BTEC Extended Diploma in Creative Media Production

Unit 7: Understanding the CreativeMedia Sector

Learning outcome 1:

Understand the structure and ownership of the media sector

Name: Coral Welburn

BTEC Extended Diploma in Creative Media Production

Understand the structure and ownership of the creative media sector

Use this workbook to help you with this learning outcome. There is some guidance and further notes which you should read and then remove, replacing it with your own answers.

Provide a definition of the following different types of ownership and provide an example of a company which is owned in such a way.

Private ownership is where people or shareholders, who are private citizens, own a company rather than the government. Private ownerships are all about satisfying the shareholders, rather than worrying about public interest. It is all about advertisements as that’s what funding the ownership. When it comes to showing advertisements it all depends on the particular channel. Channels such as MTV target ages 16-24. Which will only show advertisements that would satisfy this target audience, whereas advertisements on the discovery channel would be completely different as the target audience is different. However channels such as BBC show a variety of different advertisements as it shows a variety of different programmes that target lots of different age ranges. There are many advantages and disadvantages to private ownerships. One of the advantages of private ownerships is that because its based purely on advertising funds meaning more companies are willing to fund private ownerships as that means more air time for advertising their products. The more popular a channel and show means the more it costs to advertise products during certain times, which means more money for that certain channel to fund more shows. However a disadvantage would be that proper research isn’t done into the audiences likes and dislikes, it all depends on the funding’s like and dislikes meaning that it could easily fail if it isn’t watched by enough people.

Public service broadcasting is… is either owned by the state which is the government, of commercially owned which is where money is made through selling advertising space and product placement. It is all about showing content that isn’t all about commercial gain. This is done through showing content such as news, art programmes and religious views. This is shown through television or is broadcasted through the radio, which are two popular ways of broadcasting information that is important to get across. Public service media have the same purposes and values as broadcasting, but its done in a different way. Such as showing things on digital media, such as the internet. This particularly targets youth audiences. In the united kingdom there are a variety of public broadcasters such as the BBC, Channel 4, ITV and Channel 5. There are certain requirements that need to be followed with broadcasting which is set by Ofcom, which is all part of the licence to broadcast. Channel 4 is required to broadcast programmes that cater for art and minorities. It was set up to be a “public service alternative to the

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BBC” (http://en.wikipedia.org/wiki/Public_service_broadcasting_in_the_United_Kingdom). It’s a self-funded channel, which is funded through commercials. The BBC is a state owned broadcaster. There are a variety of ways the BBC broadcast. Its done over the television, radio and internet. They provide an online broadcast called BBC I Player, which gives the you option to catch up on missed programmes, or too watch live. Also it shows online only programmes.

Multinationals are…are large companies that are occasionally owned by large co-operations which sell/present products across the world in many different countries. For example Nintendo is a Japanese multinational electronics company that have become one of the largest video game companies. Nintendo originally started out making handmade cards in the late 1960’s, however now in 2014 it has developed into a video game company that is said to be the most influential. There are a variety of products being sold worldwide such as hand consoles such as the Ds and home consoles such as the WII, but then there are video games made for these consoles, along with the equipment made for them that are the controls for Mario kart and the traditional wii games. Having presences in different countries across the world is so good for businesses as they have a better understanding for the market and what ‘the in thing’ is and what competition they have to work with and better themselves against.

Independents are…refers to any type of media, which could be the radio, internet, television or newspapers. Independent ownerships aren’t backed by anyone, its usually one or two people that start something out that don’t have other peoples influence such as the government. With these ownerships things can only go one or two ways. Companies can do well and be bought out by other companies as they have done so well with what they started out. Companies such as Avalon television. They started out in 1989 and throughout the years have gone on to have many companies in different categories such as television, advertising etc. Also The independent Newspaper is another example. It was put together by three journalists that had quit their jobs in at the daily times. It did well but faced a lot of difficulty throughout the many years it ran causing independent media and news to sell the newspaper to a Russian individual.

