Page 113 - Critical Political Economy of the Media

92 Critical investigations in political economy

establishing and maintaining strong market positions. Financing is another
source of risk. Financing growth through ‘retained earnings’, revenue derived
from sales, generally enables control over media organisations to remain with those
who currently have it. However, increased need for investment has necessitated
greater use of debt financing whereby firms risk control passing to banks or
financial institutions if they are unable to manage repayment of borrowing. With
equity investment (selling tradeable shares in the company) there are risks of
shareholders launching a takeover bid (Flew 2007: 10). More generally, firms
need to manage the demands of investors; those institutions and individuals who
hold shares in the company.
Financing and servicing debt increases the influence of bankers and financiers
and their presence on company boards. There has been a marked increase in
the proportion of directors of media companies representing banking, finance or
equity interest; their presence has increased while that of representatives allied to
the state has declined (Winseck 2008). Financial markets favour low-risk, short-term,
high-return investments. In the 1980s and 1990s this tended to favour vertically
integrated multimedia conglomerates that possessed a large library of media
content. For Miège (1989: 43) to highlight uncertainty here is not to argue that
producers necessarily lack capacity to shape the market but that they face ‘great
difficulty in mastering the conditions of valorization for all [their] products’.
Miège argues control can only be achieved over a series of products, hence the
need for a catalogue or repertoire. Yet the expansive logic of synergy fuelling
debt-laden corporate expansion met the counter-pressure from investors for low-
risk, short-term, high returns. In the terminology of network analysis, global firms
organised around networks jettisoned unprofitable nodes in efforts to maintain
profit margins.

Reassessing synergy
Synergy was a corporate buzzword in the 1990s but much touted benefits were
unevenly realised. The lustre and hype surrounding synergy has diminished
somewhat, as claimed benefits failed to materialise, different work cultures failed to
mesh, or ‘megabrands’ flopped. Some firms that merged during the 1990s found
it difficult to achieve profitable synergies (Baker 2007) leading to demergers and
sell-offs. Time Warner had promoted synergies across its film, publishing, music
and online divisions but the collapse of AOL contributed to a major shift in
strategy. Time Warner sold off its Warner Music Group in 2003, book publishing
in 2006 and demerged AOL in 2008. Spectacular corporate failures such as
Vivendi in 2002 prompted something of a reversal of synergy hype. Yet neither the
hype nor declarations that the phase was over were substitutes for a careful grasp of
corporate reconfigurations. Acquisitions and integration continue apace; media
mergers and acquisitions reached 1,351 transactions in 2012, twice the number
reached in 2011, valued at almost $75 billion (BtoB Media Business 2013).
Integration, though, occurs alongside demergers (below). The collapse of major