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Task 1 Getting to Grips with

the Industry
Ownership and Funding
Rhys Painter
Through this I will be analysing various Case Studies to investigate Ownership and Funding in the
media. A few of the companies which I have chosen to research on are BBC, ITV and Walt Disney.
TV and Film industry is a list which shows a vast amount of companies which are operated
differently and are also funded in a different way. When it comes to the most important aspects
in the media industry Ownership and Funding are them. Ownership is really important as it
shows who is in control and owns companies and or groups in the media industries. Ownership is
made up of; public serve, commercial; private; corporate; independent companies; global
companies; or companies which are vertical and horizontal integrated and finally, monopoly.
Media Conglomerates:
- This is a media group or media institution that owns a mass
number of companies in various mass media, for instance,
television, radio, publishing, movies, and the internet. This
could be for example, Disney, News Corporation and Time
Warner.

Synergy:
- Is when the interaction of two or more forces working
together creates a greater effect than their original
individual effects.

Media Synergy:
- In which elements of a media conglomerate work together
to promote linked products across different media.
- An Example of Media synergy would be: That Disneys Hit
High School Musical promotes the DVD which promotes the
soundtrack therefore promoting the advent calendar which
then promotes the doll which also promoted the sequel
which promotes the Disney store then last promotes the
film.
BBFC, Ofcom (TV and Film regulations):

Changes over the last two decades:


- Developments in technology
- Changes in governing legislation and working practises
- Increase in the range of services and service providers
- Greater range and diversity of content
- Still have dominant terrestrial channels but audiences have more choice
- Content is more inclusive as a result

The film industry has gone through a range of technological, financial, commercial and aesthetic changes which have seen the
British film industry go through a relatively strong period of growth and development in the first few years of the 21 st Century.
Public Service Broadcasting:
- In the UK the term (Public Service Broadcasting) refers to
broadcasting which is intended for the public benefit rather than
purely commercial concerns.
A few media companies are bought by national, regional or local
government their overall objective is public service. Public broadcasters
receive funding from different areas including license charges,
individual contributions, public financing.
Their primary job is to inform,Bringing
educate and
arts to entertain
Teaching the which plays
Informing and an
the working population in diverting unpaid
advantage to the audience. class school female labour in
the home
Early principles: Covering nation- Addressing
building events religious
such as sport and differences
news
Victorian corporations often had monopolies
over their particular sector. Based on this model,
the BBC initially had a monopoly over
broadcasting in the UK.

Lord Reith - first Director General of the BBC


(1927 - 38) said:
TV should not give people what they want but
what they ought to have.

The DUOPOLY:
- The era of two (a duopoly) competing
broadcasters, ITV and the BBC, is referred to by a
manly as a Golden Age of broadcasting in the
UK. The two institutions had full control over the
programmes as they produced them in-house.
General Director in BBC: Lord Reith
John Reith (1889-1971) was the founder of
the BBC in his time. When the company was
set up as the British Broadcasting Company in
1922 he was its first general manager. He was
also its first director general when it became
a public corporation in 1927.
- He created both templates for when the
public service broadcasting in Britain and the
arms-length public corporations that were to
follow, especially after World War Two.
The British Broadcasting Company (The BBC)
- BBC was part-share owned by a group of members
who were from the wireless industries. Plus British
Thomson-Houston, General Electric, Marconi and
Metropolitan-Vickers. At it may show, Reith had
been in fortune and favoured by the company
being taken into public ownership, as he felt that
even though the boards under which he had
served, permitting him a high level of latitude on all
matters, every single future members may do as
such. Albeit opposed by a few, including individuals
from the Government, the BBC turned into a
corporation in 1927. Reith was knighted that year.
Due to Reiths autocratic attitude turned into things of BBC
legend. Through the duration of his life, Reith stayed
persuaded that the approach was the most ideal to run an
organisation. Director-General Greg Dyke was later profiling
Reith in 2007, noticed a term which was recently added to the
dictionary to signify the style of management, especially with
the connection to broadcasting.
Reith summarised the BBCs motivation in three simple words;
- Inform
- Educate
- Entertain
This hasnt changed.
It has additionally been used by broadcasters throughout the
world. One which I noticed in the USA (PBA) Public
Broadcasting Service.
The 2003 communication act required public service
broadcasters to obtain at least 25% of its content from
independent production companies (currently 39% o the
BBCs texts are produced outside of the institution by
indies.

The act also allowed foreign ownership of UK networks and


conglomeration (large networks integrating or joining forces
e.g. one large ITV region instead of individual franchises).

The number of channels has increased drastically. Many


institutions now have a family of channels.

