The Economics and Financing of Media Companies: Second Edition

by Robert G. Picard

Overview

In this updated and expanded edition of the acclaimed Economics and Financing of Media Companies, leading economist and media specialist Robert G. Picard employs business concepts and analyses to explore the operations and activities of media firms and the forces and issues affecting them.Picard has added new examples and new data, and he covers such emerging areas as the economics of digital media. Using contemporary examples from American and global media companies, the book contains a wealth of information, including useful charts and tables, important for both those who work in and study media industries. It goes beyond simplistic explanations to show how various internal and external forces direct and constrain decisions in media firms and the implications of the forces on the type of media and content offered today.

Product Details

ISBN-13:	9780823232567
Publisher:	Fordham University Press
Publication date:	05/24/2011
Edition description:	2
Pages:	286
Product dimensions:	6.20(w) x 9.10(h) x 0.90(d)

About the Author

Robert G. Picard, author and editor of 22 books, is Hamrin Professor of Media Economics and Director, Media Management and Transformation Centre, Jonkoping University, Sweden, and a fellow at the Reuters Institute at the University of Oxford.

Table of Contents

	Preface	xi
1	Media Firms as Business Entities	1
	Commercial Media and the Theory of the Firm	3
	The Roles of Profit and Return	4
	Media Firms and Risk	6
	Market, Financial, and Operational Characteristics of Media	9
	Summary	18
2	Business Models, Workflows, and Value Chains in Media Firms	21
	Media Products and Services	21
	Life Cycles of Media	24
	Business Models in Media	25
	Workflows in Media Firms	26
	Media Value Chains	30
	Core Business	36
	Value Chains and Convergence in Publishing Industries	38
	Competitiveness	44
	Sustainability	46
	Suggested Readings	46
3	Economic Forces Affecting Media	48
	Market Forces	48
	Capital Availability and Rent	48
	Audience/Consumer Demand	49
	Advertiser Demand	51
	Competition	51
	Substitutability	53
	Cost Forces	54
	Economies/Diseconomies of Scale	54
	Economies/Diseconomies of Scope	54
	Economies/Diseconomies of Integration	55
	Fixed and Variable Costs	56
	Cost Structures of Media Result from Effects of Economic Forces	59
	Content Costs	59
	Production/Distribution Costs	60
	Marketing and Advertising Costs	63
	Transaction Costs	66
	Nonmonetary Costs	68
	Regulatory Forces and Intervention	69
	Technical/Structural Regulation	70
	Behavioral Regulation	71
	Barriers to Entry and Mobility in Media Markets	72
	Capital Requirements	72
	Economies of Scale	73
	Product Differentiation	73
	Switching Costs	73
	Limited Access to Distribution Channels	75
	Government Policies	75
	Competitive Advantages	79
	Overcoming and Reducing Barriers	79
	Suggested Readings	80
4	The Influence of the General Economy on Media	81
	Growth and Contraction of the Economy	81
	Inflation	86
	Interest Rates	92
	Exchange Rates	94
	Preparing for Economic Changes	97
	Preparing for Fluctuations in the Economy	98
	Preparing for Changes in Inflation	99
	Preparing for Changes in Interest Rates	99
	Preparing for Changes in Exchange Rates	99
	Suggested Readings	100
5	Audiences and Consumers	102
	Audiences	104
	Wants and Needs of Audiences	105
	Audience Measures	106
	Audience Fragmentation	109
	Time and Media Use	111
	Consumers	112
	Demand and Prices of Media Products and Services	116
	Customer Satisfaction	118
	Audience Substitution of Media and Communications	119
	Strengthening and Stabilizing Audience and Consumer Relationships	120
	Suggested Readings	121
6	Media, Advertisers, and Advertising	122
	Why Advertising Exists	123
	Differences among Advertisers and Their Strategies	125
	Effectiveness of Different Media	127
	Mechanisms of Advertising	128
	Advertising Spending on Media and Media Products	131
	Demand and Pricing of Advertising	132
	Media Substitution by Advertisers	136
	Media as Advertisers	137
	Suggested Readings	138
7	Competition in Media Markets	139
