Media conglomerates

Media conglomerates- how a relatively few own the major media in the world

Conglomeration and Integration of Media

Concentration of media ownership means that fewer corporations own the media. At the same time that concentration of ownership has been occurring, conglomeration has been taking place. That is, media companies have become part of much larger corporations, which own a collection of other companies that may operate in highly diverse business areas.

As mass media have become big businesses, major corporations with many non-media holdings have increasingly turned their attention to media operations. In the United States, media properties are among the most attractive properties to both potential investors and buyers. The media industry today is producing high visibility, high profits, and a major item for export to other countries. Concentration has affected the relationship between various media organizations within a single conglomerate.

Economic analysts have long used the terms “horizontal integration” and “vertical integration” to describe two types of ownership integration in any industry. In the media industry, vertical integration refers to the process by which one owner acquires all aspects of production and distribution of a single type of media product. For example, a movie company might integrate vertically by acquiring talent agencies, production studios, theater chains, videocassette manufacturing plants, and a chain of video rental stores. The company could then better control the entire process of creating, producing, marketing, and distributing movies.

Horizontal integration refers to the process by which one company buys different kinds of media, concentrating ownership across differing types of media rather than “up and down” through one industry. In horizontal integration, media conglomerates assemble large portfolios of magazines, television stations, book publishers, record labels, and so on to mutually support one another’s operations. For example, Time Warner released the blockbuster film Batman with the help of a prominent review in Time magazine and heavy promotion on Time Warner owned Home Box Office. The opportunity for cross promotion is one of the driving forces behind the growth of horizontally integrated media companies.

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