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Undersanding the Structure and Ownership of the Media Sector


Michael Guthrie

on 21 December 2012

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Transcript of Undersanding the Structure and Ownership of the Media Sector

Understanding the Structure
and Ownership of the
Media Sector What is the creative Media Sector? Television Radio Film Animation Interactive Media Computer Games Publishing Press Photo - Imaging Advertising Marketing Television Television is one of the biggest sectors within the Media Industry with a lot of competition that employs over 50,000 British people. TV broadcasts many different types of TV pro grammes and films. In the UK, TV is dominated by a few main broadcasters, however there are also many smaller broadcasters. The main broadcasters are:

The BBC - Public company, funded by the TV license.

ITV - Private Company, 60% owned by ITV PLC, Also owned by STV Group PLC (Scotland) and UTV (Northern Ireland).

Channel 4 - Private Company, funded by advertising.

Channel 5 - Private Company - Owned by Northern & Shell ( Which is Owned by Richard Desmond) Radio Radio is one of the oldest forms of mass media. Radio transmits sound-based media to the likes of car radios and TV. Radios themselves are dying out as radio can now be listened to on TV and online thanks to it becoming digital. Also most people listen to radio in their cars. There are three sections of radio:

Publicly funded Radio - Taxpayer Funded (EG BBC Radio 1)

Commercial Radio - Advert Funded (EG Metro Radio)

Community and Voluntary Radio - Hospital Radio stations etc (EG Hospital Radio Hillingdon [1970-2012] - National Lottery Funded, 24 hour broadcasting) Film The film industry is one of the largest and most profitable sectors in the media industry. In the UK it employs 27,800 people. 62% are employed in exhibition, 34% in production and the remaining 4% in distribution.

There are six different specific components to the film industry:
Development, production, facilities, distribution, exhibition, and export.

The film industry is dominated by many major companies: Paramount, Universal, 21st Century Fox, Disney, and many more. These multimillion pound companies tend to produce the big blockbuster films, as they have bigger budgets to produce and market the films.

There are, however, a few smaller film companies, such as Pinewood Studios, a small British film company. Films produced by smaller studios tend to be small, cult-films. However, these films can sometimes become successful, popular films. Animation The Animation sector is vital to many other sectors within the media industry. TV, Film, Video Games, Interactive Media, Adverts, and Marketing all rely on animation. TV, adverts and film use animation as a technique for producing shows, adverts and films, and also use animation for special effects. Video games are based on animations that create a world within which the player is immersed.

The main animation companies are:

Dreamworks (Owned by Paramount)
Pixar (Owned by Disney)

There are also smaller animation companies that also have much success, such as Aardman Animations of the UK. Sectors Interactive Media The interactive media sector is the definition of the discipline of creating interactive websites that users create the content of. Examples of this are:


The interactive media sector is worth several billion pounds, and employs over 34,000 people. Interactive media is increasingly becoming a part of everyday life. People are more and more communicating through twitter and Facebook, and using YouTube to find music and TV shows. Interactive media is also now popular on smartphones and so is used even more. Computer Games The computer games sector forms a major part of the global media industry. Computer games are quickly gaining in importance and prominence. Traditionally, gaming was seen as a small activity that a small proportion of people took part in and took seriously. In recent years, gaming has become really popular, giving way to a more "casual" gamers. The sector is now more profitable than the DVD industry.

The top five biggest video game companies are:

Electronic Arts
The publishing sector focuses on producing and distributing, usually text-based, media. This can include media such as:

Press (Newspapers and Magazines)
Online Journals
Posters (Adverts - Marketing)
Mailing lists

Some British publishing companies include: Co & Bear Productions, Hesperus House, and Plexus productions. Publishing Press The press sector surrounds the deliverance of news to the general public. This can include both broadcasted news (Radio and TV) or printed news (Newspapers and Magazines). Press reports are written by journalists for different news companies.

