Industry Analysis—U.S. Media

7 min readJan 7, 2019

In the United States, five corporations, headquartered mostly in New York, control the majority of market share in the traditional media industry (television, radio, movies, books, music). While five corporations, headquartered mostly in California, control most market share in the tech media industry (social media, internet search, online distribution).

These are by definition oligopolies: a market structure in which a small number of firms holds a large majority of market share. The oligopic structure of the traditional media industry came about gradually over the last 40 years — it started in the 1980s, with the trend toward corporate ownership, and concentration via mergers, which continues to this day. Oligopolies by their nature collude, crush competition, and rig supply, in order to further the profits of the group. The following are estimates of the change in market structure over this period.

In 1983: 50 companies controlled 90% of the traditional media industry
By 2013: 5 corporations controlled 70% of the industry

In understanding this market it is also important to note the legal structure of the media suppliers. The major players in both traditional media and tech media are large corporations which trade publicly as members of the S&P500. Public corporations are state-chartered legal entities which by law must maximize profits to their shareholders (i.e. “shareholder primacy”), and are programmed with no other concerns (such as stakeholder interests) — thus all concerns other than short-term profit, must be subordinated. From here, government-granted limited liability protects them from the repercussions of their pathological behavior.

The following diagram illustrates the corporate-oligopoly structure of the traditional media and tech media industries.

The “big 5” traditional media conglomerates are 1) Fox Corp + News Corp, 2) Walt Disney Co, 3) Comcast Corp, 4) CBS Corp + Viacom Inc, 5) AT&T Inc.

Note: Fox Corp and News Corp are both controlled by the Murdoch family. CBS and Viacom split in 2005, but are both controlled by the Redstone family, which also owns National Amusements. Verizon is a smaller player with less valuable assets. The New York Times is a hugely influential player in the news industry, but not a conglomerate.

Regarding market share, the Wikipedia number of 90% is not realistic. I’ve done detailed calculations myself by analyzing the big-5’s financial statements; their revenue is approximately 70% of the total market size.

Why Corporate Media Behaves as a Monolith

While the industry’s marketing still projects an image of “independent journalists,” one can’t help but notice the industry tends to behaves as a whole, with synchronized stories, and political attacks. The reasons for that mostly derive from the industry’s structure…

I. Oligopolies by their nature collude and offer homogenous product, in order to maximize profit. When there is a small circle of suppliers they pay a lot of attention to each other; calculating the likely responses of the other players (game theory).

II. Corporations all share a common internal structure; employees serve officers, who serve the board, who serve the maximization of shareholder return. Corporate employees have low autonomy, and high loyalty to industry profits.

III. Costs are lowered, and profits maximized, when the market players work together to supply a homogeneous product (e.g. common narratives, with slight variation).

IV. Corporate conglomerate operations “trickle down” to small private companies. The big players set the standards, and the industry changes, which socially/economically pressures smaller players to adopt the same type of operations in order to stay competitive.

V. Geographically concentrated headquarters lead to groupthink. Of the 16 parent corporations in the diagram, 12 are based in either California or New York. Only one of the headquarters is located in a state that voted Republican in 2016.

VI. Political correctness controls behavior, and is strongest in precisely the cities where the media corporations are headquartered, which leads to more groupthink.

VII. Media corporations hire from the same journalism/media schools, and discriminate in favor of left-wing ideology and Democratic Party affiliation, which leads to even more groupthink.

Corporate Media’s Purpose

I. All corporations are programmed, by law, to maximize profit to shareholders (a concept known as shareholder primacy). This is every corporation’s primary function, which subordinates all other interests. The existence of shareholder primacy makes corporations incompatible with journalism, as the entity must always prioritize profit over truth, when the two are not equivalent. And limited liability is there to prevent corporations from being held accountable for disseminating this disinformation.

