This is an article about a very successful private wealth manager (his company controls over $30 billion in assets) who is quite confident that Newspapers will do well.  He has large stakes in many of the companies (Gannett, Knight Ridder, NYTimes Company), valuing multiple billions of dollars.  This article explains why he is confident that they will survive the new challenge coming from the internet (and other media), and the financial returns that he hopes to realize.  Although not the focus of this article, many journalists have been quick to point out that newspapers play an important social role--especially on the local level--and they have such prestige that it will be difficult for them to be replaced.  Indeed, names such as The New York Times, Washington Post, and The Wall Street Journal are some of the strongest, most reputable brands in the nation.

This article gives more information on the impending Knight Ridder auction (sale) and what that might portend for the newspaper industry as a whole.  According to the article, “the newspaper industry is on the defensive, with circulation stagnant, advertising dollars migrating to the Internet and newsrooms reducing their work forces to save costs,” and thus seeing what desire there is to purchase the nation’s second largest newspaper company in terms of circulation could give a good idea of how Wall Street and investors are feeling about this medium.  The article also points out that even with all these problems, in terms of net margins, newspapers are one of the most profitable industries in the entire economy.  Why, then, all the worry?  Simply because they are seen as having reached their summit and that they are now on their way out, even if they are impressively profitable today.  There has been a decline in their revenues and profits, and thus many regard them as “on their way out.”  That is, few investors want to put their money into an industry that will eventually wither away, even if it is currently performing well.

This is a very good introduction to both economics and each of the major media industries, namely the Daily Newspaper Industry, Book and Magazine (Print) Industry, the Broadcast Networks, the Cable Industry, Hollywood, Radio, the Recording Industry, the Advertising industry and burgeoning Online Media.

This volume defines all important introductory economic concepts and terms.  It explains why most mergers are unsuccessful (pages 14, 22, 38, 82 and 234), why joint ventures are so common and profitable (page 40), and all of the individual revenue streams of each of the different mediums listed above.  This volume is accessible and very interesting.  Moreover, when read in conjunction with Baker’s two books, it helps illuminate some of his points, specifically how conglomerates can be in the best interest for consumers in some ways while simultaneously detrimental to them as well.  Namely this book gives a fair description of the state of the industry and allows one to draw his/her own conclusions.  It portrays the situation without making overtly normative judgments.

McChesney’s essay can, in many ways, be read as a call to arms.  His goal is clear—he wants to reveal the true nature of the nation’s largest media conglomerates as being corrupt, insidious, and detrimental to the wellbeing of our democracy in order to provoke popular discontent and significant change within the system.  At times, he makes very powerful arguments.  But, sometimes he sounds too much like one consumed by conspiracy theories.  Namely, whenever something might look bad, he interprets it to not only be as bad as it seems, but most likely worse. While this may often be an accurate interpretation of events, after 75 pages of his essay, it begins to see a bit over determined (he never awknoledges that it could be otherwise; he mentions no flaws in his argument or examples of the existence of conglomerates benefiting the consumer, as Baker readily will do).  Nevertheless, McChesney does hit on some very important ideas regarding the media’s integral role in keep our democracy healthy, and the fact that for many people it is not just a question of entertainment.  Ideally, McChesney wants to see the media cease to be an industry like any other.  After all, a TV is not just a toaster that projects a picture.  The essay is well written and a pleasure to read, even if the rhetoric can get a bit tiring.

This article talks about job cuts at the Tribune Company’s papers. More broadly, it outlines the problems currently facing the aging media companies and how they are reacting to new challenges and market pressures. Perhaps one of the most interesting issues that this article brings up (written in the form of a dialogue) is the fact that even though newspapers are profitable, and their profits generally continue to grow, since they are seen as ultimately on headed towards demise, investors are not flocking to them. Rather, they head towards internet and other new media sectors, which they see as ultimately taking the place (financially, if not socially) of newspapers. The article, however, doubts that newspapers are own their way out.

This article goes over the financial basics of Knight Ridder’s putting itself up for sale, as well as the implications of its doing so.  Moreover, it talks about the reasons why a private equity firm or another company might decide to make an offer.  The article also discusses the spin off of Warner Music very briefly at the end, and how even though that troubled section of Time Warner seemed to have been in the doldrums, it has provided a nice return for its investors who bought it.

