" (p.172). According to Waterman, chain ownership can benefit from "transaction cost savings" and "economy of scale" which are the results of "centralized management" (p.172). Although centralized management in an economic sense is logical and efficient, it takes away the decision-making from the local media organization. Thus the local media are robbed of their autonomy to make decisions in a local setting.

In addition to autonomy, Compaine (1979) suggests three "explicit issues" involved in the area of media ownership (p.3). They are, "the degree of concentration", "the degree of conglomeration", and " the extent of cross media ownership" (p.3). According to Compaine, concentration and media ownership are "not just economic concerns but First Amendment concerns as well" (p.4).

A concentration of media ownership will result in centralized management and decision-making. It is a First Amendment issue because local media are not free to make their own decisions. Compaine (1979) suggests that media ownership play an important role in public policy. He suggests that "smaller firms have always found new niches, provided innovation, and then when successful, been acquired by larger firms, thereby establishing an incentive for more new firms to follow a similar path"(p.7).

Smaller more localized media firms function as the voice of the community because they are familiar with the background of the community. When a large national conglomerate takes over a local media firm, they take away the community’s "local media." Compaine (1979) suggests that an example of what the local media loses when a conglomerate takes over is their "editorial independence" (p.26). A way of looking at this issue is that the community’s opinions cannot be represented because editorial decision-making of the local media comes from a centralized national conglomerate. For example, Knight-Ridder, Newhouse, Tribune Co., and Gannett have 22% of daily circulation among them. As such, these four conglomerates control 22% of the total daily newspaper’s decisions. Compaine, et.al., (1983) suggested "bigness is bad" in the sense that "further growth of firms in an industry provides no further economic advantages to society"(p.19).

However, Compaine (1983) states that within monopolies "diversity is good" in the sense that a "heterogeneous democracy" needs a "broad spectrum of ideas and opinions"(p.19). Thus, to guarantee diversity, "we must allow those who control the conduits to information to be controlled by a small group of gatekeepers"(p.19).

In addition to diversity, "localism is desirable" in the sense that "control over information must be geographically as well as structurally diverse"(p.20). In a nation that has different local and state governments, information must be provided about the "immediate political and social environment"(p.20). The way to achieve this is to have local media.

Gomery (1993) also examined the structure of today’s "profit seeking" mass media. According to Gomery, "the basic cable television franchise and the single newspaper provide examples of pure media monopoly"(p.48). MSOs are good examples of how the cable companies monopolize the cable market. The cable conglomerates collect franchises under one "corporate umbrella" (p.49). A 1992 survey indicated that the top nine firms in this country (p.49) control 26 million basic subscribers of cable. The conglomeration of media industries enables all generated profit to be directed towards centralizing conglomerates, generating larger capital.

When a media conglomerate generates large capital, they can acquire or buyout other smaller media organizations to generate more sources of income, which becomes a cyclic process. Gomery (1993) suggests that the main causes of media conglomeration in the United States are, "economies of scale" (p.64), "vertical integration"(p.65), and "corporate diversification"(p.66). "Economies of scale" suggests that bigger conglomerations can have greater returns based on their size. "Vertical integration" suggests that media conglomerates try to create an entity that encompass most if not all of the consumers media needs. And "corporate diversification" suggests that media conglomerates own other forms of media besides their mainstream in order to compete with other smaller competition.

Bagdikian (1997) found the same occurring trend in the media industry. He suggests that daily newspapers, magazines, broadcasting systems, books, motion pictures, and most other mass media are moving in the direction of tight control by a handful of huge multinational corporations (p.3). Bagdikian also suggests that media monopoly practices are encouraged by two "ancient" motives, and those are, "money" and "influence"(p.5). Bagdikian’s concept of "money" motives is basically the notion of economy of scales. "Market dominant firms simply make higher profits out of every dollar than less dominant firms"(p.5). The "influence" motive is the underlying assumption that, "market dominant corporations in the mass media have dominant influence over public’s news, information, public ideas, popular culture, and political attitudes"(p.5). This implies that media ownership does have significant impact on the society.

