Media Company Case Study

Task 1 Understand the structure

and ownership of the media sector

Lauren Mawer

Private ownership is a company who’s ownership is private. Because of this, the company does not need to meet the strict securities and exchange commission filing requirements of public companies. They can have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering.

Private ownership has positive and negative qualities. It can result in better quality products due to competition and the threat of losing market share to another competitor makes firms put forward their most popular and best products. However, private ownership leads to media firms placing profit above public interest and can also lead to cultural decay in that popular media can become homogenized. Also, private ownership tends to result in industry concentration, especially if there is a dearth of regulation which, in turn, leads to the stifling of alternative points of view. Private ownership companies also are less of a liability. The owners are not liable for any debts or losses that is incurred by the company, other than the money they initially pay to buy their shares, whereas in a partnership, the individual owners are personally liable for all the debts and things that go wrong, which means they could potentially lose everything they have.

An example of a private company is ITV. They make money from the adverts, whereas a company which is public like the BBC doesn’t have any adverts because we pay for the BBC.

Types of ownership: private ownership

Public broadcasting includes television, radio and other media outlets. Public broadcasters get funding from diverse sources which include license fees, individual contributions, public and commercial financing. Public broadcasting can be nationally or locally operated. This depends on the country and the station. In some countries, public broadcasting is run by a single organisation whereas others have multiple public broadcasting organisations which operate regionally or in different languages.

What are the advantages and disadvantages of this type of ownership

http://en.wikipedia.org/wiki/Public_broadcasting

Types of ownership: public service

Types of ownership: independent

Independent ownership refers to privately held organisations. Independent businesses are also sometimes termed as sole proprietorship companies, which only have one proprietor. An independent business is operated in an independent mode and usually denotes privately held firms in contrary to public corporations which have been owned with help of allocation of shares in the stock market. Independent businesses usually take the sole proprietorship companies.

There are advantages from many aspects of being an owner of an independent business. They have full control over the business, the shape of it and how it is going to be supervised. They also have the opportunity to launch an innovative product, or a product which is protected by copyright or trademark and this can aid the independent business owner to rule the market. They can also decide the tempo in which they start the business according to financial resources, as well as the objectives of the business enterprise. Finally, they are also free to select the place of business according to their choice and service that they are going to sell and make a decision regarding the work force. However, there are some disadvantages. An example is finance. The financial resources you will need to start and develop a business can be very extensive. You will most likely have to commit the majority of your savings and sometimes there is a risk of going into debt just as you get started. If things don’t go well, you could find you may face substantial financial loss. In addition, there is no guaranteed income. There will be times (especially in the first few years), when the business isn’t bringing in enough money for you to live on. When you start up an independent business, you will be responsible for mostly everything and you will have to do many things you don’t enjoy, such as getting tied down with detailed work. This can all come down to being stressed because you have so many things to oversee, like bills, employees, customer problems and so on.

Rough trade is an independent record label formed in 1978 by Geoff Travis. It is based in London. They have successfully promoted and sold records by The Smiths an d also found success with The Strokes.

A media conglomerate is a company that owns a large number of companies in various mass media, such as television, publishing, movies, radio and the internet.

Conglomerate ownership has the advantages of many types of businesses in its fold, which means during periods of a downturn in some of them, at least the others will make money and be successful. Also, a conglomerate can create internal capital market if one of the external companies hasn’t developed properly or fully. A conglomerate can also show a growth of earnings. This is done by acquiring companies who have shares that are more discounted than their own. However, some of the disadvantages are that culture clashes can harm the industry in that they are already paying a lot of money to produce shows and films, and don’t really want to pay more money when there is no need to. But, in the long run, by conglomeration, all the industries will profit off of it because they will be able to widen the spectrum of their companies, which means that they will be able to make and produce more TV shows and films at once.

An example of conglomerate ownership is 21st Century Fox. They have a Fox music record label, FX networks on television, Twentieth century Fox world which is a theme park, Fox sports and VICE, which is a magazine. It is an American multinational mass media corporation, founded in 1979 by Rupert Murdoch.

