JJC Week 7 Evaluating Market Concentration Pertinent to Your Final Project Topic WEEK 7 ASSIGNMENT – EVALUATING MARKET CONCENTRATION PERTINENT TO YOUR FINAL PROJECT TOPIC
For this paper, you will evaluate issues relating to market concentration, oligopoly, vertically- and horizontally-integrated firms, and market-dominating firms, in relation to your final project topic and research question/thesis. Accordingly, your paper will likely inform, and may be used in part to address the following requirement of the final project assignment.
In one segment, assess issues pertaining to market competition, which include market concentration, dominance of powerful firms, oligopoly, or other competition-relevant factors as these relate to your topic. (Your Week 7 assignment may serve as a resource or first draft for this item.)
In your paper,
identify at least one issue relating to your project topic that involves market concentration, monopolistic or oligopolistic competition, market domination by one or more large firms, or tendencies toward merger and acquisition activity in a media market.
Assess the implications of your selected issue from an economic perspective relating to profits, financial viability, product and service markets, innovation, technical change, and/or other economic factors.
Assess your issue from a political economy perspective relating the market power and political power of firms to the public interest, the public sphere, or democratic institutions.
-must be three to five double-spaced pages in length.
-must cite and integrate at least two credible sources from the course required readings and two credible sources other than the course readings.
My final project plan is posted, and the other 3 documents are readings. The Noam reading should be helpful. Casey Slattery
Planning for MDST Final Project
Thesis: Looking at the present and future of support mechanisms within the political
economy of sports media, as well as the future of sports media ownership.
When trying to make a concise thesis statement for my final project, I wanted to
look at the most important factors influencing the evolving sports media market.
“Political economies of the media evolve in relation to developments in their objects of
analysis—media institutions, technologies, markets, and society— and to changes in
scholarship.” (Winseck, 13). Due to the extreme developments in the objects of
analysis, now is as pertinent a time as ever to study the political economy of sport.
There is something new in utilization of technology every time we blink, and it is no
different when it comes to the way it’s being used in sports media markets. Support
mechanisms for sports media organizations such as social media, subscription,
marketing, and advertising are undergoing massive changes, and are revolutionizing
the business model for sports media entities. Disney, for example, is adding
subscribers for its paid “ESPN+” platform at an exponential rate. “Disney’s dedicated
sports over-the-top (OTT) service ESPN+ has surpassed 7.6 million subscribers in the
US, more than doubling its paid customer base from the 3.5 million announced at the
beginning of November.” (SportsProMedia). This is just one example of the support
mechanisms of sports media taking a new step thanks to technology. I’d like to do
research on the the way sports media is utilizing all of these support mechanisms based
on the developments of the objects of analysis. Understanding and effectively using
social media has had a wildly large effect on the sports media political economy as well.
The way sports media entities utilize social media dictates their level of engagement
with consumers, has a massive effect on their popularity, and shows how they are
positioning themselves in a rapidly expanding space. There has never been a more
valuable time to research effective techniques within this field. Changes in media
ownership in the sports political economy are being made by conglomerates as well.
Due to technological convergence, aspects of the sports media machine that were
separate are now integrated. Continuing with the Disney example, “Such substantial
growth has coincided with the expansion of the US media giant’s direct-to-consumer
(DTC) business, including the recent launch of its Disney+ streaming platform, which
has already amassed 28.6 million subscribers. Overall, Disney’s DTC business
achieved astounding year-on-year growth, reaching US$693 million in revenue by the
end of 2019, up from US$136 million the previous year.” (SportsProMedia). The
integration of platforms by sports media entities is creating huge viewership changes,
and I’d like to research its effect on the industry as a whole. We are once again in a
time of fundamental restructuring for network media industries due to changes in
consumption. This occurred in the mid-1990s to 2000, and once again from 2003 to
2007. With all the changes going on from the ground up within the industry, and due to
these changes are producing some very interesting changes in the way sports media is
operating. My thesis is still road, but I think there’s a clear enough structure that I can
make a solid portfolio. Conversely, it’s definitely not too narrow, and I don’t think I’ll
have too much trouble finding information. I’m looking forward to doing more research.
Can AT&T Avoid the Merger Mistakes of AOL-Time Warner?
Sunday, March 24, 2019
AT&T wants to prevail in the media wars by combining its distribution reach with Time Warner’s content.
Will it work?
In 2000, America Online (AOL) announced it was acquiring Time Warner Inc. for a record $165 billion to
create the largest media company in the world – combining premier brands such as HBO, CNN and Warner
Bros. with AOL’s reach into millions of US homes through its online service. But a scant nine years later,
Time Warner spun off AOL, worth just $3.4 billion, to exit what often has been described as one of the
worst mergers in history.
