The document discusses different types of media ownership including private ownership like Virgin Media, public service broadcasting like the BBC, multinational companies like Rockstar that operate globally, and independent companies like Cactus TV. It also examines challenges faced by independent and multinational media companies. Cross media ownership, diversification, horizontal integration like Disney and Pixar merging, and vertical integration like Disney Production and Distribution are defined. The advantages of different integration structures are outlined, and Disney's vertical structure is mapped in a table.

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Unit 7: Understanding the Creative
Media Sector
Learning outcome 1:
Understand the structure and ownership
of the media sector
Name: Chris Bailey

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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 that is not owned by the government or funded
by the public. For example Virgin Media is a privately owned company that
covers many genres of media, including television. The private companies make
profits from selling advertising space, monthly subscriptions and the TV boxes /
installation.
Public service broadcasting is when a company broadcasts media such as
television or radio to the public. These companies are owned by the
state/government and aren’t purely for financial gain, as most of the profits go
directly back into making the media. For example BBC is a public service
broadcaster. They make their money from TV license payments that are then put
into the websites, television and radio. Because the TV licenses are paid for, the
BBC does not show adverts on their channels as that is purely for financial gain.
Multinationals are large companies that operate across the globe. Examples of
these companies are those such as Rockstar, which have studios all over the
world. These corporations and companies are based around the globe for many
reasons, for example, to avoid certain tax payments, to understand the
demographics of certain locations, or to be in direct contact with state
governments.
Independents are radio, television and internet media hubs that have no
interference from the government or external parties. This means all the released
media will not be corrupted by other sources. Independents are not owned by
large corporations or powerful organisations. An example of an independent
media hub is Cactus TV. “CACTUS TV IS A DYNAMIC, CREATIVE AND
HIGHLY SUCCESSFUL INDEPENDENT TV PRODUCTION COMPANY
SPECIALISING IN POPULAR ENTERTAINMENT”.
(http://www.cactustv.co.uk/). Cactus tv have made shows such as bbc’s
majorly popular live cooking show ‘Saturday kitchen’.
Conglomerates are large organisations, usually a combination of 2 or more
corporations engaged in entirely different business that fall under the same
group. An example of a Conglomerate is BAE Systems, a British Conglomerate
that specialises in military defence.

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BAE Systems has ties internationally, including Australia, India, Saudi Arabia and
America. Making it the second biggest defence contractor in the world.
Voluntary or not for profit organisations are organisations that are usually non
profitable. The employees are sometimes voluntary although most are usually
paid. These organisations usually put any profits straight back into the work they
do, similar to, for example a charity, or youth club. The NPOs (Non Profit
Organisations) can also be based online. Such as WikiLeaks, an organisation
that releases mostly news media, textual and imagery that usually would not be
released from conventional media organisations. As described by themselves as
“WikiLeaks is a not-for-profit media organisation. Our goal is to bring important news and
information to the public. We provide an innovative, secure and anonymous way for sources
to leak information to our journalists”. (http://wikileaks.org/About.html). The popularity of
WikiLeaks spawned from the obvious bias of other media companies now owned
by huge conglomerates.
What are some of the challenges faced by independent media companies?
Independent media companies can face many challenges in the shadow of rich
and powerful conglomerates. Independent media companies can easily be
bought over by bigger companies or merged with others, erasing all the
individuality that they stood for. Independent media companies can also be
forced out of business, like any other independent sources of trade. This is
caused by larger companies making all of the money and stealing business,
financially crushing the independents and eventually pushing them into debt and
closure. An example of the pressure on independent media companies has been
in recent news, the closure attempts on Dozhd or "Rain" in Russia by the
Kremlin. Rain is an independent media hub that operated on Russian cable
television and online, that was launched in 2010 and quickly became one of
Russia’s most popular information sources, thanks to the strong demand for un-
biased information by the Russian people. The Kremlin then banned Rain from
the cable channels, causing a loss of almost 90% of its audience. “Tax and
labour inspectors came. The owner of our building suddenly declared he no
longer wanted to extend our lease. But the most important thing was that Rain
lost its advertisers: several left because our audience had collapsed”
(http://www.theguardian.com/commentisfree/2014/apr/10/putin-war-dozhd-
russias-last-independent-tv-channel). This shows the pressure that controlling
governments can place on independent media companies in an attempt to stamp
them out.
What are some of the challenges faced by multinational media companies?
Multinational companies can face a variety of challenges that can occur due to
different corporate rights and government policies in different territories. For
example, the UK has a very open allowance on game content, as long as it