This article recounts the early days after the decision was announced to break Viacom into two separate companies (one cable, which would be a growth stock, and the other broadcasting, which would be a value stock). Simply put, Sumner Redstone’s acquisition strategy was not nearly as successful as he had expected it to be. Indeed, it has failed. But, that does not mean that the split is welcomed with open arms and rave reviews on the part of Wall Street analysts.
The main logic behind the split up is that sprawling conglomerates become dragged down by their own size and that expected synergies often do not occur because of management struggles or clashes of corporate cultures (see chapter 11, pages 233-235 of Media Economics, Theory and Practice for a great example of this).

This is a good overview of the financial/shareholder pressures facing contemporary newspaper companies and the ways in which they react to such forces.  It also notes that papers owned by families (with the original owners retaining control through holding a majority of the voting stock) tend to be both more successful and better papers.  Perhaps, then, quality is a smart investment.

Written by Ken Auletta, published in the October 10, 2005 issue of the New Yorker. Pages 51 to 61.

If you want an introduction o all the issues surrounding the contemporary newspaper industry, read this article.  It focuses on the trials and tribulations that the executive editorial staff of the Los Angeles Times has had with the “empty suits” of the Tribune Company, and given that the article appears in the New Yorker, I am sure you can imagine which side is portrayed the most sympathetically—rightfully so from my view.  The issue is that the editors see the newspaper as fulfilling a social role and for them what is at stake is creating the best possible paper.  For the corporate management, they want to meet (if not exceed) Wall Street’s profit expectations each quarter, and thus even when readership and revenue are faltering, rather than invest in the paper to make it one of the best in the nation (the editors admit that for various reasons—most of them pecuniary—papers such as The Washington Post, The New York Times, and The Wall Street Journal are not its true peers) to ensure long-term growth and profitability, they cut costs.  For quick digression, granted the gap between the LA Times and the aforementioned papers is close, and the editors believe they could close the gap, but those who occupy the corporate offices see differently.  For them, they do not want to have the best possible paper; rather, they want to have the most profitable paper with the largest margins (income as a percent of revenue).  If the two coincide, great.  But, insofar as quality is a long-term investment, the current management would rather cut the size of the newsroom staff and trim expenses to satisfy investors’ ravenous desires for ever growing profits.
            So much for my partisan take on the article.  It is not nearly that skewed in its presentation, although it does lend itself to being interpreted as such.  One important fact the article touches on (albeit tangentially) is ruinous competition.  The corporate officers of the Tribune Company would like all of their papers to share office space and staff in some of their bureaus outside of their main marketplaces (the Washington Bureau, for example).  Many editors resist this, for they want control, uniqueness and particularity in their paper—if the lose their direct control, they might as well just use a wire service.  Nevertheless, perhaps the corporate managers are on to something.  Ruinous competition does not just hurt the newspapers, it also damages consumers, insofar as resources that could be used to create content desired by a particular audience are instead expended on creating duplicates of editorial pieces that already exist.  For a better explanation on ruinous competition, see C. Edwin Baker’s book Media, Markets, and Democracy pages 30 to 37 and pages 177 to 178.

And the march to war continues.  Who is this shareholder activist who regards media assets as nothing more than mere a commodity from which he hopes to realize outsized returns?  Moreover, as a minority shareholder (along with his allies, he has but 2.9% of the common stock), what kind of aplomb must he have in order to (subtlety?) threaten the management of the largest media conglomerate in the word?

This article gives more information on the march to war within the Icahn camp as they seek to dramatically alter Time Warner’s current plans for increasing shareholder value.  Specifically, this article focuses on Robert Clark who is a director of both Time Warner and Lazard, the investment bank that is advising Icahn and his team of investors.

This article describes the about face of the FCC.  A year ago, they said that paying for cable channels à la carte would cost the consumer more.  Now, the new chairman argues that doing so would benefit the consumer for it would allow people to purchase only the channels they desire and not be forced into buying packages that do not align neatly align with what they would like to have.  Moreover, this move could be good for the children, insofar as it would allow parents to avoid certain channels altogether, which is currently impossible.  The article proposes that regulation allow for cable industries to either continue selling in blocks or experiment with à la carte distribution.  It is, of course, difficult to predict the consequences of such a change in industry practices.

