MECCSA and AMPE Joint Annual Conference University of Lincoln 5-7 January 2005 Multinational media companies in a European context Dr Ágnes Gulyás Department of Media Canterbury Christ Church University College North Holmes Road Canterbury CT1 1QU Tel: 01227-782907 Email: a.gulyas@cant.ac.uk 0 Introduction Multinational media companies have received a lot of attention both in the academic literature as well in general public discussions. They are usually seen as one of the driving forces behind globalisation and internationalisation of media. Research has been mainly focused on the largest firms, such as News International, Time Warner or Disney, whilst middle and small size multinational media companies have been somewhat neglected. Arguably, however, these smaller companies have important roles in the development of regional transnational centres and regional media markets. This paper aims to examine multinational media companies in the regional context of the European Union by analysing characteristics of European multinational media companies and exploring the policies of member states and the European Union towards the development of such firms. Multinational media companies The term ‘multinational enterprise’ is a comparatively recent one. In 1958 the French economist Maurice Bye coined the phrase ‘multi-territorial firm’ (Dunning cited in Jones, 1996, pp6), albeit companies did engage in multinational activities prior to that. During the second part of the 20th century the development of multinational companies came to be seen as an important element and driving force of the globalisation process. Their features, size, industrial focus, regional compositions, however, have altered over the decades, indeed their characteristics are not static. Dunning (2000) identifies four main developments of the last three decades which had profound impact on both the nature and composition of global economic activity, on its ownership and location, and on its organisational modes. These are: 1. the increasing importance of all forms of intellectual capital (i.e. knowledge economy); 2. the growth of cooperative ventures and alliances between and within the main wealth-creating institutions; 3. the liberalisation of both internal and cross-border markets; 4. the emergence of several new major economic players in the word economy. Dunning, 2000, pp10). Different industrial sectors have been affected differently, arguably, in the case of the media sectors the first three trends were especially significant in the development of 1 global media markets and of multinational media companies. Historically, most studies have focused on subsidiaries, foreign investments and ownership structure of multinational media companies, because these used to be their most important international activities. However, international activities of multinational companies became more diverse over the last decade with the emergence of new forms of institutional arrangements. Wall and Rees (2001) identify three categories of international activities: • Export-based methods (indirect and direct exporting) • Non-equity methods (such as franchising and licensing) • Equity methods (such as joint ventures, acquisitions, greenfield investments and consortia). Ideally, if one aims to analyse the development, strategies and behaviour of multinational media companies, one should examine all types of international activities the companies have been engaged. However, this is difficult to achieve because of lack of data, statistics and in cases secrecy of the firms. This paper would ideally examine the whole range of international activities of European multinational media companies, however given the above mentioned reasons and constraints of space, the focus is on foreign investments and subsidiaries of these firms. Dunning also argues that there has been a shift in the dominant types of multinational companies. Historically, multinational companies tended to have multidomestic or ‘stand’ alone structure, which means that the company “treats its foreign subsidiaries as autonomous wealth-creating units. Each subsidiary tends to replicate the assetexploiting activities of its mother company, and supply its products to local and/ closely adjacent markets. … for the most part, there is likely to be little trade in finished products between the parent company and its affiliates” (Dunning, 2000, pp17). However, by the late 20th century mainly as a result of the four main events described above a new type of company gained grounds: the globally (or regionally) integrated multinational enterprise. This type of enterprise “adopts a systematic and holistic approach towards its global operations, and treats its foreign affiliates as part of a network of interrelated activities, designed to promote the interest of the enterprise in toto” (Dunning, 2000, pp18). 