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follows the age rating regulations. Where as in Australia, there are very strict laws
on game content, often ending up with the creators having to remove certain cut
scenes or even reducing the graphic explicates in the games. The news recently
tells us of the hit video game ‘Grand Theft Auto V’ by ‘Rockstar’ being banned in
2 of Australia’s biggest chain stores due to violent content- “Two Australian retail
chains have removed video game Grand Theft Auto V from sale in its stores,
following complaints about the depiction of violence towards women.”
(http://www.bbc.co.uk/news/technology-30328314). This is something that is
hugely unlikely to happen in the UK or America, as we have become almost
numb to the violence in many popular games.
What is cross media ownership?
Cross media ownership is when one organisation owns multiple media sources
such as TV, Newspaper and Webpages. This is convenient for companies as it
allows their target market to broaden by spreading media in different sources,
such as the younger generation online, and the elderly in newspapers. An
example of cross media ownership is Discovery Communication, they have
media on all platforms, print, online, and television.
What is diversification?
Diversification is when a company branches out into many different forms of
trade, whether that be production, media, transport, sport or anything else. Virgin
media are known for their huge diversification, from cosmetics to space travel
and soft drinks to social networking sites. There are many plus sides to
diversification, but some downsides too. For example, the company has many
different products to be recognised by, and many different people from different
audiences. This means much more profits due to such a wide target audience.
The downside? So much diversification means things will eventually go wrong
with a product or idea, such as if people have a bad experience on Virgin trains,
they may not want to use Virgin air travel, or even Virgin media TV.
What is horizontal integration?
Horizontal integration is where two companies on the same level merge or take
each other over, for example if Ford merged with Toyota. These two companies
are both producing cars at similar price ranges, with similar capabilities and
similar market popularity. A real example of horizontal integration in media is the
merging of Walt Disney and Pixar, to make ‘Disney Pixar’.
What is vertical integration?
Vertical integration is when a company merges or takes over a company that is
on a different level to it, such as Disney production – Walt Disney Pictures and
Disney Distribution – Disney Studios Motion Pictures.

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What are some of the advantages of these different ways of structuring a
company?
Vertical integration allows a focus on the top of the business structure. It also
allows for the top of the structure to have power and authority over the business
sectors below it. This gives a much more stable structure with clear set
responsibilities functions. It also gives employees the opportunity to climb the
career ladder and strive to reach the top. The disadvantages of vertical
integration include employees at the bottom feeling less valued by the large
organisation they work for, it can also take a lot of time for information to reach
the lower links of the chain, as there is never direct contact from the top of the
chain to the bottom.
Horizontal integration allows for much more team work and cooperation between
sectors of the organisation. Cross function teams give sectors much more
freedom and power to have a say in the way things are run and done. It also
means that there is a much better perspective of progress from horizontal
integration as it will be clear to the employees what difference they are making.
With management lacking the centralised source of governing in the company,
the sectors can become lost as to what their individual responsibilities must be.
Some tasks may leak into other sectors as there are not many enforced task
borders, often due to the cross functioning.
Use the following table to show how the Disney Company is structured.
Production Walt Disney
Studios
Pixar Marvel Studios
Distribution Walt Disney
Motion Pictures
Hollywood
Pictures
Marvel
Entertainment
Screening Walt Disney
Studios Home
Entertainment
Buena Vista
Home
Entertainment
Marvel
Television
What different ways can ownership be shared out?
Ownership in the UK has rules in place to restrict how much a company can own,
as too much ownership by one company can cause a lot of concern in the public
eye, and in the governments eyes. This is due to the worry of one man, or
woman, at the top, controlling everything that is released to their own biased
opinion. Although certain media sources are allowed an opinion, the amount of
media they own is regulated by the government policies. A common way of
having multiple ownerships is shareholding, companies are usually funded by the
shareholders that invest money into a company in return for split profits, the more
shares the person owns, the more they will get in return, if the company has the
turnover they hope for, although shareholding is a very risky and technical
business to be in. Shareholding provides a large span of ownership, giving many
different people of different views a say in how the company is run, as they are

