X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Media companies: Fingers in many pies - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Dec 19, 2008

    Media companies: Fingers in many pies

    The US has the most developed media industry in the world. The US media giants have established a presence here by partnering with the Indian media houses. Interestingly, the structure of the Indian media industry is evolving to look a lot like its US counterpart. In this article we shall highlight the central theme in the US media industry: conglomerates. Conglomerates are diversified firms with presence in many industries or industry segments.

    US media industry: Ruled by giants
    The US media industry is dominated by conglomerates. Following are the important media conglomerates and the industry segments that they operate in:

    Disney: It has a market capitalisation of US$ 42 bn. It has 4 segments - media, parks, studios and consumer products. Media has 6 sub segments - broadcasting (ABC), production & distribution (Buena Vista), TV stations, cable networks (ESPN, Disney, Jetix, E!), radio (broadcasting & stations), and internet & mobile. Studio has 3 sub segments - theatres (Pixar, Touchstone, Miramax), home entertainment and TV.

    Time Warner: It has a market capitalisation of US$ 37 bn. It has 5 segments - AOL, cable, films & TV (Warner Bros., New Line, DC comics, MAD magazine), networks (CNN, HBO, Cartoon network, Pogo) and magazine publishing (People, Sports Illustrated, Time, Fortune) .

    Newscorp: It has a market capitalisation of US$ 22 bn. It has 8 segments - films (Twentieth Century Fox), TV (FOX, STAR), cable (Nat Geo), DTH (SKY), magazines, newspapers (The Times, Dow Jones-WSJ, Barron's), books (HarperCollins) & others (MySpace).

    Viacom: It has a market capitalisation of US$ 11 bn. It has 2 segments - networks (MTV, VH1, Nickelodeon) and films (Paramount, DreamWorks).

    CBS: It has a market capitalisation of US$ 5 bn. It has 4 segments - TV (CBS), radio, outdoor and publishing (Simon & Schuster).

    NBC universal: It is a division of General Electric. It has 4 segments - networks (NBC), movies (Universal), TV (NBC news, CNBC, MSNBC) and parks.

    Why conglomerates?
    The conglomerates seek to benefit from synergies between the different segments. As per Michael Porter, synergies arise out of 3 types of interrelationships between activities performed in the different segments.

    Tangible interrelationships: They arise due to the presence of common buyers, distribution channels, technology etc. Activities are shared to lower cost or enhance differentiation. Sharing has the potential to reduce cost if the cost of an activity is driven by economies of scale or learning. Sharing activities among business segments may neutralize the cost advantage of a high market share firm competing with one business unit. Also, interrelationships provide sustainable competitive advantage if competitors find it difficult to match it. The most sustainable interrelationships involve industry segments that competitors are not in and find difficult to enter.

    Intangible interrelationships: They arise when there is similarity in a broad sense such as type of buyer, type of production process. In this case, activities cannot be shared, but management knowhow in areas such as product management, brand positioning, advertising concepts are shared.

    Competitor interrelationships: They arise when there are 'multipoint competitors'. Multipoint competitors are firms that compete with each other not only in one business unit but in number of related business units. Competitors in one industry often expand in the same direction.

    The three types of interrelationships can occur together. However, tangible and competitive interrelationships are easier to implement than intangible relationships. In the next article we shall study how the conglomerate structure applies to the Indian media industry.

     

     

    Equitymaster requests your view! Post a comment on "Media companies: Fingers in many pies". Click here!

      
     

    More Views on News

    Zee Ent: GST Short term Negative but Long term Positive (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The management believes that GST will aid the advertising spends in the long-run.

    S Chand and Company Ltd. (IPO)

    Apr 26, 2017

    Should you subscribe to the IPO of S Chand and Company Limited?

    GTPL Hathway Ltd. (IPO)

    Jun 21, 2017

    Should one subscribe to the IPO of GTPL Hathway Ltd?

    Zee Ent: Advertising drives revenues (Quarterly Results Update - Detailed)

    Aug 1, 2016

    Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.

    Zee Ent: Taxes, lower other income mar bottomline (Quarterly Results Update - Detailed)

    Feb 3, 2016

    Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE TECK


    Aug 18, 2017 (Close)

    S&P BSE TECK 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS