Page 140 - Culture Society and the Media

130 CONTROL OF THE COMMUNICATIONS INDUSTRIES
holding in Thames Valley Broadcasting (the commercial radio station) was
Thames Television’s 19.88 per cent, which falls just short of Berle and Means’s
20 per cent cut-off point for owner control. What was not apparent from the list,
however, was that one of the other leading holders, EMI (with 4.52 per cent) also
held the controlling interest in Thames TV which gave the company command
over 24.4 per cent of the station’s total shares, enough for owner control in Berle
and Means’s terms. This failure to take account of the interconnections between
shareholders is symptomatic of a more general limitation in the managerialist
approach.
As I indicated earlier, effective economic ownership depends not only on the
absolute size of the largest shareholding bloc, but also on the relative dispersal
of the other voting shares and on their holders’ capacity for common action and
collective mobilization. Hence control is not a quantity but a social relation.
Consequently, its analysis requires a dynamic perspective which takes account of
the shifting balance of power between shareholders, rather than the static
enumerative approach of Berle and Means.
As well as neglecting the interrelations between shareholders, Berle and
Means also ignore the potential influence of other forms of capital relations on
corporate behaviour. In particular, critics have drawn attention to the power of
banks and other suppliers of loan capital. As Kotz has argued:

A corporation that requires a large supply of external funds, even if it is
financially sound, may have to yield a certain amount of informal influence
to a big lender or investment bank…. The ultimate source of power
obtained by financial institutions in such situations is the threat of denying
further funds, which could prevent the corporation from carrying out its
plans. (Kotz, 1978, p. 21)

A good example is provided by the American Telephone and Telegraph
Company (ATTC), the giant communications corporation which Berle and Means
singled out to illustrate the principle of management control. At first sight, it
looked like a text-book example. The voting shares were very widely dispersed
with the top twenty shareholders accounting for less than 5 per cent (4.6 per
cent) of the total between them. Consequently, Berle and Means concluded that
the corporation was under complete management control and operated
independently of any significant property-owning group. However, a closer look
revealed that ATTC was tied in with two of the largest owner groups in the US
economy—the Morgans and the Rockefellers. At the time (1932), the Morgans’
influence extended across a quarter of America’s corporate wealth, with the
Rockefellers running a close second.
Both had significant banking relations with ATTC and both were well
represented on the board. No less than fourteen of the nineteen members had
links with other Morgan interests, with fifteen representing the Rockefeller
interest (see Klingender and Legg, 1937, p. 71). How exactly the two groups