SCHOOLS BRIEF A world view Culture is local. So why are the news media and the entertainment industry increasingly global? The seventh in our series on globalisation asks whether it matters if we all watch the same shows and listen to the same songs IN MOST corners of the world, the name of Mickey Mouse will elicit at least a glimmer of recognition. Walt Disney’s most famous creation was one of the first stars with a global name. Now, Mickey has become a symbol—of the influence the United States has on global media, and particularly on television. Flick a remote control almost anywhere on earth, and you will see American products: Hollywood films, the CNN news channel, television shows such as “Friends” or “The X-Files”. Until recently, globalisation and Americanisation have gone hand in hand. But now the media business, and especially television, are becoming increasingly multinational. That trend is inextricably linked with another: an activity that was once mainly state-owned and monopolistic is becoming privatised and competitive. Both developments are driven partly by technological change, which has both increased the production and distribution capacity of media companies, and reduced some of their costs. For the moment, the scale of America’s role in global media, both as exporter and investor, is unique. Other countries are big producers of entertainment: India, for instance, makes more films each year than America (see chart 1), and the Mexican Televisa network is helping to launch digital television in South America. But the giants of American media, such as Time Warner, Walt Disney and Viacom, dominate entertainment export markets and lead joint ventures which are creating new television businesses around the world. Although some of the world’s largest book and newspaper publishers are based elsewhere, America is home to most of the world’s largest audio-visual companies. Governments have not fostered the globalisation of media. Instead, even more than in other industries, they resist foreign investment. Most countries restrict foreign ownership of television channels. In continental Europe in particular, some politicians want to go further, and ration imports of foreign television. But do such measures make sense? Is the globalisation of media really a threat to local cultures? And what forces are driving it? Tuning in The globalisation of television is essentially a consequence of the transition of broadcasting from a medium in scarce supply to one of plentiful capacity. For most of this century, the limitations of spectrum have restricted the number of television and radio channels. That is why, in most countries, the state has owned and run broadcasting—sometimes at arm’s length, as in Britain and Japan, sometimes directly. Even where, as in the United States, broadcasting has been a commercial and competitive business from the start, it has been heavily regulated. The transition to plenty began in the United States. The sheer size of the country, and the absence of public subsidies for transmission facilities, has meant that the quality of over-the-air television signals has been worse than in other rich countries. So most American homes have long had the option of television delivered by cable. As even quite rudimentary cable can carry many more channels of television than can be broadcast over the air, America has long had far more television channels than other countries. In the 1980s multichannel television began to spread around the world. The main driver was the falling cost of launching communications satellites: the technology that had once allowed the Soviet Union and America to spy on each other became an inexpensive way to transmit television signals. Initially, only cable companies could afford the huge antennas required to capture those signals, which they would then retransmit to fee-paying subscribers. In the late 1980s, miniaturisation made it possible for individuals to pick up those signals directly with dishes small enough to be mounted on the roof of a home. The result was a big increase in the capacity of broadcasting systems. What could fill that capacity? National television industries tended to be geared to filling the limited number of slots on domestic channels—and their output was often unadventurous or just plain dull. American media groups, though, had off-the-peg channels such as CNN, Nickelodeon and MTV to offer. They were also used to producing for a competitive market; they had the world’s most successful film industry; and they had huge libraries of cartoons, elderly soap operas, classic films and other programmes ripe for reuse. This material has been the basis of the expansion of global media, an expansion that is now accelerating with the arrival of digital television. Digital compression typically allows between eight and 12 channels to occupy the same capacity required by a single analogue channel. Starting with satellite, but moving on to cable and over-the-air broadcasting, the ability to transmit television programmes will thus become eight to 12 times greater—and the number is rising. Two other factors have helped to create a market for American exports. One is language and culture; the other, the curious economics of the business. Well before the birth of multi-channel television, American films dominated world cinema. True, in the 1950s and 1960s, they competed with those made in Europe. But by the 1970s European film-making was moribund. And American films have always been more successful at tapping a global mass market than any others. The average investment for a theatrical feature film is $12.3m in the United States, compared with $6m in Britain and less than $5m in France. In addition, the American culture that they package seems to have a universal appeal that may have something to do with America’s melting pot or simply with Hollywood’s commercial cunning. And English has become, thanks to the combination of British colonialism and American commercialism, a global tongue. All these factors give the American entertainment industry advantages that Japan, say, or Germany cannot easily emulate. Add to this set of cultural strengths a second factor: the huge advantages brought by the size of the American domestic market for entertainment. According to Screen Digest, a British trade magazine, a major film release in the United States is typically shown on 1,300 screens, compared with 450 in Germany and even fewer in other rich countries (see chart 2 above). Television shows