VERTICAL INTEGRATION IN MEDIA INDUSTRIES
Marco Gambaro
Paper presented 16th Biennal Conference ITS Europe 4-6 September - Porto
In recent years convergence in information industries has often taken the form
of vertical agreement between different stage of the value chain and with
content owners and distribution channels in a prominent position, suggesting
an increasing degree of vertical integration.
But when considering indicators at firm level, as the value added to revenues
ratio, emerges often a reduction in vertical integration degree.
In newspaper and television industries, firm used to be almost completely
integrated vertically while nowadays they shifted outside several stage of
production and at the same time emerged robust intermediate markets.
In some case technological innovation appears to be an enabling factor like in
printing, but in other cases as in audiovisual production rent extraction by
scarce artistic factors appears to be a major force.
In the first part the paper explore the determinants of vertical integration in
media industries confronting the approaches of transaction costs and property
rights, with special reference to the case of television production. In this market
the make or buy boundary must be defined in detail and the extreme cases of
complete internal production or buying an off the shelf program are declining in
favor of mixed choice where resources and risks are both internal and external.
In the second part the paper proposes some preliminary empirical analysis.
For newspaper and television industries the value added to sales ratio is
computed for several year in order to observe the vertical integration choice
over time.
At European level all the decisions of the commission relating to media
industries in merger and acquisition proposals are analysed and classified in
vertical and horizontal integration.
Keyword: vertical integration, media, television, audiovisual production
Jel classification: L22,L42,L82
Marco Gambaro
Professor of Media Economics
Department of Economics and Business
Faculty of Political Science
University of Milano
Tel +39 02 50321515
Email [email protected]
VERTICAL INTEGRATION IN MEDIA INDUSTRIES
Marco Gambaro – Milan University
Paper presented 16th Biennal Conference ITS Europe 4-6 September - Porto
INTRODUCTION
In recent years convergence in information industries has often taken the form
of vertical agreement between different stage of the value chain and with
content owners and distribution channels in a prominent position, suggesting
an increasing degree of vertical integration.
But when considering indicators at firm level, as the value added to revenues
ratio, emerges often a reduction in vertical integration degree.
In newspaper and television industries, firm used to be almost completely
integrated vertically while nowadays they shifted outside several stage of
production and at the same time emerged robust intermediate markets.
In some case technological innovation appears to be an enabling factor like in
printing, but in other cases as in audiovisual production rent extraction by
scarce artistic factors appears to be a major force.
In the first part the paper explore the determinants of vertical integration in
media industries confronting the approaches of transaction costs and property
rights, with special reference to the case of television production. In this market
the make or buy boundary must be defined in detail and the extreme cases of
complete internal production or buying an off the shelf program are declining in
favor of mixed choice where resources and risks are both internal and external.
In the second part the paper proposes some preliminary empirical analysis.
For newspaper and television industries the value added to sales ratio is
computed for several year in order to observe the vertical integration choice
over time.
At European level all the decisions of the commission relating to media
industries in merger and acquisition proposals are analyzed and classified in
vertical and horizontal integration
DETERMINANT OF VERTICAL INTEGRATION
Vertical integration deals with joint ownership of different stages of production.
A firm can be described as vertically integrated if it encompasses two single
output production process in which the entire output of the upstream process is
employed as part or all of the quantity of one intermediate input into the
downstream process; or the entire quantity of one intermediate input into the
downstream process is obtained from part or all of the output of the upstream
process (Perry 1989). The first case occur when a television company set up a
film production company whose broadcasting rights are all transmitted by
television parent company. The typical second case relates to a book publisher
who controls a printing company where he prints all his books but that works
also for other clients.
The vertical integrated firm has complete control over neighboring stages of
production and distribution and thus enjoys complete flexibility to make
investment, production and distribution decisions.
The key point in vertical integration is the substitution of market exchanges whit
internal exchange within the boundaries of the firm.
If the market relationship remains prevailing the move is to be considered more
a diversification. If only a substantial part of the output of upstream process is
employed as a significant part of the input of down stream process we have a
case of partial vertical integration or a case of vertical combination.