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the ones funding and partially owning it.
What is a merger? Why would companies merge together?
A merger is where 2 companies merge to make one, this is usually based on
creating a higher financial gain and profits. Companies that will be useful together
are usually the ones that merge, such as a production company and a distribution
company, as they can work together which also reduces spending costs. Such as
Walt Disney, that merged with marvel in 2009.
What is a takeover? Why do companies take each other over?
A takeover is when one larger more profitable company takes over a smaller, less
profitable company. For example, Walt Disney took over Pixar in 2006.
Companies take over each other for all sorts of reasons, such as injecting money
into failing companies that they believe they can make big, or if they take over a
rival they can capture not only the riches but the company popularity and
consumer trust of the competitor.
What is cross media regulation?
Cross media regulation was last updated in 2009, the regulatory policy states that
no company can own more than 50% of local newspapers in a regional market, a
radio station, and the ITV license for the area. This regulation is in place to stop
individual companies having too much power over the media.
Should we have restrictions on the amount of media outlets people can
own?
I believe there should be restrictions on the amount of media outlets people own.
I think this because there is the danger of one media company distributing bias
media to the public on all varieties of media outlets, like some kind of privatised
dictatorship of knowledge. I believe that if one media company was constantly
distributing bias media, the typical citizen with few political views would easily
begin to believe what they see/read/hear. We live in a country where only a small
number of people are interested in politics, even fewer know and understand the
details, and everyone else with no stern view upon them could be easily swayed,
in my opinion.
We also live in a world where conglomerates are constantly taking on smaller
companies, like helium to a balloon, each company makes them that little bit
bigger, and fly a little bit higher, making them more and more untouchable. This
cycle will eventually lead to one undefeatable conglomerate that 95% of people
will be oblivious to owning every media sector on the planet.

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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 media”
“Virgin Media Inc. is a company which provides fixed and mobile telephone, television and
broadband internet services to businesses and consumers in the United Kingdom.”
“Virgin media” makes income from a variety of streams, although they have
created a way of taking it all from one place using bundle deals available to the
public. These bundle deals include telephone, broadband, and television. “Big
Bundles, big value, big choice!” Is the motto for the bundles, really shouting
about the available offers. All the available options in the bundles are available
separate, as well as mobile contracts and sim deals as another way for “Virgin
media” to create income. “Virgin media” also host events throughout the year, such
as music festivals to promote current and upcoming music stars. “Virgin media”
uses a “laid back” and “personal” approach to the consumers, in order to appear
less like a Multi-Billion Pound Company focused purely on making money and
more like the relaxed British company it was in the beginning. This approach
makes customers a lot more comfortable, as other companies don’t always
appear as customer focused.
What is product diversity? How diverse is your company’s product range?
Product diversity is the differences between product types that a company’s
range includes. For example, “Virgin media” have a large product range, but the
diversity is not very broad. As telephone, internet, and TV all fall under the same
category of electrical household utilities.
What advantages does this give your company in the market place?
This gives “Virgin media” the ability to focus purely on one category, and to
perfect it. It allows them to create the insanely popular and irresistible bundle
deals like no other provider. Focusing on one entire category that they can
dominate is essential to staying at the top of the ladder, if something is unrelated
to the company’s focus, then it should be left to someone who can focus on it.
Richard Branson, the owner of Virgin media practically said it himself about
Virgins attempt at “Virgin Cola”, “"That business taught me not to underestimate
the power of the world's leading soft drink makers. I'll never again make the mistake
of thinking that all large, dominant companies are sleepy!" He admits that some
companies are better at their focus, and can’t be overpowered just because they are huge in

