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Broadcasting, Cable, the Internet and Beyond Chapter 5

Broadcasting, Cable, the Internet and Beyond Chapter 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

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Broadcasting, Cable, the Internet and Beyond Chapter 5

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  1. 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)

  2. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  3. Broadcasting, Cable, the Internet and BeyondChapter 5 • Types of Television Stations

  4. Broadcasting, Cable, the Internet and BeyondChapter 5 • Types of Television Stations • VHF - Channels 2 - 13 - about 570 stations • UHF - Channels 14 and above - 750 stations • DTV - new allocation for digital television

  5. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  6. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  7. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  8. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  9. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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.

  10. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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)

  11. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  12. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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. • TV homes reached by those stations does not exceed about 35% (actually, the FCC discounts penetration of some UHF stations)

  13. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  14. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  15. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  16. Broadcasting, Cable, the Internet and BeyondChapter 5 • Cable Television Program Services • Current ‘Must-Carry’ / Retransmission Consent Rules • Broadcasters could choose either ‘must carry’ - cable operators are obligated to carry local station, or • 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

  17. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  18. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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)

  19. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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)

  20. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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 provide additional revenue streams • Cable television systems are sold on the basis of cost per subscriber.

  21. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  22. Broadcasting, Cable, the Internet and BeyondChapter 5 • 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

  23. Broadcasting, Cable, the Internet and BeyondChapter 5 • Cable System Organization • Departments of the cable franchise • Technology • Marketing • Customer service

  24. Broadcasting, Cable, the Internet and BeyondChapter 5

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