China Media Group, Economic Analysis of the Expansion

 China Media Group to expand the scale of economic analysis
one, of the problem
20 century, 80 years after the deregulation of the media has become a worldwide trend. Media deregulation as the conditions for the development of media, media industry rapidly becoming an important emerging industry. According to statistics, in 2002 the total global media and entertainment market scale reached 1.0889 trillion U.S. dollars, the United States and the United Kingdom and other developed countries of the media industry output value has reached 5% of GDP. In recent years, the international media group by mergers and acquisitions to expand the operation scale of the wind rapidly intensified. such as the 1995 U.S. Time - Warner merged to $ 7,500,000,000 of the Turner Broadcasting-owned CNN, Disney merger ABC.1999 to 19 billion U.S. dollars invested in Viacom 350 billion merger CBS, 2000 in the United States to 162 billion U.S. dollars acquisition of online m Time Warner, and so on. a group of billions of dollars on the scale of multinational media group formed quickly in the world, 500 Media Group has close to 10. < br> In the sustained rapid economic growth, led by China's media industry has achieved rapid development.'s media industry output value has reached 2000m3000 billion, since 1998, the turnover of the media industry for many years to maintain growth rate of over 20% of profits and taxes totaling more than the tobacco industry, ranked fourth in all industries. In Media Group and the rapid expansion of the scale of the development of the global context of transnational Chinese media industry has also begun a group of reform attempts. Since 1996, established the first newspaper Guangzhou Daily Group, the Chinese media industry has so far established 39 newspaper groups, publishing groups 14, Issue 8 Group, SVA Group 18, Film Group 6, a total of 85 media groups. expanding media group, according to news Publication 2003 statistics, published in 31 newspaper groups to enter the top 500 Chinese enterprises with annual revenues of billions of Publishing Group of 14, the annual income of more than 10 billion newspaper group of 9. < br> Foreign Media Group is a rapidly expanding the scale of the phenomenon of attention, which contains a number of issues worthy of in-depth theoretical study. such as the rapid expansion of media group's internal mechanism? scale of China Media Group, the determinants of what is ? China Media Group to do what should be taken to a large-scale policy and strategy? This is a major concern in this paper. At present, domestic scholars have begun to expand the scale of the issue of media group theoretical consideration. If Qiufang Lie From an economic point of view the newspaper group phenomenon, that the economies of scale and scope of the newspaper group to grow the economy is the motive. Pei-Ren Shao, Bing made larger or smaller scale of operation is facing a major newspaper group confusion. They pointed out that 80 years after the 20th century, Western business philosophy has undergone major changes, The newspaper group is facing difficulties. These studies started from an economic point of view of the scale of the problem to think about media group, but only remain in the account of the relevant economic theory. This paper tries on the basis of these studies, the use of economic analysis Tools of the scale on the issue of media group more in-depth analysis.
Second, the decision of firm size: An Economic Analysis Framework
In this analysis, the media group is assumed to be a profitable business organization . This assumes that there is a certain basis. The current media group in China are all implemented enterprise management, fully self-supporting financially. Although the media group is the primary objective to maximize social benefits, but social benefits are difficult to measure , while the economic benefits related to the vital interests of the media group, so in practice Media Group incentive to maximize profit is very strong. In this assumption, the media group on the scale of the problem can be used to analyze the theoretical framework of economics.
1, the relevant decision of the concept of
firm size is a complex economic problems. with this issue several important concepts related to the need to explain.
(1) firm size
scale total assets and so on. From the perspective of output, firm size can be understood as the level of output of enterprises, namely, production or sales, the size of the enterprise.
