Analysis of Media Conglomerates Fox Inc and Walt Disney … Essay
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¶ … Media Conglomerates: Walt Disney and Fox Inc.
The Walt Disney and Fox Inc. are the conglomerate companies operating in the entertainment industry, and both companies have been able to achieve the competitive market advantages using an advance in the information technology. Moreover, both companies generate the largest percentages of their revenues by collecting the affiliation fees from their partners. This paper explores the annual report of both companies to compare and contrast the segments of both Disney Company and Fox Inc. By exploring the shareholders letters of both companies, the paper has been able to identify the common attributes of both companies.
Compare and Contrast the Walt Disney and Fox Inc.
The Walt Disney Company is a conglomerate and multinational entertainment company with a headquarter in California. Established in 1923, the Disney Company is the second largest entertainment company in term of revenue. The Disney operates under five segments that include Studio Entertainment, Media Networks, Parks and Resorts, Interactive and Consumer Products. However, the Media Networks is the most important segment that generates the highest revenue for Walt Disney. At the end of 2015 fiscal year, the Media Networks generated 48% of the company revenue. However, Parks and resorts generated the second largest revenue for Disney at the end of 2015 fiscal year. The Disney letter to the shareholders at the end 2015 fiscal year shows that innovation and creativity have been the major strategy that assists the company in achieving competitive market advantages making Disney to continuing assuming a leadership position in the entertainment industry.
Similarly, the "Twenty-First Century Fox, Inc." (Fox Inc. Annual Report, 2015p 3) is an entertainment and media company operating in the following segments:
Cable Network Programming
Filmed Entertainment, and Corporate and Eliminations.
Contrary to the Disney that operates five segments, Fox Inc. operates four segments. However, both Disney and Fox Inc. generate largest percentages of their revenue from Media Networks and Cable Networks respectively. As being revealed in Fig 1 and Fig 2, the Disney generates 44% of its revenue from the Media Networks, while the Fox Inc. generate 48% of their revenue from the Cable Network revealing the Fox Inc. generate more revenue from one major segment than the major segment of the Disney Company.
Fig 1: Percentage of Disney Revenue by Segments
Source: Disney Annual Report 2015
Fig 2: Percentage of Fox Inc. Revenue by Segments
With reference to the contents in the Form 10K, both the Disney Company and Fox Inc. highlight that both are incorporated in the state of Delaware. Although the state of Delaware is a small state, however, many companies are incorporated in the Delaware because its corporate laws are favorable to corporate organizations. Moreover, Delaware is referred as a tax haven for organizations because the state does not collect tax from companies registered in Delaware, however, that does not physically conduct businesses in the state. Thus, both the Disney Company and Fox Inc. take the advantages of the tax benefits and register their companies in Delaware. In the Form K of both companies revealing their IRS Employer Identifications Numbers. The Form K document also contains the value of the Common stocks of both companies. The values of the Disney and Fox Inc. Common stocks are $0.01 par value. While the shares of the Disney Company are listed on the New York Stock Exchange, the Fox Inc. shares are listed on the NASDAQ.
The Form K document also contains the number of Class A and Class B common stocks of the Fox Inc. "As of August 7, 2015, 1,220,939,959 shares of Class A Common Stock and 798,520,953 shares of Class B Common Stock were outstanding." (Fox Inc. Annual Report, p 1)[footnoteRef:1]. Moreover, the details of the Disney common stock outstanding showed that "there were 1,653,177,887 shares of common stock outstanding as of November 18, 2015." (Disney Annual Report, 2015 p 1). The Form K of the Fox Inc. also states the share price to be $38.41 per share as being quoted on the NASDAQ. However, the Disney does quote their share price in the Form K, however, the company share price transactions on the NY stock exchange was $178.9 billion as of November 18, 2015. [1: Fox Inc. Annual Report 2015. Twenty-First Century Fox Inc. 2015 ]
The letter to the shareholder reveals that the Media Networks segment of the Sidney Company has assisted the company to achieve market opportunities and growth, and Disney has been able to achieve globally competitive market advantages based on the advancement of the new technology. For example, the company takes an advantage of the new technology to transmit the TV program globally using the cable technology. The company also takes the advantage of the satellite to distribute its services to its customer across the globe. Similarly, the Disney Company has taken the advantages of the internet technology to boost its sales across the globe.
In the contemporary business environment, large percentages of business are using the internet technology to tap the geographical markets that are impossible to reach before the advent of internet technology. The Fox Inc. also uses the internet technology to boost their sales using the internet for the distribution of their products. Through the company website, Fox Inc. has been distributing the application of their cable television system in the United States and global markets. The Fox Inc. also takes the advantages of recent advances in communication technology to launch their Cablevision systems combined with the online video distribution. Moreover, the Fox Inc. uses the satellite for the distribution of the TV products.
Since the bulk of the Disney product and services can be distributed online, thus, the company offers the advantages for its customers to subscribe to its products and services online. A letter to the Shareholder reveals that the Disney has maintained its leadership position in the entertainment industry and has continued recording an incredible demand for their brands and franchises reaching millions of people globally. Moreover, Disney has taken the advantages of the digital technology to unlock new opportunities. Thus, the Disney greatest strength relies on the method it employs in embracing changes by using the new technology to achieve the strategy market advantages.
Despite the market advantages that the Disney and Fox Inc. enjoy in the entertainment industry, both companies face an increased competition from other companies operating in the entertainment industry. For example, Disney faces a stiff competition from other cable and networks companies as well as other independent television. Moreover, Disney competes with radio stations, television networks, independent television stations, advertising media, and other television networks. The growth of different networks from MVPD has increased the competitive pressures within the industry. Similarly, Fox Inc. faces a stiff competition with the operators of cable network programming. In the entertainment industry, the cable network operators compete for distributions and contents. Both the Disney Company and Fox Inc. face stiff competitions with other operators with reference to the price charged, quality, quantity as well as varieties of cable programming offered. Both companies also compete for viewers from a number of entertainment companies such as NBC Sports Network, and broadcast network ESPN, and free-to-air stations.
Apart from the stiff competitions that Disney and Fox Inc. face within the market environment, both companies are to comply with the government regulations in the United States, and other countries they are operating. For example, the FCC (Federal Communications Commission) mandate all companies operating in the entertainment industry to abide by the Communication Act of 1934, and violation of the regulation can result in a license revocation, denial of license renewal, or forfeiture of licenses. Moreover, FCC regulations affect the business operations of the Disney Company and Fox Inc. For example, the government grants a license to Disney for a period of eight years, which ought to be renewed after it has expired in order to continue the business operations. However, the FCC may delay the renewal of license on certain circumstances, which may affect the company business operations.
Despite the government regulations that affects the company business operations, both Disney and Fox enjoy audience from people of all ages. The Disney target audience is children, adults, and families. For example, Disney Channels focuses on children between 2 and 14. Typically, the Disney Channel consists of a cable network that airs original movies and series targeted to kids. In the United States, the Disney is on the air for 24 hours a day and produces live-action comedies, animated programming, original movies and preschool series. Disney Channel also produces the theatrical film as well as television programming for children. The Disney Company also uses the Disney Junior to air different programs for the kids aged between 2 and 7. The company also produces the live action and animated program that blends storytelling with characters learning. The Disney Junior is also aired 24 hours a day. Moreover, the Disney Junior airs the school program that focuses language skills, math, social skills, and heating habit. The Disney Company also launched the… [END OF PREVIEW]
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