The Walt Disney Company owns numerous smaller companies across various sectors such as media networks, parks and resorts, studio entertainment, consumer products and interactive media. Disney is a large, horizontally integrated conglomerate that owns companies like Marvel, Pixar, and ABC. It has faced some controversies over hidden messages in films but has remained a popular brand appealing to both children and adults.

1. Media Company Case
Study
Task 1 Understand the structure
and ownership of the media sector
Chloe Kyriacou

2. This is when a companies' ownership is private; they have complete control over legal rights. No
government or public body is involved with them. Since they are private they do not need to meet the
strict securities or exchange filling requirements of public companies. They shares they make to not
need to be issued through a public offering.
Private ownership in the media industry has both it’s positive and negative sides.
Advantages:
∗Due to the competition, private ownership can result in better quality products.
∗The threat of loosing shares to a competitor forces them to put forward their most popular products.
∗The government has no say in what they do.
∗“large media firms achieve efficiencies due to economies of scale.”
Disadvantages:
∗Private ownership means that most media companies value profit over the public interest.
∗When a media company is privately owned they tend to have there own ideology which is the only one
they present to the public; they homogenize popular media.
∗When companies come to face financial problems they will be the ones to suffer the losses.
∗An example of a privately owned company is ITV; it was formed after granada and Carlton- two
independent companies- merged together as one.
Types of ownership: private ownership

3. ∗ Public services provide a ‘service for the public’; in the media industry this is done through
public broadcasting. They are there to meet the needs and demands of the general
population; broadcasting may be national or local. There funding comes from the licensing
we pay or in some very rare cases commercial financing. Here in the UK public broadcasting
is run by a single organization- the BBC. They are the largest public broadcasters in the world;
in 1932 they launches a work service. They are funded by the TV license fees we pay annually;
this means they need to appeal to a diverse mix of cultures and interests. Channel 4 are also
a public service station, however they are commercially funded meaning they don’t have the
same freedom as the BBC nor do they have to provide us a service. Public services may be
ran by a single or multiple organizations- more commonly in other countries.
Types of ownership: public service

4. Types of ownership: independent
In the media industry allot of production companies and record labels are independently owned- this refers privately held
organizations. They are usually one of a kind business that are not part of a chain or larger organizations like some privately
owned companies are. An independent company usually only has one sole owner who can legally not be separated from his
company. Unlike privately owned companies they have no shares in the stock market- the owner is responsible for all it’s
liabilities and profit.
Advantages:
∗The owner of the company is able to start fresh with complete control of the shape the business will take.
∗If the company was previously owned by someone they do not have to follow the legal requirements set by that person.
∗They are able to launch a product or service which protected by trademark or copyright meaning there is the possibility for
them to rule a particular market.
Disadvantages:
∗The is nobody supporting them financially for example if you were to set up an independent production company the money
you need to start up and develop your company can be extensive amounts.
∗Suffering from financial losses and going into debt.
∗When first starting out your business you will be responsible for everything meaning there will be an extensive amount of
work.
In the media industry there are allot of independent companies such as record labels and production companies. Matchlight is
an independent TV production company that was formed in 2009- they specialize in documentaries on history, art and current
affairs. They independently produce TV shows which the BBC, ITV, Channel 4, Channel 5 and many more hen buy off them.

5. In the media industry there are allot of large companies that own other smaller companies within
different sectors such TV, Radio, Film, Music and Publishing. This is known as conglomerate ownership.
A very good example of this is the Walt Disney company- they are the worlds second biggest
conglomerate media company in the world. They own record labels, theme parks, TV networks, studios,
sports networks, cable channels, news channels and publishing companies all across the world.
Advantages:
∗The possibility of growing and developing a company leading to larger profits.
∗If one or two of the smaller companies are doing badly one year, you still have an income coming in
from the others.
∗You don't have to worry about investment risks as much.
∗Creates diversity.
Disadvantages:
∗A smaller company which has been taken over can loose it’s true values.
∗Culture clash between companies.
∗There isn’t always he possibility of development
Types of ownership: conglomerate

