2    A Legacy of Neoliberalism

Patterns in Media Conglomeration

Eileen R. Meehan

Neoliberal institutions and ideologues have spent the last twenty-eight years restructuring local, provincial, national, regional, and global economies. Among developed nations, the process focused on dismantling legal and regulatory systems that developed from national policies rooted in Keynesian economics and the worldwide depression of the 1930s. Such policies recognized that governments and publics shared an interest in economic stability. In contrast, neoliberals championed a belief in autonomous, free markets. In this vision, the structure of free markets gave them an infallible ability to decide what was best. Within such markets, firms would always be innovative, prudent, honest, and focused on serving customers. Infallible markets, filled with corporate models of probity, needed no governmental oversight. For neoliberals, that justified deregulating Keynesian markets and privatizating government functions. From 1980 until 2008, neoliberal beliefs circulated as commonsense across corporate media regardless of an outlet’s branding as liberal or conservative. Achieving status as commonsense, neoliberalism became the dominant ideology in most developed nations.

In 2008, failures in national and international markets for finance capital, speculation, and real estate helped trigger a global recession. In response, governments decreased their neoliberal interventions and began intervening instead to prop up failing companies and markets. In the United States, this was by no means a return to President Franklin Delano Roosevelt’s New Deal with its Keynesian interventions to get unemployed people into jobs and stall banks’ foreclosures on homes and farms. Instead, President George W. Bush focused administrative efforts on bailing out financial companies, usually identified in the press as Wall Street brokerages and banks so big that they could not fail. This was part of the Bush administration’s legacy for incoming president Barack Obama and, in retrospect, Bush’s bailouts seem a logical extension of neoliberalism’s preference for transferring public funds to private corporations. That said, when Obama took office, the United States was fighting two wars and facing crises in employment, health care, national infrastructure, transportation, real estate, and finance. With neoliberalism’s failure to deliver infallible markets and honest corporations, one might think that Keynesianism would return to center stage, bringing with it employment initiatives, overhauls of industries in crisis, and reassessments of neoliberalism’s impact on economic sectors including the entertainment-information sector. As of this writing in the middle of 2010, Keynesian intervention had not happened.

This chapter examines structural issues that militate against a Keynesian reorganization of the entertainment-information sector in the U.S. economy. I focus specifically on the film, network television, and cable television industries. Although not in crisis, these industries have felt the impact of neoliberalism in terms of deregulation and the gutting of antitrust law. In order to clarify the extent of neoliberal reorganization, I turn next to a brief reprise of the movie and television industries from 1950 to 1979. Then, I sketch the neoliberal policies that erased separations in ownership across film, television networks, and cable television. Building on this foundation, I examine the form of media organization that became dominant under neoliberalism: the trans-industrial media conglomerate as exemplified by News Corporation, Time Warner, and the Walt Disney Company. I next consider National Amusements as a variation of the trans-industrial form and subsequently examine General Electric’s (GE) NBC Universal (NBC-U). I conclude with a reflection on this legacy of neoliberalism and speculation on the possibility of change.

Film, Network Television, and Cable Television as Separate Industries

From 1934 to 1979, law and regulation combined to keep film studios from owning broadcast networks, first in radio and then in network television.1 From 1950 to 1979, law and regulation kept networks from owning cable channels and systems. These policies were largely justified by rhetorics of competition. This brief overview considers policies that kept the film, network television, and cable television industries separate.

Beginning in the 1920s, the Hollywood film industry was vertically integrated such that the major firms (studios) owned production facilities, distribution operations, and chains of theaters. The majors were Fox Film Corporation, Loews (which owned M-G-M), Paramount Pictures, RKO Radio Pictures, and Warner Bros.2 In 1938, with Keynesian economic theory in favor, this integration came under legal scrutiny in United States v. Paramount et al. The final decrees in that case, issued in 1948, forced the major studios to divest themselves of their theater chains but still allowed studios to control production and distribution of films. Their continued control over the market for theatrically released films allowed the major studios to act as gatekeepers: the majors decided whether a film from a minor studio, independent producer, or foreign producer would be distributed across the United States in mainstream theaters. Later, the major studios’ control over film distribution ensured that television networks would not distribute their own films by reediting serialized dramas into movies for theatrical release.3 The major studios’ lock on the market for distribution remained in place until neoliberal policies erased this separation between film and television.

As Michelle Hilmes (1990)4 demonstrated, the major studios had a profound interest in the emerging radio and television industries, which was blocked first by the Federal Radio Commission (FRC, established 1927) and then by the Federal Communications Commission (FCC, 1934). From 1938 to 1960, the FCC protected the market for ownership of television stations and networks in two ways. First, the FCC denied experimental licenses for television stations to major studios. This was important given legal precedents in the early days of radio: organizations that held experimental licenses retained their right to a broadcast frequency when commercial operations replaced experimentation. RCA and CBS could expect that experimental licenses for television stations in New York City or Los Angeles would automatically become commercial licenses in two of the most lucrative advertising markets. Second, from 1950 to 1969, the FCC discouraged experimentation in any form of television not based on radio, including ways to deliver films directly to television sets without network participation. This thwarted efforts by Paramount Picture’s Telemeter, Skiatron Corporation’s Subscriber-Vision, and Zenith’s Phonevision to generate a form of television that functioned as a home theater. In this way, the FCC supported RCA, which owned two radio networks and started developing a television technology in the late 1920s, and CBS, which owned one radio network and began developing its version of television in the late 1940s.