Demers (1999) identified trends in the media industry and their implications on a global society. The first trend was "structural differentiation." More diverse forms of media are needed because the society today is more segmented into groups with different ideologies (p.156). The second trend was "global media growth and differentiation", whereby global media conglomerates need to be more diverse in order to cope with global population size and constant "differentiation" of societal groups (p.162). The third trend was "bigger media but proportionately less powerful," where Demers suggests that the bigger the media conglomerates are, the less control they have over their media institution (p.163). This trend, however, would benefit local outlets by allowing autonomy at that level to operate under the needs of the society instead of the needs of the parent company.

The fourth trend is "convergence of technologies" which suggests constant emergence of new ways to deliver information to consumers (p.164). Media conglomerates can use technology to promote the diversity of ideas. This assumption is also suggestive of the fifth trend, which is "increasing diversity of ideas"(p.165). Media conglomerates should facilitate the diversity of ideas and opinions, instead of setting the agenda and opinions for society. The sixth trend "spread of Western values" is a threat to the global society (p.166). Because of the media conglomerate’s unprecedented coverage of the world’s news and opinions, they can set national and international agendas based on the Western values and assumptions. The seventh trend identified by Demers (1999) is "increasing knowledge gaps"(p.170). This trend suggests that "information rich" countries that have global media conglomerates, exert influence and overshadow "information poor" countries. Instead, "information rich" countries should assist "information poor" countries in dissemination of information (p.172).

A study by Blakenburg and Ozanich (1993) suggests that "inside control" is where owners of a media organization play an important role in decision-making. Media owners must be actively involved in economic issues of their industry in order to compete. Both public and private media organizations do perceive profits as the important goal, and there are high degrees to which goals of profits are implemented.

Finally, Albarran (1996), states the Telecommunication Act of 1996 has numerous implications towards media ownership. An increase in competition in the media industry, resulting from the legislation will be good from an economic perspective (p.84). However, in the short run, there will be more acquisitions and mergers due to the provisions of this act (p.84). Thus, the media market as a whole will be more concentrated, and there will be a decrease in privately owned, local media in the U.S. and worldwide.

Media Diversification

This section looks at how media monopolies have led to media diversification. Howard (1989) studied the variables of "growth in TV station group ownership", the number of "newspaper affiliation with TV stations", and the number of "cross-media ownership between newspaper and TV stations"(p.787). The findings of the research are significant in the sense that the number of television stations has "increased numerically" since 1982, but the number of group-owned television station has also increased (p.791). Media companies also have illustrated a rapid cross-media ownership practice since 1982, with rapid growth in ownership in both publishing and broadcast (p.791). Furthermore, "existing media companies have added new television stations to their broadcast holdings" since 1982 (p.791). As such, media conglomerates have moved toward "group" ownership, and "affiliation" with other types of media.

Burnett (1992) studied the phonogram industry to evaluate concentration and diversity ownership structure. He found that an increase in market competition resulted in an increase in product diversity in a "cultural economy"(p.764). He also argued that the music industry especially would have to present new materials and new artists in order to compete in the market. This study provided an alternate view in looking at classical approaches that found "an inverse relationship between concentration and diversity in the American popular music industry"(p.764).

Lopes (1992) looked at popular music and found a positive relationship between "innovation" and diversity (p.64). There was an increase in new artists, despite the "continuing market concentration"(p.64). This study suggested that "innovation" was also an important consideration in the media industry. Media conglomerates have to produce new materials in accordance with the interests of the users, because they are ultimately the source of their income.

Becker and Schoenbach (1989) also state the "new mass medium" has to "address a combination of senses," and use "new channels of information"(p.5). Media diversification can promote the usage of different channels of information. In this sense it will become imperative for companies to diversity in order to reach mass audiences. If they only appeal to a certain group, they will lose market shares of different groups. Therefore, a "something-for-everyone" approach is essential in order to compete in today’s media industry.

The Telecommunication Act of 1996 is also suggestive of a diversification effect. According to Albarran (1996), the Act allows any individual or companies to compete in any media market (p.100). One example is the telephone company in a local market, which is able to offer cable and Internet service, in addition to their telephone services, in one monthly bill. Although the market is constantly moving toward increased concentration, individual companies offer diverse types of services for their customers. In fact, this is promoted by the Telecommunication Act of 1996 in the sense that it allows any companies or individual to venture in to any media market. Therefore, different companies or individuals will bring different contents and media types into the media market, thus diversifying the market.