There are three broad determinants of vertical integration: technological
economies, transactional economies and market imperfections, like
externalities, asymmetric information or market power.
Like production also exchange is costly and vertical integration is simply one
method of effectuating a bilateral exchange. Consider for instance audiovisual
production. In some way it is easier to coordinate the several resources needed
to organize a project and who control the resources has to agree, write and sign
less contracts. But on the other side within one organization it is often more
difficult to deal with opportunistic behavior and to align principal and agent
incentives. Film production is now almost completely disintegrated and the cost
of the lawyers that write, negotiate and manage the hundreds of specific
contracts required for a single film is estimated to represent a 5-7% of the
budget of production.
The asymmetric information is an important factor where quality is uncertain as
happens in cultural products. The upstream producer can be in a better position
to evaluate quality than the downstream television.
In content production since every product is unique there is a bilateral monopoly
game and the supply and demand reservation prices are often quite far from
one another. Once the equilibrium is between the two reservation prices the
exchange is efficient, but the final price depends heavily on bargaining power.
Horizontal integration is easier to define: it occurs when two firms merge in the
same market and the concentration index raises. But again there is the problem
of market definition. If the two firms that merge, operate in two separate
geographic markets the action is to be considered more a diversification.
To measure the dynamic of horizontal integration we usually look at the
variation in a concentration index like Hirschmann-Herfindtal but to evaluate HH
we need to know all the market shares and C4 ratio is easier to compute but
less informative.
For vertical integration it is possible to measure the ratio of internal usage of
some intermediate output as the copies that a newspapers print in it internal
newsprint or hours of programming that a television produce internally
compared with the hours acquired outside, but usually it is not easy to obtain
this kind of information and the methodology is more suitable for limited case
studies in a specific and homogeneous industry than for larger studies.
The value added to turnover is a simple appropriate index for intertemporal and
interindustry studies but lack the precision to count specific intermediate output.
From a welfare point of view horizontal integration is usually considered harmful
since it reduces competition and increases market power. Moreover in media
industries can reduce product variety and pluralism. However in some cases the
possible scale economies can reduce costs in a way that can overcome market
power effects.
Vertical integration exhibit more efficiency effects that arise from better coordination and growing literature point out that through vertical integration it is
not always possible to raise market power and to exploit it.
EMPIRICAL EVIDENCE: ACQUISITION CASES IN EUROPE
I reviewed antitrust cases involving media companies judged by DG
Competition of European Commission over the years ranging from 1992 to
2004. It is just the tip of the iceberg since the approval of the Commission is
required only when the proposed acquisition involves a cross border activities or
relates to al very large part of a specific national market. The sample of 86
cases includes publishing, advertising, motion picture, video, radio and
television.
I classified the cases in four brad categories: vertical integration, horizontal
integration, external acquisition and geographical expansion. The latter
category is a special case of horizontal integration when the market covered by
the agreement is economically separated. For instance newspapers operate
mostly on a local basis and book publishing usually compete in a single
linguistic area. If a publisher acquires another publisher in the same national
market the horizontal concentration degree raises but if the acquisition is done
in another market the concentration level in both market remains the same, also
if the company may obtains some cost reduction or can exploit some scale
economies.
The 17 external acquisitions are made mostly by the finance sector following
the new economy bubble and the subsequent financial difficulties of several
media enterprises.
The analysis of the 86 cases shows that at the European level horizontal
integration prevails, but a possible explanation is that on average the other
cases are resolved more on a national basis. The Commission denied the
approval or demand deeper analysis only in 9 cases all of horizontal integration.
The small sample can anyway give a glimpse over the main trends. In general
intramedia acquisitions prevail both in the form of consolidation in the same
market (horizontal integration) and in the form of geographical expansion to
build a European international presence to anticipate the trend of unified
market.