Like vertical integration in film, RCA’s duopoly came under legal scrutiny in 1938 when the FCC was chaired by James L. Fly, a supporter of Roosevelt’s New Deal and civil libertarian.5 Ordered to sell one network, RCA assembled its weaker properties into a new network, selling it to Alfred Noble in 1944. Dubbed ABC, the new network did relatively well in radio but had no preparation for television, which RCA and CBS were ready to launch. Committed to that launch, the FCC allowed RCA and CBS to broadcast radio programs simultaneously on radio and television. The policy was designed to allay the fears of advertisers reluctant to abandon radio for the more expensive medium of television. It also protected the investments of independent producers and network production units in successful radio programs while eliminating the need to create programs designed specifically for the new technology of television.

From 1960 to 1967, the FCC grappled with a second form of television: cable.6 The cable television industry was comprised of individual companies owning multiple cable systems in highly populated areas.7 These multiple system operators (MSOs) offered subscribing households a menu of television stations from distant markets and cable channels unconstrained by FCC rules on decency or network censorship. Sports and uncut movies were cable’s main attractions. Networks argued that those systems would siphon off their wealthier viewers, eventually forcing highly popular programming (like World Series baseball) to migrate from ‘free TV’ to ‘pay TV.’ The National Association of Broadcasters argued that local stations could be injured by the importation of stations carrying the same programs. The FCC passed regulations to protect local television stations, which directly protected the networks’ owned-and-operated stations (O&Os) and indirectly protected the networks themselves. These regulations included requiring cable systems to carry local broadcast stations and to ‘black out’ imported stations that duplicated the programming on a local station.

Whereas FCC policies regarding cable became more supportive of that industry between 1960 and 1979,8 the FCC still pursued regulatory regimes separating cable television and broadcast television. This was justified by competition: cable television and network television competed for viewers, which meant that viewers had more choices and were thus well served by having two television industries. During the period, however, neither form of television was universally available nor was cable universally affordable.

In all of this, the crucial word was competition. Allegedly, Hollywood studios, television networks, and cable MSOs all competed to attract viewers. That competition meant all three industries generated entertainment that appealed to every possible segment of the population. Ultimately, all of this competition was supposed to give audiences a vast menu of highly diverse media products. The mantra of competition and choice was repeated in news coverage, public relations campaigns, advertisements, entertainment programming, and trade publications. It was chanted by film studios, networks, cable MSOs, trade associations, and allied industries during hearings held by congressional panels, regulatory agencies, Supreme Court justices, and other governmental entities. This apparent competition provided an empirical basis for separating the film industry from the network television industry from the cable television industry.

Separate Industries and Shared Markets

In practice, however, matters were not so simple. Antitrust actions, legislation, and regulation allowed studios, networks, cable channels, and MSOs to intermingle in markets for television programming. Film studios could make television series or made-for-TV movies. Studios could sign co-production agreements with independent television producers. Networks and cable channels could license movies, television series, or made-for-TV films from studios. This disadvantaged independent television producers because they did not have the glamour, resources, expertise, track record, libraries, and clout of the studios.

Indeed, the studios had enough clout to create a hierarchy in which the emerging market for television programs in the 1950s was distinctly inferior to the market for films.9 Whereas Hollywood studios made films with big budgets and big stars for the big screen, the same studios made television series with small budgets, casting B-actors or unknowns, and recycling plots, props, sets, and stock footage. By renting sound stages and equipment to independent producers, the studios kept the independents’ production values low as well. Film’s superiority over television was reflected in the metonymic contrast of Hollywood and Burbank.

Trustbusters and regulators did tinker with the markets for television production and programming, trying to increase the number of producers and make markets more competitive.10 In the 1960s, the Justice Department investigated networks’ ownership of production units as a potential restraint on competition. Similarly, the FCC investigated the possibility that networks renewed series in which they had a financial interest in order to profit from licensing reruns.11 In 1971, both investigations found these practices unacceptable. The Anti-Trust Division ordered networks to sell production units and the FCC issued rules banning networks’ financial interest in programs and syndication. These and other actions reorganized the markets for television programming and production units such that the networks became gatekeepers. The networks decided which companies entered the market to pitch ideas, receive commissions, and produce series.12 The resulting market was an oligopoly whose buyers— ABC, CBS, and NBC—handpicked the sellers. In that stable oligopoly, the three networks routinely included film studios as major players. Networks often required independent producers to coproduce projects with studios. Without such connections, aspiring producers had a difficult time getting into the market.

The emergence of the cable television industry created new buyers for programming and movies. However, major advertisers were wary of the new industry, which meant relatively low ad revenues for cable channels. As a result, most cable channels in the 1960s through the 1970s ran some mixture of old movies, old television series, imported programs, and inexpensive made-for-cable dramas, talk shows, game shows, etc.13 The bright spots were sports programming and uncut movies, but censored versions of the latter ran on broadcast television before moving to cable. As a result, the market for cable programming was inferior to the market for broadcast television programming, with the film market superior to both. Still, in the cable market, studios licensed packages of films and television series to cable channels whereas independent television producers had another set of customers for old television series. Until 1971, even the networks could make money licensing programming to cable channels.

