Media Audit: Disney

"I only hope that we don't lose sight of one thing - that it was all started by a mouse" (Jackson, 1993). This quote brings to light just how far The Walt Disney Company has come since 1923. From producing animated shorts, to becoming one of the largest media corporations in the world, Disney exemplifies what innovation and diversification can accomplish in todays capitalist markets. Mickey Mouse paved the way for the growth of a corporate giant. This paper will examine the theoretical framework of auditing mediascapes perspective, and the specific implementation of an institutional audit to the case study of Disney to examine media concentration and implications of the market model.

The theoretical framework for this analysis, auditing mediascapes perspective, is adapted from the political economy of communication.  In The Political Economy of Communication Mosco defines this concept as “examining social relations, particularly the power relations, that mutually constitute the production, distribution, and consumption of resources,” and a more general interest in the “processes of control and survival in social life” (Mosco, 1996). Political economy originated in the eighteenth century “partly to explain, justify and support the acceleration of capitalism. It rejected as inefficient and unproductive policies that required strong state support” (Mosco, 1996). Political economy of communication conducts historical analysis in order to study communication transformations, social totality, moral philosophy and social praxis. These four characteristics broaden the meaning of political economy to implement it through various approaches in studying communication (Mosco, 1996).

The core premise of communications transformations is that changes in conditions of human existence are intertwined with the evolution of capitalism, the dominant political rationality of our time. This includes changes within the national and global mediascapes, such as the implementation of television sets and satellite communication and how they both related to and affected social life. Social totality is the study of the social world in its entirety. Today academics is separated into compartments; those interested in social class study sociology, those interested in government study political science. What social totality calls for is a pre-disciplinary intellectual tradition which combines disciplines and breaks down borders between them in order to capture the various aspects of communication transformations. Social totality can include studies of audience, content, techniques, infrastructure, industries, policy and laws, media practices and communication education. Moral philosophy are the general guidelines of how we should act in a nation state, it is a worldview that privileges protection of democratic values. Political philosophy narrows this focus to more specific questions about how we relate to one another within political society. Finally, social praxis opens possibilities for applying academic studies of media democratization into organized structures for more humane, democratic and egalitarian mediascapes (Mosco, 1996; Ngare, 2008).

The two strategies of auditing mediascape perspective are: to hold liberal democratic governments accountable, and to invoke a participatory tenet of communicative democratic theory.  A quote from Mouffe’s Democratic Politics Today brings light to the first strategy, “Indeed, once we acknowledge that what constitutes modern democracy is the assertion that all human beings are free and equal, it becomes clear that it is not possible to find more radical principles for organizing society” (Mouffe, 1992). The very premises on which liberal democratic governments function are problematic. While they value equality, they also value state neutrality, but in order for people to be “equal” in all respects some form of government redistribution would be needed. Government redistribution would then infringe on the value of individual freedom, as people should be entitled to keep the money they own. This illustrates why Mouffe finds these principles “radical” in terms of organizing society. If government is structured on these values than they should cultivate equality through institutions such as education and employment and they should ensure citizens freedom of speech and other such liberties. One example of this will be discussed with Disney and the Copyright Extension Act of 1998. 

The second strategy, involves invoking participatory communicative democratic theory. A basic function of citizenship is participation. Citizens need access to information to remain informed and vote accordingly, and have the right to freedom of speech and equality to voice their concerns Liberal democratic theory legitimates society’s deliberation venues, such as courts and public hearings, while communicative democratic theory suggests alternative venues of deliberation. McChesney suggests that in our media centric society, we need a democratic press, controlled by the public, in the public interest. Media contributes to unequal class relations, the view of the upper class are represented and reinforced to a greater extent than the lower class. With media concentration, fewer voices are being heard and popular taste is becoming uniform. As McChesney states, “If your not at the table, your not part of the deal” (McChesney, 2007). A truly democratic communication system requires an outlet for the public to influence views expressed in culture so as not to be confined to the views of a handful of powerful corporations.  

