Media Conglomerates and Merger of

Traditional Media with Interactive

Media: The Case study of MSNBC

Lecture # 31
Media Conglomerate

A media conglomerate, media group or

media institution is a company that owns
large numbers of companies in various mass
media such as television, radio, publishing,
movies, and the Internet.

Media conglomerates strive for policies

that facilitate their control of the markets
around the world.
The World’s 10 Largest Media
Conglomerates
• Bertelsmann SE & Co. KGaA
• Gannett Company Inc.
• CBS Corporation
• British Sky Broadcasting Group Plc
• Liberty Media
• News Corporation
• Viacom
• Time Warner Inc.
• The Walt Disney Company
• Comcast Corporation
Bertelsmann SE & Co. KGaA

• German media giant

• Die flagship media company in Europe makes its name with

assets that include the RTL Group, one of the biggest
television broadcasters in Europe

• Gruner + Jahr, the biggest magazine publisher in Europe

• Random House, the biggest book publisher in the world.

Gannett Company Inc
• Gannett makes its name in the newspaper business with
ownership of USA Today, the country’s second largest
publication by circulation,
• many other publications: such as, the Detroit Free Press
and The Indianapolis Star
• Gannett also owns over 20 local television stations with
various NBC, CBS and ABC affiliates owned in different
states.
• Online, Gannett maintains ownership of Cars.com and a 50%
stake in Career Builder.
CBS Corporation
• spinning off into its own company from Viacom in 2006

• CBS has mainly controlled the network television and radio

broadcasting side of the business.

• CBS owns a 50% stake in the CW network

• it fully owns Showtime, CBS Radio and Simon & Schuster, one of
the big four of print publishers

• CBS also owns its own sports network.

British Sky Broadcasting Group

• Sky is 40% owned by 21st Century Fox, has over 10 million

subscribers in the U.K., making it the largest satellite broadcasting
company in the country

• English Premier League with Sky Sports

• Sky shows many of the U.S.’s most popular shows on its flagship
channel, Sky 1, such as “The Simpsons” and “24,” and also offers
broadband internet service
Liberty Media
• media big boys
• American mass media
• Atlanta Braves
• Overture Films
• MacNeil/Lehrer Productions
• Court TV (now Court TV)
• Starz Media
• DirecTV Sports Networks: Owners of FSN Pittsburgh,
FSN Rocky Mountain/FSN Utah, and FSN Northwest
• FUN Technologies, including Fanball
• Overture Films
• Starz Entertainment (including Starz and Encore)
News Corporation (Rupert Murdock)

• News Corporation has been masterful in utilizing its various

properties for cross-promotional purposes, and at using its
media power to curry influence with public officials
worldwide.

• News Corporation can also use its U.S. Fox television

network to provide programming for its nascent satellite
ventures. News Corporation is spending billions of dollars to
establish these systems around the world.
 Viacom
• Viacom's growth strategy is twofold. First, it is implementing an aggressive
policy of using company-wide cross-promotions to improve sales.

• Viacom's two main weapons are Nickelodeon and MTV.

• Nickelodeon has been a global powerhouse, expanding to every continent but

Antarctica in 1996 and 1997 and offering programming in several languages.

• It is already a world leader in children's television, reaching 90 million TV

households in 70 countries

• MTV is the preeminent global music television channel, available in 250

million homes worldwide and in scores of nations.
Time Warner Inc.

• Time Warner was formed in 1989 through the merger of Time

Inc. and Warner Communications.

• Time Warner is moving toward being a fully global company, with

over 200 subsidiaries worldwide.

• The Time Warner strategy is to merge the former Turner global

channels--CNN and TNT/Cartoon Channel--with their HBO
International and recently launched Warner channels to make a
four-pronged assault on the global market.
Continued…

• HBO International has already established itself as

the leading subscription TV channel in the world; it has
a family of pay channels and is available in over 35
countries.
• CNN, is also established as the premier global
television news channel, beamed via ten satellites to
over 200 nations and 90 million subscribers.
THE WALT DISNEY COMPANY
• Disney is the closest challenger to
Time Warner for the status of
world's largest media
firm. Historically, Disney has been
strong in entertainment and
animation, two areas that do well in
the global market.
• Its first order of business is to
expand the children- and family-
oriented Disney Channel into a
global force, capitalizing upon the
enormous Disney resources.
• Disney has "two horses to ride in foreign markets, not
just one."

