Merge, Churn, Money to Burn

from the book

Sharing the Pie

by Steve Brouwer

Who Will Tell the Story?

Americans interested in stories that document the concentration of wealth and power within the corporate structure will seldom find them in the mainstream media. This is because the information industries, which prefer to report breathlessly about the exciting world of business, have been monopolized at a remarkable pace in the past two decades and are now immensely profitable corporations themselves.

In 1981, forty-six media companies controlled most of the book, magazine, newspaper, movie, and television industries. By 1986, this number had shrunk to twenty-nine and by 1989 to twenty-five. Then, in the 1990s, the process of conglomeration in the media was so rapid that one could scarcely follow the players. Disney bought ABC, Westinghouse bought CBS, and General Electric took over NBC. A new network, Fox, was able to supply some competition, but only because it was part of a huge global newspaper, book, and TV empire belonging to Rupert Murdoch. Time/Warner not only controlled magazines, movies, and books, but had also taken over Turner Broadcasting, CNN, and a wide swath of the cable TV distribution network.

By 1997, just seven giant companies had nearly cornered the vast multimedia markets of the United States: Rupert Murdoch's News Corporation, Viacom, Time/Warner, Newhouse, General Electric, Westinghouse, and Disney. Newspaper monopolies such as Gannett and Knight-Ridder keep enlarging their chains at the expense of the last independent city papers. Some foreign behemoths such as the German Bertelsmann corporation, the world's second-largest media company, moved swiftly into the American book and recording markets; other giants from abroad - such as the Dutch companies Elsevier and Wolters Kluwer and the French Hachette Filipacchi corporation - are worldwide leaders in periodicals and now publish a great many American magazines and academic journals.

The concentration of economic resources in a few individual and corporate hands is thus matched by a similar domination of information and ideas. The larger business community wants regular access to media sources in order to broadcast favorable information-that is, advertising-within an engaging and inoffensive format. Advertising revenues, because they pay for all of commercial TV and radio and most of newspaper production, make the media shy of attacking other big business interests.

While they are unlikely to be critical of the products or employment policies of their advertisers, the media behemoths are by no means sitting on their hands. Often-as in the case of ABC, which is owned by Disney- the news apparatus is a small department of one division, the television network, that fits within a much larger entertainment corporation. So when the company wants to celebrate its biggest assets, it devotes TV news time and other programming to the event. This "synergy" allowed ABC's Good Morning America to devote an entire two-hour show to Mickey Mouse in Orlando on the twenty-fifth anniversary of Disney World.

For those who never trusted the quality of information transmitted by television in the first place, there is even more disturbing news from the world of books. In the 1980s and 1990s, most large and midsize independent publishers were bought up by multimedia conglomerates which saw the prospect of big profits where they had never existed before. Andre Schiffrin, a longtime managing director of Pantheon Books (before it was swallowed up by Random House), explained that the average profit margins for the publishing industry had been about 4 percent from the 1920s into the 1980s. When the independent publishers were bought up by the multimedia corporations, the new owners expected "the high returns they demand from other subsidiaries like newspapers, cable television, and film. New profit targets have therefore been established in the range of 12 to 15 percent."

The new giants of publishing concentrated their energy on "blockbusters"-popular romance and suspense novels by big-name authors or memoirs by movie stars and public figures-that could be marketed by their other media outlets. Appearances on Oprah, or Leno and Letterman, were considered a necessity for giving name recognition to authors, and publishing budgets were directed toward million-dollar book advances for the "stars" of the writing world. When HarperCollins (part of Murdoch's News Corporation) paid English novelist Jeffrey Archer a £32 million advance (about $50 million), it was a warning sign that the book industry had been transformed into something akin to the other entertainment media. Layoffs of editorial staff at the London offices of HarperCollins were attributed to the inordinate size of Archer's advance; this was followed by massive downsizing of the publishing lists at HarperCollins in New York. The company simply canceled the contracts for hundreds of books in 1997 (a tactic that authors or memoirs by movie stars and public figures-that could be marketed by their other media outlets. Appearances on Oprah, or Leno and Letterman, were considered a necessity for giving name recognition to authors, and publishing budgets were directed toward million-dollar book advances for the "stars" of the writing world. When HarperCollins (part of Murdoch's News Corporation) paid English novelist Jeffrey Archer a £32 million advance (about $50 million), it was a warning sign that the book industry had been transformed into something akin to the other entertainment media. Layoffs of editorial staff at the London offices of HarperCollins were attributed to the inordinate size of Archer's advance; this was followed by massive downsizing of the publishing lists at HarperCollins in New York. The company simply canceled the contracts for hundreds of books in 1997 (a tactic that was legal, but almost unheard of previously). This was a signal to other big publishing outfits that they ought to trim their mid-list books-the name for offerings by non-celebrity authors in serious fiction, history, criticism, and other genres that used to be published regularly in modest printings that brought in modest profits.

In a very short period U.S. publishing had become dominated by a small group of conglomerates which then proceeded to narrow the product line and restrict the employment opportunities of the primary producers (the writers and editors). But did they know what they were doing, even in a pure business sense? In 1997 the publishing industry was faltering: the book retailers (now dominated by corporate chains of super-bookstores) were returning unsold books in record numbers and the overall sales of hardcover books were down by 8 percent.

Sharing the Pie