These strategies can be used to determine if their is a democratic deficit, a notion that many scholars suggest is the reality of current democratic societies. Democratic deficits occur when citizens do not get the information they need to make informed decisions, as well as not getting the opportunity to engage in discussions about issues (Aucoin, 2003). Hackett and Carroll discuss this situation in great detail in Beyond the Media’s Democratic Deficit?  They write that media have failed to actualize democratic values such as, participation, equality, representative diversity, and civic engagement. In addition, they are becoming in themselves threats to democracy. “Media are not only failing to furnish citizens with ready access to relevant civic information . . . they are failing to help constitute a democratic public sphere” (Hackett & Carroll, 2006).

We can examine these aspects of modern society and communication by analyzing institutions through the phenomenon of spatialization to determine how such concentration, leading to power and influence in society, has emerged on a case by case basis. This essay uses Disney as the institution and tracks aspects of spatialization from the companies conception to modern day, but first a basic understanding of institutional audit is necessary for such an analysis.

The Institutional Audit has two research objectives. The first is “To account for media concentration in terms of horizontal and vertical integration” (Ngare, 2008), derived from Vincent Mosco’s concept of spatialization as discussed in his book The Political Economy of Communication: Rethinking the Renewal. Spatialization was introduced by Henri Lefebvre (1979) “to denote the process of overcoming the constraints of space and time in social life.” Marx commented on the tendency of capitalism to “annihilate space with time.” This refers to the growing power of capital to improve the means of transportation and communication across the globe. This notion was later taken up by political economists such as Harold Innis (1972). Modern political economists have amended the Marxian view, and rather than annihilating space, they say capital transforms it (Mosco, 1996). 

Political economy of communication uses spatialization to observe growth and concentration of corporations within the communication industry. Concentration can be examined vertically and horizontally. Vertical concentration involves one media firm purchasing another within the three stages of media business: production, distribution, and exhibition. This can occur in either direction, forward integration would involve moving further up the business process, while backward integration would expand the firm downward in the business process.  Larry Collette discusses the concentration processes of Disney and Time Warner, which are among the top six media corporations in the world. He says, “Disney’s expansion occurred as “content in search of outlet,” while Time Warner was “outlets in search of content.” (Collette, 1998). Meaning that while Disney created original material they could benefit from forward integration by purchasing distribution and exhibition channels for their products. Time Warner, on the other hand, could benefit from backward integration as they had exhibition channels and no production.

Horizontal concentration occurs when one media firm buys another media firm not directly related their operations, known as cross-media ownership; or when a media firm buys a firm outside of the media industry, known as conglomeration. Within horizontal concentration is the notion of synergy, the promotion of media products in different platforms in order to generate maximum profits (Ngare, 2008).  These platforms are also known as windows. Windows involve the marketing of a film or television show before, during and after its release. They are organized around different forms of exhibition and distribution, and each window would have a different release date. For example, when Disney release a film such as Finding Nemo, They may first release ancillary products as they advertise the films, these would include general merchandise like toys and clothing; then release the film in theaters; followed by a video game; a soundtrack; pay-for-view release; DVD release; and can then reuse the content on The Disney Channel, they may also create a ride in one of their amusement parks. The more holdings a company possesses the more potential windows they have for making profits adapted from a single product. Each window results in lower and lower investments, when a content reaches the company’s own television channel, there is very little cost associated with broadcasting it (Collette, 1998).

The second objective of the Institutional Audit is, “To asses implications of the market model in national and global mediascapes,” as discussed by McChesney in The Market Uber Alles (Ngare, 2008). The assumption that the competitive market is the best possible system for regulation keeps citizens from opposing media’s current structure. The notion being, it is the best possible system to give people what they want, and if they don’t like the product they won’t purchase it. Under these assumptions government should not regulate the media because any attempt to do so will interfere with the ability of market regulation. 

McChesney points to the flaws in this view. If the market it is not economically competitive market regulation will not occur, as it will not be responsive to the audience preference. He describes the media market as being an monopolistic/oligopolistic market rather than a competitive one. Firms have become concentrated through vertical and horizontal integration. These company’s have so many holdings, new and small companies cannot compete. With less competition comes less diversification of media content, thus democratic notions of a free press become compromised (McChesney, 2004).

