BTEC LEVEL 3 CREATIVE
MEDIA PRODUCTION
UNIT 8: UNDERSTANDING
THE TELEVISION AND FILM
INDUSTRIES
LO1: KNOW ABOUT
OWNERSHIP AND FUNDING IN THE
TELEVISION AND FILM INDUSTRIES
By: Sophie
Samengo-Turner
Teacher: Ms Ahmadian
The
TV and film industries are structured in a variety of ways. It could be a
conglomerate which is a large corporation with ownership in different media
interests, owning smaller companies known as subsidiaries. For example Disney
is a conglomerate and it owns the Discovery Channel, which is a subsidiary. It
could be an independent company, which has no hierarchy and can be owned by a
single person or a group of people. Another possibility is public or private
ownership. This will be further explored in the main body of the report.
As
with any industry the film and television industry relies on the ability to
generate a source of income for its operations. This can be through a multitude
of ownership and funding options. Ownership refers to who owns companies or
groups of companies in the media industries. The ownership can be in many
forms, for example, it could be publicly or privately owned. If the company is
created for the public, created to educate and entertain then it is known as a
public service. An example of this is the BBC. Funding can also take many forms
such as sponsorship or independent funding. Without funding there is no end
product or even a beginning product. The crucial point in all production is the
availability of cash, from whatever source, to pay for the production and to
ultimately make a profit for the producer so that he/she can go on to make
further productions.
The
first case study I will look at is the BBC. BBC stands for British Broadcasting
Corporation. The BBC is a Public Service Broadcaster (PSB) and was created to
educate the public. Given that the BBC was created for the public and not for
profit reasons, it is funded by public taxes. To have a television in your
house you need to pay a Licence Fee each year which funds PSB programmes. The
purposes of the BBC are the same as any other PSB:
‘Informing
our understanding of the world
Stimulating
knowledge and learning
Reflecting
UK cultural identity
Representing
diversity and Alternative viewpoints’ (Stafford, Branston. 2010, page 273). However,
in recent years the BBC has generated a significant amount of money from
selling its shows abroad and creating merchandise such as Doctor Who figurines.
This money is being used alongside the money generated by the license fee. The
BBC shows the News which is constantly updated to inform the public of any
changes or new information in the world around them. BBC also has educational
programmes running during the day such as
Daily Politics, educating its audience on politics in the world today. They
also show The Weakest Link which
educates people in general knowledge, as well, as keeping the audience
entertained. It is important to have a programme like this in my opinion to
give a non-bias view of what is happening in our society and our world because
it gives us a more open mind.
Another
very important source of funding for both large and small companies is tax
credits. This is a where a government gives a production cash back (by way of
not charging tax) to productions that are shot using, for instance, UK
facilities and crew. Tim Bevan of Working Title, once one of the largest
independent companies in the UK (now owned by Universal Studios), said he shot Les Miserables (2012), a film set in
France about the French, herein the UK because of tax credits, ‘on all of these
movies the tax credit is integral to getting them made, even bigger movies (Les Miserables) like this the difference
between the net budget and the gross (total) budget is absolutely the tax
credit in the UK’ (Screen International).
There
are two different methods by which a film can be created, these are horizontal
and vertical integration. An example of how vertical integration works is
Disney. When Disney comes up with a film idea they have a research team to look
into the different aspects of how the film should be created, where it should
be filmed, how much the film is going to cost as well as many other
considerations. Once the pre-production stage is complete they then move onto
the production stage. Disney already owns the equipment needed to make the film
or create the animation as well as the rights to the story, music, relevant
cast and crew needed. After filming on location is complete they move to the
post-production stage Disney has an editing facility to edit the film and a
manufacturing team to package the final product. If the film is going straight
onto television they already have their own programmes to air it on. Throughout
this whole process, the film idea has not left the Disney Company, from the
moment it became an idea to the moment the audience got to see it.
Horizontal
integration, on the other hand, is when the product is produced by more than
one company the company. For example, if two companies work together to create
a film the product is shared between them. If we look at the example, Titanic (1997), it was funded by 20th
Century Fox. Because of the expense of creating the film was going over the original
budget they needed to generate more money to continue. To gain more money,
Paramount Pictures, another Hollywood production company, invested in the film
and helped fund it to completion. In the end, the budget was ‘$200,000,000
(estimated)’ (IMDb). The outcome of horizontal integration means that more
profit is paid out to other investors. In this example, money is paid out to
both 20th Century Fox and Paramount Pictures. Whereas, in vertical
integration all the money is kept within the company meaning they have a larger
profit. The difference between the two approaches is the risk and reward. Many
films fail to produce a profit for their companies. If a project is kept
in-house then the company gains 100% of the profits but they also get 100% of
the loss. If a company joined with other companies to create a product then
there is a lesser profit percentage but there is also a lesser risk. This way
is also beneficial because if you are putting less cash into a project you can
spread your money about and fund more projects gaining a higher chance of
producing profit.