6. Horizontal integration is when one company takes over another similar competitive
company. It’s usually most common among conglomerates. Horizontal integration can be
achieve by external or internal expansion through mergers.
Advantages:
∗Increase in market power can be achieved.
∗Reduction in the cost f international trade.
∗Economies of scope- sharing resources.
∗Economies of scale- selling more of a product.
Disadvantages:
∗Concerns on whether anticipated economic gains will materialize.
∗Anti-trust issues may arise between other companies.
∗A business can get to big too quickly causing issues between management.
An example of horizontal integration is when Universal Music Group completed their
acquisition of EMI on September 12th
2012.
Types of Companies:
Horizontal Integration

7. Vertical integration is when a company expands it’s business into other areas that are following the
same production path. Different companies are involved in the development of one product or service.
There are three types of vertical integration;
∗Backward integration- when a company owns an input company
∗Forward Integration- when one company owns the post-production areas of a business (distribution)
∗Balanced integration- a mix of the two f the above
Advantages:
∗Cost defective.
∗More Control.
∗Differentiation.
∗Disadvantages:
∗Lack of supplier competition meaning higher costs due to low efficiencies.
∗Less economies scale- different part of production and distribution are at different stages.
An example of vertical integration is ‘The Big Five’ which included MGM, Warner Brothers, 20th
Century
Fox, Paramount pictures, and RKO. They produce and distribute films whilst also owning movie theatres.
Types of Companies:
Vertical Integration

8. Cross media convergence is they way in which different products are produced and distributed across different
platforms. A lot of the technology we use is moving towards one single platform which delivers a multi media
output- for example a Ps3 is primarily for gaming, however you can download and watch films and music videos
whilst also string Images and catching up on TV shows.
Media convergence can happen in production, distribution or exhibition. An example of this is when the music
and film industry came together to produce the James bond film- in which Adele's hit single ‘Skyfall’ was used in
It.
There's is a chance to make a lot of money in cross media convergence- particularly when two well known
brands, companies or individuals are coming together. It’s also a big advantage for companies, brands or
individuals who are not very well known but move toward a platform that is.
Cross Media convergence

9. This is when two companies come together to produce a product or service such as a film that would have a
greater combined effect than they would individually. An example of this is they synergy between a music artist
and a record label. There is a bigger financial benefit achieved through the combining of the companies; this can
be due to increased revenue, combined talent, cost reduction and better technology.
Companies will work together to promote a linked product across different media platforms- usually the
products will promote each other. For example when ‘Harry Potter and the Philosophers Stone’ was released a
soundtrack was also made. Both products promoted each other- the soundtrack persuaded you to buy the film
and vise versa.
Synergy

10. The diagram is an example of the music industries organisational structure. *Continue to next slide.
Describe the Structure and Ownership of Either The Film, TV,
Gaming or Music Industry

11. The industry itself is made up of numerous organisations, individuals and companies which
will each come into place at one point or another when producing a song. The key to the
entire music industry is the artist- without them it wouldn’t exist. For them to be ‘stars’ they
need a good composer- the better the song the richer the composer will become. The
manager comes in next, they are in charge of controlling and organising the artist. The
manager will represent the artist in dealing with record producers and publishing companies-
without them the artist would have no career. A manager will usually also employ on behalf
of the artist. Production companies are usually ones that try to ‘create’ artist with the help of
managers, musicians and composers- they then try to sell there material to record labels.
However it’s a very tricky business and the artist are usually never picked up with only a
handful ‘making’ it.
Once a composer has written a song they will sign a ‘publishing deal’ which means that they
own all copyrights to the song. The publishing company then licenses the use of these
copyrights to record labels for there artists. When the artist decides they are ready to release
the song, all copies sold of it will generate a ‘mechanical publishing royalty’. The record
company will then give this to the ‘MCPS’ who then pass it onto the publishers. The
publishers job is to ensure that the composer get’s there cut of the money- usually around 15%
of the royalties. Publishers can also license the song’s to film and advertisement makers to
generate a bigger income. Publishers have the right to sue someone if piracy is to take place.
(*CONTINUE TO NEXT SLIDE)

12. The record label are the brand or trademark associated with an artist. They
facilitate an artist and support then in everyway possible, such as with there
recording and financially. They also help manufacture, distribute and promote the
artist and there work. They will usually invest a lot of money into an artist. Like any
business, they only want the best- they want to generate as much income from the
artist as possible. The success of an artist’s song is down to the record company;
they need to get the right exposure on TV, radio and in magazines. Most record
companies will follow the same manufacturing and distributing structure with all
of there artists- if there method isn’t broken, they’re not going to fix it.
Independent companies without access to these structures, often fail to succeed-
they aim to grab the attention of major record companies to help them. To
distribute the song the record label need to acquire a licence of the ‘MCPS’. The
‘MCPS’ job in the music industry is tome oversee the collection and distribution of
CD’s. Retail acts a front line to the entire music industry- without no money would
be made.
The music industry is vertically integrated; the industry is expanded into other
areas that are following the same production path. Different parts of the industry
are involved in the development of the artist and song.