Conglomerates are…are where there are two or more co-operations that are involved in different businesses that are linked under the same co-operate group. "Media conglomerates strive for policies that facilitate their control of the markets around the world." (http://en.wikipedia.org/wiki/Media_conglomerate) For example Time warner and warner brothers work together to produce high quality films.

Voluntary or not for profit organisations are… are all about helping a certain

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cause going on to working to affect social changes. These organisations all have different aims whether that be to earn money or not. With making a profit these organisations then go onto use that to put back into their work. Some organisations pay their workers, but most of them have volunteers that just genuinely want to help. For example the media trust have a number of projects and their aim is to help the media industry help charities and the community be empowered and to be heard by the public. This trust have 20 years of experience and success, which has brought them a community channel on tv and online, also gaining an audience through the news distribution service.

What are some of the challenges faced by independent media companies?Because independent companies are done with a minimal amount of people involved, meaning that no one such as the government are backing you, it means that a lot of financial problems fall onto the partners backs. There are a lot of financial risks. A lot of money is put into the company you are creating, which could be lost or profited back. However there are many challenges in lots of different media companies. For example a challenge that is faced by newspapers is the decline of sales due to the newest technology. What this is doing is providing you with the newspaper online, or delivered to you on your phone or other device such as a tablet. The internet and social media sites are taking over, causing the newspaper sales to decline. For example the Bay Guardian, a san Francisco independent weekly paper was suddenly shut down, telling everyone to pack their desk and leave. It ran for a solid 48 years however was soon bought out by their rival, which shut it down flat as it was just a numb newspaper that was declining fast with the way the media life has changed. All companies have a target audience that they are willing to capture the hearts of, all having an aim to please certain things with what they publish or create. Cillian press create and publish fiction including contemporary, literary novels, young adult fiction etc. This is directed at a certain type of audience so there are risks with not fulfilling those choices and not having enough readers who enjoy the specific things posted. Also with it being a new publishing company, there are certain numbers that need to be reached so that there isn’t any type of debt or chance of going under.

What are some of the challenges faced by multinational media companies?

There are plenty of challenges that come with having so many businesses worldwide. There are different rules and regulations in different countries, so you have to make sure that they are followed in each country, which makes it hard as there are so many different ones to follow that perhaps you can’t without not following a different one in another country. Another problem would be having so many companies in so many different places doesn’t help you stay focused and aren’t able to see the finished products if you aren’t here. Which means that more money is spent on having people in each different company practically doing your job for you since you can’t be there all the time. Multinational companies don’t

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always make it because there is too much money going into controlling and running it, without making enough profit back unless you are a large enough company like Sony.

What is cross media ownership?Cross media is where organisations own more than just one company in the media business, for example where a newspaper and television station is owned by the same organisation. Having a variety of different media company’s gives you the insight of what appeals to different audiences and what you can change within certain companies that is going well with one that is going well for another. Also owning more gives you a better financial state, giving you more profit to then go onto put more work into making things better within the company you own. An example of cross ownership would be Walt Disney. They own around 30 different radio stations, music and book companies, along with also owning disney channel and animation studios.

What is diversification?Diversification is where large companies go on to own companies that produce products that are related to each other, however also can be un related. For example Virgin branched out from just been a music distributor going on to producing things such as virgin media, the phone network, broadband, radio stations etc. Branching out and producing different things can help a company massively, it brings in a variety of audiences who learn to trust the company, then going on to getting involved with the other things they own. For example having a phone with them, to then go on and set up something else with them that interests them. So wether it be related or not, it helps a business.

What is horizontal integration?Horizontal integration is where more than one company is owned at a time, but they are all at the same level of production. It gives companies the chance to branch out and expand in one particular area of production, or buy out companies that work in that area.

What is vertical integration? Vertical integration is where companies are owned, but are at different levels of production. Meaning that companies have the ownership of the production, the way its distributed and the way it’s shown to the audience/customers.

