Industries: Ownership and control

Most media companies are owned by one of five or six massive conglomerates that dominate the media industry.

As GCSE Media students, we need to learn how media companies are bought, sold and controlled.

Notes

Industries: recap

Industries are the producers, the companies that produce (make) and distribute the media product. 

Industries have a strong interest in who their target audience is so that they can best appeal to them. 

Some companies dominate the industry which means they own more of the content and therefore make more money (revenue).

Conglomerate ownership

A conglomerate is a media company that owns lots of smaller media companies. These smaller companies are called subsidiaries. Most of the global media industry is now dominated by a small number of massive conglomerates.

Vertical integration

Vertical integration is when one conglomerate owns different companies in the same chain of production.

For example, Disney owns film studios, CGI specialists, film distributors, TV channels (such as the Disney Channel) and streaming service Disney+. This gives Disney the chance to make money at every stage of production and distribution. Complete ownership = more profit and control.

Horizontal integration

Horizontal integration is when one company buys other companies at the same level of distribution.

For example, Facebook acquired Instagram (at a cost of $1 billion) so that they could cancel out the competition by making money from both. 

Horizontal integration allows companies to widen their audience and find other ways to make money.

Synergy

Synergy is when a company creates a brand that can be used across different media products and platforms. For example, Disney makes movies but then also has related stage shows, theme parks, merchandise, soundtracks and events all linked to the same brand or characters.

Convergence

Technological convergence refers to the fact we can now access all different types of media on one device.

The growth of smartphones has completely changed the relationship between industries and audiences. 

Traditional industries like newspapers are now moving into video or online content and audiences can now create their own user-generated content.

Industries: Ownership and control - blog tasks

Create a new blogpost called Industries: Ownership and Control. Complete the following tasks and reading exercises:  

1) What is a conglomerate in the media industries? 

2) What is a subsidiary?

3) What are the benefits for media companies of vertical integration?

4) What are the benefits for media companies of horizontal integration?

5) Give three examples of media companies or brands that have used synergy to maximise their profits. There are examples in the notes above to help you.

6) What is convergence and what device has changed the relationship between audiences and producers? 

Now read this article about Facebook’s acquisition of Instagram and answer the following questions:

7) Why did Facebook buy Instagram for $1bn? Answer in as much detail as possible

Now read this BBC article on Disney buying 21st Century Fox. 

8) What is the name of the media billionaire who used to own Fox? 

9) List 10 companies that are part of the Disney media empire. The graphic below will help you. 

10) Why did Disney buy Fox - what are the benefits? These benefits are particularly discussed towards the end of the article. 

If you don't finish these questions in the lesson, complete for homework - due date on Google Classroom.

Grade 8/9 extension tasks

Read this Inverse feature on Disney buying Marvel. Why does the article suggest it may not have been good for the movie industry overall?