Figure 1: Media cases of merge and acquisition discussed by DG competition
External acquisition
17
Geographical expansion
10
Horizontal integration
46
Vertical integration
13
TOTAL
86
A cross tabulation of buying and target sectors gives a picture of the main
directions in acquisitions. Radio and television companies appear to be the
main target since they represent half of the whole transactions. In advertising
investments television has been growing faster than press and it is becoming
the main advertising media in several European countries. On the other side
television companies exhibit strong competition in content production and
packaging and therefore attract the conglomerate’s attention since they are a
valuable piece in every portfolio media strategy.
Figure 2: Cases by buying and target sector
Target Sector
Buying sector
Publishing
Radio
TV
Cinema
Advertising
Teleco
m
Media
Conglo
merate
TOTAL
Publishing
6,4%
4,0%
0,0%
0,0%
0,0%
0,0%
10,4%
Radio TV
0,0%
25,4%
0,0%
1,7%
0,0%
0,0%
27,2%
Cinema
0,0%
2,9%
0,6%
0,0%
0,0%
0,0%
3,5%
Advertising
0,0%
0,0%
0,0%
4,6%
0,0%
0,0%
4,6%
Telecom
0,0%
1,7%
0,0%
0,6%
5,2%
0,0%
7,5%
Media
Conglomerates
6,9%
13,3%
0,6%
3,5%
0,0%
0,6%
24,9%
Finance
6,4%
4,0%
1,2%
1,2%
8,1%
1,2%
22,0%
TOTAL
19,7%
51,4
%
2,3%
11,6%
13,3%
1,7%
100,0
%
The second target is publishing where almost a third of the transaction is a
consolidation in the same sector.
On the buying side the more active sectors are televisions, media
conglomerates and finance. Advertising companies have been buying only
inside the same sector whereas media conglomerates and finance spread over
rather differentiated targets.
Publishing and television buys mostly inside their same market
The appetite of financial companies can have a double explanation: they want
to invest in media since this seems to be a growing sector in the information
society and television companies can be well positioned to catch the emerging
market that eventually will develop. Secondly convergence dreams together
with stock growth and bubble have fuelled a huge amount of investment of
which several was wrong and drove to financial crisis.
Figure 3: Breakdown of cases for type of acquisition and target sector
Target Sector
Type of
acquisition
Publishing
Radio
TV
Cinema
Advertising
Media
Telecom Conglome
rate
TOTAL
External
acquisition
6,4%
4,3%
1,1%
1,1%
7,4% 1,1%
21,3%
Geographical
expansion
3,2%
7,4%
0,0%
2,1%
0,0% 0,0%
12,8%
Horizontal
integration
10,6%
26,6%
1,1%
8,5%
3,2% 1,1%
51,1%
Vertical
integration
2,1%
7,4%
1,1%
4,3%
0,0% 0,0%
14,9%
22,3%
45,7%
3,2%
16,0%
10,6% 2,1%
100,0%
TOTAL
In advertising, television and cinema vertical integration prevails and this fact
confirms the central role of audiovisuals content in several related markets as
broadband telecommunication or video distribution. Horizontal integration
prevails in television and advertising.
The evolution of transactions over time confirms some previous findings. If we
consider three years periods there has been a significant increase in the
number of transaction in the last six years. Vertical integration transactions
seem to anticipate the trend since their peak was in 1999-2001. External
acquisition mainly by finance sector grew in the last three years confirming our
prior explanation of post crisis financial restructuration.
Figure 4: Type of acquisition over time (number of cases)
Type of acquisition
1992-95
1996-98
1999-01
2002-04
TOTAL
External acquisition
0
2
3
12
17
Geographical expansion
2
0
6
2
10
Horizontal integration
9
6
16
15
46
Vertical integration
1
3
8
1
13
12
11
33
30
86
TOTAL
EMPIRICAL EVIDENCE: ITALIAN NEWSPAPER AND TELEVISION
In the general media global landscape major mergers and acquisitions seem to
suggest a raise in vertical integration with the aim of risk reduction and better
co-ordination between different channel of content distribution. Think for
instance at Disney-ABC or AOL-Time Warner cases. On the contrary in several
empirical studies I found rather an opposite trend, in common with other
industries, a trend of vertical disintegration and specialisation where various
stages of production has been moved outside. So I made two preliminary case
studies dealing with Italian market where I found easily long-term data that can
be starting point for international extension and more complete analysis. The
cases analysed are newspapers and television.
