Broadcasting, Cable, the Internet and Beyond Chapter 5 Quick Facts zNetwork share of audience (prime-time) 1975: 90% zNetwork share of audience (prime-time)

Broadcasting, Cable, the Internet and BeyondChapter 5

Quick Facts

Network share of audience (prime-time) 1975: 90% Network share of audience (prime-time) 2002: 47% Number of TV networks, 1975: 3 Number of TV networks, 2002: 7 Number of homes with one or more TVs: 106,641,910 Percent of TV homes with more than 100 cable channels:

40 (est. 2002) Percent of TV homes with HBO: 30 (1999)


Transition sums up television today

Television is moving from analog to digital, high-definition

There are more television networks and cable networks today that 10 years ago

Television competes with home video, video games, and the Internet for viewers

About 70% of homes subscribe to cable television About 15% of homes subscribe to DBS


Types of Television StationsTV stations by type

UHF Commercial44%

VHF Commercial34%

UHF Educational15%

VHF Educational7%

UHF Commercial

VHF Commercial

UHF Educational

VHF Educational


Types of Television Stations

VHF - Channels 2 - 13 - about 570 stationsUHF - Channels 14 and above - 750 stationsDTV - new allocation for digital television


Commercial versus Noncommercial

Commercial TV - 78% of all television stations are commercial.

Commercial stations program information and entertainment in order to attract an audience.

Stations sell airtime to advertisers based on how large the viewing audience is.

Noncommercial TV - 22% stations are commercial free Most are affiliated with PBS or with a college or educational

institution


Network Television - The Big 4

Big Three - started originally as radio networks NBC - National Broadcasting Company CBS - Columbia Broadcasting System ABC - American Broadcasting Company

Fox Broadcasting Company - started in 1986 by Rupert Murdoch


Television Networks - The New Networks

UPN - United Paramount Network Started 1995 Star Trek and WWE Smackdown

WB - Warner Brothers Started 1995 Buffy, 7th Heaven and Smallville

Pax TV - Started 1998 Programming based on family values


Network Television (continued)

The 4 major networks (ABC, CBS, NBC and FOX) have the majority of television viewers About 47% of all television viewers watch these four networks

New networks such as UPN, WB, and Pax have smaller audiences. They tend to program less time than the big 4. Viewership is

much smaller, too


Television is a business comprised of two separate business models:

Network Television develops programs and distributes them to be shown by local affiliates. Networks sell time within the programming.

Local Television Stations schedule programs when networks do not program. Local news, syndicated shows and network reruns are staple

programming.


Local Television stations rated by profitability

Network owned and operated stations (O&Os) are most profitable (***** VHF, **** UHF)

“Big Four” network affiliates (**** VHF, *** UHF) WB - UPN - Pax affiliates (*** VHF, ** UHF) Independent stations (* VHF, * UHF) Low- power TV (1/2* VHF, 1/2* UHF) (more stars the better)


Lower-Power Television

This service was created originally to promote minority ownership in 1982.

Stations are limited to 100 watts VHF 1000 watts on UHF

About 500 LPTV are in operation, mainly in rural areas Alaska has the most LPTV stations

Special Interest and minority programming are likely


TV Station Ownership

Television owners tend to be large corporations

Station ownership was limited before the Telecommunications Act of 1996

In 2003, Group owners can own as many stations as

they wants as long as the total number of U.S. Total TV homes reached by those stations cannot exceed about

35% (actually the FCC discounts penetration of some UHF stations)


TV's TOP 25 STATION GROUP OWNERS

Rank Group # of Stations Percent of TV Households 1 Viacom 40 39.50% 2 Fox TV 34 38.10% 3 Paxson 68 33.70% 4 NBC 24 30.40% 5 Tribune 23 28.70% 6 ABC 10 23.80% 7 Univision 32 21.00% 8 Gannett 22 17.50% 9 Hearst-Argyle 34 15.90% 10 Trinity 23 15.80% Source: Broadcasting and Cable


Public Television

PBS programs to more than 350 stations in the U.S., and U.S. territories and protectorates

Watched by nearly 98 million homes weekly PBS has a loyal following Typically PBS ratings hover around 2% of homes in the US

Viewers have high incomes and are well educated

PBS garners funding from local television stations, from underwriting, and through federal grants

PBS has been an early advocate of digital television


Cable Television

Cable is a strong competitor to over-the-air television Cable revenues exceed $48 billion (2003) Cable systems growth

Small 12 channel systems in the 1960s were the norm 1970s, 35 channel systems typical 2003, most people receive nearly 90 different channels

Basic cable services include local channels and advertiser-supported program services


Cable Television Program Services

Current ‘Must-Carry’ / Retransmission Consent Rules Broadcasters could choose either ‘must carry’ - cable operators

are obligated to carry local station Retransmission consent - need to negotiate carriage with cable

company Today, most cable operators continue to carry programming of

TV stations in their service areas

Major nets made programming available to cable in return for channel space for new services


Cable Television Program Services

USA, Lifetime, CNN and ESPN - examples of advertiser supported basic cable services

Pay services such as HBO and Showtime - commercial free services. Nearly one of three cable homes subscribes to HBO

Electronic Program Guides (EPGs), local government channels - examples of specialty services


Cable Terminology

Homes passed - about 98 of the 105 million homes in the U.S. are capable of subscribing to cable

Households that subscribe to services like HBO are called pay households

Multipay households subscribe to more than one pay service

Systems with addressable converters allow subscribers to pick movies and events on demand (PPV)


Cable Ownership Multiple System Operators (MSOs) tend to be large

corporations. Rank MSOs subscription households 1 Comcast* 21,757,300 2 Time Warner Cable 12,847,000 3 Charter Comm 6,783,900 4 Cox Comm 6,250,000 5 Adelphia 5,453,000 * (Comcast is now merged with AT&T Cable)


Cable Economics

High up-front capitalization (cost to wire each home) Tier system provides additional revenues Local systems now sell local advertising Additional services such as high speed Internet access

provides additional revenue streams Cable television systems are sold on the basis of cost

per subscriber.


Direct Broadcasting Satellites (DBS)

Started in 1994, DBS has 1 in 5 television viewers Two companies provide DBS services

DirecTV The Dish Network

Broadcasts from powerful KU band satellites Sells packages of services Generally cheaper than cable television Few DBS markets have local television channels included


Television Station Organization

Television stations generally have 5 divisions Sales - sells time to advertisers Engineering - keeps the station operating Business - responsible for collecting money and

paying the bills Programming - develops programming for station News - produces local newscasts and informational

programming


Cable System Organization

Departments of the cable franchise Technology Marketing Customer service


Documents

Broadcasting, Cable, the Internet and Beyond Chapter 5 Quick Facts zNetwork share of audience (prime-time) 1975: 90% zNetwork share of audience (prime-time)