September 2024, UC Press (print or free ebook)

Andrew deWaard - Associate Professor, UCSD

Sequels, reboots, franchises, and songs that remake old songs—does it feel like everything new in popular culture is just derivative of something old? Contrary to popular belief, the reason is not audiences or marketing, but Wall Street. In this book, Andrew deWaard shows how the financial sector is dismantling the creative capacity of cultural industries by upwardly redistributing wealth, consolidating corporate media, harming creative labor, and restricting our collective media culture. Moreover, financialization is transforming the very character of our mediascapes for branded transactions. Our media are increasingly shaped by the profit-extraction techniques of hedge funds, asset managers, venture capitalists, private equity firms, and derivatives traders. Illustrated with examples drawn from popular culture, Derivative Media offers readers the critical financial literacy necessary to understand the destructive financialization of film, television, and popular music—and provides a plan to reverse this dire threat to culture.

Derivative Media�How Wall Street Devours Culture

“Derivative media” as a concept has six meanings:

1. Economic
2. Legal
3. Textual
4. Historical
5. Qualitative
6. Subversive

1. The Political Economy of the US

2. Financialization

(the growing influence of financial markets, firms, and instruments)

Derivative Media�How Wall Street Devours Culture

Six key tools of financialization

• the stock market
• including market power, dividends, stock buybacks, and executive compensation
• asset managers
• private equity
• hedge funds
• venture capital
• derivatives

Dividends & Buybacks

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• dividends: a distribution of profits from a company to its shareholders, paid in cash or additional stock
• stock buybacks: when a corporation pays shareholders the market value of a share, thus repurchasing shares of stocks previously issued, re-absorbing that portion of ownership and increasing the value of the remaining shares

20,645

71,111

213,333

Asset Managers

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• manage assets on others' behalf
• eg. mutual funds, pension funds, investment companies, insurance firms, university endowments, and private foundations
• gone from owning about 7% of the US stock market in 1950, to nearly 70% today
• often own stakes in rival companies �within concentrated industries
• “horizontal shareholding” or “common ownership”
• incentivized to keep prices high, wages �low, and competition to a minimum

Private Equity

• operate investment funds that acquire companies with the company’s own assets as collateral to the debt
• PE firm restructures the company to ‘maximize efficiency,’ pays itself through extraction methods, then ‘exits’ the investment by selling the streamlined property or taking it public

Private Equity Extraction Methods

Private Equity in Media

Hollywood’s Financial ‘Shadow Studios’

Hedge Funds

• use financial instruments and pressure tactics on public firms to extract “alpha” for its investors, in exchange for hefty fees
• deregulated by Clinton administration
• hedge-fund activists: pressure companies to increase cash flow and extract that cash flow

“improved operational efficiency” by “eliminating… duplicative layers,” to take advantage of a large “opportunity for rightsizing and simplification” through “workforce planning” and “strategic outsourcing”

Venture Capital

• financing that investors provide to startup companies and small businesses that are thought to have long-term growth potential
• investors get equity in the company and a say in company decisions

Corporate Venture Capital

• non-financial corporation that make minority equity investments in early-stage ventures
• financial arms of major corporations are now often growing faster than their manufacturing divisions and have come to resemble investment banks and hedge funds more so than their conventional parent company

Corporate Venture Capital in Media

Derivatives

• financial instruments to hedge or exploit risk, which dismantles any asset into individual attributes and trades them without trading the asset itself
• eg. contracts such as futures, forwards, options, swaps, and shorts.
• have become the key form of speculative capital

3. Finance Fuels Monopoly

Billionaire Boutiques

Number of Film and Television Products Released per Year by Billionaire Boutique Production & Distribution Companies, 1995-2022

link

4. The Effect of Finance on Media Texts

I used to drink Cristal /

the muh'fucker’s racist /

So I switched gold bottles on to that Spade shit

Derivative Media�How Wall Street Devours Culture

Opportunities for reform:

• eliminate stock buybacks: rescind SEC Rule 10b-18
• eliminate private equity: close carried interest loophole
• re-regulate hedge funds: return to pre-1996 rules
• eliminate destructive speculation: limit tax deductibility of debt and impose financial transaction taxes
• eliminate monopoly: enforce antitrust laws and break up Big Tech and Big Media companies
• shrink inequality: raise taxes (income, wealth, estate, corporate, capital gains) and tame tax evasion

Counterpoint

• tame
• resist
• dismantle
• smash
• escape
• erode

“The state is trapped in the demands of finance capital. Resistance must know about financial regulation in order to demand it. This is bloodless resistance, and it has to be learned.”

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- Gayatri Chakravorty Spivak

thank you!

slides are at tinyurl.com/derivativemedia

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�adewaard@ucsd.edu | andrewdewaard.com

macrolab.ucsd.edu