Disadvantages Of Media Conglomerates

- Used business strategy called vertical integration, which a company would control every stage of industrial process, from mining the raw material to transporting to product.

Vertical integration is a concept in which a company develops or acquires production units for outputs which are

Vertical integration is when one firm joins with another at a different stage of the same production process. Forward Vertical is when the other firm is at a later stage and Backward Vertical is when the other firm is at an earlier stage. Vertical integration as a whole allows for a firm to control key stages of the production process; guarantees access to a market; and gains control of supplies. Companies such as Zara and American Apparel are vertically integrated, especially at key stages of

(2) Cost reduction: Paramount & Viacom both have economies of scale and are doing business in a similar industry.

The Book of Nehemiah is narrative that continues the history of the Israelites after they return from exile. Nehemiah prays to God about Jerusalem and God’s promises. Nehemiah is sent from Babylon to Jerusalem where he inspects Jerusalem’s walls. Different sections were rebuilt by different groups of people. Through prayer, they were able to complete the rebuilding even when there was opposition. Nehemiah helped the poor by summoning the priests to make the nobles and officials take an oath to follow God’s law. A genealogical record is listed of the exiles who returned. Ezra read The Book of the Law to the Israelites. The Israelites prayed to God and confessed their sins and signed the Law of God. The Levites were brought to

Vertical integration – when you choose to produce raw materials and/or distribute finished goods themselves rather than rely on independent suppliers, factors and agents for these tasks

Horizontal integration involves buying out other companies and taking over one single step of an industrial process. It establishes a monopoly because, with horizontal integration, everyone must go the company that has monopolized that step.

Vertical integration is a business growth strategy for economics of scale. It is typified by one firm engaged in different parts of production example; growing raw materials, manufacturing, transporting, marketing, and/or retailing to expand business in existing market for the firm. It can function in two directions both forward integration and backward integration.

The media industry in the United States of America (US) is one such industry. As a powerful communication tool, the media has attracted many companies but only a handful has grown big. These media giants have dominated the local market and are currently seeking to conquer the global media industry in search of better profits.

Viacom Inc. is one of the largest media company in the world with leading positions in broadcast and television, radio, outdoor advertising and online. The company operates its business through two segments: Media Networks and Filmed Entertainment. It provides entertainment content through its TV channels like Nickelodeon, MTV, VH1, Comedy Central, and others. Viacom’s filmed entertainment segment produces, finances, acquires, and distribute motion pictures under the banner of Paramount Pictures, MTV Films, and others. The company also provides online content services like video-on-demand, pay television, basic cable television, and many more. Viacom Inc is publicly traded on NASDAQ at $33.99 price per share as of May 18,

Horizontal mergers take place between companies in the same industry. These companies are rivals who sell the same goods or services. When a merger takes place, a rival is eliminated and potential for gains become higher. A vertical merger is one in which a firm or company combines with a supplier or distributor. For example, if a car making firm is receiving chassis from two suppliers and decides to acquire them, it is a vertical merger. On the other hand conglomerate mergers are those between firms that

"[In 1998] Viacom earned more from its Nickelodeon channel than from its Paramount Studio. Fox's top earning film for the year was the animated Ice Age… Sony meanwhile earned more from its PlayStation than from all its movies and television programming combined." 7

Time Warner In 1989, the largest Media Corporation was formed. The integration of Time Inc. and Warner communications produced Time Warner, which in 1996 with the acquisition of Turner broadcasting, regained it's status from Disney as the largest media corporation in the world. The company right now, with over 200 subsidiaries world- wide, is becoming fully global with it's profits from the USA falling, and it's profits throughout the world rising.

To become vertically integrated, a company trying to enter the strategic group would need to acquire several companies in different areas of the entertainment industry. These acquisitions would be highly capital intensive and very risky for a new entrant.

Mergers and acquisitions can be classified in terms of the direction of the growth. A horizontal merger/takeover is the combining of two firms in the same stage of production, for example Well come Pharmaceuticals merged with Glaxo Pharmaceuticals. This sort of integration takes place to combat competition from the market and secure market domination; to reduce risks and increase financial strength; and to compete in