Deregulation and Industrial Integration

All of this began changing in 1980 as the Reagan administration took office, promising to eliminate onerous regulations and unleash the free market.14 Whereas FCC chairman Charles Ferris (1977–1981) had favored replacing regulation with competition by licensing more radio stations, President Reagan’s choice for chairman, Mark Fowler (1981–1987), favored repealing FCC regulations on radio, television, and cable. Fowler eliminated regulations that mandated people’s right to reply to ad hominem attacks, limited the amount of time sold to advertisers, required minimal amounts of nonentertainment programming, set technical standards, placed caps on the number of stations owned by a company, etc. Each subsequent FCC chairman pushed for further deregulation. In 1992, Congress began work on a bill to codify and further extend the deregulation of broadcasting, cable, and telephony. The Telecommunications Act of 1996, signed by President William Clinton, abolished all legal barriers that once separated those industries.15

In some sense, the Telecommunications Act simply recognized the fait accompli that started with the Reagan administration relaxation of antitrust restrictions and deregulation. In the entertainment-information sector, the Anti-Trust Division of the Department of Justice voided the Paramount decision in order to approve mergers and acquisitions fostering vertical or horizontal integration in each media industry.16 The FCC rewrote regulations to encourage increasing vertical and horizontal integration. When companies broke regulations that discouraged such integration, the FCC rewrote them after the fact.17 As a result, trans-industrial conglomeration became dominant in the 1980s and remained the dominant form in 2009.

The Dominant Model: the Trans-Industrial Media Conglomerate

These conglomerates usually organized their holdings in two ways. First, in each media industry, the conglomerates were vertically integrated. In network television, full vertical integration required ownership of a production company, distribution company, O&O station, and network. Conglomerates arranged their holdings so that they had vertical stacks in every medium of interest: film, broadcast television, cable television, recorded music, newspapers, etc. Within each level of these vertical stacks, conglomerates often acquired multiple units performing the same function, thereby becoming horizontally integrated in that function. In network television, full horizontal integration meant owning multiple production companies, distribution companies, O&Os, and networks. As neoliberals erased the rules that once separated media industries, and that limited or discouraged complete vertical and horizontal integration within each industry, companies enthusiastically began merging, acquiring, and integrating media operations. Under deregulation, a single company could operate in as many media industries as it liked. Within each industry, the firm could vertically and horizontally integrate its holdings. Companies once centered in a particular media industry restructured themselves as conglomerates whose holdings spanned multiple media industries—as trans-industrial media conglomerates within the entertainment-information sector of the economy.18

Perhaps the best-known trans-industrial media conglomerates were the Walt Disney Company, News Corporation, and Time Warner. Although each firm presented a slightly different pattern of holdings in the entertainment-information sector, all three owned vertically and horizontally integrated operations in film, network television, and cable television. All three were major players in the U.S. and global markets for movies and television. I will quickly sketch their holdings in film, network television, and cable television beginning with News Corporation, currently the largest media conglomerate and owned by Rupert Murdoch.19 News Corporation had operations in the United States, South America, Europe, Asia, Australia, and New Zealand. We will focus only on the U.S. operations, beginning with film.

In the United States, News Corporation owned the Twentieth Century Fox Film Corporation, Fox 2000 Pictures, Fox Searchlight Pictures, and Blue Sky Studios (animation). Film distribution was generally through Twentieth Century Fox Film Corporation. News Corporation did not own movie theaters. The company synergized its films, using Twentieth Century Fox Home Entertainment to repackage them as videos and DVDs, Fox Music to deal with soundtracks, and Twentieth Century Fox Licensing and Merchandising to promote them and earn secondary revenues. In film, then, News Corporation was vertically integrated in production and distribution, horizontally integrated in its ownership of four studios, and synergized through connections to other operations.

In television, News Corporation was vertically and horizontally integrated. The company owned three operations producing and distributing television programming: Twentieth Century Fox Television, Fox Television Studios, and Twentieth Television. Besides licensing some of its programming and films to other networks or cable channels, News Corporation ran its television programming on its Fox network and MyNetwork, which had both O&Os and affiliated stations. The Fox network owned seventeen O&Os; MyNetwork owned ten. Deregulation not only allowed News Corporation to own twenty-seven stations and two networks, but also to own two stations in each of nine markets: New York, Los Angeles, Chicago, Dallas, Houston, Orlando, Phoenix, Minneapolis, and Washington, DC. These so-called duopolies were affiliated with either the Fox network or MyNetwork. Thus, News Corporation achieved complete vertical integration in broadcast television in its ownership of television production, distribution, O&Os, and networks. News Corporation achieved horizontal integration in its ownership of multiple O&Os and networks. These achievements were intensified, first, by News Corporation’s duopolies— eighteen stations in nine markets—and then by each duopoly being split between the Fox network and MyNetwork.

For cable operations, News Corporation used its production and distribution arms to repackage films, recirculate broadcast programming, and generate cable programming. The company was horizontally integrated in the ownership of cable channels: Fox Business Network, Fox College Sports channel, Fox Movie Channel, Fox News Channel, Fox Reality Channel (which reran the company’s reality television series), Fox Regional Sports Networks, Fox Soccer Channel, FSN (for Fox Sports Network), FX channel (reruns and original series), SPEED (auto racing), and FUEL TV (extreme sports). News Corporation participated in one joint venture in the U.S., owning 67 percent of the National Geographic Channel.

By integrating its production and distribution operations in film and network television with its cable channels, News Corporation achieved vertical and horizontal integration as well as synergy. Supporting these operations and building more synergy were News Corporation’s Fox Music, Twentieth Century Fox Home Entertainment, and Twentieth Century Fox Licensing and Merchandising.

The general pattern of vertical and horizontal integration across News Corporation’s holdings in film, network television, and cable television was repeated in the organization of both the Walt Disney Company and Time Warner, although with variations.20 Like News Corporation, Disney and Time Warner had operations in film production and distribution. Disney and Time Warner made films under different studio brands, among them Disney’s Miramax and Hollywood Pictures as well as Time Warner’s Fine Line and Warner Bros. Pictures. However, the firms also manifested some interesting differences. In film, only Time Warner had achieved full vertical integration through Warner Bros. International Cinema, which owned or had interests in ninety multiplex theaters in Italy, Japan, and the United States.

