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Media Industries

Conglomerates, vertical and horizontal integration

  • 3 things to know
  • Components 1 and 2

Overview

Vertical integration, horizontal integration and synergy in the media industries.

What you need to know

Answer each one before you reveal it.

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Key term

Distinguish the two forms of integration and give an example of one of them.

Key term

Define vertical integration.

Key term

Define horizontal integration.

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Define vertical integration.

    Model answer

    Vertical integration is one company's ownership of several stages of the same industry. A studio that produces, distributes and exhibits its own films is vertically integrated.

  2. 2

    Define horizontal integration.

    Model answer

    Horizontal integration is ownership of several companies operating at the same stage of an industry. A publisher that buys a rival publisher has grown horizontally.

  3. 3

    Give an example of vertical integration in the film industry.

    Model answer

    Disney produces films through Marvel Studios and releases them through its own distribution arm. Disney then streams the same films on its subscription service.

  4. 4

    What is diversification?

    Model answer

    Diversification is expansion into different industries or markets in order to spread risk. A film studio moving into theme parks and merchandise has diversified.

  5. 5

    Why do conglomerates diversify?

    Model answer

    Diversification protects a company when one market performs badly. Profits from a strong division can cover losses in a weaker one.

  6. 6

    How does vertical integration reduce risk?

    Model answer

    Vertical integration guarantees a producer access to distribution and exhibition. The company keeps more of the revenue and depends less on rivals.

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AWoman's Hour began on the BBC Light Programme in 1946.
BThe Light Programme became Radio 2 in 1967.
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