(2)
economies of scale, economies of scale (economics of scale) means, with the expansion of production scale, the average cost of a declining trend. diseconomies of scale (diseconomics of scale) refers to as the expansion of the scale, the average cost of a rising trend.
shown in Figure 1, LAC said the company's long-term average cost curve. LAC interval in the OA decreases as output increases, the existence of economies of scale within the company. If the long-term average curve down to the LACr, called the company to improve economies of scale. If the long-term average curve Move up to the LAC 3) returns to scale, economies of scale describes
production scale and long-term business relationship between the average cost of production, returns to scale (return to scale) describes the production scale of enterprises and business relationship between input and output. business returns to scale three ways: increasing returns to scale (increasing return to scale): refers to the proportional increase in output is greater than proportional increase in inputs. constant returns to scale (constant return to scale): refers to the large proportional increase in output proportional increase in inputs. increasing returns to scale (decreasing return to scale): refers to the proportional increase in output is greater than proportional increase in inputs. economies of scale describes the relationship between output and costs, returns to scale described is the relationship between input and output, economies of scale and returns to scale, although not exactly the same, but the two are closely linked. In constant prices, economies of scale associated with increasing returns to scale, diseconomies of scale associated with decreasing returns to scale .
2, the determination of optimal size enterprises and change
(1) firm size and changes in returns to scale the size of enterprises and their
returns to scale are closely linked, the production scale of enterprises in different shows on returns to scale in different forms. in accordance with the different forms of returns to scale, the scale of the enterprise can be divided into three types: ① increasing returns to scale of enterprise scale: when the production scale of enterprises with an average yield point equal to marginal product, before that Figure 3 shows the input factors to OM before the interval, the average yield (AQ) is less than marginal product, the average yield increase, increasing returns to scale. ② firm size constant returns to scale: when the production scale of enterprises reached an average yield point equal to marginal product, that is shown in Figure 3 points in the input factors to OM, because the average yield (AQ) is equal to the marginal production, the average yield of the largest constant returns to scale. ③ scale enterprise scale of diminishing returns: when the production scale of enterprises with an average yield of marginal product equal to that in mind, that is shown in Figure 3 in the input factors to OM after the interval, the average yield (AQ) is greater than the marginal production Therefore, the average decline, decreasing returns to scale.
in the range of increasing returns to scale, the average yield and total production as companies are increasing, expanding the production scale can enable enterprises to increase revenue, so the scale is not the best enterprises in this range . in the enterprise range of decreasing returns to scale, when put into production after more than N points, the marginal product is negative, the enterprise's total output and average output are decreasing, if it continues to expand the scale of corporate earnings will be reduced, so optimal size of enterprises is not within this range. can be seen that the optimal size of enterprises should be within the range of MN, in this interval, when a point is reduced to a brief assessment of total fixed cost and increase the average production decline The average variable cost are equal, the maximum corporate income, this is their optimal size.
(2) to determine the optimal level of corporate
optimal size of enterprises from the enterprise demand function and cost functions joint decision. in non-perfectly competitive market, companies face declining demand function is a curve, and the corporate long-term average cost function and long-term marginal cost function is decreased and then increased the curve. in the enterprise long-run marginal cost curve ( LMC) and corporate long-term average cost curve (LAC) at the intersection of (Q2 point), the minimum average cost of long-term enterprise, business efficiency (yield per unit of product) the highest. Thus, the most efficient size of enterprises (sales income): TR2 = P2tQ2. But the company the largest corporate earnings is not the most efficient, most of the conditions of corporate earnings is: business enterprises long-run marginal revenue equals marginal cost, that is, MR = LMC. According to this principle, to enable enterprises to gain the maximum production capacity of Q1, the largest corporate sales TR1 = P1tQ1. (Figure 4)
(3) the optimal level of enterprise change
optimal size by the enterprise as companies demand function and cost function of joint decision, so companies demand function and cost function can cause changes in the optimal scale of business change. When facing the demand function changes, the optimal size of enterprises will change also. When the market demand for their products increases, the demand curve will move to the right, the optimal size of enterprises will be expanded. and when the market demand for enterprise products is reduced, the demand curve moves to the lower left, the optimal size of the enterprise shrinks. (see Figure 5)
