Ownership and Funding

Ownership Concepts

Public Service Broadcasting

The logo of the BBC, a PSB [i1]

Public service broadcasting (PSB) is a term for television channels that are deemed as having a public benefit rather than broadcasting for profit[1]. For example Channel 4 is not in this category as they show advertisements to obtain money and then turn a profit. An example that is a public service broadcast is the BBC as they do not show advertisements to obtain their money and instead get the money from TV licenses. It is the job of Ofcom to decide which channels are deemed as public service broadcasts.

Commercial Broadcasting

The most recent logo of ITV [i2]

Commercial broadcasting is what I briefly touched upon in the definition of PSBs. It is where a channel is created that has the purpose to make a profit as it is owned by a private company. The first channel of this kind in the United Kingdom was ITV, popularly referred to as channel 3 as this was its first station. ITV was started in 1955 under their longer name, "Independent Television", which was later shorted to the initialism "ITV"[2]. Since the opening of ITV in 1955 other independent, commercial channels have been started such as Channel 4 and Channel 5.

Corporate and Private Ownership

The most recent logo of Sky [i3]

Private ownership is a form of ownership in business. Also known as a privately held company, this is where a company is not owned by the government nor does it choose to trade shares on the stock market[3]. An example of a privately owned company would be British Sky Broadcasting, often abbreviated to BSkyB or just Sky. The company itself is owned by the American company News International, that owns the majority of printed newspapers in the United Kingdom[4]. This is also an example of a global company.

Global Companies

The logo of BBC America [i4]

A global company, also referred to as a multinational company, is a company that operates in a number of different countries. The majority of companies are multinational nowadays due to the increase in the internet and therefore the rise in globalisation. An example of a global company is the BBC as although, as the name suggests, they are a British company they have presence in other countries. An example of this presence can be seen in their American counterpart, BBC America, which shows BBC programmes in America.[5]

Vertical Integration
Vertical integration is where the chain of supply is owned by the company that relies on that

The title card of Sherlock, a BBC show. [i5]

particular sequence. In television this is where a television channel creates content for their own station. This is where the channel is essentially owning their own chain of supply as they need programmes to show on their channel so as opposed to paying an external company to produce the content they produce it themselves. Therefore the company will take a show through the whole chain of development from writing, producing and editing exclusively to be shown on their channel. The vast majority of TV channels do this nowadays with a few exceptions. An example of a programme created by the company that then went on to show it is Sherlock, a BBC series starring Benedict Cumberbatch and Martin Freeman. This is expensive so it is uncommon for television companies to do this, the majority will hire outside companies to produce content such as Endemol or Hat Trick Productions, the company that create shows such as Have I Got News For You.

Horizontal Integration and Monopolisation
Monopolisation, or the act of owning a monopoly, is where a company owns all of a specific sector. For example if one company owns all the movie theatres in a city it could be said that the company has a monopoly in that city. This can also apply on a grander scale, for example, before the start of ITV in 1955, BBC owned a monopoly in that there were only two channels both of which owned by the company. Monopolisation is a bad thing because, for example, if one company owned all the movie theatres in a city they could then set the price of a film and audiences would have no choice but to have to pay the price as there is no alternative.[6] An example of horizontal integration would be the merger of AOL (America Online) and Time Warner. This merger allowed Time Warner and AOL to advertise their products on different media, allowing AOL to advertise on television and Time Warner to advertise online using AOL as a medium.

Funding Types

The License Fee

An example of a TV license [i6]

One way of funding television companies is the license fee. This method is used across Europe as a method of television companies gaining funds. Only BBC get money from the license fee however it is how they get the bulk of their funds. Everyone in the United Kingdom that owns a television must purchase a television license to watch it. This excludes BBC's catchup services. This is regardless of whether they intend to watch BBC programmes or not.[7] 

Subscription

Subscription television is where you pay a fee, often monthly, to watch a particular company's television channels. The most popular example of that in the United Kingdom is Sky in which you have a satellite dish fitted and get a television box that can view all of the channels. Then you pay a monthly fee to watch the channels that they supply.[8]

One-off payment

This is, as the name suggests, where you pay once to receive the product. This is used in many, many

A Humax set-top freeview box [i7]

cases but in terms of television it is applicable to freeview and freesat in the United Kingdom. Freeview is a method of watching digital television for a one-off purchase of the television set-top box that will read digital signals and then show television. Since the digital switchover, resulting with the analog signal being discontinued in 2012, all televisions required freeview to be able to show television. There is no subscription or ongoing fee for owning one of these however you will still have to pay for the television license.

Sponsorship

An old sponsor of Coronation Street [i8]

Sponsorship is a method that television companies use to get funds. Usually it is individual programmes that they show that are sponsored by companies. An example of this would be Channel 5's Big Brother that is, as of 2015, sponsored by Lucozade energy drinks. This is good for both the company and the channel as the channel gains fund from the sponsor and the company gains advertisement of their products before the show, after the show and normally before and after advert breaks.[9]

Advertising
Advertising is the most common way for a television company to make money. The majority of

A TV advert for CompareTheMarket.com [i9]

channels do this, except for BBC who gain money from the license fee. This is where companies will pay a television company to show a short video about their service or product to gain them publicity. There are cases in which companies will buy the whole advertisement break, such as the shop John Lewis do every Christmas. Most advertisement breaks are around two to three minutes long. A general rule is that in a thirty minute programme there will be one break and in an hour long programme there will be about three. Television stations are limited to the number of breaks they can have however they are allowed to have as many as they wish during live events. There are restrictions on what can be advertised. These are regulated by the Advertising Regulations Authority (ASA).


