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: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

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.

BTEC Extended Diploma in Creative Media ProductionProvide 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 Private company is a company that is owned by the public or shareholders and is not controlled by the government. It is funded from the general public revenues. Private companies are always trying to make eth best possible products they can. Sometimes trying to get a product advertised maybe at a higher priority than the product actually being working and the public interest may not be as important as it should be.

Public service broadcasting is… Public service broadcaster with the media is a set of companies that are not purely for commercial gain. These can be state owned or commercially owned. An example, of a state owned broadcaster is BBC. Commercially owned means they make money through selling advertising space and product placement. Chanel 4 is an example of public service broadcasting.

Multinationals are… Multination’s is a large company operating in lots of different companies. They are typically owned by bigger co-operations or they can own smaller businesses. Rockstar games have lots of divisions around the world. There are benefits of operation in lots of countries for understanding different market places and often better tax arrangements so you can take advantage of the tax brackets of different countries and choose to situate your companies in certain countries to avoid high tax bills.

Independents are… Independents are any form of media such as radio, television, newspapers or the Internet. The Huffington post started as an independent new aggregator and blog before bought out by AOL in 2011. Blitz games studios were formed in 1990 originally as interactive studios. They created a range of games by taking random Disney characters and made game out o them. Despite this, they closed in 2013 due to not making enough money.

Conglomerates are… is a combination of two organisations engaged in entirely different businesses that deal less than one corporate group. For instance time warner owns both Warner Bros. Pictures and DC comics, which have come together to make the dark Knight Rises, which is one example of how Conglomerates work. 21st Century Fox is also an example of a conglomerate business. Examples of what 21st century fox own are:Fox news channel,

BTEC Extended Diploma in Creative Media Production 20th century fox,Sky.

Voluntary or not for profit organisations are… they’re main purpose is to generate as much revenue or and give back all the profits back into they’re chosen charity, cause. Hope Central in Malton is a franchise company that provides a food bank for people who struggle with supplying themselves and their families with food. People in need of food can get supplies free of charge at Hope Central. There is a café in the building where people can purchase food and drink and then all there profits will then be given to the food bank.

What are some of the challenges faced by independent media companies?The cost of continually evolving the independent companies technology and research. New laws could be put in place such as you need to pay for a permit to use a flying video drone. Also independent media companies must enrol and make an employer’s contribution for all staff who: are aged between 22 and the State Pension,  age earn at least £10,000 a year, work in the UK.

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

The challenges of multinational media companies is that you have to be confident in knowing and researching your target audience in different countries that you will have businesses in. For example, in 2001 Tesco decided to become a multinational company and set up new supermarkets in America however, they could not compete with the American popular supermarket Walmart. They were forced to sell their businesses in America in 2008.

What is cross media ownership?

BTEC Extended Diploma in Creative Media ProductionThis is when an organisation owns more than one type of media company. For example, a newspaper and a television station.

What is diversification?Diversification is when you run lots of different companies in a variety of areas. Its when a company branches out and has layers spread out in different sectors such as virgin started out as a music distributor and expanded into a record label and then branched out to an airline to a mobile phone provider. By being diversified you can understand what your customers enjoy and see what is successful with your customers.

What is horizontal integration?Organisations that own more than one company at the same level of production.

What is vertical integration?That owns multiple companies on different levels. For instance time Warner owns Warner Bro. Pictures, which are responsible for shooting everything.

What are some of the advantages of these different ways of structuring a company?Advantages-Increased profitsIncrease in market shareGreater public/societal influenceInstitutional synergies (companies you own working together and not having to hire outside companies)Complete control over production, distribution and exhibitionGreater synergies between owned companiesIncreased profits

Disadvantages-Can have too much economic and politic influenceReduced choice for audienceReduced competition in marketThe creation of monopolies and oligopolies (where a company owns/controls the majority of companies working in specific sectors)Reduce media plurality (reduce the diverse range of views and opinions are

BTEC Extended Diploma in Creative Media Productionpresented)

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

Production Pixar Marvel Walt Disney studios

Distribution

Disney media distribution

Marvel television

 Walt Disney home entertainment

Screening Hollywood pictures

Marvel entertainment

Walt Disney motion pixars

What different ways can ownership be shared out?Ownership I shared in a variety of ways. Shareholders can choose to invest money in a company. Companies can own parts of other organisations. Limited ownership rules apply in the UK to control how much of the media people can control.

What is a merger? Why would companies merge together?Mergers and takeovers are similar in that they combine two previously separate organisations. A merger involves both organisations deciding together to merge. This can help cut costs and increase profits. Walt Disney and marvel merged together in 2009 and this can happen to cut costs and improve profits.

What is a takeover? Why do companies take each other over?This is when a bigger company takes over a smaller company. A takeover is typified by the purchase of a smaller company by a much larger one. This can produce the same benefits as a merger, but is not always a mutual decision.

