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A Summary of Ben Bagdikian’s “The Media Monopoly”

Written by Jeff Drake
7 · 19 · 17

I read the book and wrote this report back in 1993.

(Ben Bagdikian was an educator and journalist who died in 2016. He will be missed!).

Given what we now know and think about our current media mess, this book, although dated, is still extremely valuable. If anything, the situation described by Bagdikian has been compounded and gotten worse, much worse. Ben did a great job of painting the picture for us regarding the state of media in our country:

Book Report:

Have you ever wondered why, with cable TV providing so many television channels to choose from, the programming seems so similar? So mediocre? So bland? So shallow?

Do you know who owns the programming you watch on television? Do you know who owns the radio stations you listen to? How about the magazines, the books, the newspapers you read?

Would you be surprised to learn that there are over 25,000 outlets for our daily newspapers, magazines, television, books and motion pictures? Probably not. But you may be surprised to learn that only 23 corporations own all of these outlets.

Here are some other interesting figures:

Between 1983 and 1992 the major media in this country shrunk from 50 national and multinational corporations to 20.

In this same period of time, the number of companies controlling most of the national daily circulation in this country shrunk from 20 to 11.

In this same period of time again, companies earning the majority of yearly magazine revenue shrunk from 20 to 2. In book publishing – from 11 to 5. (The 3 major television and 4 major movie studios remained the same.)

While the number of corporations who own the mass media in our country was dwindling during this 9 year span of time, they were also extending their reach.

For example, Time Warner owns not just magazines, but also radio, TV, books, movies and cable stations; Times Mirror (LA Times and other major newspapers) owns not just newspapers, but books, magazines, TV, and over a million cable subscribers in 13 states; Paramount Communications (owner of Simon & Schuster book publishing and Paramount movie studios) is not only the world’s largest book publisher, it is also a major movie producer, dominant cable systems owner, producers of TV and cable programs, a major video maker and also controls 1,100 movie screens in the US and foreign countries.

So how big are the corporations that own this country’s mass media? Well, that’s hard to say and… hard to find out. The corporate structures behind the scenes are convoluted with so many companies owning so many others that it is often hard to discern. In addition, some of these corporations are private and therefore don’t have to divulge their numbers.

Seeing this move towards consolidation gets some people hot, and they start crying, “conspiracy!” But, in actuality, there is no conspiracy. Corporations are just doing what corporations do best… looking out for their own interest and growing their profits.

Although you could sit all of the CEO’s of the major mass media in this country (25) in one room, it doesn’t mean that they meet, smoke cigars and plot out how they are going to control the country. In fact, nothing so sinister is real. However, this doesn’t mean that these corporations lack power or fail to act together when the need arises. After all, remember… they share the same values and goals – money and influence. What this means to us as consumers of their products is that even without a conspiracy, these corporate giants, in their efforts to increase profits, to gain power and influence, can produce similar results.

Money? How much money? It doesn’t take a genius to realize that “market dominant” corporations make a higher percentage of profit out of every dollar than less dominant firms. “In fact, a four year study of 2,746 corporations by the advertising agency Backer Spielvogel Bates showed that companies with 1.5 times the sales of their nearest rival were a whopping 52 percent more profitable than market followers. And market leaders averaged 31 percent return on investment compared to 11 percent for those ranked fourth or fifth. It is no longer necessary to be an old-fashioned monopoly, or the only firm in the business; one needs to be merely one of a small number of firms that have a larger proportion of the business than all the others combined. The study adds, “It is not sufficient to have superior quality.”

Influence? How much influence? These same “market dominant” media corporations have an incredible influence over our news, information, ideas, popular culture and political attitudes. And because they have this powerful influence over the public mind, they exert considerable influence within the government. Why? Because they not only influence our perception of life, but also how politics and politicians appear – or do not appear – in the media.

Remember that entertainment does not just entertain. “Not only does it crystallize popular culture, reflecting and confirming what already exists, but by selective emphasis and deemphasis, and by creating self-serving images and celebrities of its own, it can also create its own version of popular culture.”

MTV is an excellent example of this. There are several MTV personalities making movies right now, and their only claim to fame is that they are MTV personalities! In other words, MTV is busy creating celebrities, who are then involved with more and more selling of products. And who could argue that MTV has not been successful in creating its own popular culture?

Universally transmitting a popular culture which has been carefully and uniformly designed (i.e. contrived) for the quick and easy selling of products, to an entire society, has a profound effect on social values, for popular culture “establishes the new role models for each generation.” This is incredible power and influence.

The fact that these corporations share similar values and goals often causes them to work together in their own interests, and so joint ventures are commonplace. For instance, Time Warner owns 50% of Whittle, another corporation that also produces magazines, classroom videos and commercials; Paramount Communications and Time Warner (both in the movie business) share ownership of national movie theater chains; Rupert Murdoch, Fox studios, Paramount and MGM Pathe along with other movie studios, all have agreements on the use of Time Warner films; Time Warner is 19% owner of the Turner Broadcast System (CNN, TNN, etc.) And the list goes on and on.

Within an individual media corporation, something called synergy is the rage. Why? Because synergy is loved by Wall Street investors. Synergy is the process of reusing material from one type of media in another type of media, when both types of media are owned by the same corporation. For example, a corporation owns magazines, book publishing, television, cable and, newspapers. Their publishing house publishes a book which becomes popular, so they use the book to make a movie (an event now becoming commonplace). They then promote the book and movie through the magazines and TV they own, and the celebrities who star in their productions appear on the TV talk shows they own to sell their movie – and of course, they show the movie in the theaters they own, and the movie is rated 4 stars by the critics who work for the newspaper they own, and when the movie is finished on the movie-circuit, it is shown on the cable stations they own and so on and so forth. You get the picture… synergy.

Of course, one result of all this “recycling” of material is that it tends to increase the already high level of imitation in programming because the owners of corporations who only own one type of medium are at a complete disadvantage. They have to behave like the “big boys” or they don’t survive. And there are fewer and fewer of this type of owner.

It’s amazing that as the number of television channels has grown, so has the tendency towards concentrated ownership. Think of it… there are over 11,000 cable systems in this country that broadcast either locally to one municipality, or to a group of small cities, yet only seven corporations own the majority of these 60 million subscribers.

Well, guess what, we owe this all to Reagan. This should be no surprise to anyone. The deregulation of the cable industry in 1984 essentially caused cities to lose the power they had over cable systems competing for exclusive franchises. The result has been that even though the number of cable channels is increasing, so is the uniformity of content shown on these channels. As cable owners search for cheap programming, much of their offerings start to resemble through-the-air (i.e. “commercial”) programs. In other words, they increase profits while lowering standards. Why this happens should become clearer by the time you finish this article.

This concentration of ownership is not a good thing for us consumers. With over 150 cable channels to choose from, we should be receiving a tremendous amount of diverse programming, and we are not. We should be drowning in different choices, but we are not. And the ability to choose, to really have different choices, is the foundation of a true democracy.

As the smaller media voices which offer diversity are drowned out by the corporate media giants, the giants gain “ever greater freedom to shift the balance of news and popular culture away from reflecting what exists in American political, economic, and social culture and toward creating what they would prefer to exist.”

Millions of people get their images of the world from the newspapers, magazines and books they read, the radio they listen to, the television and movies they watch. “The mass media become the authority at any given moment for what is true and false, what is reality and what is fantasy, what is important and what is trivial. There is no greater force in shaping the public mind. Even brute force triumphs only by creating an accepting attitude towards the brutes.”