Product Placement

The product placement logo [i10]

Product placement is where a company will pay a TV network to have their products in the show. This is permitted in the United Kingdom however the TV channel must show the product placement logo at the start of the show. The logo is a small "P", signifying that product placement is used. BBC do not use product placement in their shows however other channels do. An example of a programme that uses this is Channel 5's Big Brother as well as some soap operas such as Channel 4's Hollyoaks.[10]


Private Capital

Private capital is just a term to refer to the money given to a company, often in the form of a loan.

The logo for Private Equity firm, Equistone [i11]

This money does not come from banks or the government, it is instead given to the company from other companies or individuals. It is often as a startup.[11] An example of a company that provides private capital, or private equity as it is also known, is Equistone Partners Europe, formerly known as Barclays Private Equity, part of the Barclays PLC. They offer loans to companies as a startup fund in the form of private capital.[12]

Crowd-funding

The logo of crowd-sourcing company, Kickstarter [i12]

Crowd-funding has become an extremely popular way of gaining money for a production. This is where you gain money from a vast number of people. This has been extended by using the internet and websites such as Kickstarter and IndieGoGo that allow users to create a campaign to get money to fund their project. An example of a successful campaign on one of these websites would be Wish I Was Here, a film written and directed by actor Zach Braff. This shows that this is a successful way for people to gain capital for projects, however there are hundreds of campaigns that do not get the required funding and therefore do not secure any capital. This is due to how Kickstarter works, if you don't get the total you asked for you get nothing. IndieGoGo works differently however.[13]

Development Funds
Development funds is a method of giving funds to different companies, usually companies that are

Twilio's logo, a company offering funds [i13]

affiliated with the company offering funds[14]. An example of a company that is doing this is the software platform, Twilio. Twilio have launched a development fund of fifty million dollars to software engineers that use their platform. This helps both the individual as they get money they need to launch their software, as well as the company funding them as they will get publicity and their product will get recognised easier.[15]

Bibliography

Information:
[1]: http://en.wikipedia.org/wiki/Public_service_broadcasting_in_the_United_Kingdom
[2]: http://en.wikipedia.org/wiki/ITV_%28TV_network%29
[3]: http://en.wikipedia.org/wiki/Privately_held_company
[4]: http://en.wikipedia.org/wiki/Sky_%28United_Kingdom%29
[5]: http://en.wikipedia.org/wiki/Multinational_corporation
[6]: http://en.wikipedia.org/wiki/Monopoly
[7]: http://en.wikipedia.org/wiki/Television_licence
[8]: en.wikipedia.org/wiki/Pay_television
[9]: http://en.wikipedia.org/wiki/Sponsor_%28commercial%29
[10]: http://en.wikipedia.org/wiki/Product_placement
[11]: http://www.ehow.com/facts_7339192_private-capital_.html
[12]: http://en.wikipedia.org/wiki/Equistone_Partners_Europe
[13]: http://en.wikipedia.org/wiki/Kickstarter
[14]: http://en.wikipedia.org/wiki/Market_development_funds
[15]: http://recode.net/2015/05/20/twilio-launches-50-million-development-fund/

Images:
[i1]: http://magnacarta800th.com/wp-content/uploads/2015/01/bbc-logo.jpg
[i2]: http://news.images.itv.com/image/file/146708/image_update_0a4e7bb348bbff2a_1358149724_9j-4aaqsk.jpeg
[i3]: http://en.wikipedia.org/wiki/File:Sky_logo.png
[i4]: http://images.amcnetworks.com/bbcamerica.com/wp-content/blogs.dir/55/files/2011/11/bbc_logo_1280x720.jpg
[i5]: http://upload.wikimedia.org/wikipedia/en/4/4d/Sherlock_titlecard.jpg
[i6]: http://www.bbc.co.uk/staticarchive/b9fffbfdecec9ef4a253151affbec30ee98093ea.png
[i7]: http://i.dailymail.co.uk/i/pix/2010/01/18/article-0-07E91F6A000005DC-510_468x286.jpg
[i8]: http://cached.imagescaler.hbpl.co.uk/resize/scaleWidth/460/?sURL=http://offlinehbpl.hbpl.co.uk/News/OMC/9A83F196-AA24-5B1B-78330AFC7986100A.jpg
[i9]: http://i.dailymail.co.uk/i/pix/2010/05/26/article-0-09C56FE1000005DC-907_468x320.jpg
[i10]: http://consumers.ofcom.org.uk/files/2011/02/PPlogos2.jpg
[i11]: http://en.wikipedia.org/wiki/File:Equistone_logo.png
[i12]: http://commons.wikimedia.org/wiki/File:Kickstarter_logo.svg
[i13]: http://dobsondev.com/wp-content/uploads/2014/01/twilio-logo-2100x650.png