Now, AT&T has tied the knot with Time Warner for $85.4 billion, laying out the same ambitious goals. “The
content and creative talent at Warner Bros., HBO and Turner are first-rate,” said AT&T Chairman and CEO
Randall Stephenson in a statement. “Combine all that with AT&T’s strengths in direct-to-consumer
distribution, and we offer customers a differentiated, high-quality, mobile-first entertainment experience.”
But can AT&T avoid making the same mistakes as AOL? History is not on its side. Such mergers have “been
tried for decades but it doesn’t seem to work out very well,” said Gerald Faulhaber, who worked on the
AOL-Time Warner merger as chief economist at the Federal Communications Commission and now is a
Wharton professor emeritus of business economics and public policy.
Not only are there company-specific challenges to overcome, but there is also the added difficulty of
merging a content company – Time Warner – with a conduit business – AT&T.; “It seems pretty rare to
actually make that work,” Faulhaber said. Comcast and NBCUniversal were able to integrate well and create
synergies from their combination, but they are the exception. “My view is that Comcast is an unusual
product and [CEO Brian] Roberts is a very unusual, very competent CEO,” he added.
According to Faulhaber, the mistake companies make is to lump the content and conduit business models
into the same bucket of providing entertainment. Actually, their businesses are very different. “Conduit is a
network business,” Faulhaber explained. “They’re about maintaining a physical plant [such as cable
systems] and making sure it doesn’t break.”
Content needs little physical capital but loads of human capital – creators willing to take risks and make bets
on potential hit TV shows or movies. “What you need to make a business out of Walt Disney (content) is
just very different from what you need to make a business out of Comcast (conduit),” Faulhaber noted.
Breaking Down Silos?
In an interview with CNBC last year after a federal court cleared the AT&T-Time; Warner deal, AOL CoFounder and former CEO Steve Case looked back at the mistakes made in the AOL-Time Warner merger. He
identified two main culprits: clashing cultures and short-term thinking. “There were a lot of people at Time
Warner that weren’t as enthusiastic about the digital path, weren’t as enthusiastic about the internet, were
worried about how it might cannibalize some of their businesses,” he said.
“So they tended to play defense to protect what already existed as opposed to playing offense and try to
create wht the future would be,” Case continued. “If AOL-Time Warner was run as one company, not as a
bunch of independent, siloed divisions, it would have enabled us to lead the way in digital music, lead the
way in digital video, and other kinds of things.”
This month, AT&T took steps that could be seen as breaking up the old silos within Time Warner, which it
renamed WarnerMedia. Previously, Time Warner had organized content under the Warner Bros., HBO and
Turner units (TNT, TBS, Cartoon Network and other entertainment cable channels). That means
entertainment content could be found under any of the three divisions, whether it is episodes of HBO’s
Game of Thrones, the hit sitcom Friends or blockbuster films such as Batman, Wonder Woman and Harry
Now, AT&T has organized operations by type of content under its three units: Warner Bros., and the newlycreated WarnerMedia Entertainment and WarnerMedia News & Sports divisions. It placed HBO, TNT, TBS,
truTV and the direct-to-consumer business (which includes streaming services), under the Entertainment
unit. CNN, Turner Sports, Bleacher Report and the AT&T Regional Sports Networks went to News & Sports.
Warner Bros. has the film, TV and games businesses, plus family, kids and animation content (Cartoon
Network, Adult Swim, Boomerang).
But the reorganization also led to the exit of two veterans: HBO Chairman and CEO Richard Plepler and
Turner President David Levy. Plepler had been at HBO for 27 years and Levy at Turner for 32. The new
entertainment boss is Robert Greenblatt, formerly chairman of NBC Entertainment, while CNN Worldwide
President Jeff Zucker will be in charge of news and sports.
AT&T initially retained Warner Bros. CEO Kevin Tsujihara, but he decided to step down this week due to
revelations that he helped obtain roles for an actress with whom he was in a relationship. A replacement
has not yet been announced. Tsujihara had been at the company for 25 years, and his exit means that all of
the old Time Warner division heads will be gone. Meanwhile, AT&T’s new division chiefs will report to John
Stankey, CEO of WarnerMedia and formerly the phone giant’s chief strategy officer.
By organizing for efficiency, could AT&T harm the creativity that has propelled HBO and other cable
channels to enduring success? Not necessarily, said Jehoshua “Josh” Eliashberg, Wharton professor of
marketing as well as operations, information and decisions. “Netflix and Amazon Prime [Video] have
demonstrated that you can excel on both dimensions and deliver creative content via efficient streaming
platforms,” he said. “AT&T, being a technology-oriented company, can certainly enhance the technological
aspect of HBO without necessarily hurting its creative strength.”