	Competition and Market Power	140
	Product and Audience Differentiation Constrain Competition	142
	The Role of Geographic Markets	143
	Benefits of Competitive Advantages	146
	Brands and Branding Aid in Competition	147
	Competition among and between Media	149
	Intermedia Competition	150
	Intramedia Competition	151
	Summary	153
	Suggested Readings	153
8	Concepts in Media Financing and Financial Management	154
	Understanding Financial Flow	156
	Problems of Financing a New Firm or Product	156
	Financing Continuing Operations	160
	Credit Management	161
	Credit Evaluation	164
	Credit Risk Management	165
	Collection	165
	Bad Debt	166
	Internal Credit Management Reports	166
	Cash Management Issues	167
	Summary	169
	Suggested Readings	169
9	Capital Markets and Media Firms	172
	Wants and Needs of Capital Sources	172
	Venture Capital Helps Fund New Companies and Expansion	174
	Self-generated and Borrowed Capital Supports Most Existing Media	176
	Stock Markets Support Large Media Firms	177
	Stock Market Operations	179
	Stock Markets Worldwide	181
	Major Media Companies Traded on Stock Markets	182
	The Globalization of Media Capital	185
	Suggested Readings	186
10	The Development of Large Media Companies	188
	Growth Pressures and Strategies	193
	Growth through Diversification	197
	Growth through Mergers and Acquisitions	198
	Growth through Joint Activities	201
	The Pursuit of Synergies	204
	Organization and Management of Large Firms	206
	Company Cultures	207
	Managerical Conflicts	207
	How Large Is Large?	209
	Suggested Readings	210
11	Trade and Globalization in Media Products and Services	212
	Trade in Media Products and Services	213
	Barriers to Trade in Media Products and Services	218
	Regional and Global Trade Agreements	222
	Methods of Globalization	223
	Direct Export	224
	Product Licensing and Rights Purchases	224
	Format Licensing	224
	Joint Ventures	225
	Direct Foreign Investment	225
	Patterns of Media Globalization	226
	Summary	228
	Suggested Readings	229
12	Indicators of Economic and Financial Health of Media Firms	230
	Indicators of Economic Health	230
	Market Share Change or Maintenance	230
	Changes in Demand	231
	Indicators of Financial Health	231
	Sales Revenue Growth or Decline	232
	Change in Results	234
	Debt Growth or Decline	234
	Change in Asset Value	235
	Reinvestment	236
	Indicators of Company Internal Health	237
	Productivity	237
	Capacity Utilization	241
	Employee Turnover	241
	Personnel Skills and Knowledge	242
	Innovation (R&D, New Products/Services)	243
	Resource Dependence	243
	Benchmarking	245
	Suggested Readings	248
	Glossary	251
	About the Author	263
	Index	265

Editorial Reviews

Picard nicely covers traditional media with respect to both economics and finance and addresses many aspects of digital media.

Choice

Surveying the financial structures of American media companies, Picard (Turku School of Economics and Business Administration, Finland) explores how economic and financial forces influence the operation of media and communication firms. Writing for prospective managers in the industry, he introduces a managerial economics approach that looks at business concepts and their applications for making industry decisions. Chapters cover the life cycles of products and services, market and regulatory forces affecting media, the influence of the general economy, advertisers and advertising, market competition, capital markets, mergers and acquisitions, trade and globalization of products and services, and in dicators of economic and financial health. Annotation c. Book News, Inc., Portland, OR (booknews.com)

Booknews

"Robert Picard's The Economics and Financing of Media Companies is to the media economics genre as Tom Clancy's Clear and Present Danger is to action novels. . . Picard's book is a tour de force, covering an impressive territory with some surprising twists."-Benjamin Compaine, The Journal of Media Economics

Picard nicely covers traditional media with respect to both economics and finance and addresses many aspects of digital media. —Choice

From the Publisher