A quick reply to Andrea's very interesting note on equity investment and her perceptive comments on the House of Lords report. Having drafted large parts of it, I don't disagree with the comments on different business models and the impact on quality. Without going into too much detail in a public forum, I can say that pars 154 and 155 are a very distilled version of something that was considerably longer (as a special adviser you learn to accept that you win some battles and lose others). I'm writing something now, using the enquiry evidence, that might redress the balance.
But I'm not sure that private equity models are significantly worse in their impact on quality outcomes than other corporate profit models such as publicly listed corporations, single owner controlled companies etc. Boards have a fiduciary obligation to maximise shareholder value, and the US evidence (see Appendix 4 of the enquiry) is clear that the big newspaper corps expect upwards of 30% returns regardless of the impact on editorial quality. And ditto the networks after their takeovers by the "three blind mice" of Disney, Viacom and GE (I'm quoting Tom Fenton, former CBS foreign correspondent). And are any of them any better than Richard Desmond and what he's done to Express Newspapers?
The problem is lack of rigorous comparative empirical evidence linking models of ownership, both private and public, to output - and operationalising definitions of quality. I'm working on it!
While writing, can I make a request? I've just been reappointed to the Lords committee for their new enquiry on UK content in TV and film, to be announced in a couple of weeks. It speaks directly to the debate on psb, regulatory controls and securing investment in domestic production, particularly the vulnerable areas of children's programming, factual and indigenous drama. I'd be grateful for any recommendations of articles, reports, evidence etc in the UK or Europe which anyone thinks might be helpful (don't have to be sent via meccsa, can send to my individual email). A lot of the debate at the Oxford convention on the future of C4 centred on sustaining a diversity of high quality domestic content, but there was widespread pessimism.
Prof Steven Barnett
Professor of Communications
School of Media, Art and Design
University of Westminster
Watford Road, Harrow
Middlesex HA1 3TP
Direct Line: +44 (0)20 7911 5981
email: [log in to unmask]
From: Media, Communications & Cultural Studies Association (MeCCSA) - Policy Network [mailto:[log in to unmask]] On Behalf Of Andrea Esser
Sent: 23 January 2009 17:45
To: [log in to unmask]
Subject: Private equity ownership in the media - 2nd attempt - with attachment this time (hopefully)
Dear Policy Network members,
At our meeting at the MeCCSA conference last week I was asked to put up a link to an important report about private equity investment in the German media for those of you who may be interested. As I find that few people know about private equity media ownership, or in fact know what private equity is, and because this is not just of interest to scholars interested in German media, I've tried my best to give you a half-way short but revealing account of private equity, the role it plays in the media sector, and of the German report that came out in May 2008 and my reading of it. My summaries are attached.
The German report, commissioned by the German broadcast regulator, the Direktorenkonferenz der Landesmedienanstalten and carried out by the Hans-Bredow-Institut for media research at the University of Hamburg in cooperation with the Center for Entrepreneurial and Financial Studies of the Technische Universität München and the Instiute for Journalism and Media Studies of the University of Zurich can be downloaded from this website:
In short, whilst quite informative, in my view the report offers a very disappointing economic analysis and as a result is not critical enough. This is true especially when it comes to Germany's (and now international) broadcasting group ProSiebenSAT.1 - a private commercial group, that runs major terrestrial TV channels that, like ITV, have public-service obligations. I am currently working on ProSiebenSAT.1 as a case study and hope to publish something on this of substance later in the year.
May I add that I think the German case of ProSiebenSat.1 is highly instructive for the UK considering current ownership discussions of ITV and Channel 4 and considering that the UK's House of Lords Communications Report on 'The ownership of the News' (2008) failed to pay sufficient attention to the threat of the continuing commercialisation of the media and its impact on quality. While the report expresses a general concern about quality, the report lacks insight in that it focuses nearly exclusively - as has been the case in the past decades - on the concentration in the sector and the worries this may have on plurality and diversity. Even in the section on 'different business approaches' (Ch.3) it does not however address different business models and economic issues. In my view private equity ownership and new ways of financing the media is something we need to look at urgently as it speeds up the whole commercialisation process.
With best wishes,
Dr Andrea Esser
Senior Lecturer in Media & Cultural Studies
Programme Convener Television Studies
Programme Convener MA Media & Cultural Studies
School of Arts
London SW15 5PH
Tel 020 8392 3357
Email [log in to unmask]
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