In newspapers until twenty years ago the main factor leading to close vertical
linkages had been fairly straightforward technological interdependence. In
newspapers production, typesetting printing and publishing were and in part are
all commonly carried out on the same premises by one company (Waterson,
1993). This is quite different from the case with books and magazines where the
activities are very often carried out in different locations. But with newspapers
speed is essential for economic production, hence the proximity to minimise
delay. All the production and distribution process must be carried out in few
hours since the newspaper to compete with electronic media must consider the
last news to be inserted until late night and the copies must arrive at the
newstands or at subscribers by the early morning. Now that data is easily
transferred electronically, typesetting and printing of newspapers is often carried
out in different places, with printing taking places in several locations.
I consider sixty Italian newspapers that represent 90% of total copies over a
twenty years time period from 1982 to 2002.
In 1982 virtually every newspapers controlled directly printing facilities. In
subsequent years technological innovation enabled to separate printing
activities and newspapers was able to expand geographical coverage without
suffer from the diseconomies of scale of a dedicated printing facility. In the
meantime some newspaper chain developed and they exploited some coordination of printing between different newspaper again to enlarge logistic
coverage of additional area. Large and medium newspapers with national
prestige could add a provincial edition with specific editorial coverage and
slowly gain readership without suffer the cost of sending copies from the
principal location or the costs to operate a too big printing equipment.
Starting from 1990 the minimum efficient scale for printing dropped leaving the
space to survive for little newspaper without a strong geographical focus
Some newspaper moved outside firm boundaries their printing facilities while
maintaining with them a contractual relation, but that was more the exception
than the rule.
It is difficult to write a proper contract for this relation since the printing of
newspaper exceptional events that impose delay and variations occur every
time and the newspaper need flexibility in the use of printing capability thus
competing with other employment.
On the whole for a newspaper resulted difficult not to control and to get
exclusive use of the printing both with proprietary or contractual linkages.
To measure vertical integration I considered the ratio value added to turnover.
Value added include mainly cost of labour, depreciation, financial gain/costs,
and profit and represent the easiest measure of activities carried out inside the
company in such a way that it does not request analysis of specific inputs,
allows for the use of accounting data, enables interindustries comparisons.
Figure 5: Vertical integration in Italian newspapers
1982
1996
2002
54,7%
40,7%
33,2%
Employees/copy
2,9
2,4
2,3
Journalist/page
2,4
1,9
1,7
% Journalist
23,3%
34,9%
42,2%
Copies sold
5.409k
5.880k
5.806k
VA/Turnover
At the aggregate level the ratio value added to turnover starter from 54% in
1982 and arrived at 33% in 2002 showing a clear reduction in vertical
integration of the Italian newspapers. Two main trends were pushing this
reduction: more external newsprint especially for additional copies and more
freelances for editorial work, a trend that follow product development with more
specialised and focused information.
In the period considered market structure did not change significantly: Copies
sold remain between 5.5 and 6 million each day with a peak o 6.8 in 1990 and a
slow decline afterward.
Technological advances in typesetting and printing enabled reals improve in
labour productivity as the employees per copy drop from 2,9 in 1982 to 2,3 in
2002.
In the meantime there was a substantial change in labourforce composition
where the journalist rose from 23% in 1982 to 42% in 2002. The absolute and
relative growth of journalistic workforce is explained by the combination of lower
productivity increase compared with newsprint and a significant growth of
output. The journalist per page declined from 2,4 in 1982 to 1,7 in 2002.
In television the picture is more elusive and the findings depend on different
business model and on the flexible and undetermined boundaries of make or
buy decision.