13. Disney originate from the TV and film sector of the media industry,
however years later they now own theme parks, a Disney radio station,
Disney stores selling Disney products, Disney record labels, publishing
companies and numerous other unrelated companies and organisations.
They are behind the creation of some of the world most known movies
such as ‘Snow White’, ‘The Hunchback of Notre dame’ and ‘Hercules’ as
well as kids TV shows.
Disney is the seconds largest conglomerate company in the world; they
a are large company which owns numerous smaller companies and
businesses.’
‘Disney is divided into five major sectors: media networks, parks and
resorts, studio entertainment, consumer products and interactive media.’

14. Ownership
Walt Disney and co-finder Roy O. Disney founded Disney in
1923. Mr Walt Disney acted as president from 1923 right up
until 1945. Since then six different males have followed in his
footsteps and acted as president of the company- one of
which was Mr Roy O. Disney. Currently Robert Iger holds the
president position and has done for fourteen years now.
Robert Iger does not own any other company himself-
although he had a brief stint with Pixar. Disney itself however
owns numerous companies from ‘ABC’ all the way too
‘Marvel’.

15. Whilst Disney is a conglomerate, they are a horizontally
integrated company. They have taken over a number of
smaller competitive business's, organisations and
companies to generate a bigger income and create market
power.
It owns and has share in over one hundred different
companies including ‘Marvel, ‘Pixar’, Cruise lines and TV
networks.

16. Competitors
Disney has four main competitors: ‘Twenty-First Century
Fox, Inc.’, ‘Time Warner Inc., ‘NBC Universal Media, LLC’
and ‘Dreamworks.’ All three of these companies- like
Disney- are conglomerate and horizontally integrated,
together owning over 65% of the TV market.
Disney has the advantage in that it is a household name
known by generations, it’s a trusted brand with a very big
advertising campaign backing it! They’re the only company
to own theme parks and there own channel by the company
name which helps immensely.

17. Audience
Disney is a household name that generally appeals to all ages. However
there main priority is children aged 0-11 and tweens aged 12-14. They
have ninety-five entertainment channels which are distributed in over
thirty languages meaning there reaching a large scale of people in one
hundred and sixty-eight countries. Each week over thirty thousand hours
of programming is distributed.
They are very diverse in that they aim to appeal to all races, ages, sex and
nationality. For example in 2009 Disney XD was launched which is aimed
at young males and pre-teens under 14, Whilst Disney Junior aims to
appeal to children under the age of five.
Disney has a ‘secondary’ audience- 35-55 year olds. These are the people
that most likely have families and have experience Disney first hand as
children.
Disney recently celebrated the fact they were No.1 network for primetime
TV for kids aged 6-11.

18. The only major structure changes Disney has
undergone is in leadership positions- the
changing of presidents, vice president and
board of directors.

19. Disney has had quite a few controversies over the
years in regards to some of the animations and
language in there films. Whilst the issues where
resolved in all cases, they were never proven.
An example of this is, is when Disney were accused of
having ‘hidden sexual innuendo or references hidden in
some of the movies, such as the ‘The little Mermaid’.
Audiences claimed there was a drawing of something
closely resembling a penis on the artwork for the front
cover. The object was later removed on an updated
version of the cover.
Controversies

20. http://csimarket.com/stocks/competitionSEG2.php?code=DIS
http://www.marketwatch.com/investing/stock/dis/financials
http://elitedaily.com/money/the-worlds-10-largest-media-conglomerates/
http://www.studymode.com/essays/The-Walt-Disney-Company-The-Entertainment-200155.html
http://www.nasdaq.com/symbol/dis/ownership-summary
http://thewaltdisneycompany.com/about-disney/leadership/ceo/robert-iger
http://thewaltdisneycompany.com/disney-companies
http://www.disneyabctv.com/division/index_media.shtml
http://www.therichest.com/rich-list/the-biggest/the-10-biggest-disney-controversies/
Bibliography