Types of ownership: conglomerate

Horizontal integration is an absorption into a single firm of several firms involved in the same level of production and sharing resources at that level.

Some advantages of horizontal integration is that they have lower costs. The result of horizontal integration is one larger company that produces more services and products. The higher the output, the better, because the output leads to greater economies of scale and higher efficiency. It also has increased market power. This means that the larger company has more power over its suppliers and distributors. Their access to new markets is also a great advantage. New markets and distribution channels can be accessed by integrating with a company that produces the same goods but operates in in different regions. On the other hand, it does have its disadvantages. One of them being legal repercussions. Higher integration can lead to a ‘monopoly’, which is highly discouraged by many governments due to lack of competition. This means that governments usually have to approve any larger M&A before they can happen. Its reduced flexibility also comes as a big disadvantage. Large organisations are harder to manage and this makes it less flexible in introducing innovations to the market.

Universal is a conglomerate company. The EMI became a subsidiary of Universal in 2011.

Types of Companies:Horizontal Integration

Vertical integration is when a company profits from production, distribution and consumption. It used to be only large companies such as Sony that could actually afford to profit from production, distribution and consumption. But now, due to the internet, small companies can also vertically integrate, such as independent record labels.

There are advantages of this company. One, is the lower costs due to eliminated market transaction costs and the improved quality of supplies, as well as improved coordination in the supply chain. There is also a greater market share and secured distribution channels. Disadvantages are the higher costs if the company is incapable to manage new activities efficiently, The ownership of supply and distribution channels can sometimes lead to lower quality products and reduced efficiency because of the lack of competition, and new competencies may clash with old ones and lead to competitive disadvantage.

Domino records is a good example. They have acts signed to them, such as the Artic Monkeys. They will produce a song, distribute it and make a profit from it.

Types of Companies: Vertical Integration

Cross media convergence refers to companies merging together either vertically or horizontally, sometimes both. It is used to gain access to more things and get a better distribution network for their films, TV or games.

One advantage of this is that it includes a large pool of resources. They would also receive a wider distribution, such as when channel 4 and Bauer media joined together, the fans of both of them would have merged together to create a new platform. A wider distribution means a higher overall profit. A disadvantage is ‘monopoly’. This is when a company has so much subsidiaries, they dominate all the media. This can be seen as an advantage for them because it means they make more money, its worse for the public because they will receive all their information from one source, which means they are in control. That is mostly why the government shuts them down.

For example, in a video game, there may be some recognisable songs in there. In FIFA 14, John Newman – Love me again, is one of the many tracks featured in that game. When people on the X-Factor are singing other peoples songs, this is also another example of cross media convergence. It happens when two forms of media overlap each other/join together.

Cross Media convergence

Synergy is how products are distributed. Companies will merge together to promote products of a particular person, such as making band t-shirts, necklaces, hoodies and other merchandise at concerts to promote the acts that are playing, especially if they are support acts that are making their way through the industry.

An advantage of this is it enhances the companies image, because selling all of the products is promoting the company/person. Companies such as Sony, can spread their commercial interests. A disadvantage of this is that it is easier in practice because different companies have many ideas. Also, smaller companies who only specialise in one medium struggle to compete.

An example is Jason Derulo’s Tattoos tour 2014.

Synergy

Artists need a manager to represent them in their dealings with recording and publishing companies. They will employ, on behalf of their artists, accountants, lawyers etc and deal with the day to day running of their artists career. They also need great songs, that’s where composers come in. A great song can make a composer rich. The production companies will often compromise an alliance of managers, producers and musicians who cynically create an artist/group with appeal and then sell the package to a record company. Composers then assign their copyrights to a publisher in a publishing deal, which they license the use of these copyrights to record companies who record them. Each CD that is manufactured and sold generates a ‘mechanical publishing royalty’ which is paid by the record company to the MCPS in the UK who then pass it on to the publisher who takes a cut and passes the rest to the composer. Record companies exist to facilitate of exploit an artists creativity by providing financial and organisational structures to support the recording, manufacture, distribution and promotion of an artists recorded work. The success or failure of a CD release is largely determined by a record companies ability to secure exposure on TV, radio and in the print media and then to distribute copies effectively to retail shops. Retail is the front line and as an independent music maker, you can manufacture and sell your CDs to customers mail order one by one by promoting them in live performance, on your website and through the print and broadcast media.

