Ownership and Funding Blog Post

Ownership Concepts: 

Public Service Broadcasting (PSB) - This refers to broadcasting of both TV and Radio, which is intended as a service for the general public. This has the base value to "inform, educate and entertain" (quoted by the first director general and founder of the BBC, Lord Reith): in that order. As a result of this, they aim to serve the public rather than sell them to commercials.  An example of this is the BBC, who, when were first setting up looked at America's radio, and how it was filled with content that catered for the lowest common denominator i.e cheap entertainment for mass audiences.  They didn't want this to be associated with their television or radio; they wanted it to be morally uplifting, and so, invented the  television license fee so they didn't have to be government or commercially funded. As their ethos was to inform, educate and entertain, entertain being the last and least important in their eyes; news, religion and informative programs had to be shown so many hours a day to have the right to broadcast. To some extent, other television producers are also regulated by these principles as they have to have a certain number of informative and news programs.


Commercial Broadcasting (CB)- is were broadcasters of television and radio programs are privately owned corporate media providers. These broadcasters are primarily funded and make their profit by selling advertisement space in between their content. So, the big contrasting difference PSB and CB is that PSB serve the audience where as CB sell the audience.  The first commercial broadcaster ITV, launched in 1955. However, the government required that the broadcaster fulfilled a certain amount of criteria similar to PSB broadcasting ethos - requiring a certain level of local news coverage, arts and religious programming, for the rights to broadcast.You also have other CB companies such as Sky ( broadcast by satellite) who get their viewer to pay a subscription fee to watch their content as well as sell their subscribers to advertising space. Essentially, you are paying for the privilege to be sold. 

 Corporate and Private Ownership - Corporate ownership is where someone may own the rights and shares to a company; however, they are not responsible liable for it. Where as with proprietorship, the owner of the company is responsible for any liabilities and terminates on death (Unless some specific arrangement is made for someone to inherit the business).  The company almost becomes it's own entity and is able to develop or dismiss contracts, sue or be sued, own land etc. For example, the BBC ( British Broadcasting Corporation) is under corporate ownership, it was give a royal charter in 1927 as a public body. Thus making it a separate entity.

Private owner ship is where a company is privately owned, not apart of the government and distinguishable from government property. They also don't use publicly traded on a securities exchange.  For example, Virgin Media is privately owned by Sir Richard Charles Nicholas Branson, and is aimed at making money for their shareholders. 

Global Companies - These are multinational enterprise that operate all across the globe, unlike MNEs which are regional. In the film industry the 6 major studios are, 20th Century Fox (21st Century Fox), Warner Bros (Time Warner), Paramount (Viacom), Columbia (Sony), Universal (Comcast) and  Walt Disney Studios.(The Walt Disney Company), who earn the most at 26%. These studios own many assets such as Time Warner who own DC film and HBO. These companies collect  80 - 85% of the US and Canadian Box office sales. 

Concentration of Ownership - The reason that world media is concentrated in 6 major companies is because they try to control and own other companies. They ruthlessly take over other companies by using either Vertical Integration or Horizontal Integration ( see below). However, as a result of the web 2.0 allowing us to 'proconsume', we have essentially become the media, which is changing the tide for these big companies.

Vertical Integration (owning stuff in different sectors) - In media, this is where there are 3 sectors; studios/production companies at the top - who are media conglomerates- distribution companies in the middle and then cinemas at the bottom who exhibit the product. The production companies make the original product, who then sell this to multiple distributors. These distributors then sell the previously brought product to a numerous amount of cinemas. These cinemas then exhibit the product and sell thousands of viewings (hopefully) to their audience. Now, for either of the bottom two sectors (distributors and cinemas) to break even, they need to make the same amount of money which they bought the content for. To make a profit they need to make more that what they bought the content for. So, in theory, these smaller sectors, the cinemas, are making more money than the production companies themselves: they don't like this. So, to counter this, the production companies decide to buy out or make their own distribution companies or cinemas or even both. So in turn, make more profit. This act is known as Vertical Integration as they go down either owning or taking over different sectors. An example of this can be told by Warner Bros. They made Harry Potter and the Deathly Hallows: Part Two. They then used Warner Brothers Distribution for, distribution and then exhibited the film to mass audiences using Warner Bros International Cinema chains. Therefore, they kept all of the money within their company ensuring their success and profit went directly to their company and no one else. There are laws against Vertical Integration but only if it's via merger which can be challenged by the Clayton Antitrust Act of 1914. The court make the decision is based on how the vertical integration harms competition in the market place (find out more here). 

