CRITICAL ISSUES

 
Converging or diverging culture(s)?
 The impact of secondary television circuits on the global community
 
 

OVERVIEW
 
In this section, we summarize several possible scenarios of globalization through worldwide diffusion entertainment products. More specifically, we will analyze to what degree globalization of television programming involves more than one exchange circuit and what the chances are of the emergence of secondary television circuits. These scenarios are constructed through the theoretical lenses of convergence and divergence theory (Stohl, in-press).
 


Secondary Circuits as Convergence/Divergence:

The process of globalization is reshaping the world's social, political, economic, and cultural landscapes. Some argue that we are being simultaneously torn apart and pieced together. Barber (1992) describes this dialectic in his article "Jihad vs. McWorld." He sees the Jihad as a retribalization in which cultures are pitted against one another in attempts to preserve native identities; while the McWorld is characterized by uniformity and integration that creates a commercially based homogeneity bound by forces of technology, ecology, communication and commerce (p. 1). Both forces are significant and complex--so much so, that unidirectional, static, or fixed descriptions ignore the inherent mutually casual relationship between them.

Waters (1995) defines globalization as "a social process in which the constraints of geography on social and cultural arrangements recede and in which people become increasingly aware that they are receding" (p. 3). The traditional constructs of time and space are broken down during the process of globalization, thereby stimulating the renegotiation of societal relationships. Individuals and groups attempt to explain these major shifts and events at local, national, and international levels. Yet, our individual interpretations and meanings ascribed to these events are partially shaped by a variety of cultural and organizational experiences. Communicative phenomena such as television programming are clearly a part of the process of globalization as communication is a sense-making process in which actors negotiate the ever-changing, unstable world around them. Television programming exchange goes far beyond commercial relationships, involving key roles related to national identification, social order and political power in national and transnational organizations. Stohl (in-press) elaborates, "[C]ommunication is the substance of global organizing in the sense that through everyday communication practices, organizational members collectively engage in the construction of a complex system of meanings which are intersubjectively shared and commonly misunderstood" (p.9).
 
Our team members chose to examine the communicative process of globalization by problematizing the industry of entertainment. We narrowed the topic field to an investigation of the flow of television programming, specifically secondary television circuits. We asked to what degree do certain poles of production dominate the flow of television programming? Our analysis reveals that the traditional producer and exporter of television programming has been, and continues to be Hollywood, USA. However, increasingly, challenges to the 'sovereign power' of Hollywood are being issued by the newly formed secondary television circuits producing local, culturally specific programming (see TV interactive map in the History section of this Web site).

Television programming has an especially important role in shaping such social meanings as communication content dictates the way local or global mass media systems will affect people's social experiences. A key question that arises is: if most of the programming exchanged commercially in the world is produced by a handful of countries dominated by the US, is the meaning of these experiences going to be globalized? Moreover, is centrality of a few producers going to produce homogenized content? Finally, do any other producers have a chance to break what many call a "monopoly?"

According to recent research these questions are hard to answer univocally. First of all, although American productions constitute the bulk of television programming exchanged globally, it only represents about one-third of what people can watch on TV around the world. This fact is confirmed even by studies that stress the dominance of American programming. Varis, ( 1985)  shows that in 1973 and 1983 only about than 30% of television programming on all the world's television networks were bought from another country. Our own programming database indicates that imports represent probably somewhere around 35-40% of total programming shown around the world. However, these figures have a large margin of error, and they can be vastly higher or lower. The data used in the database was collected by Television Business International in 1995 from 39 countries by using a convenience sampling procedure. However, as shown by the database only a minority of countries depend heavily on foreign programming.  Most countries are either self-sufficient or broadcast mixed programming.

It is important to keep in mind that these figures are not truly indicative of the actual rate of television import consumption around the world. They indicate what percentage foreign fare takes from the total airtime of any given station, not the actual ratings of the shows. As Antola and Rogers (1984) noted for the Mexican network Televisa, although in 1984 U.S. programming accounted for 50% of all broadcasting hours, these in fact represented only 33% of audience-hours of viewing. Similarly, "only 4 out of 50 top programs [in five Latin American nations: Argentina, Brazil, Mexico, and Peru] are U.S. imports; none of these rank higher than seventh place among the top ten" (p. 188).