2 Others also note that underlying features of multinational enterprises have changed towards the end of the 20th century. Solvell and Birkinshaw, for instance, argue that with the emergence of a knowledge economy the “benefits of MNEs gain from multinationality will be far more a function of their ability to manage practices across borders than activities” (Solvell and Birkinshaw, 2000, pp92). In their view there has been a shift from value-adding activities as the key source of competitiveness for multinational enterprises towards practices as the emerging source of competitiveness in the knowledge economy. By practices they mean the “way things are done” by the multinational enterprises (Solvell and Birkinshaw, 2000, pp101). Kogut and Zander argues on a similar line in their evolutionary theory of multinational corporations proposing that “firms are social communities that specialise in the creation and internal transfer of knowledge” (citied in Solvell and Birkinshaw, 2000, pp93). Multinational companies in the media have received special attention, probably because of the democratic roles and perceived effects of the media. Historically in the developed world the media sectors had been organised on national basis, and in many cases that is still one of the most important industrial organisational factors. However, from the mid 1980s onwards there have been several waves of mergers and acquisitions in the media markets accompanied by the emergence of giant multinational media companies. The three main factors argued to have contributed to this trend are: technological change, deregulation and liberalisation policies and the availability of capital (Picard, 2002 and Ozanich and Wirth cited in Albarran and Mierzejewska, 2004). The rhetoric on multinational media companies is usually sceptical. Adjectives for them such as ‘Beasts’ or ‘Behemoths’ are not rare (see, for example, Smith, 1991). Their role in ‘crushing’ national media markets and pursuing solely commercial aims are emphasised in critical analyses. National media markets of developing countries are perceived to be particularly under threat by the international commercial expansion strategies and aims of multinational media firms. Supporters of the media imperialism thesis see large multinational media companies as purely money-minded and capitalgrabbing executors of the international capitalist system that hamper national media development projects. The media of small nations in the developed world are also often considered to be tormented on the hands of multinational media firms. Several authors discuss how the media industries of small nations in the West became dominated by 3 international media firms, and what sombre consequences this carried on national cultural and media production and consumption (see, for example, Grisold, 1996; Werner and Trappel, 1992.) While many discussions on the subject tend to view giant multinational firms as omnipotent organisations of the global world, there are also some more restrained opinions. Picard (1998) while sharing certain worries about the concentration of international media markets, stresses that compared to other industrial sectors such as manufacturing or petrochemical media conglomerates are in fact not that huge in their revenues and capitalisation. He further argues that the power of global media firms is overemphasised in the literature, and that these companies are also prone to rise and fall under normal business pressures such as in the domains of leadership, resources and expansion strategies (Picard, 1998 and 2002). National and EU policies affecting multinational media companies Regional economic integration, such as the EU, typically refers to reductions of regional barriers and investment restrictions. Historically, the economic imperatives were the most important in EU integration and policy-making. For instance, with the establishment of the single market the aim was to abolish national boundaries in the flow of financial and economic activities, help cross-border economic cooperation and create a free trade area. EU integration, such as the single market and harmonisation of financial and economic regulations, has helped cross-national media investments and encouraged, to an extent, the development of European media industries. The European Union has been also important as a regulatory body. Many media related issues are no longer confined to the national political context, as a result of policy shifts, technological and economic changes which made nation-state boundaries increasingly permeable to cross-border media flows and transnational activities of media companies. However, European economic integration has had different effects on individual countries, industrial sectors and firms depending on their specific nature, characteristics and history. The different stages of European integration did not always correspond with the emergence of strong European-based multinational media companies, or a significant increase in transnational media activities and investments between member states. On the example of the first phase of macroeconomic regional integration within 4 the EC (between late 1950s and mid 1980s) Dunning argues that there was a substantial net increase in EC-related foreign direct investment. However, “the largest increases in foreign direct investment were from countries outside the EC; and the evidence strongly suggests that US (and later Japanese) MNEs were able to take advantage of the removal of tariff barriers, and surmount the transaction costs of the remaining non-tariff barriers better than EC equivalents” (Dunning, 2000, pp133). During the second phase of macroeconomic regional integration (development of an internal market) the relative growth of foreign direct investment in knowledge-intensive activities was perhaps the most significant trend according