Political economy of the media and how it shapes the news

Anthony Cawley

Definition of political economy

Political economy examines the production and distribution of wealth in society

The political, economic and cultural factors that affect the production and distribution of wealth

Internalised political, economic or cultural values or ideologies

How does this affect the production and distribution of media?

Emergence of the political economy concept

Adam Smith: ‘invisible hand’ of the market will lead to a trickle down of wealth from richest to poorest. Minimal role of state in the economy. People act out of self-interest, the side effect of which is the betterment of society.

Karl Marx: free market polarises wealth, rich get richer and poor get poorer. Communal ownership of the means of production is the only way of ensuring an equitable distribution of wealth. People act out of solidarity and for the good of society as a whole.

Other thinkers: Ricardo, Malthus

Political economic factors that shape the news

Political and economic systems of the society in which the media operate

Political and economic status of the country

Dominant cultural and social values

Cultural/national alignments or conflicts: allies vs enemies

These points are not mutually exclusive

Political economic influences on the media

The American case:

Edward Herman argued in the early 1990s that there were five political economic filters through which news passed before it was presented in the mainstream American media.

1: Size and ownership of the mass media

2: Advertising as the primary income source of the mass media

3: The dependence of the media on information provided by government, business and experts funded and approved by these primary sources

4: ‘Flak’ as a means of disciplining the media

5: ‘Anti-communism’ as a national secular religion and ideological control

Political economic influences on the media

The Irish case

Political: the British influence, nationalism, the dying peasant society, Irish Catholicism, authoritarianism, loyalty and anti-intellectualism (Chubb, 1992)

Economic: Free State, poor manufacturing base, dependence on agriculture, protectionism and isolation. In more recent times, membership of the EU, opening up of the economy, attracting foreign investment

The media in a free market

“A free market brings with it a free press that supplies the diversity of opinion and access to information that a citizenry requires in order to act in a democratic, responsible manner. The free market, journalism and democracy form an interdependent trinity of institutions in an open society.”

John O’Neill, Ethical issues in journalism and the media, pg 15.

Media in a free market

Oligopolistic structure of global media. A small number of people/organisations have a disproportionately high level of influence/control over the world’s media

Free market oligopoly: bigger media organisations take over smaller ones, fewer organisations control more of the world’s media. Media organisations abide by the same free market principles: media content as a commodity to be sold. Diminishing importance of public service media.

State oligopoly: state controlled media, heavy censorship, dissenting voices found in underground press

Concentration of ownership vs need for diversity

General Electric

AT&T/Liberty Media

Disney

Time Warner

Sony

News Corporation

Viacom

Seagram

Bertelsmann

They are not independent of each other: AT&T has stakes in Time Warner and News Corporation. AT&T and General Electric both have stakes in CNBC. News Corporation has at least one joint venture with each of the other seven.

Editorial independence vs proprietor’s influence

Do proprietors have the right to interfere? In a free market, most media are commercial (private) concerns, so should normal property rights apply? If, in any other business, an owner can influence output, why not in media? The editor is usually just an employee of the business

Robert Maxwell: guaranteed editorial independence when negotiating to take over The Mirror, but in a later interview admitted: “I’m not shy of interfering if I have to…I could do the editor’s job.”

Globalisation

Move from national to international media organisations

American trans-national corporations have been most successful globally - their media content embodies many American cultural, political and economic values that might not be consistent with those of other countries.

The Hollywood studios and television production companies now generate between 50 to 60 percent of their revenues outside of the United States. Their tight grip on the means of distributing media content, such as films, protects their status in the world market.

However, local cultures can prove resistant to the consumption of ‘globalised’ content.

Concentration of ownership:

Irish Sunday newspaper market

Independent Group owns or has interests in The Sunday Independent, The Sunday World, The Sunday Tribune

British Associated Newspapers (Daily Mail) - Ireland on Sunday

Trinity Mirror - Sunday Business Post

Crosbie Media (Irish Examiner) recently linked with a bid for The Sunday Business Post. Irish Times Group has, for years, talked about entering the Sunday market, but financial difficulties at the company would suggest that any such move is far off.

Geo-political economic aspects to media “There is a simple rule of thumb: the strongest media groups have their home base in those media markets which are not only the largest in their category, but also the richest.”Understanding global news: a critical introduction

The majority of news is reported from areas of political and economic power, e.g. Dublin-centric media in Ireland. In America, Washington and New York are news centres, as is London in England.

Ireland

World

Sources of revenue

1: Advertising – can lead to a conflict of interest: do you run a story that will cause a client to withdraw their advertising? However, advertisers also need media. E.g., Ryanair continues to spent heavily on advertising in Irish newspapers, although most of them have at some time written critical articles about the company.

2: Subscription – an increasingly important source of media revenue with the roll-out of digital television. Can affect media content. In order to attract the largest possible subscription base a digital broadcaster might try to appeal to the lowest common denominator, i.e. dumbing down of content.

3: Cover-price – concerns mostly the print media. The higher the circulation a print publication achieves, the higher its revenues from both cover-price and advertising. High circulation allows newspapers to increase their advertising rates. General rule: a broadsheet will derive 60% of its revenue from advertising and 40% from cover-price. A tabloid will derive 60% from cover-price and 40% from advertising. Although tabloids tend to have a higher circulation (though not in the Irish market), advertisers are willing to pay more to advertise in a broadsheet because its readers tend to have greater purchasing power (ABC1s).

4: Government/public funding – concerns mostly public service broadcasters. In recent years, public service broadcasters have come under increasing pressure, because their revenues from licences fees are not sufficient to compete with many commercial broadcasters. For example, the BBC has found itself priced out of covering sporting events. RTE has come under similar pressure, but it operates a different public service model to the BBC. As well as public service responsibilities, RTE has commercial pressures – it relies on advertising revenues. In recent years, advertising has been rising as a percentage of RTE’s overall income. The increase in licence fee will re-balance the figures somewhat, but advertising revenues have been in decline since the economic slowdown began. Hence the restructuring and job cuts at Montrose.

5: Investment – may come from a number of channels: private investment from proprietors is one, but is more likely to come from larger media organisations. E.g., Ireland on Sunday, established in 1997 by private, independent investment, was sold to Scottish Radio Holdings in 2000, and passed onto British Associated Newspapers (publishers of The Daily Mail) in 2001.

6: Share issue – larger media organisations raise finance through a share issue, but this leaves them with responsibilities to shareholders (dividends and voting power).