What happens with Hollywood programming once it arrives in a host country? Hollywood television programming has long been accused of cultural empiricism. This falls, in Stohl's terms (in-press), under convergence theory. Local communities are subject to Western ideals under the guise of differentiation or appeal to local customs, traditions and attitudes. On the other hand, theorists such as Tracey and Redal (1991) talk about  'domestic populism' a concept which emphasizes the process whereby television is informed by local cultural preferences. All of these theories emphasize that television programming does not necessarily reflect life as a mirror, nor does it superimpose ideology.  Rather, its role is constitutive of forming local identities. Convergence imposes a homogenous taste onto larger, more diverse audiences.

On the other hand, flows of programming are not always just commercial in nature. Often they involve transfers of technology and know-how. American-sponsored local networks can, at some point, become new sources of programming themselves, as the Brazilian network Globo has demonstrated  (Margolis, 1996; de Melo, 1995). Import of American programming combined with commercial stations, satellite services and cable networks proved to be tremendous tools for accumulating funds for a second phase of active local production. For example, American programming helped launch dozens of local television outlets in Europe during the 80s, and it peaked in 1987 (at 30% market share). After this date, American programming's share started to decline.  The Economist (1994) explains this phenomenon by pointing out that money made from "cheap" imports are ploughed back under, for production of original local shows.

These developments were cause to theorize that in fact there are great chances for establishing secondary television programming loops, which will mark a point of divergence from the traditional paradigm of Hollywood domination. In this manner, the localized producers would resist the sovereign power of Hollywood and (re)create their own versions of social reality via television sometimes using American templates. Concretely, this may take the form of local production and growth of a strong entertainment industry outside of Hollywood. Forbes (L.R., 1997) notes, "Latin American producers are taking on Disney, Time Warner, Viacom, Sony and other producers and distributors of U.S. TV programs. Not in the U.S.--yet--but in foreign markets as diverse as Nigeria, Romania, Turkey and Russia." The breaking of the electronic neo-colonialism, as some radical critics refer to Hollywood's domination, was marked in 1996 by Nigeria's state network decision to schedule for its prime time slot none of the shows made available by Hollywood but the Venezuelan La Drama de Rosa, a 44-episode soap opera produced by Radio Caracas, which has shortly become the highest rated show on Nigerian TV.

No other part of the world has embraced telenovelas more warmly than Eastern Europe. Shows like Kassandra, Escrava Isaura and Esmeralda have paralytic effects over whole countries when one of their episodes are run in prime time (Armaselu, 1998). They are so successful that a UK-Venezuelan joint venture has recently started rolling out in Eastern Europe the Telenovela channel (Television Business International, 1997). The initial target audience of three million viewers is located in Poland, Romania and Hungary. However, the channel relies on state-of-the-art digital multichannel dubbing that allows broadcasting the same video signal to any country on the European continent in their native language. The operators of the channel plan to extend the service in Czech, Russian, Italian, and Spanish in the coming months.

Although still far behind Hollywood in absolute sales figure, the rate of export growth for Latin American producers is impressive. They are projected to double every year in the immediate future. Even more significant, points out Forbes (1997), "For the past 18 months Televisa has been producing telenovelas in English in Mexico City and has sold five English-language programs in Britain, Canada, Australia and parts of Africa. Televisa has negotiated with Fox Television in the U.S. and hopes to air an upcoming English-language soap here before the end of the year."
 
Even though globalization through secondary circuits is advantageous for emerging producers, it does little for the new target markets. Latin American television soap operas distributed to Eastern European  are only marginally a form of cultural renaissance in that part of the world. In fact they are a form of diversification of cultural imports.

Taken together, convergence and divergence work as a dialectic, a "globalization" of culture. . . Instead of conceptualizing television programming and its effects on global culture as static, fixed, or sovereign, perhaps a more productive and accurate manner in which to discuss the impact of both Hollywood and secondary circuits on the process of globalization is through the dialectic of convergence and divergence. Stohl (in-press) elaborates upon this conception. The environmental and technological pressures on contemporary organizations to become more and more similar clashes with "the proprietary pull of cultural identifications, traditional values, and conventional practices to social life. . . neither the convergence nor the divergence perspective alone can adequately account for the complex organizational processes of globalization" (p. 3). There is evidence of a convergence of organizational structuring in the local, secondary networks production and distribution of telenovelas, yet the "significance and meaning given to many of these features continues to diverge across cultural contexts" (Stohl, in-press, p. 9).