when companies due to technical progress, labor productivity, or leaving the long-term decline in raw material prices fell an average cost of production, the optimal scale of production will grow accordingly. Conversely, when some of the reasons as to enable enterprises to increase the long-term average cost of production, the most optimal scale of production will also lead to shrink. (Figure 6)
Third, expansion of the size of China Media Group Motivation
As mentioned above, the scale of China's rapidly expanding media group the trend is obvious. to Newspaper Group , from the 90s of last century, the newspaper industry will depend on overall financial provision out of the situation, really began to self-supporting. After ten years of development, the press has become an annual sales income of several hundred million yuan, total assets of millions of element of the emerging industry. It has established a total of 39 newspaper groups with 271 kinds of newspapers, total assets of about 400 billion yuan, total assets of more than one-third of the total assets of the press 2002 year amounted to 21.237 billion yuan of business, advertising turnover amounted to 13.307 billion yuan, accounting for 70.6% of total newspaper advertising. newspapers made an average total of 49.98 million copies sub-total reported volume of 31,730,000 were issued. Radio and Television and other media groups expanded the size of the same soon. < br> in accordance with the foregoing analytical framework of economics, scale expansion of China Media Group can be attributed to the motivation of two aspects: First, market demand continues to expand, and second, continue to lower production costs. Here I separate these two aspects of the specific analysis.
1, changes in market demand media
20 century and early 21st century period, the rapid development of information technology to promote human access to the information society and knowledge economy, an important period. During this period, knowledge gradually replaced physical capital as the core driving force for economic development, information and material and energy have become equally important strategic resource. human economic and social activities become more dependent on knowledge and information, and thus the main carrier of knowledge and information needs of the mass media mm increasingly strong, the performance of this demand in the market for media products is rapidly expanding demand. demand expansion, the demand function faced by media group curve and marginal revenue curve continuously move to the right, in order to maintain profit maximization, the media Group continues to expand the production scale. The changes in demand brought about by the change in scale of production can be seen visually in Figure 5.
media market demand in order to further study due to the expansion of media group size, the author of the Chinese media market demand Total and regional media, the total market demand for empirical analysis. Media Group's main revenue is advertising revenue, according to statistics Newspaper Group's advertising revenue is about 60% of total revenue, while radio and television advertising revenue of the total group 70% of income. so you can refer to ads turnover of China Media Group, a rough estimate the scale of operation.
the overall development of the advertising industry from the view, from the 20th century, 80 years, China's advertising industry to achieve the ultra almost super-regulation of high-speed growth. advertising revenue from the early 80s to less than 1 million increased to more than 1,000 billion yuan in 2003, 1982 and 2003 the average annual growth rate of ad revenue 38%, far higher the growth rate in nominal GDP (15%), advertising sales accounted for GDP rose from 0.02% in 1982, an increase of 0.92% in 2003. (see Figure 7) China has become the fastest growing region in world advertising.
Figure 7: China's GDP growth rate compared with ad revenue growth
Source: Advertising revenue reached 24.3 billion, total advertising revenue accounted for 23%; television advertising revenue reached 255 billion yuan, total advertising turnover accounted for 24%; radio advertising revenue reached 2.8 billion yuan, accounting for advertising 3% of total turnover; magazine advertising revenue reached 2.4 billion yuan, accounting for total advertising revenue of 2%. according to the ratio of above estimates, the total newspaper industry in China in 2003 reached 40.5 billion operating income, radio and television industry Total revenue reached 404 billion yuan. advertising turnover of China's extraordinary growth is the rapid expansion of media group of the important reasons, some media group revenues in excess of a billion or even billions of dollars, than some of the large scale state-owned enterprises also large.
the expansion of the Chinese media market quickly, but the difference is very obvious across regions. I According to the data on the regional media market in China conducted a preliminary estimate, that Beijing, Guangdong, Shanghai and other economically developed areas media market is much larger than the size of Qinghai, Ningxia and other Western Areas. (see Table 1) although the central and western regions have also set up a number of media groups, but the scale is far from the eastern region can not compared to media group. Economic Development imbalance is caused by the development of regional media group operating a huge gap between the scale of the important reasons.