I considered two main Italian television companies Mediaset and Rai that
together realise about 90% of the total audience and collect 90% of television
advertising.
Rai is a public television owned by the state that began television transmissions
in 1953 with a full-integrated production structure due to internal orientation of
state television and to the substantial absence of intermediate markets.
Mediaset was settled as a national network in 1982 transmitting mostly acquired
program and the afterward produced a growing share of program including TV
news.
In a traditional national European tv network programs represent usually 6070% of total costs and the remaining is transmission cost (5-6%) and general
expenses.
Externalisation of transmission network occurs usually under a legal binding
since there are co-ordination advantages in controlling it and the coverage
choice is a strategic one that is related to program investment decisions. In
overheads there are some possibilities of externalisation like in IT, but usually
on a limited scale.
The main make or buy decisions are in programs and scheduling. In theory it is
possible to arrange a complete schedule without produce any program. In
general vertical integration in tv programs has a very flexible boundary
At the extremes of the vertical integration decisions there are on one side the
acquisition of finished program whose production decision are completely
outside the tv company that buys them on the shelf, like film or series; while on
the other side lay program completely produced in house with internal
facilities/studio and with internal workforce like, in most cases, tv news.
Between them there are several contractual arrangements which different
degree of internal input and control.
There is a set of contractual relations where the programs are formally
produced outside but with different framework and involvement. They are in
order of increasing vertical integration: pre-acquisition co-financing, coproduction with equity and commissioned programs.
In the latter category the risk is totally beard by the television which retain the
sole control over the significant production choice (director, actors, location,
excess budget, final cut),
In the extreme case of flat payment the external Production Company as little
incentive to maximise the production efforts, but the threat not to obtain future
engagements.
The tv company faces a traditional principal agent problem and must design a
contract with the proper incentives.
When there are secondary markets as in movie or in US series production other
arrangements are preferred.
In pre-acquisition the television buy in advance the broadcasting rights in
general for a flat fee, sometimes with an escalator linked to theatre admissions.
For the Production Company is a way to spread the risk while the television
pays a price that is lower with respect to subsequent price if the movie is a
success while is higher if it is a flop.
In cofinancing there is a limited participation in production choice that become
more substantial in cooproduction with equity where the company retain some
share of ownership over the negative.
In general there is a positive relationship between risk bearing and control.
On the other side also internal production shows different combination: studio
facilities, troupes, postproduction and cast can be internal or external inputs. At
the extreme an internal production can buy outside every production factor but
retain full control, full financial engagement and total risk over a specific
production.
All these consideration confirm that accounting data on vertical integration can
be misleading especially in international comparison where different accounting
practices can shadow the effective economic relations.
However I analysed vertical integration though the ratio value added to turnover
to gain a longer period of observation and to allow comparison with other
industry and other companies. In industry interview I had support that
accounting practices have not been changed significantly over the years.
Figure 6: Vertical integration in Italian televisions
1994
1998
2003
Value added
65%
62%
61%
V.A. corrected
52%
43%
42%
Value added
57%
60%
62%
V.A. corrected
25%
24%
24%
RAI
MEDIASET
To use value added as an indicator of vertical integration I had to correct it in
twofold ways: first I excluded profit both from numerator and denominator of
ratio value added to turnover as suggested by empirical literature on the
subject. In fact Rai and Mediaset show a similar value added but a different
profit on sales level that is in the range1-5% for Rai and is in the range 20-30%
for Mediaset. The second problem relates to the broadcast rights of acquired
programs as movies, soap opera and serials. The rights are usually bought on a
contract four passages in four years and since are input whose total duration
exceed the accounting years they are written on asset and liability statement
while the yearly cost of usage, the depreciation are written on profit and loss
statement. In that way value added include the cost of usage of external
programs that are a “buy decision” rather than a “make one”.
I took the depreciation linked to acquired program (immaterial immobilisation),
subtracted them from the value added and summed them to external expenses.
In that way I obtained a measure of value added level that reflects more
precisely the vertical integration choices.