Describe the structure and ownership of either the film,

TV, gaming or music industry.

Disney is in the film and TV media sector.They produce TV shows such as Phineas & Ferb, Even Stevens and Recess. They have also produced films such as Hercules and High School Musical. They have their own TV channel and shops which sell clothing, toys and teddies in the form of Disney characters, outfits from the films (eg. Cinderella dresses), DVDs and soundtrack CDs. The Disney store also have their own radio station, which announces whatever offers they have on in store as well as playing songs from selected Disney films and television shows, as well as having their own theme park ‘Disney land’ which is located in places all over the world. Disney is a global conglomerate company as it owns a large number of companies in various mass media.

Walt Disney and Roy O. Disney founded the company in 1923. The current president of the company is Robert Iger, previously Michael Ovitz and before that was Frank Wells, and has changed many times since Disney was founded. Walt Disney first became president of the company in 1023-45, and then was succeeded by co-founder Roy O. Disney until 1966.

Ownership

Walt Disney is horizontally integrated and has a wide range of television channels which it now owns and has shares in.

Disney ABC Television group, ABC Television Network, ABC Family Worldwide, ABC Family, ABC Owned Television Stations Group, Live Well Network, A+E Networks, Disney Channels Worldwide, Radio Disney, Disney Television Animation, ESPN Inc, CTV Specialty Television which is shared joint venture with Bell Media, Hulu and Maker Studios.

Disney’s main competitors are 21st Centruy Fox, Times Warner and NBC Universal Media. All of these are conglomerate and control over 65% of media and TVs market value.They don’t have much of an issue with distribution and production because they all have their own lines of distribution and production, so don’t often compete against each other.

Competitors

Disney has 95 entertainment channels with feeds distributed in 35 languages, Disney channels worldwide reaches more than 300 million homes, serving as a daily touchstone for the Disney brand for families in 168 countries.In 2010, the Company launched Disney Channel in Russia, Greece and Ukraine, and announced a joint venture to launch a local language Disney Channel in South Korea. Playhouse Disney channels in Poland, Turkey, and French-speaking Canada also debuted in 2010. In October the Company received a license for channels on Japan’s new broadcast satellite spectrum, and expects to launch Disney Channel on standard TV and free-to-air high-definition television in that market in 2011. In the United States fiscal 2010 marked Disney Channel’s most watched year on record in total day and total viewers, as well among the key audiences of kids (6-11) and ‘tweens’ (9-14). Disney Channel also celebrated its eighth consecutive year as television’s No. 1 network in primetime among kids (6-11) and its 10th year at No. 1 with tweens (9-14), thanks to a strong slate of original programming.

Audience

There were rumors that Walt Disney was anti-Semitic during his lifetime. He invited a German film maker and Nazi propagandist Leni Riefenstahl to Hollywood to promote her film Olympia. News of the Kristellnacht did not stop Disney from inviting her over to promote her film. Another animator had claimed to have seen Disney and his Lawyer attending meetings of the German-American Bund, which was a pro-Nazi organisation.Meanwhile, when animator and director David Swift, who was Jewish, found out about this, he mentioned that he was leaving and informed Disney that he was leaving to take a job at a Colombia Pictures, he responded ‘you go work with the jews’. This sparked up the rumors, although Disney said the door would always be open for him to return. These rumors carried on after Walt Disney had died.

Walt Disney & the accusations of racism &

anti-semitsim.

http://www.globalization101.org/ownership/ https://uk.answers.yahoo.com/question/index?

qid=20091015160912AAQcKkg http://kaarim321.wordpress.com/

2013/10/15/advantages-and-disadvantages-of-cross-media-ownership-ao4/

http://thewaltdisneycompany.com/investors/annual_reports/2010/kb_cable_story.html

http://en.wikipedia.org/wiki/Walt_Disney

Bibliography

And post this finished PPT with the title: ‘Task One Structure and ownership of the media sector’

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