Archive | July, 2014

July 26, 2014: Six companies control 90% of US media

According to 2012 testimony before the US Congressional House Judiciary Committee examining Comcast’s acquisition of NBCUniversal, in 1983, 50 companies owned 90 percent of the media consumed by Americans. But by 2012, just six companies — including Fox (then part of News Corporation) and Time Warner — controlled that 90 percent.  That’s truly an amazing statistic.

Rupert Murdoch’s 21st Century Fox is trying to merge with Time Warner, Inc., and that merger would reduce control of the major Hollywood studios to five owners, from six, and major television producers to four, from five.  Under that scenario, Murdoch would control 40 percent of all major film production and nearly 20 percent of all television.

As reported by the New York Times:

Fox and Warner Bros. are the largest movie producers by revenue. So far this year, Fox has close to a 19 percent market share and Warner has close to 17 percent, according to the website Box Office Mojo. (The top six studios account for about 85 percent of theatrical film revenue.)

That Fox has promised to keep Warner Bros. as a separate studio is irrelevant, since the two would be expected to coordinate their budgets, programming and release schedules.

In television, five producers account for 85 percent of the market, according to the research firm IBISWorld, which also makes it moderately concentrated. The effect of a merger would be less drastic, however, since Warner and Fox are the smallest of the five, with 2014 market shares of just under 11 percent (Warner) and 9 percent (Fox).

Fox News and CNN, the two top 24-hour news channels in cable television, would then be owned by the same company.  Fox has noted that it would be willing to sell off CNN in order to make the transaction meet the regulatory muster of the Federal Communications Commission.

The New York Times articles was not supportive of the merger, stating as follows:

Applying this standard, a Fox-Time Warner merger should be blocked whether or not it meets the antitrust division’s narrower standards.

But in the wake of the proposed Comcast-Time Warner Cable merger, and now a possible 21st Century Fox-Time Warner Inc. combination, the time may be ripe for the Justice Department to apply stricter standards to big media mergers. “I think we’ve crossed a Rubicon,” [antitrust lawyer Allen P.] Grunes said. “There’s empirical support for the claim that there’s been a loss of creativity, originality and daringness as independent producers have largely been incorporated into the larger conglomerates,” he said. Witness the preponderance of sequels and action-adventure blockbusters in Hollywood.

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