Why Media Mergers matter…

“Having a few huge corporations control our outlets of expression could lead to less

aggressive news coverage and a more muted marketplace of ideas.”

Rifka Rosenwein, Why Media Mergers Matter, Brill’s Content, December 1999

“If media moguls control media content and media distribution, then they have a lock on the extent and range of diverse views and

information,” says [Chuck] Lewis, [executive director of the Centre for Public

Integrity]. “That kind of grip on commercial and political power is potentially dangerous

for any democracy.”

Miren Gutierrez, Fewer Players, Less Freedom, Inter Press Service, March 20,

2004

Vertical Integration• Many of the large media company owners are entertainment companies

and have vertical integration (i.e. own operations and businesses) across various industries and verticals, such as distribution networks, toys and clothing manufacture and/or retailing etc. That means that while this is good for their business, the diversity of opinions and issues we can see being discussed by them will be less well covered. (One cannot expect Disney, for example, to talk too much about sweatshop labor when it is accused of being involved in such things itself.) The wider ramifications are highlighted well in this following quote:

• Vertical Integration was once looked upon with alarm by government. It was understood that corporations which have control of a total process, from raw material to fabrication to sales, also have few motives for genuine innovation and the power to seize out anyone else who tries to compete. This situation distorts the economy with monopolistic control over prices. Today, government has become sympathetic to dominant vertical corporations that have merged into ever larger total systems. These corporations, including those in the media, have remained largely unrestrained. Ben H. Bagdikian, The Media Monopoly, Sixth Edition, (Beacon Press, 2000), p. xvii

1980-1990s

In 1983, fifty corporations dominated most of every mass medium and the biggest media merger in history was a $340 million deal. … [I]n 1987,

the fifty companies had shrunk to twenty-nine. … [I]n 1990, the twenty-nine had shrunk to twenty three. … [I]n 1997, the biggest firms numbered

ten and involved the $19 billion Disney-ABC deal, at the time the biggest media merger ever. … [In 2000] AOL Time Warner’s $350 billion merged corporation [was] more than 1,000 times larger [than the biggest deal of 1983]. Ben H. Bagdikian,

The Media Monopoly, Sixth Edition, (Beacon Press, 2000), pp. xx—xxi

1990s• Disney bought ABC in 1995 for $19.6 billion

• Time Warner acquired Turner Broadcasting System in 1996 (including CNN)

• Viacom buy outs CBS in 1999 for around $37 billion

• In 2000, a new company called AOL Time Warner, with Steve Case as chairman, was created when AOL purchased Time Warner for US$164 billion. It was the largest corporate merger in history.

At the end of the 1990s, there were 9 corporations (mainly US) that dominated the media world:

AOL-Time Warner Disney Bertelsmann Viacom News Corporation TCI General Electric (owner of NBC) Sony (owner of Columbia and TriStar Pictures and major recording interests), and Seagram (owner of Universal film and music interests).

The end of the 1990s

2002

The top ten media companies were now… • AOL Time Warner• Disney• General Electric• News Corporation• Viacom• Vivendi• Sony• Bertelsmann• AT&T • Liberty Media

How the big 50 became The Big Six

THE BIG SIX

It is the second largest global

media conglomerate, after AOL Time

Warner.

The $165 billion mega-merger between AOL and Time Warner, approved by the FCC in January

2001, is the largest media merger in history. The new

company promises to offer a powerhouse of integrated communication, media and entertainment across all

platforms -- computer, phone, television and handheld wireless

devices.

Sony made its name with electronics,

but it now has more than

1,000 subsidaries worldwide,

many of them key media partners.

It's the third largest globalmedia conglomerate. FY 2000 revenues topped $25 billion.

This privately-owned German media conglomerate has interests in 600 companies in 53 countries.

Rupert Murdoch's News Corporation Ltd. has media holdings in the U.S., Canada, Europe, Australia, Latin America and Asia.

This giant's subsidiary Universal Music Group isthe number one music company in the world, with roughly 22% of the 1999 global market.