Top news broadcasters:
BBC News
ITV News
Sky News

Top Newspapers:
The Daily Telegraph
The Guardian
The Daily Mail Photo Imaging Advertising Advertising is a form of communication intended to persuade and/or advise.
Most of the time, advertisements are promoting a product or service, but there can also be public service adverts telling us useful information about health etc.

Advertising comes in many forms:
Online advertisement
Television commercials
Outdoor advertisement (Billboards, posters, etc)

There are five different advertising departments:
Account Services
Other Services Marketing The marketing sector of the media industry involves communicating the value of a product or service to customers. This is done through extensive marketing campaigns that tie in closely with the advertising sector.

There are four Ps of marketing:

Product: What is being sold?

Promotion: Why should people buy it?

Price: How much is it?

Place: Where can you buy it? The photo imaging sector is a commercial fine art surrounding the manipulation and editing of images. This sector employs 43,100 people in the UK.

Adobe Systems is the biggest company in the sector and owns many photo imaging products such as Photoshop.

Further categories within this sector are:
Image Producers
Photo Retail
Picture Libraries
Support Services Connections Between The
Different Sectors Television & Film The television sector and the film sector are connected by the fact that TV channels often play films. There are also many TV channels that are dedicated purely to showing films, such as Sky Movies.

Films are also mainly advertised on TV, both the cinema and DVD releases. Animation & TV & Film Animation is used in many television programmes and films such as cartoons, and is also used in many television adverts. Advertising & Marketing Advertising is pretty much a sub-sector of the marketing sector. Adverts are a key part of marketing campaigns. Television & Radio & Interactive Media Television & Radio shows often ask people to participate in the show through the use of Twitter hash tags or Facebook. Shows like the million pound drop live also run interactive games alongside the actual show. Interactive Media & Computer Games There is often many interactive websites that run alongside modern video games where you can track your online stats etc. You can also synch your online accounts from games consoles to Facebook, where you can share your achievements/trophies you unlock in games. Film & Computer Games Films often spin-off from video games and vice-versa. Publishing & Press Publishers publish paper-based press such as newspapers and magazines. Advertising & Photo Imaging Photo imaging may be used to create paper-based advertisements for products/services. Interactive Media & Press Newspapers often have online websites where you can participate in discussions on forums and take part in online polls. Advertising & Animation Animations are often used in adverts such as the Lloyds TSB Adverts. Radio & Advertising Audio-only adverts are played on none-publicly funded radio stations such as Metro Radio as this is how the stations are funded. Market Trends in the Creative Media
Sector A case study on the rapid growth of the Computer Games sector. The Computer Games sector has grown extensively in recent years around the world. What was once a niche, relativity underground sector has recently grown into a multimillion pound global industry that is now worth more than the DVD industry.

Traditionally, the video games industry was a small area of the media industry. When the sector was new, in the second half of the 1900's, video games were played by a few elitist "hardcore gamers" who tended to be very tech-savvy, as early games systems were very complicated to use. Early video games were also very simple, such as "Pong" or "Pacman".

Around the 1990s, video games systems become more modernised and easier to use. Games become more complex and realistic looking thanks to better graphics technology. Around this time, video games became more popular with children. In the early 2000s, video games reached high popularity. Many games series' became popular cultural icons much like TV shows, such as Halo and Grand Theft Auto. Younger people started seeing video games as a regular activity to do like watching films is.

In the later 2000s, ever improving technology brought about the "3rd generation consoles" (such as the PS3 and XBOX 360). Extremely realistic games with large emphasis on online game play caused video gaming's popularity to skyrocket. The biggest of these games being Call of Duty. Call of Duty is the biggest game franchise ever and each year breaks the record for most games sold on release day.

As a consequence of this popularity, the video games industry is now worth more than the DVD industry. Both younger and older people play games for fun in the same way they would watch a film or listen to a CD.

