Aside from the industry’s legendary “creative” accounting and lack of specificity in reporting revenues, the fact that most companies do not categorize their earnings in the same way further frustrates attempts at making direct comparison between conglomerates. Disney, for example, used to divide their revenues into categories comprised of Filmed Entertainment, Consumer Products, and Theme Parks & Resorts. After buying the ABC network, those categories changed to reflect the new properties that the company owned, and accounting was done for Theme Parks & Resorts, Broadcasting, and Creative Content—a category even more vague and ill-defined than Filmed Entertainment.

Now, the Disney company categorizes their earnings as deriving from “Media Networks,” “Studio Entertainment,” “Parks and Resorts,” and “Consumer Products.” In the Media Networks category, more than half of the revenues are from cable ($10 billion, or 62%) and the rest ($6 billion, or 38%) is from broadcast, including the ABC television network, ten local stations, the Radio Disney network, the ESPN radio network, and 46 radio stations.

In this method of organization, networks are separated, broadcasting and cable have their own category, but theatrical film remains subsumed in the arena of studio entertainment—an undignified accounting to be sure. The industry that produces the tentpoles (“event” films with the highest production and marketing budgets that are expected to bring the studios’ biggest financial rewards [11b]) [open endnotes in new window] and almighty blockbusters does not even rate its own category for shareholders on an annual report. This undifferentiated grouping indicates that medium specificity does not have primary importance, at least when it comes to reporting earnings and perhaps that kind of thinking extends to how specific media are conceptualized. Another example of this lack of interest in “film” per se is found in Time Warner’s annual report, which offers a secondary breakdown of earnings in terms of business models. That secondary breakdown reveals both an interesting lack of concern for which medium is bringing in the revenues and also more of a focus on the property or business model responsible for earnings:

Viacom is also a company that breaks down its revenues twice, once in terms of filmed entertainment vs. media networks, showing the bulk of earnings coming from television holdings, and again in a way that gives each one of those categories some nuance.

Thus for Viacom, theatrical entertainment represents 11% of the company’s annual revenue. The rest comes entirely from home entertainment, licensing, advertising, affiliate fees, and other ancillary revenues. While CEO Sumner Redstone’s empire began with a few local film theaters and expanded into a major national theater chain, since the late 1980s he has taken his enterprise quite a distance from that core business. Now the company’s major stronghold is in cable television (Viacom’s networks include MTV, VH1, Nickelodeon, TVLand, BET, Spike TV, CMT, Comedy Central, and Logo).

Film was—and remains—an afterthought at best for the parent company of NBC-Universal. As part of GE, NBC Universal was a mere 9% of the company’s annual $183 billion revenue in 2008. The entertainment unit was only mentioned five times in GE’s 112-page annual report. Even as a film studio, Universal has always been heavily invested in television, but more than 60% of NBC Universal’s profits came from cable in 2009, compared with 43% two years earlier. The most valuable asset at NBC Universal is the USA Network and it has continued to grow more profitable; Bravo, Syfy and Oxygen also showed profit gains during the worst part of the recent recession.

At the end of 2009, Comcast announced that it would be buying a majority stake in NBC Universal.[12] As the largest U.S. cable system wiring 25% of the nation’s homes, it would be the first cable operator to take over a major film studio, a broadcast network, and a host of successful cable channels. Also it has become the ultimate expression of how cable has become the core business of media conglomerates. Comcast had certainly been in the hunt before, attempting to buy Universal in 2004 and Disney in 2005. Even after failing to make those deals, the company remained interested in acquiring more programming services, which were extremely lucrative. After all, it is not the NBC network or Universal studios that is the most profitable component of NBC Universal. In fact, the network lost over $500 million in 2009[13], and Universal has had a tragic string of flops, resulting in the departure of studio Chairmen Marc Schmuger and David Linde. Instead, it is cable—USA, Syfy, Bravo—that is the prize jewel of NBC Universal. In the years just before the merger, President and CEO of NBC Universal Jeff Zucker repeatedly celebrated cable as the company’s strongest component, saying that the core cable networks represented over 75% of the company’s profits.[14] With the merger, 82% of the new content provided by the company will be cable programming.[15]

As part of Comcast, NBCU would be integral to the new company’s overall success. A vast majority of the company’s revenue (77%) will still be from infrastructure and delivery systems already belonging to Comcast—cable, Internet and phone subscriptions. The rest will come from cable programming (8%), broadcast properties, including NBC (7%), movies and theme parks (7%) and Telemundo—the broadcast/cable hybrid Spanish language network (1%).[16] While all modern entertainment empires are heavily committed to television, Comcast-NBC Universal is especially invested—top (content) to bottom (conduit)—in the medium in general and in cable specifically.

Cable television’s ascension in the conglomerate hierarchy is taking place alongside some serious troubles facing the film industry—in the form of piracy, economic recession, spiraling budgets and depressed ancillary markets. The independent and boutique divisions have been hit particularly hard: Paramount Vantage, Warner Independent Pictures and Picturehouse are now defunct; Miramax is dormant after being dismantled by Disney in 2010; and New Line is still functioning but only as a shell of its former self. All of the major studios are cutting back, with Sony and Universal halting spending in early 2009 for the year, and Disney cutting back significantly as well. DVD sales, which are essential for studios to compensate for flops or missed expectations, are down by as much as 25% for some, and international sales have suffered with the global recession. The highest levels of management were not spared either, with top executives at Universal, Paramount and Disney studios losing their jobs in the last year. Dick Cook, longtime Studio Chairman at Disney was even replaced by a television executive, Rich Ross—former head of the Disney Channel responsible for developing the (television-friendly) franchises of Hannah Montana, The Jonas Brothers and High School Musical that have brought Disney tremendous success, even during challenging economic times.

Of course, broadcast is also suffering during this time of transition and upheaval for the media industries. News Corporation reported 2008 income of $18 million from its broadcast television unit, compared with $245 million just a year earlier. They also saw a 44% decline in revenues from stations.[17] Disney’s broadcast business also had a 60% drop in operating income, and even the top-rated network CBS has seen some steep declines.[18] Fourth-place NBC is the butt of too many jokes to count, and the network’s own series 30 Rock often makes fun of NBC’s impending merger with a fictitious company called “Kabletown.” Recently, the show characterized NBC as nothing more than a tax-deductible charitable donation for the cable company, echoing a common view that Comcast would have rather done the deal without also having to buy the struggling broadcast network.

While it is clear that the Big Six are largely profiting from the television arena, isolating or identifying the root of financial success in the media industries is more complex than what numbers and balance sheets provide. The percentage of earnings derived from home video, for example, often depends on the strength of domestic theatrical sales. And the migration of content and viewers to online viewing is not just threatening the broadcast business model, forcing networks to trade “analog dollars for digital pennies,”[19] it is requiring cable and film to adapt as well.[20] In keeping with such complexity in the business, scholarly analysis and critical evaluation of media industries require similar distinction, nuance and interrogation, lest we ourselves perpetuate the same illusory accounting of industrial identity.

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