Task 1 Understand the structure and ownership of the media sector. P1, M1, D1

EXPLAINING THE STRUCTURE AND

OWNERSHIP OF THE MEDIA SECTOR

A privately held company or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately. More ambiguous terms for a privately held company are unquoted company and unlisted company. An example of a privately owned company is Disney.Advantages;The contents are considerably more reliable, credible and accurate, compared to that of independent media.State owned media are media for people. It is not an individual who holds the authority, and hence, it is not guided by an individual interest.Government media are open to all and accommodate voices of general public. In a true sense, state owned media can best act as voice of the voiceless.Whereas, the disadvantages;It suffers deliberate manipulations of its contents by the ruling party, reducing its efficiency and credibility.Government may censor the content which it deems illegal, immoral, or unfavourable to government, hence, it is not independent of the governing party.State owned media are also criticized for the boundary they impose in media competition. Unlike independent media, state owned media cannot ensure people's acquisition of unbiased information.

TYPES OF OWNERSHIP: PRIVATE OWNERSHIP

A public service company (or public utility company) is a corporation or other non-governmental business entity (i.e. limited partnership) which delivers public services - certain services considered essential to the public interest. The ranks of such companies include public utility companies like natural gas, pipeline, electricity, and water supply companies, sewer companies, telephone companies and telegraph companies. They also include public services such as transportation of passengers or property as a common carrier, such as airlines, railroads, trucking, bus, and taxicab companies. Public service (or utility) companies may operate under certificates of public convenience and necessity which may limit competition. Their services may be subject to rate control and other regulations which are not common to general businesses. An example for a public service would be BBC.Advantages;Essential services are provided.Everyone shares in the profit from public ownership.Wasteful duplication of services is eliminated.Planning can be co-ordinated through central control.Disadvantages;Inefficiency results due to the size of the organisation.There is a lack of incentive for employees to perform if there is no share in the profit or there is an absence of other motivators such as productivity bonuses - accelerated promotion.Losses must be met by the taxpayer.Political interference can occur.They interfere with the free market forces.

TYPES OF OWNERSHIP: PUBLIC SERVICE

An enterprise operating in several countries but managed from one (home) country. Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation. There are four categories of multinational corporations: 1.A multinational, decentralized corporation with strong home country presence. 2. A global, centralized corporation that acquires cost advantage through centralized production wherever cheaper resources are available.3. An international company that builds on the parent corporation's technology or R&D.4.A transnational enterprise that combines the previous three approaches. According to UN data, some 35,000 companies have direct investment in foreign countries, and the largest 100 of them control about 40 percent of world trade.Advantages include; The investment level, employment level, and income level of the host country increases due to the operation of MNC's. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's. MNC's create opportunities for marketing the products produced in the home country throughout the world.Also, the disadvantages are; MNC's transfer the capital from the home country to various host countries causing unfavourable balance of payment.MNC's may transfer technology which has become outdated in the home country.

TYPES OF OWNERSHIP: MULTINATIONAL

Independent business ownership refers to the privately held organizations. Sometimes, independent businesses are also termed as sole proprietorship companies, which have only one proprietor.Advantages include;Being an owner of an independent business can be beneficial from many aspects. The independent business owner has the option of beginning on a fresh note with absolute command over the shape of the business and how it is going to be supervised. The independent business owner does not have the necessity to enter into contractual responsibilities with the franchisees and also does not have any legal requirements fixed by the earlier business owner. Also, some disadvantages include;Once your business is established, its income may be sporadic, highly variable or seasonal. You may have to cover unexpected shortfalls. Operating a business entails many details. You may spend most of your time tending to the business instead of doing the work that you enjoy.

