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firms. For seven of the twenty-four, the market value of the media properties owned by the controlling families in the mid-1980s exceeded a billion dollars, and the median value was close to half a billion dollars.24 These control groups obviously have a special stake in the status quo by virtue of their wealth and their strategic position in one of the great institutions of society. And they exercise the power of this strategic position, if only by establishing the general aims of the company and choosing its top management.25

The control groups of the media giants are also brought into close relationships with the mainstream of the corporate community through boards of directors and social links. In the cases of NBC and the Group W television and cable systems, their respective parents, GE and Westinghouse, are themselves mainstream corporate giants, with boards of directors that are dominated by corporate and banking executives. Many of the other large media firms have boards made up predominantly of insiders, a general characteristic of relatively small and owner-dominated companies. The larger the firm and the more widely distributed the stock, the larger the number and proportion of outside directors. The composition of the outside directors of the media giants is very similar to that of large non-media corporations. Table 1–3 shows that active corporate executives and bankers together account for a little over half the total of the outside directors of ten media giants; and the lawyers and corporate-banker retirees (who account for nine of the thirteen under “Retired”) push the corporate total to about two-thirds of the outside-director aggregate. These 95 outside directors had directorships in an additional 36 banks and 255 other companies (aside from the media company and their own firm of primary affiliation).26

In addition to these board linkages, the large media companies all do business with commercial and investment bankers, obtaining lines of credit and loans, and receiving advice and service in selling stock and bond issues and in dealing with acquisition opportunities and takeover threats. Banks and other institutional investors are also large owners of media stock. In the early 1980s, such institutions held 44 percent of the stock of publicly owned newspapers and 35 percent of the stock of publicly owned broadcasting companies.27 These investors are also frequently among the largest stockholders of individual companies. For example, in 1980–81, the Capital Group, an investment company system, held 7.1 percent of the stock of ABC, 6.6 percent of Knight-Ridder, 6 percent of Time, Inc., and 2.8 percent of Westinghouse.28 These holdings, individually and collectively, do not convey control, but these large investors can make themselves heard, and their actions can affect the welfare of the companies and their managers.29 If the managers fail to pursue actions that favor shareholder returns, institutional investors will be inclined to sell the stock (depressing its price), or to listen sympathetically to outsiders contemplating takeovers. These investors are a force helping press media companies toward strictly market (profitability) objectives.

TABLE 1–2

Wealth of the Control Groups of Twenty-four Large Media

Corporations (or Their Parent Companies), February 1986

COMPANY

CONTROLLING FAMILY OR GROUP

PERCENTAGE OF VOTING STOCK HELD BY CONTROL GROUP (%)

VALUE OF CONTROLLING STOCK INTEREST ($ MILLIONS)

Advance Publications

Newhouse family

Closely held

2,200F

Capital Cities

Officers and directors (ODs)

20.7 (Warren Buffett, 17.8)

711P

CBS

ODs

20.61

551P

Cox Communications

Cox family

36

1,900F

Dow Jones & Co.

Bancroft-Cox families

54

1,500P

Gannett

ODs

1.9

95P

General Electric

ODs

Under 1

171P

Hearst

Hearst family

33

1,500F

Knight-Ridder

Knight and Ridder families

18

447P

McGraw-Hill

McGraw family

c.20

450F

News Corp.

Murdoch family

49

300F

New York Times

Sulzberger family

80

450F

Reader’s Digest

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