The GOLOBAL COM:Transnational Media Corporation and the Economics of Global Competition.

The Transnational Media Corporation and the Economics of Global Competition.
Outline
Introduction.
The Transnational Media Corporation.
The Purpose of a Global Media Strategy.
Transnational Media Ownership.
Transnational Media and the Marketplace of Ideas.

Introduction
The transnational corporation (TNC) as a system of organization, represents a natural evolution beyond the multinational corporation of the 1960 and 1970s.
The Transnational Media Corporation
The Principal
Commodity sold by
TNMC is information
and entertainment.
The Transnational Media Corporation.
TNMC is the most powerful economic force for global media activity in the world today.
It is a necessary component of global capitalism.
The Transnational Media Corporation
Nowadays, TNMC are highly global in their approach to business; however, few companies operate in all markets of the world.
TNMCs are monolithic in their approach to business: case study: the Sony Corporation.


The Purpose of a Global Media Strategy.
Most companies do net set plans to become an international company. On the other hand, it establishes a foreign office to handle the sales and services of its product.
Later, the company begins to recognize the need for a more comprehensive global strategy.
Transnational Media Ownership
The decades of the 1990s and early 21st century witnessed an unprecedented level of international mergers and acquisitions.
This dynamic resulted in a consolidation of international media players in all aspects of business.
Figure 4.1 p 62: World’s Biggest Transnational Media Corporation (6 from USA/ 8).
Mergers, Acquisitions and Strategic Alliances
TNMCs are taking advantages of deregulatory and privatization trends to make ever-larger combinations.
The field of media and telecommunication started in 1995 undergoing ipso facto a new round of corporate consolidation.
The goal of mergers acquisitions and strategic alliances is to possess the size and resources necessary in order to compete on a global playing field.
Mergers
In a merger transaction, two companies are combined into one company. The newly formed company assumes the assets and liabilities of both companies (Ozanich & Wirth, 1998).
Example of Time Inc. And Warner Communication merger in 1989 to form Time Warner Inc.
Acquisitions
An acquisition involves the purchase of one company by another company for purpose of enhancing the acquiring firm’s productive strategy.
During an acquisition, one company acquires the operating assets of another company in exchange for cash and/or security.
Example of Viacom’s 1999 decision to purchase CBS for $37 billion.
Strategic Alliances
A strategic alliance is a business relationship in which two or more companies work to achieve a collective advantage.
The strategic alliance can vary in its approach and design, ranging from a simple licensing agreement to the actual combining of physical resources.
Example of the Walt Disney’s licensing agreement with Tokyo Disneyland in Japan.
When Mergers and Acquisitions Fail…
A failed merger or acquisition can be highly disruptive to both company in terms of lost revenue, capital debt and a decrease in job performance.
The inevitable result is the elimination of staff and operations, as well as the potential for bankruptcy.

The 4 Reasons Explaining Mergers and Acquisitions’ Failures (a).
1)- The Lack of a Compelling Strategic Rationale: Unrealistic expectations of complementary strengths and presumed synergies by both companies.

2)- Failure to Perform Due Diligence: The merging parties fail to perform due diligence prior to the merger agreement.
The 4 Reasons Explaining Mergers and Acquisitions’ Failures (b).
3)- Post-merger Planning and Integration Failures: if the proposed merger does not include an effective plan for combining divisions with similar products, the duplication can be a source of friction (turf wars, managers’ division) rather than synergy.
4)- Financing and the Problem of Excessive Debt: In order to finance the merger or acquisition, some companies will assume major amounts of debt through short-term loans. If performance does not meet the expectations, (sigh!)…
Transnational Media and the Marketplace of Ideas
The TNMC of 21st century is looking to position itself as full-service provider of media and telecommunications products and service worldwide .
Transitional Media and Consolidation
Economic Concentration: A market is said to be highly concentrated if it is dominated by a limited of firms  No Competition


Albarran and Miszerwksi: Two ways to examine the problem of media concentration:
1 : Single-industry concentration:
Ex: -Microsoft (80% the world PC software)
- News corporation Ltd (70% of the world’s market share in satellite-to-home delivery)
2 : Cross-media ownership:
Ex: - Viacom Inc:
Broadcast television (CBS,UPN)
Cable television programming (MTV, Nickelodeon, Bet, etc)
Film production ( Paramount)
Radio ( Infinity Broadcasting)
The Deregulation Paradox
Deregulation is supposed to encourage competition
But, complete and unfettered Deregulation cause a lack of competition.
Demers (1990) refers to it as ‘Great Paradox of Capitalism’
Clear Chanel of Communication owns 60% of all US radio.
The Market Place of Ideas
Bagdikian (1990), McChesney(1997,2004), Schiller (1990) argued that a small number of dominant media corporations exercises disproportionate effect over the market place of ideas.
TNMC should be treated differently from other TNC because its unique ability to influence public opinion.

McChesney (1997) argues:
‘ A specter now haunts the world; a global commercial media system dominated be small number of super-powerful, mostly US based transitional media corporations. It is a system that works to advance cause of the global market and promote commercial values, while denigrating journalism and culture not conductive to the immediate bottom line or long run corporate interest’ (p.11)
Counter argument
Proliferation of telecommunication diversity means just Low-brow shows, trash journalism
Global Competition and Diffusion of Ideas
Domination of corporation
Increase profit and decrease cost
No Regulation/ No self regulation
=> promote violence and lower the standards of quality journalism
TNMC vs TNCs:
TNMC’ commodity is information > Responsibility > ethical code
TNMCS and Nation-States
Globalization
No more boundaries
=> Free Trade advantages
=> challenges political sovereignty and privacy invasion ( cultural)
Both the host nation and the TNMC have a shared responsibility to build a system of globalization that is both desirable and sustainable.