A few weeks ago, Frugal Dad’s infographic on the six media conglomerates that control 90% of American media consumption cropped up across the Web (scroll down to view the graphic).
“Total 2010 revenue was $275.9 billion,” it told us. To put that in context, “that’s $36 billion more than Finland’s GDP, enough to buy every NFL team 12 times, and five times the government bailout of General Motors.”
Furthermore, “in 2010, they avoided $875 million in US taxes; enough to double FEMA’s budget or fund NPR for 40 years.”
Let’s take a second here. Thanks to Tow-Knight’s crash course in accounting, I’ve been better able to distinguish among financial terms, and Frugal Dad’s infographic equivocated profit with revenue. See, revenue is how much money a company is bringing in before recouping its costs and paying taxes. By no means is that $275.9 billion pure pocket money.
Then the infographic tells us that the big six evaded taxes. However, due to the way that companies could elect to do their accounting, that could partially be explained by cash flow and accounts receivables. Because companies can undertake such expensive projects, often subcontracting one another’s expertise and services, they shake over contracts that promise payment within a 30 to 180-day window. The expected payments, not yet received, are called accounts receivable. Meanwhile, this affects cash flow, which is the exact amount that a company has on hand to cover immediate expenses such as salaries.
For those of you who have worked as independent contractors and freelancers, the terms accrual and cash accounting may ring a bell. One means you pay taxes on any project you completed during that tax year, regardless of whether you’re still waiting on payments. The other means that you pay taxes on the work only after you receive payment for the work; so you completed the assignment in December 2011 but won’t be paid till May 2012. You’ll pay taxes on that income in the 2012 tax year.
Rounding out the infographic is a list of links. Frugal Dad may have backed up his research but he does not pair each illustration with its data source, nor are the links clickable (another topic entirely, but it’s a design problem that we can’t easily segment illustrations on the web to be hyperlinked in just certain patches).
So let me explain this lecture: I’m disappointed. Of course it’s a problem that just six players dominate the media field. But when those of us hankering for change then decide to be sloppy with our terms, it obscures the point. I’d wager that the oligopoly would have had just as much shock value without those shaky points.
I’m reminded of Gabriel García Marquez remark about Love in the Time of Cholera: “You have to be careful not to fall into my trap.” The paper that quotes García Marquez is aptly titled “The Dangers of Gullible Reading: Narrative as Seduction in García Marquez’ Love in the Time of Cholera.”
Source: Frugal dad