What are some of the advantages of these different ways of structuring a company? The advantages of vertical integration are that you work with smaller departments that can closely monitor and control the activities of the department you’re working with, which then gets reported to top management. Each “layer” has its own responsibilities as a company and all can work as a close group as they are all working within the same company but they all have allocated jobs to

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do in each process.

The advantages of the horizontal structure is that everyone is working at the same speed and the same level of production, knowing exactly what to do in that specific area, having enough people working knowing what to do so that nothing can go wrong and that the highest level of achievement is achieved. There is more freedom as there aren’t layers of people and process’ meaning the team will be able to adapt easier to change as there aren’t too many people at different stages.

Use the following table to show how the Disney Company is structured.

Production

Distribution

Screening

What different ways can ownership are shared out? There are many different ways in which people can get involved and ownerships can be split. For example shareholders can choose to invest if they like the idea of what you’re wanting to or have already producing, believing it would be a good business deal that could perhaps make them a lot of money or be better for them in the future. There’s also the option of companies owning parts of other organisations. However there is so much of companies that people can own as in the uk there is a set limit.

What is a merger? Why would companies merge together?A merger is the combination of two previously separate organisations that have come together as one to create something entirely new, leaving no remains behind of either company, completely taking away each ones independency. Companies now merge together because neither one is doing well alone so they believe combining two companies together and putting each ones shares and profits together will be enough to make something new with fresh ideas and research properly done into what they are wanting to create. In 1990 Time Inc. merged with warner brothers to created time warner cable, which happened to create the biggest media conglomerate back then. Then that company went onto merge with AOL in 2000.

What is a takeover? Why do companies take each other over?A takeover is where a much larger company purchase a smaller company to perhaps build and work on, or change to become something of their own. Takeovers have become more popular as larger companies are wanting to build their ‘empire’ and become more popular and have a variety of different

BTEC Extended Diploma in Creative Media Production

organisations and companies to bring more profit in leading to better quality products and been able to then go onto expand more and more. For example recently Facebook purchased WhatsApp as it was a failing app for devices, to then go on and advertise it on their set ups and on peoples Facebook pages as it was wanting to start off again and do well.

What is cross media regulation? There is a certain limit in the media world with how much you are allowed to own as a company. There has been a regulation that has been set up, this is controlling the amount of what can be owned across the different categories of media that is about. There are restrictions set on most media related things. Notational and local newspapers have restrictions and limits, just like TV licences and radio stations.

Should we have restrictions on the amount of media outlets people can own?

Restrictions set limits on what can be owned by who and in what media category. People say that the more ownership you have, the more power and influence you have over the media industry and it leads others to believing your views and the way thing should be set. Having too much of one person’s influence doesn’t leave things open for competition and other genres of products produced by different people But then others say that people should be allowed freedom with how they want to live their life and if they are wanting to have a career owning different companies in different areas of media then it should be allowed. However I think that if you’re good at something and the companies you own and the organisations you are involved in are doing well and rapidly improving with profit, then why shouldn’t you be allowed to own whatever amount of something you want, but then I wouldn’t want so much of the same persons influence on things. So i would say having restrictions isn’t a good thing, but then i would see where people are coming from when they say they want a variety of products to choose from than a few people owning a huge amount of things such as radio stations, tv stations, newspapers etc. because it would all be run in the same way and the end result would more a less be the same, which wouldn’t interest people and wouldn’t raise profits to the limit you want because there isn’t that much to compete with.

You should select an organisation to work with to help you answer the following questions. It can be in any media sector. Researching your company in detail will help you produce stronger answers.