Table 1: China's media market size estimates for various regions
newspaper market size (million) television market size (million) broadcasting market size (million) magazine market size (million)
Beijing 877788 785102 * 98138 76329
Shanghai 615736 550721 68840 53542
143413 128270 16034 12471
Tianjin, Chongqing, Hebei 83598 74771 9346 7269
34291 30670 3834 2982
Shanxi 25676 22965 2871 2233
13935 12464 1558 1212
Inner Mongolia, Liaoning, Jilin 109191 97661 12208 9495
41225 36872 4609 3585
58677 52481 6560 5102
Heilongjiang, Shandong 191288 17109021386 16634
Jiangsu 274125 245180 30648 23837
73748 65961 8245 6413
Anhui, Zhejiang 260700 233172 29147 22670
43412 38828 4853 3775
Jiangxi, Fujian 104307 93293 11662 9070
Henan 57838 5173164665029 < br> 72833 65142 8143 6333
Hubei, Hunan 50956 45576 5697 4431
635929 568781 71098 55298
Guangdong, Guangxi, Hainan 38952 34839 4355 3387
7691 6879 860 669
Sichuan 109189 97659 12207 9495
Yunnan, Guizhou 43842 39213 4902 3812
18294 16362 2045 1591
847 757 95 74
Tibet Shaanxi Gansu 76300 68244 8530 6635
15543 13901 1738 1352
7681 6870 859 668
Ningxia Qinghai 3910 3497 437 340
Xinjiang 43695 39081 4885 3800
Source and description: According to the proportion of advertising revenue in light of the newspaper business income ratio, radio advertising revenue in the proportion of operating income ratio of the light station. Beijing television market size estimates and the actual data access to large, as a China Central Television advertising revenue in excess of 70 billion yuan, the data should be In addition to CCTV as other estimates of the size of the television market.
2, changes in the cost of production
media products and other products have significantly different, the media production requires a lot of fixed inputs, such as the production of newspapers need a lot of manpower, material resources, these inputs are necessary fixed investment, the lack of these inputs to production is not out of the press. And when a newspaper editor came out, copy (print) to a very low cost , that can make a lot of low-cost replication. Radio and Television and other media products also have the same properties.
this feature of the media production cost curve of production showed the following characteristics: low and constant diminishing marginal cost and average cost. (Figure 8) decreases the average cost of bringing the economies of scale or increasing returns to scale, so driven by the economic characteristics of media groups to expand the scale of production indefinitely. This analysis of the economics Media Group scale through mergers and acquisitions continue to provide a good explanation. But even in developed countries also did not like the media group theory indicates that as the scale expansion indefinitely. government regulation is constraining factors that unlimited expansion of media group, because if unlimited expansion of media group formed by natural monopoly, then social welfare will be undermined, the government want to regulate the expansion of media group. But even if the government control the factors aside, the scale of expansion of media group still subject to certain restrictions. is more important is when the media group after the scale to a certain extent, the average production cost will stop decreasing and then increasing. This is because as the expansion of media group, information distortion and weakening incentives to manage costs and increase the internal transaction costs. administrative expenses The average production costs increased so that, when more than one unit of product caused by production and management of an amount equal to the product cost increases brought the average number of fixed cost reduction, the lowest average cost curve, then it will start to increase. And according to Coase ( Coase) and other systems theories of economists, corporate boundaries (scale) determined by the internal transaction costs, if the internal transaction costs than market transaction costs, the firm has expanded internal drive. and when the internal transaction costs equal to the market transaction costs When companies stop expanding, business and the market to determine the boundary.