enjoy a similarly vast home market (see chart 3). This is important, because television production is a fixed-cost business. It costs little more to bring the “Oprah Winfrey” show to its first audience than to its millions of viewers around the world. The main expense is Ms Winfrey. The producers of such shows can cover their costs at home, and then sell around the globe at prices that local programmers find hard to match. Most European broadcasters find that the programming they make costs between two and five times as much as programming bought from outside (see chart 4 below). Imports are thus the cheapest way to fill the airwaves. Side by side with the increasing import of foreign programming, there has been a growth of foreign—again, mainly American—investment in media. Once more, television has been the chief focus. Usually, investment takes the form of joint ventures, often of labyrinthine complexity. This is because restrictions on foreign ownership make it hard for foreigners to buy local stations and networks, and because cultural differences make it useful to have a local guide. The switch to digital is creating new opportunities for foreign participation. Partly, this reflects the falling cost of distribution, as digitisation has cut annual operating costs. In addition, governments that would never allow foreigners to buy an over-the-air analogue channel seem willing to let them experiment with digital channels. The same applies to the mobile-telephone business, where governments have been more willing to allow competition with digital than with analogue telephones. Go home, Mickey Mouse But television is not telephony. When foreign companies buy into local media groups, or foreign shows appear on television screens, people often feel much more concerned than they do about other sorts of foreign investment and imports. That is understandable. Media and entertainment play special roles in society. The fact that, say, Rockefeller Centre in New York is bought by a Japanese company may be galling but has few political repercussions. In Britain, where one-third of newspaper circulation is controlled by a single foreign company (Rupert Murdoch’s News Corp, based in Australia), many people resent what they see as foreign influence on national politics. Some worry that this foreign invasion will destroy local cultures. Others fear the homogenisation of distinctive national and regional tastes. Finally, some countries fret about the economics of globalised media. European broadcasters in particular have become huge markets for imported television programming. According to Screen Digest, Germany, France and Britain each spends more on such imports than Australia, Canada and Japan combined. More than half their spending goes on American imports, with the result that the continent runs a large and growing deficit on this account. All told, Europe buys about $2 billion a year of American television programmes; Britain, the only European country with sizeable programme exports, sells a meagre $85m-worth to the entire North American market. Some European governments therefore advocate quotas on the proportion of foreign programming that national channels can show. After a long debate, the European Union agreed earlier this year to a directive called “Television without Frontiers”. Its aim was to keep frontiers in place, by insisting that half the programming shown on European television be made within the EU. In the face of intense opposition, led by Britain, the words “where practicable” were added, rendering the provision ineffectual. Do attempts to restrict foreign influence in the media make sense? Take, first, controls on foreign ownership of broadcasting. When spectrum was extremely scarce, it was defensible for governments to allocate it. Once many homes have access to hundreds of digitally compressed channels, the logic diminishes. It is, of course, undesirable for one company, foreign or local, unduly to dominate a market; but big is not necessarily bad. A single television group producing several channels with different viewpoints is surely preferable to several groups with almost identical channels. In a world with many channels, television may well become a more differentiated product, more akin to the multiplicity of magazines than the narrow market for national newspapers. Indeed, foreign ownership may sometimes be a way to ensure diversity. In countries where excessive domination by one group is a problem (such as Italy, where virtually all commercial networks are owned by a company controlled by Silvio Berlusconi, a former prime minister under investigation for various transgressions), the problem is more likely to be too little foreign investment than too much. Foreign ownership does not necessarily reinforce the tendency to buy foreign programming. In television, as everywhere else, companies usually seek to provide the goods their customers seem to want. In Asia, Rupert Murdoch’s plan for a pan-regional satellite channel has been a failure: instead, he has been forced to develop channels to suit local tastes. Almost everywhere, the programmes audiences like to watch the most are their own country’s. Look at the top-rated shows in almost any country, and most or all will be local products. Audiences watch imports only as a second choice—and American television channels increasingly repackage their shows when they take them abroad to give them a local presenter and a local feel. In China, for example, Shanghai TV is making a Chinese version of “Sesame Street”, backed by America’s General Electric, to show its 100m viewers. In fact, the technological change that makes it less expensive to distribute American programming around the world will sometimes help to reinforce local culture. True, global competition threatens the survival of the high-cost programming that many state-owned broadcasters in Europe produce. But technology will cut the cost of producing cheap-and-cheerful local programming. It will also be less expensive to distribute minority programming to scattered audiences around the world. This year, for example, a group of Taiwanese investors launched Space TV Systems, a group of eight digital direct-to-home channels, in Chinese, Vietnamese, Japanese and Korean, for Asians in North America and Australia. In this way, the globalisation of media may underwrite a globalisation not merely of Mickey Mouse, but of the many cultures valued by people who are separated by distance from their geographic or ethnic origins.