Vertical Integration:
When a company expands its business into areas that are at different points of the same production path.
For example, a car company that is expanding into tyre
manufacturing. A company such as this is often referred to as vertically
integrated.
That is to say the
company takes over another company that provides a different stage on the
production line.
Vertical Integration was once
looked upon with alarm by government. It was understood that corporations which
have control of a total process, from raw material to fabrication to sales,
also have few motives for genuine innovation and the power to seize out anyone
else who tries to compete. This situation distorts the economy with
monopolistic control over prices. Today, government has become sympathetic to
dominant vertical corporations that have merged into ever larger total systems.
These corporations, including those in the media, have remained largely
unrestrained.
— Ben H.
Bagdikian, The Media Monopoly, Sixth Edition, (Beacon Press, 2000)
Where television
channels or newspapers/magazines are owned by such large corporations, you are
understandably not going to read much criticism about those companies.
Furthermore, you are not likely to see much deep criticism about economic,
political or other policies that go against the interest of that parent
company. So, while it is understandable why a company would aim for such cross
selling and integration, the threat to
diversity and real competition is real. For smaller companies (who might still have multi million dollars
backing) without such an arsenal of distribution and cross-selling
possibilities, the competition is very difficult, and they face either going out of business, or being bought out,
or if lucky, the dictum of “if you can't beat them, join them” (or try to
emulate them!) rings true. On the one hand, Wall Street would approve of
further mergers and buyouts and vertical integration, while on the other hand, diversity and real competition would be
negated.
Furthermore, diversified
companies enable not-yet profit making areas of their business to sell products
at reduced prices. This forces competitors to either close down or follow suit
thereby reducing their profit margin. This kind of behaviour has been seen in
cross-media ownership. For example, Murdoch is able to subsidise a Press price
war with revenue from BSkyB, and undercut rival newspapers. So, Murdoch seems
to be manipulating the newspaper industry to his unfair advantage.
Also, in the 1980’s
Murdoch’s News Corporation bought up 20th Century Fox. His Sky
television is able to screen movies made by 2oth Century Fox without the
enormous costs of buying in the rights. If Sky decided to show movies made by
other companies then the subscription cost of Sky easily meets the cost of
buying in the rights. News Corporation owns 15 movie channels which can be
accessed for a monthly fee.
News International
also own a Los Angeles baseball team…they also made a multi million pound bid
for Manchester United football team in 1999/2000. So, not only do they own
Television, Film, and Newspapers…they also have a huge influence in sport.
However, the monopolies commission did not allow a merger between Man U and
Sky. Nonetheless, pay per view shows 40 matches per season for a subscription
fee. This can be upgraded so that you can see more matches if you pay more
money.
Despite the ideal of having a
free and uncensored media, the realities of the world in which we live do not
allow for this ideal’s success. With the increase in media integration,
consolidation and powerful economic interests shaping the global media
infrastructure as well as news output, the ability to preserve the “freedom of
the press” is becoming less likely and more hindered.
Nine corporations effectively control most of all global media output. From the
morning news and the weather, to mid-day traffic reporting, to music, video and
print during the day and on the weekend; the pervasiveness (saturation / wide
spread) these conglomerates enjoy is outstanding. With combined annual revenues
averaging well into the billions, they are well poised to maintain their
prominence in spite of any criticism. The ambitions, of course, are to maximize
revenues by consolidating operations. Though more often than not, at the
expense of news diversity, variety and original perspective.
SOURCE:
http://www.takingitglobal.org/understanding/media
Horizontal
Integration:
When a company expands its business into different products that are similar to current lines.
For example, a hot dog vendor expanding into selling hamburgers.
That is to say the two companies are at the same stage. So, horizontal integration might lead to a production base in plants in several locations producing similar products at the same stage of production.
Cartel:
A cartel is a group of producers whose goal it is to fix prices, to limit supply and to limit competition.
Take Back The Media Web Site: Check out the ‘Big 10’.
http://www.takebackthemedia.com/owners.html
A good answer for Outcome 1 should include the following points:
Vertical and Horizontal Integration
Specific Conglomerate – for example: News International
Ownership and Control
Patterns of consumption – for example: figures of readership/circulation
Effects of Globalisation/Diversification
New Technologies