to Dunning. There was an increasing concentration of foreign direct investment by both EC and non-EC investors in the tertiary sectors, including media markets. However, observers are undecided about the exact role of European integration in this process. “How much this is due to the internal market and how much to the deregulation and liberalisation of service-related markets in general, it is difficult to say” (Dunning, 2000, pp144). Hence, other factors, such as national governmental policies, trends in global markets and industries, are also important in the development of specific sectors and the emergence of regional multinational media companies. An example for such a factor is national policies towards foreign investment. Brown and Raines (2000) argue that there are considerable differences between EU member states in terms of national regulations towards foreign investment, the importance attached to FDI as an industrial policy objective, and the level of resources devoted to promotional activities. They identify three categories of member states in this respect: • countries that have long-standing policies to maximize the benefits of FDI in their regional and national economies (e.g. Belgium, UK, Ireland, Netherlands, Spain); • countries that traditionally either distrust losing control of domestic economic activity to foreign enterprises, fear the risk of increased competition with local businesses, or do not regard the benefits of FDI projects as justifying the costs of their promotion (e.g. Germany and Italy); • former hostile countries which have begun to pursue more positive policies (France, Scandinavian countries) (Brown and Raines, 2000, pp435). Historically many media sectors, especially broadcasting, had been heavily regulated and national media markets protected. However, during the last 5-10 years restrictions 5 on foreign ownership have been relaxed in many countries. Table 1 shows foreign ownership restrictions in the media sectors in the EU member states in 2004. Given the internal market no country limits investment from another member state, but 9 out of 25 countries restrict foreign ownership in the media sectors from outside the EU. National policies like this have limited the level of internationalisation of national media markets and the development of multinational media companies with pan-European activities. Table 1 - Foreign ownership restrictions in the media in EU member states EU member state Austria Foreign ownership restrictions in the media Yes, no more than 49% of shares in broadcasting companies can be foreign-owned; restrictions do not apply to companies from EU member states Belgium No Cyprus Yes, foreign companies cannot own more than 5%; restrictions do not apply to companies from EU member states Czech Republic No Denmark No Estonia No Finland No France Yes, foreign companies outside EU cannot own more than 20% in broadcasting Germany No Greece Yes, companies from outside EU cannot own more than 25% in broadcasting Hungary Yes, 26% of broadcasting companies have to be owned by Hungarian Ireland Yes, applications for a broadcasting company have to be from EU based companies Italy No Latvia No Lithuania No Luxembourg No Malta Only companies registered in Malta may apply for a licence, now also companies from EU Poland Yes, foreign companies cannot own more than 49%; restrictions do not apply to companies from EU member states Portugal No Slovakia No Slovenia No Spain Yes, foreign companies outside EU cannot own more than 25% in broadcasting Sweden No The Netherlands No United Kingdom No Source: based on European Media Institute, 2003. Other national policies have also been important in the development of European multinational media companies. One of the most significant of these has been regulation 6 on media concentration. Highly concentrated media markets, monopolies or oligopolies are seen as negative developments not just from an economic point of view, but from social and political perspectives which emphasise the threats of media concentration to pluralism and democratic functions of the media. Most European countries' constitutions include references to freedom of expression and of information and, at least indirectly, the necessity to uphold pluralism in the mass media. A number of countries have quantitative restrictions based on the number of channels (Italy, Portugal, Spain, Sweden), the share of audience (UK, Germany, France), the share of circulation or absolute circulation in the press sector (France, UK) (Cavallin, 1998). Arguably, these types of national policies hinder the development of pan-European multinational media companies, as they could undermine their economic base. Not only national policies have been influential in the development of European multinational media companies, but EU policies as well. Some of the policy initiatives are sector specific, such as the Television without Frontiers. There are also more general, horizontal EU legislation which have an impact on European multinational media companies, such as the Draft Directive on Services, The Charter of Fundamental Rights, EC Treaty provisions on free movement of goods, rules on competition, technical harmonisation. EU policy implementation also affect media companies, for instance, they can be subjects of the EU Commission’s merger scrutiny. Furthermore, ECJ case-law which