Streaming spree
On "streamflation", Gulf + Western, and whether the consumer techno-media experience would be better if there were a few more conglomerateurs around
A thought experiment worth a few moments of consideration: Would our present moment in technological history look better if we had more of the classic industrial conglomerate firms that used to dot the corporate landscape?
■ Conglomerates have been far out of favor since a broad downfall in the late 1970s and 1980s. Factors ranging from tax policies to an increasingly service-oriented economy affected the trend, but no small part of the change was driven by a move away from individual stock ownership to institutional ownership through entities like mutual funds. An individual shareholder investing alone may like owning a range of businesses under a single name on the ticker tape, while fund managers mostly prefer purity (or “focus”, depending on who’s saying it).
■ There have basically always been speculative, high-tech firms since the dawn of the Industrial Age. But the scale of the speculation today is pretty astonishing -- like the rival bids to take over Warner Bros. for somewhere between $80 and $110 billion. Netflix is one bidder, and Paramount is the other. Warner Bros. is a focused media company that has been trying to become even more focused. Paramount has only had its current form for a few short months, but it is a media company and only that. Netflix is about as narrowly focused on one thing as a large company could be.
■ In a different time, purity of corporate interest would have looked unstable: It might make sense to have a high-tech division or a media subsidiary, but too much focus might have looked out of place. Paramount was once a part of Gulf and Western Industries (which started as Michigan Bumper Corporation), while Warner Bros. was once part of Kinney National Co., which got its start in funeral homes.
■ It’s impossible to know for certain what might have been under an alternative history, but the widespread fusion of high technology and entertainment has been tempestuous for many consumers. The pure-play structure of many of these companies only incentivizes more big bets and corporate swashbuckling, as they compete to be seen as one of the last parties left standing.
■ Large conglomerates with far-flung interests used to take criticism for behaving like raiders, but of the few true diversified conglomerates left today, it’s not uncommon for them to be praised for providing stability, giving managers the capacity to look at the long term without panicking about appeasing Wall Street with the next quarter’s earnings report. Would “streamflation” be the same plague it is today if at least one streaming service were a subsidiary of a bigger diversified firm with a mandate to optimize its profits on a ten-year horizon instead of squeezing out the maximum number of consumer dollars today?