Research Questions

While most studies have looked at the impact of market structure and ownership variables, little research addresses diversification within media conglomerates in recent years. Based on the studies above, the following research questions on media industry diversification were addressed:

RQ1: How many news/information-oriented divisions do major media conglomerates operate today?

RQ2: How much have revenues and incomes increased since deregulation in 1996?

RQ3: Have media conglomerates taken advantage of this regulation by expanding news operations since 1996?

Methodology

This study analyzed industry data from the Security Exchange Commission (SEC) 10-K filings. Ten media conglomerates were chosen for analysis: AOL, Disney, Dow Jones Co., General Electric, Gannett, Knight-Ridder, New York Times Co., Newscorp, Tribune Inc., Washington Post, and Viacom. According to McChesney (1997), most of these companies were in the top ten of largest media groups in the world. However, the original list has been updated to accommodate for mergers and other acquisitions such as those that took place between AOL and Time Warner. These companies were also chosen because they own multiple media news outlets, a greater number than most other media news/oriented conglomerates.

Ten-K filings are yearly reports, which provide a continuing view of a company’s financial position. Filings from two years were chosen to identify a before and after effect of the 1996 Telecommunication Act and to show a longitudinal effect of media diversification. Figures from these media conglomerates’ operating revenue were used. The EBITA value, or the gross operating revenue before taxes, was taken into consideration to show how much each segment of the media contributed to the total operating revenue. Net income and profits were also analyzed. Net income is calculated by subtracting income taxes from revenues. Profits are used to compare companies with others of different size or locations. In addition, annual reports were obtained to identify subsidiaries in 1995 and 2000.

In addition to overall revenues generated by media conglomerates, revenues were broken up into contributions from different media segments. The first segment was the "publishing" division, which includes, newspaper, magazines and books. The second segment, which was "broadcast/cable,", includes all television, cable, and satellite news/information operations. The "on-line" division includes new media and Internet news ventures. This division is important because it illustrates the conglomerate’s interest and efforts in investing in other types of businesses to diversify their product and service offerings. The "publishing" and "broadcast/cable" divisions are classified as more mainstream media because the conglomerates already had stakes in these divisions.

According to Picard, the diversification measure "considers the percentage of overall company performance or investment attributed to each market segment or division"(www.tukkk.fi). With this measure, one can indicate, "the degree to which a firm participates in different market segments or provides different goods or services"(www.tukkk.fi). In addition, this measure illustrates "the degree" to which companies use their resources to contribute to company’s financial performance.

Results

Media conglomerates have most of their news-information operations in their mainstream media (See Appendix A). In 2000, the 10 media conglomerates owned a total of 1,136 news organizations. This was up from 456 news organizations in 1995. Broadcast/Cable made up 46 percent of the holdings; Publishing made up 43 percent, and On-line made up 11 percent. Table 1 indicates significant increases in the number of new media holding from 1995 to 2000. The mean number of print and broadcast/cable holdings greatly increased as well.

Table 1. Mean Subsidiaries in 1995 and 2000

Subsidiaries

1995

2000

Broadcast/Cable

16

45

Publishing

29

46

New Media

2

11

Paired Samples Test:

t df Sig. (2-tailed)

-1.99 9 .078

-1.60 9 .143

-3.22 9 .010

Table 2 indicates that revenues increased significantly between 1995 and 2000. In 1995, the mean operating revenue was $1,452.33 million; in 2000, the mean operating revenue was $2,264.66 million. However, while overall revenues increased, the categories of greatest impact shifted as well. In 1995, publishing represented 60.4 percent of revenues; however, this dropped to 46.1 percent in 2000. Broadcast/cable revenues increased from 38.2 percent to 40.5 percent. On-line media increased from 2.4 percent to 13.4 percent. Therefore, results indicate the Telecommunication Act of 1996 increased activity in broadcast/cable and new media segments of media conglomerates.

 

 

 

 

 

Table 2. Mean Operating Revenue and Percent in 1995 and 2000.

