Some History

• Radio signals the beginning of…?– Broadcasting – Wireless communication.

• The end of…?– Records– Able to hear free music

• Sound Familiar???

Industrialization

• The goal: one point to many

• 1919, the formation of RCA

• Government created monopolies:– in radio for GE and Westinghouse – in telephone for AT&T

• Nov. 2 1920: Elections– KDKA Pittsburgh– 1st Commercial station

Radio Competition• 13,500 AM/FM stations

– 2,000 educational stations

• Top 10 groups own– 2,330 stations (17%)

• Top 20 groups own– 2,814 (21%)

• Not about numbers owned, its…– Control in valuable geographical markets

Largest Geographical Markets

• For 2010:– Los Angeles ($1.1 billion) – New York ($755 million) – Chicago ($555 million)– Dallas-Ft. Worth ($416 million)– Atlanta ($398.5 million)

Radio and Consolidation

• Consolidation=– Competition – Diversity– Localism

Laying Out Some Effects

• Since the Telecommunications Act of 1996– Formed large radio chains– playlists have narrowed – advertising rates have nearly doubled– Few locally owned, locally serving stations– 4 or fewer groups control 70% of the ad revenue– Music=

• Promotion?• Or Ad Sales?

Markets…

Da Players• 840 stations?, $2.7B ($6.8B)

– 240 international stations

• 130 stations, $1.9B ($14.5B)

• 84 stations, $500M ($12B)

• 277 stations, $400M ($36B)

• 313 stations, $326M (=)

Some Money/Property Thangs

• Versus:– ad based vs. subscription based– localism vs. nationalism– censored vs. uncensored

• “Listens” model as opposed to sales/rating• Terrestrial=Free promotion for label and performer• Terrestrial pays blanket license for musical work to ASCAP or

BMI– The musical work as public performance

• Satellite and Internet radio pay every time a song is played– Both the musical work AND sound recordings

• SoundExchange collects and distributes the digital public performance royalty

Cont’d

• A “non profit”

• Board members from…

• Pandora= 2.91 cents/hr/listener

• Sirius XM= 1.6 cents/hr/listener

• Clear Channel= 0 cents

History…

• Television built upon?...– Networking – Programming– Advertising– Technologies– Infrastructure

• Commercially based model

Networks Begin

• 1946, Dumont first commercial network

• 1947, NBC as first regularly operating network

• 1948, CBS and ABC jump in

• “Chain Broadcasting”: AT&T lines and microwave relay, reaching west by 50s

• Local TV stations remain independent– Independently owned/Franchise content from

networks

• Early local stations got programming from numerous networks

• Eventually, stations would affiliate with one network and carry their prime time programs

Distribution

• National Networks

• Local Stations/Network Affiliates– Content and Ads– Not owned by network

• O&O– Local station owned by network– In largest markets– $$$

Distro Cont’d

• Independent

• Cable/Satellite– Sometimes pick up local stations– Basic, Pay, Pay Per View

• Public Stations

• National Broadcast Networks???

Competition

• Local level, stations compete for???– Audiences– Local advertisers

• Against?– Cable– Internet

• National level, networks compete for???– Audiences– Advertisers

Competition Cont’d

• National networks=– Oligopoly

• Local Stations=– Oligopoly

• Cable=– Monopoly

• Direct TV=– Oligopoly 19.2M subscribers

Ad Revenues

• $46.5B (Cable=$85B)• In 2009, Network revenues -7.2%• In 2009, Local Broadcasters -13.8%• Expected a 3% decline in 2011• Ad revenues -12.9% in 2009

Product Placement• $7B, expect $10B in 2010 ($190M in 1974)

• Ad purchase contingent upon product placement, usually a combo fee

• Film Placements

• Reverse Placements?

Markets

• TV Production:

• TV Networks:

• Local Stations:– 35

• Cable:

• Pay Cable:

• TV Production:

• TV Networks:

• Cable Systems:– 12.8M Subscribers

• Cable:

• Pay Cable:

• TV Production:

• TV Networks:

• Local Stations:– 10

• Cable:

These 3 Corporations Are???

• Vertically integrated?

• Horizontally integrated?

• Diversified?

• Use synergy(ies) to promote/sell its commodities?

The New Fox News

Big 4 (or 5?) TV Networks

• Fox Ent. Group ($2.5B/$30B)

• CBS ($2B/$14B)

• NBC ($1.9B/$157B)

• ABC ($1.3B/$36B)

• The CW ($26.5M?...private)