In network television, Disney and Time Warner produced programming, using various brand names. Time Warner was a prolific producer of television series, many airing on networks owned by other companies. Both companies had distribution arms: Disney’s Buena Vista Television and Time Warner’s Warner Bros. Television. Each firm achieved vertical integration in television production and distribution as well as horizontal integration in production. However, their profiles in terms of stations and networks differed. Disney owned one major network (ABC) and ten O&Os. Time Warner and National Amusement’s CBS co-owned a minor network, CW. Time Warner had no O&Os. Thus, Disney was fully vertically integrated in production, distribution, and networking as well as horizontally integrated in production and O&Os. In contrast, Time Warner’s co-ownership of a minor network weakened its vertical integration and the firm achieved horizontal integration only in television production.

The particular ways in which Disney, Time Warner, and News Corporation achieved vertical and horizontal integration in network television varied but the overall pattern of such integration remained across the three firms.

A consideration of Disney’s and Time Warner’s cable holdings may suggest some reasons for their differences in ownership of stations and networks. Both Disney and Time Warner owned multiple cable channels but the ownership patterns differed. Time Warner owned the premier pay channels HBO and Cinemax; Disney had none. Time Warner’s basic cable channels included six acquired from Ted Turner (Cartoon Network, TBS, TNT, Turner Classic Movies, and the news channels CNN and HLN) as well as truTV (previously the co-owned Court TV) and Boomerang (old cartoons). In contrast, Disney’s basic channels included both wholly owned operations (like the Disney Channel, Toon Disney, ABC Family, and SOAPnet) as well as joint ventures (A&E, Biography, the ESPN channels, Lifetime, Lifetime Movie Network, and History).21 Where Disney never ventured into MSO ownership, Time Warner had long owned the second largest cable system, which was spun off as Time Warner Cable in 2009. Although legally separate, Time Warner Cable’s name suggested that the MSO was still committed to carrying Time Warner channels. In cable television, then, the overall pattern observed in News Corporation of horizontal integration through ownership of multiple channels and multiple production units as well as vertical integration through ownership of production, distribution, and channels recurred. Again, all three firms had divisions that supported corporate synergy ranging from Disney’s book publishing to Time Warner’s comic books, but always with a division dedicated to music, home entertainment, and licensing and merchandising.

These brief sketches of News Corporation, Time Warner, and the Walt Disney Company show a repeated tendency for each firm to vertically integrate production and distribution in film and television programming. Each company owned multiple production units making films or television programs, thereby horizontally integrating its holdings in production. In broadcast television, News Corporation and Disney capped off, so to speak, their vertical integration through the ownership of stations and networks, although each firm took a different approach. Time Warner provided an interesting contrast. Its ownership of movie theaters made it fully vertically integrated in film. In cable, Time Warner’s apparent connections to Time Warner Cable suggested a continuing relationship that aped full vertical integration in cable. Lacking O&Os and a major network, Time Warner seemed weaker than Disney or News Corporation in television. Regardless of the individual firm’s strengths or weaknesses, however, the pattern of vertical and horizontal integration across media industries held for all three companies.

Two major players remained in film, network television, and cable in the United States: GE, which owned NBC-U, and National Amusements, which owned Viacom and CBS. The ultimate owners of NBC-U, Viacom, and CBS were not typically linked to their holdings in newspaper coverage of these media operations. Because of the potential for National Amusements and GE to be overlooked, and because they both follow and depart from the pattern of trans-industrial conglomeration, each company is profiled separately.

National Amusements, Viacom, and Cbs: Lines of Control22

Like News Corporation, National Amusements was owned by a person, Sumner Redstone. But unlike News Corporation, National Amusements allowed none of its stock to be traded publicly. Thus, National Amusements filed no statements with the Securities Exchange Commission (SEC) reporting its primary business in film exhibition. However, in 1987, National Amusements acquired the majority of voting stock in Viacom, which continued to be publicly traded and to file financial reports with the SEC (e.g., 10k, 10q, 8k, etc). These occasionally provided information about Redstone or National Amusements. Redstone did not integrate Viacom (acquired 1978) or CBS (acquired 2000) into National Amusements, instead using National Amusements to exercise ultimate control over the acquisitions.

Redstone integrated CBS into Viacom, building a trans-industrial media conglomerate like News Corporation, Disney, and Time Warner. Then, in 2005, he split Viacom into the new Viacom and CBS, each publicly traded. In 2009, he sold much of his nonvoting stock in Viacom and CBS, as well as some theaters, in order to eliminate corporate debts.23 As 10ks for the separated Viacom and CBS noted, Redstone personally controlled them through National Amusements and could make decisions that were not in their best interests.24 These lines of control allowed National Amusements to coordinate its operations with those of Viacom and CBS thus replicating the structure of a single trans-industrial media conglomerate. To illustrate this, I will trace that structure starting with holdings in film.