What is cross media regulation? For examples, if a national newspaper group has more than a 20% market share, they are not allowed to run a national or regional radio station. If they keep

BTEC Extended Diploma in Creative Media Productiontheir level of ownership at 20%, then they can do it. This is known as the 20/20 rule.

Should we have restrictions on the amount of media outlets people can own?I think we should have restriction on the amount of media outlets people can own because it restricts what a shareholder can influence or control within the business. This allows more competition throughout the market. By only having 20% market share it lets the company control their business and not let other investors own too much.

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?Virgin is a conglomerate and has many different branches of wear they make their profits. Such as, in the last year virgin Atlantic was one of there best profitable areas with making £2.6bn, virgin holidays with £535m, virgin trains £946m, virgin money UK £299m ect.

What is product diversity? How diverse is your company’s product range?Diversification is a corporate strategy to enter into a new market or industry which the business is not currently in, whilst also creating a new product for that new market. For example, virgin started off as a record company and now has branched off to being an airline, train line, Virgin media, virgin holiday and others. This shows how diverse virgin has become.

What advantages does this give your company in the market place?The advantage of having all these variety of sectors is that they are streaming in profits and making the company more diverse. It helps to promote the company as their clients/audience know virgin and are using virgin for lots of different things. And if the company has all these different sectors they can build up loyal customers as if there clients are using the virgin box for TV and they are happy

BTEC Extended Diploma in Creative Media Productionwith the product they would use virgin again for other sectors such as train line mobile virgin.

Why is the profitability of a product range so important to a company?The profitability of a product range Is important to a company as there are expenses when producing a product for example, transport for the product to the shop where it will be sold. Businesses need to make sure that the profits will be enough to pay there employees and the sales is enough to pay for these overheads such as travel and making enough products to sell.

What advantages or disadvantages are there in making big budget, mainstream products?By having a big budget they can use a lot of the money to promote and advertise their mainstream product. However, if it’s a big investment and it is not as successful as hoped for it will be a big loss.

What are some of the objectives of your chosen company?The main three objectives of virgin are:• Building a low carbon, low waste business, making sure we minimize the impact we have on the environment.• Creating a diverse and inclusive workplace, where everyone feels like a valuable part of the team.• Working with our suppliers to meet our sustainability challenges, think differently and find solutions together.

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

Advantages● For over 20 years consecutively, around 90% of all UK franchisees reported

profitability over the previous 12 months. Failure rates are correspondingly low over the same period.

● You have the opportunity to build your capital as well as your earnings● The major banks are very supportive of good franchising.

Disadvantages● The franchisor will expect a cut of your profit. You will have to still have to pay

them for the privilege of using their name (and support).● If other franchisees did something to damage the reputation of the brand, this

would have a knock on effect on your own business. Potentially this could damage your sales and profits.

What, if any, products does your company license?My company BBFC does not license any sellable things. However, marvel is a good example of a business that licenses their products. Marvel is a franchise and therefore it has licensed their products to be used when given a feasible fee or the use of their products. This allows other people to use certain products that

BTEC Extended Diploma in Creative Media Productionhave a theme from marvel for example, if a chinese company created a thor hammer they would pay marvel the right to use that object marvel created for the and then sell that as their own product. This is a good way marvel can earn more money from their products. Despite, the amount of money will be given from the buyer to marvel it can have knock on effects such as if their complaints of the hammer then some customers may complain about the product to marvel and therefore marvel will receive complaints from the chinese companies faults.

Who is in competition with your company? How successful is your company in comparison?(This gives you lots of scope for a detailed answer. When considering competition, you want to look at companies making the same product for the same type of audience (age, gender and so on), to get the best comparison. Look at the range of products, market presence and so on to help you establish who is leading your market place.) The bbfc has no competition as there is no ther need for someone else to do the job that the bbfc does. The bbfc is a regulatory body who confirms and analysis videos and films. However, marvel has a lot of competition with such organisations as time warner's. Marvel wns disney which is in big competition with warner bros. Disney targets its films such as Frozen, the lion king ect. and merchandise at the younger age around 3-11year olds.Warner bros makes a wide range of films which includes the same target market as disney including the lorax, happy feet ect. This makes this a competitive market.

Who are your customers?The bbfc’s customers are the film industry and the producers of films including time warner, disney, 20th century fox ect. All theses businesses have to use bbfc to rate and evaluate the films to make sure they are appropriate for the age group the producers are wanting to target it at. They also need to make sure they abide the rules and regulations of film and video making.

Which global media trends are affecting your company right now?Youtube and vimeo are trending and very popular during this generation and it is becoming more and more popular. Youtube and vimeo do not need age rating so they are reliable for making sure the media that is own there sites are appropriate.