Inside HBO’s Creative Process
Eric Kessler, former president and chief operating officer of HBO, was there during AOL’s problematic reign
at Time Warner. “I am a survivor of the AOL-Time Warner merger,” he said in an interview with
Knowledge@Wharton. “There was a big issue in terms of culture. You put two very different cultures
together and if it’s not managed correctly you’re going to have significant problems – and that’s exactly
what happened at Time Warner.”
As a conduit company, AT&T is going down the same path as AOL – aiming to combine its distribution reach
and technology with Time Warner’s content to prevail in the media wars. Technology is certainly useful in
helping expand distribution, improve the streaming service and develop targeted ads. “But you have to
know, when you are acquiring a creative business, the limits of technology,” said Kessler, a Wharton MBA
Creative talent is key to making great content, even if there are no guarantees for success. “You’re going to
fail. You have to accept that. You have to give creative people a wide berth to operate. You have to be
willing to take risks, and at the end of the day it’s really about a leap of faith,” said Kessler. “You are going
to listen to the vision of the creator of the show, listen to the programming executives, and you’re going to
hold hands and you’re going to walk to the edge of the cliff and take a step and hopefully there’s a bridge
above the chasm. Sometimes that bridge is not there. That is just the nature of creative content.”
Kessler remembers when David Chase, a staff writer for some TV shows back in the late 1990s, approached
HBO with an idea for a show about a mobster in New Jersey. They shot a one-hour pilot episode and liked
it, so they filmed some more. “We had no idea that David Chase was going to turn out to be a genius and he
was going to create one of the greatest shows in the history of the medium.” That was The Sopranos, which
ran for six seasons.
On the other hand, consider Vinyl. “It was the story of a record executive in the 1970s, and it had sex, drugs
and rock ‘n’ roll. What could be better, right?” Kessler said. The HBO show was written by Terry Winter, one
of the main writers on The Sopranos, executive produced by rock star Mick Jagger and directed by Martin
Scorsese. Plus, it had a $100-million budget. “You look at all those elements on paper and you say, ‘Wow.
This should be a great show,'” he said. “It turned out not to be a good show, and it was cancelled after a
year for a variety of reasons.”
Some shows take HBO a long time to get on board. That’s the case with Game of Thrones, the hit fantasy
action-drama about feuding kingdoms. “When we were pitched Game of Thrones HBO thought about it for
a year and couldn’t decide [whether or not] to make it. David Benioff [screenwriter and TV producer]
walked in and said, ‘Forget the dragon. Forget the magic. Forget everything. The show is about one thing it’s about power. How you get it and how you keep it,” Kessler said. “That was a great line because it
enabled us to understand why this show was going to connect with people” since fantasy mainly appeals to
But will HBO’s mojo disappear with Plepler gone? “It’s never been about a person. It’s about a brand, and
the programming flows from an understanding of the DNA of the brand,” Kessler said. When former HBO
CEO Chris Albrecht left in 2007, there was also concern about the future since he had been in charge of
programming when the cable channel developed The Sopranos and Sex and the City. But HBO did not
derail. “It was an HBO programming strategy, and it was an HBO brand,” Kessler said.
Kessler is hopeful AT&T will keep the creativity flowing at HBO, the king of the premium cable networks.
“They acknowledged up front the importance of maintaining the [HBO] culture. They acknowledged up
front the fact that programming is not their expertise,” he said, pointing to the hiring of NBC’s Greenblatt
and decision to keep HBO Programming Chief Casey Bloys and his team in Los Angeles. AT&T is “moving
forward in a way that I hope will enable them to sustain the magic of the HBO brand.”
Future of Media Is Streaming
Back in the early 2000s, Time Warner executives were wary of technology cannibalizing existing businesses,
according to AOL’s Case. But the media landscape was also very different. The idea of watching TV on a
mobile device was hard to fathom. Netflix was just a young company renting out DVDs by mail. Fast
internet was not yet widely available, and the iPhone and iPad were not yet on the market. TV shows and
movies were not yet streaming to mobile devices. YouTube wasn’t even around yet. The cable and satellite
TV business – pay TV – looked like a safe bet with its take-it-or-leave-it cable channel bundles. (AT&T’s Uverse and Verizon Fios would launch in the mid-2000s.)