Authorities have always known that if they want to control the public, they must control… information. Remember that the first one to possess information has political power. They have the power to disclose or conceal, to tell some of what they know or hold back until some later opportune moment, and of course, to predetermine the interpretation of what is revealed.

Readers, it’s time to wake up, to take notice of that tube you’re watching, those magazines on your table, the newspapers you read. Who owns them? What purpose do they have? Is it the dissemination of information, entertainment, or something else?

Some History:

Of course, concentration of ownership didn’t just begin ten years ago. It actually has its roots back in 1919, when the Radio Corporation of America (RCA) was formed as an umbrella monopoly under which General Electric, Westinghouse, AT&T, and the United Fruit Company, agreed to divide the newly emerging radio market among themselves. The National Broadcasting Company (NBC) was their radio network. CBS didn’t actually get its start until 1927, and it wasn’t until 1943 that the Federal Communications Commission (FCC) forced RCA to divest itself of one of its two radio networks, thus creating ABC.

Television is what is known as a “semi-monopoly.” That is, it has a limited number of owners and in most cities, the “dominant stations have virtually guaranteed high profits; the ratings simply determine which company gets the most.”

Initially, no corporation was allowed to own more than seven radio and seven television stations. But, under the drive for deregulation, the FCC loosened these rules in 1984 and gave permission for a company to expand its holdings to twelve AM and twelve FM radio stations and twelve television stations!

Magazines didn’t really become important until mass advertising did. This was a direct result of mass production. After all, when you start producing goods on a massive scale, you need to promote their sales on a massive scale. Before the era of broadcasting, magazines were the primary vehicle for national advertising because newspapers were strictly a local medium. Magazines also were capable of heavier paper and color advertising, which was very appealing. As the magazines started generating more and more profits, they attracted larger and larger operators.

Magazines, however, took a nose-dive in the 1960’s, as color television started stealing their advertising revenues. General interest magazines, like Life, Look, the Saturday Evening Post, etc. literally died out as a result of this. In their place new, specialized magazines (e.g. like those devoted to women) have taken root and remain profitable. Concentrated ownership has taken place in this area also, and as a result, the rates of profits have increased, once again the result of market domination by a few corporations. For example, even though there are 11,000 magazines in the country, three corporations have more than half the business!

The 1960’s also became a time of consolidation for book publishers, as companies like IBM, ITT, Litton, RCA, Raytheon, Xerox, General Electric, Westinghouse, and General Telephone and Electronics (GTE) entered the market of textbook publishing. These major electronic and defense industries believed that they could corner the market on what they felt would soon be the trend –  computerized teaching. They believed that not only could they sell schools the books they needed, but they could also sell them the software for the new computers which many of them manufactured. Of course, computers didn’t take over the classroom the way they believed, but it started the movement of “outside” corporations entering the book publishing business.

As for movies… the movie business consisting of Hollywood studios has long been concentrated in ownership, and still remains so. But it is now more complex. With the discovery of “synergy,” providing them with the ability to recycle their media products and leverage their promotional campaigns, and “the free-market amnesia about anti-trust law,” these movie studio moguls have once again started buying up movie houses all over the country, thus guaranteeing them audiences for their own films, and allowing them to “keep out” competitor’s pictures. In 1948, the Supreme Court found this situation to violate antitrust law, but the Department of Justice in recent years (yes – the Reagan/Bush years) has ignored this finding. By 1988, more than a third of all the movie studios in the country had been bought by a few major studios.

There are some who might argue that large corporations are gaining control of mass media because the public wants it that way. But it is more probable that the public, totally dependent on the mass media for its information, has never seen a real discussion of the political and economic dangers of concentrated corporate control of the mass media in their newspapers, magazines or broadcasts.

Also possible, is the obsolescence of an image we have of the powerful media owner’s selfish use of the media. This type of 19th century “yellow journalism” is no longer necessary or allowed. No, today what is more common is “something more subtle, more professionally respectable and more effective: the power to treat some unliked subjects accurately, but briefly, and to treat subjects favorable to the corporate ethic frequently and in depth.”

Another change from the last century is the “periodic appearance of news or criticism that does not reflect owners’ private values.” These events can have two kinds of impact on public opinion. One is brief and fleeting, the other is prolonged and deep. The first is the single news item which is soon buried by dozens of new articles, each day removing the impact of the first article farther and farther from the public memory. Far more effective in creating public opinion is the method of pursuing events or ideas in depth over a period of time, until they seem to have a coherent picture and become integrated into public thinking. (Remember the media barrage we were assaulted with prior to our intervention in Somalia? Or our intervention in Panama? Or our intervention in Iraq?)

“Continuous repetition and emphasis create high priorities in the public mind and in government. It is in that power – to treat some subjects briefly and obscurely but other repetitively and in depth, or to take initiatives unrelated to external events – where ownership interests most effectively influence the  news.”

[NOTE: Noam Chomsky, in the film “The Manufacture of Consent” explained to an audience why he was never asked to be on the television show NightLine. He said that one of the primary reasons is that when you only echo the “party line,” you can say what you want in a few sentences. But if you can’t say what you want in a “soundbite,” you are not considered to be a worthy guest. For instance, if you say “Saddam is a madman,” or “Noriega sells drugs,” people will simply nod their heads in agreement and not ask for any clarification. But, if you say something like, “The US is the world leader in state-sponsored terrorism,” or “the US invaded South Vietnam,” you will have to explain yourself in great detail. Yet, there is no way to do this if you are only given a moment or two to state your case. And in fact, you will, most of the time, come off as some kind of looney-tune because you are making all these “unfounded and unexplained” claims. The danger in this of course, as Chomsky explains, is that shows like NightLine can only pass on the “party line,” and as a result, Americans get very little in the way of real debate, and varied opinions.]

But there is so much news in today’s world! We know that it must be a difficult job for editors to determine what news gets printed or broadcast and what doesn’t. So, how do we know when something doesn’t get published or broadcast because of the corporate owner’s own interest, rather than a journalistic decision? Well, the truth is… the public can’t make that determination. We are at their mercy.

Fifty years ago, editors were rather blatant about telling reporters what they could print and what they couldn’t due to some owner’s interests. Ironically, today’s higher journalistic standards make this almost impossible to do in any kind of open fashion. Instead, reasons for killing a story due to an owner’s interests are explained as, “no one is interested in that story.” Does this mean that stories that conflict with an owners interests never get published? No. But it does mean that in order for these stories to be published, they must be “more urgent and melodramatic” than stories that support their interests. With this kind of practice, over time “the total news picture of society is skewed in favor of corporate interests.”

