The Economics and Financing of Media Companies: Second Edition

CHAPTER 12. Trade and Globalization in Media Products and Services

220 CHAPTER 12 Trade and Globalization in Media Products and Services Mid- and large-sized media companies are increasingly expanding their activities internationally as they attempt to benefit from additional opportunities and markets for their content and services. Even some small enterprises are finding innovative ways to operate globally. Their activities involve trade in their products and, sometimes, globalization of the firm by establishing itself in locations outside the country of its origin. Trade is a term used to describe the movement of goods and services among countries and involves a number of activities ranging from shipping products to consumers outside the country of origin to establishing relationships with domestic distributors and retailers, who make them available in other countries. Globalization is a term used to describe the increasing internationalization of business activities by companies worldwide that involve more than mere trade in goods and services to include establishment of subsidiaries and joint ventures worldwide, as well as activities such as the acquisitions of supplies and the manufacture of components or finished goods beyond the borders of the nation of a firm’s origin. A number of factors promote trade and globalization in media and communication product and services. The first is demand. Although media exist globally and some domestic production takes place in every location, largescale content production capabilities—particularly in film and television— are not equally distributed and tend to be concentrated in a few countries. As a result, when desired products and services are unavailable domestically or when desirable products are elsewhere, firms in these nations look externally for content products they can use. The uneven distribution of capabilities, amount of production, and range of content production has occurred because domestic needs and financial support for production in large content-producing countries such as the United States has made it possible for content-creation clusters to develop. These involve financiers, producers, studios and equipment, directors, actors, and other necessary personnel and support services. These resources have been used to create products and services to serve the domestic market and simultaneously seek additional uses in foreign markets. Technical as well as policy changes worldwide have promoted trade and globalization in recent decades. Digitalization, global telecommunications, and transportation systems have combined to create mechanisms for easier distribution of media products outside their nation of origin. These changes have accompanied the liberalization of media and communications policies that has privatized much telecommunications infrastructure and created private commercial broadcast, cable, and satellite systems, increased the number of stations, channels, and networks, and generally heightened demand for information and entertainment products and services. For some firms, globalization has occurred when ownership limits, antitrust regulations, or other governmental actions have blocked growth in a company’s nation of origin. Some firms globalize when saturated domestic markets offer few additional opportunities or when revenue and profit levels plateau or decline in domestic markets and they seek horizontal and vertical integration opportunities elsewhere to increase revenue, reduce costs, or create economies. Whatever the motivation for individual companies, trade and global expansion are becoming increasingly important activities for all sorts of media companies. In some cases they limit their activities to selected countries or regions. In other cases they engage in commerce worldwide depending upon their resources and strategies, and the demand for their media and communications products or services. trade in media products and services Trade in media products and services has occurred since the first person paid a publisher or contact in another country to send copies of books, newspapers, or other printed matter for personal or commercial use. The development of this trade often followed colonial lines. Colonists in Brazil and Indonesia wanted books published in their native Portuguese or Dutch. Colonists in North America and India sent to England for copies of books and pamphlets. The needs of financial and business communities in Europe and North America led to the creation of financial news agencies—such as Agence Havas in France, Wolff’s in Germany, and Reuters in the United t r ad e a nd g l ob a l iza t io n i n m e d ia p r od u c ts an d s e r vi c e s 221 222 t r ad e a nd g l ob a l iz a t io n i n m e d ia p r od u c ts a n...