provides interpretation for EU legislation is also influential. Media sector specific EU legislation and policies have changed over time as a result of technological changes, policy shifts at national and EU level and industry and market trends at national, EU and global level. Recently, media sectors have received increased attention which is reflected in the decision of the EU Commission at the end of 2004 to appoint a Commissioner for Information Society, Audiovisual policy and relations with the media industry. According to the new EU Commissioner for the media industries, Vivienne Reding EU media policy has had three strands. First, setting the rules of the game, the main initiative in this respect has been the Television without Frontiers Directive, the underlying principles of which are safeguarding cultural diversity, protecting certain categories of viewers and ensuring free movement of services. Second, providing financial support for the development and competitiveness of the European media industries, the main instrument has been the Media programme. Third, 7 ensuring that media policy objectives are taken into account across a range of other relevant EU policies (Reding, 2004). Similar to national regulatory systems, EU legislation has been more pronounced in broadcasting than in other media sectors due to its technological characteristics and specific historical development. EU Audiovisual policy has been driven by different aims. “European Audiovisual Policy has consistently sought to provide a framework favourable to the development of the audiovisual sector and to support the transnational dimension of this essentially cultural industry” (Reding, 2004). The three main objectives are: the establishment of a common information area, including the setting up of common standards; the promotion of television programmes with European content as a complement to existing national programmes; regulatory consistency among the Member States with a view to deregulation (or re-regulation) of broadcasting activities. (European Parliament Fact Sheets). EU media policies, however, tend to be outcomes of long debates and consultations, conflicts of interests, compromises and disagreements. There are a number of areas where member states could not agree on a common policy. One area where no compromise has emerged is EU-wide media concentration controls and media ownership regulations. It was shown above that member states have different regulations and policies in these matters. The issue of media concentration regulation has been debated at European level for the last two decades. The Commission launched a consultation paper in 1992, the Green Paper 'Pluralism and media concentration in the internal market' (COM(92)480). After a lengthy period of consultations, debates and considerable lobbying from major transnational and national media groups no agreement has been reached. Hence, national regulation remains important in the development of European-based multinational media companies and EU policies have different effects on this process. Views of European multinational media companies As part of my research on the topic I have interviewed some European multinational media companies. Among others, I asked them about their views on EU policies and European integration, the followings were the typical answers: 8 Question: What are the company’s views on the European Union? How important the EU is in your activities? Answers: “our growth opportunities are in Europe… EU decisions impact us directly. Also the common currency helps us in our business operations since it reduces the currency risks.” (regional EU multinational company, present in 14 EU member states) “Our divisions provide media and entertainment services not only in the country of their primary establishment but also in the other EU Member States. By doing so, they are taking benefits from the fundamental freedoms of the Internal Market, especially from the freedom to provide services and the freedom of establishment. … The importance of the European Union can be illustrated by the fact that more than 80% of the economic policy decision which affect our companies are made in Brussels. … Our company welcomes the liberalization of the entrepreneurial milieu within the European Union and the new opportunities for further geographical expansion due to the recent enlargement.” (global media company, present in 19 EU countries) “During the last 25 years the company has become more and more international. The focus has been on the neighbouring countries, as there are a lot of similarities. However, during the last 10-15 years the company has increased significantly and has strong European ambitions. … There are more and more awareness that we are working in a European environment. … For some of our operations, such as books and business information, the international markets are very important. (regional EU multinational company, present in 16 EU member states) Question: How important European integration and developments in the European Union have been in your expansion strategy? Answers: “European integration helps to fulfil our growth strategy but it is not necessary for it. … We are continuing to internationalise our operations and are especially interested in CEE countries, so further expansion of EU is welcomed.” (regional EU multinational