And who are these corporations? A “dominant” corporation is one that has control of half or more of all the activity in their particular medium. The following is a list of the 23 (down from 46 in 1981) dominant corporations that control most of the business in our daily newspapers, magazines, television, books, and motion pictures (some you will recognize, others you probably won’t):

  1. Bertelsmann, A.G. (books)
  2. Capital Cities/ABC (newspapers, broadcasting)
  3. Cox Communications (newspapers)
  4. CBS (broadcasting)
  5. Buena Vista Films (Disney; motion pictures)
  6. Dow Jones (newspapers)
  7. Gannett (newspapers)
  8. General Electric (television)
  9. Paramount Communications (books, motion pictures)
  10. Harcourt Brace Jovanovich (books)
  11. Hearst (newspapers, magazines)
  12. Ingersoll (newspapers)
  13. International Thomson (newspapers)
  14. Knight Ridder (newspapers)
  15. Media News Group (Singleton; newspapers)
  16. Newhouse (newspapers, books)
  17. News Corporation ltd. (Murdoch; newspapers, magazines, motion pictures)
  18. New York Times (newspapers)
  19. Reader’s Digest Association (books)
  20. Scripps-Howard (newspapers)
  21. Time Warner (magazines, books, motion pictures)
  22. Times Mirror (newspapers)
  23. Tribune Company (magazines)

Of the newspapers in this country, the dailies of which, have continually  dwindled (1,643 in 1989), there are fourteen dominant corporate owners. They are:

  1. Gannett Company: USA Today and 87 other dailies
  2. Knight-Ridder, Inc.: Philadelphia Inquirer, Miami Herald, and 27 others
  3. Newhouse Newspapers: Staten Island Advance, Portland Oregonian, and 24 other papers (Newhouse also owns Conde Nast magazines and Random house book publishing)
  4. Tribune Company: Chicago Tribune, New York Daily News,a and 7 others
  5. Dow Jones & Co. Wall Street Journal and 22 Ottaway newspapers
  6. International Thompson: 120 dailies and book publishing
  7. New York Times: New York Times and 26 others
  8. Scripps-Howard Newspapers: Denver Rocky Mountain News and 22 others
  9. Hearst: San Francisco Examiner and 13 others* Cox: Atlanta Journal and 19 others
  10. News Corp, Ltd. (Murdoch): Boston herald and 2 others
  11. Media News Group (Singleton): Dallas Times herald and 17 others
  12. Ingersoll newspapers: New Haven Register and 36 others

Magazines shrunk from 23 dominant corporations in 1981 to 3 in 1988. The primary cause was the merger of Time with Warner to form Time-Warner. The three dominant corporations in the magazine business today are (in order of estimated annual revenue):

  1. Time Warner: Time, people, Sports Illustrated, Fortune and others
  2. News Corp, Ltd.: TV Guide, Seventeen, new York, and others
  3. Hearst: Good Housekeeping, Cosmopolitan and others

The three television networks – Capital Cities/ABC, CBS, and NBC – still dominate their field. This, despite mergers, attempted takeovers, corporate turbulence, and declining prime time viewing. Cable and VCR ownership has grown, but the three networks still have more than two-thirds of the audience. And even when you add up all the revenues of radio and television, the three networks still have most of the revenues. ABC is still owned by Capital Cities, an undistinguished newspaper chain; CBS is owned by a real estate operator who cut back its most distinguished activity, the news and documentary units, to pay off the huge indebtedness it incurred while fighting off hostile takeover attempts; and NBC is now owned by General Electric, the tenth largest US corporation and a major defense contractor. They purchased NBC from RCA for $6.3 billion.

Even though book publishing is not driven by mass advertising the way papers and magazines and television are, it is still concentrated. Of the six largest book publishing firms, five are active in other media. The six companies are:

  1. Paramount Communications (Simon & Schuster, Ginn & Company, and others)
  2. Harcourt Brace Jovanovich (Academic Press and others)
  3. Time Warner (Little, Brown; Scott, Foresman; and others)
  4. Bertelsmann, A.G. (Doubleday, Bantam Books, and others)
  5. Reader’s Digest Association (Condensed Books and others)
  6. Newhouse News (Random House and others)

Even with turbulent times, the motion picture business has kept the same faces. In 1988, in terms of share of box office grosses for their films, there were four firms with most of the movie business:

  1. Buena Vista Films (Disney)
  2. Paramount Communications (Paramount Pictures)
  3. 20th Century Fox (Murdoch)
  4. Time Warner (Warner Brothers)

The Root Of Many Evils?

Of special interest are the complications that the ownership of NBC by General Electric brings to the picture. For GE is not your typical media company. GE “interlocks” with other major industrial and financial sectors of our economy, such as wood products, textiles, automotive supplies, department store chains, and banking. This can lead to a lot of conflict of interest situations.

Consider the director of a company – let’s say Company A – who also sits as director of Company B.  How does he (or she) choose between the best interests of Company A or Company B? Remember, that under law “the director of a company is obliged to act in the best interests of his or her own company.”

The truth is, that these “interlocked” boards of directors “have enormously complicated potential conflicts of interests in the major national and multinational corporations that now control most of the country’s media.”

A 1979 study by Peter Drier and Steven Weinberg found that the major newspaper chains are filled with these interlocked directorates. Gannet, for instance, shared directors with “Merril Lynch (stockbrokers), Standard Oil of Ohio, 20th-Century Fox, Kerr-McGee (oil, gas, nuclear power, aerospace), McDonnell Douglas Aircraft, McGraw-Hill, Eastern Airlines, Phillips Petroleum, Kellogg Company, and New York Telephone Company.”

The New York Times, the most influential paper in the United States, is interlocked with “Merck, Morgan Guaranty Trust, Bristol Myers, Charter Oil, John Manville, American Express, Bethlehem Steel, IBM, Scott Paper, Sun Oil, and First Boston Corporation.”

Time Inc., before it became Time Warner, had such an incredible interlocked directorship that it almost “represented a Plenary Board of directors of American business and finance, including Mobil Oil, AT&T, American Express, Firestone Tire & Rubber Company, Mellon National Corporation, Atlantic Richfield, Xerox, General Dynamics, and most of the international banks.”

Judge Louis Brandeis, before he joined the Supreme Court, called this “the endless chain.” He wrote, “This practice of interlocking directorates is the root of many evils. it offends laws human and divine… It tends to disloyalty and violation of the fundamental law that no man can server two masters… It is undemocratic, for it rejects the platform: A fair field and no favors.”

The dominant media corporations are just that… corporations. Huge corporations. Half of them are members of the Fortune 500. This means that they are invested in, and that they themselves invest in other things, like “agribusiness, airlines, coal and oil, banking, insurance, defense contract, automobile sales, rocket engineering, nuclear power, and nuclear weapons. Many have heavy foreign investments that are affected by American foreign policy.”

In the normal course of everyday business, large corporations will attempt to make serious efforts to influence the news so that they appear in a positive light, to avoid negative and embarrassing publicity, and “to maximize sympathetic public opinion and government policies.”

This is now made easier, however, in that these same corporations now own “most of the news media they wish to influence.”

On Monday, August 27, 1973, William Sarnoff, nephew of one of RCA’s early president’s, David Sarnoff – and then president of Warner Publishing, the book publishing subsidiary of the conglomerate Warner Communications – called an even smaller subsidiary of Warner’s named Warner Modular, to ask a question. He apparently had seen ads for a Noam Chomsky-Edward Herman book scheduled to be run in the New York Times, New York Review of Books, the New Republic, the Nation, and Saturday Review. Sarnoff wanted to know whether this was going to be another Pentagon Papers case that might embarrass the firm. Claude McCaleb, president of Warner Modular said no, that it was an analysis of public material by two established academics.

Two hours later, Sarnoff called McCaleb again and demanded that he personally fly to New York that night with a copy of the book. McCaleb delivered the book the next morning and went to the New York Hilton to be present when the first copies of the book, hot off the press, would be presented to a sociological convention later in the day.

While working the Warner Modular Booth at the convention, he received a call from Sarnoff to report at once to his office. After arriving, according to McCaleb, “Sarnoff immediately launched into a verbal attack on me for having published  CRV (Counter-Revolutionary Violence) saying, among other things, that it was a pack of lies, a scurrilous attack on respected Americans, undocumented, a publication unworthy of a serious publisher.”

