LO1 Task 1: Investigating a Media Organisation (PASS)

Task 1: Investigating a Media Organisation (PASS) - Script

Introduction

Hi, my name is Alex Blundell and I am currently working for Education Wise. I’m going to bring you a series of videos to help with the media course you’re doing, and in this one, we’re going to look at how a certain film company operates and what it does to succeed in the industry.

This “certain company” is the one and only 20th Century Fox, one of the biggest film corporations, if not one of the biggest corporations, on the planet. They are a conglomerate - this means that they are made up of lots and lots of other companies, known as subsidiaries. Conglomerates are different to independent companies. An independent company is one that operates and makes products by itself, and is not composed of any other, smaller, companies. These tend to be more local or national businesses, while conglomerates like 20th Century Fox tend to make more money and operate on an international scale.

Ownership of 20th Century Fox

20th Century Fox is owned by Rupert Murdoch. The company that he founded, called News Corporation, acquired 20th Century Fox in 1985, before News Corporation rebranded as 21st Century Fox in June 2013 and took over 20th Century Fox. As a conglomerate, it is composed of many other companies which help it to create a wider range of products for a wider range of audiences, such as Blue Sky Studios and Fox Searchlight Pictures. However, these subsidiaries are also composed of other smaller companies, so they themselves are conglomerates. The business is so large that it has a huge and complex structure, allowing 20th Century Fox to make as much money as possible. 

All of their subsidiaries mean that they can produce many different types of media product, such as TV, film and radio, as each subsidiary specialises in a different area. It is called cross-media ownership when a company can do this, and so 20th Century Fox is a cross media company. For example, the “20th Century Fox Television” subsidiary produces TV programmes while the “Fox Interactive” subsidiary developed and produced video games. In this way, 20th Century Fox can reach all sorts of people who are interested in different media products and make more money. In addition, since they can produce for different platforms, they can cross promote and advertise the “Fox” franchise all over the place. This creates synergy, meaning that their subsidiaries combine in advertising to make more money for the company.

Sometimes, 20th Century Fox works with other companies in what is called a joint venture. This means that two companies work together in a commercial way, usually to maximise profit. They remain individuals during the process, so they do not become part of the same conglomerate. For example, 20th Century Fox has worked with DreamWorks in the past - DreamWorks created animated films such as The Croods and 20th Century Fox distributed them. In this way, both companies can make some money.

Operating Model

20th Century Fox is a company which has vertical integration and horizontal integration. These two terms are important in how a company operates. Vertical integration is when a company can control the production, distribution and exchange of its own products. Horizontal integration is when companies work alongside one another in a joint venture, similar to what I mentioned before. The companies that work together are called affiliates. An independent company or a conglomerate can utilise horizontal integration by working with others, but only conglomerates like 20th Century Fox can use vertical integration. This is because independent companies are usually only able to produce as they lack the size and resources of a conglomerate.

For 20th Century Fox, horizontal integration is very important because it allows it to produce many different media products for many different audiences, as I explained earlier. If 20th Century Fox only had vertical integration, it could only produce, distribute and exchange films. It couldn’t access the audience of video games, for example. It works with different companies who produce different media products to maximise profit.

Vertical integration is also useful though, because it means that 20th Century Fox has the ability within the company to fully produce, distribute and exchange a media product. This allows the company to reduce costs and improve efficiency when it is making its own product, in this case, films. It doesn’t have to pay and wait for another company to do the distributing and exchanging. 

The film production process involves three processes. Pre-production involves the planning of a movie - things like sourcing actors, scouting locations, finding props, calculating a budget, writing the script and designing the set. The actual production of a movie means the making of it - it involves filming scenes, acting, costume and make-up routines, sound, on-set effects (known as pyrotechnics) and green-screening. Finally, the post-production aspect involves editing footage and audio, applying CGI (computer generated imagery), replacing green screens with backdrops, and adding special effects. Special effects are less complex than CGI, for example a black-and-white filter. These three processes are known collectively as the film production process. Since 20th Century Fox has vertical integration, it does all three of these things, as well as the distributing and exchanging. The producing, distributing and exchanging processes are collectively known as the film production cycle.

For a huge conglomerate like 20th Century Fox, both vertical and horizontal integration are really useful and necessary to make things as easy as possible and reach a mass market. 

