Page 120 - Battleground The Media Volume 1 and 2

Conglomerat on and Med a Monopol es |

In 1966, International Telephone and Telegraph (ITT) attempted to acquire the
ABC television network, and despite claims that the network would remain in-
dependent, the Department of Justice and others questioned the impact ITT’s
international operations might have on ABC News and blocked the merger. Two
decades later, the regulatory climate was altogether different, and there was little
opposition to the combination of General Electric and NBC, although the issues
were very similar.
The focus on ownership and control hinges, in part, on the potential impact of
media content. Mark Fowler, chair of the Federal Communications Commission
(FCC) in the 1980s, once stated that a television is nothing more than a “toaster
with pictures.” This, in turn, meant that the government could treat television
the same as other industries. Scholar Douglas Kellner, however, argues that tele-
vision assumes a critical role in the “structuring of contemporary identity and
shaping thought and behavior.” In his view, television has undertaken functions
once ascribed to “myth and ritual,” including “integrating individuals into the
social order, celebrating dominant values,” and “offering models of thought, be-
havior, and gender for imitation.” From this perspective, media play a significant
role in society and conglomeration becomes a far more serious issue.

TyPEs oF CongLomEraTion
There are multiple incentives for conglomeration. The expansion into diversi-
fied businesses creates opportunities for growth and allows a conglomerate to
cushion the impact of downturns in core business sectors. General Electric is
often cited as the model of a diversified conglomerate, and its collection of busi-
nesses makes it, among other things, a military contractor and designer of nu-
clear power plants. NBC Universal contributes less than 10 percent of the total
revenue of General Electric, but with a number of news outlets, among other
things, NBC might be far more important to the parent company by helping
shape public debate over contentious issues, such as militarism and energy pro-
duction, through NBC News, MSNBC, and CNBC. In 1987, for example, less
than a year after the meltdown of the nuclear reactor in Chernobyl, NBC News
aired an hour-long show entitled “Nuclear Power: In France It Works.”

synErgy
More common in media industries is related diversification. This allows a
conglomerate to build upon a strong business though the diversification into
areas that are close to the core. This can create synergies that enable it to increase
revenues and decrease costs through the common management of multiple
businesses. This is evident in the conglomeration of media assets in corpora-
tions such as The Walt Disney Company, Time Warner Inc., and News Corp.
Motion picture production and distribution remain important contributors to
the Disney bottom line, for example, but the most successful unit in Disney is
the Media Networks division, which includes both ABC and ESPN. Disney’s
corporate expansion into related fields proved to be quite lucrative.