II. Profits to individual corporations are not truly maximized, unless they cooperate to maximize the aggregate profits of the corporate family (i.e. the S&P500). These entities all trade under a single ticker (e.g. the SPY fund, ES futures, SPX options), which creates a shared financial interest. A key function of corporate media is to defend corporate interests in general, and thus to maximize the price of the stock index, of which they are members. It wouldn’t be an efficient use of resources for a propaganda asset to solely serve it’s own profit; propaganda serves a master (e.g CNN serves its AT&T parent, which in turn serves the S&P500).

III. Media corporations have ties to government as they are a state-chartered, with a dotted line to the federal government, and thus must follow “national security” and other guidance. Government influence can be used to push specific agendas or for general social conditioning. Because the nation’s media is run by just five corporations, it is easier to coordinate.

IV. Media corporations also use their influence to shape government (it’s a two way street), and culture — they push corporate-friendly political candidates, defame anti-corporate candidates, push social agendas, and defame individuals who speak against their social agendas. The primary objective is always the maximization of aggregate corporate profits.

V. Media corporations also provide services to the stakeholders. These services include news, entertainment, search results, social media platforms, etc. However, this is a secondary function (subordinate to profit maximization itself), and once markets are cornered by an oligopoly or monopoly structure, players are less incentivized to take interest in stakeholder concerns.

Deteriorating Public Trust

Trust in the mass media peaked in 1976 at 72%, and has steadily decreased since the 1980s, reaching an all-time low of 32% in 2016 (and 20% for newspapers specifically). Over the last 40 years, media trust has shown a strong inverse correlation with corporate ownership, and industry concentration (which is exactly what we would expect, since these legal-entity and market forms actively work against stakeholder/demand-side interests).

Media trust differs dramatically by political party affiliation. This makes sense when you consider mass media is run almost entirely out of New York and California, states which are ideologically far-left. However, it’s not just Republicans, but independents too, who report decreasing trust. In 2016 only 51% of Democrats, 30% of Independents, and 14% of Republicans trust the media “a fair amount.” Note in 2018 there was a peculiar jump, Democrats moved from a low of 51% to a high of 75%.

Profits Increasing, Despite Trust Decreasing

Profits of the traditional media oligopoly were $27 billion in 2016, up from $14 billion in 2011. This group is represented by eight tickers, that trade on the NYSE/NASDAQ exchanges (FOXA, NWSA, DIS, CMCSA, CBS, VIAB, T, NYT).

Profits of the new tech media oligopoly were $77 billion in 2016, up from $37 billion in 2011 (GOOGL, FB, TWTR, AAPL, AMZN).

Together these two oligopolies generate over $100 billion in annual profit (note these are total corporate profits, and so also include non-media earnings).

Centralized Power to Shape Societal Thinking

American adults spend 10 hours and 39 minutes per day consuming media. Of this, 4 hours and 31 minutes is spent watching television (chart). This is an average exposure for the U.S. adult population of 75 hours per week, which gives the media industry incredible power to influence thinking, and behavior. This explains why some corporate media arms are allowed to consistently run at a loss — the power to influence the citizenry’s thinking and behavior is more important than the profits of an individual media brand. Long-game, social engineering can maximize aggregate S&P500 profits.

Understanding Today’s Media Industry

It is important to call things what they are, not what they were, what we wish them to be, or what they pretend to be. The reality is the American media industry no longer consists of 50 smaller companies competing with each other, and striving for public trust, as it did in the 1970s. Today the market consists of five large corporations which control 70% of traditional media, plus the new tech media corporate giants.

There is nothing in corporate law that defines these entities as “news organizations” and incentives them to that public goal. Rather the purpose of every corporation is to maximize profits, including by exploiting negative externalities (i.e. passing costs off to society). And yet these shrewd profit-maximizing corporations still use the terminology of the 1970s (e.g. “free press” and “journalists”) as it gives credibility to their operations.

But for the consumer of mass media, these terms are counterproductive to a reality-based understanding of the industry. Terms such as corporate media, corporate employees, and corporate propaganda dryly and accurately describe the industry without creating unrealistic expectations of it serving a public good.

This analysis from 2017, was updated April 1st 2019 for more mergers and acquisitions (Disney acquisition of 21st Century Fox).