What income streams does your chosen company have?Disney is a huge company that has expanded over the many year’s it has been alive. Disney has a wide variety of different income streams such as their parks and resorts in many different countries. For example there is Disneyland Resort,

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Hong Kong Disneyland, Disney Cruise Line, Vacation club etc. But once you’re in these parks and resorts there are often many things you still have to pay for, for example there are many products sold by Disney such as the stuffed animals, photo booths, food stands. In Disney land resort there are two theme parks, three hotels and a Disney shopping, dining and entertainment district. Because of the explosion of success there is plenty of income that is made with just one resort as there is so much included inside past the sign. Disneyland resort has had over 650 million guests alone since 1955. However Disney offers many more options such as television channels. There is Disney channel worldwide, ABC News, ABC family, Disney Television group and ESPN etc. All these channels are massively popular. Disney Channel is a worldwide channel that expands into a portfolio of entertainment channels that is fed into 169 countries, then been translated into 35 different languages. Disney also have a variety of studios such as Walt Disney animation studios, Pixar animation studios, Walt Disney studio’s motion pictures etc. Then there is Disney interactive which produces entertainment such as where’s my water?, club penguin etc. There is a hundreds of different ways that Disney makes money which explains why it is such a well-known company.

What is product diversity? How diverse is your company’s product range?“Product diversification is a process by which businesses attempt to expand their market reach and customer base by delivering products somewhat different than the ones for which they are known.” http://www.wisegeek.com/what-is-product-diversification.htm

The products that are produced don’t have to necessarily be different products entirely, they can be extensions. For example coke was brought out, then it brought out diet coke which had the same forma with fewer calories. But then that brought in an entirely consumers who were conscious about their weight but wanted something refreshing. Walt Disney are all about providing entertainment, whether that is through theme parks or television. Walt Disney is extremely diverse as its constantly bringing out new ways to entertain, that through consumer products, so bringing a new theme into store which is either improved on or entirely new. As they are most known for their princess base, they tend to want to bring new characters in each summer year so that there is new action in the studios and resorts, so that for returning customers they aren’t seeing the same things every year.

What advantages does this give your company in the market place? This gives the customers an element of surprise and mystery, which is constantly luring them back in as Walt Disney are constantly making something new. This keeps people interested and intrigued. Because they have so many different ways of entertaining, there is constant competition for other competitors as they are having to try and compete with the speed that walt disney sells and produces things, so to customers that gives them the secure trust level with knowing they are going to get their money’s worth.

Why is the profitability of a product range so important to a company?

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Profits are what keeps company’s going, being able to pay the staff but then also having the money to keep everything running smoothly in the different parts of the company. The profitability of products ensures you that you’re doing something right and that your product is selling and making you money, not costing you it. It re assures you that the way you’re doing things works for the certain target audience and that you are able to run other products with the same structure you did with the ones that are earning you the most money.

What advances or disadvantages are there in making big budget, mainstream products?

Because Disney have a wide variety of products to offer there is research into likes and dislikes that need to be done. When making merchandise for well know films there has to be designs done that match the characters very well to be considered part of the set, otherwise customers will be unhappy and won’t be willing to pay the price Disney are charging if it’s not well made. An advantage to making big products would be people are willing to pay that little bit more to just have the Disney logo on and be able to say it’s made by Disney and its an original, rather than a look alike or fake. That means more profit is made for the company if people are willing to pay more. However a disadvantage would be that it costs a lot to make so much of one product, and if it doesn’t sell as well then you have lost out on money that could of been spent on something else.

What are some of the objectives of your chosen company?Disney has been around for many years and are all about bringing the imagination to life. They want to impress their young target audiences as they are the ones with the most magic and belief in their bodies. However they also need to keep things going smoothly, so their main objective is to make a profit in 5 different ways. Through their networks, parks, products, interactive and studio’s. They all offer so much for families, couples and people of all ages to enjoy, however it comes at a price but because it’s such a popular company that is known for providing a good experience people don’t mind paying the price that is asked as they know that it’s a once in a lifetime opportunity.

What are the advantages/disadvantages of taking part in a media franchise?

(Use examples from your chosen company as well as others. Use specific examples to help support your writing. Facts, figures and detail with help you comprehensively explain the answers to these questions.)

What, if any, products does your company license?Disney has a retail chain which is owned and operated by Disney in and around

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Europe, North America and Japan. Disney also are the worlds largest publisher of children books and magazines with over 700 million products sold each year. Disney have been licensing since 1929. DCP is the world’s largest licensor which goes on to inspire people by bringing “the magic of Disney” into consumers’ homes with products they can enjoy all year round.