To
explain what a media conglomerate is I shall look at my case study on Disney.
Disney is a multinational corporation with different Disneyland Resorts,
various television programmes and they are largely famous for the films they
have created. They are also very well known for their trademark characters such
as Mickey Mouse. As you can see, Disney sells to many different media interests
and is known worldwide with resorts in Paris, Florida and Tokyo. Disney also
owns many smaller companies such as Touchstone Television, Marvel Studios,Pixar,
The Discovery Channel and now Lucasfilm. Although, each of these companies has
their own name and logo they are owned by Disney meaning that Disney profits
from them all earning money. Also, each of the subsidiaries that Disney owns
does something different; they have a different consumer base. For example,
LucasFilm created Star Wars which is sci-fi whereas the Discovery Channel is
informative and is aimed at specific interest groups such as military
enthusiasts.
Another
example of a conglomerate is NewsCorp. NewsCorp is owned by Rupert Murdoch and
the company owns BSKYB, 20th Century Fox, Fox Network, The Times and
The Sun. Evidently, the interests are ranging from film and TV through to
newspapers. These companies owned by the head office corporations are known as
subsidiaries. A simple way to describe how this hierarchy works is by the
diagram on the next page.
This
diagram shows the different media interests of NewsCorp, as well as, showing
the hierarchy of the media conglomerate and the lower status of the
subsidiaries. The reason company is a conglomerate and not just an ordinary
company is because it owns subsidiaries and the corporations interest is not
only in one section of the media industry but in several, for example they own
newspaper companies and production companies. Often, conglomerate corporations
are small companies run by a few people and the company owns larger companies
as their subsidiaries.
A
subsidiary is a company that is owned by the conglomerate. These can be large
organisations in their own right but the majority of the shares are owned by a
conglomerate. In the case of Disney, one of the subsidiaries is Marvel Studios.
Marvel Studios was bought by Disney and although the company generates its own
income and comes up with their own ideas, ultimately they are owned by Disney.
Their profits are given to Disney. The profit taken by the conglomerate varies
between each conglomerates contract with its subsidiaries. If the company was
not owned by a conglomerate then it is not known as a subsidiary, it would be
an independent company.
There
are few successful independent companies in the media world, with so many
larger competitors. The main reason for this is the extreme amount of money and
risk needed to make films and TV productions. The bigger the company the more
cash it can generate and the more risks it can take. Normally successful
independent companies are bought up by conglomerates and then become
subsidiaries. Independent companies are run by themselves and not by a larger
institution. An example of a once independent company is So Television which
was owned by Graham Norton and Graham Stewart’s Production Company. This
company produced The Graham Norton Show
and was set up in ‘September 2000 to make high quality entertainment
television’ (So Television). By being brought up by ITV it meant that So
Television had more money to fund and also publicize making it better known.
Another
independent company is a film and television company, Scenario Films Ltd. They ‘are
an award-winning team with a long track record of television and film creation’
(Scenario Films). They
have made films such as Desire (2009) and
Brass (1983). Although they have
gained nominations and awards for their films they are not very well known.
This is probably because their films are low budget since they do not have a
large conglomerate company funding them.
By
comparing both companies (So Television and Scenario Films Ltd), So Television
is better known. This is because one was brought up by a large conglomerate and
was given more funding and the other only has a budget that is generated within
the company or that is gained from sponsors and investors. Also, Graham Norton
is a celebrity, because of this more people know him and will watch his show.
Scenario Films does not have a similar person on their team.
The
case study I will use to explain private companies overlaps with my research on
conglomerates and on synergy. The case study in question is my study on Simon
Cowell. Simon Cowell owns the company Simco Ltd. Simco Ltd created SYCO
entertainment as a trading name, ‘currently under the banner of Syco
Entertainment are; Syco Music, Syco Television and Syco Film’ (Simon Cowell
Online). This research shows that Syco has many different media interests with
many subsidiaries. Syco TV owns Britain’s
Got Talent and The X Factor. Syco
Music also owns West Life, Susan Boyle,
Cher Lloyd and One Direction. Since
Syco Entertainment is the conglomerate and Syco is owned by Simco Ltd, Simon
Cowell’s company, Simco Ltd is the conglomerate corporation. The highest power
in the company is Simon Cowell meaning there is no conglomerate above him; he
is the conglomerate so he does not need to give his earnings to a hierarchy. Syco
is a privately owned company, which has a joint venture with another large
media conglomerate Sony. A joint venture is a method where two large companies
create a contract to work on a project and split the profits and the cost, this
joining is called synergy. ‘Sony Music Entertainment announced a new long term
global venture focusing on the production of music, television, film and
digital content’ (Simon Cowell Online). With this merging, both companies will
work together to gain a larger profit and each will gain recognition when one
company does something that influences their contract.