Products

20th Century Fox can produce many different types of media as a conglomerate, as each subsidiary can produce a different type of media product. However, the company “20th Century Fox” alone produces just film. It is one of the six major American film studios so through vertical integration it specialises in films. The biggest film ever to be produced by the company was Avatar in 2009, which is actually the highest-grossing film of all time. It generated over $700,000,000. Another well-known film which was created by 20th Century Fox was Titanic in 1997, which is actually the second highest-grossing film of all time. The fact that these two films were such big hits gives you an idea of the size and reputation of 20th Century Fox!

The subsidiaries of 20th Century Fox have created well-known products in other types of media too. For example, The Simpsons, one of the most famous TV series in the world, was created by the subsidiary 20th Century Fox Television, and Ice Age, the famous animated film, was created by animation subsidiary Blue Sky Studios. And although the video game developing and producing subsidiary called Fox Interactive has now shut down, it had success with games based on films, such as The Simpsons: Hit and Run.

Since 20th Century Fox is a huge international company, it targets a mass-market and its products are usually very mainstream, meaning that they try to be popular on a worldwide scale. The company wants to make a lot of money all over the planet - by creating mainstream products which pertain to all ages and a range of audiences, 20th Century Fox can maximise profits. In the past, the company has even created more niche products, meaning films that are popular only locally or nationally, to go alongside their more mainstream pictures.

Market Position

There are many ways we can tell how successful a company is. One of these ways is by looking at the market share of a company. In 2015, 20th Century Fox is currently making 10% of all box office profits, coming 4th in the list of profits made this year. In 2014, it made 17.3% of box office profits, which made it the richest film distributor in that year. Based on this information, 20th Century Fox seems to be a very successful company. Their closest competitors are Warner Brothers, Paramount Pictures, Universal Studios and Buena Vista, and they compete closely with them every year.

Another way of looking at how successful a company is could be to see how many subsidiaries they have. The more subsidiaries a company has, the more shares they own in different areas of media, so they are likely to be richer. 20th Century Fox has 10 subsidiaries. Of course, we have to compare this to some competitors to see how significant this is. Warner Brothers also has 10 subsidiaries, Paramount Pictures has 11, and Universal Studios has 6, so 20th Century Fox is certainly up there as a sizeable conglomerate too.

Finally, the length of time that a company has been going is a really good way to see how successful it is, because if it’s been going for a long time, it suggests that it makes quality products and has built up the reputation to keep going. 20th Century Fox was founded in 1935, so it’s over 80 years old at the moment. However, Universal Studios and Paramount Pictures were both founded in 1912 and are over 100 years old, while Warner Brothers was founded in 1923. Although 20th Century Fox is not older than these other companies, this shows that all of the top film companies have been going for decades and decades, so they are all well-respected and successful. 

All of these statistics, along with the fact that 20th Century Fox has created the top two highest-grossing films of all time, should help to show you that it is a highly successful international company with a very high market position.

Competitors

The main competitors to 20th Century Fox, as I mentioned earlier on, are Universal Studios, Buena Vista, Warner Bros. and Paramount Pictures. These companies are considered competitors because they are all film-makers, like 20th Century Fox, and because they all consistently rank in the top five of box office profits made. The order might change slightly each year, but these five generally are always fighting it out for top spot.

Often, the reason why a company achieves top spot in a given year is because it releases the biggest blockbuster film of the year which generates a huge amount of money. For example, this year (2015), Jurassic World is helping Universal Studios lead the pack as it has generated nearly $650,000,000 already. This makes it the third highest-grossing film of all time. Further examples of this would be 20th Century Fox coming 1st in 2014 with the help of X-Men: Days of Future Past and Dawn of the Planet of the Apes, or Warner Bros. in 2013 with Man of Steel and Gravity. So clearly, it is important for 20th Century Fox to be able to create huge films that will have a large amount of interest in order to be able to compete with the conglomerates around it.

In an industry as competitive as films, it is difficult for one name to stand out from the others. Of course, 20th Century Fox is bigger than the majority of film companies and is already a household name, so it does stand out in this way and probably will for a long time. However, in terms of competing with its closest rivals, which are also huge conglomerates and household names, it just depends on which company can release the major hit film, or films, in a year. This is always changing as the companies are all closely matched.

Thank you for listening to this education resource, I hope you learned something new and now know more about how a film company operates! I’ll see you soon in the next resource.