POLITICAL ECONOMIC THEORY I:Internationalization, Vertical Integration

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Theories of Communication MCM 511

LESSON 30

POLITICAL ECONOMIC THEORY I

Political economic theory is an old label that has been revived to identify a socially critical approach

which focuses primarily on the relation between the economic structure and dynamics of media

industries and the ideological content of media.

It directs research attention to the empirical analysis of the structure of ownership and control of

media and to the way media market forces operate. From this point of view, the media institution

has to be considered as part of the economic system with close links to the political system.

In the early 1970s Golding and Murdock , two of Britain's leading political economists document

the concentration and consolidation of ownership in publishing, print, broadcasting, film and

recording industries in UK. They found that the top five companies in each industry held

considerable power. They accounted for 86 % of circulation of morning newspapers in Britain, 88%

of the Sunday papers, 73% of ITV network production, 86% of all paperbacks sold.

This work was one of the earliest systematic analyses of commercial power of the media it

highlighted the increasing control of the large companies over a particular media sector, or even

several sectors, but also the increasing influence over popular leisure time. Since 1974 the authors

have continued to document the consolidation of corporate power in the media industries. In the

United States such documentation is associated with the work of Ben Bagdikian in his book the `the

Media Monopoly in 1983'. He first published that about 50 media companies dominated the

American media. The latest edition of his book, published in 1997, argues this figure had fallen to

ten with around another dozen in a position of secondary standing.

Herman and Chomsky in 1988 developed this point identifying concentration and nature of media

ownership as one of the essential ingredients in their propaganda model. They argue a range of

political economic and organization filters constrain the reporting of international news in United

States. Their first filter is the `size, ownership and profit orientation of the mass media '. Similarly,

in Europe the growing power of media moguls has been subject to examination. Researcher have

shown the ability of media owners in Britain , France, Germany and Italy to deliver partisan

support at national elections and actively influence the evolving national political agenda through

their ownership of newspapers and TV channels.

Three economic processes that have increased the reach of media corporations are:-

1. Internationalization

2. Integration and

3. diversification

Internationalization

Corporations are ceasing to be simply national in their operations and are becoming global. This

trend of internationalization was noted by Murdock and Golding who consider it another aspect of

how concentration contributes to consolidation the necessary commercial constraints on cultural

production. In media firms are extending their influence into overseas markets while foreign

companies, mainly American, are consolidating their interests in the British media. Today British

media interests increasingly are part of large global empires. In every part of the global media

industries the dominance of a few corporations is document, e.g. the pop music industry. By 1994

90% of the gross sales of recorded music world wide came from albums, singles and music videos

owned or distributed by 6 multi-national companies. The power to decide what is played on `global

jukebox' rests in the hands of these organizations. Scholars note that at the end of 1980s the

combined revenue of the five largest global media firms was estimated at 18 % of the worldwide

information industry.

Theories of Communication MCM 511

Integration

Contemporary statistics show that fewer and fewer large companies increasingly own what we see,

hear and read. A specter is haunting the media around the world today and that specter is Rupert

Murdoch. He is the archetypal media owner whose interests have attracted a considerable degree of

comment and political concern.

Integration takes two forms

1. Vertical

2. Horizontal

Vertical Integration

Vertical integration refers to the process by which one owner acquires all aspects of production and

distribution of a single type of media product. Scholars discusses how global media giants such as

Sony , Bertelsmann the News Corporation and Time Warner have through vertical integration ,

extended their power to control the creation production and distribution of world-wide information

and communication

The Japanese electronic multi-national, Sony in 1989 bought Columbia pictures and Guber-Peter's

entertainment, two leading US production companies who made films and TV series for worldwide

distribution, to combine their capacity to make video /audio equipment with the ability to

manufacture cultural products. The previous year the company had purchase CBS records for same

reason. Such purchase enabled Sony to increase control over the market by reducing its dependency

on American programme making companies.

Horizontal integration

Horizontal integration is the process by which one company buys different kinds of media,

concentrating ownership across different kinds of media .Cross media ownership has developed at

a rapid pace in recent years.

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