The Disney stores include products that have been made to advertise films and books. For example there are certain parts to each store that represent certain themes from films and books. There is a Frozen theme, along with tinker bell, monsters Inc., the traditional Disney characters, princess and the frog etc. Everything follows a theme that includes dolls, mugs, books, cups, clothes, bags, suitcases etc. They sell everything with animated pictures printed onto the products. Disney make everything themselves as they want to make sure everything is done correctly, including the correct colours and themes, along with the correct text been put onto the merchandise. Having everything involved within the company is better as it can be monitored correctly and it can be done by staff that are employed to do a certain job, without having to pay other company’s to do if for you when there are plenty of staff that will do it under the Disney name.

Who is in competition with your company? How successful is your company in comparison?

Even though Disney do so well in the media industry, there are still a variety of competitors that they have to compete with to better themselves and improve. Time Warner and 21st Century Fox are also hugely popular. Time warner is one of the largest conglomerate company and specialises with businesses in television networks, film and television entertainment. This is done with divisions such as turner broadcasting, home box office and Warner bro’s. They all work together to sell and show things such as the hobbit, American dad and gotham which are all major films and programmes worldwide. Time warner also has products such as online games, online programmes and apps for mobile devices that allow you to watch streaming of their products. Time Warner is classed as a competitor because of the wide variety of selling products that are on offer, because of the different channels, printing publishers, comic books that they are involved it means that they are are also bringing in a big amount of income, leaving them with money to be able to create more products that could perhaps be widely popular, just like things Disney sell are. So Disney have to compete to perhaps show a better programme that time warner would on one of their channels. Walt Disney do so well for themselves in the category tv and film that having competition is healthy. Disney has been around for so long that people just know what they produce is worth watching and buying because its such a trusted company. If there was no competition between company’s there would be no one there to keep pushing to create things that are going to do well and not fall under something that their competitors have produced. Competition helps better yourself. For example in 2007 Walt Disney released pirates of the

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Caribbean 4 which is in line with 3 other terrific films that were widely popular with the public, targeting ages of 15 and over, however around the same time is when Harry Potter and the order of the phoenix came out. Both films target the same audience so this is an example of competition. They are both really popular films but its all about the advertisement of the film and the way its sold to the customers. For example advertising it on television and the channels they own themselves. If its sold across the right way then you have a better chance of selling the product fast. Walt Disney has a wide selection of film genres, animation being the most that is worked with.

Who are your customers?Everybody thinks that Walt Disney’s customers are young girls because of their large princess collection. For many years Walt Disney has attracted little girls because of films such as Cinderella, Sleeping Beauty, Snow White and the seven dwarfs etc. However they wish to target the whole family as recently they have started to sell films that are remade from older versions that were published. So more older people are buying Disney films as its a part of their childhood being brought back to life. Disney has a saying Your dead if you aim only for kids. Adults are only kids grown up, anyway." http://thewaltdisneyco.blogspot.co.uk/2011/09/chapter-4-marketing-environment.html this is a good saying because now they have a wide variety of products to sell that can involve many different ages and both genders. But their main customers who buy the products are parents for their little kids as most of their products are from films such as tangled, frozen, alladin, little mermaid etc.

However that is in the television and film category. The customers for the resorts and parks are families who are wanting a vacation being able to go meet all the characters and go on the rides that follow the disney themes. Wether that be on a cruise, at a resort or a studio.

Which global media trends are affecting your company right now?Dvd’s were the in thing many years ago but there is constantly being new technology and new software’s being brought out for us to download or buy. There are many websites online that are now uploading tv series, new films, old films, box sets etc onto their site which then allows you to download or play instantly for free. This is causing many people to stop buying dvd’s as its just on the internet for you too watch. This isn’t good for walt disney as a large chunk of their profits are from dvd buys from shops that its placed in, such as supermarkets or dvd shops.