Over a ten years period the corrected value added dropped significantly for Rai
and slightly for Mediaset but for the latter the starting point was rather lower and
the possibility for further vertical disintegration were rather small.
Two opposite trends contribute to the overall decreasing of vertical integration:
the growing use of acquired program and external productions was the main
force while the extension of firm boundaries with limited entry in film production,
new media content production and distribution and internet push in the opposite
directions. That means that without the extension of firm boundaries the vertical
integration drop could be higher.
EMPIRICAL EVIDENCE: EUROPEAN TRENDS
To verify the possible generalisation of the previous cases I explored the
vertical integration trend at the European level with the same methodology to
look at the evolving over time of the ratio value added to turnover.
The data base Amadeus collect balance sheet and financial information for 6
million of European enterprises. I extracted 1800 balance sheet of media
companies with more than 20 employees, in 1996-2003 period, in the Nace
sectors book publishing (2011), newspaper publishing (2012), magazine
publishing (2013), film production and distribution (9211), video production and
distribution (9212), radio and television (9220).
I cleaned the sample and dropped out the cases that contained too few years,
too little financial information or too many inconsistencies between the different
information. I obtained a final sample of 583 European companies that with the
further restriction that the ratio value added to turnover in 1997 was between 0
and 1 became 362.
As in the previous findings value added to turnover was used as a proxi of
vertical integration and for the initial exploration I did not corrected the value for
profit and for immaterial asset (television).
Figure 7 shows the evolution of vertical integration over the years in six media
industries and reveals non-general trend. In radio and television, video and
book publishing the is a limited trend to reduce the level of vertical integration,
while magazine and movie stay stable and newspaper seem to increase their
level of vertical integration. For newspaper the results seem quite different from
the Italian case.
Figure 7: Value added to turnover in some media industries
1997
1998
1999
2000
Book publishing
Newspapers
Magazines
Movie
Video
Radio and television
34.5%
43.7%
35.3%
41.8%
37.5%
40.1%
36.3%
40.1%
34.2%
45.3%
34.4%
40.6%
34.5%
44.2%
35.6%
43.7%
39.6%
42.5%
32.7%
47.0%
35.4%
41.2%
42.4%
39.0%
2001
2002
2003
36.6%
44.3%
35.1%
43.1%
29.4%
36.8%
35.7%
44.5%
35.8%
38.7%
37.2%
33.4%
27.9%
47.0%
35.9%
42.4%
34.3%
29.8%
The data need some consideration. In general the original data base contains a
lot of missing values and for many companies the only some value or only some
years that explains the passage from an initial sample of 1800 cases to a final
one of 362.
Furthermore for some country in which I know better media markets I controlled
the company included both in the initial sample and in the final one and I fond
several important companies missed and several company with a rather
different activity. For instance in television sample there were satellite service
companies, video production companies rental facilities companies.
On the whole I believe that the sample require more work to control the data
and a stronger selection to aggregate companies that faces similar market
comparable market conditions.
Figure 8: Description of variable
Dependent variable
Value added to turnove in 2003 minus value adde to
turnover in 1997
Initial vertical integration
cost of labour per employees
Turnover
Employees
fixed investment (total asset)
initial profit level
profit variation
unit cost of labour variation
total cost of labour variation
Fixed investment (depreciation)
Numbero of employees variatio
Quoted in stock exchange
Average o value added to turnover in 1997 and
1998
Average cost per employee 1997-2003
Total turnover: average period 19972003
Number of employees: average period 1997-2003
Incidence of total assets to turnover: average 1997 and 1998
Profit incidence to tutrnover: average 1997 and
1998
Difference between profit to turnover in 2003 and in 1997
Ratio between the cost per employee in 2003 and in 1997
Ratio between the total cost of labour in 2003 and in 1997
Incidence of depreciation to turnover: average of 1997 and
1998
Ratio between the number of employees in 2003 and 1997
Dummy=1 if the company is quoted
Anyway as a first exploration a regressed the vertical integration degree on
different potential explicative variables that was possible to built from simplified
accounting data contained in original database and figure 8 give a brief
description of variables.
