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: Sophie Baker

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 a company owned by people (or shareholders) who are private citizens rather than said company being owned by the government. The difference between private to public ownership is that a private ownership is funded partly from general public revenues. E.g. the BBC, which is publically funded as well as relying on politicians allowing the company (media ownership) to collect the license fee. However, private ownership can have films placing profits above public interest. As well as leading to cultural decay. Meaning a popular media can become homogenized.

Public service broadcasting/ media are things like the news, arts programming, etc. where company who’s content isn’t purely for commercial gain. Could be state owned (owned by the government) or commercially (privately) owned (makes money by selling advertising space and product placement. PSM is media, which fulfils the same public purpose as public service broadcasting. E.g. (State owned – BBC). They use a license fee to create media across a huge range of platforms. Including TV, radio and the Internet. Increasingly branching out in to digital services including online only programmes. E.g. Channel 4 is commercial example of a public service broadcaster. Gets the majority of it’s funding through commercial means such as advertising. However, it has a public service remit (they pass their allowance to do something. Contract. They have to abide their deal so they can continue) that it must meet in order to continue to broadcast.

Multinational are large companies which in many different countries. Larger corporations typically own them or they could own smaller business/ interests themselves. E.g. in the videogames industries such as ‘Rockstar’ Games are just one of many that operate in several countries. E.g. ‘Amazon’. You can purchase something at home in the UK but the website, ‘Amazon’, will tell you that they product(s) come from different countries and sometimes even continents. Operating in multiple different countries can have benefits such as a better understanding of individual market places. And often, better tax arrangement. However, regulations and laws can change between countries. It can also be difficult to maintain and focus on every company in every continent. Critics argue that multinationals lead to less choice for the consumer as well as putting too much power to a small group of people.

Independent refers to any form of media. TV, radio or the Internet. Free of the influence (none-biased) of either the government or corporate interests. E.g. The Huffington Post started out as

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an independent news aggregator/ blog until AOL bought it out in 2011. E.g. Blitz Games Studios was formed in 1990 that originally started out as Interactive Studios. Creating a range of games with a strong focus on using other intellectual property on license to produce games. It closed in 2013 after having trouble raising funds for new games. E.g. Disney character or ‘SpongeBob’. E.g. Cillian Press is an independent publisher in Manchester who publishes a range of young adult/ adult fiction. Fledgling Press is an independent publisher bases in Edinburgh who publish small runs of book/ eBooks. This company was formed in 2000 and they publish in a variety of categories that include comic book and adult fiction.

Conglomerates are a group of companies that are independent but are owned by a much larger umbrella company. E.g. ‘Com-cast’ is the No. 1 largest media conglomerate. As well as ‘Time Warner’ (TW own ‘DC Comics’ and ‘Warner Brothers’. All the companies that TW own they all act and work independent. Influences in the media such as film, TV and publishing. E.g. New Line Cinema (film) and HBO (TV). Common ownership patterns, beneficial for companies in the media because it can be expensive.

Voluntary or ‘not for profit’ organisations aim to make profits and go back in to help their cause. You don’t get a lot of these in the media, a lot them are quite small. Media companies are built by money and drive/ thrive on it. Voluntary or Not for Profit are quiet small. E.g. Wikipedia and BBFC are examples (there are only a small few).

What are some of the challenges faced by independent media companies?One of the problems media companies face are keeping up quality and relevance with people. As well as with the constantly evolving market trends and keeping up with them for their audience. Such as mainstream media companies due to them working with television, radio, newspapers, etc. Many television companies compete with one another for being the dominant channels with their featured television shows. However alternative media companies tend to be smaller companies, which are virtually polarised making them less known throughout the media world. Without being well known they will most likely receive less funding and support altogether losing business.

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

Regulations and laws can change between countries. Also, managing and maintaining multiple companies can be difficult because your focus can’t be on every company in every country/ continent you have one. Critics also argue that multinationals lead to less choice for the consumer as well as the fact that you’re putting too much power in too small a group of people.