company, present in 16 EU member states) “Due to the recent EU Enlargement (and already due to the pre-accession partnership), new European markets have been opened to our companies for their further geographical expansion. Eastern Europe has been identified as a strategic growth region, with Poland as a core piece of this strategy.” (global media company, present in 19 EU countries) “We had different motivations (to expand and invest abroad). The basic one is that as a company we wanted to grow. That’s one of the aims of all of our 200 companies. Our home country is a small one, there are 9 million inhabitants. … When a company is thinking about foreign investment, the basic thing, the first consideration is whether we have the skills, the knowledge, whether we would be able to create added value in the new market. The second consideration is policies and governmental interventions. So, yes, European integration was important, but it was only one of the factors, not the sole determinant. It has influenced our company, no doubt about it, for instance opened up new markets. … EU expansion opens up a new world. We look at similarities, rather than the differences. Similarities mean business opportunities. … The development of EU is important for us, it is important for our decisions and investments. The more stable environment you have, the easier investments gets. We are really welcoming further EU 9 integration and expansion, it makes life easier. (regional EU multinational company, present in 16 EU member states) The answers suggest that European multinational media companies tend to favour EU integration. They see EU developments and policies important, directly affecting their activities and strategies. For instance, it is evident from the interviews that EU enlargement has influenced the strategies of many European multinational media companies. However, during the interviews companies also emphasised that there were other factors, for instance policies of national governments, which were influential on their activities and strategies. In the past economists had a relatively easy job explaining motivations and identifying strategies of multinational companies. Dunning, for instance, identified four major strategies motivating outward foreign direct investment: market seeking, resource seeking, efficiency seeking and strategic asset seeking (cited in Audretsch, 2000, pp 76). However, recently observers have argued that strategies of multinational media companies have become less predictable and stable during the 1990s as international markets became unpredictable as a result of technological changes and policy shifts. Prahalad, for instance, notes that a ‘discontinuous competitive landscape’ has emerged during the last decade, where industries are no longer the stable entities they once were. The most significant characteristics of this new landscape are the convergence of technologies, technological developments, privatisation and deregulation and increased importance of new forms of institutional arrangements and liaisons (cited in Wall and Rees, 2001, pp206). This description is particularly valid for the media sectors, where convergence, technological developments and deregulation have transformed the markets and reshaped the industries during the last two decades. In the continuously changing markets companies’ international strategies and expansions have been unpredictable and subject to growth as well as cutbacks. In the course of the interviews multinational media companies expressed different views about EU policies. Some EU regulation and policies have been welcomed, while others were seen as too much intervention. From quite early on some media companies organised themselves in lobbying organisations, such as the European Publishers Council and International Communication Round Table. Some companies are active in non-media specific lobbying organisations, such as the Federation of European Direct Marketers and Friends of Europe. The largest companies have also set up their own office in Brussels and maintained direct contacts with EU institutions. All these lobbying 10 activities suggest that many European multinational media companies have been active in trying to influence EU policies which in turn affect their businesses. Arguably, with changeable market environments lobbying is particularly important as it could help the company with stabilising and predicting the effects of external factors on the organisation. Characteristics of European multinational media companies European media companies come in different sizes and varied international activities. Indeed, there are probably more differences than similarities between them as they are different in features such as size, geographical focus, management, organisation, strategies, operation, financing or age. Some of them engage in international activities, others do not. It is difficult to access the role and power of European media companies in the global market due to lack of statistics, a wide range of new forms of institutional arrangements and liaisons between media companies, and the complexity of linked media sectors. Nevertheless, there are some indicators. In the audiovisual sector the top 50 European companies had a share of 32.5% of the global market, while US companies controlled 42.8% in 2000 (Albarran and Mierzejewska, 2004). European