TYPES OF OWNERSHIP: INDEPENDENT

A conglomerate is, by definition, a large company composed of a number of smaller companies engaged in seemingly unrelated businesses. It is questionable whether media companies are unrelated, as of 2007. According to the 2013 Fortune 500 list, the Walt Disney Company is America's largest media conglomerate in terms of revenue, with News Corporation (now News Corp & 21st Century Fox), Time Warner, CBS Corporation, and Viacom completing the top five.Advantages include;A conglomerate creates an internal capital market if the external one is not developed enough. Through the internal market, different parts of conglomerate allocate capital more effectively.A conglomerate can show earnings growth, by acquiring companies whose shares are more discounted than its own. In fact, Teledyne, GE, and Berkshire Hathaway have delivered high earnings growth for a timeSome disadvantages also include;

Culture clashes can destroy value. Inertia prevents development of innovation.Lack of focus, and inability to manage unrelated businesses equally well.

TYPES OF OWNERSHIP: CONGLOMERATE

In business, horizontal integration is a strategy where a company creates or acquires production units for outputs which are alike - either complementary or competitive. One example would be when a company acquires competitors in the same industry doing the same stage of production for the creation of a monopoly.Advantages include;Employees may attain greater satisfaction in a horizontal structure due to greater freedom and autonomy. The use of cross-function teams can also lead to high levels of cooperation throughout the organization. The heavy emphasis on innovation can lead to ideas that keep the organization ahead of the competition.On the other hand, disadvantages include;The decentralized structure could lead to a "loose ship," as the team and project leaders have high levels of responsibility for achieving results but little real authority over their team members. A resulting lack of control can lead to finger-pointing when things go awry, which can hinder productivity, according to the Practical Management website

TYPES OF COMPANIES:HORIZONTAL INTEGRATION

A vertical organization typically consists of a president or chief executive officer at the top and a series of vice presidents who oversee specific functional areas such as marketing, finance and manufacturing. As you move down the chain in each functional area, the level of authority and responsibility decreases accordingly.Some advantages include; Vertical organizations provide clear lines of authority and a tight span of control, which can lead to high operating efficiency. In general, the organization is comprised of relatively small departments, allowing managers to closely monitor and control the activities of their subordinates.However, some disadvantages are;Employees at the bottom of a vertical structure may feel less valued than those higher up in the chain. Some employees may not relish the accompanying culture of politics, which places heavy emphasis on pleasing the boss.

TYPES OF COMPANIES: VERTICAL INTEGRATION

Cross media marketing is a form of cross-promotion in which promotional companies commit to surpassing the traditional advertisements and decide to include extra appeals to their offered products. The material can be communicated by any mass media such as e-mails, letters, web pages, or other recruiting sources. This method can be extremely successful for publishers because the marketing increases the ad’s profit from a single advertiser. Furthermore, this tactic generates a good liaison between the advertiser and the publisher, which also boosts the profits. Advantages include;An advantage would be that they would receive a wider distribution, for example when Channel 4 & Bauer media joined together, all the fans of Bauer media and channel 4, would have joined together in this new platform. A wider distribution means a higher overall profit.Also, disadvantages include;•A disadvantage is that sometimes when a conglomerate becomes so big and powerful they are forced to split up by the government. An example of this is Microsoft.

CROSS MEDIA DIVERGENCE

The interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects.Some advantages include;Increase profit of each separate medium.Enhances the company’s image.Can reach shrinking audiences with diverse tastes.Influence public opinion.Also, some disadvantages include;Easier in theory than in practice. Different companies may have different ideas.Smaller companies who only specialise in one medium struggle to compete.Leads to uneven distribution to power (oligopolies).

SYNERGY

If looking at the film industry compare the American and UK industry. Explain what types of companies they are (horizontal or vertical) Explain the benefits / weaknesses of this

If looking at the music industry look at companies from the “big three” to an independent as well as subsidiaries.

Look at who is involved and how it is structuredThis site might help… http://

www.planetoftunes.com/industry/industry_structure.htm

Aim to do 500 words

DESCRIBE THE STRUCTURE AND OF OWNERSHIP OF EITHER THE FILM INDUSTRY

OR MUSIC INDUSTRY