industry structure
DESCRIPTION
TRANSCRIPT
![Page 1: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/1.jpg)
Networks and Local Outlets
![Page 2: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/2.jpg)
Some Basic Fundamentals
Networks = Stations
Broadcast = Cable
Very few stations are owned by the networks
![Page 3: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/3.jpg)
![Page 4: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/4.jpg)
Horizontal Integration
• Owning multiple entities within different product or service types– A variety of cable networks – Combination of broadcast network and cable networks – A variety of TV and/or radio stations (outlets)– A variety of cable systems (outlets)– Under current FCC rules, possibly seven radio, two TV
stations (outlets) in same local market
![Page 5: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/5.jpg)
Vertical Integration
• Same entity controlling the production and distribution of a good or service– In terms of Electronic media think in terms of
conglomerate whose pieces include:• Studio (producer of content)• Network• Outlet
![Page 6: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/6.jpg)
Largest Media ConglomeratesEst. Annual Revenue ’05 (in Billions)
AOL Time Warner $41B
News Corp $30B
Disney $27B
Viacom (before CBS Split)
$27B
Vivendi Universal $25B
Comcast $18B
NBC-Universal $13B
Cox $10B
Gannett $6.2B
![Page 7: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/7.jpg)
Media & “Telecommunications” Industries Est. Annual Revenues (’05) in Billions
• Broadcast TV $45B• Radio $17B • Cable $57.6B • DBS $18B• Newspaper $48.6B• Magazines
$38.6B • Books $26.3B
• Motion Pictures $64B
• Recording Ind. $13.8B• Wireless
$81.5B • Local Phone(Wire) $127B• Long Dist. (Toll) $83.6B • Internet ????
Source: U.S. Census Bureau, FCC Statistics, NCTA
![Page 8: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/8.jpg)
The “Business” of Electronic Media
Commercial Broadcasting and Cable Nets
1. Collect an Audience• As Large as Possible• Demographically Attractive
2. Sell Access to that Audience to Advertisers
3. Use Programming to Attract the Audience
Advertiser Driven
![Page 9: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/9.jpg)
The “Business” of Electronic Media
Cable Television Systems
1. Collect Revenue from Subscribers Seeking
Signals
• Subscriptions
• Equipment Rental
• Pay-per-View
2. Local Advertising
![Page 10: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/10.jpg)
Cable Overtakes Broadcast Networks
• Primetime share of broadcast network programming continues to drop
• Two years ago, big 4 networks (ABC, CBS, NBC, FOX) primetime share dropped below 50% during sweeps (historic low at 47%)
• Collectively viewers watching more cable programming during primetime now than broadcast TV, but spread among many networks
![Page 11: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/11.jpg)
Who Watches What?
Broadcast 9/24/01—9/30/01
1. Friends 19.5 million TV Households
2. ER 18.3 million
3. Everyone Loves Raymond 14.4 million
4. CSI 14.2 million
5. Inside Schwartz 14.1 million
Cable/Sat 9/24/01 - 9/30/01
1. NFL 4.5 million
2. NFL Primetime 3.03 million
3. WWF 3.03 million
4. WWF 2.78 million
5. Dragon Ball Z 2.13 million
![Page 12: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/12.jpg)
Media Ad Revenues (2005)
• Newspaper $47.33 billion
• Broadcast TV $44.29 billion
• Cable $23.65 billion
• Radio $19.64 billion
• Magazine $12.84 billion
![Page 13: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/13.jpg)
Broadcast Television Revenue (2006)
Network Ad Sales $25.43 billion
Local Station Ad Sales $18.67 billion
Syndicated (barter) $ 4.23 billion
Total $48.35 billion
![Page 14: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/14.jpg)
Cable Revenue (2006)
• Total overall revenue $74.7 billion – Basic tier $33.6 billion– Premium $ 6.4 billion– Advertising $26.9 billion
• Network $ 20.7 billion• Local $ 4.7 billion• Regional Sports $ 789 million
![Page 15: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/15.jpg)
MVPD Statistics (2006)
• More than 111,600,000 television households in U.S.• 65.6 million cable customers in the U.S.