Sarnoff agreed with McCaleb that there was no libel problems, but, according to McCaleb, “He then announced that he had ordered the printer not to release a single copy to me and that the… [book] would not be published.”

McCaleb was taken back by the verbal assault. He said that he had not seen anything like it in 19 years of publishing. McCaleb reminded Sarnoff of the agreement he had made when he hired McCaleb – “that the professional staff would select the books and their judgment would be measured by the success of their books in the marketplace.” He said that Sarnoff dismissed the agreement, saying “it did not cover pieces that were worthless and full of lies.” He went on to complain that too many of McCaleb’s books were by left-wing authors, to which McCaleb replied that that was unavoidable since the purpose of this particular series was to print critical analyses of existing institutions.

Sarnoff canceled the ads for Counter-Revolutionary Violence and had the Warner catalogue listing the Chomsky-Herman book destroyed and a new one printed without the book being mentioned. McCaleb and his staff resigned in protest.

Five years later, Sarnoff could be found telling reporters that “if we abridge the freedom of any one writer or publisher we effectively abridge the freedom of all,” and that different points of view “should not be censored because of one’s political persuasion.” This was in response to numerous public outcries against a book another publisher was trying to publish… the memoirs of Richard Nixon. (People were telling others not to purchase the book until it was older and much cheaper.)

“In a democracy, only one condition justifies a private publisher’s imposing his personal politics on the decision of what to print: that a wide spectrum of other ideas has equitable access to the marketplace.” Something gets lost when a small group of publishers, all with the same outlook, dominate the marketplace of public ideas. In the old Soviet Union, a state publishing house would impose a political test on anything getting published. “If the same kind of control over public ideas is exercised by a private entrepreneur, the effect of a corporate line is not so different from that of a party line.”

It is extremely difficult, if not impossible, for the public to know if a publisher is exerting his corporate political views influencing what will get published and what won’t. After all, editors make hundreds of these publish/not publish decisions every day. It’s their job. And it is very easy to conceal a corporate viewpoint under other apparent good reasons. For instance, in 1982, Walter Cronkite and Ed Asner, both very popular at the time, had their programs canceled after each had made liberal speeches criticizing certain aspects of American foreign policy. The network stated that the reason for the cancellations was low ratings. Both Ed Asner and Walter Cronkite felt differently, noting that the network didn’t cancel other shows that had low ratings. But what could they do? They couldn’t really come up with any evidence to refute the network’s claim.

There are numerous reports every year about reporters, editors, television producers and writers who are either fired or demoted because they stepped on the corporate toes of their owners, But the worst damage is not in the initial incident as much as it is in the long-lasting effects of the incident. Word eventually gets out about the incident and hard working professionals at the editorial level “behave as though under orders from above, although no explicit orders have been given.” The result is… self-censorship.

Do Corporations Influence the Media They Own?

Do corporations influence the media they own? You bet they do!

“When Du Pont owned the dominant newspapers in Delaware, they regularly censored news stories or ordered emphasis in display depending on how the stories would affect family interests, actions so blatant that a distinguished editor resigned rather than comply.”

When General Electric purchased two radio stations and a TV station (KOA-AM, FM, and – TV), the stations started constantly promoting General Electric.

When striking Marshall Fields store employees tried to buy Chicago Sun advertisement space to explain why they were picketing the stores, they were refused. (Marshall Fields owned the paper).

For years after World War II, “no standard newspaper would accept ads from Consumers Union because its magazine, Consumer Reports, tested and reported, sometimes negatively, name brands advertised in newspapers.”

Perhaps one of the most important powers the media companies have is the power to create ideas and movements which, if necessary, “can reflect the strictly private desires of the media owner.”

Take William Randolph Hearst, for example. In 1949 he ran a huge publishing empire. He and Henry Luce, chief of Time, Inc., were very worried about communism and the growing liberal attitudes taking place in the United States. What do two powerful people do in this kind of situation? Well, why not create a media personality who will have an international impact? Someone who will carry the anti-communist message burned in his forehead to peoples everywhere. Someone with “contrived” credibility.

Hearst and Luce started searching for this individual. They eventually interviewed an “obscure preacher” and lent him their support. In late 1949, Hearst sent a telegram to all Hearst editors telling them to “Puff” the preacher. They did – in Hearst newspapers, magazines, movies, and newsreels. Within two months, this unknown backwoods preacher was preaching to crowds of 350,000 people!

In 1950, Luce lent his support to the Hearst publicity. The preacher later stated that “Time and Life began caring about everything I did, it seemed like. They gave me a tremendous push.”

By 1954, the preacher made the cover of Time magazine. He was preaching “Either Communism must die, or Christianity must die,” and soon became a supporter of Senator Joe McCarthy.

The name of this preacher (if you haven’t guessed already) is… Billy Graham.

The Hearst media empire was used to create Joe McCarthy also. When McCarthy was desperate for a campaign issue in 1950, he couldn’t help but notice the media support for anticommunism. In his historic speech in Wheeling, VA., he stated, “I have here in my hand a list of 205 names known to the Secretary of State as being members of the Communist Party… still shaping policy in the State Department.”

It sent a shock through the country. The rest is history. In recent years, William Randolph Hearst, Jr. who inherited the leadership of the empire from his father and personal friend and supporter to McCarthy admitted, “Joe gave me a call not long after that speech. And you know what? He didn’t have a damn thing on that list. Nothing.”

Here was a case where a newspaper chain had authoritative information regarding a falsehood that would paralyze politics in this country for five years, and they not only sat on it, but they geared up support for the person responsible.

The very size of the Hearst and Luce media empires allowed them to virtually create a national atmosphere of distrust and fear, and then perpetuate it.

One result of wielding the vast power of some relatively narrow corporate idealogies has been the creation over time, of some very widely established political and economic illusions in the United States, with very little visible contradiction seen in the media to which the majority of the public is exclusively exposed. The illusions supported by these media corporations are not minor ones. Often, they go to the heart of crucial public policy.

For instance, the general public is largely unaware that from 1950 to 1984 corporations reduced their share of federal revenues from 25 percent to 8 percent. This shift, if reported at all, usually is depicted as a necessary move to improve the economy and decrease unemployment. However, in reality it is very doubtful that it improved the economy. Much of the savings went into numerous unproductive mergers and acquisitions, “to lavish dividends at the expense of reinvestment to keep the industries competitive, for transfer of jobs to foreign countries.” But don’t doubt for a minute that the corporate shedding of their fair and proper share of taxes did indeed shift heavier burdens to individual taxpayers. Of course, this point was missed in the news. Eventually, “the corporate escape from taxes became intolerable by 1986” – a generation late in the news.

Another myth (quite popular) is the one concerning union wages and productivity. In fact, a true perspective about union wages is seldom reported in news stories about unions and national productivity. It is common to hear people exclaim that union workers are unproductive, yet… “The truth is that productivity in unionized industries has risen. It has fallen in the non-unionized sectors that include white-collar and administrative workers.” And don’t overlook the bad press that unions have received in general, with the media hyping every misdeed ever done by union leaders until most people sputter whenever you mention the name “union.” (I wonder if some of the 100,000 white collar IBM workers soon to be unemployed won’t later wish they had some union protection?)

However, the greatest loss due to all this “giantism” in the media is not necessarily its unfair advantage in power and profits, which is certainly serious enough. The real loss, is in the “self-serving censorship of political and social ideas, in news, magazine articles, books, broadcasting, and movies.” Often this self-censorship is not even a conscious effort, as subordinates learn by habit to conform to owner’s ideas. “But subtle or not, the ultimate result is distorted reality and impoverished ideas.”

