Cross ownership

Cross ownership

Cross ownership is a method of reinforcing business relationships by owning stock in the companies with which a given company does business. Heavy cross ownership is referred to as circular ownership.

In the US, "cross ownership" also refers to a type of investment in different mass-media properties in one market.

Cross ownership of stock

Some countries where cross ownership of shares is a major part of the business culture are:

Positives of cross ownership:

  • Closely ties each business to the economic destiny of its business partners
  • Promotes a slow rate of economic change

Cross ownership of shares is criticized for:

  • Stagnating the economy
  • Wasting capital that could be used to improve productivity
  • Expanding economic downturns by preventing reallocation of capital

A major factor in perpetuating cross ownership of shares is a high capital gains tax rate. A company has less incentive to sell cross owned shares if taxes are high because of the immediate reduction in the value of the assets.

For example, a company owns $1000 of stock in another company that was originally purchased for $200. If the capital gains tax rate is 50% (like Germany) and the company sells the stock, the company has $600 which is 40 percent less than before it sold the stock.

Long term cross ownership of shares combined with a high capital tax rate greatly increases periods of asset deflation both in time and in severity.

Media cross ownership

Cross ownership also refers to a type of media ownership in which one type of communications (say a newspaper) owns or is the sister company of another type of medium (such as a radio or TV station). One example is The New York Times 's former ownership of WQXR Radio and the Chicago Tribune's similar relationship with WGN Radio (WGN-AM) and Television (WGN-TV).

The Federal Communications Commission generally does not allow cross ownership, to keep from one license holder having too much local media ownership, unless the license holder obtains a waiver, such as News Corporation and the Tribune Company have in New York.

The mid-1970s cross-ownership guidelines grandfathered already-existing crossownerships, such as Tribune-WGN, New York Times-WQXR and the New York Daily News ownership of WPIX Television and Radio.

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Look at other dictionaries:

  • cross-ownership — ➔ ownership * * * cross ownership UK US noun [U] FINANCE ► the situation in which two companies hold shares in each other: »The two automakers hope that cross ownership of each other s stocks will help to shore up their businesses during the… …   Financial and business terms

  • cross ownership — ► NOUN ▪ the ownership by one corporation of different companies with related interests or commercial aims …   English terms dictionary

  • cross-ownership — ˈ ̷ ̷ ¦ ̷ ̷  ̷ ̷ ˌ ̷ ̷ noun : single ownership of two or more related business enterprises (as a newspaper and a television station) that make the owner able to control competition * * * /kraws oh neuhr ship , kros /, n. ownership of two or more… …   Useful english dictionary

  • cross-ownership — /kraws oh neuhr ship , kros /, n. ownership of two or more similar or related businesses, as communications media, esp. in the same locality: to forbid cross ownership of newspapers and TV or radio stations in the same city. [1970 75] * * * …   Universalium

  • cross-ownership — noun Date: 1969 single ownership of two or more related businesses (as a newspaper and a television station) that allows the owner to control competition …   New Collegiate Dictionary

  • cross-ownership — noun the ownership by one corporation of different companies with related interests or commercial aims …   English new terms dictionary

  • cross ownership — …   Useful english dictionary

  • Media cross-ownership in the United States — Media cross ownership refers to the ownership of multiple media businesses by a person or corporation. These businesses can include broadcast and cable television, radio, newspaper, book publishing, video games, and various online entities. Much… …   Wikipedia

  • ownership — own‧er‧ship [ˈəʊnəʆɪp ǁ ˈoʊnər ] noun [uncountable] COMMERCE the state of owning something: • Car ownership by teenagers tripled during the decade. • Home ownership is more common in Britain than in Europe generally. • Limited partnerships give… …   Financial and business terms

  • Cross-Promotion — ist eine Sonderform der Promotion, bei der mindestens zwei Werbetreibende gemeinsam Kommunikationsmaßnahmen durchführen und eine einheitliche Botschaft an eine für beide bzw. alle interessante Zielgruppe transportieren. Auf diesem Weg lassen sich …   Deutsch Wikipedia

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