Media Structural Changes: Hollywood vs. Local Productions:
 
If there are still questions about the real significance of the emergence of secondary circuits of production and exchange of television programming, the fact that this hypothesis has now become feasible and interesting is due to a series of major changes in the global landscape of television. Until one or two decades ago most countries had one or two public, noncommercial channels and media systems were generally national in scope. While there have been imports of books, films, music and TV shows for decades, the basic broadcasting systems and newspaper industries were domestically owned and regulated. Beginning in the 1980s, pressure from the IMF, World Bank and U.S. government to deregulate and privatize media and communication systems coincided with new satellite and digital technologies and public demand for more choice resulting in the rise of transnational media giants.

In 1980 there were about 40 television networks in today's European Union countries. Now there are 150, including satellite services. Within the last decade more countries around the world have implemented privatization and deregulation allowing new commercial channels to be created. Cable TV and direct broadcast satellite supplemented the old structure of broadcast networks. The increase in the number of media outlets naturally increased the demand for television programming and the U.S., almost by default, became the major player in satisfying this demand. Its studios and distributors were, in fact, the only ones possessing the technology and knew how to produce and market television as a commercial product.
 
The U.S. became a hegemonic power in the television industry for one simple reason–economic forces. For a long time this argument was doubled by the belief that the early start on the path of commercialism would eventually equate to a monopoly on the market. The usual argument runs like this: "U.S. imports are attractive because programs such as L.A. Law, which is very popular in Western Europe, are cheaper to buy than to produce" (Biagi, 1994, p. 470). Yet, as mentioned previously, and explained below by Noam, this prophecy failed to fulfill.  In fact, of 125,000 hours of television programming in Europe, only 20,000 are produced in the U.S. (Biagi, 1994).

The best argument for why American programming still dominates, but at the same time is continuously challenged by new producers, especially in more mature markets, such as Western Europe and Latin America, was made by Hoskins & McFayden (1991) and Noam (1991). Hoskins and McFayden believe that there are four main reasons for American dominance: economies of scale, first-mover advantage, geographic comparative advantage and characteristics of demand and operating environment. However, they believe that each of these advantages has a shifting dynamic that can, under certain circumstances, undermine American preeminence.

Noam's (1991) arguments are somewhat similar to the ones made by Hoskins and McFayden but he brings the discussion to another level of sophistication introducing true concepts of economic science to a debate which seems to be more political than economic in nature, despite its economic 'arguments.' He rejects the line of thinking behind the "iron law of American programming," which alleges that any non-American TV institution "when deciding how to fill its time slots, faces a choice of either costly domestic production or of importing off-the-shelf Hollywood programs that have already been produced and that therefore can be obtained for marginal cost (i.e., for almost nothing). Therefore, given budget constraints or profit maximization . . . the cheap imports will be economically more attractive than the local production, leaving Hollywood programs predominant" (p. 11). According  to Noam there is at least one major logical fallacy in this hypothesis and one violation of a very important, but elementary economic mechanism.

The fallacy is similar to the old saying, "It is cheaper to take a taxi than to buy a new car."  If John Doe intuitively knows buying a car is better than wasting your money on cabs, why would television producers do any differently? Because hypothetical TV producers who are worse logicians that your average Joe, says Noam, exist only in the minds of their critics. They live in an imaginary world which  is fundamentally asymmetrical. To put it more succinctly, the "iron law" assumes that one would buy from the Americans rather than producing the show by oneself because he/she does not believe that his/her products would ever have a chance of being sold at marginal cost in America or on other third markets. But, according to Noam (1991), this assumption is neither rational nor economic; it is political and ideological. Empirical reality, verifiable by Latin American television producers shows that there is nothing which precludes any producer in the world from making his or her production budget with an eye to possible profits abroad. To summarize, the asymmetry is imagined because any broadcaster, when considering the option of buying versus producing, does in fact take in consideration the long term benefits resulting from producing the show (owning a car) himself/herself, versus buying this service from onerous American programmers (cab drivers).

