Industries: Ownership and Control

1) Why did Facebook buy Instagram for $1bn in 2012?

Facebook bought Instagram for $1bn in 2012 because they were thinking ahead and saw that it would help secure Facebook's dominance in social media for years to come as Instagram had a huge fan base. 

2) What are the benefits for media companies of vertical integration?

The benefits for media companies of vertical integration is that greater efficiencies, reduced costs, and more control along the manufacturing or distribution process.

3) What are the benefits for media companies of horizontal integration?

Benefits for media companies of horizontal integration is that it increasesmarket share, reducing competition, and creating economies of scale.

4) What is a subsidiary?

Subsidiary is when  a company that belongs to another company, which is usually referred to as the parent company or the holding company. 

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).

For example, Business A makes $20 million in revenue, and Business B makes $10 million. If the total revenue of Business AB following the merger or acquisition is $40 million, the revenue synergy is $10 million.


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: 

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7) Why did Disney buy Fox - what are the benefits?

The deal would give Disney Fox cable properties Star, BSkyB (which the company holds a 39 percent stake in), FX and Nat Geo in addition to the film and TV studio. It would also significantly expand Disney's international cable footprint (and bring the Avengers and X-Men back together).

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