The document discusses the U.S. television industry, including its audience size, ownership trends, delivery options, and regulatory environment. It notes that the industry was historically dominated by the big three national broadcast networks (ABC, CBS, NBC) which had over 80% of primetime viewers in 1983. However, ownership restrictions and the growth of cable/satellite have led to increased options for viewers and consolidation among media companies over time. Regulation aims to balance competition and diversity with localism and public interests.

1. THE U.S. TELEVISION INDUSTRY Professor Miriam A. Smith San Francisco State University

2. The U.S. Television Industry Overview and Current Issues

3. U.S. Television Audience Population - about 300 million Percentage of Households with TV 98% (Nielsen Media Research 1998) TV Households 112.8 million (Jan 2008)

4. TV Ownership More than one TV 82% of total households in U.S. 1 TV 18% of total households 3 or more TV’s 52% of total households 99% have color television 85% have a VCR

5. Dual TV Broadcast System Large Commercial (Private) Sector Advertiser supported Much Smaller Public Sector

6. Television Delivery Options Broadcast Free-over-the air Cable Satellite Internet Mobile

7. Cable & Satellite Cable 64% of total U.S. households -- basic cable 96.6% of TV households passed by cable Satellite 22% of total U.S. households -- DBS

8. Other Options Remote Control 93% of total U.S. households VCR 85% of total U.S. households DVR VOD

9. Commercial Broadcast Television National 5 networks Local 1,752 local broadcast stations (1,566 digital)

10. National Networks ABC, CBS, NBC Fox CW (WB, UPN merger) Combined have a 58% market share

11. Public Broadcasting 1 national network -- PBS 381 television stations 254 UHF educational stations 127 VHF educational stations

12. Broadcast Regulation Federal Communications Commission

15. Basic Powers of Regulators Licensing Supervisory Rule-making

16. FCC Objectives Healthy industries Competition More choices and lower prices for consumers Diversity of voices Localism Local control Local programming

17. Rulemaking Notice of Proposed Rulemaking Comments Promulgate Rule Requests for Reconsideration

18. Licensing in U.S. 8 year license period licensee must serve public interest, convenience and necessity availability of frequency no opposition

19. Basic Qualifications Technology comply with FCC technical standards--transmission facilities, interference avoidance and signal quality Financial adequate capital -- sufficient funds to operate station for three months without ad revenue

20. Character lack of serious legal violations (don’t lie to commission, engage in fraudulent programming or commit felonies) Citizenship/Ownership U.S. citizens ownership restrictions Equal Employment opportunities Don’t discriminate

21. Media Concentration Ownership Quotas

22. Spectrum Management spectrum allocation band allotment channel assignment (licensing) Berlin International Radio Convention of 1906

24. Media Ownership Rules Always a debate

25. Other Things that Are Good to Know

26. Other Powers of the FCC Warnings Fines (forfeitures) Revoke Licenses Refuse to Renew Licenses Position Papers Informal Negotiations

27. Specific Rules Ownership Concentration Foreign ownership Political Advertising Children’s Television Cable Satellite

28. More Rules Advanced television (digital; HDTV) Close-captioning Indecency

29. Some Background For almost 40 years there were only 3 national networks in the United States. Today there are 6 national networks. Is the U.S. twice as big today?

30. Dominance of Big Three In 1983 big 3 had 80% of the prime time viewing audience In 1980, networks and their stations and affiliates accounted for about 90% of revenues and profits in broadcast television industry

31. Economic Technical Regulatory

32. Economic Reasons First networks grew out of existing radio networks CBS NBC Red NBC Blue

33. Could use radio profits to finance television Had an established program pool to exploit Could shift program, sponsor and audience to television Many new tv licensees were long-time radio affiliates

34. Technical Reasons co-channel interference -- need 200 miles between same channel stations adjacent channel interference -- need 60 miles between adjacent channels

35. even in largest city, interference would limit number of channels to 7 2, 4, 5, 7, 9, 11, 13 economically, even in large markets only a handful of stations will be successful

36. Regulatory reasons FCC decided to assign only limited portions of spectrum. FCC wanted to assign, wherever possible, at least one television station to each U.S. community (localism).

37. because most communities close in proximity, in order to avoid interference, had to limit the area television stations serve to allow for transmitters in small communities, FCC had to limit number of stations assigned to larger cities

38. Effect was to limit number of available outlets that the networks might use to reach large numbers of viewers Localism model criticism: overconfidence in local area’s ability to produce viable programming

39. Alternate: National Model Put all stations in big cities 2, 4, 5, 7, 9, 11, 13 Practical reach of signal is 50 miles Use repeaters to expand reach

40. How Did We Get 4 Networks?

41. struggle between major movie studios and networks for ownership of television programming FCC imposed rules in early 1970’s financial interest and syndication rules, networks could not own any prime time programming it distributed

42. resulted in increased supply of available programming availability of programming led to growth of broadcast television stations -- mostly independents 1975 -- 80 independents 1980 -- 121 independents 1985 -- 241 independents

43. Fall 1986 -- Fox begins 1 program 1987 single night of programming 1993 five nights of programming

44. FCC suspended full-regulation of Fox so it could grow.

45. Why More than 4?

46. UPN and WB availability of stations availability of supply of programming repeal of fin/syn rule studios want to distribute their programs and then syndicate same weblets are owned, at least in part, by studios/producers

47. 2006 end of UPN and WB birth of CW

48. Four Advantages of Networks Reduced transaction costs one network schedule takes care of 200 affiliates Increased efficiency advertisers need only deal with one network (who might guarantee the audience) Distribution costs reduced cost of transmitting signals to affiliates reduced if same program scheduled simultaneously Success breeds success in network scheduling of programs

49. Ownership of Local Stations Network owned-and-operated (O&O) Station Groups Cox Communications Hearst Business or individual

50. Local Station Administration Sales Programming Promotion Engineering Traffic News

51. Trends Mergers & consolidation leading to vertical integration Globalization Shrinking audience Increased options for audience Going digital

52. Vertical integration firm controls different aspects of production, distribution and exhibition of its products

53. Vertical Integration In 1993, vertically-integrated companies (production, distribution, station ownership) had 27% audience share. 1n 2003, have 69% audience share.

54. Current Issues

55. Current Issues Ownership Restrictions Everything is Getting More Expensive

56. Everything is Getting More Expensive

57. Programming In the final season, NBC paid Paramount $5.2 million per episode for Frasier Even reality shows can cost $1 to $2 million per episode