1. Media Management
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2. BCA 516
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The Media Market Place

3. Electronic Media Markets
BCA 516
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Electronic Media Markets
Electronic media managers must understand basic market economics and the markets in which they compete for audiences and advertisers.
Market: A place where consumers and sellers interact with one another to determine the price and quantity of the goods produced.
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4. Electronic Media Markets
BCA 516
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Electronic Media Markets
Dual-Product Markets – While media companies produce one product,
they participate in separate goods and services markets.
(e.g.) Television program & advertising
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5. Dual-Product Nature of Electronic Media
BCA 516
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Dual-Product Nature of Electronic Media
Success in selling advertising affects the ability to
sell or promote use of the media product: more
advertising provides resources that can be used to
make the product more attractive to the potential audience
Media Product
Advertiser Access to Audience
Success in selling or promoting use of the media
product affects the ability to sell advertising
access: larger or better audiences makes a
medium more attractive to advertisers
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6. Electronic Media Markets
BCA 516
Electronic Media Markets
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Geographic Markets – Electronic media companies operate in specific geographic markets.
(e.g.) Local radio & TV stations
Defining a media market involves combining the product and geographic aspects of the market.
Identification of a specific market in which a media firm offers some or all of its products to advertisers or consumers.
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7. Market Structure
The structure of a market can be defined in terms of the size and distribution of owners, and the amount of product differentiation, and the number of entry barriers within a market (Pickard, 1989).
Concentration in the market:
A market is considered concentrated if revenues, or circulation, are controlled by a limited number of companies.
(e.g.) HHI (Herfindahl-Hirschman Index)

8. Market Structure Product Differentiation:
Perceived differences among products
(e.g.) unique formats, marketing, individual TV program schedule
Barriers to entry: Obstacles new sellers must overcome before they can enter a particular market.
(e.g.) capital investments (equipment, personnel, and programming resources)

9. Market Structure Cost Structures:
Expenses needed to create products in a market.
Total Costs = Fixed Costs + Variable Costs
(e.g.) Fixed Costs: Costs needed to produce one unit of a product
(e.g.) Variable Costs: Labor Costs
Economies of Scale: The decline in average cost that occurs as additional units of a product are created
Vertical Integration: A firm controls multiple aspects of the production, distribution, and exhibition of its products

10. Types of Market Structure
Monopoly: A single seller of a product
Duopoly: Two sellers of a product
Oligopoly: Three or more sellers of a product, which may be either homogeneous or differentiated
Monopolistic Competition: Many sellers offer similar products that are not perfect substitutes for one another.
Perfect Competition: Multiple sellers &
a homogeneous product

11. monopolistic competition usually differentiated
Market Structure
monopoly
oligopoly
monopolistic competition
perfect competition
Number of firms
One
a few
many
Product --
usually differentiated
differentiated
identical
Entry barriers
Yes No 11

12. Four Types of Market Structure
media industry market structure
monopoly?
cable TV (SO)
oligopoly?
broadcast network, movie, telecommunication
monopolistic competition?
magazine, book, radio... 12

13. Strategic Alliance Strategic Alliance:
An association designed to provide benefits for each of its members.
(e.g.) Mergers & Acquisitions
Media organizations use alliances for sharing capital and costs, providing access to new markets, increasing shareholder value, and reducing risk.

14. Example: Acquisitions
Purchase of target firm as a subsidiary business with the intent of enhancing a core competency of the acquirer.
(e.g.) acquisitions of Android (mobile software) by Google (2005)
(e.g.) acquisitions of Lala.com (music streaming) by Apple (2009)
(e.g.) acquisitions of Quattro Wireless (mobile advertising) by Google (2010)

15. Example: Strategic Alliance (Networks)
Apple iphone (mobile application)
+ Starbucks (coffee)
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