companies also seem to be less dominant and relatively small compared to their US counterparts when one looks at the largest media conglomerates in the global market. Figure 1 shows the 2003 turnover of the largest multinational media companies in the world. There are 7 multinational media companies, whose annual turnover is above $20 billion. Out of the 7 companies two are originally European-based, Bertelsmann and Vivendi Universal, four are US-based and one is Japanese. All these companies are diversified both in terms of their geographical operations, and in terms of their activities in different media sectors. For instance, Bertelsmann is present in 50 countries and Vivendi Universal is present in 71 countries. All 7 companies are global companies and for all of them their European operations are important part of their activities and important source of revenues. 11 Figure 1 – 2003 turnover of largest multinational media companies ($billion) Sources: companies’ websites Herman and McCheesney (1997) give a useful categorisation of multinational media companies. They argue that a tiered global media market emerged by the mid 1990s, where there were three tiers of companies investing in foreign media markets (Herman and McCheesney, 1997, pp52). The first tier contains a small number of colossal media conglomerates such as News Corporation, Time Warner, Disney and Bertelsmann dominating the global media market. This small group of companies is listed above in Figure 1 with annual sales above $20 billion in 2003. The second tier includes about three dozen large media firms with annual sales generally in the $2-10 billion range such as Thomson Corporation, Reader’s Digest, Gannett in North America and the VNU, Havas, Axel Springer, Reed Elsevier, the Pearson Group, Wolters Kluwer in Europe. Second tier companies usually fill regional or niche markets in the global media market. Third tier media firms, which number thousands of relatively smaller companies, provide services to larger firms or fill small niches (Herman and McCheesney, 1997). Table 2 in the Appendix provides a list of European multinational media companies and their EU and non-EU activities. The companies are from the list of the top 50 European media companies complied by Zenithmedia (2003). The market research company prepares this list every year identifying the largest 50 European media companies according to their sales and activities. Obviously examining only the top 50 companies provides only a limited analysis, but it does give some indications about European 12 multinational media companies, as the larger companies tend to engage in multinational activities. Out of the top 50 companies in 2003 24 had some sort of foreign direct investment and was based or originated in an EU member state. Companies can also have other types of international activities, such as licensing, alliances or exporting. For instance, ITV in the UK is one of the largest exporters of television programmes in Europe, but the company does not have subsidiaries in other countries and has not engaged in foreign direct investment, hence it is not categorised here as a multinational company. 26 companies out of the top 50 were not included in the analysis for various reasons, 2 were not from the EU, 3 were part of larger conglomerates, one was a telecommunication company, one was an advertising company and 19 did not have direct foreign investment in another country albeit they might have engaged in other types of international activities. In Table 2 the companies are grouped according to their size and geographical activities. The first observation one can make from this data that there is no truly pan-European multinational media company which is present in all or most EU states and not present in other countries, regions of the world. Adopting Herman and McCheesney’s categorisation of tiered media markets three groups of companies are identified according to their size. 1st tier companies have an annual turnover above 15 billion Euro ($20 billion), 2nd tier companies have annual sales between 15 and 1 billion Euro, and 3rd tier firms have annual turnover below 1 billion Euro. Out of the 24 top European media companies shown in Table 2 two are 1st tier, twenty are 2nd tier and three are 3rd tier companies. In the European markets 3rd tier companies are more numerous than the other two types of firms, however, in Table 2 they are not well represented because the largest companies are examined here. There is considerable size difference between 1st and 2nd tier firms. The largest 2nd tier firm is half the size of the smaller 1st tier global media company, Bertelsmann. Table 3 shows the types of European multinational media companies. Although there are some differences between the two 1st tier global media firms, they are largely similar in terms of their range of size, diversified activities engaging in the production of almost all types of media forms and they are present in major markets of the developed world and in many developing areas as well. 13 Table 3 – Categories of European multinational media companies st 1 tier global companies nd 2 tier companies • global Bertelsmann, Vivendi Universal Lagardere, Pearson, Reed Elsevier, VNU • with EU regional focus a) Northern and East Central Europe: Sanoma WSOY, Bonnier b) Central Europe: Axel Springer c) Southern