Corporate Heroes?

“The publication, Media Decisions estimated that as much as $3 billion in corporate money goes into all methods of promoting the corporation as hero and into ‘explanations of the capitalistic system,’ including massive use of corporate books and teaching materials in the schools, almost all tax deductible.”

During the 1970’s and 80’s, there was a rigorous corporate campaign against the media, led by the oil companies. This was due in part to incidents like the Ford Pinto. You remember that one, don’t you? A report got out that Ford had done a study regarding the danger of their car, the Pinto. (It had this nasty habit of exploding into flames whenever it was rear-ended.) The study determined that it would be less costly to not fix the car and pay death benefits than it would be to fix the gas tank! When word got out, Ford was incensed over the treatment it got in the press. And in general, corporations felt they were getting bad press.

But the oil companies went after the media with a vengeance during the “energy crisis.” The sky-rocketing prices for energy during the crisis were accompanied by tremendous profits to the oil industry. When the oil industry released its profit numbers (used to impress foreign investors), people who usually ignore these types of things took notice. “The public demanded that legislators, civic groups, and the media explain why private citizens were asked to sacrifice, but oil companies were not.” A survey at that time showed that 25 percent of Americans favored nationalizing the oil industry.

Following the energy crisis, Mobil Oil, the third largest industrial corporation in the country started using some of its $25 million annual public relations budget for advertisements directed against the news media. It put ads in hundreds of newspapers deriding the news agencies for biased reporting, economic ignorance, and lack of devotion to the First Amendment. (Yet, Mobil’s own history of advertising isn’t unblemished. In 1980 Mobil agreed – under threat of official penalty – to repair the inaccuracy of an ad Mobil was running which stated that a particular product would save up to 25 percent in oil consumption, when in fact, it actually increased oil consumption).

Mobil declared “Any restraint on free discussion is dangerous. Any policy that restricts flow of information or ideas is potentially harmful.” (An interesting point of view for a corporation that soon afterwards urged PBS not to air a program that would upset its oil partner, Saudi Arabia.)

Many of the ads Mobil pays for praise the company for its sensitive attention to pollution. Yet, when the Council of Economic Priorities (of which Mobil is a member) issued a report that showed Mobil’s poor pollution record, Mobil withdrew support from the Council.

When Columbia University created a program to teach business reporters some economics (a move that would have helped eliminate some of the “economic ignorance” that Mobil complained about), Mobil contributed to the program, but later withdrew its support when Columbia named a new director to head the program that at one time had criticized the oil industry. (I guess this shows what kind of “economic literacy” Mobil desired.)

Another Mobil ad stated that the company needed all its profits for drilling because “only 1.7 percent of  its wells struck oil.” Of course, the ad didn’t explain that this was only true for a small category of drilling and that “the average success rate for all drilling is about 60 percent.”

A similar ad asked the question whether oil companies could be trusted to search for new energy supplies. The ad answers the question with “History says yes.” But, that’s not true. The profits gathered by the oil industry are not going into searching for new energy resources. Instead these profits are going into buying non-oil properties, So much so, that in 1979, “the year the Mobil ad appeared,” the total value of their non-oil properties was worth $35 billion. Mobil itself was busy during this period of time, investing its profits in “the search for new energy supplies” by purchasing Montgomery Ward, Container Corporation of America, Kansas City restaurants, Hong Kong condominiums, and W. F. Hall, one of the largest commercial printing plants in the world. Today, Mobil uses its profits “in the search for new energy supplies” by printing Playboy magazine, National Geographic, and Bantam and Random House paperback books.

Mobil also used its power to attack an economics reporter for UPI. What’s interesting about this is that the reporter, Edward Roby of UPI, graduated from West Point, was awarded the Silver Star for valor, is a devotee of Milton Friedman and personally believes that corporations should pay no taxes. But, he also believes in printing the truth.

On June 5, 1981, Roby received a routine government report prepared by the Financial Reporting System of the US Department of Energy. He noticed that the effective tax rate for the 26 largest energy firms, including Mobil, Exxon, and Gulf, was surprisingly low for their adjusted gross income. You see, typically the nominal corporate tax rate is 46 percent, “but in fact the average tax rate paid by all US corporations in 1979 was 23.7 percent. The twenty-six largest energy companies, according to the report, paid even less – 12.4 percent – at a time of record high oil profits.” This 12.4 percent income tax rate for the largest oil companies was the same rate that “would be paid by a private citizen who made less than $20,000 a year.” Intrigued by this information, Roby wrote an article explaining this to the public.

Mobil went right to work denunciating Roby’s  article in 11 different newspapers, under the headline, “Won’t They Ever Learn?” They claimed in their article that oil company income is taxed by the country in which it is earned according to that country’s corporate tax rate. The foreign income taxes are then credited against (according to US law) their foreign income to make sure that corporations avoid double taxation on the same income. Mobil went on to say that “Despite the fact that we have pointed it out hundreds of times, reporters still can’t seem to get it right.”

That should put Roby in his place, right? Wrong. Roby and the UPI article were correct. Mobil neglected (hundreds of times apparently) to tell its readers about the nice little arrangement it had made concerning the definition of “income tax” with Saudi Arabia.

You see, Mobil is a member of Aramco, a consortium of four oil companies – Mobil, Exxon, Socal, and Texaco – that deals with Saudi Arabia for oil. Way back in 1950, the Saudis announced that they were going to increase the price of its oil to its partners. Normally, this would mean that Aramco would have to pay the higher royalties and then deduct this higher cost from its revenues, as  a “cost of doing business,” much the same way that an individual taxpayer can deduct some of the total amount of doctor bills from his or her total income (but not taxes). But, this isn’t what happened.

“In 1977, Representative Benjamin Rosenthal of New York produced secret Internal Revenue Service documents going back to 1950. They showed that the tax laws of Saudi Arabia were drafted with the help of Aramco to call the added price of oil not a ‘royalty’ or a ‘cost of doing business,’ as was proper, but an ‘income tax.’ The Saudis did this knowing that income tax paid to a foreign country is deductible from the income taxes an oil company pays the United States on all income received in the United States by the parent firm.”

At the time, the Treasury department called this “royalty exacted in the guise of an income tax” a “sham.” Yet, so powerful was the oil lobby that the Treasury accepted the provision anyway. In 1977, a calculation by the House Ways and Means Committee showed that “about 75 percent of what the oil companies paid Saudi Arabia for oil was counted as ‘income tax,’ reducing their US taxes so much that it cost other US taxpayers more than $2 billion a year.” So profitable is this arrangement, that it causes US oil companies to push the use of Middle East oil despite its higher costs, its uncertain future, and the trouble our dependence on it gets us into (the Gulf War for example).

Knowing the truth about the way the oil companies operate, it should be no surprise to anyone that when the oil companies started dealing with China (which has no income tax) for oil, they actually asked the Chinese to exact an income tax! I think it’s safe to assume that this request did not arise from a desire to pay taxes to a Marxist regime, as much as it did from the desire to artificially lower its taxes in the US.

A few days after Roby’s report on Mobil, Exxon attacked another article by Roby and this time mentioned him by name. The article by Roby simply restated what had already been reported by the Wall Street Journal and industry trade papers.

You may remember that around the same time, James Watt announced that a vast area of the oceanic continental shelf was going to be opened for oil exploration. Roby, however, did not report the stink being raised by the environmental movement about this claim, but rather that a number of oil companies thought that “too much” acreage was being opened for exploration. Roby stated in his article that a communication from Exxon to Secretary Watt had recommended offering “much less acreage in each sale.” This, by the way, was exactly what was stated in the communication.