Movie exhibition was National Amusement’s main business as it owned “1,500 movie screens in the U.S., U.K., Latin America, and Russia.”25 These theaters, organized into chains, provided exhibition outlets for films made by Viacom’s film production and distribution units. In 10k filings, Viacom described itself as financing, producing, and distributing “filmed entertainment”26 through six operations: Paramount Pictures, Paramount Vantage (independent-style films), Paramount Classics, MTV Films, Nickelodeon Films, and Paramount Home Entertainment. Although Nickelodeon Films had company credits for such Nickelodeon television series as SpongeBob SquarePants, it was not clear if the rest of these units produced television programming. Whereas Viacom had ingested and then rid itself of the once-independent studio DreamWorks (live action operations, 2006–2008), Viacom retained distribution rights and ancillary rights for some co-productions made with DreamWorks. Viacom repackaged its own films through Paramount Home Entertainment, thereby integrating film production, distribution, and repackaging.

By adding National Amusements’ theater chains to Viacom’s film and home entertainment operations, National Amusements controlled sufficient properties in film production, distribution, exhibition, and repackaging to be fully vertically integrated. Horizontal integration was achieved through National Amusements’ ownership of multiple theater chains and its control of Viacom’s multiple operations in film production. Taken together, direct ownership and indirect control allowed National Amusements to act like a vertically and horizontally integrated film conglomerate. A similar outcome with respect to network and cable television was evident in National Amusements’ control over and separation of Viacom and CBS.

Prior to the separation, Viacom was vertically and horizontally integrated in network and cable television. In the split, Viacom retained operations in film (as noted earlier), its film library, and most of its basic cable channels. CBS was given operations in television production, networks, O&Os, pay cable channels, and two basic channels as well as the television library. This way of splitting operations encouraged interdependence between Viacom and CBS. Viacom had films that CBS needed to circulate on its pay cable channels (Showtime, The Movie Channel, Flix, Showtime Pay Per View, etc.), CBS network, and co-owned CW network. CBS had television programs that Viacom could use on its basic channels including BET, Spike, Nick at Nite, TV Land, etc.

Other contractual relations encouraged synergy between Viacom and CBS. CBS rented production space from Viacom on the Paramount lot for CBS Television Services (previously Paramount Television). CBS’s television series were repackaged onto DVDs by Viacom’s Paramount Home Entertainment. CBS and Viacom advertised their operations and products on each other’s operations and products. Viacom and CBS were also connected by the Star Trek franchises. In 2009, Viacom rebooted the Star Trek film franchise using characters from Star Trek (1966–1969) that were owned by CBS, which retained ownership of the five Star Trek television series.27 Through National Amusements’ control over both firms, National Amusements had the option of synergizing CBS’s and Viacom’s operations while maintaining CBS and Viacom as independent brand names.28

In terms of horizontal and vertical integration, the split left Viacom and CBS individually weaker.29 Viacom retained horizontal integration in basic cable channels but lost horizontal and vertical integration in pay cable and network television to CBS. In basic cable, CBS got the CBS College Sports channel and 90 percent of the Smithsonian Channel, resulting in weak horizontal integration in basic cable and weak vertical integration in cable channels overall. CBS fared considerably better in network television: CBS Network, CBS Television Studios, CBS Television Distribution, and thirty O&Os as well as half of the CW network. Twenty-one O&Os affiliated with the CBS network, the remainder with CW.

Individually, then, National Amusements, Viacom, and CBS appeared relatively weak when compared to News Corporation, Disney, or Time Warner. However, National Amusements’ control over Viacom and CBS was strong enough to reshuffle the holdings of the old Viacom against its obvious self-interest and then to tie together two seemingly independent firms through relations of supply and demand, synergy, and contracts. In essence, National Amusements’ control of Viacom and CBS could be exerted to ensure that their operations complimented, supported, and extended those of National Amusements. The result was a peculiar arrangement: two firms that appeared independent but were puppets of National Amusements. As long as National Amusements perceived that arrangement to serve its self-interest, the company would probably ensure that Viacom and CBS act like they were fully integrated into National Amusements. That gave National Amusements parity with News Corporation, Disney, and Time Warner.

NBC Universal: Mirroring the Giants

Whereas NBC-U mirrored the organizational structure of News Corporation, Disney, and Time Warner, it differed from them and from National Amusements in that NBC-U was owned by two much larger conglomerates, GE (80 percent) and Vivendi, SA (20 percent). Here I trace NBC-U’s structure as a trans-industrial media conglomerate and, in the subsequent section, contextualize NBC-U in terms of its majority owner.30 I turn next to NBC-U’s holdings in film, broadcast television, and cable television.

In broadcast television, NBC-U owned NBC Universal Television Studios, NBC Universal Television Distribution, NBC Entertainment (developed and scheduled series), NBC News, and NBC Sports, which had lucrative deals with the International Olympic Committee for games in 2008, 2010, and 2012. In networking, NBC-U owned both NBC and Telemundo, which targeted U.S. Spanish speakers. Of NBC-U’s twenty-six O&Os, ten affiliated with NBC and sixteen with Telemundo. In five markets, NBC-U had duopolies à la News Corporation: NBC-U owned one NBC and one Telemundo station in New York City, Los Angeles, Chicago, San Jose/San Francisco, and Dallas/Fort Worth. As a result, NBC-U vertically integrated television production, distribution, station ownership, and networks, and horizontally integrated networks and stations.

