Jihad vs. McWorld - Benjamin R. Barber [86]
While everyone chatters about synergy, the arrows all point one way: nearly all of the mergers targeted companies controlling creative product, without which neither the hardware manufacturers nor the delivery system owners had anything to show or deliver. Margo L. Vignola, a media analyst at Salomon Brothers, smartly noticed that it was a “paucity of creative talent and product available and an enormous amount of technology chasing it” that ultimately fueled the mania for acquisitions and mergers. Surveying the war between Viacom and QVC for Paramount, she concludes “companies like the regional Bells and cable providers are hobbled by the fact that they don’t have product, and a company that has very mixed results like Paramount becomes the jewel of Madonna. Everyone wants it.”6
MEDIA MERGERS
See for yourself: although many of the deals are mergers rather than takeovers, in almost every case the target is a company that controls creative product for McWorld—a movie studio, a film library, a video distributor, or a broadcast network or cable company. And these represent only a select number of the largest deals. Each of the companies in play already was involved in smaller acquisitions and mergers, which accounts for the variety of entities owned by what is technically a movie studio like Paramount. Paramount is a veritable festival of McWorld’s goods and products. Back in 1989 when it tried to prevent Time’s merger with Warner Communications via a $10.7 billion hostile bid for Time, it already had added to its extensive film and video properties the publisher Simon & Schuster (itself a publishing conglomerate including Prentice-Hall), as well as Madison Square Garden along with the basketball and hockey teams that play there (the Knicks and Rangers now spun off by new owner Viacom to still another infotainment company, Chuck Dolan’s Cablevision Systems, with financial backing from ITT). Time, Inc., on which Paramount was mounting an unsuccessful raid, meanwhile controlled along with its traditional magazines (including Life, People, Sports Illustrated, Fortune, and Money), the Home Box Office cable network, Cinemax, the American Television and Communication Corporation cable operating company, Time-Life Books, and Little, Brown and Company. By the time Paramount was in play at the end of 1993, by then itself the target of a bidding battle between friendly (and ultimately victorious) suitor Viacom and unfriendly raider QVC, its properties also included the Trans-Lux Theater Corporation, USA network, Famous Music Corporation, the Miss Universe organization, and Paramount Theme Parks. No conglomerate is complete without its signature theme parks.
In the midst of its trials with Viacom and QVC, Paramount stopped to acquire still another major publisher—Macmillan Publishing Co., Inc.—and to contemplate a deal with Chris-Craft to start a fifth television network (Fox’s being the fourth). Paramount’s holdings are mirrored by the properties owned by its half-score of competitors, including Time Warner, Sony-Columbia, Matsushita-MCA, Murdoch’s News Corporation, S. I. Newhouse’s Advance Publications/Newhouse Broadcasting, and Capital Cities/ABC. Throw in the remaining independents (MGM/United Artists under the temporary financial tutelage of Crédit Lyonnais, and Disney, the last of the true independents) along with the seven regional Bells and their new cable and foreign acquisitions who are pursuing soft-product production companies themselves, and a handful of strictly publishing giants like Bertelsmann (which recently acquired Bantam Books and RCA Records along with a New York City skyscraper), Dow Jones and the New York Times Company, as well as computer chip and software powers like Intel and Microsoft, and there are still only about two dozen companies dominating nearly every pixel of the vast infotainment telesector. We will talk a great deal about free markets and their virtues and vices in the last part of the book, but there is not much of a free market in the infotainment telesector. The absence of government