Vertical Integration and Globalization

Because globalization has as much to do with the corporate structure of a media company as with the products that a media company produces, vertical integration in multinational media companies becomes a necessary aspect of studying globalized media. Many large media companies practice vertical integration: Newspaper chains take care of their own reporting, printing, and distribution; television companies control their own production and broadcasting; and even small film studios often have parent companies that handle international distribution.

A media company often benefits greatly from vertical integration and globalization. Because of the proliferation of U.S. culture abroad, media outlets are able to use many of the same distribution structures with few changes. Because media rely on the speedy ability to react to current events and trends, a vertically integrated company can do all of this in a globalized rather than a localized marketplace; different branches of the company are readily able to handle different markets. Further, production values for single-country distribution are basically the same as those for multiple countries, so vertical integration allows, for example, a single film studio to make higher-budget movies than it may otherwise be able to produce without a distribution company that has as a global reach.

Foreign Markets and Titanic

Worth considering is the reciprocal influence of foreign culture on American culture. Certainly, American culture is increasingly exported around the world thanks to globalization, and many U.S. media outlets count strongly on their ability to sell their product in foreign markets. But what Americans consider their own culture has in fact been tailored to the tastes not only of U.S. citizens but also to those of worldwide audiences. The profit potential of foreign markets is enormous: If a movie does well abroad, for example, it might make up for a weak stateside showing, and may even drive interest in the movie in the United States.

One prime example of this phenomenon of global culture and marketing is James Cameron’s 1997 film Titanic. One of the most expensive movies ever produced up to that point, with an official budget of around $200 million, Titanic was not anticipated to perform particularly well at the U.S. box office. Rather, predictions of foreign box-office receipts allowed the movie to be made. Of the total box-office receipts of Titanic, only about one-third came from the domestic market. Although Titanic became the highest-grossing film up to that point, it grossed just $140 million more domestically than Star Wars did 20 years earlier (Box Office Mojo). The difference was in the foreign market. While Star Wars made about the same amount—$300 million—in both the domestic and foreign markets, Titanic grossed $1.2 billion in foreign box-office receipts. In all, the movie came close to hitting the $2 billion mark, and now sits in the No. 2 position behind Cameron’s 2009 blockbuster, Avatar.

One reason that U.S. studios can make these kinds of arrangements is their well-developed ties with the worldwide movie industry. Hollywood studios have agreements with theaters all over the world to show their films. By contrast, the foreign market for French films is not nearly as established, as the industry tends to be partially subsidized by the French government. Theaters showing Hollywood studio films in France funnel portions of their box-office receipts to fund French films. However, Hollywood has lobbied the World Trade Organization—a largely pro-globalization group that pushes for fewer market restrictions—to rule that this French subsidy is an unfair restriction on trade (Terrill, 1999).

In many ways, globalization presents legitimate concerns about the endangerment of indigenous culture. Yet simple concerns over the transfer of culture are not the only or even the biggest worries caused by the spread of American culture and values.