Prior to the Universal acquisition, NBC launched two cable channels: CNBC, specializing in consumer-oriented news, and MSNBC,31 which was affiliated with NBC News. NBC also owned Mun2TV, which was connected to Telemundo. These moves suggested plans to synergize network operations and cable channels. With the Universal acquisition, the NBC gained channels like USA (men) and SciFi (science fiction). The new NBC-U bought and launched new channels as well. The result was an impressive lineup that included Bravo (arts),32 Oxygen (women), Sleuth (mysteries), and UniHD showcasing Universal Studios movies and exploiting its film library. NBC also acquired Universal’s operations in television production and distribution. The acquisition increased NBC’s horizontal integration in network and cable television. The Universal acquisition also put NBC in the movie business. Film production operations included Universal Pictures, Focus Features (independent-style), and Illumination Entertainment (family-oriented) with distribution done in-house. Universal Home Entertainment produced straight-to-DVD materials and repackaged both films and television series. Overall, NBC-U achieved varying degrees of vertical and horizontal integration in film, networking, and cable.

NBC-U exploited the synergistic possibilities inherent in its organizational structure. For example, sports coverage of the 2008 Beijing Olympics was spread across NBC, CNBC, MSNBC, Oxygen, Telemundo, UniHD, and USA. Universal Studios set the second installment in the Mummy franchise, The Mummy: Tomb of the Dragon Emperor (Rob Cohen, 2008), in China. NBC-U cross-promoted Dragon Emperor and the Beijing Olympics in an extended advertisement intercutting clips from the movie with clips imagining the Beijing Olympics. The ad ran across NBC-U networks and channels as well as on its various Internet sites.

NBC-U’s organizational structure closely resembled that of News Corporation, Disney, Time Warner, and National Amusements in the film, network television, and cable television industries. Each entity was vertically integrated in film production, distribution, and repackaging. National Amusements and Time Warner achieved full vertical integration through the ownership of movie theaters. Each entity was vertically integrated in broadcast television production, distribution, repackaging shows, and network operation. Only Time Warner lacked horizontal integration in O& National Amusements, NBC-U, and News Corporation had so-called duopoly O&Os. In television networks, NBC-U, News Corporation, and National Amusements were horizontally integrated, with National Amusements and Time Warner co-owning a network. Only Time Warner had close ties to a major cable MSO, Time Warner Cable.

Each of these five entities was a trans-industrial conglomerate, transcending the old borders that separated film studios from television networks and network television from cable television. Each entity showed some degree of vertical and horizontal integration in film, network television, and cable. Each synergized operations in production, distribution, exhibition/access, repackaging, etc., for each medium. Of course, there were individual variations in the particular array of operations owned by News Corporation, Disney, Time Warner, National Amusements, or NBC-U. But those variations still fell into a pattern of vertical and horizontal integration within film, network television, and cable television. Further, each entity used its trans-industrial media holdings to build synergy across media industries.

Similarly, variations in ownership arrangements and type of ultimate owner had little impact on the form of conglomeration that each entity enacted. News Corporation, Disney, and Time Warner integrated their media operations under their respective names. National Amusements preferred to control its media operations rather than assimilate them. NBC-U was owned by GE and Vivendi. Despite these variations, NBC-U, National Amusements, News Corporation, Disney, and Time Warner were all organized as trans-industrial media conglomerates.

As such, News Corporation, Disney, Time Warner, National Amusements, and NBC-U were clearly powerful companies that synergized their holdings across three important U.S. media industries. When we add in their global operations in those three industries as well as their other vertically and horizontally integrated operations—which variously included music, book publishing, magazines, newspapers, electronic games, websites, online services, theme parks, search engines, e-tail and retail outlets, radio, theatrical/live performances, consumer goods, satellites, mobile communications, sports, etc.—we realize that these five entities were truly giants in the entertainment-information sector of the global economy.

General Electric: Dwarfing the Giants

Whereas NBC-U was among those giants, its majority owner, GE, dwarfed them all. Besides its vertically and horizontally integrated holdings across the global media, GE ran extensive operations in research and development, which combined to form an invention factory. The company was a major force in world markets for energy infrastructure, technology infrastructure, consumer and industrial manufacturing and services, and capital and finance.33 I will briefly describe each of GE’s four nonmedia segments.

Under energy infrastructure, GE provided the equipment, services, and systems necessary to produce energy from oil, gas, coal, steam, wind, nuclear reactions, and the sun. Also included in energy infrastructure were technologies, products, and processes required to treat water so that it could be potable (including desalination), used in industrial applications (like mining), and reclaimed.

In its annual financial statement to the SEC (10k filing), GE described itself as “one of world’s leading providers of essential technologies to developed, developing, and emerging countries.”34 The company identified transportation, “enterprise solutions,” and health care as comprising its operations in technology infrastructure. Transportation dealt with specialized engines for land-based vehicles, products, systems, management services, and other services needed in railroads, transit systems, and in the oil and gas, mining, and marine industries. For purposes of brevity, I include GE’s aviation operations in that category. Aviation operations focused on specialized engines, sensors, systems products, and services used in commercial and military aviation. Maintenance, repair, and rebuilding engines were themes in both aviation and transportation.

Under enterprise solutions, GE addressed issues in security and productivity including automation, computing, identification, nonintrusive testing, monitoring, sensing, communication, and prevention of unauthorized intrusion, fire, or power failure. Just as aviation and transportation seemed to have some synergy so too did enterprise solutions and health care. The health-care operation involved nonintrusive medical imaging technologies, patient monitoring systems, information systems, research and manufacturing of drugs, filtration systems, cellular technologies, equipment maintenance and services, etc. Filtration systems seemed relevant to GE’s expertise in water treatment.

GE’s third segment focused on consumer and industrial manufacturing and services. This segment manufactured equipment and systems to manage electrical power as well as types of electrical lights and related equipment for business and residential applications. For consumers, GE marketed five brands of household appliances, some manufactured by GE and others outsourced. These products included refrigerators, gas stoves, and water filtration systems. GE’s Monogram appliances were featured in NBC-U’s reality series Top Chef.