By 2015, the game had drastically changed. “The broadband market had grown. Netflix had obviously
grown. Everybody could see where the future was going,” which was online streaming, Kessler said. Apple
came out with the iPhone and iPad that made watching video on mobile devices much easier. Amazon got
into video; so did Google’s YouTube and soon Apple. More competition arrived and many consumers were
cutting the cord. “Distributors [such as cable, satellite and telecom-TV providers] weren’t happy about it
certainly, but they acknowledged that was the future.”
HBO changed, too. Because many online video services were now competing for viewers, it made sense to
get in the game and launch its own service called HBO Now, which made its premium content available to
anyone, even cord-cutters, according to Kessler. Previously, HBO had launched a streaming service called
HBO Go, but it was only available to subscribers of pay TV. At the time, HBO and Cinemax collected $4
billion from pay TV providers, and bypassing them would jeopardize these affiliate fees.
Kessler, whose team launched HBO Go in 2010, said if they had gone directly to consumers back then, they
would have lost a lot more than they would have gained. “The math simply didn’t work.” This type of
internal wrangling is common for traditional media. “HBO has been struggling for a long time with how to
integrate its creative content with technology [in the face of] changing audiences’ consumption of
entertainment content” such as through streaming platforms, said Wharton’s Eliashberg.
AT&T sees the future. Three years after launching DirecTV Now, an online video streaming service of cable
channels, it plans to launch two new skinnier streaming bundles in April: DirecTV Now Plus and DirecTV
Now Max at $50 a month and $70 a month, respectively. The company still offers its DirecTV satellite TV
service, which lost 1.24 million subscribers last year, and AT&T U-verse, which gained 50,000. DirecTV
Now’s growth slowed to 436,000 net new customers last year from 888,000, according to its latest 10-K
filing with the SEC.
One area AT&T needs to focus on is developing an efficient data analytics capability, which is in line with its
strengths, to inform the company’s decision-making, Eliashberg said. It can also think innovatively about
content. “I don’t mean innovativeness only in content generation, but also in how the content is consumed
by consumers,” he said. An example is the “interactive movie consumption such as Netflix’s Bandersnatch
where consumers can alter the narrative based on their mood and preferences.”
But while AT&T is righting its ship, charging forward are other deep-pocketed rivals: Comcast-NBCUniversal,
Disney-Fox and the tech giants. Prevailing over them “will not be easy,” Eliashberg said. At least,
WarnerMedia is shoring up other parts of AT&T’s business. It brought AT&T revenues of $18.9 billion last
year, versus $30 million in 2017 without Time Warner. AT&T’s biggest business, its wireless and wireline
operations, saw revenue fall to $144.6 billion from $150.4 billion year-over-year.
AT&T seems to be learning from the missteps of AOL. But in the end, it will take time to see whether the
acquisition will succeed or not. “AT&T has come in and they’re making organizational changes and
restructuring [Time Warner]. They believe there is a more effective and efficient way to operate the
organization, not just HBO but the whole WarnerMe the dia group of companies,” Kessler said. “Time will
tell whether that’s the right decision.”
Who Owns the World’s Media?: Media
Concentration and Ownership around the World
Eli M. Noam and The International Media Concentration Collaboration
Print publication date: 2016
Print ISBN-13: 9780199987238
Published to Oxford Scholarship Online: January 2016
Eli M. Noam
Abstract and Keywords
This introductory chapter begins by reviewing some facts about the world’s
media ownership. It then sets out the book’s purpose, which is to analyze the
media sector, across countries, across time, and to identify its dynamics,
concentration, and ownership trends. This is followed by an overview of the
research perspectives, past literature, questions addressed, and conclusions
reached by the present study.
Keywords: media industry, media ownership, media sector
MEDIA concentration has been an issue around the world. To some observers,
the power of large media conglomerates has never been greater. To others, the
Internet has brought openness and diversity. Which perspective is correct? The
answer has significant policy and business implications.
Large media proprietors and their companies have drawn attention, fear, and
ire. The fear is that communications media are increasingly controlled by an
ever-shrinking number of firms and that those firms are capable of affecting
public opinion, the national agenda, democracy, and global culture. In the United
Kingdom, the focus is Rupert Murdoch; in Italy, Silvio Berlusconi; in Mexico,
Televisa and Carlos Slim; in Brazil, Globo; in Argentina, Clarin; in Japan, five
conglomerates; in France, Vivendi; in Sweden, Bonnier; in Spain, Telefonica; in
the United States, Disney, Time Warner, Sumner Redstone, Rupert Murdoch Bill
Gates, and Google. Hardly a country, it seems, is without such disputes. Even in
tiny Iceland, media concentration created a major governmental crisis i…
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