Vertical versus horizontal integration in media markets

Communications Business

What are the differences between vertically and horizontally integrated media firms? Which represents a greater monopoly threat to a competitive market?

The greater overall consolidation of the media market is not simply a concern for competitors within the market; it is also of vital importance for every citizen of a free market. A vertically integrated firm dominates one segment of the media in a single market, for example, television, the Internet, or print. While it does have inroads in some other areas, Google is best classified a firm -- for example, there is no 'Google TV' or Google print books, merely Google e-books. Vertically integrated firms, depending on the industry they dominate, can be quite powerful. The profit of a vertically integrated firm is usually based upon an economy of scale, in other words, by having large production facilities to produce large amounts of a particular product, or by virtue of becoming a 'first mover' in a new industry, and claiming a large base of consumer loyalty that its competitors cannot overcome.

However, horizontally integrated media firms dominate a variety of media in a wide array of markets. Disney is an excellent example of this -- it produces children's cartoons, children's and adult films, hosts several theme parks, publishes books, videos, and toys, as well as owns ABC.