 

(in millions)

1995

2000

% of operation 1995 2000

Publishing

2,632.63

3,086.27

60.4 46.1

Broadcast/Cable

1,618.82

2,708.40

38.2 40.5

New Media

105.90

899.80

2.4 13.4

Total

4,356.72

6,694.37

100% 100%

Overall Mean scores

1995: $1,452.333;

2000: $2,264.666

T= -5.231; df=2; Sig.2-tailed=.035

In Table 3, results indicate, while revenues were up overall, actual income and profits did not significantly increase when comparing 1995 and 2000. Income increased from $461.2 million in 1995 to $777.2 million in 2000. Profits remained within percentage points. In 1995, the mean profit increase was 8.7 percent, and in 2000, it was 10.6 percent.

Table 3: Comparison of Income and Profits by Company in 1995 and 2000 (in millions)

 

Company Name

Inc. 95

Prof. 95

Inc. 00

Prof. 00

AOL

33.6

6%

1,152.0

15%

Disney

1,380.1

11%

920.0

3%

Dow Jones

304.0

 

119.0

 

**GE

6,573.0

10%

12,735.0

10%

Gannett

477.3

12%

1,719.0

27%

Knight Ridder

160.1

6%

314.4

10%

NYT

135.9

6%

397.5

11%

Newscorp

968.7

11%

1,196.0

9%

Tribune

278.2

12%

224.4

4%

Viacom

222.5

2%

816.1

 

Wash Post

190

11%

136.5

6%

Mean

461.2

8.7

777.2

10.6

 

T-Test: Paired Samples Test

Income 95 and 00 t=-1.470; df=10; sig: .172

Profits 95 and 00 t=-.425; df=8 sig: .682

 

Table 4 compares revenues among divisions in 1995 and 2000. The mean revenues for broadcast/cable increased from $1,558.4 million in 1995 to $3,196.2 million in 2000. Publishing revenues increased slightly from $3,170.5 million to $3,579.5 million. On-line media had the largest increase, due to AOL’s acquisition of Time-Warner. On-line media increased from $353.0 million to $2,249.5 million. Again, findings were not significant.

Table 4: Comparison of Revenues by Subsidiaries

 

(in millions)

 

BC

Rev. 95

Pub

Rev. 95

New Med.

Rev. 95

BC

Rev.00

Pub

Rev.00

New Med.

Rev. 00

Company

AOL

4,906.0

3,722.0

 

1,285.6

4,645.0

7,703.0

 

Disney

414.0

7,736.0

 

9,615.0

5,994.0

368.0

 

Dow Jones

 

1,322.4

 

327.6

1,875.1

 

 

G.E.

3,919.0

 

 

6,797.0

 

 

 

Gannett

452.2

3,088.4

437.1

788.8

4,533.6

 

 

KnightRidder

 

2,168.3

81.9

 

3,166.6

45.2

 

NYT

85.1

2,324.3

 

150.0

2,980.5

 

 

Newscorp

3,349.0

5,965.0

540.0

8,120.0

7,667.0

813.0

 

Tribune

725.1

1,260.7

 

1,465.6

3,403.0

41.8

 

Viacom

2,030.8

2,171.1

 

3,045.5

610.7

 

 

Wash Post

300.7

1,948.3

 

364.8

918.2

27.1

Mean

 

1,558.4

3,170.5

353.0

3,196.2

3,579.5

2,249.5

 

T-Test Paired Samples Correlations Paired Samples Test

 

Correlation

Sig.

t

df

Sig.

Broadcast Revenues 95 & 00

.392

.233

-1.448

10

.178

Publishing Revenues 95 & 00

.838

.001

-.941

10

.369

On-line Revenues 95 & 00

-.094

.784

-1.030

10

.327

 

In addition to comparing overall mean scores of revenues, income, and profits, it was also useful to look at how individual companies were managing their holdings (See Appendices B and C).

The first observation is AOL. They showed a decrease in the broadcast/cable divisions, but a rapid increase in on-line media when comparing the numbers with TimeWarner before AOL’s acquisition. Publishing divisions remained strong. The Disney Company also increased its on-line media suggesting more venture from new media contributing to total revenue. In addition, Disney shifted heavily into broadcast/cable.

The Dow Jones Co. showed a high degree of interest in moving from publishing to broadcast/cable. However it did not invest noticeably into new media. General Electric also increased heavily its holdings in broadcast/cable, while staying away from publishing and new media.