Many other types of media are now integrating games and gaming into their products. Smartphones and tablets have a big emphasis on 'casual games' to have a quick little play on, the biggest of these being Angry Birds. Social networking sites now also place much emphasis on social games that you and your friends can play together such as Facebook's 'Farmville'.

Games also now get film spinoffs and vice-versa. The Tomb Raider films were spawned from the original Tomb Raider video game. Big feature films also usually have an accompanying video game that gets released around the same time as the film, an example of this is the Transformers game which was advertised alongside the film on TV. Glossary of Media Terms Private Ownership Private ownership is when a company is owned privately by an individual or individual(s). Privately owned media companies such as Virgin Media are run to make a profit. Virgin Media is a publicly traded company and therefore sets out to make a profit for its shareholders, which includes the creator of the Virgin brand; Sir Richard Branson. It makes a profit by offering a payed subscription for the service, and also through advertisements. Source: http://investors.virginmedia.com/phoenix.zhtml?c=135485&p=irol-faq#29105 Public Service Media Public service media is media companies that are made by, run by, payed for by and operate for the public (The Taxpayer). Public broadcasters are there to inform, entertain and educate and are free from commercial practices but are also free from state control. As such they act as an unbiased platform for different views and so help boost democracy.

The biggest example of a public service broadcaster is the BBC. The BBC is payed for by the TV license and is not run for profit. The BBC is not politically biased and tries to give all points of view a fair airtime. Source: http://portal.unesco.org/ci/en/ev.php-URL_ID=1525&URL_DO=DO_TOPIC&URL_SECTION=201.html Multinationals Multinational corporations are companies that operate in at least more than one country globally. Multinational companies are large companies that can sometimes be more wealthy than some small countries.
News Corporation, chaired by Rupert Murdoch, is a large multinational media company that holds many news channels and news papers worldwide, such as Fox News (USA) and The Sun (UK). Source: http://www.investopedia.com/terms/m/multinationalcorporation.asp Independents Independent media companies are often smaller companies that operate outside of corporations.

An example of a small, independent media company is Bizmedia.

Source: http://www.bizmedia.co.uk/ Conglomerates A conglomerate is a corporation that is made up of a lot of different businesses. The conglomerate holds the majority stake in all of it's businesses that operate separately. Media conglomerates often own many different newspapers and TV channels.

One of the biggest Media conglomerates is, again, News Corporation, which holds many different newspapers and news channels globally.

Source: http://www.investopedia.com/terms/c/conglomerate.asp Voluntary Voluntary companies, otherwise known as not-for-profit companies, are companies that are not run for a profit. Companies such as these rely on volunteers to run them and make just enough money to keep operating.

An example of a voluntary media company is the Star and Shadow Cinema: A small, not-for-profit cinema that focuses on playing modern, underground films.

Source: http://www.accountingweb.co.uk/article/%E2%80%98big-society%E2%80%99-companies-get-details-right/518951 Cross-Media ownership Cross-Media ownership is when one company or individual owns and operates many different media formats such as Radio, TV, and Newspapers.

An example of this, again, is News Corporation, which owns many different newspapers and news channels.

Source: http://dictionary.cambridge.org/dictionary/business-english/cross-media-ownership Diversification Diversification is when a company branches out into new ventures in order to offer more services and bring in a greater deal of revenue.

An example of a diversified media company is The Guardian Media Group. It started out as an evening Newspaper, and has since branched out into an online news website that covers a wide variety of interests, and also branched out into radio through GMG Radio.

Source: http://www.gmgplc.co.uk/the-scott-trust/history/a-diversified-group/ Vertical and Horizontal integration Vertical integration is when a company starts to take over more and more aspects of the producing and distributing of the end product that it sells in order to increase that company's dominance in the marketplace. If a media company started producing the DVDs that a film it made would be stored on, this would be an example of vertical integration.