McChesney also discusses Janet Wasko’s assessment of Hollywood as a “three tier society.” The first-tier encompasses large media corporations such as; Time Warner, Viacom, News Corporation, Sony, General Electric and Disney. The second-tier are firms that dominate one or two media sectors. Third-tier media firms make up the thousands of small-scale media firms which first and second-tier firms will purchase if profitable (Ngare, 2008). An example of a second-tier firm is Pixar Animation. They were at the forefront of computer animation, but to compete in the monopolistic market they partnered with Disney to take advantage of their various media platforms and brand name. “In short, it has to give Disney a piece of the action to ensure its economic survival in the conglomerate jungle” (McChesney, 2004).

Janet Wasko discusses Disney in relation to political economy of communication in her book Understanding Disney. She says to fully understand Disney as a cultural phenomenon we must understand the corporation, how it is manufactured and marketed. She writes that economic factors set limits and exert pressures on the commodities that are produced. Disney is a business that must get citizens to consume its products to produce profit for its shareholders. 

Walt Disney first created the animation company Laugh-O-Gram with fellow animator, Urb Iwerks on May 22, 1922. Within a year this company went bankrupt and Walt moved to Hollywood. With funds from his brother Roy, he founded Walt Disney studios on October 16, 1923. Disney released the first feature length animation in 1937, Snow White and the Seven Dwarfs. With the success of this animation Walt Disney moved his operations to a much larger facility, a $3 million dollar studio, with 20 separate buildings for different stages of the animation process. The result of this new studio was an assembly line process of animation production, a more industrial process of manufacturing (Jackson, 1993). 

In addition to releasing the first feature length animation, Disney was at the forefront of technological advancements in animation, advancements that would eventually be adopted as norm. Steamboat Willie (1928) was the first animation to implement synchronized sound. Disney studios created the process of a story boarding, Disney developed the first use of technicolor animation, as well as a multi-plane camera which gave the animations greater depth and more realism, a feature Disney strived for. Janet Wasko writes in Understanding Disney that he had an “unerring appreciation of technical developments and how to use them for profit” (Wasko, 2001). These various developments helped shape the entire animation industry and set the standards for other companies to follow. 

In the 1940s some of Disney’s employees were beginning to resent the company and Walt Disney. Regardless of who produced an idea or animation “Walt Disney” was the only name to appear in the credits. Animators wanted more credit and compensation for the work they produced. This issue is still debated today in relation to intellectual property rights, as the hard work of employees tends to benefit the company more than the individual (Wasko, 2001).

By the 1950s television had become a popular medium, with 90% of American homes having a television set by 1960. Disney began making Christmas specials, such as One hour in Wonderland broadcast in 1950 on NBC.  In October 1954, Disney began airing its first television show Disneyland on ABC. Disney was the first studio executive to make a deal with a television network to produce an original series.  The show provided Disney with a vehicle for cross promotion of his various other projects, such as feature films. In addition, they could recycle old material from films to provide content for the television show (Collette, 1998). Wasko writes that Disney recognized the potential value in promoting and diversifying the film business. Disneyland theme park opened in Anaheim, California in 1955, with ABC as 35% owner.  The Disney company did not fully support Walt’s idea for a theme park, so he created a separate company which he called Walt Disney Inc. (later to become WED Enterprises), to run the park while not putting company funds in jeopardy. The television show provided a vehicle to promote the park to a large audience. 

While Disney was at the forefront of producing animation, they wanted to move into the realm of distribution as well. They created Buena Vista Distribution as a vehicle for distributing their own material. This exemplifies forward integration, and vertical concentration. Disney also developed a process of rereleasing popular feature films every few years, which produced greater profits with little investment. This still occurs today with digitally remastered films, box-sets, and collectors addition DVDs. 

