Preface
Triumph and Erosion derives from a multifaceted research project on "American Media and Entertainment" that began in September 1986, when I first arrived in New York City as a visiting Fulbright scholar. After a brief affiliation with the Cinema Studies Department of New York University ( 1986-89), some studies at the New School for Social Research (Department of Photography), as well as linking with the Freedom Center of Media Studies ( Columbia University), I focused my research on the competitiveness of the U.S. media and entertainment (M&E) industry. In 1987-90 I wrote several papers on the subject as a senior researcher of Finland's Academy of Sciences.

I was fascinated by the Janus face of American media and entertainment: triumphant products, eroding control. And I wanted to devise a comprehensive source on American M&E businesses that could serve general readers and be used as a text for graduate and advanced undergraduate students in a multitude of disciplines: film, television and communications studies, applied economics, industrial organization, competitive strategy, and corporate finance. The book should also prove a handy reference for M&E professionals, executives, financial analysts, investors, as well as journalists. Since the focus of this work is on major American media and entertainment companies, I have left out issues involving TV producers, independent cinema, and public broadcasting. Focusing on domestic competition in U.S. media and entertainment, I have also left out three significant subjects: foreign market segments and problems of globalization, organizational transformation in major M&E corporations, as well as dramatic shifts in American marketing and advertising industries. I will explore these subjects in a companion to the work at hand.

In the course of my research, several discussions added in various ways to the work itself. I'd like to single out interviews with Michael E. Porter (competitive strategy), Benjamin M. Friedman (American economic policy), Theodore Levitt (marketing issues), Graef S. Crystal (executive compensation), and even the controversial Pat Choate (foreign invasion). Also, I had highly illuminating interviews with audience research executives Michael Eisenberg (CBS) and Lawrence J. Giannino (ABC), and Arnold Becker, the legendary veteran of CBS's program testing department. Still another contributing factor stemmed from the opportunities to meet and interview top talent in U.S. media and entertainment, including producer-directors (from Martin Scorsese to Spike Lee), actors (from Paul Newman and Dennis Hopper to Robert De Niro and Donald Sutherland), authors ( E. L. Doctorow, Jay McInerney), poets ( Joseph Brodsky), jazz musicians ( Dave Brubeck, Branford Marsalis), and commercial producers Joe Pytka). I also followed closely the efforts of my compatriots to break into Hollywood ( Renny Harlin) and independent cinema (the Kaurismäki brothers).

I am especially grateful to Eric Valentine, publisher of Quorum Books, for his interest and confidence in the project, as well as to Katie Chase, Quorum copy editor, for her insightful corrections. Thanks to Herbert Rubin for guidance into accounting, and to Veli-Antti Savolainen for encouragement and support. Thanks, too, to Annabelle Minier, who was brave enough to struggle with my English and provided valuable suggestions, as well as to her husband, Heikki Sarmanto, the famed Finnish jazz musician whose artistic experiences in the United States (including a recording with Sonny Rollins), contributed to my first impressions of the American music business.

American Economy: U.S. Media and Entertainment
America is to entertainment what South Africa is to gold and Saudi Arabia is to oil. . . . Look closer and it is less American.
The Economist 1
America's economic competitiveness--defined as our ability to produce goods and services that meet the test of international markets while our citizens earn a standard of living that is both rising and sustainable over the long run--is eroding slowly but steadily.
Building a Competitive America 2

Instead of building U.S. competitiveness through strategic government intervention, the Reagan-Bush administrations put their faith in "free market forces." Yet the new fiscal and monetary policies failed to resolve the structural problems of the economy. In the 1980s America lost its global financial hegemony to Japan. Moreover, a $4 trillion twin deficit posed a massive burden to U.S. companies. Without regulatory constraints (and with new antitrust policies), the great bull market of the booming 1980s boosted the fourth national wave of mergers and acquisitions, which led to a foreign invasion of the U.S. private sector (including media and entertainment). After the demise of junk bonds and high leverage, U.S. companies also turned to foreign banks for low-cost capital. Even prior to the early 1990s, the declining competitiveness was affecting the nation's internationally most successful industries--that is, aerospace and entertainment. The two were not insulated from the instability of the U.S. economy, capital markets, and corporate...