• ESPN International dominates televised sport,

broadcasting on a 24-hour basis in 21 languages to
over 165 countries. It reaches the one desirable
audience that had eluded Disney in the past: young,
single, middle-class men. "Our plan is to think globally
but to customize locally,"
Comcast Corporation
• Comcast is top dog amongst media conglomerates in 2013

• Comcast received its biggest boost in trying to rise to no. 1

in taking over NBC Universal in 2010

• Comcast also does battle with Disney on the movie and

theme park with Universal Studios.
Mergers

• A merger transaction occurs when two companies

combine together to make one company and the
newly formed company owns the assets and
liabilities of both the companies.
 AOL/Time Warner

In 2001, media giant Time Warner consolidated with American Online

(AOL), the Internet and email provider for a whopping $111 billion. It was
considered the combining of the best of both worlds: print and electronic,
together at last!

But the synergy of these two dynamically different companies never

occurred. The dot-com bust, and the decline of dial-up Internet access
(which AOL refused to give up) spelled disaster for the new company.

After Time Warner’s stock dropped to 80%. the CEO of Time Warner,
Jeff Bewkes, Embarrassingly announced that the marriage of AOL and
Time Warner was dissolved.
 VODAFONE/MANNESMANN
February 2000 announcement that Vodafone, a UK based wireless
telephone Carrier, would merge with Mannesmann, a German
telecommunication Company,
At a cost of $190 billion, Thus making it the largest
media/telecommunication
Merger to date. The new firm, which will retain the Vodafone name, is
going to be a truly global player, with 42.4 million mobile-telephone
customers spread over
25 countries, including the U.S., Germany, Britain and Italy.
DISNEY/LUCASFILM

October 30, 2012 – Continuing its

strategy of delivering exceptional
creative content to audiences around
the world, The Walt Disney Company
(NYSE: DIS) has agreed to acquire
Lucasfilm Ltd. in a stock and cash
transaction.
Global media convergence

• Convergence is the window of opportunity

for traditional media to align itself with technologies of the
21st century. The digitization of media and information
technology and the ensuing transformation of communication
media are major contributors to convergence (Gershon 2000;
Fidler 1997).
Theoretical Focus

• Rogers (1995) seminal work “Diffusion of Innovations” has

been used in numerous industries as a theoretical foundation
to examine how new innovations are adopted.
Media historians and scholars have noted that
each medium builds and adapts to the one that
precedes it. Radio was considered a threat to
newspapers, television to its predecessors,
cable was to unseat television, and now satellite
and the Internet hover as technological unrest
for their predecessors.
 Seven Observations of
Convergence

• communication,
• commitment,
• cooperation,
• compensation
• culture,
• competition
• customer
Issues in global media convergence

The rapid pace of technological advances, including the shift

from voice to data, from wireline to wireless, and from copper
to fiber is redefining the parameters of the
telecommunications and media markets. As these changes
dramatically transform the marketplace, there is a growing
consensus that existing laws and regulations be reexamined to
address this transformation.
…..
• Concentration of media ownership

• Commercially driven, ultra-powerful mass market media is

primarily loyal to sponsors, i.e. advertisers and government
rather than to the public interest.

• Only a few companies representing the interests of a

minority elite control the public airwaves.
…….
• Healthy, market-based competition is absent, leading to
slower innovation and increased prices

• Freedom of the press and editorial independence

When Mergers and Acquisitions Fail
• Increased competition resulting in faulty
assumption that increased size makes a better
company.

• Often the combining of two companies creates

problems that no one can foresee and later not
handle.

• This leads to elimination of staff and operations

and potential for bankruptcy.
Why Mergers and Acquisitions Fail
• Unrealistic expectation and not having a compelling
strategic foundation.

• The acquiring company later discovers that the intended

acquisition may not accomplish the desired objectives.

• Bad post merger planning and integration strategy.

• In order to finance a merger/acquisition some

companies take huge amounts of loans which, in case of
poor performance, cannot be returned.
 MSNBC
- This cable and online news channel was launched in
1996, which is jointly owned by Microsoft and General
Electric, the parent company of NBC.
• MSNBC.com is the leading news site on the web with
12.3 million unique visitors.
• It provides 24 hour news and information content on
both cable television and the web.
• Visitors can view segments, participate in audience jury
vote or watch the the MSNBC cable news channel live.
• Strategic alliance with The Washington Post allows
MSNBC.com to also post print stories from the
September 2001
Washington Post and Newsweek on
Chapter 14: Media Transformation
its site. 29
 Exhibit 14-4: MSNBC Home Page

September 2001 Chapter 14: Media Transformation 30