Exxon sent teletypes, telegrams and mailings to editors all over the country denouncing Roby and saying that he “misrepresented” Exxon’s position. They never mentioned what Roby said or what their communication stated. All they said is that Roby misrepresented their position. The truth of Roby’s article is documented by the requests for less acreage made by other oil companies such as Atlantic Richfield, Union Oil, Sohio, and Marathon.

Yet, with truth or accuracy of no interest, the assault against Roby worked. UPI told Roby that he was to do no further reports about Mobil and no “in-depth stories on oil and taxes, even though his specialty in the UPI Washington bureau was energy and environment and even though his superiors agreed that his stories about the oil companies had been accurate.” Roby left UPI a short time later and became a European correspondent for another major American news organization.

So why did Exxon attack Roby about an article that contained the same information that had already been printed by papers like the Wall Street Journal, the Washington Post, and other news organizations?

You can make a case for the fact that Roby, due to his expose about oil and taxes, had become a target. With millions budgeted by the oil corporations for dissecting and attacking news they don’t like every year, the oil companies make a formidable enemy. “But, with each passing year they have yet another power: They are not only hostile to independent journalists. They are their employers.”

Advertising and the Media

In the 1800’s, as mass production of goods demanded mass communication for selling purposes, advertisers spent an average of $28.39 a year per household “urging people to buy goods and services.” By 1980, that figure had increased to $691 per household (29 percent of the ad money sent to newspapers, 21 percent to television, 7 percent to radio, and 6 percent to magazines.)

Newspapers now get 75 percent of their revenue from ads, general circulation magazines 50 percent, and broadcasting almost 100 percent. And since over $30 billion is spent each year on these media, advertisers aren’t about to “leave to chance who will see their ads.” Gone are the days when circulation was the driving factor for newspapers and magazines. Editors are no longer concerned about the “number” of people reading their rags, they are concerned about the “quality” of people instead. Is the audience too young, or too old? Or perhaps, not affluent enough? As the pressure increases on newspapers, magazines, and broadcasters to become more and more profitable, so too does the incessant push for – not just larger audiences – but higher-quality audiences. And each newspaper, each magazine, each broadcast station is out there insisting to the major advertisers that it has the highest-quality audience and is therefore worthy of their business.

The methods used by advertisers to determine the demographics of their ad carriers leave nothing to speculation. They carefully audit subscription statistics and scientifically analyze the data with  computers to determine exactly the “kind of individual that is exposed to a particular kind of advertisement in a newspaper, magazine, or broadcast.” Increasing in importance also, is the context of their ads in the medium. What kinds of articles surround their ads in newspapers and magazines? What type of broadcast program is their ad inserted in? To display an ad for a Mercedes Benz next to an article about world poverty does not make an effective association for making a sale. So, both the “quality” of an audience and the non-advertising context surrounding their ads have become very important to major advertisers. Needless to say, as a result these things have become very important to the owners of newspapers, magazines and broadcast stations.

Gannett, the largest newspaper chain in the country, owns ninety-three daily papers. A study by William B. Blankenburg of the University of Wisconsin, concludes that the chain aims at a smaller audience, but one that is more affluent: “The lost subscribers, if less wealthy… may not have fitted into their marketing scheme.”

“Otis Chandler, head of the Times Mirror empire, owner of the Los Angeles Times and the fourth-largest newspaper chain, said, ‘The target audience of the Times is… in the middle class and… the upper class… We are not trying to get mass circulation, but quality circulation.’ On another occasion, he said, ‘We arbitrarily cut back some of our low-income circulation… The economics of American newspaper publishing is based on an advertising base, not a circulation base.'”

“With no ads, who would pay for the media? The good fairy?”

Samuel Thurm, Senior Vice-President,Association of National Advertisers

Publishers are involved in an interesting magic act done for the ultimate benefit of the readers, who get something for nothing: The publishers purchase boiled pine trees for one-third more than they sell them for and they make billions of dollars in profits. How can they actually sell their raw material for less than they pay for it and make huge profits? The answer is advertising. “Advertisers eagerly pour billions into this seemingly uncapitalistic transaction and they, also, make billions in profit.”

This, of course, appears to be a wonderful free lunch for us consumers. And in fact, media owners insist that the “public is granted the gift of newspapers and magazines at less than cost and that broadcasting is completely free.” But you and I know that there is no such thing as a free lunch.

Americans do not get their newspapers and magazines at less than cost. We do not get our radio and television free. We “pay” for our “free” television, and we pay extra for our “subsidized” newspapers and we pay for advertising. Somehow, this message is not being told via the communications most of us are totally dependent on – “the advertising-supported newspapers, magazines, and commercial broadcasting.” An understanding of media economics may help explain the “illusion.”

This is somewhat convoluted, but I will try and make it as clear as possible:

If you purchased a newspaper in 1940, the paper you got would be, on average, 31 pages in length. Advertisers would have occupied 40 percent of these pages, or twelve and a half pages, to be exact.

This means that the paper contained eighteen and a half pages of editorial matter. The cost to you for this paper – 2 cents.

In 1980, the average length of a newspaper was 66 pages, of which 65 percent (or 43 pages) was advertising. This left 23 pages of editorial matter. The cost of a paper in 1980 – 20 cents.

If you were to sell the 1940 newspaper in 1980 (applying 1980 price indices), its cost would have been 5.7 cents. To bring the paper up to the number of editorial pages available in 1980 (24 pages) would bring the price of the paper up to 7 cents. If you added a penny to give the publisher a bigger profit beyond the 1940 margin, the price would be 8 cents, which is four times more than the 1940 price. But the price in 1980 was not 8 cents. It was 20 cents, which is ten times the 1940 price! So where is the difference? It is mainly in the money that we readers are being charged for the added advertising pages being delivered daily to our homes. In 1980, folks, we were not buying the paper for less than cost, we were paying for advertising.

Of course, publishers have been working on producing larger papers (with more advertising) for less cost for years now. With new computerized printing technology, smaller print, and thinner newspapers, they are lowering their production costs every year. But, the price of the newspaper is not going down. “By 1980, newspapers were getting more revenues per ton of paper than before the sharp newsprint increases of the 1970’s. None of these savings is reflected in prices charged readers.”

How much readers pay for advertising is further understated when you not only consider the fact that the increase in pages, from 31 in 1940, to 66 in 1980, was due to increased advertising; but also consider the fact that the additional editorial pages (from 18 in 1940 to 24 in 1980) did not mean that we were getting more “news.” What actually happened is that we were really witnessing an increase in what the newspaper business calls, “fluff,” (a gray area somewhere between real news and advertising). Fluff is highly desirable to advertisers, because it helps to create a “buying mood.” In 1940, “hard news” (i.e. contemporary events and commentary) consisted of four pages of the 31-page newspaper (or 13 percent). In 1980, five pages of the 66-page newspaper was hard news (or 7.5 percent). In other words, we were paying more for a rapidly shrinking share of the whole newspaper.

Twenty years ago, a prominent editor, Carl E. Lindstrom of the Hartford Times, predicted that newspapers would eventually “sink under the weight of what he called “Revenue Related Reading Matter.” Huge sections of the newspapers devoted to things like fashions, food, travel and real estate, were created as advertising bait. You may read the articles in these sections and once in a while find something useful, but most of it is going to be a mix of light syndicated features and corporate press releases. More recently, the editors don’t even pretend that these sections have anything to do with journalism, as they turn over control of these sections entirely to their advertising departments, allowing them to be filled with whatever the department thinks will enhance the selling of their ads.