Europe: Gruppo Editoriale L’Espresso, Mediaset • with significant interests a) focusing on Spanish speaking countries: Grupo Prisa b) focusing on English speaking countries: Daily Mail General Trust, Independent Newspapers c) with an Eastern European focus: Burda, WAZ d) focusing on French speaking countries: Socpresse e) with different geographical focuses: EMAP, Heinrich Bauer, Holtzbrinck Aller, De Telegraaf, Modern Times Group 3nd tier companies non-EU There are more differences between 2nd tier firms both in terms of size and geographical locations. In terms of their activities three main types of companies can be identified. There are some companies which are present in most major markets of the developed world and in many developing areas, hence they could be categorised as global firms. Lagardere, Pearson, Reed Elsevier and VNU belong to this group. These companies tend to be also diversified but to a lesser degree than 1st tier firms. They tend to specialise on specific media products or services which they provide in many markets and do not produce as much variety of media products as 1st tier firms. Another type of 2nd tier companies have a European focus and most of their activities are in the member states of the European Union. One can identify subcategories in this group. Some European multinational media companies have a strong Northern and East Central European present, others focus their activities in Central Europe and some in Southern Europe. Scandinavian firms tend to belong to the first subcategory, German companies to the second subcategory and Italian or Spanish companies to the third subcategory. These companies have a specific regional focus and tend to concentrate on one or two media sectors. They usually outgrew their original market and invested in geographically close foreign markets with similar or same products. The Swedish Bonnier group, for instance, took some of its products to neighbouring markets and invested heavily in the newspaper markets of Scandinavian and East Central European countries. The German Axel Springer group exported many its magazines to Central European markets and became market leader in these countries in some magazine and newspaper market 14 segments. It is interesting to note that there is no European multinational media company which focus only on Western European countries, this is probably due to the saturation and high costs of entry in these markets. Those companies which are present in most major Western European markets tend to be global players, and those companies which have more limited resources for expansion tend to invest in less saturated markets in Central, Eastern or Southern Europe. The third group of 2nd tier European multinational companies are present in some EU member state, but they also have significant interests in non-EU states. This means that at least one third of their turnover is from non-EU countries. They are not present in as many countries as global companies, but focus on specific regions or niche markets. Five subcategories are distinguished. There are companies which focus on Spanish speaking countries, some focus on English speaking countries and some on French speaking countries. Another subcategory is firms which have a regional Eastern Europe focus outside the EU. The fifth subcategory represents firms which are present in diverse geographical locations, they tend to focus on one or two niche markets, and present with the same or similar products in different markets where opportunities arose. 3rd tier firms could also be categorised, similarly to 2nd tier firms, according to their size and geographical locations, however, as they are not well represented in this analysis this cannot be shown here. The activities of European multinational media firms can be illustrated in other ways as well. Table 4, 5 and 6 in the Appendix show the three largest companies in the national daily newspaper, the terrestrial television and the magazine markets in EU member states in 2004. These are of course snapshots of the situation in that year, ownership structures and market positions change, however they do give some indications about the importance of multinational media companies. When examining the data from Table 4 it is apparent that the national daily newspaper markets across the EU are not dominated by a few large media conglomerates. Considering the circulation figures of the newspaper titles of the companies 7 out of 24 countries in the list are dominated by foreign media companies (meaning that foreign companies control more than two-thirds of the combined circulation), in 9 member states local companies are the dominant and in 8 countries the market is dominated by a mixture of local and foreign companies. This is a rough calculation as it is based on circulation figures and only takes account the 15 three leading companies, but it gives some indication of the market power of individual firms. It is interesting to note that 5 out of the 7 countries where foreign owners dominate the national daily newspaper market are new member states of the EU in East Central Europe. Furthermore, all large Western markets are dominated by local firms with the exception of the UK. None of the countries have foreign ownership restrictions in the press market (see Table 1), hence it is not only national policies which influence