Thierer and English Cite Declining Market Capitalizations
WASHINGTON D.C. - If the stock market is any indication, the argument that just a few large media conglomerates control the market for what we see, hear and read, is completely without merit. So conclude Adam Thierer and Daniel English in the new Progress on Point, "Testing 'Media Monopoly' Claims: A Look at What Markets Say," released by the Progress & Freedom Foundation. In their paper, Thierer and English evaluate the market performance of five large media outlets and deduce that declining stock value -- market caps down 52% over the last four years -- is a clear indication that the corporations could not possibly be acting as monopolies.
According to Thierer, Director of PFF's Center for Digital Media Freedom, and economist English, today's media market is more diverse and highly competitive than ever before, a point is illustrated by a 200 percent increase in the number of media outlets over the past forty years. That competition is reflected in the market performance of five of the largest media operators. "By looking at the performance of publicly traded media firms and their stock over the past five years, it is readily apparent that monopolists do not dominate this marketplace," Thierer and English write. "Indeed, quite the opposite is true. Large, traditional media companies are struggling to adapt to a very rapidly evolving media market."
The authors argue that if the media industry is truly controlled by monopolies, investors would be clamoring to buy media stock. "Our analysis reveals that these five firms have lost a combined 52 percent of their value (in terms of market capitalization) over the past five years, making it impossible to conclude that these firms possess excessive market power. Simply stated, if this industry was 'monopolistic' or even 'oligopolistic,' its top firms would not be losing that sort of value."
Thierer and English also compare the stock performance of the five large media firms with the so called "new media" companies to further prove that older firms do not monopolize the media market. "(T)he media marketplace is far more dynamic and competitive than critics imagine. If any of these firms were 'monopolists,' they would go down in history as some of the worst performing monopolists of all time. Not only have they failed to recoup 'excessive' profits, but haven't even been able to return to value of their stocks to pre-2000 levels. Further, at least in terms of stock market performance, they are being easily outpaced by 'new media' companies such as Yahoo! and Google, who are stealing away an increasingly large share of the advertising revenue pie."
The issue of media monopolies is also explored in Media Myths: Making Sense of the Debate Over Media Ownership, authored by Adam Thierer and recently published by The Progress & Freedom Foundation. Media Myths debunks longstanding arguments in favor of aggressive regulation of media ownership.
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.