– 58.8% of TV households subscribe to cable– Cable passes 112,600,000 households – More than 7,000 local cable systems, majority owned by a
handful of companies– 34 million Digital Cable subscribers– 28.9 million Cable Modem subscribers (high-speed Internet)– 9.5 million VoIP subscribers (Internet telephony via cable)– 531 National Video Programming Services/Networks
• Approximately 30 million DBS subscribers– 13.6 million DishNetwork– More than 16 million DirecTV
![Page 16: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/16.jpg)
What’s It Worth?Station Sales w/in last few years
• San Francisco VHF $700 million
• Worcester/Boston UHF $47.5 million
• Reno VHF $45 million
• Asheville, NC UHF $4.5 million
• Dallas FM $59.4 million
• Chicago AM $29 million
• Denver AM $4.2 million
• WLUS AM/WDJY FM Gainesville FL $762,500
![Page 17: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/17.jpg)
Revenues: GE and NBC
0
20
40
60
80
100
120
140
GE
![Page 18: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/18.jpg)
Revenues: GE and NBC
0
20
40
60
80
100
120
140
NBC
GE
![Page 19: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/19.jpg)
Broadcast StationsOwnership “Types”
– Single Station
– Group Ownership
• Economy of Scale
• Clout
– Network Owned and Operated (O&O)• Stations owned by the network (e.g. ABC) and
affiliated with the same network (e.g. ABC)
![Page 20: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/20.jpg)
Largest TV GroupsCompany Total Stations National Coverage
• Fox Television 31 41%• CBS 38 40% • Paxson 69 67%• Tribune 23 30.5%• NBC Universal 27 30%• ABC 10 24%• Univision 25 18.7%• Gannett 22 17.4%• Hearst-Argyle 33 16%• Sinclair 62 15%
![Page 21: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/21.jpg)
Top 10 Radio GroupsCompany Number of stations Local markets Revenue
• Clear Channel 1202 189 $3.5 billion• Infinity 183 41 $2.35 billion
• Cox 82 18 $455 million
• ABC Radio 55 27 $436 million
• Entercom 95 18 $415 million
• Citadel 206 40 $349 million
• Radio One 63 22 $301 million
• Emmis 23 8 $295 million
• Hispanic 48 13 $254 million
• Susquehanna 32 9 $235 million
![Page 22: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/22.jpg)
Broadcast Stations
Network Affiliation– Affiliate (ABC, CBS, NBC, FOX)
– Independent (UHFs that carry UPN, WB (now CW) & MyNetwork)
Some going truly Independent?
![Page 23: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/23.jpg)
TV Station Expenses (affiliate)
Engineering
Programs
Production
News
Sales
Ad/Prom
Gen/Adm
9.2% Engineering
27.1% Programs
3.4% Production
23.7% News12.9% Sales
5.3% Ad/ Promo
18.4% Gen/Adm
![Page 24: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/24.jpg)
Broadcast Stations: Ownership Limits
– FCC License
• 8 years
• Renewable
• Can be “transferred” (sold)
![Page 25: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/25.jpg)
Broadcast Stations: Ownership Limits
Personal Characteristics
• US Citizen
• Character
• Financial Qualifications
![Page 26: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/26.jpg)
Broadcast Stations: Ownership Limits
• Because of court decision, FCC’s proposal to
further deregulate ownership rules (June 2003) was
recently reassessed by FCC in Dec. 2007
• More info on who owns what? Visit
www.openairwaves.org
• Next several slides review what is currently in
effect, after the FCC completed the reassessment
in Dec. 2007
![Page 27: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/27.jpg)
Radio Ownership Limits
– Numerical Limits
• Radio No National Limits
• Market-based Numerical Limits (local DMA)
– If 45 stations-- can own or control 8
– If 30-44stations--can own or control 7
– 15-29 stations--can own or control 6
– 14 or less--can own or control 5
![Page 28: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/28.jpg)
National TV Ownership
Limits
– National limit based on broadcast, over-the-air
