The Magazine Industry Blog

Media Ownership – what are the issues?

The media is an industry and, as with most industries, there are large companies and there are small ones.

The tendency towards concentration of ownership and monopolisation

To ensure profit and success, most media companies will wish to control as much of the sector as they can. A large company is in a better position to challenge a smaller company through price wars, more expensive advertising campaigns and offering bigger salaries to attract staff. In February 2008, the German media company, Bauer, acquired Emap’s Consumer Media and Radio Divisions which made it the largest publishing company in the UK.  

Horizontal integration

Some publishing companies, like IPC, are part of much bigger multinational corporations, (Time Warner) who have much wider cross-media interest in radio, television and so on. Having interests in a range of companies in the same industry is called horizontal integration. For example, Warner Bros make a movie which they advertise through the magazines.

Visit: http://www.bauermedia.co.uk/Brands to see Bauer’s cross-media interests.

Vertical integration

This refers to companies who benefit from owning the production company that makes the film, the distribution company that gets the film to cinemas, the newspapers that advertise the film, the TV companies that premiere the film on the small screen and the Home entertainment company that sells the DVD.   Newscorp do this because they own Fox Studios, 20^th Century Fox Films and Distribution, Sun and Times newspapers, BSkyB and Fox Home Entertainment.

Synergy in the media

In media economics, synergy is the promotion and sale of a product (and all its versions) throughout the various subsidiaries of a media conglomerate or with the cooperation of another company to produce a combined effect greater than the sum of their separate effects.  For example, Disney pioneered synergistic marketing techniques in the 1930s when it granted firms the rights to produce the Mickey Mouse character in ads and toys. The ads and toys promoted the films and vice versa.

Elle & Project Runway = synergy

As advertising revenue plunges, magazines are increasingly using reality TV to lure new readers to their pages. Elle magazine and the TV series 'Project Runway' is an excellent example of how to use synergy to increase readership.

Cross Promotion/Advertising

Cross promotion is similar to synergy. If a company owns two magazines and a radio station, for example, the radio station could promote the magazines (promotion is free) and they also place ads for one product in the other. NME magazine is full of ads for other NME products.

Cross Media Convergence (or cross media ownership)

This is similar to horizontal integration and refers to a large company owning various subsidiaries (departments/smaller companies) and brands . In the case of one of IPC's brands, NME, it exists on multiple platforms. For example thereis NME magazine, NME.COM, NME Radio, NME on Zinio, etc.

Globalisation

Media production is extremely expensive and increasingly companies are looking to global markets to increase their profits. With the growth in the internet, national boundaries are far less important these days anyway. In the magazine industry, Prima, Grazia, Best and FHM are produced in 27 countries.

All of this BIG COMPANY stuff raises lots of issues for the media industry and its audiences. 

To be part of a multinational conglomerate or not to be?

That is the question.

Bauer is the leading publisher of magazines in the UK. Within its portfolio is one of the most iconic niche style brands of the past, The Face. Bauer plans to relaunch the magazine in 2010 as digital only, as a free title or subscription-only. Face staffers fear that Bauer doesn’t understand the individual style and identity of the magazine and that if they launch it free, then it will lose its kudos and it will be difficult to attract advertisers since it won’t be possible to know who is reading it (won’t everyone pick up a copy if it’s free?) But on the other hand, if Bauer didn’t publish it, could anyone else afford to? What’s your opinion?