More content is now produced using fewer resources e.g. a


journalist may photograph, shoot, write, edit and distribute
his own material thanks to advances in technology.
Private Companies
Private companies are generally companies in which are either
owned by a non-governmental organisation or by a relatively
small number of shareholders or even company members in
which do not offer or trade within its company stock (shares) to
the general public on the stock market exchanges, but rather
with the companys stock is offered, owned and traded or
exchanged privately. (Google)
Although there is no relevance
to TV and Film McDonalds is
Private companies are seen to be quite similar as independent known to be one of the top 10
companies. The only obvious different is that with the private well known private companies
companies they are able to choose their shareholders. However and they are doing well for
with a private company they dont need to be able to meet the themselves.
strict exchange with commission requirements that the public
companies would have to adhere to, like having to offer a certain
percentage of their given income to the government.
Independent Companies
With independent companies, they work on their own which means
that they are able to make their own decisions on their own and are
generally free of the influence of the government or corporate
interests. Independent companies are seen and are generally different
to subsidiaries as Independent companies are not owned by any
conglomerate. A potential advantage of running an independent
company would generally be that all of the money in which the
company is making would be its own profit rather than being shared
with other companies. However, a potential disadvantage with a
media company would be that they are often seen as being difficult to
survive against its competition with larger companies in which are
owned by conglomerates as they are known more to the market,
which would reduce their source of income resulting in bankruptcy.

Although if an independent media company were to be successful


they could potentially be bought by larger conglomerates meaning
the independent company and the people behind it could receive a
mass amount of profit. An example for this could be SO Television
which was actually bought by ITV.
Public Service Broadcasting
With some media companies they are owned by national,
regional or local government and their overall primary goal is
public service. Public broadcasters tend to receive the majority
of their funding from diverse sources which would includes
things like; license fees, individual contributions and public
financing. A key example of public service broadcasting would be
the conglomerate, the BBC (British Broadcasting Corporation).
The reason behind it being called public service would primarily
be be due to it being funded by the public through license fee
and also it is there to then serve the publics interest. Their main
job is to generally be able to inform, educate as well as entertain
which would overall be the benefit for the audience, and among
other companies I feel they would share the same saying but
perhaps in a different way or even have their own saying.
Commercial Institutions:
Commercial companies are generally funded just from commercials
and they are following normal accepted business practices and
operate in the effort to be able to make a profit.
- They are not financial institutions.
- Their requirements are; capital, labour and material resources
- (Google)
License Fee Funding
The license fee is generally paid by all households within the UK that
are receiving television, the annual cost for a license fee with colour
would be around 145.50 as of the 1st of April it has stayed at that
price until the current time of 2017. With a black and white TV
license it is currently sitting at 49. The majority of the BBCs
funding is generally from the license fee which again is paid by all
UK households.

Another type of funding is advertising which actually applies to


television and it is basically when products which are branded are
paid by the television commercials. For example with a Virgin advert
which was paid to be put up during the X-factor programmes
interventions. Media conglomerate such as the channel 4 as well as
commercial companies are funded by their advertising as well as
their sponsorships. With most advertising companies they would
pay media conglomerates to then have their branded product put
onto different channels to then be able to receive the publicity in
the effort of gaining more consumers for their products. In terms of
advert costs this would overally depend on the channel you would
be using for example channel 4, channel 5 or even ITV etc. However,
within my next slide I will talking about Sponsorship, this tends to
be used as another form of funding by larger conglomerates.
Subscription

With subscription, this refers to the subscription-based


television services or even agreeing to be able to make
an advance payment in the effort to be able to receive
or participate within a TV program is called subscription
funding. Subscription payments are usually paid
annually, weekly and or even monthly basis which
would be done through satellite or cable viewers which
would be for example Sky (BSKYB) or even Virgin Media.
Subscription television consists of Pay television,
premium television, or premium channels. With these
subscriptions you are able to gather extra money from
the audiences, however different subscriptions tend to
come with different benefits.
Sponsorship
Sponsorship, this is where companies are
paying for their logos/ brands to then be
put on before and after a commercial for
example with X-Factor they would
sponsor Talk Talk the telephone
company. Another example of
sponsorship funding is that vigin media
had signed a 20 million deal which was
to promote their services using the
Olympic as a theme which they intended
to use the sponsorship package to then
promote the range of services in which it
offered.
Pay per view
Pay Per View, this provides a service by which a TV audience would be
able to purchase events to be able to view via private telecast. The
broadcaster would then show the event at the same time to everyone
ordering it, opposed to video-on-demand systems, which actually allow
their viewers to be able to see recorded broadcasts at any time. With
examples, Sky sports use this for important sporting events, which offers
a huge service where a television audience would be able to purchase
certain events to then be able to view via a private telecast which
wouldnt be shown for free.