signal reach of all stations owned by one entity
– Recent Congressional law: Combined signals
can reach no more than 39% of TV Households
• UHF signals (channels 14-69) count ½
– Single company may not own two of the major
broadcast TV networks (CBS, ABC, NBC, FOX)
![Page 29: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/29.jpg)
Local TV Ownership Limits
• May own two stations in same market
(DMA) if eight independently-owned
stations remain post-merger
• Top-four rule: only one of the stations may
be among the top four rated (viewed)
stations in the particular market at the time
of acquisition
![Page 30: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/30.jpg)
Local Cross-Ownership Limits
– Owning combination of radio/TV/cable within
same local market• May own up to six radio and up to two TV stations (or 1 TV and
seven radio) as long as 20 “independent voices” (separately
owned stations) exist post-merger
• May own a cable system and station in same market
• May not own radio or TV station and newspaper in same market
(some grandfathered exceptions apply)
– In Dec. 2007, FCC ruled newspaper/broadcast station
combinations allowed in TOP 20 DMA’s (urban areas)
![Page 31: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/31.jpg)
Cable Television
![Page 32: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/32.jpg)
Some Basic Fundamentals
Networks = Stations
Broadcast = Cable
Very few stations are owned by the networks
![Page 33: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/33.jpg)
The “Business” of Electronic Media
Commercial Broadcasting and Cable Nets
1. Collect an Audience• As Large as Possible• Demographically Attractive
2. Sell Access to that Audience to Advertisers
3. Use Programming to Attract the Audience
Advertiser Driven
![Page 34: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/34.jpg)
The “Business” of Electronic Media
Cable Television Systems
1. Collect Revenue from Subscribers Seeking
Signals
• Subscriptions
• Equipment Rental
• Pay-per-View
2. Local Advertising
![Page 35: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/35.jpg)
Industry Structure
Local Systems
Multiple System Operators (MSOs)– Economies of Scale & Clout
– National limit: MSOs permitted to serve 30% of all multichannel video subscribers (includes cable & DBS)
• Recently upheld by FCC in Dec. 2007
![Page 36: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/36.jpg)
Horizontal Integration
• Owning multiple entities within different product or service types– A variety of cable networks – Combination of broadcast network and cable networks – A variety of TV and/or radio stations (outlets)– A variety of cable systems (outlets)– Under current FCC rules as of Dec. 2007, possibly six
radio, two TV stations (outlets) in same local market
![Page 37: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/37.jpg)
Top 10 Multichannel Video Program Distributors (MVPDs)*
• Comcast 24.2 (million
subscribers)
• DirecTV* 16.0
• Echo Star* 13.6
• Time Warner 13.4
• Charter 5.4
• Cox 5.4
• Cablevision 3.2
• Bright House 2.3
• Suddenlink 1.4
• Mediacom 1.4
*DBS providers
![Page 38: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/38.jpg)
Industry Structure
Program Networks Vertical Integration
– About 100 networks are owned by MSOs
– Comcast owns all or part of 64 networks
– Time Warner owns all or part of 34
– 40 % affiliated programming limit (struck down
by courts; under FCC review)
![Page 39: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/39.jpg)
Vertical Integration
• Same entity controlling the production and distribution of a good or service– In terms of Electronic media think in terms of
conglomerate whose pieces include:• Studio (producer of content)• Network• Outlet
![Page 41: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/41.jpg)
MVPD Statistics (2006)
• More than 111,600,000 television households in U.S.• 65.6 million cable customers in the U.S.