Gannett substantially invested in broadcast/cable and continued to increase its publishing holdings. Therefore, Gannet maintains publishing as its sole revenue provider, while allocating portions of the company’s resource to venture into other types of business.

Publishing is also mainstream for Knight-Ridder. There was an increase in the publishing division, suggesting that the company maintained its mainstream media as the sole provider of revenue. The decrease in new media suggested that Knight-Ridder does have interest in venturing into other types of businesses; however, it most likely found the Internet too risky.

Viacom Inc. shifted heavily from publishing to broadcast/cable, as did the New York Times Co. Finally, the Washington Post maintained its presence in television/cable, increased on-line ventures and decreased publishing.

Discussion

Since 1995, media have made bold moves away from their mainstream holdings into new media and most often into broadcast/cable. Revenues and profits have increased but not significantly so. However, most likely media companies will stay the course in hopes for increased future profits. Nevertheless, audiences and readers may have benefited somewhat, while the media organizations have comparatively stayed the same or diminished financially. The next phase of this research must address how individual communities or countries have benefited or not, with increased news outlets. This will be done by looking at each country or market where expansion occurred to identify whether or not these markets would have had as much access to media without conglomerate influence.

When looking at whether an increase in revenue for media type resulted in an increase in allocation for media types, thus promoting diversity, several conclusions can be drawn. All the selected companies individually showed interest in diversification of their operation as evident from their increase in operating revenue in the other divisions. Some companies incurred losses when they attempted to venture into other types of goods and services; therefore, they had to rely on providing their mainstream media as the provider for their revenue. Certainly, not all companies increased their profits by diversifying their media. However, most up to this point were diversified for the long run.

Publishing divisions were probably the hardest hit. However, increased newspaper closings are not likely the result. Rather, further cut-backs and closures of magazines will likely continue. In addition, broadcasters are also experiencing financial woes. TV networks are taking financial loses even more so in 2001, resulting from lost advertising revenue following the terrorist attack in September and because of increased newsgathering costs (Bergen, 2001). However, broadcasting/cable businesses over time have proven to be cash-flow operations with before tax profits margins ranging from 35 to 50 percent. Since they have traditionally had low failure rates, they have rarely gone out of business. As time has proven, mainstream media such as television, cable and newspapers, at worst, are sold to larger and better-capitalized corporations (Jones, 1996).

Conclusion

This study indicates the number of news outlets has increased dramatically since the mid-1990s. The question that remains is whether or not these outlets would have existed without conglomerate intervention. This study is a first step in providing an alternate analysis to the premise that media conglomerates must be detrimental to freedom of speech. Within the individual media conglomerates, there are multiple media types and content, which most likely provide various points of views by employing additional syndicated columnists, reporters, editors, etc. Although the data did not fully support diversification efforts by current media conglomerates, all the selected companies individually illustrated an interest in diversifying their media. However, after the 1996 Telecommunication Act, the selected companies were more likely to increase their operations in their mainstream media instead of venturing greatly into new media to generate their revenue. A larger sample will be needed in the future to show a more longitudinal effect, which will illustrate a more comprehensive nature of media conglomerate behavior. This paper selected companies with a large national and international focus. It will be important to add more specialized conglomerates to the sample such a Clear Channel which specialized in radio and Benedek Broadcasting which specializes in television network affiliate news stations.

Media diversification is important because it allows for a multiplicity of voices especially in developing or media-poor countries. Society relies heavily on the mass media to form opinions, thus media conglomerates will better contribute to the free flow of ideas by diversifying their media holdings and encouraging news gatherers to obtain a multitude of voices in their story-telling.

