Work It Out: Company Culture and the Construction of Entertainment Empires

In her book, Empires of Entertainment: Media Industries and the Politics of Deregulation, Jennifer Holt discusses the development of broadcasting networks and cable in the modern age, specifically focusing on the process of deregulation. Beginning with the presidency of Richard Nixon in 1969, the elimination of regulatory rules that limited entertainment companies’ ability to integrate horizontally and vertically progressed steadily throughout the 1970s, ’80s, and ’90s. Despite the FCC’s initial determination to prevent such changes, deregulation gained momentum over the years, reaching its height with the approval of the Telecommunications Act of 1996 and the termination of the Financial and Syndication Rules. While the establishment of a successful media empire relies on, no doubt, the accumulation of profitable assets through mergers and business deals, there exists another, more significant factor that is often overlooked: the compatibility of company cultures.

TedIn 1981, CBS launched a new basic cable channel, CBS Cable, featuring programming dedicated exclusively to the arts. As Holt notes, “the programming was ambitious and sophisticated; it included everything from a twenty-five-program history of modern jazz and a series set in New York cabarets to the Vienna Philharmonic Orchestra” (68). Though the venture’s enormous start-up costs caused the channel to fail just one year later, its attempt to establish CBS as the go-to arts programming service garnered praise from critics and demonstrated the emerging importance of niche marketing in the television industry.

Ted Turner had planted the seeds for this approach early on, securing the rights for TV coverage for two of Atlanta’s sports teams in 1973. Despite the team’s dismal track record and their hefty price tag, Turner saw the potential in creating a scheduling niche in sports. This discovery led to the creation of CNN; though not specifically sports-based, the network was guided by the same principles that made Turner’s sports endeavor so successful. In fashioning a channel targeted towards a specific interest (in CNN’s case, news), Turner acknowledged the significance of crafting a recognizable “theme” for his channel and his company, an idea that CBS and, eventually, Disney would later adopt.

In fact, it was Disney’s adoption and adaptation of this mindset that led them to pull off one of the most successful mergers in television history. Just as Viacom was dedicated to the acquisition of useful and relevant content, so too was Disney who, in the 1990s, seemingly “wrote the book on content creation and brand management” (Holt 153). The company’s masterful construction of the Disney empire (or rather, the “Magic Kingdom”) and brand made it one of the most successful conglomerates in TV history. The company’s long-standing relationship with ABC made the network the perfect acquisition candidate and in 1995, Disney bought the TV network for a whopping 19 billion dollars.

Brady But what’s significant about this purchase, aside from its watershed moment as the first post-fin-syn merger of a film studio and broadcast network, is how it illustrates the significance of “company culture” to a group’s financial success. A longtime customer of the family-friendly Disney, ABC had boasted similar values for years, regularly airing shows like The Adventures of Ozzie and Harriet, The Brady Bunch (left), and Growing Pains. Disney’s dedication to children’s programming, among other subjects, made it the perfect partner for the TV network, who had even collaborated with the media giant in the past on family-friendly projects (i.e. the launch of Disneyland, a TV show that highlighted Disney theme parts and short films (Holt 157)).

To fully understand the part that culture played in the Disney/ABC success, it’s helpful to imagine companies with clashing cultures and how they would fare in similar situations. Take MTV, for example. Known for its youthful, fun company culture, MTV has defined itself as the creative worker’s dream job. As former CEO Judy McGrath notes, “the worst thing that could happen to [MTV] is a bunch of guys in suits sitting around in a room saying, what are those kids talking about these days?” With management encouraging a ‘play around’ office atmosphere, the company prides itself on its laid-back approach to business. Merging MTV with an overly corporate entertainment company composed of “a bunch of guys in suits” would likely prove disastrous, as creative approaches and financial interests clashed. While two companies hoping to merge may have valuable assets to offer the other, unless the company cultures are compatible, their collaboration would be too complicated to pull off successfully in the long run.

For a more practical example, one can look to the AOL-Time Warner merger in 2001. In hopes of combining their digital influence with Time Warner’s massive content library, AOL offered to buy the media giant for 164 billion dollars in 2001, a landmark merger in the entertainment industry. With Time Warner looking to get their foot in the Internet’s door, the collaboration seemed like a natural, and strategically sound, development, one that would bring “new media” and “old media” together (Holt 169). While many point to the decline of the dot-com boom as the reason for the failed collaboration, Holt rightly adds that the “culture clashes between the two companies” contributed to their downfall (169). As Washington Business Journal reporter, Bill Flook, points out: “the corporate cultures could not have been more disparate. AOL was run like a big family. Time Warner was a ‘fiefdom company’ that couldn’t even cooperate division to division.” Despite the projected prosperity between the two media giants, in overlooking the significance of company culture, their endeavor failed.

Concluding her study on TV deregulation, Jennifer Holt suggests that future scholars and entertainment pioneers should “expand the [entertainment] paradigm to accommodate cultural concerns alongside those of economics and the law” (177). Her plea to consider culture in the construction of entertainment empires encourages, not only a focus on entertainment’s impact on culture but also, I think, the role culture plays in the success of such dealings. CBS and CNN’s early recognition of niche subjects as important to building a successful channel, paired with Disney’s happy collaboration with ABC and AOL’s failed collaboration with Time Warner, demonstrates the significance of company culture in the creation of a successful entertainment conglomerate.

Featured image via Fred Seibert, Flickr. Turner picture via Flickr. Brady picture via Google (Creative Commons).

Sources:

Flook, Bill. “30 Years: AOL buys Time Warner, but deal later implodes.” BizJournals. American City Business Journals, n.d. Web. 31 Jan. 2015. <http://www.bizjournals.com/washington/print-edition/2012/07/20/30-years-aol-buys-time-warner-but.html?page=all&gt;.

Holt, Elizabeth. Empires of Entertainment: Media Industries and the Politics of Deregulation. Rutgers University Press, 2011. Print.

Rao, Sree Rama. “A Case of MTV.” Citeman. 3 Mar. 2009. Web. 31 Jan. 2015. <http://www.citeman.com/5052-a-case-of-mtv.html&gt;.

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