Required reading for anyone following the current battle between financier Carl Icahn and Time Warner.  This article focuses on Icahn’s growing arsenal of financial weapons, namely a very prominent and prestigious investment bank, Lazard which is now his allay in getting Time Warner to change its ways to dramatically increase its share price.  The problem, of course, is that corporate raiders such as Icahn want to turn a quick profit, whereas the management might be more interested in pursuing a long term strategy, which is a leitmotif of this entire saga.

This article focuses on CBS’s measures to assure investors that it is prepared for the new digital age and will remain profitable even as the ways in which consumers consume media radically change. The broadcast network is focused on creating new revenue streams from video-on-demand, internet sites/portals, and more diverse program offerings on other channels that are not dependent on advertising (except in the internet case) and are more amenable to consumers’ new tendency to watch TV when and where they desire. Part of the problem that traditional broadcast networks have been having is that their content is regarded as having a different value for cable carriers than those stations that exist exclusively on their medium. This weakens broadcast newtorks’ bargaining position, for they are not regarded as having the same economic structure. In some senses, CBS (along with all other major networks) is seeking to change that by reconstructing its business model.

Important quotes:

“The shows will cost 99 cents each, and will be available in areas where CBS owns TV stations and Comcast provides digital cable. The deal bears some similarity to recent agreements NBC and ABC have struck with DirecTV and Apple Computer. All are meant to adapt the business model of a broadcast television network to changing technologies and viewer habits, and find additional ways to be paid, beyond the advertising that has been broadcasting's sole source of revenue."

"But unlike NBC and ABC, which reside inside the conglomerates General Electric and Walt Disney and have sizable cable network siblings, CBS has an extra incentive behind its digital hustle: the split-up of Viacom. The breakup will leave the CBS Television Network as the centerpiece of a new CBS Corporation, which will include 40 television stations, the UPN network, the radio group Infinity Broadcasting, Showtime, Simon & Schuster and the Paramount Television production business. The rest of the company, which includes the fast-growing MTV Networks cable channels, BET and the Paramount Pictures film studio, will continue under the Viacom name.”

This article is very informative on the workings of the newspaper industry.  It mentions that what distinguishes Knight Ridder from other newspaper companies is that the founding family does not retain control through supervoting stock, as is the case at companies such as The New York Times, Belo, and McClatchy.  According to the article, many Wall Street analysts believe that print newspapers are slowly dying, under relentless pressure from new media companies such as Google, which offer advertisers more efficient and cost effective ways of reaching their target audiences.  The article also alludes to the pressures that Wall Street puts on newspapers to cut costs; for some editors within the position, this has been anathema to them, for they argue that news content will surely suffer if given fewer resources.  This is the standard problem for publicly traded media companies: those in charge of business operations want to maximize profit, whereas those in charge of editorial content want to great the best product possible.

This article does not specifically talk about media companies, although it does mention them in the context of the current waves of spin offs and having conglomerates split up after not realizing the promised synergies before the mergers.  Indeed, there seems to be a penalty for conglomerates right now, such that the sum of the parts is probably worth more.  The idea behind many mergers was that the companies together would be more valuable than their individual assets added together, although it has since been proven that that is not the case.  According to Media Economics, Theory and Practice, 75% of all mergers and acquisitions fail to deliver on promises made to investors.

This article, published in early November 2005, focuses on the fiscal woes of the large media companies.  Even though many of them were not hemorrhaging money, their stocks had been seriously underperforming: since August, most stock prices were down between 6 to 17 percent at a time when the major indexes had lost only a handful of percentage points.  The main argument is that even though the major media companies (including the conglomerates such as Viacom and the more focused newspaper companies such as Knight Ridder) had been shaking up and revitalizing their business models to prove that they were ready to capture new markets in the evolving economy, many institutional investors were not warning up to their actions and plans.  Indeed, you could even say that there are some corporate civil wars going on in board rooms.  The article specifically mentions that a large shareholder of Knight Ridder wants the company to put itself up for sale, and it makes a reference to Carl Icahn’s efforts to get Time Warner to divest itself of some of its assets to begin a large stock buyback program (since the publication of this article, Carl Icahn has become even more confrontation when dealing with Time Warner’s current board of directors and management).  The writer does not mean to say that all media companies are having trouble, for Google and Apple have been steadily increasing for quite some time (the continue to do so).  Rather investors are not feeling the least bit sanguine when it comes to traditional ‘big’ media companies.  Perhaps they are all just dinosaurs waiting to be extinct.