This function is generally used for the fact that the audiences would be
able to pay for private broadcastings which would be viewed so that it
wouldnt be shown on normal TV. This is accomplished by using on
screen guides for example, using the red buttons on SKY or even calling
up the service provider. This tends to be used for programmes such as
sporting events like huge boxing matches. Another example for where
pay per view would be used is on blink box which is an online TV where
you are able to purchase movies or even your favourite TV series.
Product Placement
Product Placement is used as a form of advertisement, when branding goods and or services and placed into context
which usually devoid ads, such as movies, music videos, the story line of the television show or even news
programmes. Product placement generally wouldnt be disclosed at any time in which the good or service would be
featured. It is generally a key aspect which is in funding within the TV and film industry as it is a form of self-
advertising. With product placement this is used to get brands more popular in the sense of the audience, by putting
particular brands into movies/ TV programmes it dramatically increases the chances of the target audience awareness
for the particular product. An example for this perhaps could be a fashion company which may pay for famour
celebrities to wear their clothes during a certain programme, this would generally be used for commercial interests.
This would inevitably lead to the product getting a higher rate in terms of publicity and potentially draw in different
commericla interests within other sectors. It would also benefit the media company as it would receive extra funding
to then allow the product to be shown within something even bigger for something like a Programme or even a Movie.
With big companies with brands such as Apple and Pepsi they would and could promote their brand through TV and
Film.
Product Placement
Within the film industries, filming is expensive with a UK film
costing around 3 million to be able to produce a film it is
considered as being a low budget. Funding generally comes
from distributors who tend to buy the rights for the film
before they begin producing. Alternatively private investors
would hope to have a share within any of the profits in which
would be gathered from the finished products selling's.
Another form of funding would potentially be through the
Development funds for example with the UK film council
which is a non-departmental public body which was set up in
2000 by the Labour Government in the effort to be able to
develop and promote the film industry itself within the UK. If
a film were to be made by a major studio, as with the 20th
Century Fox for example a film like Avatar which was
introduced to the public in 2009, then the studio would
resort to them funding it themselves.
Horizontal integration:
This occurs when one company buys a similar company. For example a TV station buys another TV
station. This happens commonly through mergers and buyouts. An example of Horizontal integration
would be Zodiak Media (UK) they own several smaller production companies across different genres.
Potential advantages of horizontal integration could potentially be that costs can be shares
production, expertise and management. Another advantage could be that the production could
potentially done in bulk and that the profits could be larger.

However, when looking at the disadvantages of horizontal integration this could potentially be that
one company could potentially swallow another one, with loss of jobs and features. Companies which
operate the same way, according to the same rules, so scope for individuality is lost which would be
very important for local news. Market share might leave no room for competitors and then result in a
monopoly or antitrust situation.
Vertical Integration:
- This involves a company taking over a company which provides
different stages of the production process. Therefore a record
company might buy a chain of CD retail stores or a movie studio
might buy cinemas.

Advantages of this would be:


- Improved co-ordination of all activities
- Profit margins are cut, so cheaper supplies
- Sources can be specialised and exclusive
- Better access to direct distribution, with no fear of competition

Disadvantages of this would be:


- Decreased flexibility - stuck with one supplier and one
distributor
- Lower efficiency as competition stimulus is removed.
Ownership

Now focusing more towards Ownership I feel there are many different media
conglomerates around the world who own smaller companies and or corporations
which are also called subsidiaries. Conglomerates are large corporations which have
multiple media interests. Media conglomerates work towards policies regarding their
control of the mass markets across the globe. They merge with other companies, this
allows them to gain a form of synergy between them. For example Disney owns
Entertainment and Sports Programming Network (ESPN) and American Broadcasting
Company (ABC). Media conglomerates arent just interested in one aspect of Film
and TV, there are also other conglomerates such as ITV and BBC.
Synergy and Cross Media Convergence:

- Vivendi Universal make a film in Universal Studios.


- It releases the films soundtrack on polygram, one of its record labels.
- The tracks can be bought only at MP3.com, one of its internet companies.
- The film can be downloaded on Vivendi Telecom phones.
- The film is then shown in its Odeon cinema chain.
Owning all of these assets makes it cheaper for the producer to make, distribute,
market and exhibit the film, this maximising profit, enabling the studio to keep
making big budget films. This is an overall, win-win scenario for Hollywood Studios.

Cross media convergence:


- The combining of two or more mediums.
- Different mediums are TV/ film/ computer graphics/ radio and website etc.
- Media convergence in the film industry can happen in production, distribution or
exhibition.
- This happens when the music industry comes together with the film industry. For
example when Adele releases the new single for the move Skyfall.

Technology convergence:
- Technological convergence is the process by which existing technologies merge into
new forms that bring together different types of media and applications.
Film and New Technology
- Home Cinemas
- Films on the move
- IMAX 30
- The list goes on.
Advances in new media technology have made it possible for anyone to
make films and showcase them on the internet on sites like YouTube. We
can now also watch films on phones, games consoles, digital Demand on
TV. We can also see state of the act SFX on giant screens 3D.

- It is 90% cheaper to distribute digitally, than a reel of film.


- Such as apps like Instagram and Snapchat can make people take photos
and videos.