The regression was carried out for the four industries for which the number of
observation was sufficient I preferred four different regression instead of a
single regression with industries dummies since the market conditions and the
relationship among variables can be very different in various industries
In radio-television and book the dependent variable that proxy vertical
integration decrease while increase in newspapers and magazines.
The adjusted R-squared is poor for televisions good for magazine and
newspaper a suspect for book where the high level can imply multicollinearity.
Moreover some of the explanation variables used enter in the definition of
dependent variable.
In book the average cost of labour is positively related with vertical integration,
together with initial profit level and the total variation of profit level while the
initial level of fixed investment, the initial level of vertical integration are
negatively correlated with the variation in vertical integration.
In all industries the variation of profit level is strongly linked with growth in
vertical integration. That means that the companies which profits grow more in
the period 1997-2003 are the same that choice to raise their level of vertical
integration.The results do not seem completely consistent. Both total turnover
and total employees give an indication of the dimension of the company but in
three regressions on four their coefficient exhibit opposite signs.
Figure 9: Results of the regression. Dependent variable = difference between
value added to turnover in 2003 and in 1997
Radio and tv (9220)
Variable
CONSTANT
Coefficient
Magazinnes (2213)
Std. Error Coefficient
std error
newspaper (2212)
coefficient
book (2211)
stad error coefficien
-0.295514
1.18186
0.111898
0.06005
-0.004797
0.04757
1.132147 **
0.55208
-0.095663
0.0641
0.024289
0.09874 -0.135496 *
cost of labour per employees
0.007911
0.00589
0.000209
0.00026
5.04E-06
2.12E-05 0.001204 **
Turnover
1.92E-07
3.1E-07
-4.65E-07
2.13E-07
-4.21E-08
1.04E-07
Initial vertical integration
Employees
5.44E-07
9.9E-05 0.000172 **
5.77E-05
1.46E-05
2.10E-05
fixed investment (total asset)
0.059271
0.21749 -0.055623 **
0.02149
-0.016381
0.0192
initial profit level
-0.927612
0.65899
0.10382 0.214992 **
0.10832
0.16079 0.379223 ***
0.08676 1.011006 ***
0.03207
profit variation
0.04445
0.07604
0.00061
-1.64E-07
1.20E-07
3.33E-05
2.42E-05
-0.023049
**
0.136638 *
0.0106
0.08003
unit cost of labour variation
-0.449683
0.75542
-0.046616
0.04243
0.024906
0.03692
0.880921
***
-0.005703
total cost of labour variation
0.304813
0.50788
0.063321 *
0.03314
0.011225
0.01683
0.003336
0.01229
fixed investment (depreciation)
-3.029133
1.48804 -0.472963 **
0.23953
0.48043
0.143181
0.29768
numbero of employees variatio
-0.231263
0.67107
0.03776
-1.712582
***
0.001417
0.01003
0.003578
quoted in stock exchange
-0.100581
0.31997 -0.243712 ***
0.0753
0.105507
0.08326 0.173135 **
Adjusted R-squared
mean dependent variable
Obsservation
0.750138 ***
-0.070294
0.011209
std error
-0.05489
0.288
0.436
0.857
0.98
-0.116344
0.005503
0.043318
-0.073902
45
77
170
117
*,**,*** significant respectively at 10%, 5% and 1%
0.0208
0.01959
0.01632
0.07178
CONCLUSION
Horizontal and vertical integration is powerful forces that reshape media
landscape.
We need more empirical studies to understand the prevailing directions and to
test the overall effects considering not only the traditional economic forces but
also a broad social perspective.
I have shown that in some specific case industries and companies involved in a
variety of multimedia merges and alliances have indeed been lowering their
specific vertical integration as happens in Italian newspapers and televisions.
The extension of this conclusion to a broad European sample has produced
mixed results in part for the lack of appropriate data.
I plan to refine the database and to explore in more detail the possible
determinants of the changes in vertical integration degree of media companies.
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