2001 pbs online and wgbh/frontline

Where Hollywood Films make Money

* Includes domestic and international

revenue sources; "TV" includes

all related revenue streams,

including pay-per-view,

network TV, and premium cable

Source: "Filmspace: Behind the

Scenes," ABN Amro, Sept. 12,

2000

Windows of Exhibition

                                                                       

Hollywood movies are shown not only on the big screen, they're exhibited on video and DVD, on network and cable TV, on pay-per-view, and on airplanes. Hollywood films continue to make money for the studios across all of these platforms, known as"windows of exhibition," years after their theatrical release.

Here's how it works.

                                    

2001, pbs online and wgbh/frontline

                        

Studio Entertainment accounts for 23.6 percent of the revenue that Disney's top business segments generate, and only 2.7 percent of their operating income.

Business Segment Revenue (millions) Operating Income (millions)

Media Networks 9615 2298

Studio Entertainment* 5944 (23.6%) 110 (2.7%)

Parks and Resorts 6803 1620

Consumer Products 2622 455

Internet Group 368 (402)

Combined 25402 4081

*Includes Walt Disney Pictures, Touchstone Pictures, Walt Disney Feature Animation, Walt Disney Television Animation, Buena Vista Theatrical Group, MiramaxSource: The Walt Disney Company Annual Report 2000

DISNEY

VIACOMEntertainment accounts for 13.5 percent of the revenue that Viacom's top business

segments generate, and 8.9 percent of their operating income.

Business Segment Revenue (millions) Operating Income (millions)

Cable Networks 3895 1250

Television 5382 431

Infinity 2765 589

Entertainment* 2758 (13.5%) 210 (8.9%)

Video 4960 76

Publishing 596 50

Online 101 (257)

Combined 20457 2349

*Includes Paramount Pictures, Paramount Parks, movie theater and music publishing operations

Source: Viacom Annual Report 2000

Vivendi Universal(now owned by GENERAL ELECTRIC)

TV/Film accounts for 31.2 percent of the revenue that Vivendi's top business segments generate, and only 23.6 percent of their operating income*.

Business Segment Revenue (millions) Operating Income (millions)

Music 495 94

Publishing 3540 493

TV/Film** 4248 (31.2%) 526 (23.6%)

Telecoms 5270 1303

Internet 48 (184)

Combined 13601 2232

*Figures for operating income are before depreciation and amortization.**Includes Universal Pictures, STUDIOCANAL, Universal Studios Recreation Group, Canal+, Universal Television & Networks GroupSource: Vivendi Annual Report 2000

TIME WARNERFilmed Entertainment accounts for 21.7 percent of the revenue that AOL Time Warner's top business segments generate, and only 9.1 percent of their operating income*.

Business Segment Revenue (millions) Operating Income (millions)

AOL 7703 2350

Cable 6054 2831

Filmed Entertainment** 8119 (21.7%) 796 (9.1%)

Networks 6802 1502

Music 4148 518

Publishing 4645 747

Combined 37471 8744

Figures are projected; estimations for operating income are before depreciation and amortization.

** Includes Warner Bros. Pictures, New Line Productions, Fine Line Features, Warner Home Video, Warner Bros. TelevisionSource: AOL Time Warner Annual Report 2000

NEWS CORPORATION

Filmed Entertainment accounts for 27 percent of the sales revenue that News Corp.'s top business segments generate, and 15.5 percent of their operating income.

Business Segment Revenue (millions) Operating Income (millions)

Filmed Entertainment* 6625 (27.0%) 503 (15.5%)

Television 7008 991

Cable/Network 2696 197

Magazines and Inserts 1675 437

Newspapers 4600 904

Book Publishing 1907 205

Combined 24511 3237

Includes Twentieth Century Fox Film Corp., Fox 2000 Pictures, Fox Searchlight Pictures, Twentieth Century Fox Home Entertainment Source: News Corp. Annual Report 2001

SONYPictures account for 7.7 percent of the sales and operating revenue that Sony's top business segments generate, and only 1.8 percent of their operating income.

