Page 128 - Culture Society and the Media

118 CONTROL OF THE COMMUNICATIONS INDUSTRIES
DEFINING CONTROL AND OWNERSHIP
Following Pahl and Winkler (1974, p. 114–15), we can distinguish two basic
levels of control—the allocative and the operational. Allocative control consists
of the power to define the overall goals and scope of the corporation and
determine the general way it deploys its productive resources (see Kotz, 1978, p.
14–18). It therefore covers four main areas of corporate activity:

1. The formulation of overall policy and strategy.
2. Decisions on whether and where to expand (through mergers and
acquisitions or the development of new markets) and when and how to cut
back by selling off parts of the enterprise or laying off labour.
3. The development of basic financial policy, such as when to launch a new
share issue and whether to seek a major loan, from whom and on what terms.
4. Control over the distribution of profits, including the size of the dividends
paid out to shareholders and the level of remuneration paid to directors and
key executives.
Operational control on the other hand, works at a lower level and is confined to
decisions about the effective use of resources already allocated and the
implementation of policies already decided upon at the allocative level. This
does not mean that operational controllers have no creative elbow-room or
effective choices to make. On the contrary, at the level of control over immediate
production they are likely to have a good deal of autonomy. Nevertheless, their
range of options is still limited by the goals of the organizations they work for
and by the level of resources they have been allocated.
This distinction between operational and allocative control allows us to
replace the ambiguous question of ‘who controls the media corporations?’ which
is often asked, with three rather more precise questions: ‘where is allocative
control over large communications corporations concentrated?’, ‘whose interests
does it serve?’ and ‘how does it shape the range and content of day-to-day
production?’.
The answer most often given to the first of these questions is that allocative
control is concentrated in the hands of the corporation’s legal owners—the
shareholders—and it is their interests (notably their desire to get a good return on
their investment by maximizing profits) that determine the overall goals and
direction of corporate activity. However, as with ‘control’, we need to
distinguish between two levels of ‘ownership’: legal ownership and economic
ownership (see Poulantzas, 1975, p. 18–19). This distinction draws attention to
the fact that not all shareholders are equal and that owning shares in a company
does not necessarily confer any influence or control over its activities and
policies. For legal ownership to become economic ownership, two conditions
have to be met. First, the shares held need to be ‘voting’ shares entitling the
holder to vote in the elections to the board of directors—the company’s central