By Dane S. Claussen
2011-12 Head, Media Management & Economics Division

Strangely, I was recently asked to review Robert Picard’s The Economics and Financing of Media Companies, Second Ed. (New York: Fordham University Press, 2011. ix + 274 pp. $26, ISBN 978-082323257-4), for JHistory, the listserv for media historians.

But of course Picard’s book isn’t a history book, nor does it pretend to be, nor is it marketed as such. But it is a reminder to this reviewer about what journalism historians (and media economists) don’t have and, I think, won’t ever have: a comprehensive history of the economics and financing of media companies.

Before I go there, however, I first want and need to address Picard’s book as it is intended and appears. This second edition includes updated statistics and examples of market and corporate developments from the first edition, which was copyrighted 2002. Even the “Suggested Readings” lists at the end of each chapter have been substantially revised to cite numerous books that were published since the 2002 book went to press. The first edition was favorably reviewed in all of the expected places.

This book has been properly given credit for attempting to pack into less than 300 pages every microeconomic and macroeconomic force and factor that impact media, while also naturally covering, mostly in two chapters, the ways in which media companies are financed. The book also delves slightly into analyzing the financial health of a media company. Much of the book is about economic and financial factors and forces that are true for all companies or at least all consumer-oriented companies, as appropriate, but Picard always uses media industry examples and he notes those characteristics that are unusual or unique to media companies. Hence, the theory will be redundant to readers who have completed numerous courses in business administration and economics, but the relentless and narrowing focus on the media industries are of major help to those with no management/economics background in the media industries, which includes–from my observation–almost all journalism/media professors and a very high percentage of those who have worked in the media industries. (After all, how many employees at, say, a typical daily newspaper deal with its financing or market economics, at least at the big picture level of the publisher/president, CFO, or business manager?)

Picard’s only reference to behavioral economics, the biggest revolution in economic theory in the last 25 years (as the ascendency of efficient market theory, which behavioral economics largely debunks, predates behavioral economics), is on pp. 11-12: “Behavioral economics has shown that individuals and firms are affected by psychology and social psychology and that decisions are often made using existing frames of reference and groupthink. Choices are often made with limited knowledge and based on experiences and rule of thumb. In these situations, people tend to try to remove ambiguity by asserting superior knowledge and may act to avert or minimize risk and loss potential. These actions, however, can lead to difficulties when industries, markets, and products are in rapid change, because they tend to produce behavior that limits innovation and entrepreneurial responses.” Picard can say very little about behavioral economics-based research on media economics and media finance because almost none has been done. And Picard is correct that executives of media companies need to make decisions based on sufficient, if not more-than-sufficient, facts. But this reviewer suggests that studying media economics and media financing through the lens of behavioral economics would be highly productive, because for centuries, both media managers and media consumers have made a lot of media-related decisions based on frames of reference, groupthink, experience, and rules of thumb, with goals of averting or minimizing risk and loss potential, and with limited knowledge. (Just one example: how else to explain why anyone [including me] pays for a hard copy [on paper] subscription to any newspaper or magazine whose entire contents are available simultaneously and free of charge on the Internet?) This is not to say that they/we should, but only that we do.

As previously noted, Picard’s book also helps us understand how much we don’t know, and will never know, about the history of media economics, and the history of media financing. For example, on page 195, his Table 10-1 lists the dates and names of newspaper companies that went public: Times Mirror Co. in 1938, Gannett Co. in 1967, Knight Newspapers, Ridder Publications, Lee Enterprises, and New York Times Co. all in 1969, etc. But we won’t ever know the entire stories of any of these financing decisions: I would want to see budgets, strategic plans, tax returns, board minutes and resolutions, internal memos, financial statements, public relations materials, filings with the government and stock exchanges, etc., both before these companies went public (i.e. when they were still privately held) and after. Surely most or all such materials from the private ownership periods have been lost or destroyed or wouldn’t be made available, and one can only wonder where Times Mirror Co. records are from 1939, or where the Knight or Ridder internal records are from, say, 1970.

Likewise, to trace the history of, say, two metro dailies competing against each other, and against other media, for advertising dollars over a period of decades would require a large amount of material: advertising contracts, advertising rate kits, readership surveys, advertiser surveys, advertising department training and supervision materials, advertising staff payroll records, circulation/viewership/listenership audits, etc., from all of the major advertising media in a market for that period of decades. (I have a daily newspaper’s complete “media kit” for advertisers from the 1920s [note, for instance, that Audit Bureau of Circulations wasn’t even founded until 1914], and I think it would amaze just about anyone who thought newspaper advertising sales became sophisticated only recently, if even now.) Then there’s the role of local, regional, and national advertising agencies; records of major advertisers; advertising syndicates; and so on. Any such history would be extremely incomplete at best.

Writing the history of media management is only slightly easier, given the runs of newspaper trade publications, records of trade associations, books (for example, Frank Thayer released his first edition of Newspaper Management in 1926), biographies and memoirs of various editors and publishers, etc. But there are very few exceptions to the mostly to entirely missing historical record of various aspects of media financing, media economics, and media management in America; the E.W. Scripps papers at Ohio University, for example, tell us something about the internal workings of the country’s first real newspaper chain, but still not enough.

None of this is any reflection on Picard’s fine book, of course: most of the histories of media management and media economics are not relevant to today’s situation, and if Picard started adding a lot more current or historical examples and anecdotes to his theory-driven book, it would be twice as long, only slightly more useful in some ways, and distracting in most other ways. This review is a reminder that media management and media financing have long histories in practice (hundreds of years) if not as academic disciplines/subdisciplines and, sadly, we will never be able to know more than a fraction of it.

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