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Ownership and Control

 1) Why did Facebook buy Instagram for $1bn?

to make money because Facebook was wary of Instagram's growth leading to competing offers and because Instagram is a lucrative and competitive social network.

2) What are the benefits for media companies of vertical integration?
Increased profits, improved economies of scale, reduced expenses, and fewer quality-related issues are the advantages.
 3) What are the benefits for media companies of horizontal integration?
less rivalry, higher income, more profit, and more creative freedom.

4) What is a subsidiary? 
a smaller business that a larger business owns.
 
5) Give three examples of media companies that have used synergy to maximise the profit from a brand (there is one above to help you).

  • Coca-Cola and Pepsi accomplished this by concentrating all market spending on one brand and encouraging increased product sub-brand penetration and testing.
  • Disney and Marvel: product development, creative and licencing, publication
  • Sony and Spider man     

 6) Read this BBC article on Disney buying 21st Century Fox. List 10 companies that are part of the Disney media empire. This graphic may help you: 

  • Film studios
  • Walt Disney studios motion pictures
  • Disney theatrical group
  • Disney music group
  • Disney studio services
  • A&E networks
  • The Walt Disney company Europe, Middle east and Africa
  • The Walt Disney company Latin America
  • ESPN
  • Marvel Studios   
7) Why did Disney buy Fox - what are the benefits?
Disney's horizontal merger with Fox will allow them to grow both geographically and competitively while also gaining a larger portion of the market. Additionally, to create more content and earn more money

Grade 8/9 extension tasks

Read this Inverse feature on Disney buying Marvel. Why does the article suggest it may not have been good for the movie industry overall?  

It might not have been the best option for the film business as a whole since, according to the article, while Disney's acquisition of Marvel was a profitable move for the company, they aren't sure if it was the best choice for films in general. Additionally, they claim that Marvel Studios is unappreciative of Disney for saving them in the past and has excessive demands that they want all other businesses and industries to meet. Marvel would not be where they are now if it weren't for them, but if they don't express their gratitude, Disney may have made a mistake in assisting them in the first place. 

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