Media Giants Overlook One Thing: The Consumer

The New York Times has embarked on an occasional series, “The Media Giants,” which will “examine the business strategies of the major media conglomerates.” The first article, focusing on AOL Time Warner, was informative and interesting--omitting, based on a cursory analysis, only a few salient elements.

The consumer. Ordinary people. And the public-policy implications of gigantism--including folks whose jobs, in the crush toward industry consolidation, have wound up on the cutting-room floor.

Granted, in covering the entertainment industry, one can easily be drawn into looking at the world from a media giant’s-eye view, especially in a venue such as the New York Times’ business section, where the assumption is doubtless that if you’re reading such a story, you either run a media giant, own stock in a media giant or can certainly afford to shell out $12 a month for Home Box Office.

That said, coverage of these companies too often takes it as a given that everyone gets 220 channels, has access to a high-speed modem and is actively clamoring for technology that will allow them to peruse interactive data and buy mutual funds while watching CNBC.

So for those who may feel a bit left out when reading about the coming media deluge and its architects, here are a few statistics that put matters in perspective--beginning with the fact that those in the ranks of the unconverted are hardly alone but, in many instances, represent an overwhelmingly majority.

Take HBO. If an alien landed tomorrow and began rifling through magazines from Newsweek to Entertainment Weekly, he would report back to the home office that HBO is the most ubiquitous and popular entertainment vehicle in our culture. It may be a relief, then--for those whose life doesn’t come to a screeching stop when “The Sopranos” or “Sex and the City” come on--to be reminded that the pay channel is purchased by only a third of U.S. homes.

Moreover, at this point, four in five households have the opportunity to subscribe to HBO via cable or satellite dishes. That means more than half of those who could have the pay channel choose not to buy it, somehow unmoved by the allure of its glitzy series and movies.

For that matter, cable and dishes are available to just about everyone, which means a fifth of consumers--more than 20 million U.S. households--either don’t own a TV (a minuscule percentage), are content with the half a dozen channels they can blurrily discern, thanks to an old-fashioned antenna, or don’t feel they can afford paying for more.

To be clear, this isn’t an endorsement of such a Luddite approach. Much of the new technology available is wonderful stuff, offering a jaw-dropping assortment of programming and services--to be viewed and enjoyed at the consumer’s convenience--for those who care to have it.

Even top brass at the media giants, however, concede they have no idea precisely how much demand exists for some of the newer interactive technologies and innovations, especially among a baby boomer generation bred on passively staring at the tube until they grew up needing big, thick glasses. Laser surgery can address the side effect of this practice, but the recent demise of various online ventures pushing entertainment suggests it may take more than that to alter decades of ingrained TV-watching habits.

The “can’t afford it” bracket, meanwhile, raises more significant issues as society marches toward the long-discussed 500-channel future, where the emphasis will be on consumers paying for information, entertainment and services. That’s the plan, at least, at AOL Time Warner, whose subscription-driven strategy is based on letting consumers order and view programs when they want them, provided they are willing to pay for it.

Industry executives are assuming most people will gradually accept a pay-to-view arrangement, in the same way that those who use the telephone frequently pay more for the privilege.

The fear in some quarters is that this will inevitably lead to a society of information haves and have-nots, after a democratic 50-year history where enduring commercials was the most ostensible annoyance associated with reaping the benefits of TV news and entertainment--a burden that was shared by everyone.

Relying strictly on advertising, however, began to change with the advent of cable and remote controls. The next significant technological wave brings with it new devices making it easier to avoid commercials, such as the personal video recorder marketed by TiVo. (There are about 200,000 TiVos in circulation, by the way, so if you fear being the last on your block to own one, at their current penetration level of 0.2% of U.S. homes, there’s little danger unless they start handing them out free.)

Nevertheless, fear of zapping is already prompting networks to cram more ads and product-placement into programs, as any viewer can testify--from the promos plastered across the screen after each break to those sandwiched between plays in sporting events.

While the push to pony up for television will affect everyone over the long haul, a subset of the population has felt the pinch of media gigantism more directly and immediately.

Media giants, being media giants, have profit goals to reach, and by owning so much and being so big, they can frequently do more with fewer bodies. The result, in many cases, involves the combination of assets and staffs--as one sales and programming force, for example, services multiple stations or networks.

In the process, a lot of people lose their jobs--a point the New York Times acknowledged in its AOL Time Warner profile 48 paragraphs into a 55-paragraph story, and then with the somewhat euphemistic phrase that the company has “cut costs aggressively.”

Just guessing here, but one suspects those whose positions were aggressively cut might find that aspect of consolidation to be somewhat more germane. A small splash to Gulliver, after all, can look like a tidal wave to the Lilliputians.

Because media giants play such an integral role in what we see and hear, it certainly behooves us to understand them. Yet if you’re not waiting breathlessly for the next innovation meant to help fill your every waking hour with TV programming, rest assured that you are in the middle of the curve, not behind it. In this respect, the most comforting thought may be that in a marketplace of ideas, even a media giant can be muted if people turn a deaf ear to what he’s saying.

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Brian Lowry’s column appears on Wednesdays. He can be reached at brian.lowry@latimes.com.