GE’s fourth segment focused on capital and financial services. In another bit of corporate synergy, financial services loaned money to companies or governmental entities buying or leasing equipment from GE’s infrastructural operations. GE also participated in the global market for commercial real estate, making equity investments in real estate and loans for acquisitions and renovations. GE provided financial services to retailers including private label credit cards and loans. For individual consumers, GE offered bank cards, mortgages, car loans and leases, debt consolidation, personal loans, home equity loans, and savings instruments. Conceivably, an individual could buy a house using a GE mortgage, take out a GE home equity loan to remodel the kitchen, purchase GE appliances using a GE credit card, and, if misfortune struck, have GE consolidate the debt.

The sheer scale and integration of GE’s operations dwarfed those of News Corporation, Disney, Time Warner, and National Amusements. But, like these media conglomerates, GE vertically integrated its segments in energy infrastructure, technology infrastructure, consumer and industrial manufacturing and services so that each offered equipment, systems, services, maintenance, and management. Unlike the media conglomerates that spanned industries, GE’s operations spanned the energy, technology, manufacturing, and finance sectors of the economy. That made GE a trans-sectoral conglomerate in which a trans-industrial media conglomerate was embedded.

Too Big for Reform?

As we look back at the five major entities that control U.S. network television and that were among the proverbial ‘heavy hitters’ in U.S. film and cable television, we must ask ourselves: are Disney, GE, National Amusements, News Corporation, and Time Warner too big for reform? Our main precedent, the Keynesian reforms of 1938, which ultimately forced the studios to sell their theaters and RCA to sell one radio network, addressed companies that were considerably simpler than these five conglomerates. To address trans-industrial media conglomeration in Disney, NBC-U, National Amusements, News Corporation, and Time Warner, a modern Keynesian would need to disentangle vertically and horizontally integrated operations within individual media industries and across multiple industries. Addressing GE’s trans-sectoral integration and concentration would be yet more complicated given GE’s historic place in the center of the U.S. military-industrial complex.

However, recent developments regarding NBC-U are cause for both concern and hope. In November 2009, rumors circulated that GE would sell NBC-U to Comcast, the top ranked cable MSO in the U.S.35 On December 3, GE and Comcast announced a joint venture merging Comcast’s cable channels and internet properties36 into NBC-U.37 The resulting company, called NBC-U, would be owned 51 percent by Comcast and 49 percent by GE. The proposed joint venture would give Comcast full vertical integration in network television; partial vertical integration in film; horizontal integration in station ownership; and intensified horizontal integration in cable channel ownership. Comcast’s cable systems were excluded from the deal but Comcast and GE shared a vested interest in giving the new NBC-U’s cable channels privileged access to Comcast’s cable systems. With that shared interest and Comcast’s 51 percent of NBC-U, lines of control would connect NBC-U and Comcast’s multiple cable systems in a manner reminiscent of National Amusement’s ownership of movie theater chains and control over film production and distribution.

Whereas these developments are worrisome indeed, governmental responses suggest that the deal will not automatically be approved using neoliberal justifications. In the House of Representatives, Maurice Hinchey (D-New York) and Herb Kohl (D-Wisconsin) were among those criticizing the proposed joint venture. Kohl stated that “(a)ntitrust regulators must ensure that all content providers are treated fairly on the Comcast platform.”38 Whereas the sentiment was a welcome change from the neo-liberal belief that companies should do as they wish, it did not address the larger issue: most of those content providers were owned by trans-industrial media conglomerates. Hinchey also attacked the proposal, mirroring Kohl’s concern that Comcast’s NBC-U would block content providers that it did not own.39 Hinchey also raised the issue of trans-industrial media conglomeration:

Today, just five companies own all of the country’s broadcast networks, 90 percent of the top 50 cable networks, produce three-quarters of all prime time programming, and control 70 percent of the prime time television market share. These same companies … also own over 85 percent of the top 20 Internet news sites … Further consolidation would shortchange the wide array of ideas and content needed to keep the American people informed about their elected officials. This acquisition must be stopped.40

With Hinchey heading the congressional caucus on the Future of American Media, his words may signal a shift towards more critical thinking in some parts of Congress as Senator John Kerry (D-Massachusetts) and others have promised close scrutiny.41 Speculation that the proposed merger would be delayed for a year due to potential investigations by Congress, the Federal Trade Commission, Anti-Trust Division of the Department of Justice, and FCC has been matched by speculation that GE and Comcast will make concessions in order to achieve their goals and that most of their goals will be met.42

Neoliberalism’s Legacy?

The trans-industrial media conglomerate may well be neoliberalism’s legacy for the entertainment-information sector. This form of conglomeration has been achieved by companies like Disney, News Corporation, and Time Warner through the assimilation of other firms into themselves. National Amusements produces the same effects by combining owned operations with controlled operations. Comcast currently seeks to emulate that approach in contrast to GE, which embedded NBC-U within itself. Regardless of format, the achievement of trans-industrial conglomeration by these few ultimate owners creates an impression that the conglomerates are so big that nothing can be done to change them. That impression was reinforced by neoliberal ideology, which attributed these behemoths to the infallible wisdom of the market, and neoliberal policies that encouraged firms to vertically and horizontally integrate across media industries.

But, as reaction to the Comcast/GE joint proposal suggests, that impression may not be entirely accurate. The antimerger discourse is certainly a break from the Reagan-through-Bush past. Like the Obama administration thus far, this counter-merger discourse suggests that the liberals and progressives, who buoyed Obama’s candidacy, may regain some measure of influence in public action, policy, and discourse. After nearly three decades of neoliberal dominance, neoliberals might find that surprising.