A
private company does not work for the government. While profits from the BBC
would go to the government, profits from a private company like Syco go to the
company.
BBC
does not have any adverts; once a programme starts it runs all the way through
to the credits with no interruptions. After the programme there is about one
minute of promos telling the audience of future programmes for the channel.
This is because BBC is not a profit based programme. For media conglomerates
such as ITV or Channel Four there is an interruption every 12 minutes, lasting
approximately 4 minutes, and covering a range of adverts. Adverts provide a
large source of funding for these companies. These companies are paid to allow
these adverts to run during break sessions in their shows to help fill up half
an hour/hourly slots. For example, if someone is watching The Big Bang Theory on E4 and then the Head and Shoulders new
shampoo advert comes on, E4 gains money from them. Head and Shoulders created
the advert and paid for it to be shown. The money was given to E4 to put it
during their ad breaks. This is known as commercial ownership.
A
new scheme has come into play called “Now TV”. “NOW TV” was set up by Sky to
allow people to access Sky on the internet whether or not they were a Sky
customer. It is ‘a new pay-as-you-go internet television service’ (digital
spy). This means is that you can pay to watch something on Sky, e.g. Casino Royale 2006, on Sky Movies 007
without being a Sky customer or being a Sky Movies subscriber. This makes Sky
more profit, for example, from people just paying to watch the sports channels
or to give their kids the Cartoon Network channel during a car journey on an
ipad or anything connected to the internet.
There is a lot of competition in the
television and film industries. A major part of the competition is to hold onto
subscribers and viewers as the subscribers pay fees and the viewer numbers of
each channel determine how much can be charged to the advertiser. For example,
someone who owns a Virgin Media box is subscribed to the Virgin Media channels,
they pay to see those channels. ‘Subscription income does certainly offer some
security, especially if packages are sold to viewers for a set period of time
(e.g. a minimum one year contract)’ (Stafford, Branston, 2010, p 278) because
it means that for that period of subscription there is no chance that they will
lose customers and money from subscriptions since they are on contract to pay
for the year. Also some companies like BSKYB ‘earns it revenue primarily via
individual subscriptions’ (Stafford, Branston, 2010, p 279) so without
subscriptions BSKYB would likely fail from insufficient funding. This is
similar to many subscription products such as NetFlix which does monthly
subscriptions to allow the customer to stream unlimited programmes or films.
Product placement is another source
of funding in the film and television industries. If someone is watching a film
and the talent on screen is at their ‘home’ getting breakfast and they pull out
a cereal box, e.g. Frosties, then the audience can see that the character likes
Frosties and might want to buy some. That is product placement, the company
that makes Frosties cereal, Kellogg’s, paid the film companies to place their
product in the scene.
Sometimes the product is
inconspicuous and other times the product placement is obvious. These companies
would pay for their logo to be shown in a programme or film giving the programme
or film a larger budget and needing to spend less money on props. Sometimes
product placement is used to show something about a person. The James Bond films all show Bond with a
range of gadgets. Most of the time Bond is shown with the latest phone, a
shiny, professional looking watch and drinking specific vodka before or after
going to or from his clean, brand new car. By including all these things in a Bond
film, it makes the audience want to own them to be more like everyone’s
favorite spy. People believe that these products will make them look more high
class and professional, and some believe that these products could possibly
even make them look cooler!
In conclusion, it can be seen that there
are many different forms of ownership and funding. Some programs are owned by
the public, PSB or Public Service Broadcasting, other programs are owned by
private/independent companies or corporations. Film companies can also be owned
privately/independently as well. If these corporations own other companies and
have interests in other media interests then they are known as media
conglomerates. The companies owned are called subsidiaries. Films can be
created by either vertical or horizontal integration. There are few independent
companies because they either fail and go bankrupt or become successful and are
normally brought up by large conglomerates. Television companies can gain
funding by commercial ownership, license fees, subscription, pay per view,
sponsorship and product placements. Film companies can gain funding by
development funds, shareholders, distribution companies, sales of films and
merchandising. In my opinion I think that the media industry is going to be run
by the powerful media conglomerates with the majority of independent companies
being crushed by the larger competition or being bought up by these
conglomerates which will make it harder for new, smaller creative companies to
start up. There is also scope for other funding options which remain to be
seen.
Bibliography
Stafford,
R, Branston, G (2010). The Media Students Book, Routledge
Digital
Spy: http://www.digitalspy.co.uk/tech/news/a372307/sky-announces-now-tv-pay-per-view-streaming-service.html (29/11/12)
Screen
International Magazine, December 14 2012 issue.
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