Exploring centralized and federalized media conglomerates.

There are two basic templates in creating a conglomerate: Centralized and Federal. A centralized conglomerate, according to the textbook, “seeks to achieve the maximum benefits of economies of scale by combing forces wherever possible and reorganizing all aspects of the publishing operation…” (Thompson 127). Conversely a federal conglomerate, also according to the textbook, “seeks to reap the benefits of economies of scale while at the same time preserving some of the autonomy of the old publishing units.” (Thompson 127).

Conceptually federal conglomerates have a fluidity to them that, in theory, feels very advantageous – especially in regards to the big/small paradigm that Thompson wrote about. Of being big, Thompson writes: “It matters to be big when you are dealing with suppliers … where you need to invest substantial sums of money in order to gain efficiencies and where you can achieve real economies of scale.” (Thompson 127). Of being small, Thompson adds “The benefits of being small are that you’re working with creative talent and they don’t want to feel like they are working with a sausage machine… They need the personal contact; they don’t want to feel that they’re working with just anyone.” (Thompson 128). Of the conglomerates that are more federal, Random House is one of the publishers that stands out above the field. Part of the Big Six, Random House ranked first in the 12 largest publishers in the United States from 2007 to 2008, with US trade/ mass market revenues coming in at more than $1.26 billion – $200 million more than second place Penguin. (Thompson 117).

The negative to having a conglomerate utilize a federal approach like such is cost. With everyone able to operate independently, even under an umbrella company, “there is less likelihood to reduce the cost base and gain the economies of scale that can be achieved from consolidation.” (Thompson 130). At a certain point a company can stretch themselves so far that they can’t afford to operate.

I’m conflicted as to picking either a small or large company. I wrote of some of the differences about big and small publishers while describing the federalized conglomerate concept and the differences are fairly obvious. Small publishers are more intimate and big publishers have more resources. While it might be a cop-out, I would pick a middle-sized publisher and get the best of both worlds. It makes more sense than picking one thing and losing out on the other.

 

Works Cited

Thompson, John B. “Merchants of Culture” 2nd ed. New York, New York: Penguin, 2012. Print.

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