But surprising events have happened in the United States and in every corner of the globe. Following Gramsci, I conclude that research on neo-liberalism and conglomeration provides reason for pessimism. Again, in Gramsci’s footsteps, I also conclude that the remarkable events of Obama’s election, the congressional efforts to legislate economic interventions, including health-care reform, and the questions rising regarding the GE-Comcast merger are reasons for optimism. Let us hope that pessimism will inform optimism in a manner that produces progressive action.

Notes

1  Apparently, the federal government did not perceive the Radio Corporation of America’s creation of RKO problematic. In 1928, RCA bought a very minor studio, the Film Booking Office of America, from Joseph P. Kennedy and also purchased the Keith-Albee-Orpheum theater chain. Thus, RCA owned a major studio, distribution operation, and theater chain, becoming fully integrated vertically in film. This gave RCA an outlet for its Photophone technology, which projected film with sound. RCA’s system had been blocked by AT&T’s Western Electric system, which was more widely adopted (Danielian 1939). By 1940, RCA had removed itself from RKO.

2  The minor studios were United Artists, Columbia Pictures, and Universal Pictures.

3  The Walt Disney Company was a very minor studio in the 1950s and one of the first to make television programs. Disney produced an anthology program for ABC’s prime-time schedule (variously titled including The Wonderful World of Disney) and an after-school series, The Mickey Mouse Club. Both featured serialized dramas. Disney repackaged some of them and released them as films (e.g., Davy Crockett) through its distribution operation, Buena Vista. Although networks owned some of their serialized programming, reediting for theatrical release and subsequent theater release blocked as long as the studios controlled film distribution.

4  Hilmes, 1990.

5  Barnouw, 1990.

6  Mullens, 2008.

7  This form of cable television replaced Community Antenna Television (CATV) systems, which served remote areas where television signals were hard to get. CATV systems were mom-and-pop businesses that captured broadcast signals and delivered them by wire to a small number of households.

8  Mullens, 2008.

9  Meehan, 2008.

10  Cantor and Cantor, 1992.

11  The practice was called syndication and involved licensing a program to individual stations on a market-by-market basis. Until the FCC’s rule was in place, networks and stations agreed that a series needed five years’ worth of episodes to go into syndication.

12  Gitlin, 1983.

13  Meehan, 1984.

14  McChesney, 1999.

15  Blevins, 2007.

16  Meehan, 1991; Wasko, 1995.

17  National Amusement’s purchase of CBS for Viacom led the FCC to change rules limiting companies to owning one network and capping the percentage of audience that a company’s O&Os could reach at 35 percent. This allowed Viacom to own the CBS and UPN networks and to simply combine CBS’s O&Os with Viacom’s O&Os.

18  Bettig and Hall, 2003; Meehan, 2005; Kunz, 2007.

19  All information on News Corporation is taken from its 10k filing for 2008 (News Corporation 2009a) and its Annual Report 2009 (News Corporation 2009b).

20  Information on Disney was taken from its 10k filing for 2008 (Walt Disney Company 2009a) and Disney Facts 2008 (Walt Disney Company 2009b). Information on Time Warner originated in its 10k filing for 2008 (Time Warner 2009a) and its Annual Report 2008 (Time Warner 2009b).

21  ESPN channels were owned by Disney (80 percent) and Hearst Corporation (20 percent) as were the two Lifetime channels (50–50 percent). History and Biography were split between GE, Hearst, and Disney (37.5 percent each). A&E, Biography, History, Lifetime, and the Lifetime Movie Network were subsumed under A&E Television Networks in August 2009 (Walt Disney Company 2009).

22  Information regarding the three firms’ structure and alliances was taken from National Amusements, 2009; CBS 2006, 2009; Viacom, 2006, 2009.

23  Meg and Eller, 2009.

24  CBS, 2006; Viacom, 2006.

25  National Amusements, 2009.

26  Viacom, 2009.

27  The film was Star Trek (2009), directed by J.J. Abrams. The five television series were Star Trek (1966–1969); Star Trek: The Next Generation (1987– 1994); Star Trek: Deep Space Nine (1993–1999); Star Trek: Voyager (1995– 2001); and Star Trek: Enterprise (2001–2005).

28  Kunz, 2009.

29  Flint, 2009.

30  All information on NBC-U was taken from GE’s 10k filing and annual report (GE 2009 a, 2009b) as well as from NBC-U web pages on its film and television operations (respectively, NBC Universal 2009a, 2009b).

31  MSNBC was briefly co-owned with software giant Microsoft.

32  Bravo was repositioned as a reality series channel, with many series focused on strife at work: The Restaurant (chef versus backer), Blow Out (hair stylists), Work Out (personal trainers), and Flipping Out (housing speculators).

33  All percentages are rounded off and so will not add up to 100 percent.

34  GE, 2009, p. 5.

35  According to the National Cable and Telecommunications Association (2009), an industry trade organization, the top three MSOs were: Comcast (23,891,000 subscribers), Time Warner Cable (13,048,000), and Cox Communications (5,316,100).

36  These included, respectively, E!, Style, Golf, etc., and Fandango, iVillage, Daily Candy, etc.

37  Goldman and Pepitone, 2009; Comcast, 2009.

38  Goldman and Pepitone, 2009.

39  Hinchey, 2009

40  Ibid.

41  Tessler, 2009.

42  Cf. Bartash, 2009; Kang, 2009; Shields, 2009.

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