And when faced with a periodic shortage of newsprint, what do publishers decide to cut – news or advertising? You guessed it… news. “In 1973, for example, a survey by the Associated Press Managing Editors of 470 daily papers showed that the reaction to shortages of newsprint was 7 to 1 to cut news rather than advertising. Seventeen percent of those who cut the news said they would not restore it when newsprint became more plentiful.”

The spread of fluff continues. Just take a look at your own hometown newspaper. In 1979, a study done by the Newspaper Advertising Bureau, showed that in 1977 and 1978, “23 percent of the country’s papers had added ‘special lifestyle sections’ and 24 percent ‘increased ratio of features to hard news’ but only 11 percent ‘increased ratio of hard news to features.'”

Between 1971 and 1977, the non-advertising content of our daily newspapers reduced the local news, news about state government, education news, labor news, and minority news. And in the same time period, they increased puzzles and horoscopes, comics, nonlocal human interest and lifestyle articles, business and finance, and crime news.

As you might guess, changes in news content are not made in response to what readers want. For every serious survey, “including those by the newspaper industry itself,” shows quite clearly that what readers want is… more “hard” news. But what we get instead is… more fluff. “In the words of Harold Evans, former editor of the London Sunday Times, the challenge of American newspapers ‘is not to stay in business – it is to stay in journalism.'”

The domination of content by commercial advertising took a different form in magazines and broadcasting. For example, in the late 19th century, magazines attracted the attention of advertisers because it was the only national medium (newspapers concentrated on local news only) and it had high quality paper. Yet, ads in these publications were relegated to the back pages since editors assumed that “they were an intrusion to the readers.” But, in the 1890’s, when advertising revenue became important, ad agencies insisted that their ads be moved from the back of the magazine to the front. Later, these agencies demanded that their ads appear opposite the opening pages of major articles.

“Eventually, the influence of advertising on magazines reached a point where editors began selecting articles not only on the basis of their expected interest for readers but for their influence on advertisements.” Of course, serious articles were not always the best support for ads. Articles that put a reader in an analytical frame of mind did not do much to encourage the reader to take an ad seriously when the ad depended on fantasy or promoted some kind of trivial product. An article, for instance, on social suffering, probably interrupts the “buying” mood on which a luxury ad depends.

The next logical step was to actually commission magazine articles for the express purpose of attracting readers who were good prospects to buy the products advertised in their magazine. This eventually led to the phenomenon of the 1970’s – “creating magazines for an identifiable special audience and selling them to particular advertisers.”

We are now in a stage where the immediate desires of advertisers have a higher priority with newspaper and magazine publishers than the desires of readers.

Broadcasting, of course, has the firmest attachment to advertising. Historically, however, this was not the case. Radio, when it first started, wanted nothing to do with advertising. The most popular stations were noncommercial and operated by universities, states, municipalities, and school districts. “Millions of Americans were tuning in to university lectures, taking correspondence courses by radio, and listening to drama, music, and debates in their communities.”

Commercial radio at the time was operated by a private cartel called, RCA (Radio Corporation of America). Its chief members were General Electric, Westinghouse, and AT&T (American Telephone and Telegraph). Under the agreement, their primary purpose for operating the radio stations was to sell home receiving sets that they and AT&T would manufacture. So, at this stage, the noncommercial radio stations were considered useful participants in the plan, since their popularity helped to increase the sale of radios manufactured under RCA, GE, and Westinghouse labels. A few years later, AT&T began operating radio stations (which it called, “phone booths of the air”). “On August 28, 1922, at 5pm, the AT&T station in New York, WEAF, broadcast the first commercial, and broadcasting in America has never been the same.”

As time progressed, so did commercials. Eventually, there were millions of dollars to be made. The educational radio stations were no longer considered desirable for selling radios. Rather, they were looked at as a threat because their large audiences reduced the audiences that commercial stations could sell to merchants. Commercial stations banded together with their RCA-related corporations to use their influence in government to force educational stations to give up their popular radio frequencies and broadcast times. “Puzzled listeners to the noncommercial stations would discover that their favorite station was no longer at its regular frequency, which was occupied by a new commercial station.” If the listener followed the radio program to its new frequency, they might find that it didn’t come in clearly because of low power, or perhaps that it now aired on a strange schedule such as early morning hours or mid-afternoon. Eventually, they would find their favorite program was gone altogether.

Corporate owners could afford to send lawyers to regulatory hearings to argue their case, and challenge educational licenses. The threatened educational stations, of course, could not afford to fight back. The result of this was that in 12 years noncommercial radio was destroyed in this country, and it has “never regained health.” By the 1930’s, “radio made all its money from advertising and created its programs to support advertising.”

To protect their growing financial interest, the broadcast industry insisted that government regulate the air waves, to “prevent chaos on the dial (at one time most popular stations operated on the same frequency, jamming each other).” Government then gave each station a monopoly spot on the dial and made it a crime for anyone else to use that frequency. Government in return asked stations to “operate in the public interest.” What exactly this meant was rather vague, and thanks to their influence in government, stations were able to schedule their “public interest programs” during those times of the day “when there were no commercials, which meant there were minimal audiences.”

Television became a nationwide medium after World War II and evolved into a commercial activity supported almost entirely by advertising. In fact, during the first years of television, “whole programs were produced and controlled by single advertisers.” This period of time is known in broadcasting history as “the golden age” of television. Primarily this is because these programs were coherent and had unintrusive commercials. Some were comedies, but many were original, live dramas. The dramas were very popular and attracted big audiences which were important in stimulating the sales of television sets. “Network stations realized their first large profits from programs like Philco Television Playhouse and Studio One, with plays by authors like Paddy Chayefsky and Gore Vidal.”

Then, an obscure little lipstick company named, Hazel Bishop, with only $50,000 in annual revenues, took a gamble on TV. It presented a commercial message unattached to the sponsorship of a particular show. Within two years, Hazel Bishop was grossing $4,500,000 per year. Television has never been the same since. Companies, seeing the results of the Hazel Bishop gamble, rushed to buy commercial time as they dreamed of similar results. The networks then started killing the hour-long theater and comedy programs “even though their sponsors were willing to pay premium prices.” Instead, the networks began selling the “spot” ad – “the ten-second, thirty-second, and sixty-second audience and selling them to particular advertisers.”

In response to complaints about the increasing number of ads, the broadcasting industry replied that radio and television broadcasting is free, so advertisers are actually giving the public something for nothing. Of course, this article of faith has never been debated on the radio or television or in the newspapers or magazines. As a result, it has become an “accepted” fact that mass advertising is somehow essential to preserving the free press and “free” broadcasting. A parallel argument to this is that mass advertising saves us money because it stimulates mass sales, “which permit mass production, which reduces the cost of each item.”

Unfortunately, the opposite appears to be true. Radio and television are not free. Consumers spend “$116 a year in amortized cost of the TV set, antennas, and maintenance.” This is more money spent receiving broadcasts than is spent transmitting them.

The “savings” to us consumers due to mass advertising is also dubious. “An increasing number of economists find that mass advertising is a major instrument by which big firms keep prices artificially high.” According to the Supreme Court, mass advertising restrains competition by preventing new products from new companies from reaching the public. The newer companies can’t afford the costs of advertising. Advertising is therefore being used by many industries to maintain their power in the economy.

