ters and editors, financial and distribution expertise, and agents. Indeed, Hoskins, et al (1997, p. 44) state that "Hollywood's most important feature is the cluster of deal-making activity, and the associated diffusion of knowledge with respect to recent deals struck, record and availability of key personnel, and so on."
Much the same can be said regarding television production. Hoskins, et al (1997) have also pointed out that because American audiences comprise the largest market for television and films in the world, it is important for a film company to consider culture and its effects. American audiences have limited response to foreign films or foreign television programs. Consequently, a company that is focusing its efforts on the American consumer would be well advised to recognize that Americans are more likely to respond positively to films and programs created in the United States.
In making its decision, Sony of Japan clearly considered its internal goal of establishing itself as a major multinational player, one of a small number of firms who controlled technologies at all ends of the expanding markets for information and entertainment services (Kou & Spar, 1994). Sony was able, by purchasing Columbia, to improve its vertically-integrated entertainment chain. Earlier, Sony had purchased CBS Records, the world's largest record company, for $2 billion. By adding Columbia to its vertically integrated business, Sony could also leverage existing investments in technology and use its extensive film library to enter the home video business. In addition, Sony was able to use its sophisticated video-making equipment to reduce its production costs by about 25 percent, adding valuable profits to Columbia's bottom line (Kou & Spar, 1994).
All of these reasons combine to make Sony's purchase a sound movement of the technology giant into a new area of the entertainment sector. Sony not only acquired a ready-ma...