– 58.8% of TV households subscribe to cable– Cable passes 112,600,000 households – More than 7,000 local cable systems, majority owned by a
handful of companies– 34 million Digital Cable subscribers– 28.9 million Cable Modem subscribers (high-speed Internet)– 9.5 million VoIP subscribers (Internet telephony via cable)– 531 National Video Programming Services/Networks
• Approximately 30 million DBS subscribers– 13.6 million DishNetwork– More than 16 million DirecTV
![Page 42: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/42.jpg)
System Operations
Five years ago:
Systems with 54+ channels: 42%
Systems with 30-53 channels: 46%
Systems with less than channels: 12%
Now 85 % of systems provide 750Mhz offer more than 54+ & 100s of digital
![Page 43: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/43.jpg)
System Operations: Revenue
• Total overall revenue $74.7 billion (2006) – Basic tier $33.6 billion– Premium $ 6.4 billion– Advertising $26.9 billion
• Network $ 20.7 billion• Local $ 4.7 billion• Regional Sports $ 789 million
![Page 44: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/44.jpg)
System Operations: Revenue
Slightly more than 50% of
cable subscribers also
subscribe to at least one pay
service
![Page 45: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/45.jpg)
Cable Television RevenueBasic Sub
Pay Sub
Adv Svcs
PPV
Shoppin
Eq & Instal
Advert
![Page 46: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/46.jpg)
System Operations: Annual Expenses
• Programming Expenditures
– $12.5 billion overall
• $7.5 billion in program access fees (to cable networks)
• Infrastructure (including upgrades)
– $12 billion
![Page 47: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/47.jpg)
System Operations: Expenses
• Subscriber Installation/Service
• Marketing
• Customer Service
• Billing
![Page 48: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/48.jpg)
System Operations: Expenses
• Advertising Sales
• Franchise Fees ($2.5 billion
annual)
• General Administration
![Page 49: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/49.jpg)
Industry Structure
Regulation
– Local Franchise Authority
– Federal
![Page 50: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/50.jpg)
Programming Constraints
• Franchise Requirements
• Must-Carry/Retransmission Consent– All full-power local stations must be carried if
they request– Stations may negotiate with the cable system
for retransmission permission– Public TV stations can only elect must-carry
![Page 51: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/51.jpg)
Revisiting Some Basic Fundamentals
Networks = Stations
Broadcast = Cable
Very few stations are owned by the networks
![Page 52: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/52.jpg)
Networks
![Page 53: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/53.jpg)
![Page 54: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/54.jpg)
![Page 55: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/55.jpg)
![Page 56: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/56.jpg)
Networks: Definitions• 2 or more outlets connected to allow
simultaneous presentation of content
• Organization which “packages” and distributes content to affiliates
![Page 57: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/57.jpg)
Networks: Definitions• FCC definition of television network:–offers an interconnected program service on… –a regular basis for 15 or more hours per week
to…–at least 25 affiliated television licensees in 10
or more states
![Page 58: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/58.jpg)
Types of Broadcast Networks
Occasional or “Ad Hoc”
![Page 59: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/59.jpg)
Types of Broadcast Networks
Regional
![Page 60: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/60.jpg)
Types of Broadcast Networks
Regional
![Page 62: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/62.jpg)
Why Networks?
