transnational media corporations
Transnational media corporations (TNMCs) play a central role in shaping media systems around the world. While TNMCs are distinguished from other transnational corporations (TNCs) by their involvement in the production and distribution of media and cultural commodities central to the networked media economy, they are often conglomerates with corporate linkages and operations in the surrounding fields of telecommunications, information and communications technology, and online services. In fact, the names of large transnational firms that rose to prominence in the 1980s and the 1990s (Disney, Time Warner, News Corporation, Viacom-CBS, Bertelsmann, Sony) are now being joined by more recent transnational media players, the so-called tech companies, Meta, Apple, Amazon, Netflix, and Alphabet/Google.
Despite the changes in the corporate entities and structures of contemporary TNMCs, their operations continue to raise concerns about the effects of concentrated corporate control on competition, media diversity, and an informed citizenry; their effects on smaller companies and media industry workers; and their role in processes of globalization, cultural imperialism, and homogenization. This entry discusses the structure and practices of TNMCs, the rise of TNMCs, and the economic rationales for TNMCs.
TNCs are often considered as firms with headquarters in a particular country that, via foreign direct investment and ownership, have the ability to coordinate and control the operations of entities in other countries. The German firm Bertelsmann, for instance, has expanded to become the worldâs largest publisher of trade books (via Penguin Random House) through purchasing controlling stakes of other publishing companies throughout Europe, the Americas, Africa, and Australasia.
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TNCs are sometimes distinguished from global and multinational corporations based on their level of integration and responsiveness to local conditions. Multinational corporations display little international integration of production, management skills, or knowledge and remain operationally focused on different national markets. TNCs seek economies of scale and greater integration across subsidiaries but remain responsive to local product markets and contexts. Global corporations are predicated upon economic goals and efficiencies with little regard to national boundaries and cultural specificity. According to such criteria, very few international media corporations would be viewed unequivocally as global. Their development is marked by their relationship with their home country, with particular national cultural markets, and with specific nation-states.
To maximize local consumption, TNMCs often engage in strategies that reflect localization and cultural hybridization. At the same time, as the United States remains home to the worldâs largest TNMCs, the country remains the worldâs largest media market and, in a hierarchical world system, has done more than any other nation-state to advance the interests of TNMCs (both U.S.- and non-U.S.-headquartered firms).
Rise of TNMCs
Historically, the development and growth of TNCs are linked more broadly with the development of international markets in trade and investment, with organizational and managerial innovations within large companies and with the associated developments and cost reductions associated with communications technologies and transportation. The rise of the first TNMCs in the 1860s was based on the very strong ties that developed between players in the new communication technologyâsubmarine cables and telegraph systemsâand world news agencies, national newspaper firms, and advertising companies. While a small group of international firms (Reuters, Havas, and Wolff) controlled world news agencies from the second half of the 19th century, some of the largest international firms of this era were telecommunications companies such as the Eastern Telegraph Company.
The development of TNMCs also reflects the importance of strategies based on economies of scale and scope. These take advantage of the very low relative costs of reproduction and distribution of media and cultural goods and are means of managing the chronic uncertainty and endemic commercial failure associated with such commodities. Thus, in the early 20th century, the ascendant film industry quickly became characterized by oligopolistic structures in which internationalizing firms dominated. After consolidating their control of production, distribution, and exhibition activities in their large internal market, the Hollywood majors (Loewâs/MGM, Paramount, Fox, Warner Bros., and RKO) quickly overtook French firmsâ (PathĂ©, Gaumont) presence in international markets and increased their interests in the other media industries such as music publishing, radio, and live entertainment.
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A 1948 antitrust ruling by the U.S. Supreme Court in the case of United States v. Paramount Pictures, Inc., forced the Hollywood majors to relinquish their U.S. film theater assets in the postwar period. However, they strengthened their control over international film distribution and finance and extended their control of exhibition and production assets in other countries such as the United Kingdom. In the 1950s, they also diversified their operations into areas such as television content production and recorded music, two industries that were displaying processes of international consolidation.
A wave of mergers and acquisitions in the 1960s saw the majority of the Hollywood studios become part of larger diversified corporations (e.g., in 1962, MCA Inc. acquired Universal). Shifting patterns of investment and deregulation in the 1970s facilitated further restructuring of these firms to become ever-larger media and entertainment organizations (e.g., Warner Bros. was acquired by Kinney National in 1969 and became Warner Communications, Inc., in 1972). As nascent processes of globalization and neoliberalization of the economy deepened in the 1980s and the 1990s, an unparalleled series of international acquisitions and buyouts of media and entertainment companies ensued, as firms sought to gain control of the new technologies and the expanding global entertainment market. The German corporation Bertelsmann became one of the worldâs largest TNMC with international music, magazine, and book publishing operations, as well as European television assets.
The new wave of concentration of the 1980s and the 1990s was principally focused on the opportunities that deregulation presented to further acquire and integrate operations in U.S. audiovisual industries (motion pictures, television, pay TV, home video). In 1985, Rupert Murdochâs News Corporation acquired 20th Century Fox. The Japanese electronics manufacturer Sony purchased CBS Records in 1988 and Columbia Pictures in 1989. Warner Communications and Time Inc. merged in 1989, and the following year, the Japanese electronics firm Matsushita purchased MCA/Universal. In 1995, the Walt Disney Company acquired Capital Cities/ABC, and in 2000, the French firm Vivendi Universal was formed with the merger of the Vivendi media empire with Canal+ television networks and the acquisition of Universal Studios.