Walt Disney died on December 15, 1965. His brother Roy ran the company for the next six years opening Walt Disney World in Florida in 1971, but he passed away later that year. At this time former vice-president Donn Tatum became chairman and Card Walker, who was in marketing, became president. During this period Disney had ceased to be the innovative company it was during Walt’s lifetime. Expansion and diversification had slowed, and new technologies had not been produced in the studio for some time. Other film companies had begun to diversify and enter various other media outlets. In 1983 Disney again began diversifying. They launched the Disney Channel for children, and later that year they created Touchstone Pictures an adult-orientated film label.  Most analysts claimed this slowing of Disney’s diversification was an attempt for them to sit on their existing assets. Under this management, in 1983, Disney was almost victim to a takeover. Management was quickly changed and the company restructured (Wasko, 2001). 

This has been the history of Disney as an innovative company, in terms of the technologies they produced, their business structure, and diversification efforts. Today Disney has become among the top six media conglomerates in the world, with annual revenues over $27 billion. Disney has a wide range of companies that span the globe. Disney has various “teaming arrangements,” which are interactions between firms that do not involve a merger (Mosco, 1996). Disney has joint ventures with McDonalds, which provides children with toys of upcoming Disney characters in their Happy Meals; as well as an official airline, Delta; official car rental company, National Car Rental; and the Bank of America, whom Disney has been working with since 1930, is the official bank of Disney. 

In 1995, Disney shocked the world when it purchased Capital Cities/ ABC. Again implementing forward integration, this time towards exhibition. It was a $19 billion dollar takeover, which temporarily placed Disney as the largest media company in the world. The move greatly enhanced Disney’s position, restoring it to some of the glory it experienced in the early years. Prior to this merger Disney was having trouble getting its programs on television at desirable times. The purchase of ABC enabled Disney to reach larger primetime audiences (McPhail, 2001).  

The move to the new studio in the 1930s had resulted in a great deal of debt for the Disney company. In 1938 Disney became a publicly traded company. Until this point it had been privately owned. They issued 155,000 shares of preferred stock and 600,000 shares of common stock. providing much needed funds, but changing ownership control. Dominant Disney shareholders as of 2000 were the Bass Brothers, now known as Keystone Inc. As of 1985 they owned 25% of Disney stock. While not sitting on the board of directors, their influence on Disney cannot be ignored. They encourage the Capital Cities/ ABC takeover. Warren Buffet who had major investments in ABC became an influential shareholder at this time. He is largest shareholder and CEO of Berkshire Hathaway Inc. Roy Disney Jr. remained the third largest shareholder in the company, as well as being Vice Chairman. A new edition to this influential group of shareholders is Steve Jobs of Apple as a result of the Pixar- Disney partnership. In addition, Disney holds shares in various other media outlets. They own 38% of A&E Television Networks, 38% of The History Channel, 50% of Lifetime, and 34% of E! Entertainment (Wasko, 2001; McPhail, 2006). These relationships can demonstrate networks of class power, which includes overlapping dictatorship of corporate boards. All of the current members of the board of directors are also involved in other major companies. Through the board of directors Disney is directly linked to Nike, Apple, Starbucks, FedEx, KFC, Pizza Hut, A&W, Taco Bell, and Procter & Gamble (The Walt Disney Company).

 

Disney purchased the New Amsterdam Theatre in 1994 to produce theatre productions of their animations, such as Beauty and the Beast and The Lion King. These performances have also been presented at the Disney theme parks. Disney also has various music businesses, Buena Vista Music Group, Hollywood Records, Mammoth Records, and Lyric Street Records. Disney has been involved in licensing its characters for merchandise since the 1930s with Mickey Mouse and supporting characters. By 1934 Mickey Mouse was the most popular licensed character in the world, earning Disney $600,000 a year. Other film companies did not begin to realize the potential of merchandising until the 1970s. Disney’s merchandising efforts reached revenues of $14 billion worldwide in 1994, involving 3000 companies and over 14,000 Disney products. Disney also operates a large number of official Disney retail stores worldwide, as well as a large number of publications. In 1988, they published over 120 different magazines and comics, in 16 countries (Wasko, 2001; Jackson 1993).

