Deregulation & Disruption: A Tyrannical Cycle

Jennifer Holt’s Empires of Entertainment: Media Industries and the Politics of Deregulation, 1980-1996 presents a case-by-case narrative of rampant and farcical capitalism through an American lens, packed with media moguls and expansive conglomerates. Holt rightly states that:

“[This was a] Gilded Era for the entertainment industry — one that witnessed unprecedented growth, new developments, and economic expansion while spawning its own breed of ‘robber barons’ in the form of media moguls. The media industries also benefited from the same laissez-faire government policies that companies and markets enjoyed in the late 1800s” (5).

The aforementioned policies flourished under the Reagan Administration based on what are now referred to as “Reaganomics“.This figurative opening of the flood-gates resulted in swarms of media convergence as well as vertical and horizontal integration of several companies, perhaps most notably Time and Warner Bros., which was the largest merger of its time. As opposed to the hyper-competitive marketplace that Reagan envisioned, the landscape that actually ensued was one dominated by a select few conglomerates.

Courtesy of DeviantArt user Thunderbreak

“Im in ur economys trickling down ur moneys”. Courtesy of DeviantArt user Thunderbreak.

Herein lies the farce of capitalism as heralded by Ronald Reagan, though there was an unforeseen by-product of his deregulation policies: disruptive innovation and media. Challenging the long-standing empires of the film industry, Time-Warner unleashed Home Box Office. HBO was a runaway success and asserted itself as a “middleman” (29) between the film studios and the burgeoning enterprise of cable television, “negotiating the relationship between the studios’ product and the audience for their product on cable” (29). The increasing earnings of the network brought many of these powerhouses to their knees, even as Paramount, MCA/Universal, 20th Century Fox and Columbia scrambled to create their own network, Premiere. This disruptive shift was a strategic win for Time-Warner and a huge blow for the film studios, but merely marked a temporary imbalance in the media dominion. From the ashes where the “Big Five” of film and broadcast TV giants like ABC and CBS once stood arose a new empire, one dominated by the likes of Time-Warner, Viacom and today, Comcast. The masquerade of these so-called capitalistic machinations continues as we see new companies and technologies such as Netflix, Amazon and YouTube forced into battle against the current iteration of the media empire. The trend seems to be disrupt-divide-conquer-stagnate for each of these giants as perfectly demonstrated by HBO in the 1980s.

The war continues.

As much as history seems to repeat itself, the invention of the Internet seems to be the ultimate disruptor in terms of both media and telecommunications. The singularity of the web may prove that, with the proper wherewithal and Internet connection, any number of start-ups can find success and elevate themselves to the level of these aging empires. We see services such as Facebook and Twitter challenging typical journalism and also greatly enabling and diversifying the voices heard. HBO had to relinquish its stranglehold on premium TV and pay-per-view thanks in no small part to Netflix. In fact, over just a few years, the company has retracted its initial stance on offering à la carte TV, with their HBO Go service slated to launch as a standalone service this year. However, this marked change doesn’t mean that the tyrants are willing to retreat just yet; the Time-Warner and Comcast merger is still on the docket and being reviewed by the FCC which would surely stifle Netflix and similar company’s growth and creativity through data caps and other restrictive policies. Let’s just hope for innovation’s sake that Chairman Tom Wheeler is nothing like Mark Fowler in his stance on regulation.

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