• Convenient Source of Programs for Outlets
• Convenient Means for Advertisers to Reach National Audiences
![Page 63: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/63.jpg)
![Page 64: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/64.jpg)
![Page 65: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/65.jpg)
![Page 66: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/66.jpg)
![Page 67: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/67.jpg)
![Page 68: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/68.jpg)
![Page 69: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/69.jpg)
Broadcast Network Operation
• Program Packaging and Distribution
• Minimal Program Production
• Revenue from Advertisers Reaching National Audience
![Page 70: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/70.jpg)
Broadcast Network-Affiliate Relationships
• Contractual Relationship
• Legal Restrictions Apply
• Affiliates Provide Access to Local
Audiences
![Page 71: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/71.jpg)
Broadcast Network-Affiliate Relationships
• Network Compensates Affiliate for
Access
–Direct Payment
–Adjacencies and In-program
Availabilities
![Page 72: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/72.jpg)
![Page 73: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/73.jpg)
Broadcast Network-Affiliate Relationships
Network Obligations:
–Compensate Station
–Promote and Advertise
Programs
![Page 74: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/74.jpg)
Broadcast Network-Affiliate Relationships
Network Receives:
–Access to Audience to Sell to
Advertisers
![Page 75: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/75.jpg)
Broadcast Network-Affiliate Relationships
Station Obligations:
– Promote and Advertise Programs
– Show Whichever Programs It Chooses
![Page 76: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/76.jpg)
Broadcast Network-Affiliate Relationships
Station Receives:
– Network Compensation
– Programs
– Prestige
– Audience to Sell to Local and Regional
Advertisers
![Page 77: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/77.jpg)
Broadcast Network-Affiliate Relationships
– Network/Affiliate Disputes:
• Clearances and Pre-emptions
• Network Encroachment on Station Time
![Page 78: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/78.jpg)
Broadcast Network-Affiliate Relationships
• Networks pulling out of NAB
• Affiliates petition to the FCC
![Page 79: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/79.jpg)
Changing the Network/Affiliate Relationship
• Eliminate Compensation?
• Reverse Compensation?
• Recapture Commercial Availabilities
![Page 80: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/80.jpg)
Changing the Network/Affiliate Relationship
• Move Programming directly to Cable/Satellites
• Internet
• The Digital Question
![Page 81: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/81.jpg)
Changing the Network/Affiliate Relationship
• Three Possible Futures
– San Francisco: • KRON (lost affiliation with NBC became true independent like WJXT
in Jacksonville which lost CBS)• KNTV gained affiliation through reverse compensation (pays NBC
$36 million a year)
– Bristol, VA: WCYB (NBC/CW) • Multiple network affiliates with DTV in smaller markets
– WCJB in Gainesville (ABC/CW)– WGFL in Gainesville/Ocala (CBS/MyNetwork)
– Gannett Broadcasting• Attain primarily one network affiliation with group owned stations• 13 of 22 stations NBC affiliates
![Page 82: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/82.jpg)
Revisit Some Basic Fundamentals
Networks = Stations
Broadcast = Cable
Very few stations are owned by the networks
![Page 83: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/83.jpg)
Basic“Cable” Networks
• Provided as Part of Regular
Subscriber Fee
• Carried on both Cable & DBS
![Page 84: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/84.jpg)
Basic“Cable” Networks
• Two Revenue Streams
– Advertising• Specialty cable networks (e.g. Food
Network) attract most viewers possible from its target audience to entice advertisers looking for specific demographics
– Cable Systems/Operators pay a fee for
most services (program access fee)
![Page 85: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/85.jpg)
Pay Networks
• Also known as premium networks/channels
• Subscriber Pays Additional Monthly Fee
• Stagnant Growth• One revenue stream for pay
network• On Cable & DBS
![Page 86: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/86.jpg)
Pay Networks
Competitive Challenge: Product Differentiation
– Exclusive Movie Contracts
– Made-for-TV Movies
– Original Series and Specials
– “Multiplexing”
![Page 87: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/87.jpg)
Pay-Per-View (PPV)
• Uneven Performance–Current PPV revenue about
$2.3 billion
–Expected to go to @
$9 billion by end of decade
![Page 88: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/88.jpg)
Pay-Per-View (PPV)
–Recent Study of Typical PPV system showed…• 1% of basic cable subs make 48% of the PPV buys
• 50% of the PPV buys are of adult services
![Page 89: industry structure](https://reader033.vdocument.in/reader033/viewer/2022061218/54b7ad164a79590e468b4613/html5/thumbnails/89.jpg)
Rich Media, Poor Democracy Video Segment
Consolidation/Synergy leads to the following:
• Cross-promotion
• Cross-production
• Cross-advertising
• Blockbuster