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At first, all this media merger mania had me confused. There was the Time-Warner merger a few years ago, then GE-NBC, and lately, Disney-Capitol Cities-ABC, followed by recent talk of Time-Warner going after Turner. Throw in new networks like Fox and Paramount, as well as cable and telephone monopolies, new legislation in Washington, Internet dementia and Microsoft's proposed network connection bundled with Windows 95.
Nobody could keep track of this, so I didn't mind being confused about which fish were being gobbled by which sharks. The annoying part was that I couldn't figure out why there was all this activity.
My own adventures in media ownership -- a small-town newspaper 20 years ago, a little regional magazine now -- have produced little except an impaired credit rating. So why would all these smart-money Wall Street types be so interested in media? The money would appear to be better in pork belly futures, bond arbitrage or currency speculation.
Then I looked over our household accounts. We are not
people of means, but we spend plenty on what might broadly
be defined as media
or communication.
Sit down and total up what you spend on newspaper and magazine subscriptions, books, local and long-distance telephone, cable, audio compact disks and tapes, video rentals, computer information services and computer software.
It's a lot more than we spend each month on gasoline. It's more than we spend on all automotive expenses. It comes right after food and shelter, for that matter, and we don't buy books on tape, pager service, cellular telephony, premium cable channels, Pocohantas merchandise or Internet service.
(We'd like to have local Internet access, but every time some entrepreneur looks into that, US West explains that it can't provide enough local lines, and that the company's capital must go into the cities. Our job here is to shut up and pay.)
Nor does this monthly outlay include the associated hardware and its depreciation -- telephones, stereo equipment, computers and peripherals, TV set and VCR, fax machines, etc.
If we're at all typical, then there are millions of
American households spending hundreds of dollars each month
on what might be broadly defined as information
or
communication
or entertainment.
And now the media merger mania starts to make sense. If you run a cable company or a movie studio, why settle for a piece of this big pie when you might get the whole thing with a few mergers, acquisitions and consolidations?
Further, there's something called synergy,
which
means that the whole might be greater than the sum of its
parts, and this ties to Alvin Toffler's Third Wave
or Paul Hawken's Next Economy.
In essence, once
you've got this kind of media at hand, you can create
wealth.
How? Let's see. I turn on the TV, which means a cable
bill. I land on a channel where they tout the latest Ricky
Rodent animated feature as a two-thumbs-up must-see.
I've just read in a magazine, owned by the same
conglomerate, that Ricky Rodent is a significant
contribution to American culture, and indeed, the American
Dream cannot be understood without reference to Ricky
Rodent.
The newspaper, another subsidiary of this media conglomerate, has a big feature on how all the kids want Ricky Rodent CD-ROM games, and the stores are running low, so it's best to hurry before the stocks are gone and your children will face deprivation syndrome which will lead to permanent trauma which will turn them into serial cannibals.
The TV ad comes on for a fast-food chain, with a special on Ricky Rodent cups with all large soft-drink purchases. The one politician who denounced Ricky Rodent didn't get any campaign contributions from that company, so he couldn't afford advertising on that company's outlets, and he lost and disappeared from public sight.
In short, by fabricating and then promoting Ricky Rodent
in all forms of media, the conglomerate is adding value to
commodities. It doesn't matter that this is perceived
value
rather than actual value.
That is, the Ricky Rodent cup doesn't hold any more liquid, maintain its temperature any better, or resist spillage any more than any other cup. Its premium results solely from the fact that somebody has persuaded me, or my children, that Ricky Rodent is so cool that I should pay more for anything that bears his image.
If you can pull this off, it's like a license to print
money. Take a tedious book full of cliches and fabricated
by a ghost writer, put the Newt Gingrich
endorsement
on it, and presto, a best seller. I don't want to single
out Speaker Newt -- a glance at any best-seller list will
show you dozens of books which hold that status, not
because of their literary merit, but because they
supposedly written by actors, athletes or other
celebrities.
And if you can own enough media -- so that even if a few iconoclasts holler that the emperor really isn't wearing any clothes, they won't be noticed -- then you can create these profitable phenomena.
Welcome to a brave new world where everything is virtual -- excepting, of course, money and power.
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