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a completely unrelated sector of sales business.
Why is the profitability of a product range so important to a company?
“Virgin media” has a similar product range as similar companies such as Sky,
making the competition a lot harsher. This means the product range has to be
very profitable, and if something is costing more to run than it is making, then it
should be shut or replaced with something that works. A product has to be
profitable in order to keep a stream of income to the company, if it isn’t profitable
then it will bankrupt the company.
What advantages or disadvantages are there in making big budget,
mainstream products?
Big budget mainstream products are great to make as it is an almost fool-proof
method to a good stream of income, this is due to the consumer wanting a
mainstream product and going to any provider to get it at the best value. The
disadvantages to this is the fact that there is a lot of competition, when a lot of
people want a product, a lot of companies will sell the product, as they are
confident it will be a success, this means that the companies will have to fight to
have the lowest prices and best value for money, which is terrible financially for
the company, but great for the consumer.
What are some of the objectives of your chosen company?
“Virgin media” aims to give the consumer the best value deals, usually in the
form of bundles. The company’s house style attitude is the personal humanised
approach, to make the consumer feel like they matter and like they are dealing
with a human, not a web interface. “Our big goal is to help people lead sustainable digital
lifestyles. This means ensuring that we meet our needs now without denying future generations
the ability to meet theirs. To make this happen, we've prioritised the need to create a digital future
where good things happen.”- Virgin Media.” This quote explains that “Virgin media” want
to create and innovate to make today great, and tomorrow even greater.
What are the advantages/disadvantages of taking part in a media
franchise?
Media franchises are an excellent way of spreading the knowledge of a company
between different markets and audiences. For example, Virgin, that own “Virgin
media” have a huge variety of franchises. This means that people wanting good
value broadband, and people wanting a good value train service, can all look to
the same brand name “Virgin” and become grateful of its service. It also means
that the customers will look to the brand name for other services, or have faith in
its services when they see advertisements for the brands other franchises. The
downside to multiple franchises is if a customer has a bad experience with one

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product such as Virgin Travel, then they are likely not to use the brand again at
all.
What, if any, products does your company license?
“Virgin media” do not have any product license agreements for merchandise.
Other than the T-shirts sold at the Virgin Festival, this is because the virgin media
products are not really merchandisable, as people aren’t interested in broadband
bobble heads or landline key rings. Many companies do have merchandisable
products, such as Marvel and Disney, these companies focus on movies and
characters, which people love replicas of in the form of small plastic toys usually.
These toys can be collectibles, or mass produced such as the toys that come
with fast food meals such as McDonalds or Burger King.
Who is in competition with your company? How successful is your
company in comparison?
BT and BSKYB are the main rivals of “Virgin media”. They sell the same products
and for very competitive prices. BT and Sky do not support mobile plans, but the
mobile side of Virgin media is the least popular of its services, as there are much
more competitive offers from other providers such as o2. Virgins best broadband
speed is exactly double that of BSKYBs fasted speeds, as reported on the
website. This is an excellent way of competing with BSKYB as it is written proof
that “Virgin media” is faster. BT has the exact same 76mb higest download
speed as BSKYB, again, half of the “Virgin media” top download speed.
BSKYB and BT and “Virgin media” are all aiming at the exact same market and
audience, although BT appears to make an effort to target students and to relate
to students in their advertisements. But the entire spectrum of the telephone,
internet and television are all aimed at the same type of person, the average
home owner.

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Who are your customers?
The customers of “Virgin media” are most likely home owners and household bill
payers. This is because the product is a monthly paid house utility, meaning the
person needs house, or apartment, and to pay the monthly bills. The
demographics of the customers will vary largely, as everyone that has a home
will probably have these utilities.
Which global media trends are affecting your company right now?
Mobile phone deal prices are falling at a rate that is great for the consumer, but
not so good for companies like “Virgin media” that are already struggling in the
mobile area. This is due to people becoming so dependent on mobiles and
mobile data, over broadband and landline. This is allowing companies to inject
more money into their mobile market in order to give the consumer better deals
and to compete with other companies experiencing the same transition to mobile
reliance.