Rationales for TNMCs
As corporations such as Time Warner (later WarnerMedia, now part of Warner Bros. Discovery), Disney, and News Corporation accumulated different operations under their management and control, their competitiveness was argued to be a result of their structure and not simply their size. They sought both to achieve critical mass through the merger and acquisition of businesses in the same field (horizontal integration) and to gain control of the central points of the production, distribution, and exchange processes (vertical integration). These strategies sought to reduce external market uncertainties produced by, for instance, several strong competitors in the circuit of production and increase overall rates of return.
Increased control and profitability were also pursued via integration across different cultural industries (conglomeration). It was argued that this strategy would enable firms to engage in cost savings, achieve synergies, and capture a greater proportion of audience attention and media expenditure. Moreover, the administered systems of financial flow would further significantly reduce market risk via cross-subsidization and permit greater competition among product line divisions.
Such rationales for the TNMCs drew on existing justifications and analysis of TNCs. An orthodox neoclassical view is that TNCs develop because of already occurring imperfections in markets that deter armâs-length transactions with independent firms. As TNCs internalize such relations, they provide an efficient means to overcome market failure, contribute capital investment, and transfer technological know-how. Liberal market doctrines suggest TNMCs underpin consumer sovereignty and help to ensure consumer demands for information and entertainment are adequately met; moreover, free flow of information policies, strongly promoted internationally by the United States, propose that such activities provide cultural templates for the expansion of a positive capitalist-democratic model of development (rather than Americanized cultural homogeneity). Such views on TNCs and TNMCs imply that the state should not intervene except for providing a favorable environment for foreign investment.
Critics of such approaches have emphasized the oligopolistic nature of TNC operations and their market power; TNCs are themselves major factors in creating imperfect markets, and they do not simply respond to consumer preferences but use their market power to create demand for their products. Such an argument finds its place in the mainstream economic theory of the TNC, such as in the work of economist Stephen Hymer. But it also shares affinities with (and was influenced by) variants of Marxist theory, notably those that emphasize the relation between imperialism and monopoly, with the latter seen as the outcome of the concentration and centralization of capital and the reduction of competition, as discussed by economists Paul Baran and Paul Sweezy. This perspective has emphasized the role of TNMCs in the process of cultural imperialism: Backed by the U.S. state, TNMCs from the West use their combination of material and symbolic resources and coercive and persuasive strategies to impose American/capitalist ideologies, cultural commodities, and technologies on less developed countries.
Another perspective within critical political economy argues that TNCs are essentially an expression of the normal expansionary tendencies of different circuits of capital. Competition and the overall drive to accumulate lead to the internationalization of capital and a more integrated world economy. This perspective focuses on how TNCs expand through amassing market power and monopolistic or oligopolistic control (e.g., over intellectual property, technology, or a product); however, this takes place as part of an ongoing process of competition in the wider capitalist system. Such competition will lead to shifts in industry structure and corporate linkages, but it is unlikely to lead to rapid shifts in the systemic global inequality in economic profits and cultural prominence; moreover, a more integrated world economy underpins trends toward transnational capitalist class relations that problematize simplistic notions of U.S. cultural imperialism as an analytical framework.
While TNCs might develop structural power, they are still shaped by competitive relations through the circuits of money, commodities, and production. For instance, since the 1990s, TNMCsâ dependence on global capital marketsâthe money circuit of capitalâhas seen them subject to noticeable changes in the patterns of investment by corporate shareholders. A drive to reduce debt and maximize profit rates and share prices has seen some of the largest TNMCs restructured through disinvestment and deconglomeration.
A focus on broader circuits of capital also highlights that the scope of influence of TNMCs extends beyond their narrow institutional boundaries as suggested by corporate and subsidiary names. Research into TNCs is increasingly emphasizing that control, not ownership, of assets is central. As well as through direct ownership, TNCs have turned to nonequity modes of international expansion to exercise significant influence over the other business entities and link them through what is described as global value chains or global production networks.
Powerful TNCs act as lead firms coordinating and controlling their worldwide production networks that operate through internalized intrafirm linkages among subsidiaries and affiliates within each TNC, as well as external, interfirm relations with formally independent firms. What has been described as subsidiary and subcontractor modes of intercorporate relations have long characterized the complex connections between large corporations and small and medium-sized enterprises in the media industries, including downstream in distribution and retail and, particularly, upstream in production.
This is not to suggest that size is not important. While the worldâs largest firms by revenue and market capitalization own less assets than similarly placed firms once did, they are still pursuing merger and acquisitions to achieve critical mass. The number of such deals has increased steadily since the global financial crisis of 2007â2008, and some estimates suggest that 10% of the worldâs public companies generate 80% of all profits. The rise to dominance of the tech firms has spurred and legitimized a round of mergers and acquisitions among the more established TNMCs in the 2000s and the 2010s, including Comcast and Universal, AT&T and Time Warner, Disney, and News Corporationâs 21st Century Fox.
The original version of this article was published by SAGE Publications in The SAGE International Encyclopedia of Mass Media and Society.