The "the iron law" also violates "the income effect" created by the cross-elasticity of the two types of programs (foreign vs. domestic). In plain English, importing cheap programs might create opportunities for producing better domestic programs. By deciding to import some cheap programming, instead of producing everything in-house, broadcasters save in fact money. Under certain conditions it is not worth to produce a show when the American (or Brazilian, for that matter) programmer can sell it to you at lower prices (equal to "marginal" cost). Thus, the local broadcaster saves some money, which will show up in his/her books as "income" (therefore the "income effect"). This income can now be used in various ways, but a wise broadcaster would prefer to buy a car rather than taking the American cab. The peaking and subsequent decline of American TV programming in Western Europe after 1987 proves this point. Because the interest of local audiences in local production is very strong and the rate of return for money invested in it is from a point up higher that those for American programming, European commercial broadcasters prefer now to invest at least part of the profits in local productions rather than to import everything from the United States, even though it costs more to produce locally. Noam (1991) adds, however, that this is more likely to happen where preferences for domestic programs are strong, creating the incentive that the money thus saved to be used to produce a higher production-value local show rather than just to be invested in Coca-Cola stocks. It all boils down, then, not just to economics but to a mix of cultural tradition, sense of local identity and entrepreneurial sense.
 

New Programming and Production's Strategies: 
 
Hollywood already feels the pinch of a more competitive environment. The world and domestic market share of television programs produced in the U.S. is in decline. Thus, other forms of production are being explored. Franchising is becoming a common practice. A concept of a show is sold and produced in a local version in another country. Wheel of Fortune is one of the most successful shows in this category. America's Funniest Videos was originally a Japanese concept that was imported to the US.

Co-production is also an emerging trend. Companies from different countries get together and produce a program that later airs simultaneously in their respective countries, in addition to being sold to other countries. The production costs and profits are shared. This Co-production and franchising necessitates relocation of at least part of the production facilities to the host country. This also involves the transfer of know-how, technology, and business methods. The apprentice can always become a master in his own right, as TV Globo, launched with Time-Life expertise, proves (de Melo, 1991).

What is the current state of the television world? Are the second wave television programmers catching on? The global media system is now dominated by a first tier of five giants:

A more complete picture looks like this:

The world has indeed become more diverse, compared to 30 years ago, although not in the bounded, nation-driven perspective one might expect. Multinationals dominate and their scope and identity is becoming less and less dominated by any specific national power. However, this is not just another form of American imperialism in international drag as ideological prophets predict. News Corporation, for example, is a truly international organization, less bounded to a specific nationality than any other major entertainment corporation in recent history. It is driven by a business ethic that some qualify as ruthless, but less interested in cultural colonialism than many other media organizations. Murdoch (now a naturalized U.S. citizen) was the only non-American modern press baron to win both at the table of Hollywood and New York network moguls. Murdoch and other international media leaders understood that they need to use the global arena to compete with U.S. entertainment products. The rule of thumb for global media giants has two parts:

  1. get bigger so you dominate markets and your competition cannot buy you out (News Corporations' amount of debt has become legendary, but perfectly understandable upon finding that firms like Disney and Time Warner have almost tripled in size this decade), and
  2. have interests in numerous media industries, such as film production, book publishing, music, TV channels and networks, retail stores, amusement parks, magazines, newspapers and the like. The total profit for the global media giant can be vastly greater than the sum of its media parts.
For example, TCI, the largest U.S. cable company that also has U.S. and global media holdings in scores of ventures, too numerous to mention, has recently merged with AT&T. Three other first-tier global media firms are all part of much larger industrial corporate powerhouses: The media holdings of these last four firms total between $6 billion and $9 billion in business per year. While they are not as diverse as the media holdings of the first five global media giants, these four firms have global distribution and production in the areas where they compete.

However, the fact that South American producers are still separated by one order of magnitude from the Western multinationals (see chart above) indicates that secondary circuits might be hierarchically structuring themselves. This means that the internationalization of the entertainment industry is much more intense and symmetrical between the industrialized countries (Europe, United States, Japan, Taiwan, Hong Kong, South Korea and Australia) than between these countries and the rest of the world. This is a pattern identified by economists in other industries too ( Dicken, 1992).

The second tier of corporations might be reduced to fill regional, or niche, markets. Some of these firms are as large as the smaller global companies, but lack their world-wide reach. They may attempt, through aggressive mergers and acquisitions of like-sized firms, to become full-blown first-tier global media giants; but many of the them will likely be swallowed by larger companies amassing ever greater empires.
 

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