Business Segment Revenue (millions) Operating Income (millions)

Electronics 39989 1989

Game 5169 (409)

Music 4568 164

Pictures* 4442 (7.7%) 35 (1.8%)

Insurance 3415 143

Combined 57583 1922

*Includes Sony Pictures Entertainment, Sony Pictures Classics, Columbia Pictures, Columbia TriStar Television Source: Sony Annual Report 2001

BERTELSMANN• Broadcasting - RTL Group

– Radio, RTL Radio France, RTL2, FUN RADIO, RTL Radio Deutschland, 104.6 RTL (Berlin), ANTENNE BAYERN (Germany), Radio Hamburg, radio NRW (Germany), RADIO 21 (Germany), bigFM (Germany), Radio Regenbogen (Germany), Radio Dresden, HITRADIO RTL SACHSEN (Germany), Hit-Radio Antenne (Germany), ANTENNE MECKLENBURG-VORPOMMERN (Germany), Radio Brocken (Germany), 89.0 RTL (Germany), ANTENNE THÜRINGEN (Germany), BB RADIO (Germany), 105'5 Spreeradio (Germany), radio TOP 40 (Germany), Oldie 95 (Germany), ROCK ANTENNE's (Germany), RTL Radio Lëtzebuerg, Bel RTL, Radio Contact (Belgium), Mint (Belgium), Onda Cero (Spain), Europa FM (Spain), Television, RTL Television, M6 (France), Five (UK), ANTENA 3 (Spain), RTL 4 (The Netherlands), RTL 5 (The Netherlands), RTL 7 (The Netherlands), RTL TVI (Belgium), RTL Klub (Hungary), RTL Televizija (Croatia), Télé Lëtzebuerg, VOX (Germany), RTL II (Germany), Super RTL (Germany), n-tv (Germany), Den 2. RTL (Luxembourg), RTL Shop (Germany), Traumpartner TV (Germany), RTL TVI (Belgium), Plug TV (Belgium), RTL 9 (France), REN TV (Russia), Fun TV (France), Téva (France), Paris Première, Série Club (France), TF6 (France), W9 (France), M6 Music Rock (France), M6 Music Black (France), M6 Music Hits (France), Antena 3 (Spain), Antena.Nova (Spain), Five US (UK), Five Life (UK)

Programming– FremantleMedia, UFA Film & TV Produktion, UFA Fernsehproduktion, UFA Filmproduktion, UFA Entertainment, Grundy

UFA, GRUNDY Light Entertainment, Karlheinz Brunnemann. teamWorx, Universum Film, talkbackTHAMES, Crackerjack, Blue Circle, Blu, Home Shopping Service, SND, CLT-UFA, ENEX

• Publishing – Books: Random House, Inc., Ballantine, Ballantine Books, Ballantine Reader's Circle, Del Rey, Del Rey/LucasBooks, Fawcett,

Ivy, One World, Wellspring, Bantam Dell Publishing Group, Bantam Hardcover, Bantam Mass Market, Bantam Trade Paperbacks, Crimeline, Delacorte Press, Dell, Delta, Domain, DTP, Fanfare, Island, Spectra, The Dial Press, Crown Publishing Group, Bell Tower, Clarkson Potter, Crown Business, Crown Publishers Inc., Harmony Books, Prime, Shaye Areheart Books, Three Rivers Press, Doubleday Broadway Publishing Group, Broadway Books, Currency, Doubleday, Doubleday Image, Doubleday Religious Publishing, Main Street Books, Nan A. Talese, Harlem Moon, Knopf Publishing Group, Alfred A. Knopf, Anchor, Everyman's Library, Pantheon Books, Schocken Books, Vintage, Random House Audio Publishing Group, Villard Books, The Modern Library, RH Trade Paperbacks, Striver's Row Books, Random House Children's Books, Dell/Delacorte/Dell Young Reader's Group, Alfred A. Knopf, Bantam, Crown, David Fickling Books, Delacorte Press, Dell Dragonfly, Dell Laurel-Leaf, Dell Yearling Books, Doubleday, Wendy Lamb Books, Random House Diversified Publishing Group, RH Value Publishing, Random House Information Group, Fodor's Travel Publications, Living Language, Prima Games, Princeton Review, RH Espanol, RH Puzzles and Games, RH Reference Publishing , Waterbrook Press , Shaw Books, Fisherman Bible Study Guides

BERTELSMANN (cont’d)