Horizontal Integration/ Monopolisation - Horizontal Integration is much like vertical integration however, moves across, taking out competition on the same sector as you. They have two main charming ways of achieving this friendly business goal: out right, buy the other company out or drive them out of business. To do this, they could lower their product drastically in sale price so the competition is either ignored by the public and not bought, thus destroying the opposing company's sales  and increase back to regular prices after they go bankrupt or; the opposing  company will also lower their prices and then you have to wait it out and hope your company can last longer with a drain on money than the other ones does and bankrupts. It's a dog eat dog world out there. From this, there is one less company in the sector or you have bought them out, you have increased sales because there is now more people buying from you due to less competition and you are achieving horizontal integration because you either own more companies on that sector or now have their consumers due to making them go bankrupt.

Monopolisation - this is where a company owns multiple or all of the sectors in a market, being the only provider, in other words, full horizontal integration. Opposed to a perfectly competitive market where multiple companies operate and sell services. However, as previously mentioned, this is illegal via merger and can be challenged. Therefore, to achieve this they use the destroying out the competition techniques described in the above paragraph to achieve footholds in the sector.

Sources for Funding -

The Licence Fee - This is where you pay a fee to an organisation to have the rights to use or do something. In this instance for the BBC, households can pay annually for a licence to view TV legally.

Subscription - This is where you pay in advance, regularly to receive something. For example, Sky and Netflix are monthly paid subscriptions for television, film and media services.

One-off payment to own a product - this is where you pay for something and you actually own it! You don't have to pay more than once! Items which have this glorious attribute are Blu-rays, DVDs, CDs and Vinyls.

Pay-per-view - is where you pay, essentially, for a one off, live, digital ticket which you view from the comfort of your own home. These are typically sports events such as boxing or UFC; however, this can be films as well. Typically they are always broadcasted live. You can obtain this right of viewing by either contacting the company via a phone or using the an interactive service on your Tv.

Sponsorship - This is where a company or product becomes associated with a program. A memorable one for me is 118 118 sponsoring the Simpsons.

Advertising - This is where companies encourage their audience to buy their product. They do this by using a structure of grabbing their attention, informing them of the product, why they want and desire the product and then try to get them to act, going out to buy the product. To then distribute this advertisement they buy advertising space, sold by the television broadcasters, to air their advert. This allows for a mass showing of this advert, which they can target to audiences who they feel their product is most likely to be bought by, using BARB viewing figures and other similar organisations.

Product Placement - this is where companies pay films and television programs to either use or be featured in their films/programs. This gains exposure for the product and sometimes, an association with the film and the product, thus increasing sales. A classic example of this is with James Bond and Aston Martin almost always being featured and used in the Bond films.

Private Capital - is where an individual or individuals fund movies/productions privately, usually out of their own pocket. Sometimes more than money is invested, such as time, effort and work. A well known private capital investor in the film industry is Megan Ellison, who invested around 45 million on Zero Dark Thirty.

Crowdfunding - this is where finances are raised by asking the general public to donate to a cause. There are many websites where crowdfunding takes place, for example, Kickstarter. There have been films purely funded or partially via this method such as Zach Braff and his project, Wish I was Here (2014). 

Development Funds - this is where funds/investor are purely aimed towards a regional product. For instance, the Lottery funds British Films because we are heavily dominated by American Culture and it's film industry. Therefore, the Lottery funds british films to help promote our industry and culture.