foreign media ownership. Other influential factors include the level of saturation and openness of the market segment, entry cost, the power of local firms, traditions and the perceived cultural and social importance of the given media form. East Central European press markets became open with low level of entry costs following the fall of the communist regimes, hence the relatively high rate of foreign ownership there. Table 5 shows the three market leaders in the terrestrial television markets in the EU. Similarly to the national daily newspaper markets a few large media conglomerates do not overpower the national markets, and foreign owners tend to be of European origin. When considering viewing figures 4 out of 25 countries are dominated by foreign media companies (meaning that foreign companies control more than two-thirds of the viewing figures), in 7 member states local companies are the dominant and in 14 countries the market is dominated by a mixture of local and foreign companies. With the exceptions of Greece and the new member states in East Central Europe public service companies dominate in most EU countries, and in all member states the public service broadcaster is among the three leading companies, except Luxembourg. Given the importance of public service broadcasters the number of countries where foreign owners dominate the terrestrial television markets is lower than in the case of national daily newspaper sectors. All four countries where foreign ownership is dominant are small countries and most of them are new member states from East Central Europe. Foreign ownership is more significant when looking at the commercial sectors of terrestrial television across the EU, which is indicated in the higher number of countries with a mixture of foreign and local ownership. Bertelsmann has a particularly strong position in Europe in this market segment, in 7 EU countries it is among the three leading companies. Arguably foreign ownership is higher in market segments whose social and political roles are perceived to be less important. Table 6 shows the three largest companies in the magazine markets of some EU countries. Due to lack of data only 13 member states are 16 included in the list. When considering market share 4 out of 13 countries in the list are dominated by foreign media companies (meaning that foreign companies control more than two-thirds of the market share), in 3 member states local companies are the dominant and in 6 countries the market is dominated by a mixture of local and foreign companies. As half of the member states are missing from this list it is difficult to compare it with the situation in the daily newspaper and the terrestrial television sectors. Nevertheless, it is worth noting that the three countries where local companies are dominant has particularly strong magazine companies which are often present in a number of other member states. Furthermore, even the large Western markets, such as France and UK, have significant foreign ownership levels. Conclusion This paper examined European multinational media companies and the policies of member states and the European Union towards such firms. It was shown that there was a wide range of policies both at national and EU levels which affect multinational media companies. Some encourage European multinational media companies, others hinder their development. National policies, such as media ownership and concentration regulation tend to hamper the development of pan-European media firms. At EU level media related issues are often subject to heated debates and disagreements, and the effects of EU policies are not clear as there are other important factors, such as technological developments and policy changes at national levels, which are important in the development of European multinational media firms. In relation to their characteristics it was argued that there were more differences than similarities between European multinational media companies as they differ in size, geographical focus, management, organisation, strategies, operation, financing and age. In terms of their activities these companies tend to be either global firms or they focus on specific regions in Europe, and pan-European companies as such are rare. Arguably, however, for most media companies their national market remains the most important market and the internationalisation of European media companies is limited. It was shown that only half of the top 50 European media companies engaged in foreign direct investment in 2003, albeit more were involved in other types of international activities. It was also illustrated that many European media markets remain quite intraverted, for instance, in the national daily newspaper or in the terrestrial television sectors. The 17 reasons for the limited development of pan-European multinational companies are multifold, including language differences, national and EU media policies, divergent social and cultural traditions, market saturation and segmentation, high entry costs as well as small sizes of some national markets. Bibliography Albarran, Alan and Mierzejewska, Bozena (2004) ‘Media Concentration in the US and European Union: A Comparative Analysis’ paper presented at the 6th World Media Economics Conference, HEC Montreal, Canada, May 12-15, 2004. 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