Ollie Hosier's BTEC Media Blog: Ownership In The Media Industry

Introduction

Ownership in the industry involves many different aspect and vary in differences for many reasons. In this blog post I will be describing and explaining the different aspects involved and will be giving examples to back up what I am saying. Lets get started!...

Public Service Broadcasting (PSB)

In the UK the first media industry that came around was Radio which started off in the 1920's, was very popular and started way before Television came around. In November 1922 a man called John Reith founded the company 'The British Broadcasting Company' also known as the BBC. He was the first Director General of the BBC and he presented a statement of his views on broadcasting. This was presented to the government committee which was set up to base guidelines for the long-term future of broadcasting.

The key points from Reith's memo are that broadcasting should:

Educate, inform and entertain (in that order);
Lead public taste, not pander to it;
Act as a cultural, moral and educative force;
Present the best of human knowledge, endeavor and achievement;
Preserve a high moral tone, avoiding the vulgar and the hurtful;
Bring the nation together 'as one man', by ensuring universal access;
Act as a social cement to create a national identity and an enlightened democracy;
Remain free from commercial and government pressures.

The one thing that BBC didn't want to happen was to be a commercial broadcaster nor did they want funding from the government. So instead of following either of those paths, they created something called the 'Licence Fee' where each household would pay £145.50 (2013 figures) for a colour TV and £49.00 for a black and white TV. This payment would then fund the television, radio and online services for the BBC. One reason why they did not want to be funded by the government was because they didn't want to be a cause for Propaganda. They didn't want the government using the BBC as a way to promote any kind message in those times. Towards 1946 - 1956 the BBC became and 'monopoly'. This was because the BBC was the only kind of media company that ruled radio and television and was its own market.

Commercial Broadcasting

Unlike Public Service Broadcasting, Commercial Broadcasting is set out to sell products. This is done through advertisement and the thing that commercial broadcasting sells is audiences. Commercial Broadcasting base their time around advertisement to make profit. TV channels like ITV, Channel 4 and Channel 5 are funded from the money that adverts make.

ITV was created in 1962 and was regulated around some PSB principles. Besides ITV selling audiences to advertisers so they could gain profit, they had strict regulations to have a certain number of hours of different programmes a day. For example there had to be a variety of religious, educational, and children related shows on and some would be shown around 7 hours a day for one programme. On Sundays religious channels would almost be on all day and this appealed a specific audience.

Channel 4 was created in a very interesting way. It was set up to try and appeal the more niche audiences or audiences that weren't targeted in ITV and to also make innovative programmes. One example that Channel 4 did was Big Brother and was a huge hit to the target audience.The way they funded there channel was by taking money from ITV and in return they could sell advertising space to make sure they make some more money back. It was a kind of subscription fee to ITV. In today's world Channel 4 now fund their own programme by selling their own advertising space.

Corporate Ownership

Corporate Ownership is when a company becomes a sort of entity. If a person created or founded a company and they make it Corporate owned, then they are no longer the owner of that company. So, in conclusion if the company goes down hill for any kind of reason, the original owner is not hugely affected by the damage of the company failing.

Private Ownership

Private ownership is quite simple in its own way. Private ownership companies are non-government owned and but are owned by the original creators. They are also known as independent companies. If it is a media company they may be freelance offering services when needed.

Global Companies

Global companies are companies that operate around the globe and not just around their nation or continent. In the media industry there are 6 big global companies called the 'Big Six'. These companies are:

These 'Big Six' own hundreds of different other companies that are normally TV channels, radio stations, magazine companies etc. Lets take a look at some examples. NEWS CORP own many studios like 20th Century Fox, broadcast TV like Fox Broadcasting Company (US TV Network), satellite TV like British Sky Broadcasting (UK and Ireland), cable TV like FX, music and radio like Fox Studios Australia, magazines companies (UK, US, Ireland, Papua New Guinea, and Australia), and the internet like IGN Entertainment.

As you can see from NEWS CORP the global company it's self owns a lot of other national and international companies and vary over many different formats of the media (from Magazines to the Internet). For the rest of the Big Six the same rules apply but some have fewer companies than others. Here is the FULL LIST.

Vertical Integration

In the film industry for example the simple but in some cases more complicated process for creating and distributing a film is:

Actually shooting the film (Production)
Getting the film recognized through advertisement (Distribution)
Getting the film in the cinemas (Exhibition)

Through this process the Exhibition sector earns the most profit than the Distribution sector or the Production sector. So to solve this problem some production companies buy or create their own distributors and exhibitors and which when a film is released, not profit is lost. This is called Vertical Integration as the three processes of making a film is integrated into one production company. One example would be the WARNER VILLAGE CINEMAS.

Horizontal Integration

In contrast to Vertical Integration, some production companies can make money horizontally. For example If WARNER BROS brought out SONY then money is then made by both production companies. This is called Horizontal Integration. An existing example is Disney and Pixar. If a company buys out all of the other production companies then that is known as a MONOPOLY.

Monopoly

Monopoly have already been explained in previous paragraphs but to summarize an monopoly is the 'exclusive possession or control of the supply or trade in a commodity or service' (Google Dictionary). It is seen as the market itself and has no other sellers. So an example that has already been said is the BBC as back in the early 20th Century the BBC was the only broadcaster in the UK. Also in the previous paragraph about Horizontal Integration if a company owns nearly all other production companies then it is known as an monopoly.

Funding

There are many ways that the media can gain funding and in return gain profit.

The first one is the licence fee. This has already been explained in the BBC paragraph but to summarize it is a fee that a household pays to get BBC service. The money gained from the fee is then used to fund the company.

The next one is the one off purchases. These can be things like going to the cinema, a individual pays one ticket price to see the film once. Freeview Boxes are also a one off purchase as it allows the users to experience a small number of channels through the one off purchase of the box.

Sky have a subscription fee where packages that offer different channels can be purchased by the user of the sky box. The profits then go to the Sky company. Sky also use a Pay Per View system where users can purchase a movie to watch once and then, if wanted, could purchase and watch it again.

Programmes like the X-Factor that is normally seen on ITV use sponsorship to fund their programme and the channel itself. For example the X-Factor used to be sponsored by The Carphone Warehouse.

Advertising on commercial broadcasters like ITV use advertisement between programme breaks to fund the ITV service.

In films like James Bond (007), the main character (Bond) normally wears an Omega Watch on his wrist. This product placement funds the production company as Omega have paid the company to show that product in that film.

Some people sometimes invest in their own films to have full profit returns. This is called Private Capital. One example of an individual that has done this is Megan Ellis.

Crowd Funding is when an individual collects their funds through asking for it from the public. This is done mostly through the internet and can become most effective if done correctly.

The final way that a company can fund for their broadcasters or films is through financial aid and development funds. One example of this is the BFI Lottery Fund, at which a production company in the UK can gain funding for their film from the BFI. This encourages more filmmakers to create professional projects.