Beyond the Mogul: From Media Conglomerates to Portfolio Media

36 Pages Posted: 31 Mar 2017 Last revised: 16 Aug 2017

Eli M. Noam

Columbia Business School - Finance and Economics; Columbia Business School - Institute for Tele Information

Date Written: August 15, 2017

Abstract

Media ownership and market concentration are important topics of public debate and policy analysis. Today we are witnessing a new chapter in that discussion. It is important for the policy analysis community to look ahead and provide though leadership.

For a long time, critics of powerful private media focused on the classic moguls of the Murdoch and Redstone kind. More recent trends raise concerns of a different nature, about media being increasingly controlled by large interests that are outside the media sector. An example is Jeff Bezos of Amazon buying the Washington Post. Similar acquisition can be observed around the world. This has become known as “media capture.” This paper will take the discussion one step further by quantifying the development and identifying the dynamics of such outside ownership.

The analysis is based on a quantitative study of media companies and ownerships, using a large and unique global database of ownership and market share information from 30 countries, 13 media industries, and 20 years. Using a wide-ranging analysis across countries, industries, and time periods, permits us to identify general trends and avoid a discussion that is usually mostly anecdotal.

The analysis shows, so far that entry into media by non-media firms follows three phases, each with a different priority:
Stage 1: Seeking influence
Stage 2: Seeking business synergies
Stage 3: Seeking portfolio diversification

The analysis, so far, shows that the ownership of media by industrial companies as a way to create direct personal and corporate political influence has been declining in rich countries. The second phase for such a non-media/media cross-ownership is based on more direct business factors of economic synergies. It, too, has been declining in many rich countries.

On the other hand, there has been a significant growth of outside-ownership of an indirect type, through financial intermediaries of private equity finance and institutional investment funds.

In contrast, the media systems of emerging and developing countries are still operating in the first two phases of outside-ownership, centered on projection of influence, and seeking conglomerate business synergies.

Will these divergent trends in media control lead to fundamentally divergent media systems? It is likely that these dynamics will lead to a “capture gap” in the media of emerging and rich societies. Media in the former would be significantly controlled by the seekers of personal influence – “crony capitalists” – and conglomerateurs, while media in the latter are subject to professional investor imperatives of profitability, growth, and portfolio diversification. The same financial institutions from rich countries are also likely to seek acquisitions in the emerging markets by leapfrogging the two other stages and investing directly. If this would play itself out freely, a global media system might emerge whose ownership is not centered on individual moguls or conglomerates but on international financial institutions based in a few financial centers.

The responses are then predictable. Countries will impose restrictions on foreign ownership of media. And domestic conglomerates that step in and assume control will wrap themselves in the flag as protectors of national sovereignty. Media control by industrial firms will become patriotic.

Thus, the emerging challenges to diverse and pluralistic media comes less from inside the media and its large media companies, and more from the outside, through an ownership by non-media organizations: financial institutions in rich countries, and a combination of domestic industrial and foreign financial firms in poor and emerging countries.

The paper will conclude with an analysis of the policy issues and regulatory responses.

Keywords: Media ownership, Developing countries, Mass media, Investments

Suggested Citation

Noam, Eli M., Beyond the Mogul: From Media Conglomerates to Portfolio Media (August 15, 2017). Available at SSRN: https://ssrn.com/abstract=2944354

Eli M. Noam (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Columbia Business School - Institute for Tele Information ( email )

3022 Broadway
New York, NY 10027
United States

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