This book is intended to help the reader to develop a better understanding of how economic and financial forces influence the operations and developments of media and communications firms. It is designed to improve the knowledge of those who presently work or will work in such firms so that they can better cope with the increasing complexity of the environment in which their firms operate.
The book is designed to make managers and future managers more effective in confronting the demands of the increasingly competitive communications industries by improving their abilities to respond to the ever-changing problems and issues that arise in the course of managing such firms. It is also intended to give those who observe media a broader context in which to consider the operations and decisions made by media managers.
This book strives to provide concepts for understanding and analyzing communications companies and their environments, to increase readers' abilities to identify and evaluate alternative strategies and courses of action, and to allow them to work more effectively with specialists with deeper expertise in finance and economics.
The approach employed by this book is not theoretical. It uses a managerial economics approach that involves the use of economic theories and various tools to help managers make knowledgeable decisions and to help others understand why managers make those choices. The approach to financing is also practical and is based on the practices of contemporary capital sources and media firms.
The economics and financing of media companies are the foundations upon which all media activity takes place. Regardless of cultural, political, and social roles and expectations for media, media must cover their costs and create returns, just as any other
business, or they will wither and disappear. The forces that require effective operation are the same for both private commercial media and noncommercial media such as public service broadcasting.
Since the beginning of the study of communications, attention has primarily been focused upon the roles, functions, and effects of communications. When media and other communications enterprises were studied, they were explored as social institutions, and much of the focus was on the social, political, legal, and technological influences on the enterprises and their operations. Scholars ignored, or only lightly attended to, the effects of economic forces. This should not come as a surprise to anyone familiar with the history of communications inquiry, because communications scholars initially came from the disciplines of sociology, psychology, political science, history, and literary criticism and then passed on their approaches to studying media to new generations of communications scholars who were produced during the second half of the twentieth century.
In the 1970s an increasing number of economics and business scholars began exploring media, especially as the result of changes leading to the development of cable television and problematic trends appearing in the newspaper industry. It was not until the 1980s, however, that communications scholars themselves began to accord economic and financial forces and issues the significant attention they were due. Since that time, a coherent and growing body of knowledge about economic issues and problems and the financial strategies and behavior of communications enterprises has developed. That literature has developed to help explain how economic and financial forces and strategies affect media developments and operations.
Several significant economic texts have emerged in the field, revealing how basic economic laws and principles can be applied to the study and operation of media,1 exploring the economic structure and organization of various communication industries,2 and focusing on economic issues in specific communication industries.3 Excellent analyses have considered the political economy of communications enterprises and its effects on society and vice versa.4
1 Robert G. Picard, Media Economics: Concepts and Issues (Newbury Park, Calif.: Sage Publications, 1989).
2 Alison Alexander, James Owers, and Rod Carveth, eds., Media Economics: Theory and Practice (Hillsdale, N.J.: Lawrence Erlbaum Associates, 1993); Nadine Toussaint Desmoulins, L'Economie des medias, 4th ed. (Paris: Press Universitaires de France, 1996).
This book seeks to expand upon those works concerned with how economic and financial pressures affect a variety of communications activities, systems, organizations, and enterprises across all media sectors and telecommunications. It builds upon those works and then introduces business concepts and their application in media firms to reveal how these factors influence choices and how they can be used to improve and understand industry decisions and practices.
3 Bruce M. Owens and Stephen S. Wildman, Video Economics (Cambridge, Mass.: Harvard University Press, 1992); Robert G. Picard et al., Press Concentration and Monopoly: New Perspectives on Newspaper Ownership and Operation (Norwood, N.J.: Ablex Publishing, 1988); Richard Collins, Nicholas Garnham, and Gareth Locksley, The Economics of Television: The UK Case (London: Sage, 1989); Peter Dunnett, The World Television Industry: An Economic Analysis (New York: Routledge, 1990); Stuart McFadyen, Colin Hoskins, and David Gillen, Canadian Broadcasting: Market Structure and Economic Performance (Montreal: Institute for Research on Public Policy, 1980); Eli Noam, Video Media Competition: Regulation, Economics, and Technology (New York: Columbia University Press, 1985); R. Schmalensee, Economics of Advertising (Amsterdam: North-Holland, 1981); Centro Vejanouski and W. D. Bishop, Choice by Cable: The Economics of a New Area in Television (Lansing, U.K.: Institute of Economic Affairs, 1983); G. Kent Webb, The Economics of Cable Television (Lexington, Mass.: Lexington Books, 1983); Stephen Lacy and Todd F. Simon, The Economics and Regulation of United States Newspapers (Norwood, N.J.: Ablex Publishing, 1988).
4 Kenneth Dyson and Peter Humphreys, eds., The Political Economy of Information: International and European Dimensions (London: Routledge, 1990); Nicholas Garnham, Capitalism and Communication: Global Culture and Information Economics (London: Sage, 1990); Vincent Mosco and Janet Wasko, eds., The Political Economy of Information (Madison: University of Wisconsin Press, 1988).