Horizontal integration is when a company takes over another company in order to increase its own market share. This can be done through a buyout, whereby the second company is outright bought by the owner of the first, or a merger whereby the two companies merge together into one. An example of this is Google's takeover of YouTube, which it took over in order to obtain a larger and more loyal user-base.

Source: http://bizdharma.com/blog/what-is-vertical-and-horizontal-integration/ Share of ownership Share of ownership is when the ownership of a company or corporation is divided into shares that are owned by different people, called the shareholders. Shareholders pay for their share, and in return get a slice of the profits the company makes depending on how much of a share they hold.

PLCs (Public Limited Companies) are companies that sell shares to the public in order to generate revenue through public investment.

Privately Held Companies are split into shares between the different owners of the business but do not sell their shares publicly.

Source: Own knowledge. Cross-Media Regulation Cross media regulation is the regulation and control of how much control companies have over the different sectors of the media in a country so that they do not have the monopoly over the media, and so that the press remains free which is important in a democracy.

In the UK, media ownership is capped at 20% of total circulation.

Source: http://www.editorsweblog.org/2011/09/12/cross-media-ownership-regulation-in-the-uk Sources of Income There are many sources of income that can bring money into a company:

Selling a product or service
Selling shares publicly
Getting private investment
Getting government (taxpayer) investment.
Voluntary donations.

Source: Own knowledge. Profitability of product Range Profitability of product range is how much profit a company will make from the products that it sells. If a product is unprofitable, it is unlikely that a company would continue to sell it. Therefore, companies tend to sell products that are popular to decrease the risk of making a loss.

This is why media companies tend to follow what is "in" in order to maximise the profitability of their products. Film companies tend to produce the most popular kinds of film, TV companies produce the most popular kinds of TV show, video games companies produce the most popular kinds of video game, all in order to make as much profit as possible. This is also why it tends to be the smaller companies that create "indie" films.

Source: http://dictionary.cambridge.org/dictionary/business-english/product-profitability Performance against Financial Concerns Organisational Objectives Organisational objectives are the objectives that a company has in regards to where it wants to be in the future. They are set by the owner/CEO of the business. These objectives generally surround amount of sales, rates of growth, profit levels and the value of the business.

Source: http://www.tutor2u.net/business/strategy/objectives.htm Licenses and Franchises Licenses and Franchises are companies whereby different people can set up different businesses under a common name. To do this however they have to pay an initial or ongoing fee to the owner of the franchise. The advantage of this is your business can instantly be well known and popular. however, you have to conform to the codes, regulations and rules of the franchise.

The biggest example of a Franchise is McDonalds, a multinational fast food franchise.

Source: http://www.entrepreneur.com/answer/222052 Competitors In the world of business, competitors are rival companies that produce a similar product to each other and compete for the biggest share of the market. Competition in business is good as this can lead to better products and more innovation in order to try to get the edge over their rivals. This competition can be on a local scale (Two shops on a high street), a national scale (Two major corporations, IE: BBC VS ITV) or an international scale (Two major multinationals, IE: AOL vs SKY).

An example of two big business competitors in the media industry is Sony VS Microsoft in the video games sector. The Sony Playstation and the Microsoft Xbox have been competing against each other for years, creating new ideas for their consoles and copying the best ones from their rival (Eg: Playstation Move VS Xbox Kinect).

Sources: http://www.pcmag.com/article2/0,2817,2405305,00.asp Customers Customers are the people who pay to use a product or service that a business sells. Businesses are always trying to attract the highest number of customers as possible in order to get the most money possible, through diversifying, creating new products, advertising campaigns and taking over other companies to get their customers. Companies have a duty to satisfy the customer and must take all customer complaints seriously.

Sources: Own Knowledge. During periods of financial concern such as recessions and depressions, businesses expect to grow and produce less profit as they will get less customers as people will have less money. The business must instead focus on surviving, this may be through firing unessential staff or lowing prices in order to bring in as many customers as possible.

Sources: Own Knowledge.
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