Magazines: GRUNER, JAHR, ALLAKSTE YEFSIS, ART, ASTROLOGOS, AUTOREVUE, AVTO MAGAZIN, BIEN DANS MA VIE, BÖRSE ONLINE, BRIGITTE, BÜHNE, ÇA M'INTéRESSE, CAPITAL, CAR & MOTOR, CLAUDIA, CONNECT, COSMOPOLITAN, CUISINE ACTUELLE, CUISINE GOURMANDE, DB MOBIL, DECORATION, DIVA, DOGS, E&T - FÜR JEDEN TAG, ELLE, ELTERN FAMILY, ELTERN ARZT & SCHWANGERSCHAFT, ELTERN UNSER BAB, E-MEDIA, EMOTION, ESSEN & TRINKEN, EXODOS, FEMME ACTUELLE, FITNESS, FLORA GARTEN, FOCUS, FORMA, FORMAT, FRAU IM SPIEGEL, FOCUS, FUSHI MEIRONG, GALA, GEO, GLAMOUR, GOLFREVUE, GUIDE CUISINE, GUSTO, HÄUSER, HEALTHY LIVING, HOW TO SPEND IT, IKIA & DIAKOSMISI, IMPULSE, JACK, JASMIN, JIAJU, JOY, KLIK, LEA, LISA, LIVING AT HOME, LUFTHANSA EXCLUSIVE, MANAGEMENT, MARIE CLAIRE, MEN'S HEALTH, MIA, MOJ LEPI VRT, MOJA LEPA BA TA, MOJE DIJETE, MOJE GOTOWANIE, MUY INTERESANTE, NAJ, NATIONAL GEOGRAPHIC, NEON, NEWS, NOVA, PAIDI & NEI GONIS, PARENTS FUMU, PARK AVENUE, P.M., PRIMA, PROFIL, QUEST, RODZICE, SCHÖNER WOHNEN, SER PADRES, STARS, STERN, STORY, SWAROVSKI MAGAZIN, TéLé LOISIRS, TOP GIRL, TREND, TV-MEDIA, VIEW, VIVA!, VOICI, VSD, VW MAGAZIN, WOMAN, XIANFENG, Xpress, YACHTREVUE, YI REN, YO COCINO

Newspapers: CHEMNITZER MORGENPOST, DRESDNER MORGENPOST, FINANCIAL TIMES DEUTSCHLAND, MORGENPOST AM SONNTAG, SÄCHSISCHE ZEITUNG

Music: Sony BMGArista, Bluebird, BNA, Burgundy, Columbia, Epic, Jive, J Records, Legacy, Masterworks, Provident, RCA, Windam Hill, Zomba

2004-2005

• On February 4, 2004, Mark Zuckerberg launched "Thefacebook,” originally located at thefacebook.com

• The News Corp. chairman Rupert Murdoch paid just $580 million for the social media giant MySpace in 2005.

• In 2005, Google acquired of online video source YouTube for an estimated $1.65 billion dollars.

2005 -2006

• By the end of 2006, there are only 8 giant media companies dominating the US media, from which most people get their news and information:

• Disney (market value: $72.8 billion) • AOL-Time Warner (market value: $90.7 billion) • Viacom (market value: $53.9 billion) • General Electric (owner of NBC, market value:

$390.6 billion) • News Corporation (market value: $56.7 billion) • Yahoo! (market value: $40.1 billion) • Microsoft (market value: $306.8 billion) • Google (market value: $154.6 billion)

2006

• Television - NBC Universal (January 2010)

• Cable– Comcast Cable

• Programming – E! Entertainment, Style, Comcast SportsNet Philadelphia, Comcast

SportsNet Mid-Atlantic, Comcast SportsNet Chicago, Comcast SportsNet West, SportsNet New York (partial), The Golf Channel, Versus Network, AZN Television, PBS KIDS Sprout, TV One, G4

• Sport Franchises – Philadelphia 76ers, Philadelphia Flyers, Philadelphia Phantoms,

Philadelphia Charge, Frederick Keys, Delmarva Shorebirds, Bowie Baysox

• Other – Through Comcast Spectator, Wachovia Center, Wachovia Spectrum,

Ovations Food Services, New Era Tickets, Front Row Marketing Services

Terms you should know

• Hollywoodism• Vertical Integration• Windows of Exhibition• Conglomerates• Monopoly• Majors• Independents• Distributors

• Exhibitors• Anchor Product• Merchandising• Product Placement• Paramount Consent

Decrees• Anti-Trust Laws• Consolidation

Anchor Product