Here are two interesting and important quotes from the article:

”Beyond those concerns, they worry that with slower advertising growth, the profitability of media properties like television and radio stations could be affected. And even if the ad market were to become robust again, just how many of those dollars might flow to the Internet and away from traditional media is an open question.”

And

''There is a buyers' strike,'' said Dennis Leibowitz, general partner at Act II Partners, a media hedge fund. ''People are afraid to touch the old media. No matter how cheap they have gotten, people are fleeing. The environment is scaring them, and they can't figure it out.''

On the most superficial level, this article focuses on NBC’s decision to move its hit show the Apprentice from New York City to Los Angeles. It raises issues such as branding, regional and cultural differences across the United States and the net of associations that society has about each location.  The article discusses the motivations for moving the setting, although it appears that the main reason stems from a desire to keep things ‘fresh.’  The fifth season will be out this upcoming spring, and even though the show remains popular, NBC wants to make sure that it stays one of the more dynamic programs on the air.

This article focuses on the fallout of the infamous AOL Time Warner merger.  Even though it is a few years after the stock’s precipitous crash, the company is still having great difficulty reviving itself.  Its stock price has stagnated for the past few years, and recently the financier Carl Icahn has been taking a more aggressive position in trying to get the company to divest itself of some assets to begin a large ($20 billion) stock repurchasing plan.  A few months ago, rumor started spreading of a possible sale of AOL (or at least a portion of it) to another company.  The most probably candidates were Google, Comcast, Microsoft, or Yahoo.  This article focuses on the evolution of that process and gives an update that shows just how complicated these industry alliances can be.  It should be noted that this deal would be larger than most joint-ventures that large media conglomerates work on together.

Jurgen Habermas, "The Public Sphere" pages 92-98.

Bagdikian works to expose the monopolistic practices of the media industry. He specifically focuses on the big five (Time Warner, Disney, Bertelsmann, News Corporation, Viacom) and how they act together like an oligopoly or cartel. One of the main issues is that they work together on joint projects that prevent them from being true competitors.

He also looks at the monopolies in other media areas, specifically newspapers. He examines the ways in which newspapers are run without true competition in local markets and the self-censoring effects of advertising (for a more in-depth analysis, I recommend Professor Baker’s books).

Another problem that becomes apparent is the conglomerate nature of these corporations and the fact that advertisers and interest groups can leverage their power against one facet of the conglomerate to create change in another (boycott ads in one periodical to protest an article in another in which the advertiser does not place its ads).

Baker takes certain ideas touched upon in Bagdikian’s book, The (New) Media Monopoly and analyses them in much greater depth (Bagdikian has published many versions of his book, the first of which appeared when there were 50 major players in the media business… there are now only 5). He uses economic analysis to determine the efficiency of the current system (or lack thereof), and makes various policy arguments for remedying the current problem within our press. The structure is as follows: he illustrates the problem, proves it economically, introduces a policy proposal, compares it to programs implemented around the world, and then discusses the constitutionality of going forward with his recommendations.

Implicit throughout his book is that the media serves a distinct role in society and that given the current influence that advertisers can exercise, they prevent the media from fulfilling the needs of a democratic society. This idea is developed in greater depth in his book Media Markets and Democracy where he analyses a democratic society’s requirements of its press according to 4 different theories of democracy. He values diversity and that the media should work harder to meet the desires of its readers through content rather than from its advertisers by delivering the right readers.

Another key point of Baker’s argument is that advertising disproportionately hurts the poor. He points to the example of an English newspaper that had larger circulation than the other major newspapers combined, but not withstanding this fact, because the newspaper was read by people without a substantial disposable income, there were few (if any) advertisers who would subsidize the paper. Thus, the paper had to be profitable with only subscription revenues, and it eventually failed. Baker gives the case study and then explains why this is so on theoretical grounds and that this phenomenon most likely occurs rather often—advertisers seek a wealthy audience, and thus media products are disproportionately catered to their tastes, in terms of political leanings, interest pieces, and other editorial content.

An essay by George Eliot that reviews many contemporary novels by women writers.  It is a joy to read and Eliot demonstrates her impressive wit and eloquence.