"Media industries typically exhibit two fundamental features, high fixed costs and heterogeneity of consumer preferences. Daily newspaper markets, for example, tend to support a single product. In other examples, such as radio broadcasting, markets often support multiple differentiated offerings. Both contexts can deliver preference externalities, when the options and well-being for consumers depend on the number and mix of consumers according to their content preferences. This chapter presents evidence on these fundamental features of media markets. We then incorporate these features into a suite of theoretical models to obtain both a description of media markets as well as predictions for how they would be expected to function. The mass media system in the United States is a market system. In a market system, consumers demand information and media companies supply the types and amounts of information that people will pay for. Payment can be direct or through advertising. The system in the United States differs from nonmarket systems, which are characterized by information being supplied based on demand by an institution, usually a government. Mass and specialized media are big business; in 2000 alone, industrywide revenues of media companies increased 18%, reaching $276 billion.
Media companies have undergone two changes during the past several decades that fundamentally change how they operate in the United States today. These are the merging of companies into larger and larger entities and the “going public” of many media companies. Media companies can be owned either publicly or privately. Under public ownership, the corporation sells stock to the public. Anyone who has enough money to buy stock can become part-owner of the public corporation. Under private ownership, a person or group of people owns all of the company stock. Ownership type has a significant impact on organizations.
Group and chain ownership has been a structural component of the media industry since the 18th century, but the issuing of publicly held stock by media corporations is a recent phenomenon. Group and chain ownership has continued to expand. During the 1980s, large media groups, such as Capital Cities and ABC, merged, combining a variety of newspaper and broadcast holdings. Early in 1986, in the largest non-oil company merger ever, General Electric acquired RCA—and the NBC network—for the astounding sum of $6.28 billion. This building of mega-companies continues. Today's largest companies include AOL Time Warner. Time Warner, even before the merger, was the most dominant company. It was followed by the Walt Disney Company, Bertelsmann, Sony, Viacom, the Fox Entertainment Group, Thomson Corporation, General Electric/NBC, AT&T Liberty Media, and Automatic Data Processing. The top 10 firms account for about 40% of all revenues.
Accompanying the merger phenomenon was the “going public” of media companies. In newspapers, this trend began during the early 1960s, with Dow Jones Inc., publishers of the Wall Street Journal, issuing publicly traded stock. The Times Mirror Company, based in Los Angeles and formerly a closely held family organization, was listed on the New York Stock Exchange in 1964. Gannett and Media General went public in 1967. During the late 1960s, components of what are now Knight–Ridder, the New York Times Company, and Lee newspapers all went public. During the 1970s, the Washington Post Company, owner of Newsweek magazine and several broadcast properties, and Affiliated Publications, owner of the Boston Globe, went public. Others soon followed the trend, and by the late 1980s at least 15 publicly traded corporations owned newspapers" (Source: Media Industry, ScienceDirect, 2025).