Disney, in addition to California and Florida locations, also operates theme parks in Tokyo, Paris and Hong Kong. They run the Disney Cruise Line, Disney Vacation Club, and Adventures by Disney along with a large number of resorts. They also have sport affiliations. They control ESPN, the sports channel which was founded in 1979 and is owned 80% by ABC. After their successful film The Mighty Ducks, Disney purchased the rights to their own hockey team, which became known as the Anaheim Might Ducks, in an innovative cross-promotional effort (McPhail, 2006).

In relation to globalization, Disney characters such as Mickey Mouse, may be among the most recognizable characters worldwide. In addition to Buena Vista Distribution, Disney’s original distribution company, they now operate Buena Vista International, ranked the world’s top international distributor of the 1990s. Touchstone and Miramax, two other film labels within Disney, also distribute films internationally. In addition to international release of films, Disney merchandise also operates cross-boarders. One controversial merchandise deal was the Royal Canadian Mounted Police when they signed an agreement with Disney to license Mountie merchandise worldwide. Critics in Canada are often wary of our proximity to the U.S. and what they consider cultural invasion of U.S. corporations. In addition, the Disney theme parks outside of the U.S. have been met with controversy, especially the Paris location, where protestors egged Disney executives when they announced plans for the park in 1992. In addition, Disney operates numerous multinational corporations to exploit international opportunities such as cheaper labour and operational costs (Wasko, 2001).

Disney was influential in the Copyright Extension Act of 1998. Intellectual property had been an issue for Disney since the 1930s among some of its animators. Disney lobbied Congress directly and the bill was passed, extending copyright properties from 75 years to 95. This had important implications for Disney as, under the original law, Mickey Mouse was going to become public property in 2003. This is an example of state-media relations and demonstrates the weight of corporations to influence policy. While public property can have beneficial outcomes for the society as a whole, corporations exercise their power to maintain ownership of their products to further increase and maintain their billion dollar revenues.

Criticisms of Disney arise from its influence on other cultures, its power structures, monopolization of the market, representation of minority groups within the media, and exploitation of lower cost labour. These are criticisms that are associated with virtually all modern corporations. The media industry is now controlled by a small group of very large and diversified corporations. Due to the diversification of these companies into such a variety of different fields, their dominance of the market and culture is not likely to change in the near future without some form of societal change to remedy our current problems. The history of Disney provided within this essay, has demonstrated just a fraction of how large these corporations are and how far their influences extend. McPhail writes, “US multimedia empires, along with their extensive advertising networks, project and encourage US tastes, values, morals, history, culture and language around the world” (McPhail, 2006). 

The extent to which concentration continues to occur is adding both to the monopolization of the market, as well contributing to the democratic deficit. As was demonstrated within this paper, Disney’s various innovations to animation and business structure were eventually adopted by their competitors. In addition, ownership within the market has become concentrated. Today content across firms has become very similar, there is less differential between the various film companies techniques and opinions.

This essay has attempted to provide a basic outline of auditing media perspective and the institutional audit. It has demonstrated various examples of vertical and horizontal concentration throughout the history of The Walt Disney Company, as well as drawing on observations of dominant shareholders, teaming arrangements, networks of class power, internationalization and state-media relations. Disney has been an innovative company both in its business processes and influence on popular culture. It helped to shape the structure of modern media corporations and Mickey Mouse is perhaps the most recognizable media character across the globe.  For better or worse Disney has grown into one of the most influential media corporations on the planet, and “it all started with a mouse.”

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 References 

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Hackett, R. & Carroll, W. (2006). “Beyond the Media’s Democratic Deficit.” In Remaking Media: The struggle to democratize public communication.  New York: Routledge. 

Jackson, K.L. (1993). “Walt Disney: A Bio-Bibliography.” London: Greenwood Press.

McChesney, Robert (2007). “The Rise and Fall of the Political Economy of Communication.”  In Communication Revolution: Critical Junctures and the Future of Media. New York: New Press. 37-98.

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Mouffe, C. (1992). “Dimensions of Radical Democracy: Pluralism, Citizenship, Community.” New York: Vesso.

Ngare, Joseph (2008) Institutional Audit Lecture. Carleton University.

The Walt Disney Company (2008). Accessed November 29, 2008.  http://corporate.disney.go.com/corporate/overview.html