BTEC Extended Diploma in Creative Media Production

What is cross media ownership?Cross-media operates by owning more than one type of Media Company. A company that owns interest in news cooperation and it works across the media. Owning various newspapers (e.g. the Sun) and digital television companies, Internet connection companies, etc. The print and interests in cable networks. E.g. Kerrang! Is based in Germany by Bauer Media Group. It’s a good thing by having lots of interests in multiple companies is because you’re reaching out into different brands (diverse your brand with different platforms). As well as money, you’ll get more with the multiple companies. You can also carry ‘lose making brands’ meaning a company (one of yours) will slowly, or quickly, lose profit (e.g. magazines because of digital media. Synergy or entry points. This allows you to branch out a variety of products with that one brand. E.g. A Disney brand (e.g. Hannah Montana) will use DVD’s, CD’s, television shows, merchandise, the internet (websites), live shows, magazines, video games, (you’ll have to work with companies like Nintendo to make a game (as well as game makers)), etc. Allow you to work in different sectors, which will allow you to widen your audiences.

What is diversification?Diversification is where you start off with one thing and branch out bit by bit to do other things. E.g. you make a record company and then branch out to have a radio station. You want to be diverse. E.g. Virgin is a good example; diversification is like cross-media in a way but sticking with your brand primarily. Virgin started off as a music distributer that expanded to a record label, radio, mobile phone provider, book publishing, etc.

What is horizontal integration?Horizontal integration is where you own more than one company and have them spread across the board. E.g. TimeWarner. Is the same as cross media ownership, owning a record company as well as a publishing and radio company, etc.

What is vertical integration?Vertical integration is companies owned that go through different levels of production. Once production (filming, editing, producing, etc.) is done you need to distribute the film (to homes and cinemas) and then exhibition (they’ll show other films as well, and if it’s a new line film it’ll earn even more money).

What are some of the advantages of these different ways of structuring a company?Some advantages of these different ways of structuring a company/ companies are that they are lucrative because you’re broadening your horizon and audiences with increased market shares. As well as you owning each stage in the product, you will have the final say. If one of your many companies goes down, and stops making money, you don’t have to worry about losing all of your money because it one of many. It can also be a smaller one so even less money will be lost in comparison to if you were to loose a bigger one.

BTEC Extended Diploma in Creative Media Production

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

Production  Pixar  Walt Disney Studios

 Marvel Studios

Distribution

 Disney Media Distribution

 Walt Disney Studios: Home Entertainment

 Marvel Television

Screening  Hollywood Pictures

 Walt Disney Motion Pictures/ Cinema

 Marvel Entertainment

What different ways can ownership be shared out? Ownership can be shared out by; for instance, with larger companies can buy shares within the company. The more shares that the company has the more money they can make/ have. E.g. Disney can own parts of other organisations. The more share that you have, the more power you have over the company/ companies you have shares with until you are the prime shareholder.

What is a merger? Why would companies merge together?A merger are when two companies come together to work together so that they can help with cut costs and increase the profits of their companies. And example of this is ‘AOL’ merging with ‘TimeWarner’ to create the one company ‘AOL TimeWarner’.

What is a takeover? Why do companies take each other over?Takeovers occur when the companies want to produce the same benefits as you can if you were to do a merger. However, it’s not always a mutual decision between the two companies. Doing this requires having a smaller company being purchased by a much larger one.

What is cross media regulation? Cross media regulations are created to control what will own what within a range of different medias. Cross media regulations are there because of the restrictions with national/ local newspaper groups and their ability to own different media(s). Such as radio stations and/ or TV licenses. An example of this is if a national newspaper groups owns more than 20% market share and keeps to their level of ownership of 20%, rather than more, where they can go and run a national or regional radio station. This is known as the 20/ 20 rule. Even though these

BTEC Extended Diploma in Creative Media Production

regulations have been changed over the years there are still restrictions that are in place.

Should we have restrictions on the amount of media outlets people can own?I say yes because it’s known that, for instance, if someone owns multiple market shares around the world (or even locally) they are more likely to be unable to keep on track of all of them at a time. This causes many of them to fail. Having multiple market shares can be good because if one business goes down you have others to still feed off of. However, having too many can cause more problems to multiple people and can give too much power to someone.

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?One of the ways is through sponsorship and advertising within the product. Disney is one of the worlds biggest companies because of their connections within the media. They have direct selling products such as films, television shows, games, merchandise, magazines, etc. With many magazines, particularly children’s magazines, they will have asked to advertise their new toy brands and upcoming films/ television shows. As well as asking newspapers for advertising their theme park destinations. Merchandising is a huge source of income because of the films they make. Not only merchandise for children anymore as well because they are sponsoring the new Star Wars films. So they will sell mugs, clothes, posters, etc. As well as the more traditional dolls and stuffed animals for children for Disney animated movies.

