This document provides information about the structure and ownership of the media sector. It defines different types of ownership like private, public service broadcasting, multinationals, and independents. It also discusses challenges faced by independent and multinational media companies. Cross media ownership and diversification are explained. Disney's structure is shown as an example. Mergers, takeovers and cross media regulation are also summarized.

1. BTEC ExtendedDiplomainCreativeMediaProduction
Unit 7: Understanding the Creative
Media 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.

2. BTEC ExtendedDiplomainCreativeMediaProduction
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 Private companyisa companythat isownedbythe publicor
shareholdersandisnotcontrolledbythe government.Itisfundedfromthe general public
revenues.Private companiesare alwaystryingtomake ethbestpossibleproductstheycan.
Sometimestryingtogeta productadvertisedmaybe atahigherprioritythanthe product
actuallybeingworkingandthe publicinterestmaynotbe as importantas itshouldbe.
Public service broadcasting is… Publicservice broadcasterwiththe mediaisasetof
companiesthatare not purelyforcommercial gain.These canbe state ownedor commercially
owned.Anexample,of astate ownedbroadcasterisBBC. Commerciallyownedmeansthey
make moneythroughsellingadvertisingspace andproductplacement.Chanel 4isan example
of publicservice 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:

3. BTEC ExtendedDiplomainCreativeMediaProduction
Fox news channel,
20th century fox,
Sky.
Voluntary or not for profitorganisations 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?

4. BTEC ExtendedDiplomainCreativeMediaProduction
This 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 profits
Increase in market share
Greater public/societal influence
Institutional synergies (companies you own working together and not having to
hire outside companies)
Complete control over production, distribution and exhibition
Greater synergies between owned companies
Increased profits
Disadvantages-
Can have too much economic and politic influence
Reduced choice for audience
Reduced competition in market
The 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

5. BTEC ExtendedDiplomainCreativeMediaProduction
presented)
Use the following table to show how the Disney Company is structured.
Production Pixar Marvel Walt Disney
studios
Distributio
n
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.

6. BTEC ExtendedDiplomainCreativeMediaProduction
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
their 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.

7. BTEC ExtendedDiplomainCreativeMediaProduction
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
with 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.

8. BTEC ExtendedDiplomainCreativeMediaProduction
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
have 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?

9. BTEC ExtendedDiplomainCreativeMediaProduction
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.