Media Group for China in terms of cost of production factor is more complicated, can be summed up in two categories: one is to reduce production costs factor, and the other is to increase the cost of production factors. reduce the production cost factors include: the degree of specialization and cooperation to improve, the widespread adoption of advanced technology and innovation management system and so on. higher production costs of the main factors : raw material prices and rising labor costs, information distortion caused by scale, and the weakening incentives. The following discussion will mainly caused by lower production costs, several important factors.
(1) degree of specialization and cooperation improve
specialization to improve labor productivity has an important role. classical economist Adam. Smith believes that is the specialized division of labor productivity, wealth and the main driving force of economic growth, Xiaokai, Paul. Romer (P. Romer) development of a modern economist Adam. Smith and other ideas, the establishment of special economic models used to describe the specialized division of labor on the role of increasing returns. According to their theory, the division of the root causes of increasing returns from the professional the acceleration of the accumulation of knowledge and skills effect, workers engaged in a professional work that will effectively improve the work of With the deepening of collaboration also will strengthen. Alchian and Demsetz studies suggest that team production is greater than the simple sum of individual outputs, collaboration enhanced specialization of increasing returns. of a business organization speaking, the degree of specialization and cooperation to improve, will effectively improve production efficiency, and cost of production dropped significantly.
With the deepening of enterprise management, and deepening the reforms in recent years, the Chinese media group the degree of internal division and cooperation continues to increase. This is mainly manifested in two aspects: first, editing and operating system on two separate systems, as well as the establishment of new collaborative mechanisms. Second, editing and operating the two business processes within the system more perfect, the degree of interdependence and collaboration significantly improved. Dazhong News Group for the pilot to the the editors and management division of the two major business functions more clearly, and be separated in the structure, establishment of parent and subsidiary companies in the field of institutional management, and collection system and management system to establish a new cooperation mechanism between. This new internal division of labor and cooperation , will be enhanced media management capabilities, will help improve the management level Media Group, and reduce production costs. in editing within the system and operating the two, the degree of specialization and cooperation is also rising. with operating system as an example , the media group set up advertising, circulation, Internet, print, film and television production, and other specialized subsidiaries, these companies operate their own specific business media group, or management of special assets, and around the core business of mutual cooperation and common services for the media products increased specialization . This specialized division of labor and cooperation, will break all the old media by more detailed, the more specialized division of labor between jobs, and the formation of close mutual cooperation. Media Group, the level of collaboration within the professional division of labor and the increase will help workers learn professional knowledge and skills and accumulation, and promote the improvement of labor productivity and production costs decrease, so that the effects of economies of scale media group is more significant.
(2) the widespread adoption of advanced technology
in economic theory, technological progress, economic growth is considered another major factor. technology progress to improve labor productivity of capital to compensate for factors of production output. In the case of no technical progress, capital deepening will play a role in the law of diminishing returns. technological advances to achieve increasing returns, it is an important source of economic growth. Economics Robert home. Solow (R. Solow) established a model of exogenous technical progress, to describe the technological advances in the role of economic growth. Since then, Paul. Romer (P. Romer) of the Solow model was modified , established a model of endogenous technological progress, emphasizing the conscious invention's role in economic growth. For an enterprise, the use of advanced technologies to rapidly improve labor productivity, reduce material consumption, saving production costs.