It became apparent early on that a single message, spread over the entire continent, was actually a commodity of “extraordinary value, economically and politically.” It was also discovered that once a message (either a set of memorable words or a striking graphic design) had been launched over the entire continent and was repeated sufficiently, it began to have a value separate form the product it advertised. (I still remember jingles from my childhood – “plop, plop, fizz, fizz, oh what a relief it is!” or “it’s so easy when you use Lysol!” among others). A familiar brand name with a life of its own is, of course, a big benefit to companies that have superior products. But it is also a benefit to companies with inferior products, because it actually helps prevent competition.

How? Well, in actuality, mass advertising can negate the classical theory of supply and demand. This is the theory that success in the marketplace will automatically attract new sellers with lower prices and therefore keep established sellers from raising their prices to exploit the rush of business.

This theory, of course, worked rather well in Adam Smith’s1 village square full of farmers selling the same kinds of products to housewives who could then test the product by smelling it, squeezing it and tasting it. But this theory began to evaporate when the village square was replaced by “large, distant corporations, making complex products that could not be judged directly by the average consumer – products like automobiles or medicines, or products with purely emotional differences, like perfume, or categories of products that are the same, like aspirin.”

For it is with these products that advertisers can produce a brand loyalty based not on the experience of the consumer, but on the “cleverness and persistence of advertising.” If the product fails somehow to meet expectations, or is considered overpriced, an advertising campaign can overcome the difficulties and lessen the chances that a new competitor will enter the scene. Emotionally charged advertising can shift the consumers attention away from the disliked characteristics of the product, or sweep away “the field before a non-advertising competitor can win approval.”

Do you remember the Studebaker automobile? In the 1950’s, Studebaker had to sell their cars in smaller quantities due to small advertising budgets. But, for the ads they did buy, they had to add $64 to the cost of each car they sold to cover their advertising costs. GM and Ford with larger advertising budgets and therefore larger sales, only had to add $27 to the cost of each car to cover advertising costs. So, even before the Studebaker could be tested by the consumer as to whether it was a superior product or not, it already cost $37 more than GM or Ford. In order to remain competitive, Studebaker had to reduce its profits by $37, which reduced its capability to compete with the giants even more. Add to this, the volume advertising discount of 7.5 percent given to GM and Ford as major advertisers, and the result can prove fatal to new competitors regardless of the quality of their products or their costs of production. Studebaker went bankrupt.

Some people would like to argue that advertising will not work unless it is promoting a superior product. But, the history of consumer goods includes spectacular examples of products that were highly successful yet were either dangerous or ineffective. Granted, this was true before the creation of advertising, but goods were then sold in much smaller volumes so the ill effects were on a much smaller scale.

One of the biggest users of ads initially was the patent medicine market. This is a market that has a tremendous reputation for past tragedy and fraud. Trendy slogans and false claims of healthy results often covered up harmful ingredients like cocaine and heroin, or ineffective ingredients like alcohol and water. One of the most successful products of this era was Lydia Pinkham’s Vegetable Compound for “female discomfort.” Its ads stated that it could “do more for a woman than any physician in America.” Perhaps, since it was 14 percent alcohol. Whatever else it contained was useless.

Lydia Pinkham continues to have imitators. Consider mouthwash sales. In the 1970’s, these sales skyrocketed to $300 million a year. This, even though the National Academy of Sciences has said, “There is no convincing evidence that any medicated mouthwash, used as part of a daily hygiene regimen, has therapeutic advantage over… salt water and even water.” But, due to the color added to mouthwashes and associations between color and emotions, and of course, constant repetition of the same messages, companies spend over $115 million a year to sell mouthwash. We, the public, get mouthwashes that are from 5 to 25 percent alcohol.

Did you know that all aspirin is the same? Because of this unmentioned fact, the $130 million a year the public spends on aspirin is pretty much a waste. “Four of the top ten advertisers on television are drug manufacturers.”

Does advertising a product over and over reduce the product’s price? No. In fact, there is evidence that the opposite is true. Think about it. When sales start to sag in a company’s product line, do they reduce the price of the product? Hell no! They increase their advertising, which is deductible from their corporate taxes as a business expense. This is a much more palatable cure than reducing prices.

Did you know that all liquid bleach is basically the same? Simply a 5.5 percent solution of sodium hypochlorite. The difference in pricing between the different bleach products is mostly the creation of advertising. As we walk down the grocery aisle, we scan the shelves for the familiar brand name, usually unaware that the source of our familiarity is “most often the pleasant associations that have flowed out of the consumer’s television set.” But, the more advertising such goods receive, the higher the price that we consumers have to pay.

When Clorox Bleach sales began to fall in the 1970’s due to the recession (and a consumer movement towards lesser priced “generic” brands), Clorox responded with a statement to its stockholders that “the Company is responding to these challenges with an increased marketing effort.”

The standard theory of supply and demand says that the automatic response to lowered demand is lowered prices. Because of advertising, and “consequent market control, that is no longer necessarily the case.”

“It is no coincidence that industries considered to have artificially high prices and high barriers to entry by competitors include those industries that advertise heavily in the mass media – liquor, drugs, soaps, autos, photo supplies, cereals, soft drinks, cigarettes, toilet preparations, tires and tubes, large appliances, chemicals, and petroleum products.”

Mass advertising is no longer simply a means of introducing and distributing consumer goods, although it does that. It has evolved into a key mechanism used by a relatively small number of giant corporations, to hold “disproportionate power over the economy.” Newspapers, magazines and broadcasting are needed by these corporations not just to sell products, but to maintain their continued economic and political influence. This makes the media not just some neutral agents of the merchants, but “essential gears in the machinery of corporate giantism. And increasingly they are not only needed but they are owned by the corporate giants.”

Perhaps this is why the advertising-supported media have not told the complete story about the “miracle” of advertising. We, the viewing public, have this glowing picture of wonderful new and liberating products made possible through mass advertising, of products at the lowest possible prices, of a vital competition kept alive through advertising, and cheap newspapers and magazines and of course, “free” radio and television. Ain’t life grand?

“And let us remind readers regularly, in editorials, in our promotional advertising, in speeches to civic groups and others, that advertising helps people live better and saves them money. This fact needs constant selling.”

            Paul Miller –  when he was CEO of Gannett in a message to his peers.

“I have a theory that television, in particular, has never been evaluated properly. Television, I would say, isn’t an advertising medium, it’s a selling medium.”

William S. Paley, founder of CBS

The issues addressed so far in this article are important. As consumers of media we are paying artificially high prices for goods that are advertised through our media. And we pay high and hidden prices for the media themselves. Top this off with the fact that the media are no longer neutral or simply selling space and time to merchants to promote their goods, but are now actually vital instruments needed by major corporations to maintain their economic and political power.

What you end up with are questions – questions about the role of the mass media in the American economy and politics.  Face it, advertising is not a simple luxury for large corporations. Instead it is an activity with very definite and profound economic and political consequences. After all, the media are now totally dependent on these corporations, and increasingly are owned by such corporations. As a result, the media have become virtual partners in achieving the “social and economic goals of their patrons and owners.” Yet, whom does the American public rely on as its primary source of information and analysis concerning these types of economic and political issues? Yes – the newspapers, general magazines, and broadcasters. “This raises the question whether our mass media are free to exercise their traditional role of mediating among the forces of society at a time when they have become an integral part of one of those forces.”

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Jeff Drake

Retired IT consultant, world-traveler, hobby photographer, and philosopher.