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October 11, 2001
Media Corporations Get Less than Rave Reviews
    by Mark Thomsen

German research firm Oekom finds that the largest global media companies have room to improve their social and environmental performance.

Media companies recently seem to be acting on a belief that size and reach increases competitiveness and ensures survival in a tough global industry. Over the past three years, Germany's Bertelsmann Group acquired Random House, French media conglomerate Vivendi Universal was formed through the merger of Vivendi, Canal Plus, and Seagram, Viacom swallowed CBS and AOL merged with Time Warner.

Given their control over news and the flow of information, the extent to which these companies are good corporate citizens should concern not only social investors but society at large. Oekom, a social and environmental research firm based in Munich, Germany, recently released a study in which it assessed 20 media companies in terms of corporate social and environmental performance.

Under Oekom's Corporate Responsibility-Rating (CRR) system, 50 percent of the evaluation is based on a company's social and cultural performance and policies, and 50 percent is based on environmental performance and policies.

The highest score a company can receive is A+, which according to Oekom represents companies that "are especially progressive in the social/cultural as well as the environmental realm." The lowest score is a D-, given to companies in which "hardly any noteworthy social/cultural or environmental activities could be identified."

The highest overall score in the study was B, which was only attained by the U.K.'s EMI Group. Two German companies, Bertelsmann Group and Axel Springer Verlag, scored a B-. On the other end, nine companies received a D+ rating or lower. At the bottom of the barrel was Clear Channel Communications (ticker: CCU), which received a D-. Australia's News Corporation (NWS) was one of six media companies that had an overall score of D.

Voluntary commitments to guaranteeing fair and objective reporting become increasingly important when a smaller number of companies exercise greater control over copyrights and media content. Oekom added this point as a criterion in its social and cultural rating, and research for the report included information sources such as national press councils and relevant non-governmental organizations.

The top scorer on this section of the study was the British news agency Reuters (RTRSY), which received an A-. Close behind was Bertelsmann Group, which scored a B+.

Negative scores were given where journalists risked sanctions if they produced critical reports; this was the case with News Corporation. Rupert Murdoch's media empire has already collected numerous fines from the courts because critical reports were deliberately barred from publication, most recently about Monsanto, one of its advertising clients. In that particular case, the company, fearing the loss of significant advertising revenue, censored the article and sacked the two editors responsible.

The social and cultural rating also assessed companies in terms of social and cultural management, staff relations, and external relations. Bertelsmann received the highest overall social and cultural rating of B. Five companies followed with a score of B-: Reuters, EMI Group, McGraw-Hill Companies (MHP), U.K.'s Carlton Communications (CCTVY), and Vivendi Universal (V).

Media corporations generally fared worse with regard to environmental ratings, it seems mostly because of inattention. Oekom found that companies typically were not able to provide evidence of initiatives to protect the environment or identify what actions were needed. While many media giants rightly stated that the information and entertainment sectors tend to have fewer environmental impacts than other sectors, these companies are nevertheless involved with paper production, printing, and the manufacture of films, videos, CDs and DVDs. Media companies certainly have the potential to influence the environmental performance of their suppliers.

Environmental ratings included environmental management, products and services, and environmental reporting. Axel Springer Verlag came out on top with an overall environmental rating of B+. The company was lauded for avoiding toxic inks, reducing the amount of solvents used in the printing process, and using a high proportion of recycled and oxygen-bleached paper.

Unfortunately, six companies scored a D and seven scored a D-, revealing how much room there is for improvement. Companies that received a D- include Canada's Thomson Corporation (TMS), Clear Channel Communications, and News Corporation.


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