Chinese media period of rapid development group, a time when high-tech advances in information technology, in particular the period. these advanced technologies in the media group in the rapid and widespread adoption of media group has played an important role in promoting. the media industry is the information industry, with the computer, communications and other information industry is very closely linked, so earlier is always the latest information technology is widely used in the media industry. to the print media, for example, advanced printing technology and Internet technology on the print media industry had a profound impact . advanced printing technologies including: laser typesetting technology and remote transmission version of technology. 90 years ago in the 20th century, China's printing industry in the basic use of the printing type, not only great energy, pollution is serious, and printed very inefficient. by the Founder Group of independent developed the fourth generation of laser typesetting technology, once available, to the rapid promotion in the domestic media. laser typesetting technology has greatly enhanced the printing efficiency, effectively reducing the cost of production, the promotion of the development of print media played an important role. Remote Communication version of the print media to promote the development of technology is another key technology. before the invention of the technology in the print media can only be transported to other areas of transport, not only reduces the time, but also to pay a huge transport costs. Satellite remote transmission version of technology adoption, to synchronize remote areas to quickly implement printing. the technology in 1992 China's rapidly growing popularity, the Internet media group in China, rapid application. Internet technology to make the media has fundamentally changed the production process, from now to get clues, collect data, interview the pipeline, until the whole process of finalization is to spread the network as the basis, completely out of the traditional media, (3) systems of innovation
economics, modern system, the system is an important reason for economic growth. North co-founder of Institutional Economics (D. North) through the economic history of the West's study, found that play a decisive role on economic growth is the institutional factors rather than technical factors. highlighted by institutional change reflected, when the high efficiency system to replace the inefficient system, the effect of economic growth is more evident. System on Economic Growth in the following aspects: the system of people's incentives, the system of the role of resource allocation, institutional role in promoting technical innovation, and institutional impact of transaction costs. For a business organization is concerned, the system can stimulate the enthusiasm of the staff innovation and creativity, saving production and management costs, improve the ability to create profits .
China Media Group with the deepening of reform, the media group in the system of innovation for a variety of useful exploration. The system of innovation as the media group added a new vitality, a strong impetus to the development of China's media industry. I believe that a major media group in China mainly include three aspects of innovation systems: the establishment of modern enterprise system, regional, cross-media operations, and capital operation. With the deepening of the reform group, the media group's attempt to begin to build enterprise system, many Media Group has been established in line with market economy requirements of the modern enterprise system. This system changes into two categories: one is stripped conversion, that is, the media group operating assets and business units from a business spun off of, the establishment of parent-subsidiary system . the central government's four newspaper groups (overall transformed into enterprises, diversification of investment. Beijing Youth Daily, China Securities News, China Insurance News, Chongqing and so are the overall restructuring of the computer report. Media Group, multi-media, cross-regional operation has also been great progress. In terms of cross-media According to the central spirit of the document 17, the current set up radio and television groups, such as Shanghai Media & Entertainment Group, the Beijing Radio and Television Group, and China Radio Film and Television Group, involves radio, television, movies, websites, transmission networks, newspapers, literature and art and other related industries. Newspaper Group also has a new cross-media trends, just to raise 900 million yuan in Hong Kong-listed Beijing Media heavily in the (Beijing Youth Daily), the next step will focus on investment in television investment. in regional , the Volkswagen Group in Qingdao and Zibo newspaper founder of the Liaoning Investment Newspaper. recent realization of regional newspapers were: Guangming Daily Newspaper Group and Nanfang Daily Newspaper Group co-founder of Economic News the company initiated the establishment of other units as the shares of Hunan TV's Paid initiated the establishment of other units, the Chengdu Business Daily, and other units initiated the establishment of Brilliant Media, initiated the establishment of the People's Daily and other units of the Chinese group, initiated the establishment of the Beijing Youth Daily, etc. China and other songs online in December 2004 when Beijing Media in Hong Kong Stock Exchange, opened the first of its kind overseas listing of Chinese newspaper.
IV scale expansion of China Media Group constraints
As previously above, the scale of China's expanding media group dynamic, growing demand from the market, as well as the degree of specialization and cooperation to improve, the widespread adoption of advanced technologies, system innovation brought about by the decline in long-term production costs. In the next period of time years, along with the further deepening of China's overall reform, and macroeconomic continued rapid development, these factors will continue to play a role, thus promoting China Media Group to further expand the scale. But the expansion of the size of China Media Group ...