What is product diversity? How diverse is your company’s product range?Disney’s product range is very diverse. Many believe that Disney is only for children but now that they have deals with Marvel and the new Star Wars movies they have a wider audience that ranges from children/ teenagers to adults. There is something that appeals to everyone. Films, video games, TV shows, toys, clothes, posters, mugs, etc. Which are all relevant to the films. As well as having multiple theme parks around the world that feature all of the films from Disney, Marvel and Star Wars.

What advantages does this give your company in the market place? Disney is one of the most dominant companies in the market place worldwide. This is due to their connections in the market place, having branched out to having so many different markets within their own company. Such as having a theme park, live shows, film, songs, musicals, merchandise, etc.

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

BTEC Extended Diploma in Creative Media Production

The more profitability of a product range the company has the more power they have as a company overall. Disney has many connections within the media with pretty much every market place in the media. Disney’s biggest source of profitability is with their films through Box-office. So far their most profitable film is ‘Star Wars: The Force Awakens’ with over $906 million dollars. And their least profitable film at box-office is ‘Hercules’, but they still made over $99 dollars.

What advantages or disadvantages are there in making big budget, mainstream products?The disadvantage is that the fact that the mainstream product won’t do that well. Usually it’s the film that has done the worst in box-office that won’t do well with their merchandise. The advantage of using a big budget is that if they do well the company will make a much bigger profit than expected. With a company like Disney it is a kind of ‘luck of the draw’ because you never know if everyone is going to like their new films.

What are some of the objectives of your chosen company?Walt Disney’s mission statement was, “The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products. The company's primary financial goals are to maximize earnings and cash flow, and to allocate capital toward growth initiatives that will drive long-term shareholder value.” Walt Disney was essentially setting out from the beginning of his career to be a top leading provider for entertainment and information. As well as making sure that as the years go by with this company they will still hold long-term shareholder value. Walt Disney was promising and promoting value, quality and all of this being long-term for years to come.

What are the advantages/disadvantages of taking part in a media franchise?An advantage of being apart of a media franchise like Disney is the fact that the companies name itself is such a large cooperation in the media industry. If someone like an actor or another company wanting to branch off of Disney they will become much better known worldwide because Disney is worldwide for all ages. A disadvantage is always the idea that taking part in said company is that their work in the franchise might not workout. If you come up with an idea for a new brand of merchandise and it doesn’t appeal to the consumer you will lose money.

What, if any, a product does your company license?Whatever Disney makes, particularly with a new and up-and-coming film, they will maker merchandise to support their sales for said film. With all of branching that comes from that film they will license the costs and rights to them. For instance if another company, such as a local store, makes something to their brand that is similar and a copyright the company Disney has the licensing to take it away from

BTEC Extended Diploma in Creative Media Production

that store so they don’t make money off of their copyrighted product. The same can come from someone pirating one of Disney’s new films that haven’t come out on DVD yet. Whenever Disney does work with another store/ company to sell their products they will receive a percentage of the money earned from that product sold.

Who is in competition with your company? How successful is your company in comparison?Disney’s main competitor is Time Warner when it comes to studio market share. They were ahead of them in 2013 grossing with $1.8 billion dollars, whereas Disney grossed in 2013 with $1.6 billion dollars. When it comes to toys sales Disney’s biggest competitors are stores that don’t sell their products. Many well-known toy stores like “Toys-R-Us” already sell products from Disney for children. However, companies like ‘Mattel’ have annual sales of $6.3 billion dollars. Disney used to work with Mattel to make their toys but starting in 2016 they moved to work with Hasbro, now making their biggest competitors in toy market sales because they make toys for big companies such as ‘Fisher-Price’, “Hot Wheels’ and ‘Barbie’.

Who are your customers?Disney’s has a wide range of an audience that branch from children to adults. Because of their large stock of merchandise it ranges from items such as ‘All-in-one’ suits for new-born babies and nursery cots to darker more adult feature films such as ‘Pirates of the Caribbean’ and t-shirts for adult sizes. So Disney’s audience ranges from new-borns to an adult audience due to their wide range of products and attractions. For instance in their theme parks they have roller-coaster rides have height and age restrictions based on who can go on them. Yes there is a wide range for their diverse audience but there are restrictions prepared for them.

Which global media trends are affecting your company right now?Global media companies that are affecting Disney’s company are rival movie production companies such as Warner Brothers Studios. Both companies work hard to produce anticipated movies throughout the year and compete for the best hits at box-office. Disney also has been known to compete with sports channels for ratings in comparison to their channels for children. Particularly when there are large sporting events on.