Political Economy of the global media business: Why corporate interests shape the news

ICOM 816 Communication & Political Economy

Sebastian Plappert

Political Economy of the global media business:

Why corporate interests shape the news.

In traditional liberal thinking the press operates as “the people's watchdog” who critically evaluates political decisions (Hudson 1999). Thereby, the media has to be organised by private citizens or organisations independent of government censorship and control (Pasley 2001). As long as government intervention is prevented, the free press will guarantee the free flow of information and ideas (Martin 2001). Since democracies build upon “popular sovereignty” the citizens as the ultimate decision makers have to rely on public access to information in order to make sound political choices (Meiklejohn 1960, pp. 8-28). Following conventional wisdom, the government and the private media are by nature in conflict with one another, and therefore, public interest is served best by letting the balancing forces of the market regulate the media system (Lichtenberg 1987). As a consequence “the communication system has emerged as a central area for profit making in modern capitalist societies” (McChesney & Schiller 2003, p. 1).

Much has been written about media corporations growing in size and reach, but since theoretical framework and findings correlate with each other, there is a wide range of research from various perspectives (Wasko 2005). Whereas an array of authors perceives these developments as unavoidable for the media operating in an era of globalisation (Bauman 2000; Stiglitz 2002; Gledhill, 2004), others point to the dangers for democracy and call for public interference (Schiller 1981; Parenti 1993; Barnouw & Gitlin 1998; Bagdikian 2000; McChesney 2000a, 2000b, 2001; Herman and Chomsky 2002). Closely connected to critical and Marxian theory (Murdock & Golding 1979), a political economy approach has to consider “the social relations, particularly the power relations, that mutually constitute the production, distribution, and consumption of resources” (Mosco 1996, p. 25). Accordingly, this paper will briefly trace recent developments in the media industry, before examining the role of the state and neo-liberal ideology in shaping the global communication system. After analysing the effects of media concentration, special focus will be put on the concept of commodification in the media industry and the notion of cultural hegemony and dependency of media. Thereby, it will be argued that elitist corporate interests shape the news content in order to guarantee a profit friendly political environment.

Media concentration

During the past decades, the global communication system has undergone a variety of dramatic changes, shifting power to commercial interests. Technological improvements in digital communications created an increasingly global market for corporations looking for investment (Schiller 1999). Thereby, predominantly western companies engaged themselves in “conglomeration and transnationalization” through corporate takeovers, mergers and acquisitions of unprecedented scale (Jin 2007, p. 185). These ongoing processes of vertical and horizontal integration fostered the emergence of huge media conglomerates (Jamison 1998; Schiller 2001). Vertical integration, the acquisition of related businesses in the process of profit generating (Gomery 1986), enables corporations to effectively produce, distribute and broadcast its products under one roof and, therefore, minimise transaction costs (Stigler 1964). In other words, a corporation owning production companies and distribution outlets, as well as TV stations and movie theatre chains, simultaneously provides itself with its own supply and demand. Horizontal integration, on the other hand, aims at obtaining a greater share of the market by acquiring companies in the same field of business in order to maximise profit through price control (Gomery 1986). Hence, only a hand full of globally operating corporations remained, with the majority of them based in the US (Jin 2007, p. 191). Since “many of the largest media firms have some of the same major shareholders, own portions of one another or have interlocking boards of directors” (McChesney & Schiller 2003, p. 12), eventually, “the global media system is fundamentally noncompetitive in any meaningful economic sense of the term” (McChesney 1998, p. 5). Whereas “the ownership structure of the news industry purportedly aligns the news media’s coverage of the economy with the overall business interests of the corporate community” (Kollmeyer 2004, p. 435), the “oligopolistic control of much of the world communication market by a few giant corporations” renders it not only practically impossible for newcomers to penetrate the market (Jin 2007, p. 148), but, in consequence, enables these firms to “behave as if a monopoly were operating” (Gomery 1989, p. 50). Lacking any effective competition, the intertwined ownership structure of the media industry cultivates the shaping of media content according to underlying corporate interests.

Neo-liberal ideology and the role of the state

The rise of this global commercial media system is closely linked to the assertion of neo-liberal capitalism as the dominant theory of economics. Being “significant beneficiaries” of the current global structure, the media giants have a particular interest in supporting the perpetuation of neo-liberal capitalism (McChesney & Schiller 2003, p. 13). Since the unregulated free market as the fairest and most effective way of wealth distribution is the essential precondition for a prospering democratic society (Harvey 2005), there is no need for the public to interfere in the current organisation of media ownership (Touraine 2001). Thereby, both consumerism and corporate concentration are depicted as natural (Bauman 2000), inevitable consequences of globalisation (Cowling & Tomlinson, 2005; Sklair, 2002). However, since globalisation, and thereby neo-liberal ideology, “was restored by [US] military force and national policy, it was not a ‘natural’ state of affairs” (Hirst & Thompson 2002, p. 249). Economic neo-liberalism strongly relies on governments forming a global regime that “defines and guarantees, through international treaties with constitutional effect, the global and domestic rights of capital” and enterprises (Panitch 1994, p. 64). Hence, there is no reason for Hirst and Thompson (2002, p. 248) to assume that all the processes linked to globalisation “have an inherent dynamic that prevails over all countervailing forces”. Neo-liberalism is not a dogmatic consequence of globalisation, and despite the general perception of globalisation representing “an unstoppable historical force in the face of which politics is helpless” (Scott 1997, pp. 1-2), it remains reversible (Williamson 1998, p. 70), always dependent on governmental backing (Scholte 1997, p. 442). Moreover, as an instrument of an overarching ideology of free market capitalism, neo-liberalism “is grounded in the [ever-increasing] power of multinational corporations arguing for free trade by means of removing political and governmental rules and regulations that may inhibit the movements of goods, services and capital across borders” (Nafstad et al. 2007, p. 316). In summary; “the centerpiece of neoliberal policies is invariably a call for commercial communication markets to be deregulated” (McChesney 2001, p. 2).

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