Appendix A: News/Information Subsidiaries in 1995 And 2000

BC/Cable

95 00

Pub

95 00

On-line

95 00

Total

95 00

AOL/(TW)

8 39

15 104

1 23

24 166

Disney

70

28

18

116

DowJones

3 5

11 38

0 2

14 45

GE

10 40

0 0

3 25

13 65

Gannett

21 20

82 136

1

103 157

KnightR

0 0

20 52

7 9

27 61

NYT

9 12

31 26

1 2

41 40

Newscorp

16 144

83 53

4 16

103 213

Tribune

17 29

8 15

3 19

28 63

Viacom

52 152

23 20

0 10

75 182

WashPost

19 9

7 16

2 3

28 28

 

 

 

 

 

Total

155 520

280 488

21 128

456 1,136

Percent

34% 46%

61% 43%

5% 11%

 

 

 

Appendix B: Full Comparison of Revenues in 1995 and 2000

 

 

Rev. 95

Inc. 95

Prof95

Rev. 00

AOL/TW

394,300,000

33,600,000

6%

7,703,000,000

Disney

12,112,100,100

1,380,100,000

11%

25,402,000,000

DowJones

2,283,761,000

304,041,000

 

2,202,618,000

G. E.

69,276,000,000

6,573,000,000

10%

129,497,000,000

Gannett

4,006,700,000

477,300,000

12%

6,222,300,000

Knight Ridder

2,774,800,000

160,100,000

6%

3,211,800,000

NYT

2,409,403,000

135,860,000

6%

3,489,500,000

Newscorp

8,640,600,000

968,700,000

11%

13,421,000,000

Tribune

2,244,674,000

278,200,000

12%

4,910,363,000

Viacom

11,688,700,000

222,500,000

2%

20,043,700,000

Washington

Post

1,719,400,000

190,100,000

11%

2,412,200,000

Inc. 00

Prof

00

1,152,000,000

15%

920,000,000

3%

119,000,000

 

12,735,000,000

10%

1,719,000,000

27%

314,400,000

10%

397,500,000

11%

1,196,000,000

9%

224,400,000

4%

816,100,000

 

136,500,000

6%

T-Test: Paired Samples Correlations

Revenues 95 and 00 N=11 Correlation: .997; Sig: .000

Income 95 and 00 N=11 Correlation: .000, Sig.: .000

 

 

 

Appendix C: Full Comparison of Revenues by Subsidiaries

 

 

Broadcast

Revenues 95

Publishing

Revenues 95

On-line

Revenues 95

AOL

4,906,000,000

3,722,000,000

 

Disney

414,000,000

7,736,000,000

 

Dow Jones

 

1,322,363,000

 

General Electric

3,919,000,000

 

 

Gannett

452,126,000

3,088,423,000

437,065,000

KnightRidder

 

2,168,285,000

81,897,000

NYT

85,106,000

2,324,297,000

 

Newscorp

3,349,000,000

5,965,000,000

540,000,000

Tribune

725,117,000

1,260,642,000

 

Viacom

2,030,800,000

2,171,100,000

 

Washington Post

300,678,000

1,948,316,000

 

 

Broadcast

Revenues 00

Publishing

Revenues 00

On-line

Revenues 00

1,285,600,000

4,645,000,000

7,703,000,000

9,615,000,000

5,994,000,000

368,000,000

327,569,000

1,875,049,000

 

6,797,000,000

 

 

788,767,000

4,533,551,000

 

 

3,166,589,000

45,178,000

150,000,000

2,980,500,000

 

8,120,000,000

7,667,000,000

813,000,000

1,465,553,000

3,403,028,000

41,782,000

3,045,500,000

610,700,000

 

364,800,000

918,200,000

27,100,000

 

T-Test Paired Samples Correlations

 

Correlation

Sig.

Broadcast Revenues 95 & 00

.392

.233

Publishing Revenues 95 & 00

.838

.001

Other Revenues 95 & 00

-.094

.784

 

 

 

 

 

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Alexander, A., Owens, J., & Carveth, R.,(1993). Media economics, theory and practice. Lawrence Erlbaum Associates, Publisher. 115-133.

Alexander, A., Owers, J., & Carveth, R.,(1998). Media economics, theory and practice. (2nd ed.) Lawrence Erlbaum Associates, Publisher.

Bagdikian, B.H. (1997). The media monopoly. Beacon Press.

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Jones, T. (1996). The hot media properties? Plain old TV. Chicago Tribune, July 28, sec.

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Howard, H.H., (1989). Group and cross-media ownership of TV Stations: a 1989 Update.Journalism Quarterly, 66. 785-792.

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Online Resources

www.wsrn.com/companyResearch.xpl

www.edgar-online.com/

www. sec.gov

www.fcc.gov

www.hoovers.com

www.tukkk.fi/mediagroup/Resources/concentration.htm